TSA and Rapiscan end contract for full body scanner

Secure 1000SP

Rapiscan Systems and TSA have ended the contract for the company’s Secure 1000SP Advanced Imaging Technology (AIT) systems and Automated Target Recognition (ATR) software.

Rapiscan’s parent company, Hawthorne, CA-based OSI Systems said it had reached an agreement with TSA concerning the controversial backscatter systems, concluding their use because the Secure 1000SP wouldn’t be ready to meet the next level of ATR software in time for a congressionally-mandated June 2013 deadline. TSA had asked the company to come up with a way for the machines to display less graphic X-ray-like images of scanned subjects.

Critics have called the backscatter system the “naked scanner” because of the images it produced of people passing through it. Scanning technology that uses radio waves to detect objects and then displays the results in a generic human outline have been deployed by TSA.

"TSA has strict requirements that all vendors must meet for security effectiveness and efficiency since the use of this technology is critical to TSA’s efforts to keep the traveling public safe," the TSA said in a statement.

The agreement relates to the contract underlying the issues raised in a "show cause" letter delivered by the TSA on November 9, 2012, said the company.

"We are pleased to reach a mutually satisfactory agreement with the TSA," OSI Systems president and chief executive officer, Deepak Chopra, said in a Jan. 17 statement. Chopra said the company has had a close current working relationship with TSA which would continue as it provides more technologies and services to the agency.

OSI said TSA plans to deploy these systems, with Rapiscan's assistance, to U.S. government agencies that already rely on the Secure 1000 product line or can enhance their security programs with the Secure 1000SP. According to OSI, the agreement enables the U.S. government to continue to benefit from the investments made by TSA, but will allow TSA to meet the congressional ATR mandate. The agreement results in the mutually-agreed conclusion of ATR software development for the Secure 1000SP, but continues Rapiscan's overall contract with TSA for AIT systems, it said.

Under Rapiscan's contract to provide AIT systems, OSI said it didn’t sell any AIT units to the TSA in fiscal 2012 or fiscal 2013 and had approximately $5 million of ATR software development backlog as of September 30, 2012, which will be de-booked. OSI added that it expects to report a related $2.7 million one-time impairment and other charge in the quarter ended December 31, 2012.

While OSI said it reached agreement with the TSA regarding the AIT/ATR contract, final resolution of the "show cause" letter is subject to Department of Homeland Security disposition and is currently working to complete that process.