OSI Systems [OSIS] has reached a settlement with the Department of Homeland Security (DHS) that allows the company to avoid disbarment from federal contracting after an investigation into modifications of automated threat recognition software used in its body scanners.
OSI says that with the signing of the Administrative Agreement, its Rapiscan Systems division “can continue its current and future business with the U.S. federal government agencies.”
The Transportation Security Administration (TSA) has purchased body imagers, which the agency calls Advanced Imaging Technology (AIT), from L-3 Communications [LLL] and Rapiscan for deployment at aviation security checkpoints across the country. More recently TSA finished removing Rapiscan’s Secure 1000SP AIT systems from checkpoints because of the company’s inability to develop automated threat recognition software for the systems that met agency specifications.
Last fall TSA sent a show cause letter to OSI System alleging that Rapiscan did not disclose issues related to the development process of the ATR software for the Secure 1000 system. OSI said at the time that it did not falsify test data related to the software development.
At the end of May, OSI disclosed that Rapiscan had been notified by DHS of a Notice of Proposed Disbarment. That notice temporarily prevented Rapiscan from contracting with the federal government. The DHS investigation could have resulted in a longer-term disbarment from federal contracting.
The settlement also clears the way for the company to receive a potential $200 million foreign military sale with Iraq.