Just two months after awarding Rapiscan Systems a potential $67 million winner-take-all contract to provide new X-ray systems to the nation’s airports, the Transportation Security Administration (TSA) last week terminated the contract for default.
Rapiscan’s parent company, OSI Systems [OSIS], announced the termination late on Dec. 5, adding that as a result it has de-booked the initial $60 million order. The company also said that TSA will issue a revised solicitation in the future for the Advanced Technology X-ray (AT-2), which will be used to screen carry-on bags at airport checkpoints.
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| Rapiscan’s 620DV dual view AT X-Ray System. Photo: Rapiscan |
Neither TSA nor OSI Systems provided specifics as to why the contract was terminated.
In a written statement, TSA said, “Through active contract management, and in line with the Federal Acquisition Regulations, TSA has terminated an order for X-ray equipment used for screening carry-on baggage, due to a violation of contractual requirements.” The statement also said that “TSA has strict requirements that all vendors must meet for security effectiveness and efficiency.”
The award to Rapiscan was under protest by Smiths Detection, part of Britain’s Smiths Group. The company protested TSA’s “best value” determination because it didn’t sufficiently factor in Smiths’ relatively lower risk and lower lifecycle solution (Defense Daily, Oct. 31). Smiths also said that its solution provides greater detection capabilities, fewer false alarms and a more efficient checkpoint.
Rapiscan had been contracted to provide 550 of its 620DV dual view AT-2 systems to TSA beginning in November through September 2014 (Defense Daily, Sept. 30). TSA said following the award in September that existing AT X-ray systems deployed at airport checkpoints have been upgraded to the same functionality as the new AT-2 systems.
In addition to Rapiscan and Smiths Detection, which have supplied TSA with most of its AT X-ray systems, L-3 Communications [LLL] has provided the agency with some of these systems.
For OSI Systems, the contract loss may not have much impact on its financial outlook as it is awaiting decisions on larger orders, particularly a foreign military sale to Iraq. Moreover, the company may yet win a share of the AT-2 under the revised solicitation. TSA has traditionally split the buys for AT systems between Rapiscan and Smiths Detection.
However, the default termination is certainly a black eye for the company. Several industry officials pointed out that it’s the second time now that TSA has canceled a contract it had with the company.
Rapiscan, along with L-3, had each been providing TSA with whole body imaging scanners, called Advanced Imaging Technology, but the agency stopped buying systems from Rapiscan and eventually removed their systems from airport checkpoints when the company couldn’t deliver on automated threat recognition technology that would enhance privacy protections for individuals.