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Friday, May 31, 2013

Why Does TSA Makes Competition Incredibly Difficult? Self-Preservation

A menace to society

A major component to bureaucracies (and human nature) that makes them so hard to control is the fact that every person, manager, and department is acting; not for the people or customers; but in the interest of self-preservation.
Whether consciously or not, every employee wants their position to add "value" so it is deemed to be redundant and eliminated. This mentality works its way up the chain until every department is trying to validate its own existence.
While this is true for individuals employed in the private sector as well, their actions culminate in products that are desired in the marketplace. If an employee is genuinely not adding value (or adding less value than their wages reflect) the resulting product would be of inferior quality and would fail in the marketplace. To remedy this, that individual would likely be fired before having that profound of an effect on the end product.
This situation doesn't play out in government. Because most government products are not subject to market demands, citizens must take what is provided. Additionally, government is not paid according to the value of their products, they are paid what according to what politicians decide and with money its citizens are compelled to contribute.

Short of explaining the entire theory behind capitalism, this is all a long introduction to the TSA and this interesting piece from Bob Poole of the Reason Foundation.

TSA Putting New Hurdles on Road to Screening Opt-Out

Despite Congress more than a year ago directing the TSA to speedily process airport applications to use TSA-certified screening contractors under its Screening Partnership Program (SPP), the agency appears to be stone-walling. Industry sources tell me that even though applications have been approved for six airports, not a single new SPP contract has been awarded by TSA since the 2012 legislation (part of FAA reauthorization last February) was enacted.

In some cases, procurements that were under way have been pulled back, to be re-started at some unnamed future date. That's the case for a four-airport Montana solicitation begun last October, due to be completed by the end of February 2013. Not a word was heard during March, but finally, on April 17th, contenders received a letter from TSA cancelling the procurement and saying it would be re-started at a later date. Orlando-Sanford's approved application is still without a contract solicitation and Sarasota-Bradenton application awaits action.

What appears to be happening is that TSA while TSA has adhered to the letter of the law contained in last year's legislation directing actions on applications, it has come up with a new hurdle for airports and contractors to surmount: a "cost-efficiency" factor. At the April 12th bidder's conference for re-bidding the SPP contract for San Francisco (SFO), bidders were told that no contract will be awarded unless it meets TSA's cost-efficiency target. The same provision was added at the last minute to the requirements for re-bidding the Kansas City contract earlier this year.

What this means, exactly, is not yet clear. It appears that TSA has taken language from the SPP provisions of the 2012 FAA bill and used it to create a requirement that no SPP contract will be awarded if the cost to the government would be higher than what it currently costs TSA to provide screening at the airport in question. Taken at face value, that sounds uncontroversial. But as the GAO has pointed out in several reports, TSA still has not fully and accurately reported all its screening costs, and TSA still claims that its own screening costs less than contract screening under SPP.

In its 2008 study (GAO-09-27R), the agency faulted TSA's cost comparisons for omitting the cost of overlapping TSA administrative staff at SPP airports, and failing to include TSA costs for workers' comp, general liability insurance, and some retirement costs. Not mentioned in this report, but relevant to accurate cost comparisons, TSA also does not include the cost of using its screener flying squad (the National Deployment Force) to fill in at TSA-screened airports. In March 2011, GAO reported that TSA had "made progress in addressing the limitations related to costs" (GAO-11-375R), but still had work left to do. GAO's most recent report in December 2012 (GAO-13-208) focused on screener performance at TSA and SPP airports, and did not address whether TSA was finally including all costs in its comparisons of screening.
And as I noted at the time, GAO's 2012 report ignored a detailed study by the staff of the House Transportation & Infrastructure Committee: a case study of the cost of screening at two major hub airports, both in TSA's high-risk Category X—Los Angeles and San Francisco. The former has TSA screening and the latter is one of the original pilot program airports using a TSA-approved screening contractor. Even though federal law requires SPP contractors to pay screeners comparable wages and benefits as TSA, the study found that the cost per screener at SFO was 5.3% less than TSA's cost at LAX. While that may not sound like much, when combined with much higher productivity at SFO (16,113 passengers per screener at SFO vs. 9,765 at LAX, due mostly to a good mix of part-time and full-time screeners at SFO), the overall result would be 42.6% lower screening cost at LAX if the SFO contract model were applied there (see table).

Cost Saving if LAX Had Contract Screening
TSA ModelContract ModelSavings
Cost per FTE Screener
Salary$38,480$38,480$ 0
National Deployment Force$ 289$ 0$ 289
Recruiting & Training$ 2,439$ 541$1,898
Total Cost per Screener$41,208$39,021$2,187
Number of FTE Screeners2,2001,333867
Total Screener Cost$90.66M$52.02M$38.64M
Source: http://archives/republicans/transportation.house.gov/Media/file/112th/Aviation/2011-06-03-TSA_SPP_Report.pdf)

I expect TSA will ignore this report when it promulgates its "cost-efficiency" standard for SPP—but members of Congress with both aviation security and taxpayers in mind should not let them get away with this. House Homeland Security Committee Chair Rep. Mike McCaul (R, TX) has asked GAO to do a new study on SPP airports, to see if using contractors is "more effective and efficient." I hope his request to GAO requires them to assess the House T&I study, in addition to GAO's own previous efforts. On the other side of the aisle, the Committee's Ranking Member, Rep. Bennie Thompson (D, MS) has introduced legislation to "reform" SPP, including restoring TSA's discretion to veto applications from airports—a power TSA assumed despite language in the 2001 Aviation & Transportation Security Act granting all airports the right to opt out of TSA screening.

As stated before, it is human nature to want to preserve your existence (in this case, your means of earning a living and lifestyle).
The TSA is acting in defense. If more and more airports are allowed to privatize their security, it reduces the size, scope, and influence of the TSA. Therefore, it is doing all it can to prevent this from happening.
We cannot expect the TSA to organize itself out of this never-ending "application" cycle. Its existence is due to, and thus must be controlled by, the politicians in Congress and the White House.

Not really related, but thought it was amusing that they have a chart detailing acceptable baseball bats.
Also interesting, but makes little sense: golf clubs, ski poles, pool cues, lacrosse and hockey sticks are allowed. (TSA)

Obviously, the easiest, and best, direction would be to privatize the airport security system completely. However, as this is not likely in the near future, at the very least, the monopoly of a government-controlled (instigated by the government) must be broken.
Alas, we must turn to and expect the politicians (trying to validate their own existence and worth) who instituted the TSA to reign it in.

*Update* For more, somewhat amusing, evidence on how hard TSA tries to defend its existence, see the TSA and TSA Blog Twitter accounts.

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