This is the accessible text file for GAO report number GAO-06-284 
entitled 'Contract Security Guards: Army's Guard Program Requires 
Greater Oversight and Reassessment of Acquisition Approach' which was 
released on April 4, 2006. 

This text file was formatted by the U.S. Government Accountability 
Office (GAO) to be accessible to users with visual impairments, as part 
of a longer term project to improve GAO products' accessibility. Every 
attempt has been made to maintain the structural and data integrity of 
the original printed product. Accessibility features, such as text 
descriptions of tables, consecutively numbered footnotes placed at the 
end of the file, and the text of agency comment letters, are provided 
but may not exactly duplicate the presentation or format of the printed 
version. The portable document format (PDF) file is an exact electronic 
replica of the printed version. We welcome your feedback. Please E-mail 
your comments regarding the contents or accessibility features of this 
document to Webmaster@gao.gov. 

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. It may be reproduced and distributed 
in its entirety without further permission from GAO. Because this work 
may contain copyrighted images or other material, permission from the 
copyright holder may be necessary if you wish to reproduce this 
material separately. 

Report to Congressional Requesters: 

United States Government Accountability Office: 

GAO: 

April 2006: 

Contract Security Guards: 

Army's Guard Program Requires Greater Oversight and Reassessment of 
Acquisition Approach: 

GAO-06-284: 

GAO Highlights: 

Highlights of GAO-06-284, a report to congressional requesters: 

Why GAO Did This Study: 

Following the terrorist attacks of September 11, 2001, increased 
security requirements and a significant number of active duty and 
reserve personnel sent overseas to support the war on terror left the 
Department of Defense (DOD) with fewer military personnel to rely on to 
protect domestic installations. To correct this shortage, Congress is 
temporarily allowing DOD to use contract security guards to fulfill 
roles previously performed by military employees. The U.S. Army has 
awarded contracts worth nearly $733 million to acquire contract guards 
at 57 Army installations, an investment far greater than those made by 
other DOD services so far. 

The requesters asked GAO to assess how the Army has been managing and 
overseeing its acquisition of security guard services, particularly 
with regard to the Army’s (1) acquisition strategy, (2) employment 
screening, (3) training of contract guards, and (4) award fee process. 
This report also discusses DOD’s mandated November 2005 report to 
Congress on the contract guard program. 

What GAO Found: 

The Army’s three-phased approach for acquiring contract security guards 
has relied heavily on sole-source contracts, despite the Army’s 
recognition early on that it was paying considerably more for its sole-
source contracts than for those awarded competitively. The Army has 
devoted twice as many contract dollars—nearly $495 million—to its sole-
source contracts as to its competed contracts and has placed contract 
security guards at 46 out of 57 installations through sole-sourcing. 
These sole-source contracts were awarded to two Alaska Native 
corporation firms under the Small Business Administration’s 8(a) 
Business Development Program. Congress has provided these firms with 
special advantages in the 8(a) program. During initial planning, the 
Army worked with a contractor who had not performed guard services 
before to refine the contract performance work statement. 

The Army’s procedure for screening prospective contract guards is 
inadequate and puts the Army at risk of having ineligible guards 
protecting installation gates. The Army found that, at two separate 
installations, a total of 89 guards were put to work even though they 
had records relating to criminal offenses, including cases that 
involved assault and other felonies. Thorough background checks lag far 
behind the rate at which contract guards are put to work, and the 
initial screening process relies on prospective guards to be honest 
when filling out job application forms. In response to an earlier GAO 
report, DOD agreed to revise its antiterrorism standards to put into 
place a better mechanism for verifying the trustworthiness of 
contractors. 

The Army has given its contractors the responsibility to conduct most 
of the training of contract guards, and the Army cannot say with 
certainty whether training is actually taking place and whether it is 
being conducted according to approved criteria. GAO found that there is 
no requirement for the Army to certify that a contract guard has 
completed required training and that Army performance monitors do not 
conduct oversight of training as a matter of course. GAO also found 
missing or incomplete training records at several installations. At 
three installations, guards were certified by the contractor before 
training had been completed. An investigation discovered that at one 
installation, contractor personnel had falsified training records; the 
Army subsequently paid the contractor over $7,000 to re-qualify the 
guards. 

The Army has paid out more than $18 million in award fees, but the fees 
are based only on compliance with basic contractual requirements, not 
for above-and-beyond performance. Over the life of the contract guard 
program, the Army has paid out almost 98 percent of the available award 
fees. The practice of routinely paying contractors nearly the entire 
available award fee has created an environment in which the contractors 
expect to receive most of the available fee, regardless of acquisition 
outcomes. GAO found that many Army performance monitors were not 
conducting all of the required inspections of contractor activity in 
order to rate performance. 

What GAO Recommends: 

GAO made recommendations to the Secretary of Defense to improve 
management and oversight of the contract security guard program. In 
written comments on a draft of this report, DOD agreed with the 
recommendations and stated that the Department of Army is implementing 
them. 

www.gao.gov/cgi-bin/getrpt?GAO-06-284. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Katherine V. Schinasi at 
(202) 512-4841 or schinasik@gao.gov. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

Army's Approach for Acquiring Contract Security Guards Relies Mostly on 
8(a) Sole-Source Contracts: 

Army Procedures Do Not Provide Assurance That Contract Security Guards 
Are Adequately Screened: 

Lax Oversight and Training Irregularities Raise Doubts About the 
Adequacy of the Guards' Training: 

Continued Need for Award Fees Is Questionable: 

DOD Report to Congress Does Not Address Some Key Issues Pertaining to 
the Army's Guard Program: 

Conclusion: 

Recommendations: 

Agency Comments: 

Appendix I: Scope and Methodology: 

Appendix II: List of Army Installations Using Contract Security Guards: 

Appendix III: Agency Comments: 

Tables: 

Table 1: Overview of the Army's Three-Phased Approach for Hiring 
Contract Security Guards: 

Table 2: Army's Three-Phased Acquisition Approach: 

Table 3: Highlights of Activities Required under Army's Two-Part 
Screening Process: 

Table 4: Contractors' Training Requirements: 

Table 5: Criteria Used to Evaluate Contractors' Performance: 

Table 6: Evaluations and Percentage of Fees Authorized as of February 
1, 2006: 

Figures: 

Figure 1: Number of Installations with Guards Obtained under Each 
Phase: 

Figure 2: Comparison of Contract Security Guard Award Fees Authorized 
and Not Earned as of February 1, 2006 (dollars in millions): 

Abbreviations: 

ACA: Army Contracting Agency: 

ANC: Alaska Native corporation: 

DOD: Department of Defense: 

GSA: General Services Administration: 

IMA: Installation Management Agency: 

NCIC: National Crime Information Center: 

SBA: Small Business Administration: 

United States Government Accountability Office: 

Washington, DC 20548: 

April 3, 2006: 

The Honorable Ike Skelton: 
Ranking Minority Member: 
Committee on Armed Services: 
House of Representatives: 

The Honorable Lane Evans: 
House of Representatives: 

In the aftermath of the September 11, 2001, attacks, the Department of 
Defense (DOD) sent numerous active-duty, U.S.-based personnel to 
Afghanistan, Iraq, and other destinations to support the global war on 
terror. These deployments depleted the pool of military security guards 
at a time when DOD was faced with increased security functions at its 
U.S. installations. To ease this imbalance, Congress temporarily 
authorized DOD to waive a prohibition against the use of contract 
security guards at domestic military installations. Subsequently, DOD 
has turned to contractors to help fulfill the security guard function 
at a growing number of installations. We recently reported that the 
government's increasing reliance on contractors for missions previously 
performed by government employees highlights the need for sound 
planning and contract execution.[Footnote 1] 

The congressional authority allowing DOD to hire contract guards 
initially was to expire in December 2005, but Congress extended the 
waiver authority through September 2006, on the condition that DOD 
submit a report to Congress addressing various aspects of the security 
guard program. DOD submitted the report in November 2005. The National 
Defense Authorization Act for Fiscal Year 2006 has further extended the 
waiver authority through September 2007. The Army, the first service to 
use the authority, has awarded contracts worth nearly $733 million to 
acquire contract guards at 57 installations. We were asked to assess 
how the Army has been managing and overseeing its acquisition of 
security guard services. Specifically, we determined (1) what 
acquisition approach the Army used, (2) whether the Army ensures that 
the guards are effectively screened for employment, (3) whether the 
Army ensures the guards are adequately trained, and (4) the Army's 
rationale for providing the contractors with award fees and how the 
award fee process is being implemented. This report also discusses 
DOD's November 2005 report to Congress. 

To address these objectives, we obtained and analyzed key documents, 
including Army and contractor policies, procedures, and records, as 
well as policies and procedures followed by the U.S. Air Force and the 
Department of Homeland Security's Federal Protective Service for their 
contract security guards. We selected 11 Army installations to visit by 
(1) ensuring that each of the Army's security guard contractors were 
included and (2) choosing installations that represented a range of 
contractor performance evaluation outcomes, from perfect scores to 
lower average scores (according to March/April 2005 Army 
assessments).[Footnote 2] These installations are cited in appendix II. 
In addition, we met with officials at the Army's Installation 
Management Agency, the Army's Office of the Provost Marshal General, 
and the Army Contracting Agency. We also met with the contractors and 
subcontractors that provide security guards to the Army. We examined 
the November 2005 "Department of Defense Installation Security Guard 
Requirement Assessment and Plan" and met with the head of the working 
group that prepared the report. Further details on the scope and 
methodology of our review can be found in appendix I. We conducted our 
review from May 2005 to February 2006 in accordance with generally 
accepted government auditing standards. 

Results in Brief: 

To acquire its security guards, the Army is relying heavily on sole- 
source contracts under the Small Business Administration's 8(a) 
Business Development Program, despite the fact that contracting 
specialists had identified existing competed contracts under which they 
believed the guards could have been acquired just as quickly. The 8(a) 
sole-source contracts, currently valued at over $494 million, went to 
two Alaska Native corporation (ANC) firms, which have been accorded 
special contracting advantages under the 8(a) program by 
Congress.[Footnote 3] Prior to contract award, the Defense Contract 
Management Agency assessed these firms' capabilities at the request of 
the contracting officer and rated one as "high risk" for performance 
because it was a manufacturing firm with no experience providing 
security guard services. Despite this firm's lack of experience, the 
Small Business Administration's Alaska district office had recommended 
it to the Army as a good candidate for fulfilling the security guard 
requirement and the Army worked with this firm to refine the contract's 
performance work statement. Both of the ANC firms have subcontracted 
with other companies in order to meet the Army's requirements, with 
agreements in place allowing the subcontractors to perform 49 percent 
of the work--just under the 50 percent subcontracting limit under the 
8(a) program. After the initial group of installations received their 
guards under the 8(a) sole-source contracts, the Army obtained guards 
for a second group under full and open competition. But the Army turned 
again to the 8(a) sole-source contracts for a third group of 
installations--significantly increasing the contracts' value--in spite 
of an Army analysis that revealed the competitive contracts had turned 
out to be about 25 percent less costly. In all, 46 of the 57 
installations have guards obtained under the 8(a) sole-source 
contracts. 

