Los Angeles Business Journal

TSA Cancels OSI Deal for Baggage Scanners

By Deborah Crowe Friday, December 6, 2013

Shares of OSI Systems Inc. fell nearly 10 percent on Friday after the company announced that the U.S. Transportation Security Administration canceled a $60 million order for its airport screening machines.

The TSA terminated a Sept. 26 contract for the Hawthorne manufacturer’s carry-on baggage screening equipment for default, the company said. The agency indicated that it will issue a revised solicitation for the systems, made by OSI subsidiary Rapiscan Systems.

OSI’s passenger-screening machines -- called “naked scanners” by critics – had earlier been removed from U.S. airports after the TSA said the company wouldn’t meet a government deadline to obscure the images.

Shares closed down $6.97, or 9.7 percent, to $64.75 on the Nasdaq.