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OSI Systems plunges 34%, TSA wants to debar Rapiscan from contracts

OSI Systems' (OSIS -33.6%) shares plummet after news breaks that the company may face a ban on contracts with the DHS after its Rapiscan Systems subsidiary lost a contract from the TSA for carry-on baggage screeners.

The fiasco began on Friday, with OSI using a Chinese part without receiving consent from the TSA, which led to the department pulling the rug out from a $60M contract OSI won weeks ago.

The company is no stranger to government contract trouble, with Rapiscan averting debarment by the DHS last year over accusations that it had misled the TSA about testing of its body-scanning machines.

There is market chatter that Benchmark is out defending the company, calling the meltdown an overreaction.

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