Weaknesses in the Army's employment screening process have resulted in 
the hiring of unscreened security guards, some with criminal histories, 
at U.S. installations. The weaknesses include policy-related problems, 
background checks that lag far behind the rate at which contract guards 
are put to work, and procedures that depend on job applicants to be 
honest on their employment forms. We found that some guards had taken 
firearms training and started work at installations before any initial 
screening was completed. At one installation we visited, the required, 
detailed national agency checks had never been initiated. At two other 
sites, the Army Criminal Investigation Command found guards were put to 
work even though they had records relating to criminal offenses; at one 
site, 61 such guards were identified and about two dozen of them had 
charges that would cause concern and possible ineligibility for 
employment in the security force. Army policy permits interim 
employment pending completion of initial screening, but interim 
employment can last more than 2 years because that is how long it can 
take to obtain the results of the national agency checks. The Army has 
delegated to the contractors responsibility for validating employees' 
self-reported information during the initial screening process and 
finding out whether critical information was left out of the 
application form, such as criminal histories or aliases. We have 
previously raised concerns about the screening process for contractors, 
including security guards, and DOD has agreed to revise its 
antiterrorism standards to put into place a better mechanism for 
verifying trustworthiness.[Footnote 4] 

There is a general lack of government oversight of the guards' 
training, as well as poor record keeping on the part of the contractors 
and inconsistent training techniques. We found at 4 installations that 
government monitoring of the training is not consistently done, if at 
all. We also found missing or incomplete training documents at each of 
the 11 installations we visited. At three installations, guards were 
certified by the contractor before their training had been completed, 
and one guard was certified before he had completed weapons- 
qualification training. In early 2005, it was determined that 
contractor personnel had falsified training records at one 
installation, and the government paid over $7,000 to the contractor to 
repeat weapons-qualification training for the guards. Moreover, the 
Army does not provide standardized instructions on how contractors 
should conduct training for required skills. As a result, contractors 
are applying different standards and techniques. We found that one 
contractor allowed employees unlimited attempts to pass weapons 
training, while another allowed only three tries. We have previously 
reported on marked improvements in training through increased 
government oversight and standard training.[Footnote 5] Army officials 
told us they are drafting new contract requirements aimed at 
standardizing training for contract guards. 

The Army's process for evaluating and rewarding contractor performance 
through award fees has resulted in a payout of more than $18 million in 
monetary incentives as of February 2006. The award fee evaluation 
factors, however, require only that contractors comply with basic 
contractual requirements, not that they provide above-and-beyond 
performance. We also found that Army personnel responsible for 
monitoring contractors' performance were not complying with 
requirements for assessing and rating performance. For example, several 
Army monitors told us that limited resources prevent them from making 
the required weekly inspections to ensure that contract guards are in 
fact present and doing their jobs, and a requirement to test guards by 
attempting to pass through installation gates with fake identification 
is not being conducted on a consistent basis. Several Army personnel 
told us that they are in need of more specific guidance about how to 
measure contractor performance. Despite the recognition that 
performance monitors are not consistently applying the award-fee 
criteria, the Army has often given high ratings for contractor 
performance, and those ratings frequently translate into high payouts 
of available award fees. We found that 66 percent of all evaluations as 
of February 1, 2006, have resulted in scores of 99 or 100 percent. The 
initial rationale for the award fees was in part to motivate the first 
contractors to post security guards at the gates within 90 days; this 
rationale is no longer applicable. 

DOD's November 2005 report to Congress on the contract security guard 
program makes several statements that we believe could be misconstrued. 
While the report addresses DOD's contract guard program as a whole, 
most of DOD's experience with contract guards has been with the Army, 
which has invested far more in the program than the other military 
services.[Footnote 6] On the basis of our review of the Army's program, 
we believe that the report overstates some issues, including the cost- 
effectiveness of using contract guards versus Army civilian employee 
guards; the contract guards' performance vis-à-vis that of military 
guards; their screening and training, and the extent and effectiveness 
of government surveillance and oversight of the contract guard program. 
Finally, the report refers to the ANC firms' contracts as set-aside 
8(a), which implies competition among 8(a) firms. A more accurate 
depiction would characterize these contracts as sole-source under the 
8(a) program. 

In this report, we are making seven recommendations to the Secretary of 
Defense to improve management and oversight of the contract security 
guard program. Specifically, we recommended changes in the acquisition 
strategy, improvement in the screening of the guards, and improved 
oversight of the guards' training. In written comments on a draft of 
this report, DOD concurred and stated that the Department of Army is 
implementing the recommendations. DOD's comments are included in their 
entirety in appendix III. 

Background: 

Since late 1982, Congress has, for the most part, prohibited DOD from 
contracting for security guards at U.S. domestic installations. 
According to the legislative history, the prohibition was originally 
enacted because of concerns about the uncertain quality and reliability 
of private security guard services, base commanders' potential lack of 
control over contractor personnel, and the right of contractor 
personnel to strike. Following the terrorist attacks of September 11, 
however, DOD directed installation commanders to ensure that all 
vehicles, identification cards, badges, and other forms of 
identification were inspected for authorized access to military 
installations. These increased security requirements created an 
increased demand for personnel to perform security-related tasks. 
Initially, security requirements were filled at military installations 
with active duty and reserve component personnel. However, as reserve 
personnel reached their mandatory release dates from active duty and as 
competing demands for both reserve and active component personnel grew, 
resources became constrained. DOD reported that contracting for 
security guard services was deemed necessary and practical to allow it 
to simultaneously support increased demands for military forces and to 
meet heightened security requirements for continental U.S. 
installations and facilities. Accordingly, in the Bob Stump National 
Defense Authorization Act for Fiscal Year 2003, Congress temporarily 
authorized DOD to waive the prohibition against contracting for 
security guard functions, thereby minimizing the department's need to 
use military personnel to perform these functions. 

The congressional waiver authority was predicated on an expectation 
that without the contract guards, military personnel would be used to 
perform the increased security function. In addition, it was expected 
that contract guards would perform their jobs as well as the military 
personnel who had previously served in that capacity. The 2003 
authorization act required that in order to use the authority, the 
following stipulations must be met: 

* Recruiting and training standards for contract security guards must 
be comparable to standards for DOD personnel who perform security guard 
functions. 

* Contract security guards must be effectively supervised, reviewed, 
and evaluated. 

* Employment of contract security guards must not cause a reduction in 
the security of the military installation. 

The waiver authority was initially set to expire in December 2005, but 
the Ronald W. Reagan National Defense Authorization Act for Fiscal Year 
2005 extended the authority through September 2006, provided that DOD 
submit a report to Congress on the contract guard program. The report, 
entitled "Department of Defense Installation Security Guard Requirement 
Assessment and Plan," was submitted to Congress on November 22, 2005. 
The National Defense Authorization Act for Fiscal Year 2006 again 
extended the waiver authority an additional year, through September 
2007. 

The Army, Air Force, and Navy each have employed contract security 
guards under the waiver authority.[Footnote 7] The Army was the first 
to begin acquiring guards and has used the waiver authority most 
extensively; as of December 2005, it had contracted for security guards 
at 57 installations, whereas contract guards are being used at 18 Air 
Force and 5 Navy installations. Several key players are involved in the 
Army's contract security guard program. 

* Army Office of the Provost Marshal General: This office directs 
policy for all matters relating to Army law enforcement, police 
intelligence, physical security, criminal investigations, provost 
marshal activities, and military police and provides oversight of these 
resources. The Office of the Provost Marshal General was the requiring 
agency that determined and prioritized security guard requirements at 
each installation and identified the number of guards needed. 

* Installation Management Agency (IMA): Formed in 2002, IMA is 
responsible for centralized oversight of U.S. Army bases and for 
administering all aspects of the contract guard program according to 
the requirements set by the Provost Marshal General. IMA is responsible 
for developing the guard contracts' performance work specifications, 
which specify what the Army expects the contractors to do, such as 
detailing the requirements for screening and training. 

* Army Contracting Agency (ACA) (northern region): This was the 
contracting agency for the guard program. It awarded six fixed-price, 
award-fee contracts and has issued task orders under these contracts 
for guards at 57 installations. The contracting officer has designated 
an IMA official as the government's primary oversight representative 
for the guard program. 

* Army installations: These are the recipients of contract guards. 
Installation officials are responsible for ensuring that the 
contractor's performance is evaluated daily and that the guards are 
screened and trained by reviewing contractor-supplied records. 
Installation personnel provide input to IMA as part of the award-fee 
process. 

* U.S. Small Business Administration (SBA): SBA oversees the 8(a) 
Business Development Program and is responsible for issuing regulation 
and policy concerning the program. Although SBA has delegated 
contracting authority to DOD for 8(a) procurements, SBA district 
offices--in this case, the Alaska district office--must approve any 
proposed contract going to an 8(a) firm and are to be notified if 8(a) 
contracts are modified. 

* Contractors: Two of the four contractors providing security guards 
are 8(a) Alaska Native corporation firms, both of which have 
subcontracted a portion of the work to security guard firms that are 
large businesses. ANCs were created by Congress to help settle Alaska 
Native land claims and to foster economic development for Alaska 
Natives, have been accorded special advantages under SBA's 8(a) 
Business Development Program. 8(a) ANC firms are considered small 
disadvantaged businesses, and as long as they meet relevant size 
standards for the procurement and other eligibility requirements, they 
can be awarded contracts noncompetitively for any dollar 
amount.[Footnote 8] Generally, acquisitions offered to other 8(a) 
businesses where the contract value is more than $3 million or $5 
million (for manufacturing) must be competitively awarded.The other two 
contractors are not ANC firms. 

* When acquiring services, a federal agency's first course of action is 
typically to develop an acquisition strategy. Ideally, this would 
involve examining and weighing several alternatives. Once the Army 
decided to use contract security guards, it began analyzing its 
contracting options. ACA could have chosen from among numerous contract 
vehicles available to acquire the guard services. It had the option of 
awarding a new contract or using existing interagency contracts through 
other federal agencies. For example, the General Services 
Administration (GSA) awards: 

* governmentwide contracts, including contracts for security guard 
services, under its Federal Supply Schedule (Schedule) program to help 
federal agencies make purchases in less turnaround time on a 
competitive basis for commonly used items or services. 

To motivate contractors to perform well, the Army chose to use monetary 
incentives called award fees. Award fees allow agencies to adjust the 
amount of fee paid to the contractor based on performance. We recently 
questioned how effectively these fees are being used at DOD because its 
programs have paid contractors large amounts of fees on acquisitions 
that are experiencing problems. We reported that DOD has little 
evidence to support its belief that these fees improve contractor 
performance and acquisition outcomes.[Footnote 9] 

Separately, we have reported on concerns involving the trustworthiness 
of contractors and subcontractors who have access to U.S. military 
installations. DOD officials have told us that they have not evaluated 
the trustworthiness of some contractors because the department's 
existing antiterrorism standards do not specifically require them to do 
so. In response to our recommendations, DOD officials are in the 
process of revising the standards to verify trustworthiness of 
contractors and subcontractors and better control access to 
installations, facilities, and sensitive areas.[Footnote 10] 

Army's Approach for Acquiring Contract Security Guards Relies Mostly on 
8(a) Sole-Source Contracts: 

The Army has awarded two sole-source contracts, totaling almost $495 
million, to 8(a) ANC firms to acquire the bulk of its contract guards, 
even though contracting officials pointed out that using competed GSA 
Schedule contracts would have been just as fast and less costly. We 
found that the Army hired an inexperienced contractor to help refine 
the performance work statement, failed to monitor certain 
subcontracting limitations under 8(a) contracts, and turned again to 
the 8(a) sole-source contracts in a third acquisition phase despite 
knowing that its competed contracts for the same services, awarded in 
the second acquisition phase, had cost 25 percent less than the initial 
8(a) sole-source contracts. 

