Audit Finds Mismanagement Drained $1 Billion Project

The New York Times
Audit Finds Mismanagement Drained $1 Billion Project
By ERIC LIPTON

WASHINGTON, April 1 — Mismanagement of a $1 billion technology contract by the Transportation Security Administration resulted in the expenditure of the entire budget long before all of the needed computer and telephone equipment was installed, according to an audit released Thursday by the inspector general of the Homeland Security Department.

The contract, with the Unisys Corporation, called for the installation of computers, pagers, cellphones, radios, telephones and a high-speed network to serve the agency's 65,000 employees at its headquarters, 21 field offices and 429 airports.

The $1 billion was supposed to be enough to finance the project through 2009, the audit said, but most of the money ran out this year before many projects were complete.

Federal security directors at some airports had to rely on dial-up Internet connections to get e-mail messages and information on schedules, training and attendance for airport screeners, although all of them now have high-speed connections.

Other promised systems still not fully delivered include voice mail, a staff management system, a secure wireless network and a network of training computers, the report said, and equipment that was installed often was not robust enough to handle the constant use.

"We were given a hodgepodge of $20 RadioShack rack phones with which to conduct business," one federal security director was quoted as saying in the report, noting that a caller could not be put on hold or transferred. "Some are so old they actually have a mechanical bell that rings when someone is calling."

Transportation Security officials generally did not dispute the report's main findings and have acknowledged that in a rush to set up the new agency after the attacks of Sept. 11, 2001, mistakes may have been made. But they added that they realized, despite the $1 billion cap on the contract, that it would not be enough to cover all of the required cost.

The audit found that in the few cases where government contract managers took the time to check, Unysis frequently "proposed too many hours and higher labor categories than necessary" for the work. In those cases, federal officials negotiate lower prices. The problem was that much of the work on the contract proceeded without such oversight, the audit said.

Unisys defended its performance, saying in a statement that it had provided state-of-the-art equipment and met the contract's requirements.

Regardless, late last year, the agency declined an option to extend the contract with Unisys, so it can move, as recommended by the inspector general, to a new deal that ensures "fair and reasonable pricing," avoids unauthorized work and routinely evaluates the quality of work the contractor is doing.