OSI Systems issues public announcement on TSA order withdrawal

OSI Systems (OSIS +0.8%) releases a public announcement on the TSA's $60M order cancellation: it believes the termination "results from Rapidscan's use of an upgraded component in the AT-2 detection systems. ... it did not meet the contractual approval requirement of obtaining TSA's approval in advance ... When Rapsican leadership discovered the error, they proactively informed the TSA of the configuration change."

The X-ray generators are produced by Shanghai Advanced Non-Destructive Testing, which "According to the TSA's own preliminary test results ... shows comparable detection capability and false alarm rates."

Shares tumbled 9.4% last Friday when the disclosure of the contract cancellation first hit. The TSA intends to issue a revised solicitation for the contract.

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