Turning Around a Failing National Credentialing Program

The Full Story

TWIC was the toughest operational turnaround I ever led. The Transportation Worker Identification Credential program was a federal security initiative for port workers and others who needed access to secure maritime facilities. The first enrollment surge alone covered roughly 300,000 workers, and the program would continue from there with new hires, renewals, and normal turnover — projected to reach around a million enrollments over five years. The geography was as difficult as the volume. Coverage was required near more than a hundred ports, not just in the continental United States but also in Alaska, Hawaii, Puerto Rico, the Virgin Islands, American Samoa, and other outlying locations, often with the requirement to have a center within five miles of the port itself.

IBT had bid for the work and lost. My view then and now is that TSA simply wasn't willing to award a program of that size to a company as small as IBT, regardless of how well suited the operating model was. We had built the fingerprinting services model from scratch, were already running HazPrint for TSA, and understood distributed enrollment networks and the economics of transaction-based delivery better than anyone else in the market. The prime contractor that won had the brand and the scale that looked safe to a new government program office. They got the contract, and we filed a formal protest.

When the protest failed the matter escalated further — not a small decision, since we were already doing business with TSA on HazPrint and challenging the same customer on a second program carried real risk to that relationship. But the belief that the award was wrong ran deep, and L-1 had strategic reasons to fight for a role on a large federal program. There was a settlement effort to bring IBT onto the winning team as a subcontractor, but it didn't succeed, as the winning prime contractor believed they could stand up the program on their own.

It didn't take long for the cracks to show. Although they were getting paid per transaction, the contractor didn't understand the business and built the program wrong, with large fixed-cost structures — subcontractors leasing offices around the country, multiple labor suppliers providing hourly staff, people standing in fixed locations drawing pay whether volume was there or not. Their model was viable during the early enrollment surge, but in the long run it was a loser. An executive at the prime contractor later told me, over a beer, that they were losing about three million dollars a month. The number made sense. The applicant's fee of $137 had to be shared with government fees, vetting costs, FBI charges, and program overhead, leaving the operator's actual per-enrollment revenue far smaller. At steady-state volumes, a fixed-cost model built around leased offices and hourly employees was financially unworkable.

Eventually the prime contractor came back to the table, serious about bringing us on board this time. The negotiation was very difficult. I represented IBT and L-1 through the discussions, establishing our position with Charlie Carroll and taking it back into calls where there were five or six executives from the prime and me. Our position was clear: we were not so hungry as to come back and lose money on their behalf. Our number was about twice what they had in mind, because we knew what it would take to support a real operating model. The prime didn't like it and went to L-1's CEO to complain. But we held on the price and only offered minor movement on the edges, so the other side could say they had some wins. The core economics stayed intact.

The negotiation ran for months, working through performance guarantees, subcontract terms, transition timelines, and a hundred pages of complexity. The prime had made commitments to TSA it wasn't meeting, TSA was sending formal letters and applying increasing pressure, and the prime needed the bleeding to stop. Eventually we reached agreement and the real work began.

What we inherited wasn't a program we could simply operate. It was a program we had to rebuild from the inside while it stayed live. The prime's subcontracts were novated over to us, meaning the companies they had hired now worked for us contractually. I had to assess each one: which offered any continuing value, which needed to be unwound. Most didn't fit what we were trying to build. A labor provider supplying hourly staff in a leased office was the opposite of our model. We had spent years proving that the right answer was a distributed partner network — small businesses with existing storefronts and existing staff who could add fingerprinting as one more service, paid per transaction, with IBT providing equipment, training, software, support, marketing, and program management. That model aligned cost directly with demand. When nobody enrolled, we had no cost.

But we couldn't just flip a switch. The program was live every day. Port workers still had to enroll, TSA still had obligations to meet, and the prime still had commitments to fulfill. The scheduling website still had to route applicants somewhere real. I described it at the time as changing the engine on the airplane while it was flying — because that was exactly what it felt like.

For every city in the network, the same set of questions had to be answered: did we have a partner nearby who met the requirements — right distance from the port, ADA-compliant facility, capable of handling the volume, solid management and staff, acceptable to TSA? If not, we had to find one. That triggered a nationwide partner recruitment effort, not just in convenient urban locations but in port cities, outlying areas, and places where a suitable business district simply didn't exist five miles from the water. Sometimes we had to go back to the prime and TSA to ask for practical relief on the distance requirement. We built dedicated teams around every thread of the transition: lease terminations, partner recruitment, equipment deployment, site training, TSA coordination, scheduling-system updates, and call-center scripting. Each cutover had to be staged carefully — the website updated, customer service briefed, the old arrangement wound down without leaving a gap in service. That process repeated across something like 150 to 200 locations.

Internally the pressure never eased. Every month that parts of the old cost structure remained in place was another month of red ink, and we had to explain internally why certain checks still had to be written — this lease isn't out until March, this labor arrangement can't be cut until the replacement site is certified, this location is still waiting on TSA approval — all while driving the spend down as fast as operational reality allowed. Unreliable internal financial reporting made that harder. The numbers shifted without warning, and I got blindsided more than once by a worse picture than I'd been given. There wasn't much room to play defense. The only real solution was forward motion: keep replacing the old structure, keep cutting over locations, keep reducing fixed costs, keep pushing the whole system toward the partner model.

As partner locations came online and the legacy arrangements came down, the economics improved. Within roughly six months the program reached break-even. About three months after that, it was profitable. And it became calm. A failing federal program is a noisy thing — the customer is angry, the prime is exposed, the subcontractors are nervous, and every weekly review feels like a courtroom. A stable program gets quiet. TSA settled down. The prime stopped bleeding. The new operating model made sense for everyone, and the program that had been generating formal non-performance letters approached routine. That was the real achievement: a broken operating model replaced by a working one while the program stayed live every single day. Applicants kept enrolling, ports kept functioning, and TSA avoided what could have become a significant political problem.

Later, when TSA moved toward Universal Enrollment Services — a consolidation of HazPrint, TWIC, and other enrollment populations under one broader program structure — TWIC was part of the platform we stood on. By then we weren't outsiders arguing that we could do the work. We were the people already doing it. The prime contractor that had won TWIC and then needed to be rescued eventually approached me about serving as a subcontractor on my next bid. That reversal said everything about how the program had turned out.

TWIC stays with me because there were so many hard things at the same time: negotiation, financial restructuring, customer recovery, political risk, labor and facility problems, and a nationwide operational rebuild — all running concurrently, without the option of taking the service offline for even one day.