Initially, security requirements were filled at military installations  with active duty and reserve component personnel. 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. 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. As of  December 2005, more than $200 million has been subcontracted under the  Army’s guard contracts. 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. 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. 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. The Army requires that the contractors conduct training in these 19 areas  before the guards are put to work and annually thereafter. In 2005, an investigation  discovered that contractor personnel at one installation had falsified  training records relating to firearms qualification. The installation required the guards to be  requalified in firearms, which cost the Army over $7,000. 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. 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. 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. 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. The report, “Department of Defense  Installation Security Guard Requirement Assessment and Plan,” was  delivered to Congress on November 22, 2005. 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. 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. 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.
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.