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Engaging Private Security under USAID Contracts and Awards

November 13, 2019

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Olga Wall

Chief of Compliance and Contract Administration
Palladium: Make It Possible

This one is for those working in more and more dangerous and unpredictable environments, which require security services contracts.

As we all know, USAID’s funds cannot be used to directly procure weapons or military grade equipment, therefore the only way for a USAID implementer to obtain security for its staff in the field is to procure “turn-key security services” on some sort of fixed price basis, which does not allow direct procurement and ownership by the implementer of prohibited equipment.

What does that mean? How do you compete and award a contract for “turn-key” security? What type of contract do you need and what compliance safeguards are needed to be put in place?

This article attempts to cover some of these issues:

Turn-Key Security – Competition

This means armed static and mobile security, vehicles with drivers, tracking, bomb sniffing dogs, entry scanner equipment, Closed Circuit Surveillance, Emergency Medical Response Services, body searchers, and the like, that you need to have at varying levels in the world’s conflict zones.

The only way to compete these services, in my view (and Diplomatic Security agrees), is on a “best value basis”, since “lowest price/technically acceptable” competition can result in sub-standard services being provided in the area, which can cost your staff’s lives. 

Procurement procedures

  • Pre-qualify/Short-list the companies, which will be invited to compete
  • Issue Request for Letter of Interest and attach a Non-Disclosure Agreement for those companies, which will want to compete – this will allow you to disclose sensitive requirements/information during Request for Proposal Stage
  • Issue a Request for Proposal (RFP)

RFP Best Practices

In order to obtain the best value services, your request for proposal must include the following:

  • Security/Threat Assessment and Requirements (this can be a product of a separate subcontract to be completed by a company or a consultant (or in-house security) other than the security companies competing for the security contract. This assessment needs to be agreed upon by your Corporate Security Decision Makers.)
  • Detailed Scope of Work, Position Descriptions, Personnel Standards, Personnel Min Training Requirements and Specifications for Equipment based on the approved Security/Threat Assessment
  • Request for copy of Code of Conduct/Ethics, Functional Training Curriculum, SOPs, Safeguarding, Staff Duty of Care and other relevant Procedures/Policies
  • State Minimum Period of Performance (for pricing), allow for Continuity of Services pricing
  • State Invoicing and Verification of Services Procedures (see below – discussion on Changes)
  • Request License/Registration for the country of performance
  • Request identification and/or pricing of available optional adjacent services (medevac, evacs, vetting databases, travel locator services, relevant apps/systems and K&R processes)
  • Disclosure of Recruitment Procedures and Vetting Procedures for Personnel or Requirement to Confirm Compliance with certain Vetting Procedures
  • Past Performance/ Past Experience Info
  • Key Personnel Resumes
  • Request for References Contact Information (at least 3)
  • Disclosure of any Serious Incidents and Casualties over the last 5 years
  • Request for Loss History for 3-5 years (“Loss Runs”) from offeror’s Insurance Providers/Agents for all relevant types of insurance coverage, included in the contract to be issued
  • Request for Financial Capability Information (ability to obtain credit/existing credit line etc.)
  • Request for Security Personnel Payroll procedures (you do not want guards who go unpaid for months)
  • Request Details on how positions are manned and minimum and maximum hours personnel are required to work/rest etc.
  • If K-9 services are being procured, request the procedures for K-9 care, medical clearances, duty of care and humane treatment – US MWD (Military Working Dogs) have excellent standards.
  • Attach a copy of the Contract which will result from the solicitation including all the required flow down provisions from your Prime Instrument
  • Attach a template for Price Proposal
  • Certifications in regard to debarment (by US or other governments), terrorist non-support, anti-lobbying, anti-trust, Foreign Corrupt Practices Act and other eligibility certifications
  • State any ISO certifications or equivalent for the industry 

Type of Contract

You would think that a traditional T&M subcontract would be the right contract for this type of effort and you would be wrong.

Most security companies do not do well with DCAA mandated time sheet requirements for T&M contracts. Mostly because they are not set up to operate that way, it is too costly and also because it is hard to fill out a time sheet when you are hiding behind an armored vehicle trying to save your principle’s life…..

