Differences between proprietary and contract guard services

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249

Operating Personnel- Intensive Programs

Quis custodiet ipsos custodes? (Who will guard the guards themselves?) —Juvenal, Satires

Security programs concern themselves with people, technology, and procedures. Earlier chapters considered theories of workplace productivity and particular strategies of select- ing, training, motivating, and generally managing employees in security functions. This chapter considers the macro level of managing people in functioning programs. It looks at two significant categories of security employment—security officers and investigators— and the programs that make them productive and efficient.

Like all aspects of protective management, personnel applications have experienced considerable change in the past years, and continue to experience change today. Contemporary security officers are more likely to be contract workers than permanent proprietary employees relative to past decades. Similarly, investigative resources in industry and government have increased, and both contract and proprietary investigative services have expanded to fit these new workplace needs. Moreover, the scope of investigative tasks has broadened considerably.

THE PROPRIETARY/CONTRACT EMPLOYEE DEBATE

For most of the 20th century, security workers were permanent proprietary employees with the same expectations and corporate relationships as any other employee. Beginning early in the 1900s, and most notably since the early 1950s, security guard positions have increasingly been provided by contract services, diminishing their percentage relative to contact protective workers. In fact, by the year 2000, about 60 percent of all security officers were provided by contract services, and this trend continues to grow. Although proprietary and contract personnel both have their own distinct advantages, it is impor- tant that all factors be weighed in making this decision, as shown in Table 9.1.

The main reasons cited for contracting out security employees are as follows:

• Less total cost. Employers generally believe that it costs less to contract out for services than it does to employ a full-time staff. In determining the level of savings, management must be certain to include in-house costs for acquiring, monitoring, and administering such services.

McCrie, R. D. (2007). Security operations management. ProQuest Ebook Central <a onclick=window.open('http://ebookcentral.proquest.com','_blank') href='http://ebookcentral.proquest.com' target='_blank' style='cursor: pointer;'>http://ebookcentral.proquest.com</a> Created from apus on 2020-08-10 13:15:42.

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Savings for liability insurance may also be factored in since the contract firm will provide its own coverage. (This does not mean, however, that all liability for negligent guard services passes to the contract service.) Nevertheless, taking such monetary factors into consideration, management typically expects a net savings of 5 to 20 percent from the previous cost level.

Rather than focus solely on economic benefits, however, employers considering converting from proprietary to contract services should perform a comprehensive cost/benefit analysis to determine whether the advantages are significant. In doing so, it is important to remember that fringe benefits are the responsibility of the service provider, as are benefits to attract and retain staff.

In some cases, management will have other compelling reasons for deciding to con- tract out or not to contract out that are more significant than cost savings. Dennis Dalton, a consultant experienced in security services conversions from proprietary to contract, says: “All too often executives make the decision to convert based solely on the economic gain. What they fail to consider are the dynamics involved in displacing long- term, loyal employees.”1

• Administrative ease. The contract firm is responsible for recruiting and vetting security employees. It should be highly proficient at this task. The security services firm handles routine details for contract security employees, similar to those for proprietary workers. Nonetheless, the security services firm’s client generally maintains a residual duty to review personnel files and conduct interviews of workers who will be assigned positions of responsibility within the workplace. Taxes and benefits are the responsibility of the service provider.

• Criminal records screening. In some states and geographic areas, the law dictates that security personnel be screened through criminal

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Table 9.1 Contract or Proprietary Security: Weighing Factors

Factors Favoring Contract Security Factors Favoring Proprietary Security

Less total cost normally Personnel retention high Administrative ease Perception of greater quality of employee Criminal records screening Greater site knowledge Recruiting and vetting transferred More flexible controls Training transferred Greater loyalty to the employer Supervision transferred Reliability of service Specialized liability insurance Cost savings in some circumstances Specialized protective experience Personnel scheduling flexibility Less likelihood of collusion with

proprietary employees Emergency staff may be available

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justice databases for the presence of convictions that would bar them from working in the field. Such databases are not always available to private-sector employers. Many service providers are thus able to assure employers that security workers have no evidence of significant criminal records in the jurisdictions where such information is checked.

• Recruiting and vetting transferred. The process of recruiting and vetting new security personnel is the responsibility of the service provider. This relieves the client from the primary responsibility for this process.

• Training transferred. The security vendor is expected to have the commitment and expertise to train security personnel to the level required for the contractor’s needs. Additionally, the contractor may provide specific additional training to meet the needs of the assignment.

• Supervision transferred. Security officers usually are supervised by the service provider. Many large contracts include a full-time site manager who handles routine administration. The client (contractor) may elect to provide site supervision by proprietary workers.

• Specialized liability insurance. Security service providers normally should possess comprehensive liability insurance as a safeguard against potential lawsuits. Even in the event that the contractor has some liability in a judgment, the amount is likely to be divided between two parties, lessening the burden on each.

• Specialized protective experience. The security services provider should serve as a general resource, as needed, in security matters. Security services firms may share their practices and resources, acting as informal consultants on procedures and policies on a limited basis.

• Personnel scheduling flexibility. When the contractor requires additional personnel for special purposes, such as a conference, annual meeting or an untoward event, the services contractor can add employees on short notice. Similarly, if an employee fails to meet the needs of the contractor, the employee often may be replaced rapidly.

• Less likelihood of collusion and fraternization. Contract security personnel are hired and managed by a separate organization from the clients they serve. This managerial separation makes collusion less likely than if security workers were proprietary staff members. Similarly, the likelihood of fraternization—extensive socialization between security and nonsecurity personnel—is reduced. This principle is codified in Section 9(b)(3) of the National Labor Relations Act, which gives employers the right to terminate voluntary recognition of a non-guard union. That is, the employer of a unionized workforce may require that security officers be members of a different union than the primary union.

• Emergency staff available. If the client requires additional security personnel for brief assignments, security services may provide extra officers as needed. This could be less burdensome than hiring additional personnel on a temporary basis.

The Proprietary/Contract Employee Debate 251

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Now that we have discussed the main reasons why organizations contract out for security services, let’s look at the factors cited by organizations that instead have elected to retain a proprietary security service:

• Personnel retention. Security directors generally prefer to have low employee turnover. This is due to many reasons, including the time and cost of recruiting, training, and guiding workers. Proprietary employees are more likely to remain on the job longer. However, this is not guaranteed, and some security services providers also can point to extensive longevity with some of their employees.

• Perception of greater quality of employee. Many employers believe that proprietary workers, in general, are superior workers because they are attracted to the normally better compensation and career opportunities within a proprietary organization. However, some employers argue that the quality argument is relative to the circumstances and that, given attractive inducements by a security services provider, the quality of service is not likely to be substantially different over time.

• Greater site knowledge. An aspect of greater worker retention is that such employees are likely to know people, procedures, and principles better than those with a shorter tenure do. Logically, this produces more reliable service.

• More flexible controls. In proprietary programs, personnel usually may be transferred from one location to another as a condition of employment. Contract employees also may be shifted with ease from one site to another. However, some security directors believe that this process is easier for employees who are permanent workers.

• Greater loyalty to the employer. Many directors of proprietary programs believe that staff workers are more loyal than contract workers are. This view, which they support with anecdotal evidence, cannot be quantified, though the argument is appealing on its surface. It implies that proprietary employees make extra efforts to provide quality service. However, it can be argued that contract workers have reason to be loyal to the place where they are assigned as well.

• Reliability of service. A few contract security firms prove to be disappointing after an initial period of meeting standards. According to Randolph D. Brock, a former security director and principal of a security services firm, “Contractors tell clients what clients want to hear and believe, and say they do. But they really don’t, opting instead to maintain control of the relationship and dictate terms and conditions.”2

• Cost savings. Normally, managers expect to achieve significant savings from contracting out for security guard and patrol services relative to their in-house equivalents. However, in some cases—particularly with smaller programs—savings will not be achieved, and the organization would save money by staffing its own program internally.

As indicated in this discussion, there tend to be more reasons for contracting out security services than for retaining them as proprietary services. Indeed, the direction has

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favored growth of the contract sector for several decades. Yet many organizations have retained proprietary security because they conclude that it is the best policy for their organization. The decision to convert from proprietary to contract or vice versa should only be made after careful consideration of all the factors involved.

Combined Proprietary and Contract Staffs

Many security directors conclude that proprietary and contract services have complemen- tary benefits. Therefore, they include both types of services in their operations strategy. Similarly, some analytical directors will contract with more than one outside service. This permits qualities to be compared with different service vendors. It also serves as a means of an ongoing assessment of performance of each type of service unit.

The search for enduring, cost-effective, reliable security services challenges man- agers. Consultant Dennis Dalton notes that seven out of ten security directors for the largest companies in America identified “finding and retaining a really quality-driven contract security agency” as one of the three critical factors in their programs.3 There are, therefore, many reasons why organizations seek to obtain the perceived quality of a proprietary staff with the flexibility and depth provided by the contract sector.

