[House Hearing, 109 Congress] [From the U.S. Government Publishing Office] AIRLINE PASSENGER BAGGAGE SCREENING: TECHNOLOGY AND AIRPORT DEPLOYMENT UPDATE ======================================================================= (109-86) HEARING BEFORE THE SUBCOMMITTEE ON AVIATION OF THE COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE HOUSE OF REPRESENTATIVES ONE HUNDRED NINTH CONGRESS SECOND SESSION __________ JUNE 29, 2006 __________ Printed for the use of the Committee on Transportation and Infrastructure U.S. GOVERNMENT PRINTING OFFICE 30-656 PDF WASHINGTON : 2007 ------------------------------------------------------------------ For sale by Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area (202) 512-1800 Fax: (202) 512-2250. Mail: Stop SSOP, Washington, DC 20402-0001 COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE DON YOUNG, Alaska, Chairman THOMAS E. PETRI, Wisconsin, Vice- JAMES L. OBERSTAR, Minnesota Chair NICK J. RAHALL, II, West Virginia SHERWOOD L. BOEHLERT, New York PETER A. DeFAZIO, Oregon HOWARD COBLE, North Carolina JERRY F. COSTELLO, Illinois JOHN J. DUNCAN, Jr., Tennessee ELEANOR HOLMES NORTON, District of WAYNE T. GILCHREST, Maryland Columbia JOHN L. MICA, Florida JERROLD NADLER, New York PETER HOEKSTRA, Michigan CORRINE BROWN, Florida VERNON J. EHLERS, Michigan BOB FILNER, California SPENCER BACHUS, Alabama EDDIE BERNICE JOHNSON, Texas STEVEN C. LaTOURETTE, Ohio GENE TAYLOR, Mississippi SUE W. KELLY, New York JUANITA MILLENDER-McDONALD, RICHARD H. BAKER, Louisiana California ROBERT W. NEY, Ohio ELIJAH E. CUMMINGS, Maryland FRANK A. LoBIONDO, New Jersey EARL BLUMENAUER, Oregon JERRY MORAN, Kansas ELLEN O. TAUSCHER, California GARY G. MILLER, California BILL PASCRELL, Jr., New Jersey ROBIN HAYES, North Carolina LEONARD L. BOSWELL, Iowa ROB SIMMONS, Connecticut TIM HOLDEN, Pennsylvania HENRY E. BROWN, Jr., South Carolina BRIAN BAIRD, Washington TIMOTHY V. JOHNSON, Illinois SHELLEY BERKLEY, Nevada TODD RUSSELL PLATTS, Pennsylvania JIM MATHESON, Utah SAM GRAVES, Missouri MICHAEL M. HONDA, California MARK R. KENNEDY, Minnesota RICK LARSEN, Washington BILL SHUSTER, Pennsylvania MICHAEL E. CAPUANO, Massachusetts JOHN BOOZMAN, Arkansas ANTHONY D. WEINER, New York JIM GERLACH, Pennsylvania JULIA CARSON, Indiana MARIO DIAZ-BALART, Florida TIMOTHY H. BISHOP, New York JON C. PORTER, Nevada MICHAEL H. MICHAUD, Maine TOM OSBORNE, Nebraska LINCOLN DAVIS, Tennessee KENNY MARCHANT, Texas BEN CHANDLER, Kentucky MICHAEL E. SODREL, Indiana BRIAN HIGGINS, New York CHARLES W. DENT, Pennsylvania RUSS CARNAHAN, Missouri TED POE, Texas ALLYSON Y. SCHWARTZ, Pennsylvania DAVID G. REICHERT, Washington JOHN T. SALAZAR, Colorado CONNIE MACK, Florida JOHN BARROW, Georgia JOHN R. `RANDY' KUHL, Jr., New York LUIS G. FORTUNO, Puerto Rico LYNN A. WESTMORELAND, Georgia CHARLES W. BOUSTANY, Jr., Louisiana JEAN SCHMIDT, Ohio (ii) SUBCOMMITTEE ON AVIATION JOHN L. MICA, Florida, Chairman THOMAS E. PETRI, Wisconsin JERRY F. COSTELLO, Illinois HOWARD COBLE, North Carolina LEONARD L. BOSWELL, Iowa JOHN J. DUNCAN, Jr., Tennessee PETER A. DeFAZIO, Oregon VERNON J. EHLERS, Michigan ELEANOR HOLMES NORTON, District of SPENCER BACHUS, Alabama Columbia SUE W. KELLY, New York CORRINE BROWN, Florida RICHARD H. BAKER, Louisiana EDDIE BERNICE JOHNSON, Texas ROBERT W. NEY, Ohio JUANITA MILLENDER-McDONALD, FRANK A. LoBIONDO, New Jersey California JERRY MORAN, Kansas ELLEN O. TAUSCHER, California ROBIN HAYES, North Carolina BILL PASCRELL, JR., New Jersey HENRY E. BROWN, Jr., South Carolina TIM HOLDEN, Pennsylvania TIMOTHY V. JOHNSON, Illinois SHELLEY BERKLEY, Nevada SAM GRAVES, Missouri JIM MATHESON, Utah MARK R. KENNEDY, Minnesota MICHAEL M. HONDA, California JOHN BOOZMAN, Arkansas RICK LARSEN, Washington JIM GERLACH, Pennsylvania MICHAEL E. CAPUANO, Massachusetts MARIO DIAZ-BALART, Florida ANTHONY D. WEINER, New York JON C. PORTER, Nevada BEN CHANDLER, Kentucky KENNY MARCHANT, Texas RUSS CARNAHAN, Missouri CHARLES W. DENT, Pennsylvania JOHN T. SALAZAR, Colorado TED POE, Texas NICK J. RAHALL II, West Virginia JOHN R. `RANDY' KUHL, Jr., New BOB FILNER, California York, Vice-Chair JAMES L. OBERSTAR, Minnesota LYNN A. WESTMORELAND, Georgia (Ex Officio) DON YOUNG, Alaska (Ex Officio) (iii) CONTENTS TESTIMONY Page Baer, Susan M., General Manager, Newark Liberty International Airport........................................................ 8 Berrick, Cathleen A., Director, Homeland Security and Justice Issues, Government Accountability Office....................... 8 Britz, William W., Project Manager, Aviation Security Systems, Raytheon Technical Services Company, LLC....................... 8 Cooke, Dennis, President, GE Security, Homeland Protection Division....................................................... 36 Ellenbogen, Michael, Chief Executive Officer, Reveal Imaging Technologies, Inc.............................................. 8 Hauptli, Todd, Senior Vice President, Airport Legislative Alliance....................................................... 36 Null, Randy, Assistant Administrator for Operational Process and Technology, Transportation Security Administration............. 8 Ripp, Thomas, President, Security and Detection Systems Division, L-3 Communications, Inc.............................. 36 Wood, John W., Jr., President and Chief Executive Officer, Analogic Corporation........................................... 36 PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS Carnahan, Hon. Russ, of Missouri................................. 95 Costello, Hon. Jerry F., of Illinois............................. 96 Oberstar, Hon. James L., of Minnesota............................ 116 PREPARED STATEMENTS SUBMITTED BY WITNESSES Baer, Susan M................................................... 48 Berrick, Cathleen A............................................. 60 Britz, William W................................................ 89 Ellenbogen, Michael............................................. 99 Hauptli, Todd................................................... 105 Null, Randy..................................................... 111 Ripp, Thomas.................................................... 120 Wood, John W., Jr............................................... 127 ADDITIONS TO THE RECORD Kamen, Hershel I., Staff Vice President, Security and Regulatory Affairs, Continental Airlines, Inc., statement................. 133 Parker, A. Louis, President and CEO, GE Security, statement...... 139 AIRLINE PASSENGER BAGGAGE SCREENING: TECHNOLOGY AND AIRPORT DEPLOYMENT UPDATE ---------- Thursday, June 29, 2006 House of Representatives, Committee on Transportation and Infrastructure, Subcommittee on Aviation, Washington, D.C. The committee met, pursuant to call, at 10:00 a.m., in room 2167, Rayburn House Office Building, the Hon. John L. Mica [chairman of the committee] presiding. Mr. Mica. Good morning. I would like to call this hearing of the House Aviation Subcommittee to order. We have two panels, a rather full schedule this morning. The order of business will be opening statements by members and then we will turn to our first panel. With that, I would like to welcome everyone. The topic of today's hearing is airline passenger baggage screening, and we are going to look at technology and airport deployment and its current schedule, get an update. This morning's hearing, as I said, will focus on the Transportation Security Administration, TSA's process, for certifying, testing and deploying and funding integrated in- line explosive detection systems for screening checked baggage. It has been just under two years since this Subcommittee last considered this issue, and some four and a half years since Congress passed the Aviation and Transportation Security Act, which we helped author and establish the TSA. The Act set some very tight deadlines for screening 100 percent of the checked baggage for explosives. The TSA's first step was to waste, unfortunately, $1 billion to contract for airport EDS installation designs, and unfortunately, most of those designs and plans still sit on shelves, and many of those plans will never be used. One of the things I intend to do as a result of this hearing is ask the Inspector General in GAO to investigate and review this contract and what took place, what went wrong. Now, some of all of this was done in a rush to meet Congressionally-mandated deadlines. And in that rush, TSA unfortunately created a hodgepodge of systems and we now have in place explosive trace detection equipment at some airports, and we have standalone EDS machines at others, and various combinations. Even more unfortunately, the vast majority of airports in the Country are still in a state of disarray today. We still have crowded airport lobbies, some of them packed with the variety of equipment and procedures that I just mentioned. We have inconvenienced passengers and we have enormous headaches for airport operators and also for airlines. This patchwork system has also resulted in a small array of personnel costs with more baggage screeners, I think we are up to 16,800 just behind the scenes screening baggage out of a work force, a small army of 45,000. We have increased on the job injury rates, and huge worker compensation costs. As I said, we are looking at somewhere about 16,800 employees by TSA behind the scenes, and unfortunately, we have seen in addition to the workers comp rates, we have seen vacancy rates on average of 24 percent. The Occupational Safety and Health Administration, OSHA, has projected that more than 16 percent of TSA employees will report a job related injury or illness by the end of fiscal year 2006. That happens to be, as we understand it, the highest percentage in the Federal Government. For 2007, the TSA has requested $20 million in back payments to reimburse the Department of Labor for prior workers compensation claims filed in just 2005. The 2007 budget request also includes $55 million for workers compensation. That is a 40 percent increase from the 2006 request. Unfortunately, that picture is pretty grim, and it is also pretty costly. The situation has even impacted the Nation's Federal security directors, they have become completely overwhelmed by personnel matters. Quite frankly, the TSA's current baggage screening system continues to show no ability to adapt or keep pace with the ever-changing demands of the aviation industry. That is where today we come into the picture, trying to keep the planes and passengers moving on time and their baggage with them. At the same time that that patchwork system is getting bogged down by its own efficiencies, there is in fact growing evidence that it does not even afford us more effective security screening. The whole purpose for this multi-billion dollar effort and huge army of personnel is again good screening. And unfortunately, that isn't the case. Testing by TSA and the Department of Homeland Security has repeatedly demonstrated the advantage of fully integrated in- line checked baggage EDS systems, especially at large airports. In-line EDS systems have also proven to be highly efficient, extremely cost-effective and more accurate, again, at the primary purpose for all of this, the detection of dangerous items. They also have a lower maintenance cost, require fewer screeners and have less out of time service. TSA has estimated that at the nine airports that received letters of intent, LOIs, the TSA will recover its initial investment in just over a year and will save $1.26 billion over seven years. These are some incredible figures. The GAO has reported that in-line EDS systems at nine LOI airports they looked at would reduce the number of TSA personnel, screeners and supervisors, by an astounding 78 percent. That could mean a reduction in as many as 13,000 TSA baggage screeners, saving millions, in fact billions of dollars. Yet despite the mounting evidence in the two years since this Subcommittee last held a hearing on this topic, the TSA reports that only an additional 15 airports, for a total of 23 airports out of 441 commercial airports, have converted to full in-line EDS systems. That sounds like a bad picture, but you have to remember that there are 29 airports in this Country that handle 75 percent of all passengers. Only nine have full in-line EDS systems. Of those nine airports, eight funded the EDS projects on their own. That is eight of the nine, funded them on their own, and received letters of intent to be reimbursed by the TSA over a three to five year period. That is an absolutely dismal record for the Federal Government. I am extremely disappointed with Congress, and I have to take a lot of the responsibility in this, and also with the TSA for their lack of progress in this program. We must examine the reasons for delay. First, of course, funding remains an issue, and through fiscal year 2006, Congress has appropriated a total of $3.851 billion for EDS purchase and installation. Of those funds, however, no more than half a billion of those dollars were used by TSA on the short-term challenges associated with meeting the 100 percent baggage screening deadline. Just an aside, this is one reason why I tried to get that deadline extended, and some people imposed the deadline. When we first debated this, we knew exactly what would happen as we put a hodgepodge system in place at great expense, using a huge army of personnel. And that is exactly what we have gotten, and very few automated, good performing systems. In fiscal year 2007, the TSA requested $435 million for EDS purchase and installation. However, TSA plans to use only $156 million for EDS installations at the remaining 432 non-LOI airports. Yet based on the strategic planning framework for the electronic baggage screening program provided to Congress by TSA in February 2006, between $4 billion to $6 billion will be needed to achieve the optimal EDS systems. We have right now a 2019 schedule. The top 25 airports requiring EDS installation will cost approximately $1.4 billion. Furthermore, according to the strategic plan deployment model, approximately 200 airports still require some form of in-line system. As a result of the lack of funding for installation of in-line EDS systems, airports are using a variety of funding mechanisms, alone sometimes and also in combination, to pay for in-line system installation. They use airport improvement funds, AIP money, other transactional agreements, OTAs, and with the TSA, sometimes with their own revenue and sometimes using passenger facility charges, or PFCs. This funding dilemma has further complicated the already hodgepodge EDS system TSA has put in place. I have said it before, and I am sure I will say it again, but TSA and OMB must think outside the box and use modern financing tools available to the Federal Government to leverage scarce dollars. But the lack of progress is also attributable to the amount of time it takes for TSA to certify, test, to conduct a pilot or demonstration project and also to deploy some of these systems. Despite the fact that a number of manufacturers are developing alternative technologies to complement the existing EDS systems, and they are also experimenting with different system configurations, progress in testing and deploying the innovations is frustrating and any real progress made in research and development also lags behind. We are going to hear, I have hauled in the folks where there was a Reveal demo today, and we are going to hear a great example of a disaster in that corridor. For instance, in September 2004, as part of Phase I of the Manhattan II project, TSA awarded ten cooperative agreements totaling approximately $5.2 million for the development of new technologies. Phase I ended in December of 2005, yet after six months, TSA has not provided any funding for Phase II. Our research and development also to complete this certification process, unfortunately is just as tedious. I am told that TSA technology certification process can take up to nine months to complete. TSA also seems to get bogged down in piloting and demoing technology, but then fails to develop and issue minimum technology standards that can be utilized by the security and aviation industries. TSA's oversight and follow- through on some of their pilot programs has been absolutely disappointing. Today, as I said, we are going to hear about the disastrous Reveal pilot program at Newark Liberty International Airport. My goal in this is to review and analyze what went wrong at Newark. I hope that this will provide a template for future TSA pilot programs to not repeat the same mistakes. The bottom line is, our Nation's aviation security system must become smarter and more efficient. We absolutely must make better use of limited resources and come up with a more efficient and speedy process for testing and certifying and deploying new security technologies. Continuing to follow the slow, jumbled and disconnected path taken by TSA in the last four and a half years is no longer acceptable. It is providing a real drain on the system and to the aviation industry. A patchwork approach will inevitably lead to weaknesses in the system and possibly even disaster. Long comments, but background necessary for this Subcommittee and this hearing. I am pleased to yield at this time to the Ranking Member. Mr. Costello. Mr. Chairman, thank you. And I thank you for calling this hearing today. I do have a lengthy statement that I will submit for the record. We have two panels of witnesses here and I look froward to hearing from them. There are a number of problems associated with the deployment of the various systems at our airports. Part of, I think the blame can be shared by TSA, part of it can be shared by the Administration, part of it can be shared by the Congress. Because we often times talk about security priorities, but do not follow up with the appropriation in order to purchase the equipment that is needed and the personnel in order to carry out the job. But with that, I will submit my statement for the record and yield at this time the balance of my time for an opening statement to Mr. Pascrell. Mr. Pascrell. Thank you, Mr. Chairman, Mr. Ranking Member. I appreciate your decision to hold a hearing on the status of the explosive detection systems for baggage at our Nation's airports. This issue has been of great concern, as you