security executive - feb/march 2008

w w w . s e c u r i t y e x e c u t i v e . o r g

F e B r u A r y / M A r c H 2 0 0 8

A P u B l i c A t i o n o F t H e n A t i o n A l A s s o c i A t i o n o F s e c u r i t y c o M P A n i e s

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table of Contents

F E B R U A R Y / M A R C H 2 0 0 8 • S E C U R I T Y E X E C U T I V E . O R G1

Measuring UpEvaluating client and employee survey applications.

Written by Mark Dillenbeck14

Cover Photograph: Jason Smith | Agency: Dreamstime.com

F E B R U A R Y / M A R C H 2 0 0 8 • V O l U M E 3 , N O . 2

w w w . s e c u r i t y e x e c u t i v e . o r g

e d i t o r i A l

PublisherJoseph Ricci, CAE

[email protected]

EditorElizabeth Tetkoski

d e s i g n & P r o d u c t i o n

Art DirectorJacki Silvan

Think Tank [email protected]

A d v e r t i s i n g s A l e s

Joan [email protected]

B o A r d o F d i r e c t o r s

Chair: Martin Herman, Special Response Corporation1st Vice Chair: Heather O’Brien, Security Forces, Inc.

2nd Vice Chair: James McNulty, Securitas Security Services USA3rd Vice Chair: Stephen I. Kasloff, Guardsmark, LLC

Treasurer: Lynn C. Oliver, American Security Programs, Inc.Secretary: Julie Payne, The Wackenhut Corporation

Directors-At-LargeDennis Roberts, SecTek

David Buckman, AlliedBartonDonald Bottom, Security Engineers, Inc.

Executive Director: Joseph Ricci, NASCOPast Chair: G. R. Massimei, U.S. Security Associates, Inc.

Security Executive is published bimonthly by the National Association of Security Companies (NASCO), the nation’s largest contract security trade association. Security Executive is designed to provide practical information on all aspects of security management. Subscription rates: Free for members and non-members in the U.S., Mexico and Canada; $45 for international members; $55 for international non-members. Security Executive content may not be photocopied, reproduced or redistributed without the consent of the publisher. Copyright 2008. All rights reserved.

Security Executive is distributed to more than 6,000 decision-makers at nearly 3,500 contract security companies.

Opinions or statements of authors and advertisers appearing in Security Executive are their own and do not necessarily represent the opinions or statements of NASCO, its board of directors or NASCO staff. Security Executive welcomes article submissions and reader feedback. Articles and comments may be e-mailed to [email protected]. Include your full name, address and phone number.

For questions regarding subscriptions, please call 703.519.0912.

Postmaster: Send address changes to Security Executive, 1651 Prince Street, Suite B, Alexandria, VA 22314.

National Association of Security Companies1651 Prince Street, Suite B | Alexandria, VA 22314

www.nasco.org

Features

In every Issue

2 CalendarofEvents

4 IntheNews AWArd Winning: AlliedBarton Wins Training Recognition

tAking leAd: G4S Wackenhut Takes New Direction

neWly AcqUired: Murdoch Continues East Coast Acquisitions

on the rise: CA Union Set to Vote on Benefits Increase

secUring chAnge: Day & Zimmerman Appoints Division President

A federAl cAse: Tri-S Security Awarded Georgia Federal Facilities

8 NASCOUpdate check on it: NASCO Testifies on FBI Background Check Legislation

living legends: NASCO Facilitates CEO Forum with Icons

18 LegislativeUpdate overvieW revieW: 2007 Legislative Overview and 2008’s Focus

constructing a PlanThe past, present and future of M&As.