Army Used Three-Phased Acquisition Approach: 

An understanding of the Army's approach for acquiring contract security 
guards requires getting a broad overview of the three phases of the 
acquisition, knowing how much the Army has spent so far to acquire 
guards and who the key players are, and following the chronology of 
contracting events. Table 1 presents the three-phased approach and 
shows in which phase the Army used 8(a) sole-source contracts or 
competitive contracts. 

Table 1: Overview of the Army's Three-Phased Approach for Hiring 
Contract Security Guards: 

Acquisition phase: Phase one; 
Contracting approach: 8(a) sole-source; 
Contractors hired: 2 contractors that are 8(a) Alaska Native 
corporation firms; 2 security guard firms as subcontractors. 

Acquisition phase: Phase two; 
Contracting approach: Full and open competition; 
Contractors hired: 2 other contractors hired through the use of new 
competitive contracts. 

Acquisition phase: Phase three; 
Contracting approach: 8(a) sole-source; 
Contractors hired: Same contractors used in phase one. 

Total committed value of 8(a) sole-source contracts from phases one and 
three: $494.8 million. 

Total committed value of competitive contracts from phase two: $238.0 
million. 

Source: Army (data); GAO (presentation and analysis). 

[End of table] 

Since the Army's contract security guard program began in 2003, the 
Army has devoted almost twice as many contract dollars to sole-sourcing 
under the 8(a) program as it has to full and open competition. Figure 1 
shows that 46 out of 57 Army installations received their contract 
guards through 8(a) sole-source contracts in phases one and three and 
that the guards for the remaining 11 installations were acquired 
through competed contracts. 

Figure 1: Number of Installations with Guards Obtained under Each 
Phase: 

[See PDF for image] 

[End of figure] 

Table 2 shows how the acquisition approach began taking shape before 
the Army settled on its three-phased approach and who the key players 
were. 

Table 2: Army's Three-Phased Acquisition Approach: 

Key player: Army headquarters; 
Activity: Requirement: Issued instructions for implementing contract 
security guard program. 

Key player: Army Installation Management Agency (IMA); 
Activity: Description of approach: Issued an implementation approach 
for identifying the installations in need of contract security guards. 

Key player: Army's Office of the Provost Marshal General; 
Activity: List of installations needing contract security guards: 
Prioritized a list of 89 installations on the basis of critical need, 
type, and size of installation, allowing the maximum number of reserve 
personnel to be deployed for military operations. 

Key player: Army Contracting Agency (ACA); 
Activity: Contracting options: Northern and southern regional offices 
developed preliminary approaches for acquiring guards; 
Contracting specialists in both offices identified the option of using 
GSA Schedule contracts; combined, the following benefits of using these 
contracts were noted: 
* They offer quickest solution for placing "boots on the ground"; 
* They allow for competitive procurement; 
* Individual installations could place orders for contract guards 
against GSA Schedule contracts and choose from 66 companies that had 
experience with contract security guards; 
* Small businesses would have sufficient opportunity to win security 
guard contract opportunities under GSA Schedule contracts because 45 
vendors on the list were small businesses; 
* Installations could negotiate with vendors and conceivably obtain 
prices an average of 10 to 15 percent lower than the stated GSA 
Schedule prices; 
* It is easier to place orders against GSA Schedule contracts than to 
initiate new competed contracts; contracting specialists at one of the 
regional offices said neither the regional office nor the installations 
have sufficient staffing resources to award and properly administer new 
contracts; 
Contracting specialists in the northern region also proposed another 
option: awarding sole-source contracts to 8(a) ANC firms. The office 
identified the following benefits to using this approach: 
* Potentially a huge amount of new dollars going to business 
participating in the 8(a) Business Development Program,; 
* A large consolidation at the national level that both ACA and IMA 
could point to as a success story. 

Key player: ACA headquarters and northern region; 
Activity: Northern region, selected as contract office, developed 
Army's acquisition strategy; Made decision not to use GSA Schedule 
contracts because ACA officials believed this method would require a 
significant amount of time; Cited another disadvantage with using GSA 
Schedule contracts-- assumed that responsibility for acquiring contract 
guards would have to be devolved to individual installations, a course 
that would have stretched out the time available for getting guards to 
installations and "suboptimized" the performance work statement and 
resulting contracts. 

Source: Army (data); GAO (presentation and analysis). 

[End of table] 

Army's Sole-Source Approach Centered on Contracting with 8(a) ANC 
Firms: 

Even though the use of the GSA Schedule was identified as a possible 
acquisition approach, the Army decided that the best course of action 
for the first acquisition phase was to award contracts to 8(a) ANC 
firms, believing that use of the GSA Schedule would have taken longer, 
would not have allowed a consolidated approach at the national level, 
and would have diluted the Army's purchasing power. The Army was not 
able to provide us with any analysis showing how it made these 
determinations. We found that other federal agencies, such as the U.S. 
Air Force and the Department of Homeland Security's Federal Protective 
Service, have used GSA Schedule contracts to obtain their security 
guards.[Footnote 11] According to the Air Force contracting officer, 
using GSA Schedule contracts was considered the more efficient, faster 
method to obtain the guards. The Air Force has used these contracts to 
obtain contract security guards at 18 bases at an annual estimated cost 
of $29 million. The Federal Protective Service manages and oversees 
10,000 armed contract security guards that were mostly obtained under 
GSA's Schedule program. 

SBA's Alaska district office, in a May 2003 letter to ACA, stated that 
it was "marketing" a particular 8(a) ANC firm to meet the Army's 
security guard requirements. According to ACA officials, this firm was 
already being considered by the Army. A second 8(a) ANC firm that had 
approached the Army was also considered. Before awarding the contracts 
to these companies, the contracting office asked the Defense Contract 
Management Agency to evaluate the firms' capabilities.[Footnote 12] The 
agency rated one of the firms--the one SBA had marketed to the Army--as 
"high risk" for performance because it had experience manufacturing 
goods but no experience providing services. The risk was mitigated 
somewhat because of anticipated support and assistance from the 
company's parent corporation, the Defense Contract Management Agency 
said, and because the firm had chosen to team up with a subcontractor 
experienced in providing security guard services. Subsequently, in a 
process known as "alpha contracting," Army officials worked together 
with this ANC firm to finalize the contract guard performance work 
statement by refining specific tasks for feasibility and affordability. 
The resulting performance work statement was then used on all of the 
security guard contracts. 

During a second acquisition phase in September 2003, the Army awarded 
four competed contracts. In evaluating the contractors' cost proposals 
for the second acquisition phase, the Army recognized that the same 
contractors involved in the first phase submitted cost proposals 
considerably higher than the winning proposals. But the Army turned 
again to these same contractors in phase three, adding 37 more 
installations to the 8(a) sole-source contracts. The Army took this 
action despite knowing that the government was paying considerably less 
for the phase-two competed contracts. An ACA analysis computing the 
cost per contract employee showed that the competitive contracts cost 
about 25 percent less than the 8(a) sole-source contracts. ACA 
officials told us that the Army returned to the ANC firms in part 
because doing so was an easy method of obtaining additional security 
guards and because they were pleased with the ANC firms' performance. 
In addition, IMA officials asserted that because the phase three 
requirements were not finalized until within 90 days of when the 
contract guards were required, a competitive solicitation was not 
possible. 

In phase three, the ANC firms' contracts were modified to expand the 
ceiling prices to a total value of $480 million each.[Footnote 13] When 
modifying the contracts, ACA did not comply with a requirement to 
notify SBA. In delegating procurement authority under the 8(a) program 
to DOD, SBA requires that DOD provide a copy of contracts, including 
modifications, to the SBA district office within 15 working days of the 
date of award or of contract modification. The Army contracting officer 
was unaware of this requirement and said she does not send 8(a) 
modifications to SBA. However, after being made aware of this 
requirement, the contracting officer said that contract modifications 
will be forwarded to the appropriate SBA office. 

ANC Firms Subcontracted with Large Security Guard Companies: 

Under the 8(a) program, businesses can subcontract up to 50 percent of 
the personnel costs incurred under each service contract.[Footnote 14] 
The two ANC firms have established agreements with their 
subcontractors, large security guard companies, intended to ensure that 
the subcontractors perform 49 percent of the work, while ANC firms 
retain 51 percent. As of December 2005, more than $200 million has been 
subcontracted under the Army's guard contracts. 

The ANC firms have taken different approaches to dividing the workload 
with their subcontractors. One divides the workload on an installation 
basis, while the second firm decided to share workload by staffing the 
gates at each installation partially with its own employees and 
partially with the subcontractor's employees. In the latter case, the 
guards' uniform patches reflect the names of both companies. 

The Army's contracting officer is responsible for determining whether 
the ANC firms are complying with the 50-percent limit on 
subcontracting, but this is not being done. The contracting officer 
told us that the contractors' proposed approach for complying with the 
limitation on subcontracting is reviewed each time additional work is 
awarded to the ANC firms, but actual performance is not monitored to 
ensure compliance. We found confusion as to who is responsible for the 
monitoring. The contracting officer pointed to SBA; the contracting 
officer representative in IMA pointed to ACA. In practice, the Army is 
relying on the prime contractors themselves to ensure that their 
subcontractors stay below the 50-percent limit. The two firms told us 
they monitor their compliance with the required 50/50 split. 

Army Procedures Do Not Provide Assurance That Contract Security Guards 
Are Adequately Screened: 

The Army's screening process is unreliable because of lack of adherence 
to Army policy, a time lapse of as much as 2 years from the start of 
interim employment until detailed nationwide background checks are 
completed; and a reliance on job applicants to self-report accurate 
information on their employment application forms. The combined effect 
of these weaknesses has put the Army at risk of staffing its gates with 
contract security guards who are not qualified for the job and in fact 
has resulted in applicants with criminal histories, including felons, 
being employed as guards. We have previously reported on, and made 
recommendations concerning, the inadequacy of screening measures used 
for contract employees with access to military installations and other 
sensitive areas.[Footnote 15] 

Two-Part Screening Process Has Significant Weaknesses: 

Army policy requires all prospective contract guards to undergo a two- 
part screening process--an initial screening conducted by the 
contractor followed by a thorough, more detailed screening conducted by 
the federal government. Table 3 highlights the activities required for 
each part of the process and who is responsible for conducting the 
various screening activities. 

Table 3: Highlights of Activities Required under Army's Two-Part 
Screening Process: 

Part one: initial screening: Who's responsible: the contractor; 
Part two: detailed screening: Who's responsible: Army officials at each 
installation. 

Part one: initial screening: Required activities: Local agency check: 
Ensure that a local check be conducted in the jurisdiction where the 
applicant has resided during the most recent 5-year period; the 
contractor does not conduct the local agency check on its own, but 
hires a company to conduct it, which includes the following: 
* arrest records; 
* criminal and civil court records; References: Contact applicant's 
former employers and supervisors, former educators, and other personal 
references; Education: Check applicant's educational records; Finances: 
Check credit history; 
Part two: detailed screening: Required activities: National agency 
check: the Army official submits a request, along with the applicant's 
fingerprints, to the Office of Personnel Management, which conducts a 
search to see if the fingerprints match any of the ones contained in 
national databases, which include the following: 
* Security/Suitability Investigations Index; 
* Defense Clearance and Investigation Index; 
* Federal Bureau of Investigation Name Check; 
* Federal Bureau of Investigation National Criminal History Fingerprint 
Check. 

Part one: initial screening: Time frame for conducting these 
activities: We found it took 1 day to 2 weeks; 
Part two: detailed screening: Time frame for conducting these 
activities: We found time frames ranging from 1 week to over 2 years. 

Sources: U.S. Army (data); GAO (analysis and presentation). 