know, at Newark Liberty International Airport in New Jersey. The initial deployment EDS machines are set up throughout lobbies and other common areas in three terminals at Newark Airport. This has created, charitably, an awkward system. It hurts efficiency at the airport, the safety of the travelers in the lobbies. It is not the best way to go about screening baggage. However, Newark Airport has made the best of these initial circumstances. Given the limited physical capacity for expansion, the airport has worked to improve the baggage screening system with the best technology available. It is generally agreed that in-line EDS machines are the gold standard for screening. However, to retrofit many of the Nation's older airports costs in the neighborhood of between $100 million and $200 million apiece. In fact, installation of an integrated, in-line EDS would require extensive terminal modifications. Some do not have the physical capacity nor the infrastructure to support the changes. So far, the Federal Government has not provided appropriate resources to facilitate in-line system implementation. It would seem that this is against our own self-interest. According to the GAO, if TSA were to fund in-line EDS systems at the nine airports with which it has letters of intent agreements, the Federal Government would recover its initial investment in just over one year and save over $1.26 billion every seven years. The GAO has stated that very clearly. This is an investor's dream. But with $4 billion to $6 billion in needs remaining, $435 million a year will not cut it. You can't do it. So we are only kidding ourselves. Why? We have not made this a priority. Why? There are other priorities. Why? It is important that Barry Bonds gets a $72,000 tax cut, and you know what I am talking about. You may shrug all you want, that is a fact of life. When everything is a priority, nothing is a priority. If this is going to be a priority, if we want to protect the customers, then we have to invest the money. Clearly, there is room for improvement. I am positive that this Committee will continue to be a strong advocate of providing our airports with the resources they need. I hope the appropriate officials here today are listening. However, many airports have made the decision to move ahead on their own, to better the inefficient and precarious hodgepodge system created by the original placement of the EDS machines. In Newark, the airport has gone about purchasing and installing 23 new EDS machines to form a system integrated with the checked baggage system. Last year, as part of this upgrade, Newark participated in a TSA pilot program using the new technology. In the end, this program was not successful. The reasons remain unclear. I look forward to a vigorous discussion with our panel members about the unfortunate outcome of this program. This is particularly frustrating, Mr. Chairman, and I thank the Ranking Member for yielding. Mr. Mica. Thank you. And I hope you stay, Mr. Pascrell, to hear about the whole Newark fiasco. Because it is not always how much money we spend, it is how we spend it. Newark was to be our premier demonstration of new technology. That is one reason why I asked them all to come here, because I have heard five or six different stories. And we are going to hear the whole truth and nothing but the truth today. Mr. Ehlers. Mr. Ehlers. Thank you. I will try to speak the truth and nothing but the truth. Thank you for having this hearing. It is a very important issue. And putting it in the broader context, I think we have done rather well overall across this Nation in dealing with aviation security. That doesn't mean it is good. It is just that we have so many good targets in this Nation, because we live in a free and open society, that we are never going to be able to reduce all the threats. We can just try to handle them as best we can and try to prioritize. I appreciate the work that has been done by all Government agencies trying to do that. I am continually impressed, since I fly at least four flight segments a week, at how many, and I tend to have a devious mind, I might add, a devious scientific mind. I am continually surprised at how many weaknesses I identify in the system and how easily I could devise ways to bypass the system and get contraband material on board. I will not share that with you or with anyone else. It is bad enough having a devious mind without sharing it. But it just illustrates the extent of the problem. We cannot make aviation perfectly safe. We cannot make our ports perfectly safe. But what we can do is make it difficult for anyone to do wrong. And that is what I think we are beginning to do effectively. We have a long way to go on the ports. We have a good start in aviation. But having said that, then we get down to the Chairman's concerns and my concerns as well. Are we doing it effectively, are we doing it cost-effectively? And that is something where I think we have fallen down in many areas. So I look forward with interest to the testimony today. With that I yield back. Mr. Mica. I thank the gentleman. Mr. Honda. Mr. Honda. Thank you, Mr. Chairman and Ranking Member Costello, for scheduling this hearing, which is of enormous importance to Mineta San Jose International Airport and airports all across this Country. It is good to see you, Dr. Null. I just want to let you know parenthetically that TSA leadership at the airport is great. Properly securing our Nation's airports is wrought with challenges that can only be addressed with adequate funding, innovative thinking and a strong Federal and local partnership. Following the terrorist attacks of September 11th, I convened a blue ribbon task force on aviation security and technology, comprised of aviation experts and also Silicon Valley executives. This task force called together the brightest minds of Silicon Valley, the heart of our technology revolution, to brainstorm about the future of aviation security. In 2002, the task force issued a final report. Some of the recommendations in the report were taken up by TSA as pilot programs, including the use of GPS to track vehicles on the tarmac. Other recommendations unfortunately have not been pursued for reasons that I can't understand at this time. The task force placed great importance on providing strong security in a traveler-friendly manner. I am concerned that TSA, for financial or other management reasons, has not taken the same approach. Dr. Null is very familiar with San Jose Airport, and the great strides the airport has made to improve the baggage screening process. That task has not been easy at at least one of the airport's terminals, which was constructed to address the capacity concerns of pre-9/11. The airport and the city of San Jose have undertaken the task of dramatically renovating and expanding the airport. They have added an international arrival terminal and are in the process of improving existing terminals. San Jose's airport's efforts have managed to keep the security process out of the terminal lobbies, resulting in a more efficient flow of the pedestrian traffic. One of the airport's top priorities will be secure Federal support for an on-line screening system to improve their efficiency and eliminate double handling of baggage. I understand that San Jose is one of the top 24 airports in the Country being considered for fiscal year 2007 funding to construct their system. I hope that TSA will continue to work cooperative with San Jose airport as they move forward into the construction phase of the new EDS system. I thank you, Mr. Chairman, for this opportunity, and I yield back. Mr. Mica. Thank you. Are there any other opening statements? OK. This morning I am going to swear in our witnesses. Would you stand, please, raise your right hand. [Witnesses sworn.] Mr. Mica. Let's for the record indicate that all the witnesses answered in the affirmative. We take this matter pretty seriously. We don't have the representative of Continental Airlines here. We do have a written statement by Hershel Kamen. I ask unanimous consent that that entire statement be entered into the record by Mr. Costello. Without objection, so ordered. And we will also call that witness in, swear that witness under oath and question that witness about, again, one of the pending oversight issues that we are going to address. With that, we have our first two witnesses. One is Mr. Randy Null, he is the Assistant Administrator for Operational Process and Technology of TSA. And then we have Ms. Cathleen A. Berrick, she is the Director of Homeland Security and Justice Issues at the U.S. Government Accountability Office. We will hear first from Randy Null, with TSA. Welcome, and you are recognized. TESTIMONY OF RANDY NULL, ASSISTANT ADMINISTRATOR FOR OPERATIONAL PROCESS AND TECHNOLOGY, TRANSPORTATION SECURITY ADMINISTRATION; CATHLEEN A. BERRICK, DIRECTOR, HOMELAND SECURITY AND JUSTICE ISSUES, GOVERNMENT ACCOUNTABILITY OFFICE; MICHAEL ELLENBOGEN, CHIEF EXECUTIVE OFFICER, REVEAL IMAGING TECHNOLOGIES, INC.; WILLIAM W. BRITZ, PROJECT MANAGER, AVIATION SECURITY SYSTEMS, RAYTHEON TECHNICAL SERVICES COMPANY, LLC; SUSAN M. BAER, GENERAL MANAGER, NEWARK LIBERTY INTERNATIONAL AIRPORT Mr. Null. Good morning, Mr. Chairman, Congressman Costello and distinguished members of the Subcommittee. I am pleased to have the opportunity to appear before you today on behalf of the Transportation Security Administration, to provide you with an update on our electronic baggage screening program. Since the initial deployment of TSA's checked baggage screening technologies, we have pushed hard for innovation and investment intended to dramatically improve the system. Today, 51 airports are either operational or deploying some form of advanced in-line baggage screening systems. Additionally, TSA has certified two new explosive detection systems and is testing others that if certified, will provide additional capabilities. We continue to search for answers outside the box and ways to better utilize existing technology and work in partnership with airports and airlines to address pressing needs, take advantage of special opportunities and develop innovative, cost-effective solutions appropriate for unique operating circumstances. We have learned valuable lessons in the last three years about the operational nature of advanced in-line explosive screening and adapted. Research into both short-term and long-term technological solutions continues. Several vendors are developing equipment upgrades to increase the life span and efficiency of our current equipment. Our long-term development strategy places an emphasis on developing EDS technologies that can process greater than 900 bags per hour and employ revolutionary threat detection concepts to lower false alarm rates. Laboratory results thus far indicate that those are indeed achievable goals. TSA continues to take action on several fronts to ensure that optimal sufficient screening solutions are provided to airports. Through eight letters of intent, we have collaborated closely with stakeholders at nine airports to develop, design and install advanced in-line baggage screening systems. Our funding commitment to the nine LOI airports runs through the end of fiscal year 2007, completing a Federal investment of almost $1 billion for facility modifications. Furthermore, we have developed and relocated equipment to increase screening capacity, reduce worker injuries and increase screening efficiency. Finally, when airport operators or tenants are able to fund a significant portion of the expense necessary to build an in-line system, either during new construction or renovation, TSA has offered financial assistance through the use of other transactional agreements for smaller projects. Under these efforts, the 51 airports are either operational or are deploying some type of in-line baggage screening system throughout an entire airport or on a terminal basis. In February of 2006, we delivered to the Congress a strategic planning framework for the checked baggage screening program that has already begun to influence our investment and deployment decisions. This framework details TSA's long-term planning philosophy for the development and implementation of optimal baggage screening solutions at the Nation's top 250 airports. The goals of the plan are straightforward: reduce total life cycle costs by deploying optimized and customized screening solutions; expand the amount of baggage screened by EDS technology; develop and publish planning and design guidelines for in-line systems, incorporating lessons learned; accelerate and leverage next generation technology matched to those best practice designs; and work actively with stakeholders to collaboratively manage and oversee the design of optimally scaled screening systems. Under this framework, TSA has prioritized airports based upon projected passenger growth and estimates of peak capacity needs. Using these estimates, we can make a general determination of the optimal screening solution for each airport, taking into account reasonable assumptions of development in EDS technologies. These estimates have largely been completed, although they must continually be updated to reflect current operational conditions. Use of these estimates is beginning to provide flexibility to deploy optimized solutions to airports based upon priority, with the understanding that changes in operational conditions, as well as increased stakeholder participation at a particular airport may alter that listing. A large component of the strategic plan is a specialized study on alternative financing solutions. This cost sharing and investment study required by the Intelligence Reform and Terrorism Prevention Act of 2004, and developed in coordination with aviation industry stakeholders, will be completed in the summer of 2006. As you are aware, authorization of the Aviation Security Capital Fund created by Vision 100, Century of Aviation Reauthorization Act, expires in fiscal year 2007. The funds provided that the first $250 million collected in passenger security fees is used to fund airport security improvement projects, to include checked baggage screening projects. We support a three year extension of the fund through fiscal year 2010, with the proviso that the allocation requirements contained in the fund and which are not specifically tied to aviation security needs are eliminated. Finally, as you are aware, the 100 days between Memorial Day and Labor Day represents the busiest time at airports across the Country. TSA expects to screen more than 200 million passengers and their bags during this time. In light of this increase in passenger flow, TSA has taken aggressive actions to manage airport conditions this summer by increasing our staffing through local hiring initiatives, deploying members of our national screener force to support airports with passenger volume challenges and reconfiguring screening lanes at some airports to speed passenger floor. Peak wait times have remained consistent with the average peak wait times between 15 and 20 minutes and only sporadic instances of wait times over 30 minutes. TSA is fully prepared for the summer travel season, and we are working with our industry partners to ensure that the people have a positive travel experience. Thank you for the opportunity to testify today, and I will be pleased to respond to any questions. Mr. Mica. We will hold questions and we will hear next from Cathleen Berrick. She is with the Government Accountability Office. Welcome, and you are recognized. Ms. Berrick. Thank you, Mr. Chairman, Congressman Costello, and members of the Subcommittee, for inviting GAO to discuss TSA's progress in planning for and deploying optimal checked baggage screening solutions at U.S. airports, including in-line baggage screening systems. The benefits of in-line systems are widely known and include a significant reduction in transportation security officers, or screeners, needed to operate screening equipment, increased baggage throughput, increased security and reductions in on the job injuries. In-line systems can also reduce the need for TSA to use alternative screening procedures, which involve security trade-offs and are sometimes used when large volumes of bags or passenger crowds create security vulnerabilities. With the issuance of its strategic planning framework in February of this year, TSA has begun to systematically plan for the optimal deployment of checked baggage screening systems, as we previously recommended. In this framework, TSA identified the optimal screening solution for 250 airports with the highest checked baggage volume. These screening solutions vary by airport and range from fully automated, high speed in-line systems to standalone EDS and ETD equipment. TSA also prioritized the top 25 airports that should first receive Federal funding for in-line systems. TSA reported that if these airports do not receive in-line systems, they will require additional screening equipment to be placed in airport lobbies and additional screeners in order to continue to electronically screen 100 percent of checked baggage. Regarding potential savings from the installation of in- line systems, we reported in March 2005 that TSA estimated it could save about $1.3 billion over seven years for nine airports that were constructing in-line systems. Since that time, TSA has determined that many of the initial in-line systems have not produced level screener savings sufficient to offset the up-front capital cost of constructing the systems. TSA believes that the keys to reducing future costs are establishing best practice design guidelines for in-line systems and using newer EDS technology, both of which should be available in the near-term. Currently, TSA estimates that it can achieve a savings of about $4.7 billion over 20 years for the 250 airports reviewed by installing optimal screening solutions, to include in-line systems. TSA further estimates that it will cost $22.4 billion to install these solutions over this time frame. As you know, despite the benefits of in-line systems, resources have not been made available to fund these systems on a large-scale basis. TSA reported that under current investment levels, installation of the optimal screening solutions at airports will not be completed