CORE EXPECTATIONS OF SECURITY OFFICERS

Security officers have numerous obligations to their employers, each of which is of critical importance. The following are the security officer’s main obligations:

• Deter. The primary goal of security personnel is to deter or prevent harm to people; protecting property is secondary. Adequately trained security personnel deter crime and disorder. The vast majority of potential offenders restrain themselves from disorderly or criminal conduct in the presence of security personnel. This is because the opportunities for identification, arrest, conviction, and possible civil recovery are too high a price for the crime to be attractive to a potential offender. In deterring illegal and disruptive behavior, security personnel provide visible security that makes the public feel safer and more confident about being where they are. This function may be the most important quality provided by security personnel in most circumstances.

• Delay. In the event that offenders commit a crime, security personnel may delay their successful flight, leading to apprehension.

• Detect. When an incident occurs or when procedures are not followed properly, security officers can ascertain the violation quickly, mitigating or reducing the chances of loss.

• Respond. Security personnel are trained to respond to detected incidents or calls for service while on duty. They are expected to take action at such times to protect people and property and to make the public feel safer.

• Report. In the event of an incident, a report from an independent observer, like a security officer, provides important information

Core Expectations of Security Officers 253

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for management. The report serves as a possible factor in changing internal procedures, a basis for an insurance claim, or as possible evidence in an arrest or lawsuit. Reporting normally is completed as soon as possible following a response. Supplementary reports may be prepared as additional pertinent details concerning the incident are discovered. Events (untoward exceptions) and some incidents may not be reported as a policy of the workplace. And some incidents can be reported directly to the insurance carrier. Regardless, security officers are logical report writers when most security and safety incidents occur.

Other Important Expectations

The security officer is expected to maintain a suitable appearance at all times, as this reflects positively on his or her employer. Also, personnel who make a good impression are likely to have more positive experiences with the public, thus improving their own self-esteem at work. Security workers often are the first individuals whom the public meets in the workplace. They often serve as providers of general information to the public and are in a position to enhance the public’s impression and regard for the organ- ization in the process.

Protective personnel who have contact with the public need to be sensitive to indi- viduals who may be impatient, angry, confused, incoherent, and possibly mentally ill. Encounters with such people are exceptional. Yet they do occur, and security personnel are the first or among the first workers to encounter such distraught individuals. Dealing with an unpredictable public must be anticipated in training. For the most part, security personnel best serve themselves and the public by being friendly, sincere, and having rel- evant knowledge about their workplace. All security employees—proprietary and con- tract alike—need to make an ongoing commitment to advance the interests of the employer while protecting people, property, information, and other assets.

Finally, the honesty and integrity of security personnel are of utmost importance. Juvenal’s query, “Who will guard the guards themselves?” appears facetiously in his Satires. But a serious implication is clear: Protection personnel should be above ethical reproach.

Non-expectations of Security Officers

Regardless of proprietary or contract status, security officers should not be expected to perform tasks that are not part of their job descriptions. Unless required by an emergency or specifically requested by a supervisor, or both, the security person is not expected to undertake duties normally performed by other employees. This is in part because such diversionary activity prevents the security officer from performing his or her intended functions—that is, deterring, delaying, detecting, responding, and reporting security- related incidents.

Additionally, security personnel are not expected to take unreasonable risks in their tasks or to assume potentially hazardous tasks. Further, security personnel must never usurp the duties of sworn public law enforcement officers. (The exception is a security worker who is also an off-duty sworn law enforcement officer who must take such action

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in the context of official requirements.) However, in all cases, if a simple, brief action by a security officer can correct, improve, or facilitate a situation, such action should be taken as a natural matter of course. This is preferred even if the task would normally be performed by another worker or at times even if the action appears to be against written policies and procedures (see Box 9.1).

Core Expectations of Security Officers 255

Box 9.1 Fire and Smoke in an Emergency Response

The Emergency: A contract security officer was performing a nighttime patrol of a new high-rise luxury office building, soon to be ready for use. On one floor, the security officer smelled what he thought was smoke coming from under locked doors. The floor was not occupied at the time as the space was being prepared for tenants. The security officer quickly returned to the base and obtained the key for the floor, which had been left with the security officer by decorating contractors who were preparing the new space.

When the officer returned, he entered the floor and found the source of the smoke. Decorators had been staining the new wood panel walls of a conference room. Inexplicably, they had left a heaping pile of used rags soaked with volatile chemicals on the floor. The rags were smoking and would have combusted. The security officer found a portable fire extinguisher and applied the contents of the extinguisher to the pile. He then called the fire department, which arrived eight minutes later. Firefighters further spread and doused the rags and ventilated the area.

The next day, the agent for the building’s owner called the contract guard firm to commend the firm for the officer’s action. However, the security company man- ager initially was less than enthusiastic. Written policy directs security personnel to call the fire department first when discovering a fire condition. Then the security officer may return to the location and see what prudent measures could be taken. (Of course, if an actual fire was encountered, the security officer is expected to send an alarm, retreat safely, and then stay available to direct firefighters to the source of the problem.) The contract security manager felt conflicted: Should the security officer be rewarded, or disciplined, or both?

The Resolution: The contract security manager discussed the situation with the building owner’s agent and a fire inspector. All agreed that the stated written policy was correct: that is, security personnel should call the fire department first when a fire condition is encountered. However, they also agreed that exceptions do exist. In this case, a trained security officer with good common sense determined that a low level of personal risk was acceptable in attacking the potentially dangerous situation immediately. The few additional minutes saved by not contacting the fire depart- ment immediately were better used in attacking the fire risk immediately. However, praise and reward for the guard were subdued by the conflict between a sensible written policy and the equally reasonable action taken by an alert security officer. In retrospect, a preferred action might have been for the security officer to call the fire department and wait at the entrance to direct them to the suspicious condition.

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Expectations of Investigators

Also called detectives and fact-finders, investigators are persons who systematically and thoroughly examine and make inquiries into an event. According to J.J. Fay, an investiga- tive survey is “an in-depth probe or test check of a specific operation or activity, usually conducted on a programmed basis, to detect the existence of crime or significant admin- istrative irregularities.”4 Investigators or fact-finders undertake a wide variety of inquiries. Most organizational investigations deal with business or civil issues, but the private sector may conduct criminal investigations on behalf of itself or at the request of the public sector. A clear understanding between the two is imperative, and is explained in Table 9.2.

Most private sector investigations concern specific incidents. A loss of assets, con- tract dispute, or crime may have occurred and facts need to be collected to stop the loss, resolve the contract issue, and, conceivably, conduct a portion of the criminal investiga- tion. Most investigations for security operations, however, involve civil and contractual issues and are not criminal in nature. Retailing is an exception. Such investigations cover a huge range of possible topics, which grow as the nature of commerce evolves. An exam- ple is investigation for diversion fraud. This type of loss is a major activity today, but scarcely existed a generation ago (see Box 9.2).

Investigations can extend into personal concerns as well as civil and contractual issues.5 The following are types of investigations undertaken in the private sector:

• Accidents (aircraft, vehicular, industrial, construction, personal) • Acquisition due diligence • Adjustments (in the case of claims for liability) • Antitrust activity • Asset location • Breach of contract (to determine facts and possible damages) • Competitive information

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Table 9.2 Criminal versus Civil Investigations

Factor Criminal Civil

Plaintiff The state (public sector) Private and nonprofit interests Prosecutor The people The victim Main purpose Punishment of the guilty Redress of injury Investigations By or on behalf of the state By the victim Sanctions Jail, prison Damages to victims

Fines Corrective action or behavior Specific corrective activity

Conviction Beyond a reasonable doubt Preponderance of evidence Appeals Possible by defendant Possible by either party

Fundamental differences exist between criminal and civil litigation. A defendant may be sued criminally, civilly, or both, in which case different plaintiffs will bring charges. Private sector investigations normally serve the interests of plaintiffs and defendants in civil litigation. However, private investigators may be hired by the government, when indicated, to collect evidence on behalf of the public sector in criminal cases and administrative issues.

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Core Expectations of Security Officers 257

Box 9.2 Investigating for Diversionary Fraud: A Pharmaceutical Case History

Often, manufacturers have price agreements that differ for various members of the distribution chain. As part of the agreement to distribute a product, an organ- ization agrees to specific terms with the manufacturer or distributor that usually limit the area into which certain products can be marketed and sold. When such an agreement is broken, the manufacturer is deprived of rightful profits. Similarly, distributors in the areas undersold by rogue distributors lose profits and goodwill. Investigations often identify the source of such illegal practices and stop them.

The pharmaceutical industry frequently is victimized by diversionary fraud. (Similar examples could be cited from numerous other types of manufacturers, including software vendors.) Here is how it works: A pharmaceutical company may charge distributors in the United States a particular price for its products. The price of the identical drug may be considerably less for distribution, say, in Central or South America or Africa. This is due to competitive, governmental, and humanitarian reasons. A foreign distributor may order the product from the manufacturer in the United States at the favorable foreign price and then scheme to divert the product back into U.S. distribution channels. This undercuts profits to both the manufacturer and American distributors of pharmaceutical products.

When the U.S. pharmaceutical manufacturer discovers price undercutting in its normal distribution channels, an investigation is in order. Fact-finding is needed to ascertain the losses and identify the likely source of the product diversion. Investigators must become familiar with manufacturing codes and packaging variations in order to identify diverted products. They must gain access to pharmaceutical buyers for hospitals, drug chains, and other distributors in order to develop leads. Often, they must seize the back-channeled merchandise. At other times, they purchase products that do not belong on the premises of the organization they are visiting and hold such materials as evidence against the offender.