[End of table] 

IMA requires contractors to conduct local agency checks before offering 
interim employment to prospective employees. Training, such as firearms 
training and weapons qualifications, cannot begin until the local 
agency checks have been completed and the results are favorable. If the 
results are unfavorable, employment is not offered. 

Weaknesses in the screening process have led to risky situations, as 
the following examples illustrate: 

* A contractor had permitted guards to take firearms training and start 
working even before their local agency checks were completed. 

* In April 2005, the Army found that 61 guards had been put to work at 
one installation even though they had records relating to criminal 
offenses, about two dozen of which involved felonies or domestic 
violence and abuse cases. One of the guards had an active warrant and 
was arrested while performing his duties. The Army found similar 
circumstances at another installation in August 2005 with a different 
contractor. Twenty-eight guards were identified in the Army's Crime 
Records Center database as having records relating to criminal 
offenses, including assault, larceny, possession and use of controlled 
substances, and forgery. 

* At another location, we found that paperwork to initiate national 
agency checks had not been submitted for any of the 128 guards hired 
during a 2-year period. The contractor had been responsible for 
initiating and submitting these checks between December 2003 and March 
2004, but did not follow through and was out of compliance with the 
terms of its contract. In March 2004, it became the responsibility of 
installation officials, rather than the contractors, to submit the 
national agency checks. However, the officials told us they had not 
received the new direction from IMA and thus did not comply with it. 
The officials said that they have now submitted the required paperwork 
to initiate the national screening process. An IMA official told us 
that national agency checks had never been conducted for guards at 
another installation either. 

* An Army official at another location informed us that national agency 
checks were pending for the 8 guard files we sampled. However, the 
installation's security office found no record of a national agency 
check ever being initiated for 3 of these guards. 

* At the same installation, when we asked for documentation of 
compliance with the Army's regulation for certifying the reliability 
and suitability of prospective and current contract security guards, we 
were provided with documents that were missing key screening 
information. For example, the section addressing the screening of 
personnel records was not completed and the name of the physician 
conducting the medical examination was not included. Also missing was 
information demonstrating that guards had been briefed on the Army's 
reliability standards and objectives. These documents were all signed 
and dated by the Army's certifying official on the day they were sent 
to us. Moreover, the certifying official did not fill out the section 
on the form indicating whether the individual was or was not suitable 
for employment. 

Initial Screening Process Relies on Individuals to Self-Report 
Information: 

The Army's reliance on job applicants to be forthcoming and accurate on 
their application forms affects the quality of the local agency checks. 
The contractor asks for typical employment information, such as full 
name, other names or aliases, Social Security number, addresses during 
the most recent five-year period, and employment history. The local 
agency check is dependent on full and accurate disclosure on these 
forms. The contractor itself does not conduct the check, but hires an 
outside firm to perform this task, and each firm uses the job 
applicant's information as a basis for conducting the check. If the 
applicant falsifies information or neglects to include former addresses 
outside the county and state of current residence, the local agency 
check may not search existing records in those jurisdictions, and the 
contractor may never know that the applicant is unsuitable for hire. 
Furthermore, how the checks are conducted varies among the different 
firms. For example, one firm conducted a statewide investigation, while 
another company checked records in all 50 states and 57 counties. 

Because Army policy allows interim employment after a local agency 
check uncovers no problems, a contract guard who successfully hid a 
criminal history during the job application process could be working at 
an installation gate, using a firearm, until a national agency check 
discovers the truth. When we brought these concerns to IMA officials, 
they stated that permitting interim employment is the fastest, most 
effective means of putting contract guards at the gates. IMA officials 
also asserted that the issues we found only highlight that the contract 
security program is working as intended because individuals with 
criminal histories ultimately were caught. The officials were unwilling 
to explore other options to mitigate the potential risk of having 
extended periods of time during which unsuitable individuals were 
guarding Army installations. 

DOD Planning Actions to Improve Screening Process for Contractors: 

In 2003 and 2004, we reported on the inadequacy of screening measures 
used for contract employees with access to military installations, 
facilities, and sensitive areas, and the risks posed to military 
forces.[Footnote 16] As a result of our work, the Assistant Secretary 
of Defense, Special Operations and Low Intensity Conflict, is revising 
the department's antiterrorism standards to require a more thorough 
screening of contract personnel, including security guards, at military 
installations. The standards, however, have not been completed or 
approved--and no specific time frame is set for their approval. 

In addition, in response to a Homeland Security Presidential Directive 
regarding the need to establish a common identification standard for 
federal employees and contractors, DOD is strengthening its screening 
process to include new, secure, and reliable credentials that will be 
used by DOD employees as well as contract personnel. These credentials 
will not be issued unless employees and contract personnel pass the 
national agency check. According to DOD's implementation plan, the 
revised screening improvements are to be implemented by October 2006. 
The Federal Acquisition Regulation has also been amended to require 
contractors to comply with the agency's personnel identity verification 
process.[Footnote 17] 

Between now and when the new screening improvements are implemented, 
the Army could mitigate the risk of hiring personnel with criminal 
records by supplementing the local agency check with background 
information accessed through the Army's Crime Records Center database, 
which maintains information from Army law enforcement records. The 
Army's Criminal Investigation Command has recommended that these checks 
be done on prospective security guard employees. 

Another supplemental source of information is the Federal Bureau of 
Investigation's National Crime Information Center (NCIC) database. The 
NCIC database is a national index of theft reports, warrants, missing- 
persons reports, and other criminal justice information submitted by 
law enforcement agencies across the United States in a secure, 
electronic format in real time. While not a perfect solution, since it 
also relies in part on self-reported information, use of this database 
would give the Army access to detailed background information on 
prospective contract guards with far less turnaround time than it 
currently takes the Office of Personnel Management to conduct national 
agency checks. In fact, the Army's Criminal Investigation Command 
recommends use of the NCIC database. Some Army installations, concerned 
about the time lapse between the local and the national agency checks, 
have used it to mitigate what they perceive as risks associated with 
hiring guards based only on the local agency check. IMA officials, 
however, have repeatedly instructed installations not to use the NCIC 
database, citing an Army policy from 1993 that, they assert, does not 
permit its use. An IMA official told us that the purpose of requiring 
the contractor to perform the screening function is to reduce the 
Army's costs and to streamline the background check process with, IMA 
asserts, adequate results. 

During our review, officials from the Office of the Provost Marshal 
General told us that they recognized the need for interim improvements 
in the screening process and said they would contact the Federal Bureau 
of Investigation to explore the feasibility of the Army using the NCIC 
database. 

Lax Oversight and Training Irregularities Raise Doubts About the 
Adequacy of the Guards' Training: 

The Army may not have in place adequately trained contract security 
guards protecting its installations because contractors are given 
responsibility to conduct nearly all of the training; and neither IMA 
nor Army installation personnel provide sufficient oversight to know 
whether training is actually conducted in accordance with contractual 
provisions, training records are accurate and complete, and contractors 
are adhering to standards. We found instances where the contractors 
were not complying with requirements to track and maintain records of 
employee training and where contractors' training techniques were 
inconsistent. 

Weaknesses in Army's Training Program Include Inadequate Oversight, 
Poor Record keeping, and Lack of Compliance with Standards: 

The Army requires contractors to train their guards in 19 competencies 
listed in table 4. 

Table 4: Contractors' Training Requirements: 

1. Use of force; 
2. Antiterrorism, threats, definition, and identification; 
3. Security operations, basic functions, patrolling techniques and 
responsibilities; 
4. Response to hostage situations; initial actions prior to military 
police response; 
5. Personnel identification procedures, package and vehicle search 
procedures, and contraband identification/seizure procedures; 
6. Firearm (pistol and/or shotgun) qualification and safety; 
7. Unarmed self-defense; 
8. Oleoresin capsicum (OC) spray techniques, use, and application; 
9. Nightstick and police baton use and techniques; 
10. Clearing, securing, and protecting crime scene; 
11. Use of interpersonal skills, verbal skills, de-escalation, 
nonverbal actions; 
12. Techniques for searches, Fourth Amendment rights, consent and 
seizure; 
13. Application of handcuffs; 
14. Hand and arm signals, basic traffic control techniques; 
15. Recording of police information and sworn statements; 
16. Contract security guard authority and jurisdiction; 
17. Prevention of sexual harassment; 
18. Customer service; 
19. Military customs and courtesies. 

Source: Army (data); GAO (presentation). 

[End of table] 

The Army requires that the contractors conduct training in these 19 
areas before the guards are put to work and annually thereafter. 

Government Oversight Lacking: 

While contractors are required to make training records and 
certifications available for Army installations to review, Army 
personnel are not required to certify the training. Even though some 
installations officials said they have taken the initiative to have 
their performance monitors observe the guard training on a periodic 
basis, we found at 4 installations that monitoring of the training is 
not consistently done, if at all. According to IMA officials, 
government monitors should be supervising the contractors on a daily 
basis and should be observing guard training in accordance with the 
Quality Assurance Surveillance Plan.[Footnote 18] We found, however, 
that training is not referenced in the plan. In fact, the plan states 
that the government is responsible for ensuring its stated needs are 
met while allowing the contractor sufficient latitude to allow 
accomplishment of the desired task with a "minimum of oversight." 

Lack of government oversight may have contributed to a situation where 
a contractor's training records were falsified. In 2005, an 
investigation discovered that contractor personnel at one installation 
had falsified training records relating to firearms qualification. The 
contractor subsequently determined that its employees had not followed 
the company's procedures and had validated training for individuals who 
had in fact not properly qualified. The installation required the 
guards to be requalified in firearms, which cost the Army over $7,000. 
At least three guards could not qualify. The supervisor of the guards 
and training officer involved in the incidents were terminated by the 
contractor. According to Army officials at that installation, they have 
since stepped up their on-site observations of the weapons training. 

Training Records Incomplete: 

We found that poor documentation in the training files also contributed 
to some installations not knowing whether guard training is meeting 
contract requirements. Our analysis of individual training records 
found several instances of missing documentation and irregularities. 
Each of the installations we visited documented and maintained the 
training records differently. The lack of detail, in some cases, would 
make it impossible for a government performance monitor to know whether 
the guards had been trained as required. We also found that at three 
installations, the contractor had certified security guards as trained 
before records indicated that the training had been completed, 
including one case where a guard was certified before the weapons 
qualification training had even started. At another installation, 
officials determined the guards did not need to train in one or more of 
the specific training topics found in the performance work statement. 
However, according to installation officials, IMA was not informed of 
this decision, nor was this deviation noted in individual training 
records. 

Training Techniques and Tasks Not Standardized: 

While the Army requires contractors to train their employees in the 19 
competency areas, it is left to the contractors to determine how to 
structure the training. The Army provides little guidance in terms of 
training content or techniques. As a result, we found a lack of 
standardization across installations. For example: 

* weapons training conducted in a simulation room with moving targets 
versus only classroom lectures; 

* prospective guards given unlimited tries to pass weapons training 
versus being allowed only three tries; 

* firearm training conducted within the first 3 days of training-- 
because this is an area prospective guards are likely to fail--versus 
during the third week of training; and: 

* a subcontractor using its own, detailed weapons re-qualification 
policy that the prime contractor has not endorsed and does not follow. 

Because the contractors have a large amount of leeway in how they 
conduct the training, this variation is not surprising. 

Potential Improvements for Contract Security Guard Training: 

While the Army does not require its performance monitors to oversee 
contract security guard training, other federal agencies do require 
such government oversight. For example, the Air Force and the Federal 
Protective Service, both of which use contract guards, require 
government officials to observe and certify that the guards have 
successfully completed weapons-firing qualification. 