So, unlike traditional T&M contracts, which provide for “work days” at Fixed Burdened Rates and do not pay for non-work days, security contracts are priced based on a total cost of personnel plus agreed burden multiplied by total months for each position to be provided.

For example:

For 6 Armed Static Guard Posts required to be manned around the clock, the security company will likely price 18 personnel (2 shifts of 12 hours plus rotation personnel on stand-by for pee breaks, vacations, days off etc.). So the pricing goes something like this:

6 Static Positions (1 year contract) = 18 people x 12 months x monthly burdened rate = total cost ceiling.

Now, this is how the security company assures your 6 positions have coverage and they price the risk of the fact that, in reality, the actual number of personnel that the security company may have to provide to man those 6 positions 24/7/365 may be more than 18.

Your fixed price per month/per position stays the same regardless of how many personnel they actually employ – this provides value for money and price guarantee, because each position is priced on a fixed price basis regardless of the number of personnel that a security company would have to employ to man it.

This of course also means, that time sheets are not needed to track individuals’ time, because all that you should care about is that those 6 posts have a guy (or girl) with a weapon in accordance with your specified standards it at all times around the clock.

This calls for a Fixed Unit Price Contract or Fixed Monthly Price Contract or Fixed Unit Price plus Reimbursable Ceiling Contract or any combination thereof.

Fixed Unit Price plus Reimbursable Price Contract may look like this:

  • Labor – The contract will list fixed unit price rates per month by position/post or even for all positions together per month (the prices are all inclusive: weapons, personal protection equipment, uniforms, fringe, rotations, travel, allowances, profits etc.)
  • Equipment and Mobile Services – Fixed unit price rates for provision of equipment, vehicles with drivers (discussion below) and other things needed to implement the contract. Again Fixed Unit Prices are all inclusive and must be provided to a specified standard and/or a specified operations schedule etc. Substitutes at minimum standards may be discussed at reduced prices.
  •  Insurance and Fuel- this may be provided on reimbursable basis with provision of receipts. Especially important for DBA insurance premiums, which get audited based on actual payroll numbers.
  •  Armored Vehicles – USAID does not allow direct purchase of armoured vehicles unless they conform to USAID armed vehicle standards, which are diplomatic security standards. Those standards are so high that only a few classified manufacturers are able to make them and a waiting list is 24 months long.  This is because USAID retains title to purchased armoured vehicles and may use them for their own staff after your program is over, and USAID direct hire staff are required to be protected in a certain way and may only be transported in DS approved standard vehicles.

Also, all vehicles with a few exceptions, procured with USAID funds, must be manufactured in the US, which, again makes this process too long and renders the task useless. These US-made rules apply even if you are simply leasing a vehicle for longer than 180 days.

The way to do this is to procure “transportation services” and not lease individual vehicles and hire full time drivers. Transportation services are defined as fixed unit priced vehicle/driver services, inclusive of all insurance, maintenance etc.

This is why your fixed unit prices for armored mobile services should either be priced on Vehicle/Driver Per Day or Vehicle/Driver/Per Month Basis, inclusive of all maintenance and automobile insurance.

Deductive Changes/Price Adjustments

So, what happens if the vehicles/drivers or armed guards do not show up upon inspection? Since you are paying a fixed price per month, would your only remedy be to “default” the contractor, which is providing essential life-saving services?

Well, no, of course, you have to write in a “claw-back” provision into such contract, by setting up an “Additive and Deductive Changes Pricing Schedule”. The schedule will list daily or hourly rates for positions or equipment, which you can use to deduct against fixed price invoices for services not-provided. The schedule or acceptance of services schedule may also have a “tolerance” level column to allow for full price to be paid if the deviation from acceptable standards is minor.

In order to do that, you have to write into the contract an established “Invoicing and Inspection/Charges Verification Process”, which will involve your security personnel in the field verifying that all positions and services were provided as written in the contract to the standards specified for the duration specified.

This Changes Schedule may also be used to ramp up services and order additional positions/units to be provided at pre-negotiated prices or provide continuity of services for phase out and phase in services between security providers or at the end of the program.

This post originally appeared on LinkedIn on October 9th 2019