Privatize a little, fix a little: Why Trump’s TSA contracting plan is not meaningful privatization

If this latest Department of Homeland Security (DHS) shutdown has confirmed anything, it is how deeply structural the drawbacks of the Transportation Security Administration (TSA) truly are. As TSA funding lapsed, security lines stretched for hours, TSA officers went unpaid, and hundreds of TSA staff quit. Yet the airport screening system showed no way of adapting or improving as the DHS shutdown persisted.

In the proposed FY 2027 DHS budget, the Trump administration presented a partial fix. If enacted, this budget would eliminate 4,528 TSA personnel whose jobs will be performed by private contractors. TSA will hire these private screeners under the Screening Partnership Program (SPP), a step towards privatization.

However, without changing the incentives that drive performance, this move will be a modest success at best. At worst, it will be a cosmetic change that bypasses the opportunity for true airport security reform.

The SPP: Privatized in name, under TSA control in practice

The SPP is often cited as the federal government’s primary post-9/11 experiment with privatized aviation security. There are nearly two dozen airports that are under the SPP program, including San Francisco and Kansas City. The program is a case study in how government contracting for services comes up short as compared with true privatization.

Airports cannot simply opt into the SPP because there is a comprehensive application process. They have to apply to the TSA, undergo a federal review process, and then navigate a federal contracting cycle before private screening can begin. Under the TSA’s timeline the process can stretch to 300 days from application to implementation.

On the private contractor side, access to SPP work is restricted. Only firms that have already secured a spot on the TSA’s SPP contract vehicle may compete for SPP work. While the TSA technically retains the authority to admit new vendors, the system functions as a closed pool of pre-approved contractors in practice because adding new entrants is slow, rare, and administratively burdensome.

This means that competition is limited to those already eligible for the contract vehicle, and that pricing is constrained by government-set ceilings rather than true market forces. Contractors bear little financial risk, while any efficiency gains largely accrue to the government, not the operator. This structure blunts the very incentives privatization is meant to unleash.

TSA also continues to set screening procedures, approve technology, and oversee day-to-day operations. Contractors must follow agency-mandated protocols, use TSA-approved equipment, and submit to continual monitoring by the Federal Security Director. If a contractor identifies a faster or cheaper method, implementing it requires federal approval, which is slow and uncertain. As a result, contractors are paid to replicate government processes instead of competing or experimenting to deliver better outcomes.

Even with these limitations, the SPP is not without merit. Contractors have more flexibility in managing day-to-day operations, which can ease bottlenecks and improve passenger flow. These small efficiencies show that private management can outperform centralized TSA operations in specific contexts.

Yet these gains are localized and constrained. The procedures, technology, and oversight remain firmly under the domain of the TSA. This setup leaves the incentive structure largely bureaucratic in nature. The SPP is privatization in name only. It stops far short of the efficiency and accountability that true privatization would provide.

Trump’s illusion of a leaner TSA

The limitations of the SPP highlight why partial privatization cannot deliver system-wide reform, and the Trump FY 2027 budget reinforces that reality. This proposal targets small airports with the promise of $52 million in savings and a reduction of 4,528 TSA full-time equivalent (FTE) positions through expanded private screening. Compared with the $11.7 billion proposed TSA budget, these savings are relatively modest.

Most of the FTE reductions presumably reflect shifting federal employees to contractors, not eliminating positions or workload. The shift will save roughly $11,000 per FTE eliminated, indicating this reform is largely an accounting reclassification rather than a meaningful reduction in total screening costs. This result is unsurprising since SPP contracts are legally required to be cost-neutral, which is to say that private screening cannot exceed what the TSA would spend itself.

Small airports are particularly unlikely to see any large gains. Limited competition in the bidding process, federal procurement hurdles, and scale constraints mean that contractors have little incentive or ability to innovate. Pricing remains capped by government rules, and efficiency improvements primarily benefit the government rather than operators. Even if SPP expansion marginally succeeds at a handful of airports, the program’s strict federal oversight and procedural constraints limit the potential for significant efficiency gains.

The TSA needs more than a band-aid

The expanded SPP proposal highlights that contracting for private-sector security is an improvement over the status quo but is also insufficient. Restricted competition, costneutral pricing, and continued TSA control over procedures, technology, and oversight all act as obstacles to producing meaningful gains. As previously discussed in this blog, the real problems with TSA stem from poor incentives and centralized control.

True reform requires moving beyond government-managed contracts toward a genuine market framework in which operators assume risk, compete openly, and innovate to improve performance. Full privatization of aviation security would align incentives with outcomes, deliver accountability, and unleash the competitive pressures necessary to drive sustained improvements.

The government can move around contracts and FTEs to its heart’s content. However, real performance gains will not happen until airport security operators truly have skin in the game.