Also, we have previously reported on the benefits of centralized 
development of training content, including standardization.[Footnote 
19] Centralizing design can enhance consistency of training content and 
offer potential cost savings. Additionally, centralization can help 
agencies realize cost savings through standardization of record keeping 
and simplified and more accurate reporting on courses, certifications, 
educational attainment, costs, or standards. The Transportation 
Security Administration, for example, has taken several steps to 
strengthen its review of air carriers' crew member security training 
curriculum. These steps include developing a standard review form for 
inspectors and trainers to use to enhance consistency in the review 
process.[Footnote 20] 

Based on our review of a draft IMA document, the Army is considering a 
requirement that the contractors submit periodic status reports 
specific to each installation, using a standard form that includes an 
update on training. This training update would include the number of 
new hires trained, annual refreshers and continuing education classes, 
and weapons qualifications. In December 2005, IMA officials conducted a 
briefing to the installation monitors that discussed the need to 
inspect training and training records. 

Continued Need for Award Fees Is Questionable: 

The Army's strategy of using award fees to motivate contractors has 
resulted in over $18 million in fee payouts for complying with the 
basic contractual requirements--not for exceeding what the contract 
requires. We identified a number of concerns with the award-fee process 
and question the continued need for award fees under the security guard 
program. 

Award-Fee Plan Rewards Basic Compliance: 

Each of the Army's security guard contracts uses the same award-fee 
plan, which spells out criteria for evaluating contractor performance, 
and the final ratings dictate how much money is to be paid in award 
fees. In our comparison of the award-fee plan with the contract's 
statement of work, we found that the award fee is not designed to 
elicit "above-and-beyond" performance. Rather, the award-fee plan 
merely requires contractors to meet contractual requirements. 

The evaluations are conducted on a semiannual basis. Each of four award-
fee factors is worth a certain percentage of the total score. In 
addition, under each factor, a score between 0 and 100 can be given. A 
score from 91 to 100 is considered excellent performance, 81 to 90 is 
very good, 70 to 80 good. A score of 69 or below is considered 
satisfactory or below performance, resulting in no award fee. See table 
5 for an overview of the award-fee factors used in conducting the 
semiannual evaluations. 

Table 5: Criteria Used to Evaluate Contractors' Performance: 

Factor: Achieving/maintaining full operational capability (20%); 
Selected subfactors: 
* Extent to which contractor achieves and maintains required level of 
guard coverage; 
* Responsiveness, alertness, physical fitness, courtesy of guards. 

Factor: Proper control of access to the installation/controlled 
facilities (30%); 
Selected subfactors: 
* Denying access when proper in both actual circumstances and 
government surveillance or blind tests. 

Factor: Effective contribution to a positive Army image in the 
installation and surrounding community and effective management of 
guard improprieties (30%); 
Selected subfactors: 
* Proper appearance, to include appropriate uniform; 
* Interaction with the public and DOD personnel; 
* Appropriate conduct in the community while off-duty; 
* Extent to which contractor effectively responds to incidents of 
employee misconduct or allegations of impropriety. 

Factor: Cooperation with IMA and Army commands; sound management of 
government property (20%); 
Selected subfactors: 
* Effectively works with the Army organization to jointly and 
effectively resolve security services-related questions, problems, and 
issues that arise during contract performance; 
* Extent to which contractor personnel demonstrate the ability to 
respond to duty changes and contingencies that may arise; 
* Assist with the effective management and maintenance of government 
resources. 

Source: Army (data); GAO (analysis and presentation). 

[End of table] 

Army Has Awarded Almost All Available Award-Fees: 

As of February 1, 2006, a total of $18.76 million in award fees was 
available in the contract guard program. Only $0.42 million or almost 2 
percent was not earned by the contractors. As figure 2 shows, IMA has 
authorized almost all of its available award fees. 

Figure 2: Comparison of Contract Security Guard Award Fees Authorized 
and Not Earned as of February 1, 2006 (dollars in millions): 

[See PDF for image] 

[End of figure] 

The Army's practice of routinely paying its contractors nearly the 
entire available award fee creates an environment where contractors 
expect to receive most of the available fee, regardless of acquisition 
outcomes. We recently reported that DOD frequently pays most of the 
available award fee to contractors regardless of their performance 
outcomes.[Footnote 21] 

The award fees being paid to the security guard contractors are in 
addition to the profit they have already built into their prices. We 
found that under the terms of their contracts, not all of the 
contractors are eligible to receive the same percentage of award fee-- 
even though they are all performing under the same performance work 
specification. Three of the four contractors negotiated a fee equal to 
5 percent of their annual contract value, but the other negotiated only 
3 percent. One contractor told us that it offered to reduce its fee but 
ACA officials refused, stating that they believed the 5 percent fee was 
necessary to motivate performance. 

Army Performance Monitors Not Consistently Complying with Award-Fee 
Plan: 

Among the criteria used to rate the contractors' performance are the 
results of on-site inspections of the guards. Army performance monitors 
are required to conduct inspections, evaluate performance, take into 
account any comments from persons who have had dealings with the 
guards, assign ratings commensurate with performance, and report their 
ratings to IMA's award-fee review board. The board comprises members 
familiar with the contract requirements, and the board makes the final 
recommendation to IMA's award-fee determining official about how much 
the contractors should receive in award fees. 

We found that at over half of the 11 Army installations we visited, the 
government monitors rated performance without having conducted all of 
the required inspections. Several monitors stated that limited 
resources prevented them from conducting the inspections. Three 
monitors told us they have not been conducting weekly checks of the 
contractors' performance. Another monitor said it was a "waste of time" 
to go around counting guards to ensure the contractor has provided 
enough employees to meet contract requirements. Several monitors told 
us that they are not conducting the required blind checks, where they 
attempt to get on base using false identification. In one case, the 
monitor said this check is impractical because the contract guards know 
him by sight. One monitor told us that in deriving the ratings, he 
starts at 100 and lowers the rating if there are inadequacies in 
performance. 

Lack of guidance from IMA was a complaint among the monitors we 
interviewed. For example, several monitors told us that they have no 
quantifiable way of determining whether a contractor who performs in an 
excellent manner in a certain evaluation factor should receive a score 
of 91 or 100. For lack of any other method, they ultimately use 
subjective reasoning to make their decisions. Several monitors have 
taken it upon themselves to establish their own methods for determining 
where the ratings should fall. One created a checklist that he fills in 
each week, and at the end of each evaluation period the weekly ratings 
are used to derive an overall rating. Another convenes a "mini" award- 
fee board at the installation to obtain formal input from other 
government officials familiar with the contractor's performance. 
Actions such as these demonstrate that some monitors are attempting to 
inject more rigor into the award-fee process, but the result is a lack 
of uniformity in criteria for determining award-fee payouts. Although 
monitors said they have brought this issue to IMA's attention, the 
agency has not issued any clarifying guidance. IMA and ACA officials 
indicated they believe the award-fee plan provides sufficient guidance 
for the performance monitors to follow. 

IMA Award-Fee Board Has Recommended Consistently High Ratings: 

March/April 2005 marked the end of an award fee evaluation period. Our 
analysis found that, of the 50 recommendations given by the award fee 
board to the fee determining official, all were in the "excellent" 
range, with 29 receiving scores of 100 percent and 10 others receiving 
99 percent. None fell below 91 percent. Table 6 shows that this result 
is typical of the pattern over the life of the contract guard program, 
with 66 percent of contractor evaluations receiving a score of 99 or 
100 percent. 

Table 6: Evaluations and Percentage of Fees Authorized as of February 
1, 2006: 

Percentage of available fees authorized: 100; 
Number of evaluations: 89; 
Cumulative percentage of evaluations: 53; 
Total award fees authorized (in millions of dollars): $8.57. 

Percentage of available fees authorized: 99; 
Number of evaluations: 23; 
Cumulative percentage of evaluations: 66; 
Total award fees authorized (in millions of dollars): $3.19. 

Percentage of available fees authorized: 97 - 98; 
Number of evaluations: 28; 
Cumulative percentage of evaluations: 83; 
Total award fees authorized (in millions of dollars): $2.83. 

Percentage of available fees authorized: 94 - 96; 
Number of evaluations: 16; 
Cumulative percentage of evaluations: 92; 
Total award fees authorized (in millions of dollars): $2.52. 

Percentage of available fees authorized: 90 - 93; 
Number of evaluations: 8; 
Cumulative percentage of evaluations: 97; 
Total award fees authorized (in millions of dollars): $0.58. 

Percentage of available fees authorized: Less than 90; 
Number of evaluations: 5; 
Cumulative percentage of evaluations: 100; 
Total award fees authorized (in millions of dollars): $0.65. 

Total; 
Number of evaluations: 169; 
Total award fees authorized (in millions of dollars): $18.34. 

Source: Army (data); GAO (analysis and presentation). 

[End of table] 

Award-Fee Board's Processes Lack Rigor: 

We found that IMA's award-fee board did not always carefully review 
performance monitors' input in making award fee determinations. An IMA 
official said that "rubber stamping" by the board may have led to an 
error that we found in the course of our audit work. During the 
March/April 2005 evaluation period, the board mistakenly reviewed an 
evaluation report covering the wrong period and recommended 99 percent 
of the available award fee be paid to the contractor at the time this 
contractor was under investigation for falsifying training records. To 
rectify the error, the board later recommended lowering the score from 
99 to 90 percent of the available award fee amount. The government 
monitor at this installation was unaware that the board had reviewed 
the wrong report or that it had initially awarded the contractor 99 
percent of the award fee. 

IMA's appeals process also raises questions about the integrity of the 
award-fee process. During the March/April 2005 evaluation period, the 
award-fee board raised over 25 percent of performance monitors' 
ratings. Sometimes the board raised the scores unilaterally because 
members believed the monitors were being too critical of the 
contractor's performance. Sometimes the scores were raised because the 
performance monitors did not, in the board's view, provide sufficient 
narrative to support their scores. In these cases, the board normally 
raised the scores without contacting the monitors for additional 
support. In reviewing performance evaluations, we found that some 
performance monitors, on the basis of poor contractor performance, gave 
the contractors relatively low ratings--in the "good" range with a 
score between 70 and 80--but the IMA board often raised the scores. For 
example, for the "sound management of government property" factor, a 
performance monitor provided a score of 80 because the contractor had 
three vehicular accidents. IMA raised the score for this factor to 95 
because the contractor remedied the problem and paid for damages. This 
action resulted in the contractor receiving an overall performance 
score of 99 and almost $55,000 in award fees for that period. 

Contractors, upon receiving award-fee evaluations, are allowed to rebut 
the scores, either in person or by letter. The board has raised ratings 
after hearing rebuttals during the appeals process, but it is not IMA's 
policy to inform performance monitors when their submitted scores are 
changed. In the March/April 2005 evaluation period, IMA adjusted 14 of 
the 50 performance monitor assessments. IMA raised the scores for 13 of 
them--increases ranging from 2 to 15 percent--and lowered the score for 
one by 6 percent. In one case, a performance monitor reported that the 
contract guards were not able to detect a fake installation vehicle 
pass, which was presented to gain access at nine different control 
points. The performance monitor also reported that five guards, in 
violation of standard operating procedures and Army regulation, fired 
on a vehicle leaving the installation. After the contractor appealed 
the score, IMA raised the rating of 90 (very good) to 96 (excellent), 
awarding the contractor almost $246,000. 