By collecting all the facts possible in a case, the investigators, in cooperation with management, are able to quantify the extent of the diversionary fraud. This may be the basis for a civil action against the offenders. When the facts are indis- putable, the chances for a resolution favorable to the victimized manufacturer are good to excellent. Yet no recovery would be possible without the creative and per- sistent efforts of investigators—proprietary or contract—evaluating the problem and collecting facts.

Source: Security Letter (July 16, 1984). Part I, pp. 2–3.

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• Consulting • Conversion (controlling another’s property) • Copyright and trademark violations • Cybercrime • Electronic countermeasures • Employee background (also called vetting) • Espionage • Fire incidents • Fraud • Injunctions • Insurance claims or counterclaims • Inventory shortages and shrinkage • Locating lost individuals • Marine investigations • Mergers and acquisitions • Negligence • Personal injury • Patent infringements • Polygraph examinations • Product liability • Property and equity claims • Public records searches (vital statistics, assets, credit, crime, debit,

education) • Return fraud (in retail environments) • Security surveys • Sexual harassment • Surveillance • Trial preparation • Undercover operations • Workers’ compensation • Workplace violence

Investigations can occur for any reason that seems to make economic or strategic sense for an organization. However, investigative work depends upon the experience, training, and abilities of persons available. In many cases, a business or institution antic- ipates its needs and is staffed with a large cadre of competent investigators. This is the case, for example, in the financial and insurance industries, which face many repetitive and serious types of investigative activities. Most organizations will not possess such depth of available investigators or need to. In addition, the varied nature of the types of business, contract, and institutional problems makes keeping a staff of suitable investiga- tors more difficult. Therefore, organizations frequently turn to independent investigators who specialize in certain types of investigations.

Investigations by the private sector sometimes are an important part of criminal prosecution. While it is the duty of the state to prosecute alleged offenders, it is frequently in the interest of private or not-for-profit organizations to conduct at least part of the criminal investigation. Often, a public prosecutor will not accept a case on behalf of the state unless the evidence is sufficiently compelling. Specifically, the state wishes to ensure

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that an offense has in fact occurred, that the offender has been identified, and that evidence collected for use at court is strong. A private investigator normally does not act as an agent of the state and must not imply this. However, he or she may develop the case substantially and turn it over to the police and public prosecutors to facilitate their efforts.

The following are criminal cases in which the private sector plays an active role in the investigation prior to arrest, arraignment, and trial:

• Arson • Bomb threats • Burglary • Cargo thefts • Computer crimes • Conspiracy to commit crime • Criminal defense • Cybercrime • Embezzlement • Employee dishonesty • Extortion • Fencing • Forgery • Fraud • Insurance fraud • Kidnap and ransom cases • Motor vehicle thefts • Narcotics/drugs violations • Organized crime • Product diversion (transshipment) • Shoplifting • Substance abuse • Terrorism • Theft (personal, commercial, institutional) • White-collar crimes • Workplace violence

The Importance of Investigations in IT Crimes

Protection-related issues constantly evolve. In the 21st century, risks associated with information technology (IT), including communications, have taken on great signifi- cance. Chapman and Zwicky note: “The Internet is a marvelous technological advance that provides access to information, and the ability to publish information, in revolution- ary ways. But it’s also a major danger that provides the ability to pollute and destroy information in revolutionary ways.”6

The IT revolution has produced a new category of deviance called “cybercrime.”7

Such crimes include extortion, boiler-room investment and gambling fraud, credit card fraud, pyramid schemes, fraudulent transfer of funds, telephone fraud, and sex crimes.

Core Expectations of Security Officers 259

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Additionally, denial of service, privacy invasions, attacks by high-energy radio frequency guns, commercial software piracy, and attacks by computer viruses all require systematic investigation to identify offenders and reduce chances of future recurrence. The alleged inadequacy of IT security can result in civil litigation. In one case, Schalk v. Texas, the defense argued successfully that the plaintiff had not taken sufficient due care to protect information that was stolen from a computer system.8 As with other types of offenses, IT crimes and attacks require post-incident and pre-trial investigations. Generally, computer crime investigators and auditors specialize in this area.

Non-expectations of Investigators

While exceptions exist, the investigator generally is not expected to arrive at a final conclu- sion relative to the point of the investigation. Rather, the supervisor of the investigation, or another person for whom the investigation is being performed, should review the facts and all other pertinent information and then make a conclusion about the central question. For example, an investigator may collect extensive information, both positive and negative, rel- ative to an applicant in a background investigation. But the final decision on extending or not extending an employment offer is best left to others. The opinion of a seasoned inves- tigator generally is welcome. But the hiring decision is ultimately the responsibility of a person who considers more factors than those unearthed by the investigation alone and assesses those facts within the general context of all that is known about the applicant.

An investigator also has ethical and legal obligations in providing services to the employer, which also extends to individuals who may be subject to the investigation. For example, federal rules of entrapment apply to private security agents.9 In particular, it is unethical and illegal for an undercover security agent to originate the idea of committing a crime. Such felonious notions should originate solely with suspects. An undercover agent can appear to be a willing participant in a criminal or improper act, but he or she must not step over the line and actually initiate a crime.

Trends in Proprietary and Contract Security

The necessity for security in the workplace has grown for several reasons, as discussed earlier in this book. In the year 2000, the aggregate employment of security personnel in the United States reached an estimated 2.1 million persons. This compares to about 700,000 employees in law enforcement at the local, state, and federal levels. This trend represents a long period of growth in private security in absolute terms and also relative to law enforcement. Meanwhile, the structure by which those security services are being delivered to the workplace has also changed.

PROPRIETARY SECURITY STRATEGY

Private guards employed to protect individuals and private property have been used at least since the time of the Egyptians, when guards protected tombs and tomb sites.10

In Psalm 127, Solomon observes the importance of security in urban life, though holding the security guard as being inferior to divine presence: “Unless the Lord builds the house,

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those who build it labor in vain. Unless the Lord watches over the city, the watchman stays awake in vain.”

With the arrival of the Industrial Revolution, the scope of private protection grew enormously.11 Protective personnel served employers in piecemeal, temporary assign- ments as the need for protection existed. Security personnel came to be required on a per- manent basis because industrial operations increased beyond small, discrete businesses into those involving hundreds of workers, sometimes working round-the-clock shifts. Further, as industrial production increased in scope, work became more specialized. Whereas the protective function initially was fit for anyone who could threaten possible malefactors away, it later became the task of individuals assigned to that particular process. Agents were hired to protect people and assets when risks were greatest.

Proprietary security began in the early 19th century in the United States as a means of general deterrence against crime, vandalism, and fire. In the second half of the 19th cen- tury, security agents protected industrial facilities against threats like external and internal theft, vandalism, and sabotage, especially during times of labor unrest. During World War I and II, private security was responsible for heightened proprietary and vital information control, both as anti-espionage measures and as means of protecting industrial know-how. In the last 30 years of the 20th century, physical protection remained an important facet of the security industry, while new concerns about IT-oriented risks and threats to intellec- tual assets shaped the way in which proprietary security is structured in the workplace.

Several aspects of monitoring a proprietary security program have been covered in previous chapters. The following sections will consider further operational management aspects of security personnel activity.

Scheduling Requirements

In the process of analyzing security tasks to be performed, security managers must deter- mine the number of personnel required and the hours for which they will be deployed. The complexity of this issue is based on the size of the program, its geography, and the level of training required. In earlier years, security directors faced the tedious task of preparing scheduling plans on paper forms or chalkboards. The scheduling information was constantly being changed; therefore, the information had to be erasable to accom- modate the new changes. Security directors frequently delegated the scheduling details to clerks, who kept master records and distributed them to supervisors and area managers on a periodic basis. Derivative reports dealing with shift rotations, work locations, and event scheduling were made from the master schedule.

More recently, software has become available that is written specifically to help schedule security personnel.12 Scheduling time has been cut, saving considerable clerical costs in the process; schedules can be displayed graphically and changed with ease; and relevant information on security personnel can be instantly available. These software programs can help control overtime costs. They can also link to most software systems operated by human resources. Billing errors are reduced. Management may review assignment plans over the Internet, while information can be linked to other management and financial controls software packages, further reducing time and costs. Figure 9.1 shows an example of such a software package. These packages can be learned in a short time. Managers and supervisors can create useful supportive reports such as those indicating

Proprietary Security Strategy 261

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guard availability and unavailability; scheduling conflicts; and assignment or customer work history data. They can also create “barred-from-customer” conflict lists and seniority lists. Automated officer check-in systems allow managers the opportunity to be assured that security personnel are at their posts.

Management’s support for such software packages is enhanced by their additional features. Costs are saved because the schedules are prepared much faster than by the pre- vious manual process. However, further cost savings result from the reduction of over- time by better monitoring of hours and separate links to payroll, invoice creation, accounts payable, accounts receivable, and general ledger software programs.13

Determining Personnel Needs for Posts

As a rule of thumb, managers require the equivalent of 4.2 to 4.5 persons to be available to staff each post on a 24-hour, 365-day basis, assuming a 40-hour workweek. Complications in planning occur because of vacations and other schedule changes, such as illness or per- sonal time off. Consequently, an adequate pool of full- and part-time security personnel needs to be available to fill the requirements of large security programs with 24-hour posts.

