State Department awarded $23.8M for security services in China, raising questions about value and competition

Contract Overview

Contract Amount: $23,841,952 ($23.8M)

Contractor: Coastal International Security, Inc

Awarding Agency: Department of State

Start Date: 2009-09-02

End Date: 2018-09-24

Contract Duration: 3,309 days

Daily Burn Rate: $7.2K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 3

Pricing Type: TIME AND MATERIALS

Sector: Other

Official Description: CLEARED AMERICAN GUARD SERVICES IN GUANZHOU, CHINA CONSTRUCTION PROJECT

Place of Performance

Location: UPPER MARLBORO, PRINCE GEORGES County, MARYLAND, 20772

State: Maryland Government Spending

Plain-Language Summary

Department of State obligated $23.8 million to COASTAL INTERNATIONAL SECURITY, INC for work described as: CLEARED AMERICAN GUARD SERVICES IN GUANZHOU, CHINA CONSTRUCTION PROJECT Key points: 1. The contract's duration and cost suggest a significant investment in security infrastructure. 2. Competition was limited, potentially impacting price discovery and overall value for taxpayer funds. 3. The use of Time and Materials pricing introduces cost escalation risks. 4. The contractor has a history of providing security services, but specific performance metrics are not detailed. 5. This contract falls within the security and protective services sector, a critical area for diplomatic missions. 6. The geographic location in China presents unique logistical and operational challenges.

Value Assessment

Rating: questionable

The total award of $23.8 million over nearly 10 years for security services in Guangzhou is substantial. Benchmarking this against similar contracts for diplomatic security in high-risk areas is difficult without more granular data on service levels and specific threats. The Time and Materials (T&M) pricing structure, while flexible, can lead to cost overruns if not closely managed, making a definitive value-for-money assessment challenging. The contract's long duration also means that initial pricing may not reflect current market conditions or evolving security needs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating that while a competition was held, certain sources were excluded. This suggests a limited competitive landscape. With only 3 bidders, the level of competition was not robust, which can lead to less favorable pricing for the government. The exclusion of sources further complicates the assessment of whether the government received the best possible offer.

Taxpayer Impact: Limited competition and the exclusion of sources may have resulted in higher costs for taxpayers than a fully open and robust bidding process would have achieved.

Public Impact

U.S. diplomatic personnel and facilities in Guangzhou, China, benefit from enhanced security. The contract ensures the provision of security guard and patrol services. The geographic impact is concentrated in Guangzhou, China. The contract supports jobs within the private security industry, both domestically and potentially locally in China.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may have led to suboptimal pricing.
Time and Materials contract type carries inherent cost escalation risks.
Long contract duration could lead to outdated service provisions or pricing.
Exclusion of sources limits the pool of potential providers and competitive pressure.

Positive Signals

Contractor has experience in security services.
The contract addresses a critical need for diplomatic security.
The award was made by the Department of State, indicating a recognized requirement.

Sector Analysis

The security and protective services sector is a significant part of the federal contracting landscape, encompassing a wide range of services from physical security to cybersecurity. This contract for guard services falls under the broader category of physical security, which is essential for protecting government assets and personnel, particularly in overseas locations. Comparable spending benchmarks for security services in diplomatic contexts can vary widely based on location, threat levels, and service requirements. The North American Industry Classification System (NAICS) code 561612 for Security Guards and Patrol Services indicates a specific market segment.

Small Business Impact

There is no indication that this contract involved small business set-asides, as the contractor, Coastal International Security, Inc., is likely a larger entity. The contract's value and nature do not suggest significant subcontracting opportunities for small businesses, although some support services might be outsourced. The primary impact is on the larger security service providers capable of handling complex international contracts.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of State's contracting officers and program managers. Accountability measures would be tied to the performance standards outlined in the contract and the T&M reporting requirements. Transparency is facilitated through contract award databases, but detailed performance reports and cost breakdowns are typically internal. The Inspector General of the Department of State would have jurisdiction for audits and investigations into potential fraud, waste, or abuse.

Related Government Programs

Department of State Diplomatic Security Service Contracts
Overseas Security Guard Services
Federal Protective Service Contracts
Security Services for Embassies and Consulates

Risk Flags

Limited competition
Time and Materials pricing
Long contract duration
Exclusion of sources

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $23.8 million to COASTAL INTERNATIONAL SECURITY, INC. CLEARED AMERICAN GUARD SERVICES IN GUANZHOU, CHINA CONSTRUCTION PROJECT

Who is the contractor on this award?