In another case, a performance monitor had deducted 10 points under the 
factor "effective contribution to a positive Army image," in part 
because a contractor employee had been arrested off-post with 100 
prestamped passes to the base in his possession. The contractor 
protested its rating, arguing that the incident occurred off-post and 
involved no negative publicity. IMA added back 2 points, awarding the 
contractor almost $97,000. 

We also found that in one case, IMA reduced the installation monitor 
performance rating from 99.1 to 93.1 points, both scores considered 
excellent, because the contractor had refused to provide pepper spray 
to its guards, as required. Even though the contractor was not in 
compliance with the contract, over $100,000 in award fee was 
authorized. 

Continued Need for Award Fee Questionable: 

During the acquisition planning for the guard contracts, ACA's contract 
attorney questioned the appropriateness of using an award fee. In his 
memorandum to the contracting officer, he stated that the government 
has already dictated the standards to the contractor in the statement 
of work, and if those standards are insufficient, the government should 
raise the standards. The attorney concluded that he was unconvinced 
that adding an award fee made good business sense and was in the best 
interest of the government. Nevertheless, ACA prepared a written 
justification for use of award fees which asserts, among other reasons, 
that award fees were needed to motivate the contractors because of the 
"extremely subjective" nature of the performance evaluation. The 
Federal Acquisition Regulation states that fixed-price contracts, where 
the contractor's profit is already built into the base price, may 
include award fees to motivate a contractor when other incentives 
cannot be used because the contractor's performance cannot be measured 
objectively. However, IMA's award-fee plan sets forth a number of 
objective factors, such as providing the required coverage at the gates 
and wearing proper uniforms, on which monitors are to base their 
ratings. 

ACA's justification also states that the award fee is needed to 
motivate a "better than satisfactory" performance. As discussed above, 
the contractors are merely required to comply with the basic terms of 
the contract, not to perform above and beyond, to earn the fee. The 
initial stated intent of having the award fee was that the fee would 
motivate the contractors to provide security guards as quickly as 
possible--within 90 days or fewer of contract award. The award-fee plan 
was subsequently modified to remove the 90-day requirement now that 
guards are in place, and it now reflects the evaluation criteria 
outlined in table 5. The Army's continued need to use award fees well 
after the contractors have achieved full operational capability is 
unclear. IMA officials said they like the award fee because it gives 
them leverage to deal with the contractors and results in the 
contractors being more responsive. 

In addition, the ACA contracting officer, who is handling all of the 
Army's guard contracts and task orders, told us she finds the award-fee 
administration time-consuming and cumbersome, because she must modify 
each task order every 6 months to reflect the award-fee decisions. We 
found errors in the administration of the program. For example, in one 
incident the contractor was overpaid $47,548, but this administrative 
error was not recognized for over a year. In two other examples, award 
fees were based on an incorrect amount and the contractor was underpaid 
by about $130,000. 

DOD Report to Congress Does Not Address Some Key Issues Pertaining to 
the Army's Guard Program: 

The Ronald W. Reagan National Defense Authorization Act for Fiscal Year 
2005 extended the waiver authority for hiring contract guards through 
September 2006, but the extension hinged in part on a required report 
by DOD on its contract guard program. The report, "Department of 
Defense Installation Security Guard Requirement Assessment and Plan," 
was delivered to Congress on November 22, 2005. The report addresses 
Army, Navy, and Air Force experience with contract guards. On the basis 
of our work with the Army, which has acquired the vast majority of 
contract guards, we believe additional observations should be provided 
on some of the report's statements. 

* The report describes the use of contract security guards as "cost- 
effective," but at the same time states that the Air Force has 
determined that cost-effectiveness must be determined base by base 
because of differing locations and economic circumstances. We found 
during our review that the issue of cost-effectiveness is not clear- 
cut. In fact, there are differing opinions on this subject even within 
the Army. The Deputy Assistant Secretary of the Army's Director for 
Programs and Strategy prepared an independent cost evaluation in April 
2005 entitled "Contracting Versus Using Department of the Army 
Civilians to Provide Installation Security." The study found that using 
Department of the Army civilian guards is significantly less costly 
than using contract guards. IMA officials disagree, emphasizing that 
the cost evaluation does not calculate the challenges imposed by the 
Army's current personnel system in hiring civilians or the benefit of 
contracting this function in the flexibility it offers IMA. 

* The report states that "assessments to date determined that they 
[contract guards] perform on par with military security guards." When 
we asked the report's working group chairman for the basis for this 
statement, we were told that input from installation officials had been 
obtained. IMA officials, who assisted in writing the report, told us 
that the assessments refer to the award-fee performance evaluations. 
Those evaluations, however, are used to determine how the contractors, 
not individual contract guards, are performing; they do not compare 
contract guards with military security guards. 

* The report states that "contracts for security services are specific 
concerning the training, performance and supervision of security 
guards. Effective oversight ensures that installation and facility 
security is not diminished." We found that the oversight function 
performed by the Army, specifically training, needs improvement. 

* The report cites quality assurance surveillance plans that are 
supposed to be prepared by government representatives and used by 
installation performance monitors. We found that the Army's quality 
assurance surveillance plan, which applies to each of the 57 
installations using contract security guards, mirrors the award-fee 
plan, which performance monitors have found to be unclear. 

* The report states that "on-site visits of installations by the 
headquarters of the respective services are conducted to ensure proper 
enforcement of the performance work statements." However, IMA officials 
did not visit all 57 installations. In fact, they told us that in 2005, 
they conducted 17 on-site visits to enforce the performance work 
statement. At the 11 installations we visited, we found that 
improvements were needed in training and screening oversight. At one 
installation, it took over 2 years before IMA found that the contractor 
and the installation were not in compliance with the performance work 
statement. 

* The report states that "local security checks and National Agency 
Checks are performed on all prospective employees." As we found during 
our review of the Army's guard program, weaknesses in the screening 
process have led to unscreened personnel guarding the gates, and the 
checks had not been performed on all contract guards. 

* The report characterizes the contracts to the ANC firms as set-aside 
8(a). Set-aside 8(a) generally refers to cases when there will be 
competition among 8(a) firms. In fact, these were sole-source contracts 
under the 8(a) program. According to ACA officials, future reports will 
make this clarification. 

Conclusion: 

To make the best use of taxpayer dollars and achieve its desired 
outcomes in relying on contractors to guard military installations, the 
Army requires sound acquisition planning, leading to prudent contract 
awards, and rigorous monitoring of contractor performance. A lack of 
diligence in these areas, coupled with the practice of awarding fees 
for compliance with basic contractual requirements, indicates that the 
Army needs to do more to achieve its goals. The Army needs to take a 
stronger role in overseeing contractor performance, and we believe a 
reassessment of the acquisition approach is called for. 

Recommendations: 

We are making the following seven recommendations to the Secretary of 
Defense to improve management and oversight of the contract security 
guard program. We recommend that the Secretary of the Army be directed 
to take the following seven actions: 

* Direct the ACA to take the following two actions: 

* reassess its acquisition strategy for contract security guards, using 
competitive procedures for future contracts and/or task orders, 

* remove award-fee provisions from future contracts and task orders 
under existing contracts. 

* Direct IMA to take the following four actions: 

* monitor the status of DOD's revised antiterrorism standards and 
implement them into Army policy for screening of contract security 
guards as deemed suitable, 

* direct installations to use the Army's Crime Records Center and the 
National Crime Information Center databases to supplement initial 
screening (local agency check) of contract security guards until the 
new standards are in effect, 

* issue a standardized recordkeeping format for contractors to show 
that the guards have met all training requirements, and: 

* require installation performance monitors to review training files to 
ensure that initial training certification is achieved as well as 
subsequent annual recertification. 

* Direct the Office of the Provost Marshal General to require an Army 
official to monitor and certify contractor training of guards, 
especially weapons-qualification training. 

Agency Comments: 

We provided a draft of this report to DOD for review and comment. In 
written comments, DOD agreed with the findings and stated that the 
Department of the Army is implementing the seven recommendations. DOD 
stated that these recommendations will strengthen the contracting 
process and help ensure that the department receives the best security 
guard support available. 

The department's comments are reprinted in appendix III. 

We are sending copies of this report to the Secretary of Defense, the 
Secretary of the Army, the Director of the Office of Management and 
Budget, and interested congressional committees. We will make copies 
available to others upon request. This report will also be available at 
no charge on the GAO Web site at http://www.gao.gov: 

If you have any questions about this report or need additional 
information, please contact me at (202) 512-4841 or Schinasik@gao.gov. 
Contact points for our Offices of Congressional Relations and Public 
Affairs may be found on the last page of this report. Key contributors 
to this report were David E. Cooper, Director; Michele Mackin, 
Assistant Director; Noah Bleicher; Lily Chin; Todd Dice; Paul Gvoth; 
Arthur James Jr; Robert Rapasky; Holly Reil; and Russ Reiter. 

Signed by: 

Katherine V. Schinasi, Managing Director: 
Acquisition and Sourcing Management: 

[End of section] 

Appendix I: Scope and Methodology: 

The Army, Air Force, and Navy each have employed contract security 
guards under the congressional waiver authority. At the time of our 
review, the Marine Corps had not yet used the authority. We focused our 
review on the Army's use of contract security guards because it (1) was 
the first activity to use the waiver authority and (2) had used the 
authority substantially more than the Air Force or Navy. The first Army 
contract security guard contract was awarded in July 2003, whereas the 
Air Force and Navy contracts did not start until May and June 2004, 
respectively. In addition, the Army has contracted for security guards 
at 57 installations, whereas contract security guards are being used at 
18 Air Force and 5 Navy installations. 

During our audit, we conducted interviews with Army officials from the 
Installation Management Agency (IMA), the Army Contracting Agency, and 
the Office of the Provost Marshal General. We visited 11 Army 
installations that are currently using contract security guards and met 
with government and contractor officials at each location. Officials 
from these 11 installations are responsible for a total of 14 different 
installations. These installations represent approximately 25 percent 
of the 57 installations that have the contract security guard program 
in place. We used two factors to determine which installations to 
visit: the contractor and the March/April 2005 performance monitor 
assessments. Our analysis of these evaluations ensured we visited at 
least 1 installation per contractor that had a perfect score, where the 
average of the four award-fee rating categories was 100 percent-- 
typically, these were locations IMA had recommended we visit. To 
provide a balanced view, we then chose 2 other locations for each 
contractor with lower averages and a wide variation in the range of 
scores for the categories. We visited 3 installations per contractor, 
except in the case of Coastal International Security, which provides 
guards at only 2 locations. 

At the 11 installations, we collected an arbitrary sample of the 
personnel files, including screening and training records. We met with 
officials responsible for and collected documentation related to the 
contract security guard program at (1) Adelphi Laboratory Center, (2) 
Fort Belvoir, (3) Fort Campbell, (4) Fort Detrick, (5) Fort Drum, (6) 
Fort Eustis/Fort Story, (7) Fort Meade, (8) Fort Myer/Fort McNair, (9) 
Redstone Arsenal, (10) Fort Riley, and (11) Fort Stewart/Hunter Army 
Airfield. We also met with officials from the four contractors and two 
subcontractors that provide guard services to the Army: Akal Security, 
Alutiiq Security and Technology (with Wackenhut Services as a 
subcontractor), Chenega Integrated Systems (with Vance Federal Security 
Services as a subcontractor), and Coastal International Security. We 
also consulted with officials from the Army Audit Agency, Air Force 
Audit Agency, and the Army Criminal Investigation Command. 