until the year 2024. TSA further reported that unless investment is accelerated, a substantial funding requirement for replacing old EDS machines will compete with funding needs for new in-line systems in about eight to nine years. TSA is currently collaborating with airport operators, airlines and other key stakeholders, to identify funding and cost-sharing strategies for the installation of in-line systems. They expect to complete this effort by the fall of 2006. Some of the financing options being considered include equipment leasing, sharing and savings from in-line systems with airports, enhancing the eligibility of passenger facility charges and tax credit bonds. Due to the substantial efficiency and security benefits that can be achieved, and the demands expected to be placed on existing screening systems due to protected airline traffic growth, continuing partnerships between TSA and airport stakeholders will be critical for the ultimate deployment of optimal screening solutions. Mr. Chairman, this concludes my opening statement, and I will be happy to respond to any questions. Mr. Mica. OK. Here is what we are going to do. I have these three other panelists with the Newark situation. We have heard from TSA, and you have given us an update on what you are doing, and GAO has reviewed what they are doing. Part of the reason for this hearing was what we uncovered as the disaster with our demonstration project, our pilot project at Newark. We have been buying this equipment, which is pretty expensive, L-3 or InVision equipment, at almost a million dollars a copy. It is the size of a Volkswagen. Most of the members of the panel have seen it. And it is expensive to integrate it into these in-line systems, and Congress has balked at funding it. So for several years we have tried to encourage certification, getting other competitors into bringing it into competition and lowering the cost. One company was Reveal, that spent at least a year, I guess, getting certified, maybe longer, through the certification process. Finally that was done a couple of years ago. They got their certification. We wanted to deploy it, because it was about a quarter of the size, a quarter of the cost. A decision was made to acquire that. Some of the airline industry and some of the large airports said this was a solution, and it was important that we try installing it at large airports, maybe a medium size airport in a smaller, independent use of the equipment, standalone use of the equipment. One of the great hopes was to try it at Newark Airport, which is one of our highest traffic areas. We were encouraged by Continental and others that this would be a solution. The gentleman, we have one gentleman from Reveal, Michael Ellenbogen, and then we have Mr. William Britz, with Raytheon. Now, Reveal provided the equipment, Raytheon was hired by TSA to do the installation of the system. And then we have Susan Baer, with the airport. And the airport agreed to participate in this project. Now, why this is so important is again, because this was going to be the hope of putting this less costly equipment in place. I found out by accident that something had gone awry a few months ago, went up and looked at it, had staff go up and look at it. Can we put a slide up and show, this is what the vendor proposed. If you see the counters, I guess the counters would be at the very bottom. The idea here would be to have very little lifting from the counter where the bag is checked in, be put on a conveyor, and then the three white slashes there are the Reveal machines. You see one Reveal machine in a horizontal position. So the agent would merely take it, it would get set by the passenger, actually down there, it would go on a conveyor belt, and then the black lines are additional conveyor belts. This is a less costly configuration than going in and gutting the insides of the airport, putting these million dollar copies in there. This may seem like a small point to some folks, but this is very important, that we see how this works in larger airports, again, looking at less cost. So this is what the vendor, I am told, recommended, the installation. Can you go to the next slide? This is what we ended up at. This isn't a good slide, because it doesn't show, if you see these two sort of, they look like little torches here, are the conveyor belts, and actually, the counters are out in front. So the conveyor belts don't connect with the counters, and you have another piece of equipment off to the left. There was originally supposed to be five Reveal pieces of equipment. We ended up with three. What you don't see off to the right is they ended up putting two InVision 5500's, the big equipment, off to the right in the configuration. Those are almost million dollar copies. So this is nothing like the Reveal, the producer of the equipment envisioned, nothing like Congress envisioned. It is an absolute disaster, in my opinion, because we have no airport now with high volume showing how this could possibly work. It took about nine months to a year to get this in place. We will hear exactly that period of time. And whatever money was spent. So we have got the equipment certified, we spent this time on a demo project that doesn't demonstrate anything. And I got different answers from different people. That is why I have asked these folks to come in today. Finally, just show the configuration. This is the way it is in the lobby. Again, it makes me absolutely flip out when I see it, because you see you actually have to lift up the bags and put them into the machine. None of the equipment is put together, connected together, integrated. There is no integration whatsoever. And there was supposed to be one spot for resolution in the original. That would be where the machines are connected and networked together, and one spot for resolution where you would have one or two people reading. Instead, this requires one person to lift the bag and another one to do resolution independent. I mean, again, I just completely lost it when I saw this. This is just an unbelievable waste of time and money. It is an incredible setback for us, nationally. This is an incredible setback for us nationally, because we have no demonstration of this technology and we are three years into the thing. It just drives me out of my gourd. So I sent staff up there, I have been up there, when I heard about it. And we have had Homeland Security staff up there. So this today is to figure out what went wrong, pardon my phraseology. But you can tell, this is one of the biggest frustrations, biggest fiascos I have ever seen. We need to find out what went wrong. So that lays the groundwork for the members on the panel, sorry for taking this time, but I had to get everybody to understand the importance of this, and then the mess that you see at Newark International Airport. Did you want to comment at all? Then I am going to hear from these three witnesses and we will get Continental's folks later. Mr. Costello. Mr. Chairman, I would agree that it is a mess. But I think there are reasons why that it is, and I---- Mr. Mica. We want to hear that. Mr. Costello.--have questions for our witnesses, not only I think is there blame again to be shared by TSA, but I think by Raytheon and by Reveal as well. I question really if this equipment was the appropriate equipment to be placed at this facility, at this airport. There are those who say that it probably will not work at hub airports, but at mid-size airports is probably where it is best, the CT-80 machines are best used. And there is also some question about TSA may have in the contractual agreement that was executed by Reveal, maybe the expectations were set too high. Because we will hear from hopefully the people at Reveal what they advertised the capacity of the CT-80, how many bags per hour that they can throughput. I understand the web site says that they can throughput somewhere around 100 bags per hour, where the contract required them to do 120 bags per hour. There is a question, too, if the location at the airport, if there was enough space physically to put five of these machines, physically in the space that was designated. So there are a number of questions, and there is a lot of-- I don't want members who may have to leave early to think, well, it is just TSA's fault or it is Raytheon's fault or it is Reveal's fault. It seems to me that there is enough blame to go around. And we will get into that when we get into questions. Mr. Mica. Thank you for those excellent comments. Again, with that introduction, I want to hear from Michael Ellenbogen, President and CEO from Reveal. You have heard some of the questions raised here, all three witnesses. So we will hear from you first and then we will go to the other witnesses. Thank you. Mr. Ellenbogen. Mr. Chairman, you are not an easy act to follow, sir. Members of the Committee, thank you very much for inviting me to testify today. My name is Michael Ellenbogen, I am the founder and President of Reveal Imaging Technologies. Reveal is a three and a half year old, privately financed company. We designed the CT-80 to offer flexible options for checked baggage screening. TSA funded much of the CT-80 development and certified the system in December of 2004. TSA's certification is focused on detection and false alarm rates. Newly developed systems, upgrades, features, et cetera, are then tested by the TSA through their pilot program. The goal of the 30 day pilot program was to verify the CT-80's operational performance, reliability, real world throughput and false alarm rates, as I understand it. TSA identified three different airports--Newark, JFK, and Gulfport, Biloxi, Mississippi--to test the CT-80's operational characteristics after it was certified. Eight systems were installed and tested last summer. And these pilots were successful in demonstrating that the CT-80 is able to operate reliably in both low and high throughput environments. The successful pilot resulted in a procurement contract and an order for 73 of the CT-80 systems. Mr. Chairman, the CT-80 offers a variety of flexible installation options for checked baggage screening at airports of different sizes. We are actively working with TSA to demonstrate and deploy the most cost-effective solutions possible, and I look forward to answering any questions you might have. Thank you. Mr. Mica. Thank you. We will hear now from Mr. Britz. Mr. Britz. Thank you, Mr. Chairman and members of the Subcommittee. My name is Bill Britz. I am a project manager for the Aviation Security Systems for Raytheon Technical Services Company, LLC, who I will refer to in the rest of my document as RTSC. RTSC is a solely-owned subsidiary of Raytheon Company. Thank you for giving me the opportunity of testifying before the Subcommittee today on RTSC's role in the Reveal pilot project at Newark International Airport. In the interest of time, the testimony I will give you today is an abridged version of the written testimony previously submitted to the Subcommittee. Under a competitive contract, RTSC provided a broad range of engineering services, including project management, engineering design, site preparation, installation supervision and data collection and analysis. Under my leadership, RTSC performed all these services for the Reveal pilot project at Newark International Airport. Stakeholders in the project included TSA, the Port Authority of New York and New Jersey, Continental Airlines, Reveal Imaging and RTSC. The goal of the project was to verify the capabilities of integrating the Reveal machines, CT-80's, into a baggage handling system in a live airport environment. Up to this point, the Reveal machines had been tested in two other pilot sites, Gulfport and JFK, but only in a standalone configuration. In the Reveal pilot sites, a trade-off was made on the number of machines to test. Three machines were chosen because of the cost and space constraints at Newark. Two machines of the three were configured in an exit-integrated configuration and one in a more expensive fully integrated configuration. The fully integrated configuration added an automatic storage conveyor, an in-feed conveyor, so that the Continental Airlines ticket agents could place several bags on the storage conveyor at one time and the bags could automatically feed into the machine when the machine was ready to accept them. The addition of the storage conveyor increased the time the ticket agent could spend helping passengers in check-in. During the design phase, the pilot project, under other configurations were considered, including ones proposed by Reveal Imaging and Continental Airlines. Ultimately the configurations that were chosen for the project were those that allowed the project to meet the goals at the lowest cost installation-wise. The Reveal machines were installed around August 2005 and were ready for use before the conveyors and control systems needed for the integrated configurations were available. When this situation became clear, TSA decided to add a preliminary test phase to the project in which the Reveal machines were first tested in a standalone configuration. The standalone configuration ran from August to October 2005, which included about 2,600 bags that were scanned at the time. The integrated configuration ran from October to November 2005, during which time 20,000 bags were scanned. One concern that arose during the project was getting the Continental ticket agents to use the Reveal machines. Using the machines required the agents to take the additional responsibility of moving and lifting the bags to the machines. Prior to the pilot project, passengers were responsible for taking their bags over to the large explosion detection systems, the CT-5500's, located adjacent to ticket counters. In summary, the Reveal project at Newark International Airport was successful in validating the exit and fully integrated configurations in an operational environment, which until this point had not been tested at any other Reveal pilot test sites. This is a significant step forward in demonstrating the capabilities of the Reveal machine. Mr. Chairman, I would like to thank the Subcommittee and you for giving me the opportunity to testify. I would be pleased to answer any questions you may have or your members may have. Thank you very much. Mr. Mica. Thank you. And we will hear from our other witness, which is Susan Baer with Newark Airport. You are welcome and recognized. Ms. Baer. Thank you. Chairman Mica, Congressman Pascrell, and the other distinguished members of the Subcommittee, good morning. I am Susan Baer, General Manager of Newark Liberty International and Teterboro Airports for the Port Authority of New York and New Jersey. On behalf of the Port Authority, I would like to thank you for calling this hearing and giving me the opportunity to testify today. As an aside, thank you, Congressman Pascrell, for your comments recognizing the hard work that we have done in cooperation with the TSA and the airlines at Newark to improve our overall baggage screening from a rocky beginning. It has certainly gotten much, much better. My comments will be brief, and I request that my entire statement be read into the record. The Port Authority of New York and New Jersey is a bi-State public authority that was created by our States with the consent of Congress. Its mission on behalf of the States of New York and New Jersey is to identify any critical transportation and infrastructure needs of the bi-State region and provide access to the rest of the Nation and the world. The role of the agency's aviation department is to run four airports that are critical to the Nation's trade, travel, commerce and tourism: the rapidly growing global gateway, JFK; a major domestic and international hub, Newark Liberty International; the premier business airport, LaGuardia; and a vital corporate and general aviation reliever, Teterboro; as well as an urban helipad, the downtown Manhattan Heliport. These facilities handle aircraft as diverse as a Piper Cub, a Sikorsky S-76, and the Boeing 747. They were used by nearly 100 million passengers in 2005, an increase of over 6 percent, making our airport system the busiest in the Nation. Newark is now leading this growth with almost 15 percent more passengers using our airport so far this year. This activity produces annually an astounding $62 billion in economic activity and directly and indirectly supports more than 375,000 jobs in the New York-New Jersey metropolitan region. The Port Authority and the TSA are joined together in a common pursuit: exploring new territory and meeting difficult challenges to provide the best possible security at our airports. Like all partnerships, to be successful, the parties need to agree on objectives, share with each other our concerns and provide mutual support. To cultivate and sustain our good relations with the TSA at New York Liberty, as well as our other airports, we hold weekly conference calls, conduct bi- weekly inspections, organize tabletop problem solving exercise and cross-train TSA and Port Authority staff in an effort to continue to improve communications and cooperation. Now, as operator of one of the Nation's busiest airport systems, it is vital to us that the aviation screening system be responsive to our increasing passenger and cargo traffic. It needs to be effective, customer-focused, performance-driven, risk-based and be given adequate resources to fulfill its mission. We are concerned that at a time when our passenger traffic is on the rise, TSA staffing strategies are still subject to a cap. Currently, the hard-working TSA screeners at Newark are screening 40,000 bags per day. The TSA continues to face enormous physical capacity challenges at the airports, as passenger traffic rose rapidly. Some of our older terminals, like those at the airports across the Country, there is often a lack of adequate space for checkpoint and baggage screening. It is difficult and expensive to reconfigure existing facilities, and sometimes it is just not possible to add security lanes without undertaking expensive capital construction, a project that neither the financially ailing airline industry nor we are well equipped to undertake. We also need to reconfigure bag rooms to provide for the installation of equipment