By Calvin Biesecker
FLO Corp. [FLRP], the last company left standing as a service provider for the suspended Registered Traveler (RT) program, yesterday said it is working with several airports to re-launch the service in January.
FLO expects to re-launch RT services at one major airport next month and is in discussions with three small airports to also resume these services, Fred Fisher, senior vice president at FLO told Defense Daily.
The RT program was suspended in June when the largest RT service provider, Verified Identity Pass‘ Clear brand, ceased operations. Verified Identity filed for bankruptcy earlier this month.
While Verified had about 188,000 Clear members, FLO was a distant second with about 10,000 members and Vigilant Solutions had about 7,000 members. All three firms suspended RT operations in June. Vigilant’s web site is no longer up.
FLO also announced a new business model for its RT offering, a partnership with biometric software and hardware provider Cogent Systems [COGT] that takes advantage of Cogent’s nationwide network of biometric enrollment centers. A joint announcement by FLO and Cogent yesterday said that Cogent has more than 1,000 enrollment centers nationwide. According to information on Cogent’s web site, the company has applicant fingerprint services in eight states, including Alabama, Arkansas, California, Florida, Georgia, Ohio, Pennsylvania and Tennessee.
In the past, FLO signed most of its members up by doing membership drives at targeted businesses and groups, sending two employees and the enrollment hardware to corporate campuses to enroll members. This was expensive and FLO didn’t make much money this way, Fisher said.
The new model allows FLO to take advantage of an existing infrastructure of biometric enrollment centers and pay Cogent when an RT applicant enrolls at one of its locations. That creates revenue for Cogent without FLO having to make a significant infrastructure investment.
For FLO’s potential customers, it would mean not necessarily having to go to a central location to enroll by having more options in different cities.
Verified on the other hand, maintained staffed enrollment centers at various locations, a model that proved very expensive.
Fisher said the partnership with Cogent is exclusive but does have an end date, which he declined to disclose.
Fisher also declined to name the large and small airports that FLO is negotiating with to re-launch RT services. When these services do reopen, he said FLO would provide its own infrastructure, such as kiosks that can do enrollment and identification matching for any RT members, regardless of who the service provider is. This interoperability between RT service providers their equipment has been a feature of the program since it began several years ago.
The RT program began as a pilot project by the Transportation Security Administration to mitigate aviation security risks by allowing airline passengers who agreed to go through a background check of their biographic and biometric information to possibly receive certain conveniences at the security checkpoints. The plan was to have this become a privately run program–hence the creation of qualified RT service providers–who would charge their members a fee if they successfully completed the enrollment process, which included the TSA administered background check.
However, TSA ultimately backed away from the program under the leadership of then Administrator Kip Hawley when the agency determined that United States citizens who may be potential terrorists but had no criminal background or known association with terrorist groups might be able to take advantage of RT. This idea of “clean skin” terrorists was sparked by the failed car bombings in the United Kingdom in 2007 by two men, one born in Iraq and the other in Jordan, who were medical professionals in Britain.
In the end, while TSA denied giving RT members any conveniences at the security checkpoints, it appears that Verified was done in by the pitfalls associated with starting a business. According to the bankruptcy filing, the company owes its creditors $32 million. Its assets are worth between $7 billion and $10 billion, according to the filing.
One of the creditors, L-1 Identity Solutions [ID], is owed about $1 million. L-1 is one of at least several companies and private equity firms bidding on the assets of Verified. Fisher said that FLO is also bidding on those assets, which basically include the Clear membership lists, and kiosks and related equipment at nearly 20 airports.
L-1 has over 1,000 biometric enrollment centers throughout the country, including at many state department of motor vehicle branches and other locations.
Verified’s Clear brand was synonymous with RT as the program ramped up over several years. The company did a significant amount of advertising and its former chief executive, Steven Brill, was very public in pushing his service and the program. Brill frequently criticized TSA for not providing RT members with any sort of conveniences at the security checkpoints, such as leaving shoes on or not having to divest jackets.
RT basically became a “go to the front of the line” program, Fisher said. Fisher was with Verified before joining FLO.
Fisher believes that when Errol Southers, the Obama administration’s nominee to head up TSA, is confirmed in the Senate, the agency’s position on RT will change and that security conveniences will eventually be offered. Southers backed the RT program during recent confirmation hearings. However, Southers’ confirmation is on hold because Sen. Jim DeMint (R-S.C.) wants the nominee’s position on unionizing TSA screeners to be clarified.
If Southers is confirmed and does make changes to RT, such as granting members security conveniences, it raises questions that Hawley posed before. Namely, if there is technology that can enhance the security at the checkpoint and at the same time speed passenger travel, then TSA will apply it to all passengers.
That’s true but a dedicated RT lane for members could serve as a place to conduct pilot demonstrations of new technology, Fisher said.
Regarding the bidding for Clear’s assets, in particular the membership lists, Fisher said that the purchase of these lists by anyone who isn’t a qualified RT service provider would violate the privacy agreements Verified has with its members. If a non-RT service provider successfully bids for the assets, FLO will challenge the award, he said.
Documents related to Verified’s bankruptcy filing show that General Electric‘s [GE] former homeland security business, which is now owned by France’s Sagem Securite, is the largest creditor at about $1.9 million. Superior Technical Resources, a staff services provider, is owed the next largest amount, $1.4 million.
Fisher said that in FLO’s business model, it plans to use far fewer staffers than the Clear service used, particularly at the airports.