An Examination of Security Contracts
Security contracts, also known as security services agreements or security guard contracts, are contractual arrangements designed to help both governmental and private entities protect assets, information, and other critical infrastructure. These contracts are between a security services company (the contractor) and an employer of security services such as a large or small business or government body (the client).
Security contracts are often times long-term arrangements where the contractor provides complete surveillance , patrol, and security guard services to the client. As more business are putting in measures to address their security needs in today’s social climate, contractors are looking for security contract opportunities to provide their services to prospective clients.
Finding Security Contracts
The best way to find security contract bidding opportunities is to do a thorough search online and transform yourself into a bid "hound." There are many online sources, such as GovWin, Onvia, BidNet, Deltek GovWin IQ, FedBizOpps, Source Suite, and e-Maryland Marketplace that can assist you in finding government procurement opportunities. Some are free to use while others charge subscription fees or membership dues. Join the security industry organizations, including ASIS International, Security Industry Association (SIA), and the National Institute of Justice (NIJ). Another fruitful source to identify security contract bidding opportunities is to regularly read industry publications such as Security Management and Security Info Watch. Many security industry journals provide procurement opportunity listings on their websites.
How to Bid on Security Contracts
The first step in preparing to bid on a security contract is to make sure you satisfy the requirements of the request for information (RFI) or request for proposals (RFP). This means that you must have the licenses and credentials required to perform the anticipated work and you must have the minimum experience necessary for the project. If it is a government contract, it is also likely that you must be registered with the System for Award Management (SAM) website and/or the Department of Defense’s Wide Area WorkFlow (WAWF) system.
Second, you will have to develop your proposal, which should include a detailed and thorough plan on how you are going to execute the potential contract. You can either submit a set price for a term of service or an hourly rate; either way, you need to get into the details of how you are going to price your labor, materials and equipment. In government contracts, there is a bidding process that is often conducted online through GSA eBuy or FedBid. If you are awarded the task order, a formal contract is issued through the GSA schedule or an Intra/Government Order (IGC).
Once the task order is accepted, then a formal contract is issued. The amount of time it takes from bidding on the contract to the issuance of the contract can take anywhere from 30 to 120 days or more.
Bidding Considerations
Determining how much to charge for security contracts is very often a guessing game. If you bid too high, you won’t get the contract. If you bid too low, you will make a loss. It is important to do your research before quoting your price. The last thing you want as a small business is to be constantly forced to spend money rather than make money.
Ideally you should have a price range in mind that you absolutely won’t go below. You may decide to offer lower rates for new customers or for contract renewals, but you should never go below that. Doing research that helps you determine your competitors’ pricing is vital.
You also need to make sure you comply with all state and federal regulations and laws when bidding. This is critical. Failing to comply with such laws can even lead to the contract being terminated, as well as criminal and civil penalties. Such regulations could be labor laws or prevailing wage laws, depending on your state. You will want to consult with your lawyer if you are unsure which laws are relevant to your work.
One of the best ways to get an edge over competitors is to be as thorough and accurate as possible with the information you provide to the client about how you will fulfill their needs. Any proposal you put forth should reflect the amount of research you have done into the client’s needs and how you will be meeting them. If you skip over certain questions or fail to provide specific details in your proposal because you don’t have answers, this gives the impression that you are not thorough or thoughtful in your work. Better to be upfront about questions and uncertainties and say you’ll touch base with the client later than to make a halfhearted proposal that suggests the work will not be done professionally.
You have two choices when bidding on a contract. Bid high or bid right. The first option will result in you missing out on lots of work, but at least you won’t suffer for it. Bidding low means you will definitely win a lot of contracts, but you may suffer for it in the long run. If you use competitive intelligence and do your research, you will likely be able to build your reputation and business so that you can raise your rates and perform quality work at the same time.
Mistakes to Avoid When Bidding on Security Contracts
A common pitfall may be a company’s justifiable excitement about landing a contract. Because bidding success is such a lightning bolt in the business world, the energy behind a project can blind businesses or make them underestimate the project’s costs. But it is worth taking a closer look at how to estimate the costs accurately and to take time to read the contract terms thoroughly.
Estimating costs
First, companies need to be clear about how to deal with such issues as material costs. For a prime contractor, it may be as uncomplicated as estimating the material costs. But if your company is a sub or team member, it’s critical that you understand how to translate the material costs into labor costs. Identify raw materials, and consider how much of the overall material cost will become labor costs.
Also ensure you have estimated the correct size of crews for the job. Some companies roll personnel into multiple shifts so that around-the-clock work on a large site allows them to get a price advantage. Depending on the requisite skills and time that staffers may be working , it is important to analyze accurate numbers of days and shifts needed on the security contract site.
