    Contract Security Guards: Army's Guard Program Requires Greater
    Oversight and Reassessment of Acquisition Approach (03-APR-06,
    GAO-06-284).

    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.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-06-284
        ACCNO:   A50617
      TITLE:     Contract Security Guards: Army's Guard Program Requires
    Greater Oversight and Reassessment of Acquisition Approach
         DATE:   04/03/2006
      SUBJECT:   Army procurement
    	     Contract administration
    	     Contract oversight
    	     Contract performance
    	     Contractor payments
    	     Department of Defense contractors
    	     Employee training
    	     Performance measures
    	     Risk assessment
    	     Security services contracts
    	     Sole source procurement
    	     Standards
    	     Award fees
    	     Background checks
    	     SBA 8(a) Program

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    GAO-06-284

         * Results in Brief
         * Background
         * Army's Approach for Acquiring Contract Security Guards Relie
              * Army Used Three-Phased Acquisition Approach
              * Army's Sole-Source Approach Centered on Contracting with 8(a
              * ANC Firms Subcontracted with Large Security Guard Companies
         * Army Procedures Do Not Provide Assurance That Contract Secur
              * Two-Part Screening Process Has Significant Weaknesses
              * Initial Screening Process Relies on Individuals to Self-Repo
              * DOD Planning Actions to Improve Screening Process for Contra
         * Lax Oversight and Training Irregularities Raise Doubts About
              * Weaknesses in Army's Training Program Include Inadequate Ove
                   * Government Oversight Lacking
                   * Training Records Incomplete
                   * Training Techniques and Tasks Not Standardized
              * Potential Improvements for Contract Security Guard Training
         * Continued Need for Award Fees Is Questionable
              * Award-Fee Plan Rewards Basic Compliance
              * Army Has Awarded Almost All Available Award-Fees
              * Army Performance Monitors Not Consistently Complying with Aw
              * IMA Award-Fee Board Has Recommended Consistently High Rating
              * Award-Fee Board's Processes Lack Rigor
              * Continued Need for Award Fee Questionable
         * DOD Report to Congress Does Not Address Some Key Issues Pert
         * Conclusion
         * Recommendations
         * Agency Comments
         * GAO's Mission
         * Obtaining Copies of GAO Reports and Testimony
              * Order by Mail or Phone
         * To Report Fraud, Waste, and Abuse in Federal Programs
         * Congressional Relations
         * Public Affairs

    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

    Contents

    Letter 1

    Results in Brief 2
    Background 6
    Army's Approach for Acquiring Contract Security Guards Relies Mostly on
    8(a) Sole-Source Contracts 9
    Army Procedures Do Not Provide Assurance That Contract Security Guards Are
    Adequately Screened 16
    Lax Oversight and Training Irregularities Raise Doubts About the Adequacy
    of the Guards' Training 20
    Continued Need for Award Fees Is Questionable 24
    DOD Report to Congress Does Not Address Some Key Issues Pertaining to the
    Army's Guard Program 31
    Conclusion 32
    Recommendations 33
    Agency Comments 33
    Appendix I Scope and Methodology 35
    Appendix II List of Army Installations Using Contract Security Guards 38
    Appendix III Agency Comments 40

    Tables

    Table 1: Overview of the Army's Three-Phased Approach for Hiring Contract
    Security Guards 10
    Table 2: Army's Three-Phased Acquisition Approach 12
    Table 3: Highlights of Activities Required under Army's Two-Part Screening
    Process 16
    Table 4: Contractors' Training Requirements 21
    Table 5: Criteria Used to Evaluate Contractors' Performance 25
    Table 6: Evaluations and Percentage of Fees Authorized as of February 1,
    2006 28

    Figures

    Figure 1: Number of Installations with Guards Obtained under Each Phase 11
    Figure 2: Comparison of Contract Security Guard Award Fees Authorized and
    Not Earned as of February 1, 2006 (dollars in millions) 25

    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

    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. However, because this
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    separately.

    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.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.

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

    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).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.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.

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

    3Alaska 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.

    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.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.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.