Salary and Compensation

Money is not the only motivator for workers. It is, however, the most important one. Managers have to keep within their allocated budget guidelines, constantly improve

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FIGURE 9.1 Software programs specifically written for security operations facilitate operations and control.

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services, and control payroll costs. The average (median) hourly pay for security guards varies widely based on geography alone. In some programs, average pay for security personnel will be consistently below average. In others, it will be within the mid-range, and in still others, average compensation will be above average.

Managers can determine the average hourly pay for security officer services from data collected by the Bureau of Labor Statistics of the U.S. Department of Labor.14 These reports are prepared by the Office of Compensation and Working Conditions in cooper- ation with the Office of Field Operations and the Office of Technology and Survey Processing. The data may be months old when a manager accesses the latest report for a particular region and therefore the rates may need to be adjusted for any circumstances that may have changed. The information is national in scope and covers private and public positions. Scores of employers provide reasonably accurate base salary data to the survey, thus revealing the normal hourly compensation for 150,000 to 250,000 security officers. Managers can turn to this source to judge their own compensation programs rel- ative to other employers in varying regions.

Compensation ranges for security supervisors, investigators, specialists, managers, and executives are equally important in determining the costs of operating a department. Such information can be obtained from compensation studies specializing in the security, protective services, and law enforcement categories.15

Managers can reduce operational costs for salary and benefits processing by using software dedicated to the tasks. Alternatively, the activity can be turned over to an out- side service bureau which handles the requisite administration.

Insurance

The actions of security officers, investigators, and other protective personnel are covered under the organization’s comprehensive insurance. The risk of errors and omissions from security performance normally is defended by the insurer on behalf of the insured. In the event that security services are contracted out, savings on liability coverage should be realized.

CONTRACT SECURITY SERVICES

As previously discussed, the trend in recent decades has been for operating entities to con- tract out numerous types of services. The scope of such services is broad and includes diverse temporary help, technical services, entertainers, drivers, hospitality industry workers, janitorial workers, home healthcare workers, agricultural workers, and prop- erty managers. However, one of the largest contract services is security personnel. In fact, it may also be the earliest organized service industry. The Pinkerton Agency contracted out armed security guards to packing plants and commercial houses beginning in 1858.16

By the end of the 19th century, scores of security services businesses could be found in urban America.

The concept of “employee leasing” has many attractive features, in that the leasing firm must assume numerous accounting and administrative duties on behalf of the workers.17 Requirements for the administration of records and benefits are regarded as

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particularly burdensome to small businesses or those with temporary operations. The employer might have to:

• Maintain tax deduction records • Compute tax liabilities and make timely bank deposits • Respond to garnishment from the court or other taxing bodies • Conduct audits for workers’ compensation benefits • Conduct audits for unemployment claims • Provide healthcare benefits • Comply with COBRA legislation (1986) requiring employers with

more than 20 employees to offer continuation of healthcare coverage in the event that an employee is terminated or experiences another qualifying life event

• Manage a 401(k) program • Reconcile employee paychecks • Post records for state and federal taxing agencies • Prepare workers’ year-end W-2 filings • Maintain vacation and other authorized leave benefits • Maintain payroll and tax changes • Answer questions from workers on regulatory, pay, and benefits issues

Employers usually must provide such services to proprietary workers as a matter of course, and this includes security personnel. However, when such duties are transferred to an outside organization, the primary organization is relieved of these duties and related costs. Yet contract security programs are differentiated from proprietary ones on more substantive issues than who will be responsible for routine administrative issues; as discussed earlier in this chapter.

SELECTING CONTRACT SECURITY SERVICES

The process of selecting a contract security service may be uncomplicated for small and simple organizations. However, it can be a formal and extensive process for large, complex organizations. The following sections discuss these two scenarios.

Small, Simple Programs

Employers requiring one or more security officer for an assignment that involves visible patrol begin the process by preparing a report or memorandum in which the specific tasks of the required security personnel are outlined. This need be only two or three pages long, but it should provide the basic vital information required by a contract security firm to make an informed proposal. This report should include the number of security per- sonnel required; the type of vetting to be performed; the training to be completed prior to assignment; the duties to be performed; the nature of experience desired; the hours to be worked (including any exceptional circumstances); the type of uniform desired (tradi- tional guard, military style, or blazer and slacks); the extent of the insurance to be provided; and the field supervision to be offered.

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Additionally, the prospective employer should consider the level of pay desired for the security personnel, including projected increases over the length of the contract. This information will be sufficient for the prospective bidders for the contract to prepare a proposal. Many other nuances to the selection process may come up later, but the basic material just described will start the process for the contract proposal for a protective program requiring contract security officers.

The next step is to interview three to five security guard firms. Typically, a client wanting security officer services will seek to meet with one to three national security services firms and one to three local, independent security services providers. In some areas, the number of choices will be limited. In addition, many established security firms may not choose to pursue the business of an operation that offers little opportunity for growth and that does not provide the contract firm with its gross profit target.

The proposed service providers may be selected by references from colleagues who manage existing locally respected programs and from local membership lists of profes- sional organizations like ASIS International and the National Association of Security Companies. Additionally, many state associations for security guard and investigative services have been formed that provide access to responsible potential service providers. It is also advisable to peruse relevant business directories or source books for names of service providers. An initial letter to the identified companies can provide details on the security services required and invite an expression of interest by a particular date. In some cases, security services firms will learn of the search on their own and ask management for the opportunity to be considered. Their enterprise should be recognized. A brief review of the company’s capacities should settle if it also can be included among the prospects.

The next step will be to meet with the prospective bidders and provide them with full details on the assignment. For a new security services requirement, it is probably best to meet individually with the prospective bidders. The security firms—individually or as a group—should be able to see the exact area where the security personnel will work as part of a site visit. The prospective security services firms should have time to complete their surveys and have equal access to all relevant details. A date for the completed pro- posals must be set.

When all the proposals have been received, the client compares and contrasts the various submissions. Sometimes, a modified comparative scale is used to judge the secu- rity firm by various objective and subjective criteria. The client may briefly visit the office and training facility of the prospective services provider, and will wish to check references provided. Often, considerable negotiations occur on finer points of the agreement before both parties agree to the terms. When the winner is selected, a contract is signed. The contract is usually drafted by the client. But it may be provided by the security services firm and then must be carefully reviewed by the client, possibly with a lawyer or industry consultant.

LARGE, COMPLEX SECURITY PROGRAMS

Large organizations with formal structures require a much more detailed process to identify and award a contract for security services than the one just described. This is particularly true for institutions and the government, which often issue a request for proposal (RFP)

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when making selections for security services providers. (Large and medium size corpora- tions also use RFPs, or modifications of them, when selecting security vendors.) Larger government or institutional contracts usually attract numerous hopeful bidders. However, sometimes excellent and well-experienced security service providers have to be encouraged to respond to a RFP. Thus, RFPs are used both to ensure fairness and to defend against claims of unfair awards. The process is invariably structured with firm dates and specific demands for replying to the RFP. An outline for a formal RFP follows. It provides insight into the types of issues that have occurred in the past when organiza- tions have contracted for protective officer services, experienced difficulties, and wrote specific demands into a formal agreement.

RFPs require effort and expense to prepare. The questions and concerns of bidders should be anticipated in advance, thereby facilitating the selection process. Often, the document begins with a Solicitation Summary, which provides proposed instructions, submission requirements, and conditions. These include such factors as:

1. Statement of purpose. This states what the task would be for the required security personnel.

2. Client contact person. Usually, a single individual is identified for all written or telephone inquiries or contacts. If a potential vendor requests interpretation of the RFP, this request should be placed in writing. The client reserves the right to respond to any and all such requests. Answers to substantive questions are shared with all responders, usually via fax or e-mail.

3. Submission. The final proposal usually is sent to a different office and contract officer than the client contact person identified to handle inquiries.

4. Proposer conference. A proposer’s conference is set for a particular date, usually in a conference room where all representatives can be accommodated. Proposers may be requested to notify the agency at least five days in advance if they plan to attend. Proposed vendors are under no obligation to attend such a conference, but normally they do. Attendance is usually taken at such times.

5. Letters of intent. Proposed vendors interested in submitting a pro- posal are requested to submit a letter of intent to the agency.

6. Submission requirements. This section summarizes what the prospec- tive vendors must prepare and submit in order to be considered. The number of copies of the proposal and the date and hour on which the sealed proposal package must be received by the client is stated.

7. Modification or withdrawal of proposals. The costs provided by the bidder to the proposal are deemed to be irrevocable until the contract award, unless the proposal is withdrawn or modified prior to the time or date set as the due date for the proposal and in accordance with the RFP.

8. Post-opening withdrawals. The client may allow a potential vendor to withdraw its bid only after the expiration of a stated number of days after the opening of the proposals. Such a withdrawal must be in writ- ing and in advance of the actual award.