To address the Army's acquisition strategy, we reviewed the various 
proposals for and the ultimate acquisition plan used by the Army 
Contracting Agency. We reviewed Defense Contract Management Agency 
analysis on the Alaska Native corporation (ANC) firms. We also reviewed 
federal regulations pertaining to ANCs under the Small Business 
Administration's 8(a) Business Development Program. We reviewed each 
contract and its subsequent modifications. We analyzed the task orders 
to determine the cost of the different contract vehicles the Army used 
to obtain its contract security guards. We compared the Army's 
acquisition strategy with that of other agencies using contract 
security guards, specifically the U.S. Air Force and the Department of 
Homeland Security's Federal Protective Service. We also held 
discussions with officials from these two agencies. 

To assess whether the Army ensures that the contract security guards 
are effectively screened, we reviewed screening requirements in the 
performance work statement and analyzed the selected personnel 
screening files at the 11 installations we visited. We reviewed 
screening requirements the Air Force and Federal Protective Service 
have for their contract security guards. We interviewed officials at 
the installations, including contractors, and IMA. We shared the 
specific results of our file review of screening records with 
installation and contractor officials. We reviewed our prior reports on 
combating terrorism[Footnote 22] and consulted with representatives 
from the Department of Defense's Office of Special Operations and Low 
Intensity Conflict and the Federal Bureau of Investigation. 

To determine whether the Army ensures the contract security guards are 
adequately trained, we reviewed the training requirements outlined in 
the performance work statement and Army regulation 190-56, The Army 
Civilian Police and Security Guard Program (June 1995), in addition to 
analyzing the sample of personnel training files at the 11 
installations we visited. We interviewed installation officials, 
including contractors, and IMA. We shared the specific results of our 
file review of training records with installation and contractor 
officials. We reviewed the report on the falsification of training 
records prepared by a contractor and consulted with an official from 
the Defense Criminal Investigative Service. We also reviewed the 
training requirements for contract security guards at the Air Force and 
the Federal Protective Service. 

To assess the Army's rationale for providing the contractors with award 
fees and how the award fee process is being implemented, we reviewed 
the Federal Acquisition Regulation to determine what circumstances are 
appropriate for using an award fee with a firm fixed-price 
contract.[Footnote 23] We reviewed the Army Contracting Agency's 
"Contract Incentives Guide" (November 2004), and our recent report 
Defense Acquisitions: DOD Has Paid Billions in Award and Incentive Fees 
Regardless of Acquisition Outcomes (December 2005).[Footnote 24] We 
compared the government monitors' evaluation reports with the criteria 
in the award-fee plan as well as with the final scores approved by the 
IMA fee determining official. We analyzed the requirements in the 
performance work statement and compared them with the award fee-plan. 
Because the Army does not maintain information on how much it is paying 
in award fees, we reviewed each task order to identify the award fees 
authorized and whether contract modifications were executed. At each of 
the installations visited, we discussed the award-fee process with the 
performance monitors and obtained their observations and concerns. 

We conducted our review from May 2005 to February 2006 in accordance 
with generally accepted government auditing standards. 

[End of section] 

Appendix II: List of Army Installations Using Contract Security Guards: 

Installation: Adelphi Laboratory Center; 
Contractor: Chenega Integrated Systems[B]; 
Phase[A]: 3; 
Competition: ANC-8(a) sole-source. 

Installation: Anniston Army Depot; 
Contractor: Akal Security, Inc; 
Phase[A]: 2; 
Competition: Full & open. 

Installation: Barnes Building; 
Contractor: Chenega Integrated Systems; 
Phase[A]: 3; 
Competition: ANC-8(a) sole-source. 

Installation: Fort Belvoir; 
Contractor: Coastal International Security, Inc; 
Phase[A]: 2; 
Competition: Full & Open. 

Installation: Fort Benning; 
Contractor: Chenega Integrated Systems; 
Phase[A]: 3; 
Competition: ANC-8(a) sole-source. 

Installation: Fort Bliss; 
Contractor: Chenega Integrated Systems; 
Phase[A]: 3; 
Competition: ANC-8(a) sole-source. 

Installation: Blue Grass Army Depot; 
Contractor: Akal Security, Inc; 
Phase[A]: 2; 
Competition: Full & open. 

Installation: Fort Bragg; 
Contractor: Alutiiq Security & Technology; 
Phase[A]: 1; 
Competition: ANC-8(a) sole-source. 

Installation: Fort Campbell; 
Contractor: Akal Security, Inc; 
Phase[A]: 2; 
Competition: Full & open. 

Installation: Carlisle Barracks; 
Contractor: Alutiiq Security & Technology; 
Phase[A]: 1; 
Competition: ANC-8(a) sole-source. 

Installation: Fort Carson; 
Contractor: Alutiiq Security & Technology; 
Phase[A]: 3; 
Competition: ANC-8(a) sole-source. 

Installation: Fort Detrick; 
Contractor: Chenega Integrated Systems; 
Phase[A]: 1; 
Competition: ANC-8(a) sole-source. 

Installation: Detroit Arsenal/Selfridge and Sebille Manor; 
Contractor: Alutiiq Security & Technology ; 
Phase[A]: 3; 
Competition: ANC- 8(a) sole-source. 

Installation: Fort Drum; 
Contractor: Coastal International Security, Inc; 
Phase[A]: 2; 
Competition: Full & open. 

Installation: Dugway Proving Grounds; 
Contractor: Chenega Integrated Systems; 
Phase[A]: 3; 
Competition: ANC-8(a) sole-source. 

Installation: Fort Eustis/Fort Story; 
Contractor: Alutiiq Security & Technology ; 
Phase[A]: 3; 
Competition: ANC-8(a) sole-source. 

Installation: Fort Gordon; 
Contractor: Chenega Integrated Systems; 
Phase[A]: 3; 
Competition: ANC-8(a) sole-source. 

Installation: Fort Greely; 
Contractor: Chenega Integrated Systems; 
Phase[A]: 3; 
Competition: ANC-8(a) sole-source. 

Installation: Fort Hood; 
Contractor: Akal Security, Inc; 
Phase[A]: 2; 
Competition: Full & open. 

Installation: Fort Huachuca; 
Contractor: Chenega Integrated Systems; 
Phase[A]: 1; 
Competition: ANC-8(a) sole-source. 

Installation: Fort Irwin; 
Contractor: Chenega Integrated Systems; 
Phase[A]: 3; 
Competition: ANC-8(a) sole-source. 

Installation: Fort Jackson; 
Contractor: Chenega Integrated Systems; 
Phase[A]: 3; 
Competition: ANC-8(a) sole-source. 

Installation: Fort Knox; 
Contractor: Chenega Integrated Systems; 
Phase[A]: 3; 
Competition: ANC-8(a) sole-source. 

Installation: Fort Leavenworth; 
Contractor: Alutiiq Security & Technology ; 
Phase[A]: 3; 
Competition: ANC-8(a) sole-source. 

Installation: Fort Lee; 
Contractor: Alutiiq Security & Technology ; 
Phase[A]: 3; 
Competition: ANC-8(a) sole-source. 

Installation: Fort Leonard Wood; 
Contractor: Alutiiq Security & Technology ; 
Phase[A]: 3; 
Competition: ANC-8(a) sole-source. 

Installation: Letterkenny Army Depot; 
Contractor: Alutiiq Security & Technology ; 
Phase[A]: 3; 
Competition: ANC-8(a) sole-source. 

Installation: Fort Lewis; 
Contractor: Akal Security, Inc; 
Phase[A]: 2; 
Competition: Full & open. 

Installation: Fort McPherson/Fort Gillem; 
Contractor: Alutiiq Security & Technology; 
Phase[A]: 3; 
Competition: ANC-8(a) sole-source. 

Installation: Fort Meade; 
Contractor: Alutiiq Security & Technology; 
Phase[A]: 3; 
Competition: ANC-8(a) sole-source. 

Installation: Military Ocean Terminal, Sunny Point; 
Contractor: Akal Security, Inc; 
Phase[A]: 2; 
Competition: Full & open. 

Installation: Fort Monmouth; 
Contractor: Alutiiq Security & Technology ; 
Phase[A]: 3; 
Competition: ANC-8(a) sole-source. 

Installation: Fort Monroe; 
Contractor: Alutiiq Security & Technology ; 
Phase[A]: 3; 
Competition: ANC-8(a) sole-source. 

Installation: Fort Myer/Fort McNair; 
Contractor: Chenega Integrated Systems; 
Phase[A]: 1; 
Competition: ANC-8(a) sole-source. 

Installation: Natick Soldier Systems Center; 
Contractor: Alutiiq Security & Technology ; 
Phase[A]: 3; 
Competition: ANC-8(a) sole-source. 

Installation: Picatinny Arsenal; 
Contractor: Alutiiq Security & Technology ; 
Phase[A]: 3; 
Competition: ANC-8(a) sole-source. 

Installation: Fort Polk; 
Contractor: Chenega Integrated Systems; 
Phase[A]: 3; 
Competition: ANC-8(a) sole-source. 

Installation: Presidio of Monterey; 
Contractor: Chenega Integrated Systems; 
Phase[A]: 3; 
Competition: ANC-8(a) sole-source. 

Installation: Red River Army Depot; 
Contractor: Chenega Integrated Systems; 
Phase[A]: 3; 
Competition: ANC-8(a) sole-source. 

Installation: Redstone Arsenal; 
Contractor: Alutiiq Security & Technology; 
Phase[A]: 3; 
Competition: ANC-8(a) sole-source. 

Installation: Fort Richardson; 
Contractor: Chenega Integrated Systems; 
Phase[A]: 3; 
Competition: ANC-8(a) sole-source. 

Installation: Fort Riley; 
Contractor: Akal Security, Inc; 
Phase[A]: 2; 
Competition: Full & open. 

Installation: Fort Sam Houston; 
Contractor: Chenega Integrated Systems; 
Phase[A]: 1; 
Competition: ANC-8(a) sole-source. 

Installation: Sierra Army Depot; 
Contractor: Chenega Integrated Systems; 
Phase[A]: 3; 
Competition: ANC-8(a) sole-source. 

Installation: Fort Sill; 
Contractor: Chenega Integrated Systems; 
Phase[A]: 3; 
Competition: ANC-8(a) Sole-Source. 

Installation: Fort Stewart/Hunter Army Airfield; 
Contractor: Akal Security, Inc; 
Phase[A]: 2; 
Competition: Full & open. 

Installation: Tooele Army Depot; 
Contractor: Chenega Integrated Systems; 
Phase[A]: 3; 
Competition: ANC-8(a) sole-source. 

Installation: Fort Wainwright; 
Contractor: Chenega Integrated Systems; 
Phase[A]: 3; 
Competition: ANC-8(a) sole-source. 

Installation: Walter Reed Army Medical Center; 
Contractor: Chenega Integrated Systems; 
Phase[A]: 1; 
Competition: ANC-8(a) sole- source. 

Installation: U.S. Military Academy at West Point; 
Contractor: Alutiiq Security & Technology ; 
Phase[A]: 3; 
Competition: ANC-8(a) sole-source. 

Installation: White Sands Missile Range; 
Contractor: Chenega Integrated Systems; 
Phase[A]: 3; 
Competition: ANC-8(a) sole-source. 

Installation: Yuma Proving Grounds; 
Contractor: Chenega Integrated Systems; 
Phase[A]: 3; 
Competition: ANC-8(a) sole-source. 

Source: Army (data); GAO (analysis and presentation). 

[A] Phase 1: Installations obtaining contract security guards starting 
in fiscal year 2003 from the ANCs' sole-source contracts under the 8(a) 
program. 

