Department of State Contract for Security Installation at Embassies
Highlights
In March 2003, the Department of State (State) awarded a sole-source contract to EmbSEC, a Virginia limited liability corporation, for work at U.S. embassies. The contract currently has a ceiling price of $354 million. The contractor is required to install and maintain technical security equipment, such as alarms, cameras, and controlled-access equipment; establish X-ray capability for special projects; and maintain and repair physical security products. The contractor also procures equipment and materials and operates the warehouse where they are stored. EmbSEC was created as a joint venture, mentor/protege partnership under the Small Business Administration's (SBA) 8(a) business development program. A joint venture in the 8(a) program is an agreement between an 8(a) participant and one or more businesses to work together on a specific 8(a) contract. SBA regulations state that the purpose of the mentor/protege relationship is to enhance the capabilities of the protege and to improve its ability to successfully compete for contracts. The EmbSEC joint venture is comprised of RDR, Inc., the mentor, and BP International (BPI), the protege, an 8(a) firm at the time the contract was awarded. The terms of the EmbSEC joint venture state that RDR will perform operations support, database development, and security system design and installation under the contract, in addition to performing administrative services under the joint venture, such as accounting and contract administration. BPI is to provide program management, warehousing, computer resource, and procurement services. EmbSEC's only source of revenue is its contract with State. We received a tip on our fraud hotline regarding the EmbSEC contract. The objectives of our review, conducted under the authority of the Comptroller General to conduct evaluations on his own initiative, were to determine (1) the basis for awarding the contract without competition, (2) the effect of treating travel costs, which comprise a large portion of contract costs, as firm, fixed-price, and (3) whether contract administration is being effectively carried out. We are sending a separate management letter to the Administrator of the Small Business Administration (SBA) regarding this contract.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Office of the Under Secretary for Management | To help manage risk under this contract, the Under Secretary for Management should direct the Director of the Bureau of Overseas Buildings Operations (OBO) and the Assistant Secretary for Administration to compete the requirement at the earliest feasible opportunity. |
Closed – Implemented
The State Department concurred with our recommendation and in August, 2007, the Department competitively awarded four contracts to four small businesses to provide these services.
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| Office of the Under Secretary for Management | To help manage risk under this contract, the Under Secretary for Management should direct the Director of the Bureau of OBO and the Assistant Secretary for Administration to closely monitor travel expenses incurred by the contractor, and take necessary steps to promptly recover unused travel funds after task order completion. |
Closed – Implemented
The State Department noted that it continues to closely evaluate travel costs proposed by the contractor and added a contract clause into the contract that allows the government to recover unexpended travel funds after work is completed. The contracting officer communicated with the contractor to obtain either a deobligation proposal in accordance with the added clause or a certification from the contractor that all trips were taken as awarded on the delivery order. The contracting officer has scheduled a review of travel costs every 30 days until the end of the contract.
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| Office of the Under Secretary for Management | To help manage risk under this contract, the Under Secretary for Management should direct the Director of the Bureau of OBO and the Assistant Secretary for Administration to reevaluate the contract type, in light of unpredictable travel costs. |
Closed – Implemented
In August, 2007, the State Department awarded four contracts to four small businesses to provide these services and let the old contract for these services expire. In the new contracts, task orders are to be issued on a firm fixed price basis, however the travel expenses are cost reimbursable line items. This is a change from the previous contract where travel expenses were firm fixed price.
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| Office of the Under Secretary for Management | To help manage risk under this contract, the Under Secretary for Management should direct the Director of the Bureau of OBO and the Assistant Secretary for Administration to assess the workload of the contracting office to determine whether changes are needed to keep up with the contract administration workload, including timely definitization of contract actions. |
Closed – Implemented
State Department officials noted that the department continuously assesses the workload and reassigns human resources as necessary; however, there are a finite number of resources available. They noted the overall shortage of contracting staff. For this contract, they explained that the contracting officer has worked to reduce the backlog of undefinitized actions and the number of old actions, and does not approve any new Notices to Proceed.
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| Office of the Under Secretary for Management | To help manage risk under this contract, the Under Secretary for Management should direct the Director of the Bureau of OBO and the Assistant Secretary for Administration to delete reference to the improper September 19, 2001 blanket waiver from State's acquisition regulation. |
Closed – Implemented
State Department officials told us that they were in the process of changing the regulations. 1/10/08 update: The regulations have been changed. The section that referred to the waiver-- section 619.805-2(2)-- has been deleted.
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