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9. Late proposals, withdrawals, or modifications. To prevent charges of unfairness, clients generally do not make exceptions for late proposals, withdrawals, or modifications. An exception is when any modification of a successful proposal makes the terms more favorable to the client than those initially presented. Occasionally, a client may allow a vendor to join the process after it has begun. Such a vendor would be expected to meet all stated submission deadlines and requirements pertaining to other vendors.

10. Proposers’ right of appeal. The process whereby proposers may protest and appeal decisions regarding the solicitation and award of a contract is identified.

11. Payment policy. The customer for security services states when it expects to pay proper invoices, which set forth the description, price, and quantity of services rendered with the appropriate documentation appended. (A generation ago, some security service providers billed clients monthly, in effect giving the client improved cash flow. In recent years, weekly or biweekly billing has become the norm.)

12. Amendments to the RFP. If amendments to the RFP occur, all proposers will receive such notifications and must verify that they have received all addenda issued.

13. Discussion with proposers. The client may wish to conduct discussions with proposers who have provided the most responsive proposals. However, this discussion is not necessarily required prior to a contract award.

14. Procurement policy rules. The RFP may be subject to the rules of procurement by the government agency involved in the bid. In the case of a private organization, it may be stated that the decision to award is left solely to the discretion of the client.

15. Fairness and ethics. If any potential vendor feels that unfairness, favoritism, or ethical improprieties have occurred in the proposal process, the vendor may contact the client’s attorney designated by name to receive such information.

Element of a Comprehensive RFP

Following the Solicitation Summary, the proposal then provides considerable depth on the nature of the work to be accomplished by the proposed contracted services. A table of contents may begin the section, listing detailed aspects of the proposal covered in the document. The following is the outline of an expanded RFP, indicating considerations that could be important in completing a mutually beneficial contracting out process:

1.0 Introduction 1.1 Purpose. The name of the proposed client and the nature of the

security services required is explained. For example, “(The client) is requesting proposals from fully licensed firms in the business of providing trained, uniformed, unarmed male and female security

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officers who have had at least five consecutive years of experience in furnishing such services to large institutions, corporations, or to government units.” The specific nature of the experience expected to be demonstrated by the security services firm is also mentioned.

The length of the contract is indicated (for example, three to five years). The cost proposal must state a rate for each year of the contract. However, the client may wish to retain continuance of the contract for one to three 12-month extensions beyond the initial period at the client’s discretion. The date at which the contract is to begin is indicated.

1.2 Background. This section describes the nature of the client’s organization and states the importance of security in the view of management. Further details on the type of work generally provided by the organization may also appear in this section or be made part of the RFP packet provided to interested proposers.

1.3 Specific facilities. Next, the RFP will list all the facilities to be covered in the contract. It will include address, type of activities, number of employees working at the location, and any special features of concern from a security standpoint. If any physical changes in the nature of these facilities are anticipated within the life of the contract, they should be identified.

1.4 Security issues. A statement or section about the nature of the most significant security issues requiring management may be included here. For example, such issues as fire watch, employee theft, outsider theft, meeting and greeting the public, and emergency response capabilities are quite distinct activities and require that the security firm consider them thoughtfully in arriving at a bid proposal that would provide security officers who had the required skills.

1.5 Services needed at the facilities. Following from the previous section, this section identifies the serious problems that have occurred in the facilities in the past. A potential risk occurs if the RFP fails to identify serious crimes and incidents that have happened, say, in the past three to five years that would affect the nature of the staffing required. Specific details do not need to be presented in the RFP; however, the document needs to identify the major issues that have been the focus of security in the past. If the facility is new, the RFP will identify the nature of the problems that management expects the security services firm to be able to handle. How the client has dealt with these incidents elsewhere in the past may also be explained.

2.0 Scope of services. In RFPs for large and complex operations, it is possible for the organization to organize the work for one contract firm, several firms, or a combination of contract and proprietary services. The way management expects to divide such services may be identified here.

2.1 Minimal specific tasks and requirements. The writers of the RFP are not in the position to instruct the security services firm on how to do their job. Rather, the RFP writers can describe what the job involves

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and ask how the security supplier plans to meet the client’s security objectives. For example, the RFP may identify specifically the salient issues of greatest concern: • Protecting staff, customers/clients, vendors, and visitors against

malicious injury • Protecting the premises against theft, pilferage, vandalism,

damage, or destruction • Permitting only authorized persons to enter protected areas • Responding to an alarm with a protocol set by customer • Reporting to the client all violations of regulations via written

reports • Operating and monitoring a comprehensive closed-circuit

television and communications monitoring center • Operating and using X-ray, walk-through, and hand-held metal

detectors at entrances to the facilities • Patrolling areas of the facilities including perimeter walls and

fences, building exteriors, parking lots, roofs, main floors, corridors, stairwells, restrooms, and basements

• Observing and reporting at assigned locations activities that can lead to improved security performance

2.2 Guidelines for guards. In this section, the client indicates the minimum expected guidelines of the services. The following are examples that may be cited: • Contract security personnel must view the safety of all site

employees, visitors, vendors, and others on or near the premises as their main duty.

• Security officers shall challenge all persons entering protected premises for proper authorization and identification prior to entry.

• In facilities deemed part of the nation’s critical infrastructure, security officers should be alert to exceptional circumstances that may pose a threat and be prepared to respond reasonably.

• X-ray, walk-through, and hand-held metal detectors and other physical security devices, where provided, may be used to process individuals who enter the facility.

• Doors, windows, and other portals must be secured when required. • All incidents must be reported to the local director or site

supervisor. • A security log book must be maintained. • Contract security personnel must adhere to any site policies as

prescribed by the local manager or other officials in charge. • Contract security personnel should safeguard from damage all

equipment, systems, and property on the premises. • Contract security personnel must provide only general information

to the public, such as directions and locations of various offices. At no time will contractors’ employees be permitted to discuss with the public operating activities at any of the client’s sites. Such a

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discussion may serve as a breach of security of the site and of the organization.

2.3 Requirements for incident reports. A policy on incident reports may be expressed: • Unauthorized intrusion, trespassing, or other illegal entry onto

the site • Any criminal or unlawful act that has been committed on the site • Any assault, altercation, or confrontation that results in any

injury • Any emergency responses to the site by fire, police, emergency

medical, or government agencies • Any safety or health hazards observed by the security officer • Any exceptional incident that could require a claim against

management or that would require further investigation on the part of the client’s management

• No information contained in an incident report or brought to the attention of the security officer at the site shall be disclosed to third parties without expressed consent of site management.

2.4 Vendor responsibility. The following vendor responsibilities may be mentioned in this section: • Continuity of services. It is vital that security services be provided

without interruption to the client. Accordingly, the security services provider must propose how to ensure coverage in the event of strikes, work stoppage or slowdowns, or other situations in which services and operations may be disrupted. If the security firm is unionized, for example, the vendor might report that “a no-strike provision” is part of the agreement. Alternatively, a statement on labor/management working relationships—hopefully harmonious—may be included.

• Provision for female security officers. The security services provider may be expected to provide a certain minimum number of female officers depending on the locations and the nature of services to be provided.

• Uniforms and equipment. The following uniform and equipment guidelines may be mentioned in this section: a. The contractor must furnish and ensure that each security

officer wears a uniform in compliance with any state and local regulations. Security personnel should present a neat and orderly appearance at all times during the performance of their work. Proposers should identify details of their uniform options in the proposal. Alternatively, the client may prescribe special clothing to be worn by security personnel and may indicate whether the client will pay for the clothing or if it is to be included in the proposer’s fee.

b. At no time shall firearms, knives, or other unauthorized instruments or tools that might be used as a dangerous instrument or weapon be carried by security personnel.

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c. Supervisory personnel shall wear a uniform that distinguishes them from subordinate security personnel.

d. Security personnel shall exhibit identification credentials, as prescribed by the contract, in order to gain access to the facility for the performance of work.

e. Each security officer shall be furnished with a two-way radio, beeper, cellular phone, or laptop computer Wi-Fi ready. The purchaser may require a primary and a redundant communications system for each officer. Inoperable devices must be replaced immediately. The equipment shall be in working order at all times. The provision to safeguard and recharge the equipment remains the responsibility of the security services provider.

f. Security personnel responsible for the operation of security systems shall be held responsible for the systems’ security and care. Any unreported or unexplained damages to such systems shall be deemed the service provider’s responsibility.

3.0 Guidelines for proposal preparation 3.1 Proposal content. The proposal specifically must explain how certain

tasks will be handled. This content should include: • The specific security tasks that will be performed by security

officers. • The monitoring and supervisory control of the workforce. • A description of the training program to be provided security

officers and supervisors. • A security management assessment for the location—or part of the

location—needed to adequately secure the facility. • The internal controls that will be exercised by the security services

firm over the officers and their supervisors. • The security officer standard measures required to provide

adequate security. • The measures to be taken to protect employees and visitors against

malicious injury and to protect the premises and property against theft, pilferage, vandalism, damage, and destruction.

• The means of securing and safeguarding documents and records. • Procedures for reporting, preparing, and maintaining logbooks,

forms, and records. • Procedures and methods for excluding unauthorized persons. • Access control and security procedures for storage and equipment. • Details of uniforms to be furnished to and worn by security

officers. • How the service provider monitors statutory requirements for

annual training, if any. • Strategy for keeping security personnel updated on new

technology, regulations, and procedures that could be pertinent to the assignment.

• Any other security measures appropriate to the client and its sites.

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3.2 General information 3.2.1 Conflicts. If the proposer feels that any part of the proposal

appears to be in conflict with another part, or if an aspect of the work to be performed is unclear, the proposer should ask the potential client for clarification. If relevant, this elucidation will be shared with other proposers.

3.2.2 Inspectors and tests. The proposer should be aware that all personnel and equipment may be subject to inspection, examination, or test by the client at any time during the course of the contract. The client shall have the right to reject unqualified personnel who do not comply with the guidelines and requirements of the contract. Similarly, unsatisfactory equipment or materials may be rejected by the client.

3.2.3 Supervision by contractor. The proposal shall indicate in what manner a representative will supervise the work that his or her staff is performing to ensure the firm’s complete and satisfactory performance in accordance with the terms of the contract. The representative shall be authorized to receive and put into effect promptly all orders, directions, and instructions from the client.

3.2.4 Adequate and competent supervision. The proposer shall provide, as part of its contract and at no additional cost to the client, a visiting site manager. The site manager should visit all facilities at least once during an eight-hour tour to assure that quality security services are being provided. The site supervisors shall have a minimum of two years’ experience as supervisors in security-related or law enforcement positions prior to being assigned to the client.

3.3 Additional requirements 3.3.1 No-arrest policy. Security services personnel must not make

any arrests without the expressed consent of the chief or director of security. Security services employees shall not sign a complaint on behalf of the client or sign any request to do so by governmental authorities.

3.3.2 Tour limitation rule. Security services employees should not be on duty in excess of 16 hours per 24-hour period or in excess of 60 hours per week. Each security officer shall have a minimum of 24 consecutive hours off each week. Any hours in excess of the above-stipulated maximum shall not be billed to the client.

3.3.3 Overtime pay policy. In the event of an emergency or other contingency requiring guard service for a period in excess of the stipulated shift, payment for such services shall be at the same rate as the standard contract rate. This provision will not apply if the contractor has not been notified at least eight hours prior to the start of the shift, in which case the

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contractor shall receive the rate of one-and-one-half times the regular rate for that shift. If overtime is caused by the security services firm and is not attributable to the client, the service firm shall not be entitled to any overtime rate.

3.3.4 Training agreement. The proposer must provide a training program for its employees at no cost to the client. All employees must complete the training program prior to assignment. Such proposed training must consist of [a stated number] hours of training. The curriculum for the training and the resources used must be approved by the client prior to beginning such training. The client retains the right to provide part of the training prior to assignment.

3.3.5 Right to audit. The client reserves the right to audit relevant security services providers’ financial records related to the contract to assure compliance.

3.4 Standards for workforce 3.4.1 Education and background requirements. Proposers should

offer security officers and supervisors who meet the following minimum requirements: at least 21 years of age; high school diploma or GED; at least three years, alone or in combination, of (1) satisfactory prior work experience in a security-related field or human care–related area; (2) military service; or (3) satisfactory completion of college-level study. Security officers with records of criminal convictions will not be satisfactory to the client. (However, minor traffic violations or misdemeanors of some years earlier not relevant to the assignment may not disqualify the officer for consideration.) In fulfilling the contractor’s obligations under this requirement, the contractor shall comply fully with all laws of the state and disclose pertinent information to the client. Security officers shall be in good general health without abnormalities that would interfere with the performance of security duties, and must be capable of performing normal and emergency tasks requiring moderate to arduous physical exertion. Medical fitness is to be determined by a medical examination conducted and documented within 90 days prior to entry on assignment. Security officers must speak and write English intelligibly. Security officers must be citizens of the United States or possess acceptable alien registration documentation. Documented proof in the form of true certified copies (i.e., birth records, diplomas, military discharges) and previous employment verification should be maintained in a permanent personnel folder for officers. The folder will include training records.

3.4.2 Hiring and replacing personnel. The contractor shall be required to provide the client with the names of all newly

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hired officers. The personnel dossier of each newly hired officer shall be provided the client before the officer is assigned to a post. The contractor shall provide a certification for each individual officer stating that he or she meets all contract requirements. The contractor shall provide the certification with the officers’ folders for review prior to the beginning of their employment at the client’s site for the first time.

3.5 Information on the security services provider. The contractor shall provide the client with comprehensive information on the fitness of the contractor to perform the proposed contract. This infor- mation shall include historical information on the contractor; an organizational chart; résumés of the contractors’ principals and managers in charge of the contract; a list of the board of directors; a list of current contracts including a contact name and address and the date on which service began; and letters of support/ recommendation concerning the contractor.

4.0 General guidelines for submitting proposals 4.1 Letter of intent. Prospective vendors shall submit a letter indicating

their intent to submit a proposal by the deadline stated in the Solicitation Summary at the beginning of the RFP. Letters of intent are not binding, and proposals received by the stated deadline from proposers who did not file a letter of intent will still be considered. The letter of intent should identify the name of the proposer, plus the name, location, and telephone number of an authorized representative and any proposed subcontractor.

4.2 Application deadline. Proposals should be filed by the close of business on the date of the deadline stated in the Solicitation Summary. Proposers who mail their proposals should allow suffi- cient mail delivery time to ensure receipt of their proposals by the deadline. Delivery is the sole responsibility of the proposer. All appropriately filed proposals will be acknowledged in writing.

4.3 Questions. Written questions are to be submitted to the client contact listed in the Solicitation Summary. Answers to all questions, as well as copies of the questions, will be provided to all proposers unless, in the opinion of the client, a question is of such a nature that it is proprietary to the asking proposer.

4.4 Proposals or declinations. It is requested that the client receive responses, either proposals or declinations, from all parties receiving the RFP.

4.5 Restriction on contact with the client’s employees. From the issue date of the RFP, all contacts with the client’s personnel must be cleared through the client contact.

4.6 News release. The proposer shall make no news releases pertaining to this project without prior client approval.

4.7 Proprietary information. All proprietary information submitted in the proposal which the proposer desires to remain confidential shall be indicated clearly by stamping the word “Confidential” on the top and bottom of pages on which such information appears. For those

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proposals that are unsuccessful, all copies of such confidential information shall be returned to the proposer.

4.8 Contract award. The client reserves the sole rights to judgment and acceptance of the vendor’s proposal. After the proposal(s) has/have being selected, the name(s) of the successful applicant(s) will be disclosed. Upon selection, the successful applicant(s) will be required to execute a contract with the client. In general, contracts will be awarded to the qualified proposer whose proposal is most advantageous to the client in terms of quality, cost, and other factors. The contract to be entered into between the client and the successful proposer shall contain negotiated provisions based on the specific requirements set forth in the RFP, and on the successful proposer’s treatment thereof, as contained in the proposal.

4.9 Reservation. Notwithstanding anything to the contrary, the client reserves the right to reject any and all proposals received in response to this RFP; may select for contract or for negotiations a proposal other than that with the lowest net cost; can wave or modify any informalities, irregularities, or inconsistencies in proposals received; could negotiate on any aspect of the proposal with any proposer; may negotiate with more than one proposer at the same time; and shall terminate negotiations if a satisfactory agreement is not reached.

4.10 Site visit. Proposers must inspect the client’s named location(s) prior to the submission of their proposals.

4.11 Oral presentation. Proposers may be required to give an oral presentation to accompany their written submission.

4.12 Incurring costs. The client is not responsible for any pre-contract activity or costs incurred by applicants in the preparation of their proposals.

5.0 Selection of vendor 5.1 Method of selection. The client will evaluate all proposals and

select the proposal(s) that it deems most beneficial. The quality and appropriateness of security operations will be evaluated first. Proposals meeting minimal acceptable standards will then be considered for overall costs. The final selection will be based on the combined merits of both the quality and pertinence of security services and the fee proposal. The evaluation will include the following criteria: • Organizational capability and quality (25 points). Prior

experience of the proposer in similar undertakings and the quality of such work must be demonstrated. Proposers should submit evidence of managerial effectiveness in this field for the previous five years or more. Proposers also should provide documentation regarding their proposed team/organizational structure to oversee the scope of work required in the RFP.

• Understanding the need of the client (10 points). This criterion is to be scored based on the proposer’s ability to appropriately use

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required staffing, resources, and planning to address the nature of the client’s unique needs.

• Recruitment strategy and planning (10 points). Proposers should submit a complete plan for the recruitment of qualified security officers and supervisors for the duration of the contract.

• Qualifications and experience of the proposer’s personnel (10 points).

• Training plans, curriculum, and training capability (10 points). • Supervisory control (10 points). Proposers should submit detailed

job descriptions of the supervisory position, including span of control, and the method of disciplinary action for security personnel assigned to them.

5.2 Rating system. Proposals best meeting the minimal acceptable requirements on a 75-point scale will then be considered for their overall cost proposal.

6.0 Payment. The client agrees to pay the vendor on a timely basis from weekly invoices, which shall be submitted accompanied by attached original time sheets signed by the site director or designee. (Electronic verification of work performed certified by the contractor may be acceptable.)

