TSA to remove controversial X-ray scanners

By JOSHUA FREED | AP Business Writer

Those airport scanners with their all-too revealing body images will soon be going away.

The Transportation Security Administration says the X-ray scanners will be gone by June because the company that makes them can't fix the privacy issues. The other airport body scanners, which produce a generic outline instead of a naked image, are staying.

The government rapidly stepped up its use of body scanners after a man snuck explosives onto a flight bound for Detroit on Christmas day in 2009.

At first, both types of scanners showed travelers naked. The idea was that security workers could spot both metallic objects like guns as well as non-metallic items such as plastic explosives. They also showed every other detail of the passenger's body, too.

The TSA defended the scanners, saying the images couldn't be stored and were seen only by a security worker who didn't interact with the passenger. But the scans still raised privacy concerns. Congress ordered that the scanners either produce a more generic image or be removed by June.

On Thursday Rapiscan, the maker of the X-ray scanner, acknowledged that it wouldn't be able to meet the June deadline. The TSA said Friday that it ended its contract with Rapiscan.

The agency's statement also said the remaining scanners will move travelers through more quickly, meaning faster lanes at the airport. Those scanners, made by L-3 Communications, used millimeter waves to make an image. The company was able to come up with software that no longer produced a naked image of a traveler's body.

Rapiscan parent company OSI Systems Inc. said it will help the TSA move the scanners to other undisclosed government agencies. Scanners are often used in prisons or on military bases where privacy is not a concern.

OSI said it will maintain a scanner contract with the TSA, but would take a one-time charge of $2.7 million.

The contract to change the software on the scanners came under scrutiny in November when the TSA delivered a "show cause" letter to the company looking into allegations that it falsified test data, which the company denied. On Thursday it said final resolution of that issue needs approval by the Department of Homeland Security.

The agreement with the TSA is an indication that OSI Systems will be cleared of the issues raised by the agency, Roth Capital Partners analyst Jeff Martin wrote on Friday. OSI shares jumped $2.79, or 4.1 percent, to $70.44.

Besides the scanners being dropped by TSA, Hawthorne, Calif.-based OSI Systems makes other passenger scanners used in other countries, as well as luggage scanners and medical scanners.