    4GAO, 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).

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

    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.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-`a-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.

    6From 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.

                                       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:

               o  Recruiting and training standards for contract security guards
               must be comparable to standards for DOD personnel who perform
               security guard functions.
               o  Contract security guards must be effectively supervised,
               reviewed, and evaluated.
               o  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.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.

               o  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.

               o  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.

               o  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.

               o  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.

               o  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.

               o  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.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.

    7The 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.

    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.

    813 CFR 124.506(b).

    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.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.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.

    9GAO, 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 .

    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

                         Contracting
    Acquisition phase approach         Contractors hired
    Phase one         8(a) sole-source 2 contractors that are 8(a) Alaska
                                          Native corporation firms; 2 security
                                          guard firms as subcontractors
    Phase two         Full and open    2 other contractors hired through the
                         competition      use of new competitive contracts
    Phase three       8(a) sole-source Same contractors used in phase one
    Total committed value of 8(a) sole-source                   $494.8 million
    contracts from phases one and three:
                                                                   $238.0 million
    Total committed value of competitive contracts
    from phase two:

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

    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

    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              Activity
    Army headquarters       Requirement: Issued instructions for implementing
                               contract security guard program
    Army Installation       Description of approach: Issued an implementation
    Management Agency (IMA) approach for identifying the installations in need
                               of contract security guards
    Army's Office of the    List of installations needing contract security
    Provost Marshal General 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
    Army Contracting Agency Contracting options: Northern and southern
    (ACA)                   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:

                                  o  They offer quickest solution for placing
                                  "boots on the ground"
                                  o  They allow for competitive procurement
                                  o  Individual installations could place orders
                                  for contract guards against GSA Schedule
                                  contracts and choose from 66 companies that had
                                  experience with contract security guards
                                  o  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
                                  o  Installations could negotiate with vendors
                                  and conceivably obtain prices an average of 10
                                  to 15 percent lower than the stated GSA
                                  Schedule prices
                                  o  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:

                                  o  Potentially a huge amount of new dollars
                                  going to business participating in the 8(a)
                                  Business Development Program,
                                  o  A large consolidation at the national level
                                  that both ACA and IMA could point to as a
                                  success story.
    ACA headquarters and    Northern region, selected as contract office,
    northern region         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).

    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.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.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.

    11The 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.

    12DOD'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.

    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.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.

    13Initially, 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.

    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.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.

    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.

    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.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      Part two: detailed screening
    Who's responsible: the           Who's responsible: Army officials at each
    contractor                       installation
    Required activities:             Required activities:

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

    Education: Check applicant's
    educational records

    Finances: Check credit history
    Time frame for conducting these  Time frame for conducting these
    activities: We found it took 1   activities: We found time frames ranging
    day to 2 weeks                   from 1 week to over 2 years

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

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

    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:

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

               o  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.

               o  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.

               o  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.

               o  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.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.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.

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

    17The 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.

    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).

    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.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."

    18The 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.

    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:

               o  weapons training conducted in a simulation room with moving
               targets versus only classroom lectures;
               o  prospective guards given unlimited tries to pass weapons
               training versus being allowed only three tries;

               o  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

               o  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.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.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.

    19 GAO-04-546G .

    20GAO, 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).

                     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                                 Selected subfactors
    Achieving/maintaining full operational    o  Extent to which contractor
    capability (20%)                          achieves and maintains required
                                                 level of guard coverage
                                                 o  Responsiveness, alertness,
                                                 physical fitness, courtesy of
                                                 guards
    Proper control of access to the           o  Denying access when proper in
    installation/controlled facilities        both actual circumstances and
    (30%)                                     government surveillance or blind
                                                 tests
    Effective contribution to a positive      o  Proper appearance, to include
    Army image in the installation and        appropriate uniform
    surrounding community and effective       o  Interaction with the public
    management of guard improprieties         and DOD personnel
    (30%)                                     o  Appropriate conduct in the
                                                 community while off-duty
                                                 o  Extent to which contractor
                                                 effectively responds to
                                                 incidents of employee misconduct
                                                 or allegations of impropriety
    Cooperation with IMA and Army             o  Effectively works with the
    commands; sound management of             Army organization to jointly and
    government property (20%)                 effectively resolve security
                                                 services-related questions,
                                                 problems, and issues that arise
                                                 during contract performance
                                                 o  Extent to which contractor
                                                 personnel demonstrate the
                                                 ability to respond to duty
                                                 changes and contingencies that
                                                 may arise
                                                 o  Assist with the effective
                                                 management and maintenance of
                                                 government resources

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

    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)

    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.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.