7.0 Liquidated damages/adjustments of compensation 7.1 General provisions. Upon the occurrence of any of the acts or

omissions listed below, liquidated damages may be assessed daily against the contractor in the amounts indicated for each occurrence and for each day, starting from the day the occurrence commenced until the day the irregularity is corrected. The amount of assessment will be paid by the contractor or deducted from the contractor’s invoices. (The dollar amount is not a standard and is included for reference purposes only.)

7.2 Liquidated damages: $350 per day. Liquidated damages may be assessed against the contractor in the sum of $350 per day per occurrence for each of the following acts or omissions: • Failure to provide a security officer who meets the criteria specified

in the contract. • Failure to provide a site supervisor who meets the criteria specified

in the contract. • Failure to maintain complete personnel records folders for

employees specified. • The contractor’s employees engage in a strike, work stoppage, or

slowdown at the client’s premises (a fee is assessed for each employee).

7.3 Liquidated damages: $200 per day. Liquidated damages may be assessed against the contractor in the sum of $200 per day per occurrence for each of the following acts or omissions: • Failure to provide a visiting site manager who does not

visit at least once during every tour as specified in the contract.

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• Failure to provide a site supervisor at each client location for each shift, covering seven days per week.

• Failure to provide security services in an emergency or other contingencies for a period in excess of the stipulated shift hours as specified in the contract.

• Failure to notify the client of the names of security officers newly hired and assigned and to provide their personnel folders for review as specified in the contract.

• Failure of the contractor’s employees to obtain approval from the client prior to signing a complaint on behalf of the client.

7.4 Liquidated damages: $100 per day. Liquidated damages may be assessed against the contractor in the sum of $100 per day per occurrence for each of the following acts or omissions: • Failure to train guards required for a post or shift as required by

the contract. • Failure to maintain complete records of all hours each security

officer assigned to the client’s premises is engaged in, for which work is computed on the basis of actual hours worked.

• Failure to assign a correctly dressed security officer. • Failure to replace any security officer within eight hours upon

request by the client. • Failure to submit oral or written reports of incidents occurring on

the client’s premises to the client. • Failure to provide each security officer with required and working

equipment. • Failure to report in a timely fashion missing fire extinguishers,

smoke detectors, hazardous conditions, or exceptional occurrences as specified in the contract.

• Failure to properly maintain the security officer location logbook as specified.

7.5 Incomplete shift penalty. Failure to provide a security officer at a specified client location on time or the early departure of a security officer from a specified client location will result in an agreed-to hourly assessment.

7.6 Improper assignment penalty. If the contractor assigns a security officer to the client’s premises who, it is later determined, has a criminal record, the total paid to the contractor for the security officer’s services shall be deducted from the contractor’s invoices.

7.7 Return of a previously terminated worker. If a security officer is dismissed from one client location and shows up for work at another without the client’s permission, the total amount paid for the officer’s services from the date of dismissal will be refunded to the client plus $100 per day for each infraction.

7.8 On-the-job negligence. If the client’s security system or property is damaged or stolen as a result of misuse or negligence by the contractor’s employees, the contractor will be held liable for replacement or repair costs of the items.

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8.0 Notification requirements. Vendors must notify the client and obtain advanced approval for any change, addition, or termination of major contract components and any change in the staffing by the vendor needed to serve the client effectively.

9.0 General contract provisions. The contract entered into between the client and the successful proposer(s) shall contain negotiated provisions based on the specific requirements set forth in this RFP and the successful proposer’s treatment thereof, as contained in its proposal.

10.0 Submission of Federal Employer Identification Number (EIN) 11.0 Insurance. The contractor must have a minimum of $10 million

of general liability insurance at the time the contract is awarded. The contractor must provide a certificate of insurance listing the client as being insured under the vendor’s policy. The contractor’s insurance policy must be written with an insurance carrier with a rating of at least “A” from A.M. Best. In the event the insurer is reduced to a lower rating, the vendor must take timely action to replace the insurance coverage with an insurer rated as at least “A” as judged by A.M. Best. Additionally, the vendor shall maintain specific adequate coverage for any vehicles to be used in the function of the contract.

12.0 Reports. The vendor shall maintain records and make reports as may be required by the client, including information needed for computerized data systems.

13.0 Prime contractor responsibilities. The selected vendor(s) will be required to assume sole responsibility for the fulfillment of the resultant contract(s).

14.0 Subcontracting. No part of the work covered by this RFP shall be subcontracted by the successful applicant(s) without prior approval from the client.

15.0 Reservations. As the need requires, the client reserves the right to increase or decrease the number of personnel to be authorized at the protected locations subject to the contract without limit. In addition to furnishing security services at the client’s locations listed in this RFP, the contractor may be required to provide services at other client facilities not stated in the RFP.

16.0 Length of contract. The contract is for a 36-month period to be extended for a second 12-month period at the same rate for the initial period (or for whatever rate and policy the proposer wishes to achieve).

17.0 Termination. Either party to the agreement reserves the right to cancel any or all sites with 30 days’ written notice.

18.0 Equal Employment Opportunity. The contract is awarded subject to applicable provisions of federal, state, and local laws and executive orders requiring affirmative action and equal employment opportunity.

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Determining Final Costs

In addition to analyzing quality and competence of service (75 points), the final contract in this sample RFP is to be awarded based on cost considerations as well (25 points). The client determines the projected number of hours of coverage for security officer services. In the example of the above RFP, the client asks that the contractor anticipate a variety of expenses and incorporate them into the price to be charged for each hour scheduled by a security officer. In this instance, the vendor must consider a large number of ancil- lary costs—officer overhead, profit, selling and proposal preparation costs, uniform and equipment expenses, supervisory costs, potential liquidated damages, insurance and other amounts—into the hourly proposed rate.

In other cases, proposed vendors and clients may identify other factors that could be expensed separately. For example, if vehicles are required to patrol the facilities, they may be provided by one party or the other, accounting for differences in payment.

Other Considerations

The RFP discussed above leaves much to be negotiated between the prospective vendor and the client. To the vendor, successful agreement on numerous fine points may be the difference between profit and loss on the actual contract performance. To the client, the difference can be between projected costs and costs that exceed budgeted targets. Clearly, a spirit of harmonious goodwill between both parties is needed throughout the life of the contract to resolve issues that normally occur. The RFP above provides for “liquidated damages,” or cash penalties, against the vendor for specified breaches of the contract. Wise clients do not desire a punitive environment in which such measures occur with any frequency. If the client has screened the vendors carefully, service will meet expectations without the necessity of frequent cash penalties.

The design of the security officer’s job relates to quality of performance. A guard who sleeps on a post faces dismissal. Yet, in candor, some jobs are designed with such little stim- ulation that it is difficult for someone not to sleep, especially if the security officer is sitting during an evening shift. Meaningful tasks, built-in variation, and regular visits by supervi- sors can maintain the discharge of duties at an optimal operating level with high alertness.

Continuous Supervision

Whether the security contract is small or large, it is incumbent on the client to maintain an ongoing evaluation of security services. Observations on the quality of services—good and bad—should be constant. Feedback may be provided orally, in written form, or in both ways to the contractor. It should be understood that a satisfactory level of service can lead to a continuing relationship between the parties.

RETAINING SERVICES OF PRIVATE INVESTIGATORS AND CONSULTANTS

Over 8,000 private individual investigators and investigative firms are licensed in the United States. Countless others work under the supervision of experienced,

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licensed investigators. Many of these are solo practitioners who work only occasionally as assignments come along. A few are organized, deeply staffed, and have offices throughout North America and beyond. Some practitioners are generalists; others spe- cialize in a particular field. The Security Letter Source Book identifies over 35 different categories of investigators and security consultants; doubtlessly, others will emerge as needs occur.

An employer requiring an investigator for a specific assignment must identify can- didates who appear to have the experience, training, and ability to undertake the assign- ment. This is usually achieved by interviewing candidates for the assignment and describing in general terms the work needed to be undertaken. Competent investigators will outline how they would undertake the process, what resources they would need, the amount of time required, and the approximate cost for the service.

Compensation for investigators, consultants, or their agencies can be structured in different ways. The methods include a per-project basis in which the fee includes all per- sonnel and out-of-pocket costs; a per-project basis with ancillary costs billed extra; and hourly rates plus extra expenses. The cost of an investigator or a consultant normally will be marked up two-and-a-half to three times the actual hourly rate paid to the investiga- tor or consultant. This divergence pays for the overhead and benefits for the investigator or consultant and provides sufficient extra to subsidize the investigator during times when assignments are few. Generally, the fee is related to time, skill, and difficulty for personnel involved in the investigation or consultation.

CONTRACTING FOR ALARM MONITORING SERVICES

The alarm monitoring and installation business is an important part of the security indus- try. It generates more than $12 billion in revenues. Alarm monitoring is part of almost every security program of consequence. In the past generation, the industry grew in volume and services while the number of individual operators shrank. Generally speak- ing, alarm businesses seek to recover costs or make only a small profit on the hardware and installation portion of the contract. Their strategy is to earn profits over time from the recurring revenues from monitoring and responding to alarm inputs.