that is currently located and still located in some of our passenger terminal lobbies. We are doing just that in the terminal we run at Newark with in-line screening in place by 2008 in Terminal B. But we need not look just to physical expansions but also to embracing technology to achieve the same or better results. We strongly support the implementation of the Department of Homeland Security Office of the Inspector General March 2005 audit findings that call for the greater deployment of technology. As has been noted, Newark has served as the pilot airport, or one of the pilot airports, for the Reveal baggage machines. The Port Authority was not a partner in that pilot, but I know others on this panel can speak to this project and its results. We were eager for this test, and many others, because we firmly believe that the TSA must test equipment at very busy O&D airports like Newark, to ensure that new technology is up to the rigors of a system that is at capacity much of the day and is expanding quickly. The Port Authority, as I have noted, is committed to serving as the DHS-TSA test bed for technology to enhance security. We have participated in tests of biometric access control, vehicle tracking, video situational awareness, radio frequency identification technology, cargo tracking, cargo radiation detection, ASDE-3 radar use for perimeter surveillance and many more. We urge the Government's continued investment in pilots of promising technology, and ask the TSA to facilitate the exchange of information among airports about the results and lessons learned from pilot tests. Some technologies that can have demonstrable benefits to securing our airports are not so new, and it confounds us that resources have not been made available. Our experience with costly terminal evacuations due to breaches of security screening points has convinced us that closed circuit television surveillance of both the screening points and the baggage rooms is a necessity. The costs of terminal evacuations or delayed flights are enormous. One of the ways to resolve issues at checkpoints is to go to the video tape. But sadly, the TSA has not installed such surveillance, nor has it been planned for the future. We at the Port Authority are committed to CCTV and it is a commitment that is shared by our local TSA staff. As a result, the Port Authority has begun to dedicate some of our capital resources to begin installation of cameras in areas where we think it is appropriate. Again, I would like to thank the Committee for this opportunity to share some of our views. We look forward to working with the Committee in the future on our shared goal of effective, customer-focused and performance driven risk-based security. Mr. Mica. We want to thank you, and I want to thank the other witnesses. We have three votes. We will be back at 11:30, so take a breather. This Subcommittee will stand in recess until that time. [Recess.] Mr. Mica. The Subcommittee will come back to order. We have heard now from all the panelists. We can get into questions. I will start with a few. Let's start with Reveal. I want to concentrate some on the Newark situation and then I have some more general questions. Reveal, how long did it take to get your equipment certified? Mr. Ellenbogen. The process took about nine months. Mr. Mica. About nine months. And I have you were certified in December of 2004, approximately? Mr. Ellenbogen. Correct. Mr. Mica. Did you all come up with the initial configuration, recommended configuration for the Newark installation? Mr. Ellenbogen. I believe we may have. Mr. Mica. This is your configuration here? Mr. Ellenbogen. I believe so. Mr. Mica. As I see it, it was to be networked and there was to be one point of resolution, is that correct? Mr. Ellenbogen. That was the intention of the design, yes. Mr. Mica. OK. Now, you have been up to Newark and seen, of course, the way it is installed. It doesn't look anything like this. And I talked to your folks and they said one of the reasons that it doesn't look like this is because TSA only allowed it three machines, so it is impossible to have this configuration. So that was the first decision to influence the configuration we ended up with, is that correct? Mr. Ellenbogen. I know TSA allocated three machines. I believe their intention, though, was really to test the operation of the equipment as opposed to this particular configuration of the equipment. Mr. Mica. But it would be impossible with three machines to do this configuration. You did not do the installation, did you? Mr. Ellenbogen. We did not. Mr. Mica. So TSA did the installation, and Mr. Britz, you did the installation. You were just, when you came, or Raytheon came into this, there was a three-unit decision previously made, is that correct? Mr. Britz. That is correct. Mr. Mica. The space that they have in your first proposal probably isn't any larger, I have been there, than what the space they are now using with three Reveal pieces of equipment and two InVision 5500, is that--I mean, the footprint is about the same, isn't it? Mr. Britz. I will answer that. The CTX5500's were put in over a year ago, prior to the Reveal machines. So they were running as the primary baggage screening machine. Mr. Mica. That wasn't my question. My question is the footprint would be about the same as if we had five of these Reveals. Mr. Britz. The five Reveal machines, from our point of view, wouldn't fit in this constraint, in the space there, as well as the cost consideration. Mr. Mica. But again, I could put this configuration, the original recommended, in the same footprint that you have now, with the two 5500's? Mr. Britz. I--you can get five machines in there, but there are requirements that the five machines won't fit in there. Mr. Mica. You had two 5500's sitting out on the right side. There are three, now, you don't see them here, do you? Mr. Britz. They are in front of the ticket counter. They are not even behind the ticket counters. They are way out in front. Mr. Mica. They are off to this side, it would be in front of us. But they take up a lot of space. They are at least three times as big as Reveal, aren't they, two, three times? Mr. Ellenbogen. Approximately. Mr. Mica. OK. So my point is, again, if you have 5500's that are taking up as much space, so we never got the configuration, TSA, do you want to respond to why? Well, first of all, again, from our standpoint, we have no place in the Country now where we have a major airport, where we have Reveal installed in an integrated fashion and to demonstrate its capability of this type of proposed use. Is that correct, Mr. Null? Mr. Null. That is correct. The current installations are the Newark installation and JFK installation, which essentially integrate the back end of the machine but not the front end of the machine. Mr. Mica. We also had Continental Airlines, who said that this was going to be a model, too, of using this newer, less costly--they sat right at that table right in that area there, they are not here today, and said that this was going to be tried at a larger airport, in fact, one of their biggest hubs, and it would result in less cost, less personnel. With this configuration, Mr. Ellenbogen, the way I saw it, you have to have one person to do the resolution and then one person to handle and feed the bags, is that correct? Except at one point. There is only one conveyor that is connected to the machine. Mr. Ellenbogen. I believe that is the way TSA is operating them today. Mr. Mica. So this configuration requires two people at each machine. It was anticipated that actually the baggage handler and possibly one person could serve a couple of the lanes, and making certain that the, I said lanes, the conveyor belts, to make sure that the bags went incorrectly. So you have to use twice as many personnel in this configuration, is that right, Mr. Ellenbogen? Mr. Ellenbogen. I am not familiar enough with the installation requirements. Mr. Mica. Well, I am telling you, that is what they told me it requires. Mr. Britz. The number of resolution people required by how many bags are alarmed. Normally in design, that is normally between 20 and 30 percent of the bags that we have to assume are alarms. That drives how many people are in the resolution area. If you have that many machines, if you have five machines, you will have a lot more than one person doing resolution. Mr. Mica. No question about it. But resolution, TSA resolution on this was not at each machine. It obviously takes more at each one with each machine. If we had had five and they did it in a half-baked configuration, it would take five people, right? If it isn't networked and remote? And we do have that in-line, we have remote resolution, do we not? Mr. Null. We have remote resolution for the larger machines today, the multi-plexing. This was a year ago when this went in, and the reality is that we did not have the multi-plexing capability in place at that point in time, which would have required five TSOs, one at each of the machines, for resolution at that point. Mr. Mica. So is your equipment, Mr. Costello said your equipment doesn't have a high enough throughput rate. But with the configuration and conveyor from the counter to the machine, is it possible for an agent to do more than the machine's capability? What is your capability for throughput? Mr. Ellenbogen. The system was certified at 80 bags an hour originally. We currently have software going through recertification. Mr. Mica. So it was certified by TSA at 80 bags an hour? Mr. Ellenbogen. That is correct. Mr. Mica. And everyone thought that that would be a good application, that an agent really couldn't do many more bags than that per hours with this configuration? Mr. Ellenbogen. In the configuration that is currently being shown, that would be sufficient to keep up with a couple of ticket agents. Mr. Mica. OK. So we use two times as much personnel. What about the networking? Mr. Ellenbogen. I think there might be a misunderstanding. What we deliver, the product, the system and the software, it then goes through TSA approval process. And at the time that this installation happened as part of the pilots, we had not yet been through the complete approval process for all the multi-plexing and the networking. Mr. Mica. So there was no capability at that time? Mr. Ellenbogen. It hadn't been approved yet. Mr. Mica. Did anybody from Reveal ask or Raytheon ask if that was a feature that we wanted incorporated? Mr. Ellenbogen. That was not a feature that we were testing here or required to test at the site. Mr. Mica. So TSA set the parameters, basically? Mr. Britz. Because the machine wasn't ready at the time for that capability. Mr. Mica. Is it capable now? Mr. Ellenbogen. It is, yes. Mr. Mica. Was this configuration just something pie in the sky that your guys made up, or is it possible to have this configuration work? Mr. Ellenbogen. It is possible to have it work. Mr. Mica. To have it networked and have remote resolution? Mr. Ellenbogen. It is possible to have it work, networked, with the remote resolution and these are some of the capabilities that we needed to pass with TSA. Mr. Mica. I see Mr. Null shaking his head affirmatively, yes. Mr. Null. Yes, sir. In fact, in Jackson Hole, we will be evaluating the full---- Mr. Mica. OK, Jackson Hole, Gulfport, Gulfport may be a nice installation for that nice size. My problem is, I only have a handful of our major airports that are completed with in-line expensive systems. This was a machine that cost a third less or whatever it is and takes up less space. It has the potential for saving us billions of dollars for installation at a large airport. That was the whole reason for the Newark experiment. But I do not have, we do not have that in place in any large airport. Do you think we could try this at one airport to see if it is possible? And I am told the machine works very well. I heard the resolution is excellent, the imaging, all its capabilities meet or exceed the L-3 and the InVision. Mr. Null. Mr. Chairman, the Jackson Hole implementation has eight Reveal machines. So we will get a large enough sample to evaluate the scalability of this system in a large airport. Mr. Mica. Are you going to do it at one of the 29 big airports? Or should we just say forget this, we will throw it away and that is not a solution? I mean, this takes billions of dollars, whether it is one point X billion for his equipment and maybe his equipment won't work. Or it is going to take us multiple billions to go in and gut the bowels of some of these major airports and put the big equipment in, in-line system. The worst part about all this, and most of this is classified, I can't speak to, is that the system that we have now in place, the failure rate is just totally disastrous. The hand processing with these 16,800 people, the results we have that have been made public, it is disastrous. Where you have the in-line systems, and we have seen the results with the good equipment, the high-tech equipment, it is just the opposite. And the whole purpose of this isn't to employ 16,800 people and have bags go through some process that is farcical. It is to actually achieve some detection of dangerous materials. Well, I will go on. Let me just give a shot to Mr. Costello and then we will get back. Mr. Costello. Thank you, Mr. Chairman. Let me follow up on your comment about the success and failure rate, and it is classified, and we have had briefings. I do want to point out that while it is unacceptable, let me say that I firmly believe that it is a far better system than it was prior to 9/11. So I want to go on record saying that and make sure that everyone understands that. Mr. Mica. I am with you there, too. Mr. Costello. So let me go on. Dr. Null, I want to clarify a few things here. It may not be important to everyone in the room, but I think for the record we need to clarify some things. Number one, did TSA ever agree to supply five CT-80's at Newark for the pilot program? Mr. Null. No, sir. No, we did not. Mr. Costello. And so without question, there was no agreement to provide five machines? Mr. Null. Not following the analysis that we did on the required throughput. Mr. Costello. OK. Mr. Britz, in follow-up to the Chairman's question about the space issue here, who chose the space for the five machines? Number one, there was no agreement to provide five CT-80's. But space that they were going in, you were saying from your perspective that the space was not adequate, did not meet the regulations to place five machines in that space, is that correct? Mr. Britz. That is correct, in regard to the requirements of the maintenance of the machines, the requirements of the controls that are required for the machines, and the resolution space that is required between the machines, those machines are, as we feel, the layout was too tight, and that they wouldn't fit in the space. Mr. Costello. So you are saying that Continental chose a site that was too small to accommodate all five CT-80's, if five CT-80's were to be set up, is that right? Mr. Britz. That is correct. Mr. Costello. Let me, Ms. Berrick, let me ask you, as the Chairman pointed out correctly, and we all know that it has been two years since TSA has been required to screen all checked bags, using explosive detection systems, including EDS and ETD, one, does TSA in fact check all bags using the explosive detection system, 100 percent of the time, just for the record? Ms. Berrick. The answer is no, TSA doesn't electronically screen 100 percent of checked baggage, 100 percent of the time using EDS and ETD. What I can say publicly is that the vast majority of the time they are screening baggage with EDS and ETD, but there is a small percentage of time that they use what they call alternative screening procedures. Those are essentially procedures involving the use of EDS and ETD in non- standard ways. It could be canine explosive searches, it could be physically opening the bag and searching its contents. There are some trade-offs in security effectiveness with these procedures that we have found. We have made some recommendations to TSA and their management of alternative screening procedures. One is that they conduct covert testing in an operational environment to get more data on how effective these procedures are. And we also recommended that TSA strengthen their process for monitoring the extent to which alternative screening procedures are used, because we have found weaknesses in how that information is recorded. Mr. Costello. In order for TSA to meet the requirement, they are mandated by the Congress to meet the requirement, what do they need in order to comply, in terms of equipment and staff, in your judgment? Mr. Null. Well, I think the issue that we face today is the fact that there are always events that will occur that sort of exceed and go beyond your normal operating capability. If equipment goes down, then what would normally be able to cover a load, then we have to respond and have some type of alternative procedures to manage risk in that fashion. I think our main challenge today is to be able to stay ahead of the growth and to be able to preserve that level of coverage. We do use, as Ms. Berrick had said, typically electronic screening, but it uses protocols that are different in order to achieve higher throughput. That is all based on security issues that may be generating because of bags piling up or safety issues. Mr. Costello. I have a few more questions for you, Dr. Null, but the same question to you, Ms. Berrick. Ms. Berrick. Thank you. I would agree. TSA will always have to use alternative screening procedures to some degree, because equipment breaks down, there will be unforeseen events, there will be some crowding. What would help in mitigating the use of that is the deployment of these optimal screening solutions. TSA estimates that if they are not able to deploy these solutions that they will have to field more EDS equipment and put it in airport lobbies, they will need more screeners. Another factor that could help prevent the use of alternative screening procedures, or not prevent it, but reduce it, is increased technology, higher throughput, lower alarm rates. There are some technologies that offer that and should be available within two to three