Phase 2: Installations obtaining contract security guards under the 
full and open competition contracts. 

Phase 3: Installations obtaining contract security guards starting in 
fiscal year 2004 and later from the ANCs' sole-source contracts under 
the 8(a) program. 

[B] Chenega Technical Products received the original contract award; it 
subsequently changed its name to Chenega Integrated Systems effective 
December 7, 2004. 

[End of table] 

[End of section] 

Appendix III: Agency Comments: 

OFFICE OF THE UNDER SECRETARY OF DEFENSE: 
ACQUISITION, TECHNOLOGY AND LOGISTICS: 
3000 DEFENSE PENTAGON: 
WASHINGTON, DC 20301-3000: 

Mr. David E. Cooper: 
Director, Acquisition and Sourcing Management: 
U.S. Government Accountability Office: 
441 G Street, N.W.: 
Washington, D.C. 20548: 

MAR 29 2006: 

Dear Mr. Cooper: 

This is the Department of Defense (DoD) response to the GAO draft 
report, "CONTRACT SECURITY GUARDS: Army's Guard Program Requires 
Greater Oversight and Reassessment of Acquisition Approach." dated 
February 22, 2006, (GAO Code 120452/GAO-06-284), 

The Department of Defense agrees with the findings of the subject 
report and the Department of the Army has already implemented the seven 
recommendations "Specific comments on each recommendation are enclosed. 
These seven recommendations will strengthen the DoD contracting process 
and help ensure that the Department receives the best security guard 
support available. 

This report and its recommendations come at a very critical time 
because the current threat and security requirements at DOD 
installations and facilities are anticipated to continue. Additionally, 
the requirements for utilization of active and reserve component forces 
are expected to continue for both the global war on terrorism and in 
support of other national emergencies. To combat this threat, and 
provide adequate manpower for these competing missions, commanders must 
have the flexibility to rapidly respond to changes in installation 
security requirements. The ability to contract for security guards 
provides DOD a scalable and repeatable mechanism that is responsive to 
initial surges and adapts smoothly with requirements for long-term 
support while freeing military forces from these time and personnel 
intensive duties. 

Continued authority to use contract security guards provides the 
military services strategic flexibility to respond efficiently to 
installation and facility security requirements. It allows for the 
efficient use of military manpower by enabling the services to plan for 
the long term scope of participation by active and reserve component 
personnel. To consider a long-term plan without the use of contractors 
could result in an untenable security position at our installations. 

Signed by: 

Philip W. Grone: 
Deputy Under Secretary of Defense (Installations and Environment): 

Enclosure: 

GAO DRAFT REPORT-DATED FEBRUARY 22, 2006 GAO CODE 120452/GAO-06-284: 

"CONTRACT SECURITY GUARDS: ARMY'S GUARD PROGRAM REQUIRES GREATER 
OVERSIGHT AND REASSESSMENT OF ACQUISITION APPROACH" 

DEPARTMENT OF DEFENSE COMMENTS TO THE RECOMMMENDATIONS: 

RECOMMENDATION 1: The GAO recommended that the Secretary of Defense 
direct the Secretary of the Army to reassess its acquisition strategy 
for contract security guards, using competitive procedures for future 
contracts and/or task orders. (p. 33/GAO Draft Report): 

DOD RESPONSE: Concur. The Army is in the process of re-soliciting all 
contracts for the 54 installations using full and open competition. 

RECOMMENDATION 2: The GAO recommended that the Secretary of Defense 
direct the Secretary of the Army to remove award-fee provisions from 
future contracts and task orders under existing contracts. (p. 33/GAO 
Draft Report): 

DOD RESPONSE: Concur. The Army has removed the award-fee provisions 
under the re-solicitation of all of the contracts under full and open 
competition. 

RECOMMENDATION 3: The GAO recommended that the Secretary of Defense 
direct the Secretary of the Army to monitor the status of DoD's revised 
antiterrorism standards and implement them into Army policy for 
screening of contract security guards as deemed suitable. (p.33/GAO 
Draft Report): 

DOD RESPONSE: Concur. The Army will incorporate the revised 
antiterrorism standards into policy for the screening of contract 
security guards. 

RECOMMENDATION 4: The GAO recommended that the Secretary of Defense 
direct the Secretary of the Army to direct installations to use the 
Army's Crime Records Center (ACRC) and the National Crime Information 
Center (NCIC) databases to supplement initial screening (local agency 
check) on contract security guards until the new standards are in 
effect. (p. 33/GAO Draft Report): 

DOD RESPONSE: Concur. The Army will send out a Headquarters, Department 
of Army message and implement into Army policy the use of ACRC and NCIC 
until the new DoD standards take effect. 

RECOMMENDATION 5: The GAO recommended that the Secretary of Defense 
direct the Secretary of the Army to issue a standardized recordkeeping 
format for contractors to show that guards have met all training 
requirements. (p. 33/GAO Draft Report): 

DOD RESPONSE: Concur. The Army is revising the Performance Work 
Statement (PWS) which will include a standardized recordkeeping format. 

RECOMMENDATION 6: The GAO recommended that the Secretary of Defense 
direct the Secretary of the Army to require installation performance 
monitors to review training files to ensure that initial training 
certification is achieved as well as subsequent annual recertification. 
(p. 33/GAO Draft Report): 

DOD RESPONSE: Concur. The Army is updating the Quality Assurance 
Surveillance Plan (QASP). The QASP will provide clear and detailed 
instructions to inspect all individual training records and 
certifications. 

RECOMMENDATION 7: The GAO recommended that the Secretary of Defense 
direct the Secretary of the Army to require an Army official to monitor 
and certify contractor training of guards, especially weapons- 
qualification training. 

DOD RESPONSE: Concur. The revised QASP and PWS will include the 
requirement for an Army official to monitor and certify contractor 
training of security guards. 

[End of section] 

FOOTNOTES 

[1] GAO, Hurricanes Katrina and Rita: Preliminary Observations on 
Contracting for Response and Recovery Efforts, GAO-06-246T (Washington, 
D.C.: Nov. 08, 2005). 

[2] Officials from the 11 installations are responsible for a total of 
14 installations. 

[3] Alaska Native corporations are authorized to own 8(a) firms that 
can be awarded sole-source contracts for any amount under the Small 
Business Administration's 8(a) Business Development Program, as long as 
they meet relevant size standards and other eligibility requirements. 

[4] GAO, Combating Terrorism: Improvements Needed in European Command's 
Antiterrorism Approach for In-Transit Forces at Seaports, GAO-03-731NI 
(Washington, D.C.: September 2003), and Combating Terrorism: 
Improvements Needed in Pacific Command's Antiterrorism Approach for In- 
Transit Forces at Seaports, GAO-04-851NI (Washington, D.C.: August 
2004). 

[5] GAO, Human Capital: A Guide for Assessing Strategic Training and 
Development Efforts in the Federal Government, GAO-04-546G (Washington, 
D.C.: March 2004). 

[6] From fiscal year 2003 through fiscal year 2005, the time frame 
covered in the report, the Army had contracted for 89 percent of DOD's 
overall guard program. 

[7] The Marine Corps intended to start using the program if Congress 
further extended the waiver authority in the National Defense 
Authorization Act for Fiscal Year 2006 or made it permanent. 

[8] 13 CFR 124.506(b). 

[9] GAO, Defense Acquisitions: DOD Has Paid Billions in Award and 
Incentive Fees Regardless of Acquisition Outcomes, GAO-06-66 
(Washington, D.C.: Dec. 19, 2005). 

[10] GAO-04-851NI and GAO-03-731NI. 

[11] The Federal Protective Service's mission is to provide law 
enforcement and security services to more than 1 million tenants and 
daily visitors to all federally owned and leased facilities nationwide. 

[12] DOD's Defense Contract Management Agency provides numerous 
services to DOD agencies, including insight into contractor operations 
to assess and forecast contractor cost, schedule, and performance 
information. 

[13] Initially, the caps were increased to a total of $2.1 billion. 
When we asked for clarification, the contracting officer said it was 
never the Army's intention to award to that ceiling amount, and 
subsequent contract modifications were executed to decrease the total 
contracts' value to $480 million each. 

[14] "Limitations on subcontracting," FAR 52.219.14. Such nonlabor 
costs items as weapons and uniforms for security guards are provided by 
the subcontractor and do not apply toward the 50-percent limit. 

[15] GAO-03-731NI and GAO-04-851NI. 

[16] GAO-03-731NI and GAO-04-851NI. 

[17] The revision became effective January 3, 2006, and applies to 
solicitations and contracts issued or awarded on or after October 27, 
2005. Contracts awarded before that date requiring contractors to have 
access to a federally-controlled facility or a federal information 
system must be modified by October 27, 2007, pursuant to Federal 
Acquisition Regulation 4.13. 

[18] The purpose of the Quality Assurance Surveillance Plan is to 
ensure that the security guard contractor meets the objectives of the 
performance work statement. The plan is intended to provide 
installation monitors an effective and systematic surveillance method 
for the services listed in the performance work statement. 

[19] GAO-04-546G. 

[20] GAO, Aviation Security: Flight and Cabin Crew Member Security 
Training Strengthened, but Better Planning and Internal Controls 
Needed, GAO-05-781 (Washington, D.C.: Sept. 6, 2005). 

[21] GAO-06-66. 

[22] GAO-04-851NI and GAO-03-731NI. 

[23] Federal Acquisition Regulation 16.404. 

[24] GAO-06-66 

GAO's Mission: 

The Government Accountability Office, the investigative arm of 
Congress, exists to support Congress in meeting its constitutional 
responsibilities and to help improve the performance and accountability 
of the federal government for the American people. GAO examines the use 
of public funds; evaluates federal programs and policies; and provides 
analyses, recommendations, and other assistance to help Congress make 
informed oversight, policy, and funding decisions. GAO's commitment to 
good government is reflected in its core values of accountability, 
integrity, and reliability. 

Obtaining Copies of GAO Reports and Testimony: 

The fastest and easiest way to obtain copies of GAO documents at no 
cost is through the Internet. GAO's Web site ( www.gao.gov ) contains 
abstracts and full-text files of current reports and testimony and an 
expanding archive of older products. The Web site features a search 
engine to help you locate documents using key words and phrases. You 
can print these documents in their entirety, including charts and other 
graphics. 

Each day, GAO issues a list of newly released reports, testimony, and 
correspondence. GAO posts this list, known as "Today's Reports," on its 
Web site daily. The list contains links to the full-text document 
files. To have GAO e-mail this list to you every afternoon, go to 
www.gao.gov and select "Subscribe to e-mail alerts" under the "Order 
GAO Products" heading. 

Order by Mail or Phone: 

The first copy of each printed report is free. Additional copies are $2 
each. A check or money order should be made out to the Superintendent 
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or 
more copies mailed to a single address are discounted 25 percent. 
Orders should be sent to: 

U.S. Government Accountability Office 

441 G Street NW, Room LM 

Washington, D.C. 20548: 

To order by Phone: 

Voice: (202) 512-6000: 

TDD: (202) 512-2537: 

Fax: (202) 512-6061: 

To Report Fraud, Waste, and Abuse in Federal Programs: 

Contact: 

Web site: www.gao.gov/fraudnet/fraudnet.htm 

E-mail: fraudnet@gao.gov 

Automated answering system: (800) 424-5454 or (202) 512-7470: 

Public Affairs: 

Jeff Nelligan, managing director, 

NelliganJ@gao.gov 

(202) 512-4800 

U.S. Government Accountability Office, 

441 G Street NW, Room 7149 

Washington, D.C. 20548: