Pract 7(20)

Services and Systems: Methods for Wise Purchasing Decisions

OBJECTIVES

After studying this chapter, the reader will be able to do the following:

1. Discuss pitfalls when purchasing security services and systems

2. List seven specific purchasing rules and nine sources of information

3. List guidelines and inquisitive questions that improve purchasing decisions when seeking security services

4. Discuss contract undercover investigations, consultants, and certifications

5. List guidelines and inquisitive questions that improve purchasing decisions when seeking security

systems

6. Name and explain three types of bids in the purchasing process

7. Explain outsourcing

KEY TERMS

·  Security services

·  Security systems

·  Vendors

·  Key performance indicators

·  “Observe and report”

·  Competitive bidding

· Request for information Request for quotation Request for proposal Work breakdown structure Outsourcing

How Was Security Personnel Conned Into Using a Bogus Bomb Detection Device and Why Did They Continue to Use It? As hundreds were being killed and wounded from terrorist bombings in Baghdad, Iraq, in 2016, the embattled prime minister ordered stepped-up security measures to stop the carnage and anger from the citizenry. Many explosives were getting through multiple checkpoints into crowded neighborhoods resulting in almost daily bombings. Terrorists were executed and security measures included aerial scanning, intelligence gathering, the use of X-ray

equipment, and an effort to abandon the use of a worthless electronic bomb detection wand known as ADE 651. At the same time, security forces were continuing to use the ADE 651 that cost the Iraqi government thousands of dollars each. The device was touted as not needing a power source because it operated on static electricity (Associated Press, 2016; Detecting a Fake, 2013; Salim & Morris, 2016).

In 2010, British authorities arrested James McCormick, the director of ATSC, Ltd, maker of the ADE 651. A whistle-blower inside McCormick’s company exposed the scam. McCormick was charged with fraud, and in 2013, he was sentenced to a maximum of 10 years in prison. The company had sold the bogus device to several countries and made more than $70 million. In Iraq, the director of the counterexplosives unit was sentenced to 9 years in prison. How did such a bogus device get into the hands of security forces? Unfortunately, bribes were paid to officials in the countries where the device was sold. Other factors included McCormick’s use of authoritative sources, a highly respected college degree, and endorsements in addition to fear of looking stupid for not understanding McCormick’s “scientific” explanation of the device.

Why was the device still being used? Any device customarily gives off a false positive; this device did so and no bomb was found, so security forces did not think anything of it, knowing that no device is perfect or human error caused the false positive. The horror resulted from a false negative followed by an explosion that killed and injured; when this occurred, security forces and first responders prioritized helping people and investigating the scene, with the failure of the device as being a lower priority at the time.

Once the device was deployed and once many realized it was bogus, the seriousness of bombings caused security forces to use it as a fake deterrent, especially if nothing else was available. A fake deterrent can cause an offender to show signs of nervousness that would be investigated by security personnel.

As a security practitioner, and without causing “career suicide,” how would you handle a sit- uation where a security service or system was not working, but management decided to continue using it?

Introduction

One topic often neglected in the security and loss prevention literature is how to make wise purchasing decisions when obtaining security services and systems. The best plans are useless when poor purchasing decisions are made which can affect one’s career. Security services include duties performed by personnel to further the goals of security and loss prevention. Security officers represent a large part of these services. Security systems include hardware and software that protect people and assets. Access control systems serve as an example.

Most business executives and institutional administrators do not know how to select security services or systems or even what questions to ask vendors (i.e., sellers or salespeople). Money may be wasted and results may be disappointing. Many factors are at the foundation of purchasing decisions such as legal requirements, industry regula- tions and standards, risk analyses, and budget limitations. A specialist in the field who is not a salesperson can improve decision-making.

Pitfalls and Advice When Purchasing Security Services

and Systems

Vendors promote their services and systems through many subtle methods such as seminars, webinars, white papers, articles in periodicals, “research,” and social media (e.g., YouTube videos). They are not immune to the temptation of unethical and illegal activities for profit. Vendors are known to misrepresent information, exaggerate, and fail to deliver on promises. The rotten apple syndrome is prevalent in this industry just as it is in other facets of lifedthere are unscrupulous vendors as well as honest ones.

Because the contract security officer service industry, often called “guard services,” is so competitive, some companies bid very low, knowing that they will have to bill the client for phantom services (services not rendered) to make a profit. Other companies lie to clients about screening of applicants, training, and experience. Promised supervision may not take place. Liability insurance coverage may be exaggerated or nonexistent. Investigative companies that conduct overt and undercover investigations are known to deceive clients about excessive losses through scary weekly reports to lengthen in- vestigations and thereby reap greater profits.

Practices employed by dishonest vendors selling security systems include peddling outdated technology that is easy to defeat, pushing overstocked items on customers and deleting information concerning additional hardware requirements, software problems, and expensive maintenance. Sales information may portray systems operating under ideal conditions of perfect weather and lighting (Strauchs, 2001). Some security system installers set sensors to detect minor intrusions during a test and then, following the test, lower the sensitivity of the sensor to reduce false alarms. One specific tactic involves reinforcing the customer’s fear. Crime, fire, and accident dangers are intertwined within high-pressure sales pitches.

In reference to emerging loss prevention technologies, Beck et al. (2017) write the following: “When looking at innovation, it is often hard to separate the publicity and hype of new technologies from the actual state of adoption and deployment.” Two additional considerations are proven success and ROI.

Segal (2016) reported on fake online locksmiths that gouged customers. Tricking Google into presenting locksmiths as having a store in customers’ neighborhoods in many cities (e.g., using Photoshop to place a “store” in a vacant lot), call centers (i.e., lead generators) provide a cost estimate and then contact a “locksmith” to respond to

customer needs. Seeking cash payment higher than the estimate, this bait-and-switch ploy has spread to other services such as security systems, garage door repairs, and carpet cleaning.

McCumber (2006) notes that hype is also a problem in the IT security industry. He offers the example of an IT salesperson who exaggerated a problem that a customer would pay a high price to avoid. The salesperson demonstrated the vulnerability on his laptop and showed how his company’s software solution eradicated the problem. When the salesperson offered to load the software onto the customer’s IT system to show its effectiveness and emphasized how he could easily delete it, the salesperson was escorted to the exit.

The Report of the Task Force on Private Security (US Department of Justice, 1976) and the first Hallcrest report (US Department of Justice, National Institute of Justice, 1985) stated several recommendations for improving the industry with the consumer in mind. For example, both reports favor certified training for alarm service personnel.

The following seven cardinal rules, designed with the consumer in mind, can put the buyer on the road toward wise purchasing decisions:

1. Buyer beware.

2. Use a team approach for decision-making. Bring together various specialists.

3. Properly evaluate the needs of the organization, not the needs of the vendor.

4. Acquire information and know the state of the art.

5. Study the advantages and disadvantages of each service or system. Apply critical

thinking skills.

6. Ask vendors to demonstrate the value and ROI on what they are selling.

7. Avoid panic buying.

Nine beneficial sources to acquire information about services and systems are cus-

tomers with experience with the service or system, peers, standards and related orga- nizations, independent consultants not affiliated with any vendors, courses, seminars, trade publications, the Internet, and salespeople (in that order).

Is the security industry the only industry where the buyer should beware? Support your answer.

Purchasing Security Services

Questions When Considering Contract Security Officers

1. Does the security contractor conform to state and local regulatory law, such as registration, licensing, training, and bonding?

2. Does the contractor strive for high standards and seek such guidance (e.g., ASIS standards for private security contractors; National Association of Security Companies).

3. What are the contract company’s liability and other insurance coverage (e.g., worker’s compensation)? Request copies of policies. Are lawsuits pending against the company?

4. Has the contractor been vetted? What is the company’s Dun and Bradstreet finan- cial rating? What are the views of clients of the contractor? What are the impres- sions from visiting the contractor’s office?

