Federal auditors say the prime contractor on a $1 billion technology contract to improve the nation's transportation security system overbilled taxpayers for as much as 171,000 hours' worth of labor and overtime by charging up to $131 an hour for employees who were paid less than half that amount.
Three years ago, the Transportation Security Administration hired Unisys Corp. to create a state-of-the-art computer network linking thousands of federal employees at hundreds of airports to the TSA's high-tech security centers.
The project is costing more than double the anticipated amount per month, and the network is far from complete -- nearly half of the nation's airports have yet to be upgraded. Government officials said last week that the initial $1 billion contract ceiling was only a starting point for the project, which they recently said could end up costing $3 billion.
Procurement specialists said the Unisys contract illustrates the pitfalls of relying on corporations to manage ambitious homeland security contracts with little oversight from a thinly stretched federal procurement force. Since the Sept. 11, 2001, terrorist attacks, several projects have experienced similar problems with cost and performance, including efforts to hire federal airline passenger screeners and to place bomb detectors and radiation monitors at airports and seaports.
In two reviews conducted last year, federal auditors found that Unisys charged higher per-hour labor rates than were justified for lower-level employees, according to copies of the audits obtained by The Washington Post. For example, Unisys billed taxpayers $131.12 an hour for a technical writer who should have made no more than $46.43 an hour. The extra money was generally not passed along to the employees but was kept by the company.
Last spring, the auditors referred findings of "suspected irregularity" to the Office of the Inspector General at the Homeland Security Department, which includes the TSA, according to copies of the audits and referral.
The contract is under review for possible violations of the federal False Claims Act, according to documents and interviews. A spokeswoman for the inspector general's office declined to comment.
"There certainly was no attempt here to commit any type of misdeed of any form," said Tom Conaway, managing partner of homeland security for Unisys who is overseeing the contract.
Unisys of Blue Bell, Pa., inappropriately charged some of the highest rates possible under the contract by labeling lower-level employees as experts in their fields, the auditors found. Unisys said the employees' experience and responsibilities merited the higher rates.
At the same time, the auditors discovered that timesheets were repeatedly adjusted to change job and labor categories long after the work was performed without "adequate explanations," the auditors said.
"We found significant internal control weaknesses regarding the reliability of the recorded labor hours," said auditors from the Defense Contract Audit Agency, which was hired by the TSA last year to examine the Unisys contract. "We were unable to quantify the impact of the adjustments due to the lack of verifiable documentation."
The TSA has not publicly released the audits. The Post obtained copies independently.
Conaway acknowledged that Unisys had problems with its internal financial controls. He also said that employees miscoded timesheets and that mistakes were not caught until months later because the company was pushing to meet the demands of the contract.
"Our discipline on some of our internal processes lapsed a little bit," he said.
Conaway said the company, in partnership with the TSA, has since begun a new program, "Project Bedrock," to improve oversight and resolve questions raised by the audits, including a plan to review all of the labor hours billed under the contract. He also disputed the audit findings on the overtime.