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TheStreet Open House

5 Big Winners from TSA Security Rules

Stock quotes in this article: UIS, SI, LMT, LLL, ACN, GE, NOC, IBM, OSIS

Former officials now in business for themselves
The failure of bomb-sniffing "puffers" set the stage for the use of millimeter wave body scanners -- those X-ray machines that produce an abstract image of a "naked" passenger to search for weapons and contraband.

The American Recovery and Reinvestment Act, the stimulus package of 2010, paid for 450 scanners.

Despite protests by many travelers, the TSA has plans to greatly increase the machines' use. In May, the agency announced that Lockheed Martin had been awarded a $72 million contract "to help TSA integrate and deploy new passenger screening and security equipment at airports across the east and central United States. It includes the use of Advanced Imaging Technology equipment and software upgrades."

Irritating TSA watchdogs all the more is that a key adviser to the Department of Homeland Security is Norm Augustine, former CEO of Lockheed Martin.

It is not the first time a TSA purchase of such scanners had a familiar name behind the scenes.

Former Homeland Security secretary Michael Chertoff was an outspoken figure in calling for the need for the TSA to buy the scanners. His view, in the eyes of critics, may have had more in mind than just safe skies.

After leaving government, he became a lobbyist and founded the Chertoff Group. Among its clients was Rapiscan Systems. Owned by OSI Systems (OSIS), the company was awarded a $25.4 million contract in 2009 using Stimulus Act funds to make and install the controversial "backscatter" scanners, stealing market share away from L-3 Communications as a preferred provider.

The cost doesn't end at the equipment. According to the Government Accountability Office, the added cost of running the AITs as the agency expands their use could cost up to $2.4 billion over their expected service life.

If your company wasn't able to score a body scanner contract, you may be interested in the latest bidding process under way.

The Department of Homeland Security is seeking a vendor for a "Shoe Scanning Device ... capable of detecting threat objects concealed in footwear without requiring passengers to remove their footwear."

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