years. Mr. Costello. Dr. Null, according to TSA and GAO, the throughput Reveal CT-80 screens about, or has the capacity to do about 80 bags per hour. There is some confusion. We have TSA and GAO saying 80 bags an hour, we have Reveal's web site that says that the equipment does 100 bags an hour. Apparently, I am informed that the contract on the pilot project at Newark required Reveal to screen 120 bags per hour. Is that correct? Mr. Null. That is my understanding, sir. Mr. Costello. So TSA was requiring Reveal to screen 120 bags per hours, knowing that the equipment could not screen 120 bags per hour? Mr. Null. It certainly was our objective, as a part of the pilot, to work with Reveal to get to that level. And we are continuing to work with them in a number of changes and upgrades to both their software as well as their hardware, to achieve that number. Mr. Costello. TSA has informed me that ``a plan was in place for Reveal to meet their contract. They have not, so a monetary penalty is currently in place.'' Is that correct? Mr. Null. That is correct. Mr. Costello. And what is the monetary penalty that has been assessed against Reveal for its failure to comply? Mr. Null. I am sorry, sir, I don't have that ready, so I will have to get back with you on that exact value. Mr. Ellenbogen may have the answer to that, but I don't recall at this point. Mr. Costello. Can I ask you if Reveal knows? Mr. Ellenbogen. Reveal knows. [Laughter.] Mr. Costello. And? Mr. Ellenbogen. I believe it is a 10 percent holdback on the contract value. I just would like to clarify for the purpose of this discussion, the pilots took the output of the Phoenix program, which was the Reveal CT-80 at 80 bags an hour, to test its operational throughput. The pilot contract did not require 120 bags an hour. There was not a throughput requirement on that pilot contract. We then entered into a procurement contract in September, after the pilots were done, a procurement contract we started shipping against in December. During the course of that contract, we were required to come up to 120 bags an hour. That software has been delivered to the TSA, it is currently going through their approval process, and has been for some time. We are actively working with TSA to get that approved and deployed, so we can live up to our end of the contract requirement and release the holdback. Mr. Costello. So back to my question, has there been a monetary penalty assessed against Reveal? Mr. Ellenbogen. Not for the pilot program, no. Mr. Null. For the procurement side. I stand corrected. The 120 was in the procurement contract, rather than in the pilot contract. That 10 percent holdback is on the procurement that we have underway with Reveal at this point. Mr. Costello. Let me ask you also, from Reveal's standpoint, in fiscal year 2005, the DHS appropriations conference report said that Reveal's CT-80 should be deployed particularly in medium and small airports. Do you believe that the CT-80's are better suited for the medium size to small airports, and not the major hub airports in the Country today? Mr. Ellenbogen. I believe the CT-80 is idea for medium to small airports and for certain larger airports with particular requirements, we can help solve some of those challenging problems with in-line screening options. And we are working with TSA to demonstrate that capability. Mr. Costello. Dr. Null, would you want to comment on that, is the CT-80 more appropriately used at small to medium or at large? Mr. Null. I think in terms of general deployment, medium and small are the right sweet spot for that capability. I think at larger airports, as you look at optimizing how you are going to do baggage screening, there certainly will be locations where Reveal is a good solution for a part of an overall solution, but not for large scale, common infrastructure with high, high volumes. Mr. Costello. I have a few other questions, Mr. Chairman, but my time is more than up. Hopefully we will come back with a second round. Mr. Mica. Are there other members with questions? Mr. Pascrell. Mr. Pascrell. Mr. Null, if the capacity of the product was in question, why did you choose to fund the project using this technology at one of the Nation's most busy airports, busiest airport? Mr. Null. Well, sir, we had a specific application with the Continental location here. The reason, first of all, that we went from five to three is that three would meet the capacity requirements of that checkpoint environment. So we were really looking in this pilot to do operational utility testing, to look at different configurations of the equipment. And we were not throughput constrained by the equipment by going with the three. Mr. Pascrell. Who was responsible for the design of these machines? Mr. Null. The design was a cooperative design that was agreed to by Continental, ourselves and Reveal. Mr. Pascrell. So you consulted with Continental Airlines and Newark Airport in designing the machine? Mr. Null. Everybody signed off on the design, sir. Mr. Pascrell. They signed off on the design? Mr. Null. Yes, sir. Mr. Pascrell. So your answer to that question is yes? Mr. Null. Yes. Mr. Pascrell. Thank you very much. I would like to talk about the GAO report, Ms. Berrick. A clarification. You say on page four of your testimony that TSA report that, in May of this year, TSA report under current investment levels, I just want to make this clear in my mind, installation of optimal checked baggage screening systems would not be completed until approximately 2024, given the cost of each of these machines, if we continued to go on the same pace that we are going right now, investing the same capital money, we would not complete this project until 2024. Is that accurate? Ms. Berrick. That is correct. That is what TSA estimates. Mr. Pascrell. And then you said that the TSA is currently collaborating with airport operators, airlines, et cetera, in an effort, that TSA expects to complete by early fall of 2006. So if there was some cost sharing here, we are just talking about what is designed right now, what is on the boards right now. If you want to do this with all the airports, it will take us until 2024? Ms. Berrick. The estimate about 2024 is related specifically under current investment levels, what has been appropriated. The effort that is underway right now is TSA is partnering with airports and other stakeholders to try to identify some creative financing and alternative financing solutions. That effort, which is supposed to be completed in the fall, is supposed to put forth recommendations on how they can better fund and support the installation of these systems. So hopefully the optimal screening solutions can be deployed before 2024. Mr. Pascrell. Because that doesn't say much for the system we are putting into effect, if we are going to have to wait until 2024, luckily, in order that it be completed in the airports that we want to do this. Ms. Berrick. It is really how much the up-front capital investment that is required to do---- Mr. Pascrell. Well, let's talk about the up-front capital. Where is the money, give me general percentage numbers of where the money is coming from. Ms. Berrick. There are a few sources. One is through the letter of intent agreement. TSA awarded eight LOIs for nine airports, which resulted in a funding obligation for the Federal Government of about $950 million. There is also the Airport Improvement Program, which is no longer available to support the installation of in-line systems. Quite a few airports did get in-line systems through the AIP funding. TSA also uses a mechanism called Other Transaction Agreements, where they fund portions of in-line systems, usually for smaller systems. So if you break that out, the Federal Government spent about $950 million, or will through the end of next year, through the LOI process. And they have spent about $350 million through the Airport Improvement Program and Other Transaction Agreements. Mr. Pascrell. And it is obvious that we are not going to get this system anywhere near done unless there is capital investment from the Federal Government. Ms. Berrick. The money will need to come from somewhere. And that is why it is important---- Mr. Pascrell. You know the budget for 2007, then, that has been proposed by the Administration. Is there sufficient money in there to continue the project to the degree that you and I and everyone else is talking about here? Ms. Berrick. I don't know the extent to which the funding request would support TSA's top 25 airports where they want to fund in-line systems. Mr. Pascrell. Otherwise, the money has to come from the airlines and the airport? Ms. Berrick. That is right. Mr. Pascrell. And they are just jumping for joy to do that, right? Ms. Berrick. Well, hopefully through this study that is going on right now, there will be some recommendations coming forth on how to more creatively finance these systems. Mr. Pascrell. Any time we hear study, particularly in terms of the Department of Homeland Security or TSA, we are holding our breath as to when it will be completed and what will it show in the results. So I take you for full granted, and I accept the research of the GAO. You do a terrific job, all of you do a terrific job in terms of helping us in our oversight responsibilities. Mr. Ellenbogen, given that your technology was designed for this low throughput, what adjustments are needed, do you need to make, to compensate for the high traffic at Newark Airport? And what were your expectations for the performance of your technology in an integrated EDS system? Mr. Ellenbogen. The system was intended as an alternative to the large in-line approach. And with the configuration that you see up on the screens now, there isn't a requirement for high throughput. As we have described in the past, it is like a PC approach, networked computing approach, as compared to a mainframe approach. We are not claiming it is a panacea. It is not the only solution. It is an alternative. It offers some flexibility. The original certification was at 80 bags an hour. We anticipate upcoming certification at approximately 110 to 120, going toward 140 bags an hour. So we are increasing the throughput of the system to apply to different ways of deploying it to optimize its utility to TSA. Mr. Pascrell. You would agree with the Chairman's analysis and description of the convoluted system that now exists at Newark Airport? Do you agree with his description of what exists there right now, or do you disagree with it? Mr. Ellenbogen. I think what exists there now was designed for the pilot application, to test the system's reliability and operational capability. I think it can be optimized. Mr. Pascrell. By? Mr. Ellenbogen. I would have to sit down and work with TSA to understand what the trade-offs might be. Mr. Pascrell. Let me ask a question, if I may, Mr. Chairman, to Ms. Baer. It is my understanding that the Port Authority's role in the Reveal pilot project was not as partner, we heard that term used very loosely in here, but it was mainly an administrative role. Would you agree or disagree with that? Ms. Baer. I would agree with that. While we have been partners in some of the technology enhancements at the airport, in this one, our only role was to do the kind of review that you would do if someone wanted to put a piece of equipment in a lobby floor, to make sure the floor could support it, that the electrical systems are adequate, and that sort of review. So we did a review, but not of the operation, just of the physical entities. Mr. Pascrell. So this separation of activities at Newark Airport, we have to go through two processes. That is not acceptable to you, is it? Or is it? Ms. Baer. We always do those kinds of reviews, because as the landlord of the airport, we need to ensure that the physical plant of the airport maintains its integrity. So that kind of process we would always do. We are then often partners in technology applications, but not necessarily. Some are more appropriate than others. We run a terminal, there it is more appropriate for us to be very involved. Mr. Pascrell. Let me tell you what my concern is, in conclusion. And I have overstayed my welcome here, but let me take a shot at this. My observation is this. The issue is the way Raytheon set up the machines. They are not configured to be fully integrated. I think that this is a simple conclusion. Full integration was the whole point of the pilot project, that I remember. So it seems that we got off on the wrong foot in the first place. Why do you think Raytheon did this? Was it because of the configuration of the airport? Was it limited space? Why? Ms. Baer. I think I have to defer to Raytheon on that. Mr. Pascrell. Well, you were there. Ms. Baer. I actually wasn't there when this decision was made. Mr. Pascrell. Well, you should have been. My point is this. I am looking at Newark Airport, this is what is on the table right now. And I am wondering if we are trying to squeeze too much in a small box. I don't know how much Newark is capable of. We are talking about a lot of jobs here. I want to make sure it is safe. We are trying to do the best that we can, all of us here in this room. We thank everybody for their service. I am not so sure that, for instance, that this particular problem, I can think of several others, is not reflective of an airport that is trying to squeeze too much out of its assets and resources. I am not so sure about that. I want it to grow. We can't. There is no place to put another runway. Everybody wants the land at Newark Airport. That is easy to say. We are backed up to Cleveland, for crying out loud, making landings around 4:00, 5:00, 6:00 o'clock at night, 7:00 o'clock. I just would ask you to take a look at that, so it is fair to everybody here, so that we are not simply kidding ourselves. We are going to have to make some capital investments at Newark Airport in order to expand the place, the area, where we can put any machines, correct? Ms. Baer. Absolutely. Mr. Pascrell. Thank you, Mr. Chairman. Mr. Mica. Mr. Honda. Mr. Honda. Thank you, Mr. Chairman. I have three quick questions. They are questions with San Jose Airport in mind. So you can take the questions in that context. There is about $156 million ultimately that would be available in fiscal year 2007 for EDS installation at 9, 10, 11 airports. About how many airports would you expect to fund in the coming year and how does that compare against the number of high priority airports that will be ready to begin work next year? Mr. Null. Well, sir, first of all, the reason we only have 150 is that it is the final year of the LOI payments. And then things would free up later at the current level, if that were the case. I think that it will depend very dramatically on what airports we do. Now, we have got 25 airports that are the high priority. Those will float, depending on the ability or the willingness of the particular airport to participate. So how far down we get will be somewhat driven over the next few months of getting a better feel for who can participate, who will be willing to participate and we will develop our 2007 spending plan. So it is difficult, depending on whether it is a $14 million project or a $100 million project, that list will vary dramatically. We should know that within the next few months. Mr. Honda. OK, then as TSA makes decisions on the allocation of the 2007 EDS installation funds, exactly what criteria will you be using and how significant are factors like construction readiness, integration into ongoing terminal renovation, or significant local financial share of the project, as San Jose is? Mr. Null. Well, the first priorities are all about security and safety. So we will look for those airports where we know that we will have the most restricted capacity, where the growth will be pushing us to the limit to maintain baggage screening. So those will be at the top of the list. We also are looking for those airports where we have the highest injury rates, and those have a level of higher level of priority as well. We have to be very opportunistic in how we manage that priority list. And when we have airports that are ready to step up and have, we can intercept a greenfield terminal or new airport, those are important things for us, and we will shift the priorities based on the ability to get that local funding and to intercept a construction project. Mr. Honda. OK. Some airports will have TSA-validated designs for EDS installation, ready to begin construction by the end of this year. If TSA is not using letters of intent to commit future funding, how can those airports move forward without losing the possibility of these 75 percent Federal reimbursement to which they would be entitled, if they simply waited for another year or two? And is it possible to enter into, I guess what you call the other transaction agreements, or other agreement now, that protects their full reimbursement from future appropriations, assuming those appropriations ultimately are made? Mr. Null. Mr. Honda, that is exactly the cost study, sharing study that we have underway right now with the airports and air carriers. We are looking at a number of potential vehicles to achieve funding levels similar to LOI shares. And those will all be sort of put on the table here in the next few months. So we are not going to leave anything off the table. We are going to sort of put it all out there, look at what may be potential multiple vehicles for doing the funding and as a part of that study, we are also making sure that we understand those airports who have stepped up and invested early how they will play in that going forward as well. Mr. Honda. Well, San Jose is in that mix of 25? Mr. Null. Yes, sir. Mr. Honda. So how all these factors play together will determine where San Jose may end up in terms of the lineup. It doesn't sound like there is a priority in terms of who is first, who is second. But it is based upon a mixture of criteria. Mr. Null. Well, the top 25 are based on capacity and peak demands that we know we are going to hit over the next few years. That will shuffle based on the availability of funds and willingness of local airports. So where that is going to end up will be a result of a number of discussions with different airports over the next few