    21 GAO-06-66 .

    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                 Cumulative
    available fees   Number of percentage of   Total award fees authorized (in
    authorized     evaluations   evaluations              millions of dollars)
    100                     89            53                             $8.57
    99                      23            66                             $3.19
    97 - 98                 28            83                             $2.83
    94 - 96                 16            92                             $2.52
    90 - 93                  8            97                             $0.58
    Less than 90             5           100                             $0.65
    Total                  169                                          $18.34

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

    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.

               o  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.

               o  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.

               o  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.

               o  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.

               o  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.

               o  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.

               o  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:

               o  Direct the ACA to take the following two actions:

                            o  reassess its acquisition strategy for contract
                            security guards, using competitive procedures for
                            future contracts and/or task orders,
                            o  remove award-fee provisions from future contracts
                            and task orders under existing contracts.

               o  Direct IMA to take the following four actions:

                            o  monitor the status of DOD's revised antiterrorism
                            standards and implement them into Army policy for
                            screening of contract security guards as deemed
                            suitable,
                            o  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,
                            o  issue a standardized recordkeeping format for
                            contractors to show that the guards have met all
                            training requirements, and
                            o  require installation performance monitors to
                            review training files to ensure that initial training
                            certification is achieved as well as subsequent
                            annual recertification.

               o  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) 512-4841or 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.

    Katherine V. Schinasi, Managing Director Acquisition and Sourcing
    Management

    Appendix I: Scope and Methodology 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 terrorism1 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.

    1 GAO-04-851NI and GAO-03-731NI .

    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.2 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).3 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.

    2Federal Acquisition Regulation 16.404.