Alarm monitoring services may be in-house; that is, totally monitored and responded to by employees or contract officers of the workplace. However, the majority of security programs will turn to outside contract companies to install and monitor alarm signals. Additionally, the security program may expect the alarm monitoring firm to design the alarm system, to verify the authenticity of the signal, and to respond to it. These are issues that are negotiated for the particular sites or programs. Typical aspects to an alarm monitoring contract (for the hardware aspects see the next chapter) are as follows:

• Terms of agreement. Normally an alarm contract is signed on an annual basis. But the alarm provider is interested in customers for the long term. Indeed, contracts that are likely to last less than five years might not be economic to alarm businesses without extra fees or penalties provided. Often agreements are considered “evergreen” in that they are automatically renewed on an annual basis unless one

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party notifies the other of a plan to terminate or of a fundamental change in the agreement.

• Notification for termination. Alarm companies may penalize the customer if the contract is terminated before the end of the annual period. The customer may be charged fees through the end of the annual period. In the event of a catastrophe or disaster, the agreement may permit either party to cancel before the termination of the contract. Alarm businesses also usually reserve the right to cancel service when payment dues are more than 30 days overdue and unpaid.

• Ownership of the security system. Despite the fact that the subscriber has paid for the design and installation of the system, it may in actuality belong to the alarm company. This may not matter to the subscriber, particularly because systems reach obsolescence in a few years’ time. But this could have a significant strategic impact on the subscriber who wishes to cancel the contract: The alarm company may threaten to remove the alarm equipment on short notice, leaving the former customer unprotected.

• Maintenance of the security system. The customer may not own the system but be expected to maintain it. The alarm company may be willing to service the system and to respond to problems, but may maintain that it has no duty to maintain, operate, actuate, or non- actuate the installed system.

• Suitability of the system. The alarm installation and monitoring company may state that it does not represent that the system is suitable for the subscriber.

• Interruption of telephonic signals. The alarm business is not responsible if signals do not reach it due to a loss of utilities. (In such cases, the subscriber would plan for backup.)

• Daily testing of the system. The subscriber is responsible for testing and setting the system each day. In some cases, a “walk test” if motion detection is provided must be conducted by the subscriber. Any operating defect must be reported to the alarm company.

• Burden of customer to carry own insurance. Alarm company contracts normally notify customers that they are not insurance companies. (See next point.) Therefore, the payments made by the subscriber are for the value of the services and have no relationship to the value of the property or other assets to the subscriber. The alarm company makes no warranty, normally, for the fitness of its own services and for the alarm system that it may have designed, configured, and installed.

• Liability for negligence. In the event the alarm monitoring firm is negligent, resulting in loss to the subscriber, the amount the subscriber will be reimbursed will be limited to the amount cited in the contract. That could be for $100 or the equivalent of one year’s monitoring services. Thus, negligence that resulted in substantial losses because of failure to respond, for example, would result in a de minimis payment to the aggrieved subscriber. (An exception would be if the alarm

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monitoring business were to be grossly negligent in its duty to subscribers.)

• Obligations of the subscriber. Opening and closing times and holiday schedules are likely to change. It is the duty of the subscriber to notify the alarm company of any changes or corrections in the previously agreed-to schedule. The subscriber must determine at the beginning of an engagement how many minutes before or after a scheduled opening or closing time may pass before an alarm condition prevails. Such changes can be made easily when an authorized person contacts the service center and verifies that the change is authentic.

In contracting for alarm services, the subscriber should determine in advance what is needed for response. That is, in some areas an automatic response by police will take place when an alarm condition is signaled to law enforcement. However, in the effort to reduce false alarms, many communities expect alarm monitoring firms to verify the alarm before notifying the police. This verification may occur through telephoning the sub- scriber, checking on-site CCTV, sending private security to evaluate the alarm, or other measures. Before signing an agreement with an alarm business, the subscriber needs to determine where the alarms will be monitored and what backup has been provided in the event the primary monitoring location is out of service.

PURCHASING SECURITY SERVICES THROUGH INTERNET PROPOSALS

Security services traditionally have been negotiated between people. The Internet has changed that, even for services as distinctive as guarding, investigations, consulting, and alarm monitoring. The process is so new that it has not been subject to rigorous scrutiny and criticism. For now the concept of inviting service providers to bid online is appeal- ing if safeguards protect the interests of all the parties. In the end before a contract is awarded, the customer will want to meet face-to-face with bidders on the short list any uncertainties can be eliminated and the sites may be visited.

SUMMARY

Personnel represents the largest cost in most security programs. Consequently, the optimally performing manager will seek to assure that security functions are achieved with the minimum number of people required. Proprietary and contract security services both have advantages; therefore, managers sometimes plan to employ both in large operations. Software programs specifically written for security applications have improved accounta- bility and decreased costs since their introduction. Investigations are currently playing an ever-widening role in both civil and criminal processes. A request for proposal (RFP) is a bureaucratic, costly, and burdensome means of selecting a security services vendor. However, the process sets out a fair basis for identifying the best security company for the client and also helps to determine the most favorable arrangements for the client.

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DISCUSSION AND REVIEW

1. What factor is all too often not considered by management when the possibility of converting from proprietary to contract guard services is considered?

2. What is the significance of possible collusion between employees and security personnel? What do many security directors feel is a measure that combats collusion?

3. How important is making people feel safe in security programs? 4. Outline the critical differences between criminal law and civil or con-

tract law as discussed in the chapter. 5. What new types of investigation have emerged in recent years? 6. Security officers who are on “barred-from-customer” lists can be mon-

itored most easily by what type of management tool? 7. What are convenient means by which security directors can determine

compensation ranges for security officers in various geographic areas?

ENDNOTES 1 D.R. Dalton (1991). Managing Contract Security Services: A Business Approach. Fremont, CA: Mill Creek Publishing, p. 5. 2 D. Dalton (September 1994). “Looking for the Quality-Oriented Contractor.” Security Technology & Design, Vol. 4, p. 6. 3 Ibid. 4 J.J. Fay (1987). Butterworth’s Security Dictionary. Boston, MA: Butterworth- Heinemann, p. 102. 5 A. Buckwalter (1984). Investigative Methods, Boston, MA: Butterworth-Heinemann. 6 B. Chapman and E. Zwicky (1995). Building Internet Firewalls. Cambridge, MA: O’Reilly & Associates, p. 1. 7 D. Parker (1998). Fighting Computer Crime. New York, NY: Wiley Computer Publishing. 8 Ibid, p. 428. 9 J.K. Barefoot (1995). Undercover Investigations, 3rd ed. Boston, MA: Butterworth- Heinemann, pp. 92–94. 10 A.R. David (1986). The Pyramid Builders of Ancient Egypt. Boston, MA: Routledge & Kegan Paul, pp. 68–69. 11 M. Lipson (1975). On Guard: The Business of Private Security. New York, NY: Quadrangle/The New York Times Co. 12 Examples include CCS Security Guard Management System from Complete Computer Service, Ltd., Farmington Hills, MI; InTime Officer Scheduling from InTime Solutions, Inc., Burnaby, BC; and Security Management Systems (SMS) from Valiant Communications, Inc., Woodbury, NY. 13 W.L. Winston and S.C. Albright (1997). Practical Management Science: Spreadsheet Modeling and Applications. Belmont, CA: Duxbury Press; L.J. Krajewski

Endnotes 283

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and L.P. Ritz-man (1993). Operations Management: Strategy and Analysis. Reading, MA: Addison-Wesley. For example, see Valiant SMS and the publisher’s website for the book. 14 Security Letter (October 15, 2005). Part II. This information is also available at www.securityletter.com and the publisher’s website for the book. 15 S. Langer (2000). Available Pay Survey Reports: An Annotated Bibliography, 5th ed. Crete, IL: Abbott, Langer & Associates. 16 F. Morn (1982). The Eye That Never Sleeps. Bloomington, IN: Indiana University Press, p. 98; also: J.D. Horan (1967). The Pinkertons: The Detective Dynasty That Made History. New York, NY: Bonanza Books, p. 50. 17 J. Willey (1988). The Business of Employee Leasing. San Bernardino, CA: Employee Leasing Consulting Group.

ADDITIONAL REFERENCES

ASIS (1998). “ASIS International Presents Introduction to Security for Business Students.” Alexandria, VA: ASIS International.

E.F. Ferraro and N.M. Spain (2005). Investigations in the Workplace. Boca Raton, FL: Auerbach Publications.

R.D. Heil (June 2006). “Guarding Against Poor Performance.” Security Management 50(6): 57.

R.J. Meadows (1995). Fundamentals of Protection and Safety for the Private Protection Officer. Englewood Cliffs, NJ: Prentice Hall.

Office of Federal Protection and Safety (April 1984). Contract Guard Information Manual. Washington, DC: U.S. General Services Administration.

D.A. Sklansky (April 1999). “The Private Police.” UCLA Law Review 46(4):1165–287. A.J. Slywotzky and J. Drzik (April 2005). “Countering the Biggest Risk of All.” Harvard

Business Review 83:78. T.G. Travers (2005). Introduction to Private Investigation, 2nd ed. Springfield, IL:

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