months to see how that final shakeout will look. Mr. Honda. Thank you, Dr. Null. Mr. Mica. Thank you. I am going to ask a few questions and then yield to Mr. DeFazio and others that have questions. First of all, I have the record from Continental. Continental worked with Reveal in November and December of 2004 to devise a pilot plan. That pilot plan that is on the board there, that says EWR. What does that stand for, Ms. Baer? Ms. Baer. That is the designator for Newark Airport, EWR. Mr. Mica. OK. That is not LAX, that is not Phoenix, it is not Denver, it is not O'Hare. That was devised for Newark. Then it says in February they met, it took them until, they had to wait until February to meet with TSA to discuss the proposal. And then somewhere, someone made a decision that they wouldn't get, basically this plan was rejected, is that correct? Was there ever any plan to use five machines, Mr. Ellenbogen? Was there any plan to use five machines, or is that something you just dreamed up? Mr. Ellenbogen. There was a lot of discussion with Continental about how we could configure the systems. Mr. Mica. Who did this plan? Did Continental do that plan? Did the airport? Where did this plan--and there is more to this plan, because there is a whole report. I have seen the report. I want a copy of that report for the record. All I have got is that. Can you provide me with that? Mr. Ellenbogen. I am not sure which report you are referring to, sir. Mr. Mica. The rest of the details that go with this proposed configuration. This is for Newark Airport. Who has it? Do you have one, Mr. Null? Mr. Null. I will certainly find out, and if we do we will supply that. Mr. Mica. I want the rest of the plan. Because this just didn't come out--and I don't have Continental here, but I have the scenario of how this was developed. And then they went to TSA. Somewhere, TSA made a decision, and I heard that, and it may have been funding or something that they only received from Congress enough for eight machines. Is that correct? Mr. Null. The plan was to utilize eight machines for across the three pilots. But that was not the reason for the three machine decision at Newark. Mr. Mica. Well, somewhere--they sat down, here is the testimony, and I am going to have them in and swear them in, they sat down and developed this configuration for a large airport. This is all about a large airport. You sat here and said that you believed that it may not be suited, or you said it would be suited only for medium and small? Mr. Null. And I think there will be situations---- Mr. Mica. Well, we will never know. We will never know. How will we know? The whole purpose of this was to have in one place at one large airport--we know it will work in small airports. We know it probably will work in medium airports. The whole reason for this, for having another vendor even qualified, and you were qualified at--just for the record, where were you certified at, 80? Mr. Ellenbogen. That is correct. Mr. Mica. And you met that. TSA certified that, didn't they? Did you certify 80? Mr. Null. Yes, sir. Mr. Mica. Yes, you did. So this is--don't put a lot of mumbo-jumbo on the table here. You certified that you had the equipment that would do that. And it was supposed to be installed in one airport, because this Congress is going to have to spend billions of dollars, billions of dollars. How much would it cost to change out your entire system and put an in-line with a large InVision or L-3 equipment? Ms. Baer. Throughout the entire airport? Mr. Mica. Yes, throughout your entire airport. Ms. Baer. Right now we have---- Mr. Mica. How much would it cost---- Ms. Baer.--59 EDS machines at the airport. Hundreds of millions of dollars. Mr. Mica. Hundreds of millions of dollars. Ms. Baer. Yes, it would. Mr. Mica. And we encouraged the private sector to come up with developing equipment that would be less costly. What is your, just ballpark, a third of the cost of an L-3, is that right? Mr. Null. Yes, sir. Mr. Mica. A third? OK. Just for the record. So we will never know, and we have gone through this planning process, we have gone through buying the equipment, we will never know how much it is going to cost us. We have 3 major airports done out of the 29 that handle 75 percent of all our air passenger traffic. And Congress is trying to find a way to install efficient equipment? That is just not acceptable to me. Somewhere, and I think it is TSA, if I see TSA going after Reveal in any way, and you are being awfully quiet, and I probably know why, because you are put in the middle of all this. All you supplied was the machines, is that right? Mr. Ellenbogen. That is correct. Mr. Mica. And you worked with them on this, whether you admit it or not, you worked with them? Mr. Ellenbogen. With Continental, yes. Mr. Mica. With Continental, OK. And you got the contract from them to install it the way they said, and they made the decision for the three machines, right? Mr. Britz. That is correct. Mr. Mica. OK. And you provided the space. And don't tell me that equipment will not fit in that space. I will go out and walk it with anybody here and some other folks. It will fit. And if you can fit two 5500's at the end and make the passengers walk around, don't tell me it won't take as much space. You can fit it in that blueprint. So this is an absolute fiasco, a farce, it has set the entire Country back and 20 some major airports, because we do not know today whether this equipment in fact will work with that configuration. You would think somebody would look at that, now, wouldn't you, and say, do we need to, now, you said that you didn't have the ability to network this and do the remote resolution. But somebody could look at it and say, that is the way it should be done, Mr. Null, wouldn't you say someone should have looked at that then and said that? Mr. Null. Well, certainly once we get the multi-plexing system, that will give us a lot more economies of scale and there will be some big advantages. The challenge that we have here, sir, is the fact that---- Mr. Mica. If anybody in TSA could just think of what we are trying to do, and put this together, in one location we could see if we could save billions of dollars and have a system that would work. But we may never know, because again, we have spent 18 months, almost 2 years with this disaster. I have to scoot, and besides that, I am losing my cool. But let me yield to Mr. DeFazio. Mr. DeFazio, I will match you for emotion on any day. Thank you. [Laughter.] Mr. DeFazio. It is the Italian, Mr. Chairman. [Laughter.] Mr. DeFazio. I have already vented for the week. So I may be a little mellow today on other issues. Generically, to Ms. Berrick, just broadly, we have confirmed through ongoing analyses that an investment in EDS generally at at least the 25 largest airports could have a payback, quite a short payback period, to TSA in terms of savings, is that correct? Ms. Berrick. Right. TSA initially estimated that for the nine LOI airports, they could recover the up-front investment in little under a year. But there have been some lessons learned since those systems were installed. TSA realized the need to develop best practice design guidelines for installing in-line systems. That would help and make the process more efficient. They also realize that better technology with increased throughput and lower alarm rates would help facilitate cost savings. They are working right now on developing best practice design guidelines. There is some technology in the pike that will increase throughput significantly. So the common knowledge is that there are still significant savings that can be achieved, not only savings, but also security benefits through underlying systems. But initial estimates may have been a little high. There have been a lot of lessons learned since then. But still, the savings are significant. Mr. DeFazio. Well, and from further reading your report, we expect the earlier generations of these machines apparently are going to have a useful life of maybe 10 years. I don't know about the later ones. But let's just say, let's use 10 years. So for capital investment that has a 10 year expected life, perhaps within a third of that time period, the Federal Government could recapture its investment in operating savings in terms of personnel and other attributable costs? Ms. Berrick. That is possible. Mr. DeFazio. So if we were running Government like a business, which the Republicans always tell us they want to do, we would probably be thinking about making these investments. So Mr. Null, I am curious, you said you are looking at other potential vehicles for funding. I am curious what you might recommend, because Chairman Mica and I have mulled this over at great length. We tried to make a run on some Federal bonding and we were turned down by OMB and others. We feel that the Federal Government has an obligation to carry a substantial portion of the cost of these machines, not the airports, not the airlines. We are looking for some cost sharing, but not putting the whole bill on them. So can you give us a couple of hints about what these potential vehicles might be? Mr. Null. I think as Ms. Berrick had indicated earlier in her discussion, there are a number of possible ways as far as service contracts, buy-leaseback options, potentially tax credit bonds, LOIs or something that would still be put on the table and then what we will have to understand and what are either the legislative or the scoring issues that would have to be addressed in order for those vehicles to be implemented. So none of them are clean. So our challenge is to identify what the options are and then understand what actions will have to be taken in order to utilize those. Mr. DeFazio. If we think this whole thing through and obviously baggage is not the only place we have a problem, I have tremendous concerns about carry-on bags, passenger screening in terms of explosives, and as the Chairman and I both said, two or three years ago now, when the Chechen terrorists took down the planes in Russia, this is probably our last wakeup call before somebody does that here in the United States. What do you think the economic cost, anybody up there, the economic cost to the United States of America would be if two or three planes were blown out of the sky one day by terrorists? There were two in Russia, let's just be conservative and say two. Short-term, total interruption of air service and all that, let's say we decide a week or 10 days we can put planes up again, with some new measures of security. What are we looking at in terms of, when we look at how much it would cost to install this equipment? Anybody think that the cost would be less than the cost of building up these systems quickly? I don't think so. Neither do I. I guess the question is, when we are looking at prevention of terrorist acts and tragedy, when we are going to kind of look at what the potential downside is versus the annual scoring and/or that, and buy-leasebacks. We have seen what happened with the Boeing deal, not too great. Sometimes it is better for the Federal Government just to make the investment straightway up front. If we need to borrow some money to make that kind of investment, looking at the savings we are going to recoup, the benefits, the taxes that will accrue, we should do it. With that, we have a problem with back injuries, big problems documented at TSA in terms of lost time, workers comp, injuries, all that. We have already talked about the issue of potential savings. So I guess what I am puzzled about here is, when we look at in-line systems, they will work some places. In some places they have the room to do it. But GSA says here that up to 50 percent of the cost is for facilities and infrastructure modifications. And I assume that is not a worst case, that is an average? Because at some places, there isn't really any place to put them, right? Mr. Null. That is true. Mr. DeFazio. So it could be considerably higher? Mr. Null. It can run considerably higher. Mr. DeFazio. So I guess I am wondering why we wouldn't perhaps revisit or put more effort into this dispersed idea. I am not saying it is going to be most appropriate everywhere, but at an airport where the costs are going to be, where 75 or 80 percent of the cost are going to be in modifying the facility versus the cost of the equipment, why wouldn't we put out a relatively small amount of money to more adequately test in a proper configuration these sorts of systems? Because I am just thinking that a mixed system where we avoid extraordinary costs at certain airports would be valuable. We always talk about, is it St. Louis, Jerry, that everybody has their own gate and we have all the security scattered around? Mr. Null. It is Kansas City. Mr. DeFazio. Kansas City, sorry. So every airport is a little bit different, and it just seems to me we might want some more flexibility than trying to drive everybody toward the EDS, which we know works great. I have been to San Francisco, I have been to Heathrow and Manchester and seen those systems. They are great. But they aren't maybe the solution everywhere. Do you think that this was a realistic test of the potential for dispersed technology, given the constraints on the number of machines we had? Do you think we disproved the possibility of doing it this way, since we didn't follow this original design, whoever created it? Mr. Null. First of all, as part of the strategic plan, we talk about optimized systems, not only in-line systems. So we recognize that these big central in-line systems are not the answer for every airport and we certainly would not propose that. I don't think that this pilot has done anything to eliminate the possibility of utilizing this configuration in large airports. At the time we were setting this pilot up, it was to prove the technology's reliability, our ability to integrate into the takeaway systems and to match the throughput from the ticket counters to the capacity that we put in place. Mr. DeFazio. So then this isn't a definitive test of whether or not a dispersed technology, particularly using well designed dispersed points, could possibly avoid a whole lot of structural costs and delays in terms of terminal modifications and those sorts of things? Mr. Null. And in fact, the Jackson Hole implementation will give us a fairly large scale test of integrated systems with multi-plexing capability and allow us to project what would happen in a much larger airport at the same time. Then we can look for future possibilities where we would do that. Mr. DeFazio. OK. So then this isn't definitive. I think the Chairman fears that we are going to somehow, going to disregard this possibility or this particular manufacturer because of the disappointments we had in this particular test. You don't find it definitive and you are not making any sweeping conclusions that would lead to that? Mr. Null. Not at all. We continue to work with Reveal on their ongoing system improvements and changes and we feel that Reveal is a critical part of one of the arrows in our quiver of how we are going to deliver optimized systems in the future. Mr. DeFazio. OK. Well, as I do to all of the Administration folks who come before us on the Committee to talk about these issues, and I do it both here and in Homeland Security, I just urge you and/or your superiors to give us an honest assessment of what it would cost, how are we going to get there and it should not be constrained by the people at OMB. We are big boys and girls here, you give us a big bill, we can look at it and say, we can't do that, you will have to come up with something else. Or we are going to say, yes, maybe it would be worth it to avoid what happened in the Soviet Union here in the United States, or Russia, excuse me. The Soviet Union doesn't exist any more. You know, it would be worth that cost, and we will figure out a way to find the money and borrow it. We are the ones who should make that decision. I hope it doesn't get backstopped. So I just would give you that counsel. Thank you, Mr. Chairman. Mr. Kuhl. [Presiding] As you can see, the Chairman has regained his Kuhl. No pun on that. [Laughter.] Mr. Kuhl. I will yield to Mr. Costello. Mr. Costello. Thank you, Mr. Chairman. I do have a few questions, but let me yield quickly for a quick question from Mr. Pascrell. Mr. Pascrell. Thank you, gentleman from Illinois. Mr. Britz, what adjustments did Raytheon have to make to the integrated placement design after a normal six to nine month delay and missing the peak travel time at Newark? And the second question is, what was the main cause of the delay? Mr. Britz. The systems were ready. We were installing systems at both JFK and Gulfport at the same time. We had to do the site preparation at the site, which is running all kinds of conduits and running power to all the machine areas. We had to get the design ready for integration, which was getting control panels built, fabricated and installed. And as well as conveyor belts fabricated and installed. That all took place over a period of time. Mr. Pascrell. Well, you know that before. Mr. Britz. Yes, we did. Mr. Pascrell. Well, you still had a delay of six to nine months. Mr. Britz. We installed the first machine in Newark in the August time frame and had it operational. Mr. Pascrell. This system was supposed to be ready in when, exactly? When was this originally supposed to be in place? Mr. Britz. I don't think there was a fixed date of when it had to be in place. Mr. Pascrell. There was no fixed date? Mr. Britz. That I remember. I don't know. Mr. Pascrell. For the record, that is what you are telling us? Mr. Britz. I don't have one in my notes right now. Mr. Pascrell. Well, then, how could it be delayed? Mr. Britz. The project was initially slated to get done in the summer. We finished the installation and had the first machine in August and the second and third machines installed in August and operational in August at a standalone configuration. We didn't delay the project in regards to the integration. We ran it as a standalone configuration until the integration equipment was ready and then we installed the integration equipment. And then the machine was fully integrated and available for full integration testing in October. Mr. Pascrell. Is the system at this day, at