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Online Extras: News to Note

January 20, 2013

Naked-image scanners to be removed from U.S. airports

WASHINGTON — The Transportation Security Administration will remove airport body scanners that privacy advocates likened to strip searches after OSI Systems Inc. couldn't write software to make passenger images less revealing.

TSA will end a $5 million contract with OSI's Rapiscan unit for the software after Administrator John Pistole concluded the company couldn't meet a congressional deadline to produce generic passenger images, agency officials said in interviews.

The agency removed 76 of the machines from busier U.S. airports last year. It will now get rid of the remaining 174 Rapiscan machines, with the company absorbing the cost, said Karen Shelton Waters, the agency's assistant administrator for acquisitions. The TSA will instead use 60 machines manufactured by L-3 Communications Holdings, the agency's other supplier of body scanners.

"It became clear to TSA they would be unable to meet our timeline," Waters said. "As a result of that, we terminated the contract for the convenience of the government."

The decision to cancel the Rapiscan software contract and remove its scanners wasn't related to an agency probe of whether the company faked testing data on the software fix, Waters said.

In November, Rep. Mike Rogers, then chairman of the House Transportation Security subcommittee, wrote in a letter to Pistole that the company "may have attempted to defraud the government by knowingly manipulating an operational test." Rogers, an Alabama Republican, said the panel had received a tip about falsified tests.

Rapiscan has denied manipulating data or information related to the reviews.

OSI Systems is "pleased to reach a mutually satisfactory agreement with the TSA" that will involve moving the machines to other government agencies, Chief Executive Officer Deepak Chopra said in a statement. The company, based in Hawthorne, Calif., said it expects to report a $2.7 million one-time charge during the quarter that ended Dec. 31.

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