Company Says Nothing Out Of Line With Contract

Federal auditors are questioning several billing documents filed by Unisys, the prime contractor on a $1 billion tech contract with the Transportation Safety Administration. Auditors claim, among other issues, the agency (and by extension, taxpayers) was overbilled by as much as 171,000 hours worth of labor and OT.

The auditors also claim Unisys charged the TSA as much as $131 per hour for employees who were then paid less than half that amount.

"We found significant internal control weaknesses regarding the reliability of the recorded labor hours," said auditors from the Defense Contract Audit Agency, an auditing group hired by the TSA last year to review the Unisys contract. "We were unable to quantify the impact of the adjustments due to the lack of verifiable documentation."

Unisys was hired three years ago by the then-emerging TSA to create an advanced computer network, linking thousands of federal screeners and other employees at airports across the country to the TSA's security command centers.

Project costs have since grown to more than double the anticipated amount every month, according to a report in the Washington Post, even though the network is far from complete -- less than half of the airport slated for the new technology have yet to be improved.

Now, according to government officials, project costs could escalate to as much as $3 billion.

So, where does Unisys fit into this? According to industry analysts and procurement specialists, the Unisys contract is a shining example of the potential dangers of handing important government contracts to private corporations. Other examples of recent issues with such a system include efforts to hire baggage screeners and place bomb and radiation sniffers at airports.

According to internal auditing documents obtained by the Post, two separate reviews in 2004 showed Unisys was charging the government much higher than normal labor rates for low-level employees, in some cases as much as $131.12 per hour for a technical writer who should have been making about half that. The audits found Unisys kept the difference, instead of paying it to the employee or refunding it back to the TSA.

The auditors also found timesheets that had been 'repeatedly' adjusted to change job categories, without "adequate explanations."

“There certainly was no attempt here to commit any type of misdeed of any form,” said Tom Conaway, managing partner of homeland security for Unisys, in response to the Post's inquiries.

However, Conaway later admitted "our discipline on some of our internal processes lapsed a little bit," as he acknowledged employees who miscoded timesheets. According to Conaway, these errors were not noticed until much later, as the company was focusing its efforts on meeting the demands of the contract.

He disputed the auditors' claim of incorrectly billed overtime, which in their words represented "100 percent profit to Unisys."

Conaway also stressed Unisys has since implemented a program, in cooperation with the TSA, called "Project Bedrock," intended to improve oversight and resolve any issues raised by auditors. Labor costs will be extensively reviewed under the contract, according to the Unisys spokesman.

The TSA is also coming under fire from auditors for some of its initial assessments, including the original figure of $1 billion to cover the cost of the program. According to former TSA chief information officer Patrick Schambach, the figure was only a guess of the actual cost of the upgrade program.

"That $1 billion was a number out of the air, frankly," said Schambach, who now works in the private sector for a government contractor. "I had no clue if that number was going to be enough to carry us. All I got from the DOT was, 'When you hit $1 billion, come back to us.'"

As of last month, Unisys had billed the government $940 million under the contract, with less than half the work completed. While the nation's largest airports are now on the upgraded network, more than half of the 443 airports where the TSA has a presence are not. The costs of adding those remaining 228 airports to the list will bring the final costs closer to $3 billion -- a fact Transportation Department knew at the time, said Schambach, although he maintains he was told to quote the more palatable $1 billion figure.

The TSA claims it became concerned with rising project costs in 2004, when they initially asked auditors to review Unisys's billing policies. Although the TSA questioned the costs, the agency also termed Unisys's performance "acceptable" in a recent internal review.,

"Given that we are currently working through audit results, TSA cannot speculate on the nature of those issues or how they may or may not have impacted the scope of work completed to date," said chief TSA spokeswoman Yolanda Clark.

FMI: www.tsa.gov, www.unisys.com