Security contractors could face new rules

House defense authorizers are pressing ahead with efforts to weed out fraud, waste and performance debacles that have plagued private security contractors in Iraq and Afghanistan.

Lawmakers on the House Armed Services Committee are expected to approve several provisions in the 2011 defense authorization bill that would establish standards for how private security contractors would win Pentagon business.

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Private security contractors have lobbied for the changes, arguing that higher standards and more oversight would ensure that contracts go to legitimate companies. The Armed Services Readiness subcommittee already vetted the provisions under consideration.

House lawmakers are trying to establish a third-party certification process to determine whether private security contractors should be eligible for Pentagon contracts. Defense authorizers are requiring the Defense secretary to establish a third-party certification process for “specified operational and business practice standards to which private security contractors must adhere” as a condition of being selected as contractors.

It has not yet been determined whom the “third party” issuing the certifications would be, but the provisions aim to establish a baseline for acceptable contractor performance, industry officials said.

It would ensure that “everybody is up to the same standard,” said Doug Brooks, the president of the International Peace Operations Association (IPOA), which represents the Association of the Stability Operations Industry and has advocated for the provision. “We support the concept that somebody would check on how these companies do everything they are supposed to.”

Private security contractors have tried to convince lawmakers to support contracts that offer the best value rather than just the lowest price. As a result, defense authorizers are seeking to establish a pilot program within the Pentagon that would implement best-value standards for private security contracts in Iraq and Afghanistan.

The contracts awarded under the pilot program would continue until they are supposed to expire even if the pilot program is terminated, according to language in the defense authorization bill awaiting a full committee vote. The Defense secretary has to provide to the committee each Jan. 15 for three years a report identifying the contracts awarded under the pilot program, including the consideration that led to the award of the contract.

“The best-value language would avoid the race to the bottom,” said Jeff Green, who lobbies for IPOA.

Avoiding contracts that are awarded solely on the lowest-cost criterion would go to the heart of the private security industry’s efforts to preserve good standing. Lowest bidders often trim “some of the ethical aspects of their operations to save money,” said IPOA’s Brooks.

Companies could cut their training standards or the vetting of their own employees to keep costs low, explained Brooks.

“In the long run it will provide enormous value for U.S. taxpayers,” Brooks said. The best-value concept “focuses more on getting the mission done right rather than simply saving money.”

Erik Quist, the general counsel of Eodt EOD Technology, warned that by focusing solely on the lowest price, the private security business would become a simple commodity such as “a box of nails.” He said criteria for judging contractors should go beyond price and also reflect the complexity of the business.

Quist said his company would welcome an improved vetting process for private contractors.

 “Any responsible contractor certainly should welcome appropriate standards and oversight in the area of security contracting,” he said. “It is my belief that the legitimate players in the security industry have been seeking this for a long time because it is a way to demonstrate and get credit for being a credible contractor.”