The Government Accountability Office (GAO) this month denied two protests by L3Harris Technologies [LHX] of a Transportation Security Administration (TSA) contract award to Smiths Detection for the first tranche of new scanning systems to screen carry-on bags at airport checkpoints.
The rejection of the protests means that Smiths Detection, which is part of Britain’s Smiths Group, can get to work on delivering the first of the computed tomography (CT)-based checkpoint scanners to TSA for acceptance testing within the next few months before deployments can begin. The agency in late March awarded Smiths a $96.8 million contract for 300 of the company’s HI-SCAN 6040 CTiX systems, which will begin to replace Advanced Technology (AT) X-Ray systems currently in use.
A TSA spokesman told HSR on July 19 that deliveries of Smiths’ CT systems are expected to begin sometime this fall. GAO rendered its decision on July 8 and published it on July 19.
Under terms of the contract, Smiths has 60 days to deliver the first system to TSA for testing and evaluation, a process expected to take a month or two.
Once TSA approves the first test article scanner, Smiths will have 30 days to deliver the first 30 CT systems and then is contracted to deliver 30 more per month to complete deliveries.
In addition to L3Harris and Smiths, TSA also considered bids from Analogic and Integrated Defense & Security Solutions. Smith’s price proposal was far below what TSA expected, even though price ranked fourth in terms of evaluation criteria, with production and deployment capability ranked first, followed by technical capability and past performance. The award was based on a best-value tradeoff basis, GAO said.
In its decision, GAO published what appears to be the proposed evaluation prices of each of the four bidders for the checkpoint CT systems, but only mentioned L3 and Smiths by name. Smiths’ bid came in at $2.9 million, with L3 the next lowest at $4.1 million, followed by Offeror B at $5.4 million and Offeror A at $6.1 million.
The highest technically rated proposals were Offeror A followed by Smiths but the difference was only “slight” and the wide gap in pricing went in Smiths favor, according to the GAO decision based on TSA’s source selection rationale. Next, TSA evaluated the proposals of Smiths, Offeror B and L3, finding no “tradeoff was necessary because Smiths’ proposal was technically superior, and offered the lowest proposed price to the government,” GAO says.
L3Harris’ primarily objected to the production and deployment capability rationale of TSA, which ranked Smiths second with an “outstanding” grade and L3Harris fourth with an “acceptable” mark. According to the GAO, L3Harris proposed adding an automated diverter feature to its system, which TSA assessed as potentially adding schedule risks. L3Harris argued that the assessed risk was unreasonable but GAO disagreed.
TSA is expected to add the automated diverter feature as a requirement in future proposals for the checkpoint CT systems.
L3Harris also challenged TSA granting Smiths’ proposed deployment timeline as a strength that would reduce schedule risks, arguing that the company has “little relevant experience” and that its HI-SCAN system is too heavy and will not be able to execute installation, according to the GAO. However, the GAO said that TSA verified that Smiths had installed two identical systems for operational tests and evaluations at airports in St. Louis and Los Angeles.
With regard to the weight of Smiths’ system, GAO also disagreed with L3Harris’ challenge given the earlier HI-SCAN installations.
L3Harris also protested over Smiths’ manufacturing capability, arguing that it doesn’t have a domestic production plant and that the systems will be manufactured in Germany. This should have been assessed as a “material risk” to the delivery schedule due to having to import the systems.
But GAO said that L3Harris didn’t prove that Smiths can’t produce its HI-SCAN systems in the U.S. and that Smiths’ proposal includes a domestic manufacturing facility that has produced more than 9,000 X-Ray systems since 2010. Smiths plans to use its German facility for surge capacity if needed, GAO said.
L3Harris also protested that it should have been given a strength based on its installation of more than 100 CT systems at 12 airports worldwide, arguing that Smiths should have been assessed a weakness here given a “lack of experience,” GAO said. But the auditors said L3Harris’ challenge in this regard should have been filed before bids were due.
With regard to Smiths’ experience deploying its CT system, TSA found that the company has already successfully installed the HI-SCAN systems and outlined in its bid that it could exceed the 30 systems a month requirement, GAO said.
TSA is expected to buy around 2,400 checkpoint CT scanners and industry officials expect a second source to be added. The next round of contracts for the systems is expected in 2020.
The CT systems provide a virtual, three-dimensional view of the contents of a carry-on bag, giving an operator a better image than the current 2-D systems. The better image quality will mean that travelers will be able to leave their personal electronic devices in their bags. The systems also have the capability to automatically detect explosives, which TSA eventually expects to take advantage of and allow liquids to remain in bags as well, helping speed up throughput at the checkpoint.