5. Can the company perform expanded services? Several security companies avoid branding themselves under names such as “contract security” or “guard services” while favoring names such as “security solutions” and “security” to market not only guards and investigators but also a variety of high-tech security including access controls, analytics, and cybersecurity.

6. What type of background screening is conducted on applicants? Can you set up an agreement whereby your company interviews officers before assignment? Do you require personnel folders to help you select the best candidates?

7. How are officers on duty monitored? How often during a shift does a supervisor visit? Are post orders specific as to who and what to protect and when?

8. Does the contract company apply the latest technology and software so that cli- ents experience transparency; accuracy; and real-time remote reporting of in- cidents, attendance, tardy and no-show alerts, and billing?

9. How does the company ensure the honesty of its officers and how are disciplinary problems handled?

10. In general, how is morale? What is the turnover rate?

11. What is the wage-to-rate ratio? This shows the portion of the total rate received

by each officer.

Many security firms draft their contracts so that much of the risk is on the customer.

If, for example, an assault takes place on the 10th floor of a building, the security company may go back to the contract and read that an officer was assigned only to the lobby and more services were available, but the client refused them (Finnerty, 1996). The contract should specify rates of pay (including overtime pay), medical insurance and benefits, minimum required background and physical condition of officers, post orders, number and location of officers, supervision, uniforms, equipment (e.g., vehicles, weapons, and radios), and training.

An option for the customer is to prepare a contract with specific requirements as described above and attach it to the request for proposal sent to contract security firms. Because of competition, security firms may accept the customer’s contract. An at-

torney should prepare the contract and negotiate any changes.

Contracts for security guard services can amount to millions of dollars, and clients favor key performance indicators (i.e., metrics to evaluate success in reaching objec- tives) tied to financial rewards or penalties for the vendor. Examples are no-show rates, missed supervisory visits, complaints against officers, violations of policies and pro- cedures, and inappropriate uniform and appearance (Campbell, 2011, 2015; Heil, 2006).

Levine (2012) adds that a client should select a vendor that applies technology to elevate the performance of security officers. Professionalism is also important, and it includes opportunities for officers to be certified and to attend college.

Those in the contract security business know that the above requirements from cli- ents have a cost. Contractors face a constant challenge of satisfying clients while making a profit and striving for successful bids and cost containment. When one is dealing with contract companies, it is good to know the views of these business people. A portion of the managers in contract guard companies refer to their vocation as a “nickel-and-dime business” with a “never-ending turnover of bodies.” The former comment refers to the awarding of contracts by clients based on slim differences in bids. The latter comment refers to the high turnover of officers because of low wages. Although a low bid may win a contract, the service company may be unable to fulfill both their contracted promises and meet payroll obligations. This is a problem often with small guard companies, something akin to “bait and switch,” and the guard company may be unable to pay damages for breach of contract because of financial problems.

Can Incentives for Security Make Security a Soft Target?

Security at the US facility known as Y-12 that produces nuclear weapons serves as an example where incentives did not work. In 2004, a US Department of Energy Inspector General investigation found that for several years the Wackenhut Corporation, that provided security for Y-12, had been cheating on security exercises. Simulated attacks on Y-12 were used to evaluate the security force’s ability to defeat an attack. The results of the simulated attack affected payments to the security contractor and bonuses for security officers. The investi- gation showed that before mock attacks, Wackenhut management told security officers which buildings and targets would be attacked, the number of attackers, and the location of a diversion. In anticipation of mock attacks, the security force placed trucks as obstacles at key points, added additional officers, concealed others, and disabled laser tag gear so they would not register as being shot (Bunn & Sagan, 2014).

Points to ponder include the following: incentives should be carefully planned, knowing that they may result in shortcuts and violations of policies and procedures. Security programs may require independent inspections, penetration testing, and even undercover in- vestigations. In addition, policies and procedures that are too burdensome or antiquated may be violated, so they should be periodically evaluated and updated.