this point in time operable? Mr. Britz. I haven't been involved with the project since then, but I understand it is still running. Mr. Pascrell. Mr. Ellenbogen? Mr. Ellenbogen. The system is being used every day to screen bags, yes. Mr. Costello. Thank you. Dr. Null, let me just ask a couple of questions again for the record concerning the pilot at Newark. I understand that one of the machines did have entry integration. One, is that correct? Mr. Null. That is correct. The machine that was servicing the kiosks. Mr. Costello. And why didn't all three of them have both entry and exit integration? Mr. Null. Well, first of all, the machine with the entry integration services a number of kiosks. So there were multiple load points that were all supplied to that single machine. The reason that we did not integrate them into the ticket counter is because of matching the speed of the ticket counter processing with the capacity of the equipment required only two more machines, not four more machines. So from a capital utilization standpoint, our cost per bag standpoint, we could achieve comparable throughput with only two machines rather than four machines. So that is why we did not integrate those machines. Mr. Costello. And what did it cost TSA to provide entry integration on the one machine? Mr. Null. It was approximately $400,000, somewhere a little over that. And that is a very specialized belt to deal with, a 90 degree turn, which is why it is a little more expensive. Mr. Costello. And why weren't the machines at Newark multi- plexed? Mr. Null. We were at a stage where the software had not been finalized through the approval process or through the testing process. So we were not able to multi-plex those over to a single resolution point. Mr. Costello. And who made that decision, TSA or Raytheon? Mr. Null. Oh, that is a joint issue between Reveal and TSA and where they are at in their development process and where they are through the testing process with TSA. Mr. Costello. Mr. Chairman, I have no further questions, but I would like to give each of our witnesses the opportunity to make a final comment, very brief comment at this time, if any of them would care to. Mr. Kuhl. Do any of the panelists wish to make a final comment? Mr. Ellenbogen. No, sir. Mr. Kuhl. Dr. Null? Mr. Null. No, sir. Mr. Kuhl. Mr. Britz? Ms. Baer? Well, on behalf of the Chairman, thank you for coming and participating. I know the information that you have provided will be helpful as we move ahead in this Subcommittee. So I appreciate your coming and participating again. And Mr. Ellenbogen, I think you are staying for the next panel. A glutton for punishment, I guess. We understand that you have already submitted your one written statement, so it will not be necessary for you to retestify. Thank you for coming. We appreciate it. If we could, we will move on to the second panel. I would like to move right along, because we are getting the preliminary signals from the floor that there will be some upcoming votes in about an hour, maybe shortly before that. So at this point, if Mr. Todd Hauptli, Mr. John Wood, Mr. Louis Parker, Mr. Ellenbogen, you can retain your position right there in the center, and Mr. Tom Ripp, if they would like to take their positions. Mr. Hauptli, I think I have it here that you are the Senior Vice President of Airport Legislative Alliance, the American Association of Airport Executives and Airports Council International-North America. We appreciate your participating this afternoon. Mr. John Wood, the Chief Executive Officer, Analogic Corporation. Mr. Louis Parker, President and CEO of GE Security. And Mr. Tom Ripp, who is the President of Security and Detection Systems, L-3 Communications Corporation. Mr. Cooke, I don't have a bio on you. If you could just give me your allegiance at this point. Mr. Cooke. Yes, I am sitting in for Mr. Parker. I am President of GE Security's Homeland Protection Division. Mr. Kuhl. OK, great, and welcome. So to move right along, Mr. Hauptli, in accordance with the normal procedure, you have five minutes. We appreciate your participating. TESTIMONY OF TODD HAUPTLI, SENIOR VICE PRESIDENT, AIRPORT LEGISLATIVE ALLIANCE; JOHN W. WOOD, JR., PRESIDENT AND CHIEF EXECUTIVE OFFICER, ANALOGIC CORPORATION; DENNIS COOKE, PRESIDENT, GE SECURITY, HOMELAND PROTECTION DIVISION; THOMAS RIPP, PRESIDENT, SECURITY AND DETECTION SYSTEMS DIVISION, L-3 COMMUNICATIONS, INC. Mr. Hauptli. Thank you, Vice Chairman Kuhl. And for the record, I was laughing hard inside at your joke earlier. [Laughter.] Mr. Hauptli. I want to make one general observation and three specific recommendations. The general observation, a number of the points were already made this morning. Three hundred million more passengers coming through the system within the next decade--today we are already leaving bags behind as planes are taking off, because they are not able to get through the screening process. The Federal Government took this responsibility over and has frankly botched it. Two billion dollars has been spent on a $5 billion to $10 billion problem. And by TSA's own admission, it is 2024 at the current spend rate before we get this problem solved, which is completely unacceptable. The Federal budget process is getting in the way of real life economics. As was pointed out earlier today, anywhere from a year to three to four years is the payback period for putting in-line systems in place. Yet we don't have either the will or the resources, and it is probably a combination of both, to put these systems in place. OK, for recommendations, three. One, we need to extend and expand on the current aviation security capital fund. The $250 million that is mandatory that is guaranteed is very helpful. This Committee attempted to make that $500 million, and the Appropriations Committee bested you, unfortunately. We have to scramble every year and try to get crumbs on the table beyond that $250 million. So that program, which terminates next year, needs to be extended and strengthened. And parenthetically, I would add for the record, as we look to the FAA reauthorization bill next year, this mandatory spending issue--the guaranteed funding--it shows you how important it is to continue and strengthen the guaranteed funding in Vision 100, to make sure that the capital programs of the FAA are funded. Because otherwise they will be traded off against other transportation needs. Secondly, we need these creative financing solutions, whether it is tax credit bonds, the letter of intent program or other mechanisms; the Federal Government is not doing its job on its own. And the private sector is willing to step in and help in that regard. But we need to have some meaningful programs that will work. The TSA baggage screening investment study that Ms. Berrick and Dr. Null talked about earlier, we may see something out of that in the next few weeks. I would encourage this Committee to push hard to make sure that that study receives appropriate attention in Congress rather than simply sit on a shelf at TSA. And then finally, I think we need to modify the screening partnership program that is currently in place, to make that a more meaningful option for airports. Specifically as it relates to the subject at hand today, we need somehow to be able to capture and utilize the personnel savings from putting in-line systems in place to pay for both the initial capital investment and the debt service on putting in-line systems in. With that, I will yield back my time. Mr. Kuhl. Thank you. Mr. Wood? Mr. Wood. Thank you. On behalf of Analogic, we appreciate the chance to testify. I would like to touch on four programs. There has been considerable discussion about the Government's very large investment in in-line EDS systems and working with our partners, L-3 Communications, we have had a TSA approval of a year ago for an upgrade for these systems. We provided about half of them in U.S. use. This was certified at 600 bags per hour, which I will point out is 6 to 8 times the throughput rate that preoccupied the last panel, with a 25 percent improvement in false alarm rate. It is multi-plexed, it is networked. It provides archived bag images of every bag that goes on an airliner for a 48 hour period. Many advancements. We look forward to this being fielded. We are completing testing of this in a networked version, actually finished standalone testing. We have online networked testing underway at John Wayne Airport. We believe this is ready. And this will preserve and enhance the TSA's investment in these machines to make them continue to operate online for years to come. Moving to next generation, we have developed, with TSA support, an extra large bore machine, shown here, able to process 1,100 bags per hour. And although there is some debate as to whether the Airbus Jumbo will be widely deployed, there is no debate over the fact that passenger throughput rates are climbing. There is a need to process many more bags and larger bags. This can handle a bag up to one meter by .6 meters, the largest snowboards, golf clubs, as well as small cargo, and do this at a very high rate in a very cost effective manner. And we expect to have this at the Transportation Systems Laboratory for certification early next year. Our next challenge is to take the well proven CT Computer Tomography technique to the checkpoint, which I think everyone would agree is primitive, and that we are using the same two- dimensional x-ray techniques that were developed over 30 years ago for the hijacking crisis. Screeners are unable to find threats with this and it is very time consuming. So we have developed Cobra. It has several advantages. One, your laptop would not have to be removed from a briefcase as a traveler. Much higher throughput rate, 300 bags per hour. And we tackled what we view as a very simple problem, and that the bin handling by TSA employees. It seems ironic to us that many TSA employees at checkpoints are not really participating in the screening process, but they are hauling plastic tubs back and forth. And a relatively straightforward bin retrieval system would take care of this, in addition to providing a much higher quality screening system. We had this system installed at Logan Airport, screened 37,000 bags. There are many things that screeners at an official TSA checkpoint missed, they were doing the best they could. But with conventional, two-dimensional x-ray, you are limited in what you can do. This can be integrated into a smart checkpoint, and we are working with others to incorporate information, say, from a personnel screening system. Of course, there is talk of RFID tags, advanced techniques. And we believe that we can make the screening process much more pleasant for the traveler and provide a much more accurate screening process by using CT, so widely deployed and approved in checked baggage, and it is time to deploy that in carry-on baggage. And we have a system to do that. A lot of extensive field testing and going for certification again early next year. Again, the previous panel had a lot of discussion about the secondary airports. And we would not suggest that in-line systems are appropriate for all airports. In fact, we have been engaged with the TSA to develop a version of our Cobra machine that would handle the secondary airports, but do it at a much higher throughput rate than the existing systems, namely, 300 to 350 bags per hour, a CT based solution. It doesn't occupy much floor space, it doesn't have to go behind the scenes. And in all of these systems, I would suggest that the issue that Chairman Mica raised, the 16,800 people working in the back office, the over 40,000 screeners working combined, we offer the prospective of greatly reducing that by not requiring a screener to look at every single bag, but rather look at only the alarmed bags and clear those. So we have four programs underway. We would encourage Congress to provide TSA the funding to do the laboratory to bring these not only to the operational readiness trials, but also to bring those to implementation to provide better safety and a more economical approach to airline screening. Thank you very much. Mr. Kuhl. Thank you, Mr. Wood. Mr. Cooke? Mr. Cooke. Thank you, Mr. Chairman, Congressman Costello and members of the Subcommittee, for this opportunity to discuss the current status and the future of checked baggage screening at our Nation's airports. I will share with you GE Security's perspectives on the current deployment of EDS systems and how technology available today needs to be more widely deployed to increase efficiency, quality and security in air travel. Finally, I will discuss the need for research and development that will result in technology that significantly increases both security and productivity for the future of baggage screening. Let's start by describing the known problems in baggage screening today. This picture that we have up shows one of the many standalone lobby-based EDS systems that we have at our Country's airports today. These lobby systems require manual handling of the baggage. Their throughput is significantly lower than with in-line EDS systems. And as you can see, the process can become quite chaotic during peak load times. The process is inefficient and can lead to flight delays or bags missing planes. In fact, on a recent flight out of Washington Dulles, a pilot came on and announced to the passengers that in fact the flight would not have an on-time departure because over 3,000 bags needed to be loaded on awaiting aircraft, and their aircraft was one of those aircraft. Flight delays due to inefficient bag screening was highlighted in a 2005 Washington Post article, where a Lufthansa spokesman said that it is not uncommon for an aircraft to wait 45 minutes to an hour, waiting for the checked baggage to be loaded on. Just to put that in perspective, the cost to an airline is estimated to be $760 per minute for a wide body aircraft. That means $45,000 per hour. And then there is the additional cost of finding and delivering a delayed bag. IATA and SITA's WorldTracer service estimates that the average cost to the airline is $100 per bag. In addition, the manual loading and unloading of baggage contributes to an alarming rate that has been discussed at this Committee of injuries and associated workmen's compensation claims that the TSA is facing, which is the highest in the Federal Government. In 2007, the budget is $55 million, it is estimated, as discussed earlier. This is an increase of 40 percent in just one year. Fortunately, the industry has a solution that has been discussed for these problems, and that is in-line EDS systems. However, as this map shows, that we have put up, several of the Nation's top airports do not have letters of intent for Federal funding to implement in-line EDS systems. These include airports in New York, Washington, D.C. and Miami. There has been some progress made. This is a picture of the lobby at the San Francisco International Airport. After installing the in-line EDS system, you can see how much the lobby was improved. It is dramatic. There is no longer a bottleneck for checked bags or passengers. After installing in-line EDS systems, San Francisco saw injury claims for baggage screeners decline by 42 percent, and the total cost for workmen's compensation claims went down an amazing 77 percent. Just imagine if we had in-line systems at all of our major airports throughout the Country what could happen. Options for the future, let me transition and talk about that. The problems are likely to escalate, driven by the increased enplanements, which will further stress the inefficient processes that we have in place today. The FAA projects that we will reach 1 billion enplanements in the U.S. by 2015. The current screening systems will be overwhelmed long before this if we don't act now to fund the deployment of automated screening solutions. There is no more space for additional people or machines in lobbies. Automated technologies for improved security with less real estate and cost is the answer. Finally, I would like to talk about technology development. Technology has progressed significantly in recent years, and is poised to make great advances in the near future. Since GE last testified before this Subcommittee in 2004, we have made a number of advancements. Each step in our technology road map is upgradeable to ensure that your investments are not wasted. We recently released the CTX9400, which is currently in TSA certification. Its two major benefits include a projected 25 percent relative reduction in false positives, and a 50 percent reduction in shield alarms. And as you know, with shield alarms, they are the hardest to resolve and require opening up of the bag. The release of the CTX9800 is scheduled for 2008, and it will further increase throughput and lower operational costs. GE certified the first actual next generation EDS technology and x-ray diffraction system which automates threat resolution. Broader leaps in EDS technology are being developed through the longer range Manhattan II program. GE participates in this important DHS R&D effort. In summary, the future of checked baggage screening, passenger checkpoints, rail, public transit and other security technology applications depends on investing in a development path that leads to affordable, effective, non-intrusive security solutions. As air traffic grows, the throbbing headache that we feel today is going to become a full-blown migraine. The pain will even be felt by smaller airports due to the hub and spoke system that we have. Eventually, another terrorist event or the crushing weight of an inefficient system will force a less desirable reactive response. GE stands ready to work with the U.S. Government and all stakeholders to increase security through effective and cost-saving technology. Thank you, Mr. Chairman. Mr. Kuhl. Thank you, Mr. Cooke. Mr. Ripp. Mr. Ripp. Thank you, Mr. Chairman, members of the Committee. I am very pleased to have this opportunity to appear before you to discuss what we can do to improve passenger baggage screening. As you know, since its certification by the FAA in 1998, L-3 has been one of two suppliers to the TSA of high throughput explosive detection systems. Since that time, we have deployed over 625 systems. We