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Exploiting a tragedy

As the government scrambled to tighten security after 9/11, one company found a way to turn a $104-million contract into a $741-million sinecure.

Never give a sucker an even break. That was the cynical attitude of NCS Pearson Inc. after it won a contract with the Transportation Security Administration to hire new airport personnel following the Sept. 11, 2001, terrorist attacks. Unfortunately, American taxpayers are the suckers in this case.

At a time when the nation felt vulnerable and the government was in a rush to respond, Pearson stretched a $104-million contract to hire passenger screeners into a $741-million sinecure. While some of the cost inflation can be attributed to poor direction from the TSA, most of the blame falls on Pearson, according to a recently revealed Pentagon audit. Forty percent of the amount billed - a total of $303-million - is questioned in the audit, which was obtained by the Washington Post .

Some examples:

--Pearson set up applicant assessment centers at hotels, apparently at the suggestion of TSA, rather than use its existing offices. The charges were outrageous, such as the use of an exhibition center in New York for $39,000 a day. In Boston, the company set up a tent outside the Hilton Hotel that leaked so badly it was unusable when it rained - for $514,000.

--A subcontractor providing security at one site charged $125,400 to rent six metal detectors. Auditors found that the detectors could have been purchased for less than $36,000. In that instance, Pearson did dock the subcontractor $39,900.

--Security guards paid $15 to $20 an hour were billed to the government at $30 to $40 an hour. Pearson made no apologies for the ripoff, saying nothing in the contract called for the company to "simply pass-through labor costs (on a dollar-for-dollar basis)."

Pearson executives put the blame on the TSA, and that agency certainly wasn't protecting taxpayers. As one former Pearson employee said, "I never saw any government people" overseeing the contract.

The TSA did request the audit by the Defense Contract Audit Agency, and used the information to win a modest settlement with Pearson - reducing the cost from $867-million to $741-million. Then the TSA covered its own shortcomings by denying requests from the Post to release the audit. The newspaper was finally able to obtain a copy elsewhere.

Americans are not surprised by government waste but this case is especially shameful. Any scheme to take advantage of a tragedy, especially one of 9/11's magnitude, is despicable. The ill-gotten gain should be returned, and maybe someone should go to prison.

[Last modified July 5, 2005, 01:33:21]