    3 GAO-06-66

    Appendix II: List of Army Installations Using Contract Security Guards

    Installation                     Contractor            Phasea  Competition
    Adelphi Laboratory Center        Chenega Integrated         3  ANC- 8(a)
                                        Systemsb                      sole-source
    Anniston Army Depot              Akal Security, Inc.        2  Full & open
    Barnes Building                  Chenega Integrated         3  ANC- 8(a)
                                        Systems                       sole-source
    Fort Belvoir                     Coastal International      2  Full & Open
                                        Security, Inc.
    Fort Benning                     Chenega Integrated         3  ANC- 8(a)
                                        Systems                       sole-source
    Fort Bliss                       Chenega Integrated         3  ANC- 8(a)
                                        Systems                       sole-source
    Blue Grass Army Depot            Akal Security, Inc.        2  Full & open
    Fort Bragg                       Alutiiq Security &         1  ANC- 8(a)
                                        Technology                    sole-source
    Fort Campbell                    Akal Security, Inc.        2  Full & open
    Carlisle Barracks                Alutiiq Security &         1  ANC- 8(a)
                                        Technology                    sole-source
    Fort Carson                      Alutiiq Security &         3  ANC- 8(a)
                                        Technology                    sole-source
    Fort Detrick                     Chenega Integrated         1  ANC- 8(a)
                                        Systems                       sole-source
    Detroit Arsenal/Selfridge and    Alutiiq Security &         3  ANC- 8(a)
    Sebille Manor                    Technology                    sole-source
    Fort Drum                        Coastal International      2  Full & open
                                        Security, Inc.
    Dugway Proving Grounds           Chenega Integrated         3  ANC- 8(a)
                                        Systems                       sole-source
    Fort Eustis/Fort Story           Alutiiq Security &         3  ANC- 8(a)
                                        Technology                    sole-source
    Fort Gordon                      Chenega Integrated         3  ANC- 8(a)
                                        Systems                       sole-source
    Fort Greely                      Chenega Integrated         3  ANC- 8(a)
                                        Systems                       sole-source
    Fort Hood                        Akal Security, Inc.        2  Full & open
    Fort Huachuca                    Chenega Integrated         1  ANC- 8(a)
                                        Systems                       sole-source
    Fort Irwin                       Chenega Integrated         3  ANC- 8(a)
                                        Systems                       sole-source
    Fort Jackson                     Chenega Integrated         3  ANC- 8(a)
                                        Systems                       sole-source
    Fort Knox                        Chenega Integrated         3  ANC- 8(a)
                                        Systems                       sole-source
    Fort Leavenworth                 Alutiiq Security &         3  ANC- 8(a)
                                        Technology                    sole-source
    Fort Lee                         Alutiiq Security &         3  ANC- 8(a)
                                        Technology                    sole-source
    Fort Leonard Wood                Alutiiq Security &         3  ANC- 8(a)
                                        Technology                    sole-source
    Letterkenny Army Depot           Alutiiq Security &         3  ANC- 8(a)
                                        Technology                    sole-source
    Fort Lewis                       Akal Security, Inc.        2  Full & open
    Fort McPherson/Fort Gillem       Alutiiq Security &         3  ANC- 8(a)
                                        Technology                    sole-source
    Fort Meade                       Alutiiq Security &         3  ANC- 8(a)
                                        Technology                    sole-source
    Military Ocean Terminal, Sunny   Akal Security, Inc.        2  Full & open
    Point
    Fort Monmouth                    Alutiiq Security &         3  ANC- 8(a)
                                        Technology                    sole-source
    Fort Monroe                      Alutiiq Security &         3  ANC- 8(a)
                                        Technology                    sole-source
    Fort Myer/Fort McNair            Chenega Integrated         1  ANC- 8(a)
                                        Systems                       sole-source
    Natick Soldier Systems Center    Alutiiq Security &         3  ANC- 8(a)
                                        Technology                    sole-source
    Picatinny Arsenal                Alutiiq Security &         3  ANC- 8(a)
                                        Technology                    sole-source
    Fort Polk                        Chenega Integrated         3  ANC- 8(a)
                                        Systems                       sole-source
    Presidio of Monterey             Chenega Integrated         3  ANC- 8(a)
                                        Systems                       sole-source
    Red River Army Depot             Chenega Integrated         3  ANC- 8(a)
                                        Systems                       sole-source
    Redstone Arsenal                 Alutiiq Security &         3  ANC- 8(a)
                                        Technology                    sole-source
    Fort Richardson                  Chenega Integrated         3  ANC- 8(a)
                                        Systems                       sole-source
    Fort Riley                       Akal Security, Inc.        2  Full & open
    Fort Sam Houston                 Chenega Integrated         1  ANC- 8(a)
                                        Systems                       sole-source
    Sierra Army Depot                Chenega Integrated         3  ANC- 8(a)
                                        Systems                       sole-source
    Fort Sill                        Chenega Integrated         3  ANC- 8(a)
                                        Systems                       Sole-Source
    Fort Stewart/Hunter Army         Akal Security, Inc.        2  Full & open
    Airfield
    Tooele Army Depot                Chenega Integrated         3  ANC- 8(a)
                                        Systems                       sole-source
    Fort Wainwright                  Chenega Integrated         3  ANC- 8(a)
                                        Systems                       sole-source
    Walter Reed Army Medical Center  Chenega Integrated         1  ANC- 8(a)
                                        Systems                       sole-source
    U.S. Military Academy at West    Alutiiq Security &         3  ANC- 8(a)
    Point                            Technology                    sole-source
    White Sands Missile Range        Chenega Integrated         3  ANC- 8(a)
                                        Systems                       sole-source
    Yuma Proving Grounds             Chenega Integrated         3  ANC- 8(a)
                                        Systems                       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.

    Appendix III: Agency Comments

    (120452)

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

    April 2006

    CONTRACT SECURITY GUARDS

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

    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 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.

    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.
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