Reading the contract
The contract is not just a formality to sign. If you don’t carefully read particular terms, you can find yourself in a doozy of a spot. For example, when the volume of work is higher, deadlines can be tight, and understaffing can trigger penalties. However, some companies fail to recognize force majeure clauses, which can allow for an extension of deadlines due to adverse weather, such as unusually heavy rain or snow.
It is also vital to be aware of the law’s ramifications with regard to deadlines and how it can impact your bottom line. While the Louisiana Public Bid Law usually does not count weekends, state or federal holidays, it can be worth reading carefully a contractor law and how it pertains to the deadlines and payment periods, for example.
If your security business gets to the bottom of the details of your proposed contract, you might discover you need to revise your bid so that it is advantageous for you. Avoiding pitfalls and knowing how to think ahead can help you win a security contract.
Maximizing Your Success in Receiving a Security Contract
Don’t overlook the importance of communication in your dealings with potential clients. It may seem trivial, but the more comfortable you make the client feel with his/her choice to share the sensitive details of the security contract process with you, the more likely they will be to award that contract to you. And honestly, if you’re not communicating thoroughly with your client or communicating effectively with them – or, simply, you’re not communicating at all – then you have no business taking on a security contract in the first place. Be open, be relatable and be available, even if it seems redundant. People tend to get taken in by those who speak plainly and clearly, so don’t be afraid to self-edit a bit when dealing with clients.
Of course, relying on "soft" skills like communication is only one aspect of this process. If you lack the experience and credentials that you’ll need to build the necessary trust with a potential client, you lose. It’s therefore important to do your homework before bidding on a security contract. Your experience matters: do you specialize in any specific type of service, like armed security or fraud prevention? Do you have experience working with clients in a particular field or industry? While you likely have plenty of experience in the security field, this doesn’t mean you have any experience with industrial security or corporate espionage solutions, for instance. Find out what security services are in highest demand where you’re located.
Be proactive: if you know someone you’ve worked with in the past, either as a client or a consultant, has recently expanded their services to include security guard services, it doesn’t hurt to pay them a visit, ask a few questions, then follow up later down the road. People hire other people like them, so remember that the next time your perusing local businesses that may be in need of a security contract. Your network matters, and if you regularly hire security solutions experts, then it stands to reason that your trusted security expert likely knows him or her as well. You can stand out from the crowd by knowing what your competitors are offering through your former security consultants; otherwise, you’re just another face in the crowd.
Legal and Ethical Bidding Considerations
The bidding process is fraught with legal and ethical issues that are intended to ensure a level playing field among bidders. To this end, federal, state, and local governments have laws that specifically address the bidding process and the kinds of information that must be disclosed (and when). Additional regulations from the Federal Acquisition Regulation (FAR), Federal Information Resources Management Regulation (FIRMR), and the Office of Management and Budget (OMB) also address debarment, contract awards, and protest rights. Of equal importance to contracting officers are any state and local laws that dig deeper into the rules of the contracting process. These may, for example, require submission of a Statement of Non-Collusion Affidavit. This is primarily to avoid collusion among bidders to lock out a competitor or to inflate bids. The theory is that if someone has to sign a third-party document swearing that they have, not colluded with other potential bidders, bidders are less likely to engage in illegal conduct. Federal law and state and local laws prohibit the following: These laws prohibit attempts to influence or pressure a public official via bribery or other improper means. They also may include prohibitions on the use of threats to effect the award of a contract. Antitrust laws prohibit contracts that restrain free trade via price fixing, bid rigging, or kickbacks . Contracting officers are obligated to evaluate bids on the basis of their responsiveness to solicitation requirements and the bidder’s ability to perform the work. If a bidder intentionally conceals aspects of their bid, such as experience, reputation, and financial stability, that reflects negatively on their ability to do the work, that bidder could be suspended or debarred from the industry. Although debarment notices are intended to be publicly available, it is not uncommon for contractors to forget their obligations. If a contractor is suspended or debarred and does so work they were not qualified to do, a court may order disgorgement of profits or could impose huge penalties. Both criminal and civil penalties apply, although criminal penalties are rare. Penalties addressed through civil proceedings can include fines of up to three times the amount of damages to the U.S. incurred through fraud or false claims. There are also penalties for knowingly submitting false certifications or claims under an existing contract that call for rigorous application of ethics laws. Importantly, there are five year statutes of limitation that cover most cases. Since the commencement of affirmative contracts with the government is often marked by a Certificate of Representation, counsel should be sure to carefully screen clients representation before signing such documents to avoid liability under the False Claims Act.