The obligated recipient is COASTAL INTERNATIONAL SECURITY, INC.

Which agency awarded this contract?

Awarding agency: Department of State (Department of State).

What is the total obligated amount?

The obligated amount is $23.8 million.

What is the period of performance?

Start: 2009-09-02. End: 2018-09-24.

What is the track record of Coastal International Security, Inc. with the Department of State and other federal agencies?

Coastal International Security, Inc. has a history of contracts with the Department of State and other federal agencies, primarily for security guard and protective services. Reviewing their past performance on similar contracts, particularly those in overseas locations or high-risk environments, would provide insight into their reliability, quality of service, and ability to manage complex security operations. Data from contract performance evaluations (e.g., CPARS) would be crucial to assess their track record. While this specific contract was awarded in 2009, understanding their more recent performance would offer a clearer picture of their current capabilities and any potential issues that may have arisen.

How does the cost of this contract compare to similar security services provided at other U.S. diplomatic missions?

Direct cost comparison is challenging without detailed service level agreements and threat assessments for each location. However, the average annual cost for this contract, approximately $2.6 million ($23.8M / 9.3 years), should be benchmarked against security contracts for missions in comparable regions or countries with similar security challenges. Factors such as the number of personnel, hours of service, specific security technologies deployed, and local labor costs in Guangzhou would influence the overall price. A thorough analysis would involve comparing the cost per man-hour, cost per square foot of protected area, and the overall security posture achieved relative to the investment.

What are the primary risks associated with a Time and Materials (T&M) contract for security services in a foreign country?

The primary risk with a T&M contract for security services in Guangzhou is cost escalation. Since the government pays for direct labor hours at specified rates and for the cost of materials, there is less incentive for the contractor to control costs efficiently. This can be exacerbated in a foreign location due to potential fluctuations in local labor rates, currency exchange, and the cost of imported materials or equipment. Without stringent oversight and well-defined ceilings, the total cost can significantly exceed initial estimates. Additionally, defining 'materials' can sometimes lead to disputes. Effective risk mitigation requires robust monitoring of labor hours and material expenses, clear definitions, and potentially a cost-plus-fixed-fee or firm-fixed-price structure for certain components if feasible.

What does the 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' designation imply about the procurement process?

This designation implies that the agency initially intended to conduct a full and open competition but subsequently excluded certain sources. This exclusion could be based on various factors, such as national security concerns, specific technical capabilities required that only a limited number of firms possess, or previous performance issues with certain contractors. However, it significantly narrows the competitive field. The justification for excluding sources must be documented and defensible to ensure fair and transparent procurement. It suggests that while multiple bids were sought, the pool of eligible bidders was intentionally restricted, potentially impacting the final price and the range of innovative solutions considered.

How has spending on security services for overseas diplomatic missions evolved over the life of this contract (2009-2018)?

Spending on security services for overseas diplomatic missions has generally trended upwards over the period of this contract (2009-2018) due to increasing global security threats and the need to maintain secure facilities. The Department of State consistently allocates significant resources to its Diplomatic Security Service. Factors influencing this trend include geopolitical instability, evolving terrorist threats, and the implementation of enhanced security standards mandated by Congress or international agreements. Analyzing the State Department's overall budget for security and comparing the proportion allocated to guard services over this decade would reveal the broader spending patterns and the relative importance of contracts like this one.

What are the potential implications of awarding a long-term contract (over 9 years) for guard services?

Awarding a long-term contract like this one (over 9 years) can offer stability and predictability for both the government and the contractor, potentially leading to better planning and resource allocation. It can also foster a stronger working relationship and allow the contractor to make specialized investments. However, it carries risks: the government might be locked into potentially outdated technology or service methods if the contract doesn't include robust mechanisms for adaptation. Pricing negotiated years in advance may become uncompetitive over time, especially if market rates decrease or inflation is higher than anticipated. Furthermore, it reduces opportunities for other contractors to compete for the business during the contract's term.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Investigation and Security Services › Security Guards and Patrol Services

Product/Service Code: UTILITIES AND HOUSEKEEPING › HOUSEKEEPING SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Parent Company: Akal Security, Inc. (UEI: 017711888)

Address: 8198 TERMINAL RD STE 204, LORTON, VA, 22079

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $23,841,952

Exercised Options: $23,841,952

Current Obligation: $23,841,952

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Timeline