are the first to go into an in-line configuration at Boston's Logan Airport, and we are the first to develop a networking capability, enabling central screening operations, all the while providing systems to the TSA for the lowest cost, lower by $300,000 versus similar systems. Rather than read my entire testimony, I would like to summarize for you what I believe to be some of the key points. First, we need to focus on detection and operational efficiency, which translates into reduced overall cost to deploy and operate. If we continue to deploy without an operational focus, the long-term costs of our Nation's aviation security infrastructure will become an overwhelming burden, which it already is. Second, a simple review of the TSA budget clearly indicates the problem areas, the people costs. The cost are high, I believe the budget has greater than $2.5 billion next year, and it will continue to grow unless security leverages the efficiency current technology is capable of providing. Third, we need to deploy more EDS systems for in-line installation. I think the number of airports with in-line EDS has been talked about here at about 23. That leaves about 80 of our Nation's largest airports with inefficient standalone installations. Both the TSA and the GAO have reported that in- line baggage screening could reduce the dependence on TSA screeners by up to 78 percent. The math is pretty simple. The sooner in-line EDS systems are implemented, the sooner the TSA can begin to save significant annual recurring costs. Fourth, currently deployed explosive detection systems are preferable to existing trace detection systems. Why? Trace detection is slower, it is labor intensive and has poorer detection capability. Again, as noted by the GAO, replacing trace detection equipment with EDS units will increase security, increase throughput and reduce the number of screeners required. Fifth, save costs and increase the value of current assets by refurbishing the older, standalone units. Why do this? These systems can be brought to as-new condition and be upgraded with the latest software releases for approximately one half the cost of purchasing a new EDS. If the TSA procures new systems for transition to the more cost-effective in-line installations, the standalone systems can then be refurbished and redeployed to those airports that are growing and require greater levels of capacity. Sixth and lastly, focus development dollars on the deployment of alternate technologies, which when added to the currently deployed systems, offer very effective paths to increased detection capabilities with much lower false alarm rates. For the most part, next generation development programs will focus on the introduction of bigger and higher throughput machines. I believe these machines will have a higher cost base and therefore a limited applicability to the general airport market worldwide. Instead, work with industry to develop lower cost alternate technology which utilizes the existing platforms as its base. The result will be cheaper and far more effective as we strive to provide more flexible capability. The bottom line is we need to more widely deploy our current technology to improve the overall level of airport security. If we simply develop bigger, faster systems, which cannot be cost effectively deployed across the majority of our air travel system, we will leave gaps that may be exploited. As an example of less than optimal approach to technology is our Nation's checkpoints. Industry continues to offer emerging technologies that when deployed, do little to improve overall detection and worse yet, slow down throughput. L-3 is creating and will pilot shortly an advanced checkpoint solution, which incorporates multiple technologies for screening of both passengers and their carry-on baggage. We have simple goals. We want to accommodate 300 plus passengers per hour in a single system that reduces screener requirements at the checkpoint by 40 percent, all with improved detection. This advanced checkpoint would screen both people and their carry-on baggage at a targeted cost of little more than the carry-on baggage screening systems currently under development. I appreciate having this opportunity to share our views, and I look forward to answering your questions. Mr. Kuhl. Thank you, Mr. Ripp. Mr. Ellenbogen, given the four previous statements, did you have anything you wanted to add before we go to questions? Mr. Ellenbogen. All I wanted to add was that Reveal was also one of TSA's two selected partners to develop carry-on baggage inspection EDS systems, under their CAMBRIA program. We will be delivering the first CT-80FX this fall, which will automatically look for explosives and weapons in carry-on baggage. We share the other witnesses' desires to improve the overall performance of our checkpoints, while reducing labor and see that as a great opportunity to do so as we move forward. What we have learned over the last few years it that stakeholders must work together. There is great advantage to be had with TSA, the airports, airlines and the manufacturers to work together to optimize these systems. I don't think we have taken advantage of all those opportunities in the past. So I appreciate the opportunity to speak here today. Mr. Kuhl. Thank you. Let me yield at this time to Mr. Costello. Mr. Costello. Thank you, Mr. Chairman. Mr. Hauptli, let me ask you, you mentioned in your written testimony about a number of in-line financing alternatives, including the reauthorization, as you mentioned in your testimony here, of the Aviation Security Capital Fund. Is it your opinion that reauthorizing the capital fund is the best and simplest and most direct alternative for financing the EDS? Mr. Hauptli. Yes, sir, and it would be optimal if it could be increased. Mr. Costello. Very good. Other than providing more funding for the in-line EDS, what are some of the other things? Is there anything else that you believe that TSA could do to get the EDS system installed? Mr. Hauptli. What can TSA do to improve the installation process? Mr. Costello. Yes, other than money and financing, what does TSA need to do in order to bring the EDS system online? Mr. Hauptli. There aren't that many problems in this area that money can't solve, Mr. Costello. Mr. Costello. So it is money? Mr. Hauptli. It is mostly money, yes, sir, resources. Again, TSA has tried, but they are within the Department of Homeland Security. The Department of Homeland Security is within the Administration. The Office of Management and Budget has put its heavy boot on TSA and TSA hasn't figured out a way to lift that off. So the LOI process has been stifled and there are a lot of airports with very much pent-up demand for systems that we are just short of funding on. Mr. Costello. Mr. Wood, what is the cost of the AN6400 field upgrade, and how much savings, in your opinion, would the TSA realize by utilizing these upgrades? Mr. Wood. We estimate the cost of the kit, Mr. Costello, at $150,000 and estimate the install cost at around $25,000. I think the answer to your second question is more difficult, because for instance, we were certified, as I mentioned, at 600 bags per hour. The question is, can the airport's baggage handling system fully take advantage of this capacity, does this allow increase or are they maxed out for other reasons. And I think it will take some field testing to see what this 25 percent in false alarm rate results in. I would say one of the key advantages is networking or multi-plexing. In other words, when an alarmed bag pops up in one EDS, that bag will be displayed in the next available screen. An if on-screen resolution is permitted, then it moves along its way. So I look forward to being able to answer that question more quantitatively. Mr. Costello. You mention in your testimony that contractual and other issues have resulted in delaying the AN6400 upgrade at John Wayne Airport. I wonder if you might elaborate on that. Mr. Wood. Yes, sir. As I mentioned, we have tested successfully in a standalone operation at the Southwest counter at the Phoenix Sky Harbor airport, but are looking forward to the TSA accelerating the implementation and the placement of a contract so that we can get four of the machines in a networked application, because well, as I mentioned, we were certified a year ago. We believe that, we expect no glitches, no bugs in the operational testing. We are ready to go. So as soon as the TSA is able to complete that testing, we believe the Government budget provides perhaps for 60 of these machines to be modified with a kit, and we understand that perhaps 150 to 200 are in in-line applications now and would greatly benefit from this upgrade. Mr. Costello. When do you expect Analogic's carry-on baggage real-time assessment, Cobra and King Cobra, to be certified? Mr. Wood. Next spring. We began this development on our own company's money. As a result of close collaboration with the TSA, we have modified it, the TSA is looking for new and additional threats, as you know. So we have made quite a number of changes. We have one of these devices at the laboratory as we speak. As I mentioned, we have screened 37,000 bags at Boston Logan Airport, and we would hope to pass the hurdle of formal certification testing early next year. Mr. Costello. Will the King Cobra fit behind the ticket counter like the Reveal CT-80? Mr. Wood. I believe it is somewhat bigger, three times the throughput rate. And so one of these machines would accommodate two or three of the existing x-ray machines, or the current version of the Reveal machine. So I would suggest, sir, that you could find a place to put it and have the same throughput rate without expanding the floor space requirements. Mr. Costello. Mr. Ripp, how many DX6000's are in existence right now, being used? Mr. Ripp. We have close to over 700 systems installed worldwide. Mr. Costello. And how many are used here in the United States? Mr. Ripp. About 625 are installed in the United States. Mr. Costello. Very good. Mr. Chairman, that is all the questions that I have at this time, thank you. Mr. Kuhl. Thank you, Mr. Costello. I don't want Mr. Ellenbogen to feel left out, so I will start with you. As you look back at your experience now, Mr. Ellenbogen, obviously you have had a little bit of trial and error through the process here of the implementation of this new kind of screening process, I am interested in what you think the Government should do differently in that experience that you had. How can we make this operation go smoother? I would just appreciate your thoughts. Mr. Ellenbogen. I would say the amount of time that it takes to go from submittal of a system into the certification and approval process, followed by actual certification into what they call FAT&E, which is first article acceptance, then into pilot, then into procurement. That cycle is long, to state it simply. So streamlining that process would certainly help every supplier at this table. Mr. Kuhl. Anything as it relates to you being a small business, in your operation, that we could do differently that would make it easier? Mr. Ellenbogen. Nothing in particular about being a smaller business. Reveal, we have been very pleased with the process we have gone through with TSA. In the last six months, we have deployed more than 60 machines. We are shipping at a rate of a dozen systems a month right now and they are going into the airports, they are being installed quickly and inexpensively, as advertised. And we believe that TSA has moved this process along very quickly. It is always too slow for a small company, but from a Government perspective, it has been lightning fast. Mr. Kuhl. I appreciate that. Mr. Ripp, let me just follow up. You had talked a little bit about refurbishment. I am interested from an economic standpoint what you see as cost savings, if you can give me some sort of an example, as we talk about taking some of the existing equipment out, refurbishing. What are we talking about as far as savings go, percentages if you have them, dollars if it is easier to explain it that way. Mr. Ripp. Sure. We have estimated if we take a system out of a standalone configuration, some of the ones that are in- line are difficult to peel out of the conveyor belt systems in place. But the standalones can be brought back, we believe we can upgrade those, worst case, for about half the cost, which is about $450,000. Right now we sell a new system for $880,000. So we estimate about half the cost. It is a mechanical upgrade, and it a software upgrade. It is important to note that software upgrades are available to also increase detection capability and lower false alarm rates now, which we could include in equipment to reduce, again, screener content. It is our thought that that equipment could then be redeployed to the mid-size airports that where capacity requirements dictate the need for a machine that can do, in standalone configuration, let's say 350 bags per hour, or in an in-line configuration, to 650. I also want to note that there are smaller airports where they hook up and connect to a very simple baggage handling system where the cost is not the millions of dollars that we heard on the earlier panels, but maybe $500,000 to $1 million just to hook up, so that the system can be fed automatically. Mr. Kuhl. OK. Do you view essentially reselling the equipment, then, after you refurbish it, to another airport? Mr. Ripp. We would envision that the TSA would then redeploy this equipment to airports that are heavily dependent upon trace or want higher throughput EDS. We have not looked at the possibility of reselling the equipment off to another vendor. One of the advantages of TSA is, of course, we could offer extending the warranties. And as was mentioned earlier, I believe, by one of the members, using the assets that have already been purchased wisely and extending their useful life. Mr. Kuhl. Good, thank you. Mr. Cooke, a question, what do you think the biggest problem or hurdle is relative to the implementation of the new technologies? Mr. Cooke. You are thinking of in-line EDS in particular, Mr. Chairman? Mr. Kuhl. That is what I am thinking, yes. Mr. Cooke. I think frankly it is financing, it is leveraging the dollars we talked about earlier. I mean, clearly, the bottleneck is getting airports ready for the equipment and the economics are staggering. So there has to be a way, and I know there is a working group looking at it, and we are participating, getting ideas through our GE capital arm, at how to finance these in-line EDS installations. Mr. Kuhl. So it is the finance side of it? That was Mr. Hauptli's comment, that there is not enough money out there for people really to make the conversion or the introduction of the equipment. Mr. Cooke. I think the business case is compelling, as everybody has talked about. It is execution now from a finance point of view. And the appropriations dollars are just not there, so let's look at financing alternatives. Mr. Kuhl. Any thoughts, given your perspective, and maybe Mr. Hauptli, you would like to jump in as a comment to Mr. Costello about financing not being enough, you talked about the $250 million levels. Is $500 million enough, or is it going to take more than that? Mr. Hauptli. Sir, it is going to take more than that. Again, the Federal Government has contributed $2 billion to this problem that ranges, estimates range from it being anywhere between $4 billion and $10 billion. So would we like to get it in billion dollar chunks? You bet. But is half a billion dollars a year better than a quarter of a billion dollars? It is a start. Mr. Kuhl. I guess my question really kind of goes to, OK, what can you spend. We could appropriate, we do it every week, practically, another $10 billion here, or whatever, for whatever purpose it may be. But often times, when we appropriate money, it just can't go out the door fast enough. So I guess the question, what I am looking really for is what level is really a good level of anticipated ability to actually expend and acquire the equipment that is necessary to process? It is like a bridge, you can only build it so fast, or a building, you can only build it so fast. So you can only spend the money so fast. Mr. Hauptli. Mr. Kuhl, I would submit to you that the companies represented at this table would have no trouble whatsoever ramping up to spend a billion dollars a year, and we could get this done in 2 to 3 years, as opposed to the next 16 years, which is the pace that we are currently on. Mr. Kuhl. OK. That is a great answer. That is what I was looking for. Mr. Wood, do you want to chip in on that one? Mr. Wood. Yes, sir, I would. Mr. Kuhl. Notice that play on words there? Mr. Wood. Yes, thank you, very good. [Laughter.] Mr. Wood. I will chip in. I would suggest that it is not necessarily new money being appropriated, but how the existing money is being spent. I believe that the Government peaked or began with 60,000 screeners shortly after 9/11, and it is now down to a little over 40,000 consuming, I believe, still close to half of the TSA's budget. I think you have heard from panelists here the prospect of greatly reducing that by automating the process, in the case of checkpoint, not looking at every single bag, sometimes with two screeners, but only the alarmed bags. So I think if you consider the life cycle costing concept, this equipment pays for itself in a very orderly basis. Mr. Kuhl. OK, good. Mr. Costello? Mr. Costello. No other questions, but I am sure the first panel would have preferred you to be in the chair instead of Mr. Mica. [Laughter.] Mr. Costello. Let me just thank the witnesses for being here today. Mr. Chairman, I have no further questions. I am sure that we will be revisiting this issue many times in the future. Thank you. Mr. Kuhl. And gentlemen, on behalf of the Chairman, let me thank you for your willingness to come and testify. Like Mr. Costello said, this issue is not totally completed at this point. There is a lot of issues and a lot of work to be done. We appreciate your willingness to help us make the right decisions. So thank you again for coming and your participation. This hearing is adjourned. [Whereupon, at 1:20 p.m., the subcommittee was adjourned.] [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]