Written by Robert H. Perry10

calendar of Events


April 30Security Expo 2008, ASIS Boston ChapterBoston, Mass.www.asis-boston.org

April 22–24The TFM ShowChicago, Ill.www.todaysfacilitymanager.com/tfmshow

MAY 13–143rd Annual Contract Security Summit & Hill DayWashington, D.C.www.nasco.org

MAY 122008 ASIS NYC/IFMA GNY Solutions Expo, ASIS New YorkNew York, N.Y.www.asisnyc.org/tradeshow

April 23–24GovSecWashington, D.C.www.govsecinfo.com

April 2–4ISC WestLas Vegas, Nev.www.iscwest.com

100%Military & Police Experience.

www.specialresponse.com4 1 0 . 7 8 5 . 1 2 1 2

When your company is faced with a crisis, whether man-made or natural; trust the experts in security and executive protection: Special Response Corporation, where every security officer has extensive military or police experience... And every one is a security specialist.

The leader in specialized security services.

NASCO 3rd Annual

Contract Security Summit & Hill DayMay 13–14, 2008 • Washington, D.C.

SESSION:Keynotes with Congressional leaders

•A panel with federal private security customers including representatives from the Federal Protective Service (FPS), Department of Defense (DoD) and Department of

Homeland Security (DHS)•

A review of the latest in federal and state regulation including U.S. Department of Labor audits, meal breaks and other labor issues

•How to recruit, manage and retain the future of the workforce

•How to select and manage the right federal government contracting vehicles

•Highlights of success stories where colleagues will share best practices for winning

contracts

In addition to addressing the most pressing topics in our industry, NASCO’s 3rd Annual Contract Security Summit & Hill Day

will also allow attendees to have the opportunity to participate in Q&A sessions, hear informative presentations from leaders

in the industry and meet with various exhibitors concerning innovative products and services. Attendees are encouraged to

participate in our annual trek to Capitol Hill. These pre-arranged visits give us the ability to meet with Congressional members

and their senior staffs to share our views about important issues.

For more information and complete details regarding agenda, speakers and activities, please call NASCO

at 703-519-0912 or visit www.NASCO.org.

The National Association of Security Companies (NASCO), the nation’s largest contract security trade association, will hold its 3rd Annual

Contract Security Summit & Hill Day, May 13-14, 2008 in Washington, D.C. This is a great forum for networking and the event offers

informed discussions regarding the latest trends and issues impacting the contract security industry. In 2007, the program attracted more

than 100 senior private security executives including owners, CEOs, presidents, vice presidents and other executives responsible for the

business of contract security. NASCO is a expecting a larger participation for 2008 and has developed an expanded program and agenda.

This is the only national event focused on the business of contract security. Sponsors and exhibitors include uniform manufactures and

distributors, software solutions, equipment, insurance, drug testing and other services and products supporting our industry.

G4S Wackenhut Takes New Direction

AlliedBarton Security Services, a premier provider

of highly-trained security personnel, has received

three prestigious awards. The company earned

national recognition for its training programs for

the third consecutive year in Training Magazine’s

Training Top 125 list, and for its leadership

development practices with the Corporate Uni-

versity Xchange and ASTD Excellence in Practice

Awards.

“AlliedBarton was the first security services com-

pany honored on the Training Top 125 list, which

includes Fortune 500 companies and leading busi-

nesses that are household names,” said Jim Gillece,

Chief People Officer and Senior Vice President of

Human Capital Management. “We are honored to

once again be listed among the best of the best.”

Companies are selected for the Training Top

125 based on factors such as training programs,

methods of employee evaluation and measurement

and financial commitment to training. Training

Magazine also conducted workplace surveys and

analyzed a variety of training and personnel data

from each applicant prior to selecting the compa-

nies for the Training Top 125.

The Corporate University Xchange Awards

for Excellence and Innovation in Corporate

Learning honor learning organizations whose

programs improve employee and business

performance. AlliedBarton competed against

international and domestic companies and was

recognized in two categories: Launching, for its

leadership development programs, and Alliances,

for its partnership with the Center for Talent

Retention in the development of Leadership

Boot Camp.

The ASTD Excellence in Practice Award

recognizes AlliedBarton’s Leadership Boot Camp

in the Workplace Learning and Development

category. AlliedBarton also received two citations

in other categories. The Excellence in Practice

Awards are presented to companies who imple-

ment proven practices that meet a demonstrated

need, have appropriate design values, are aligned

with other performance improvement initiatives

and deliver clear and measurable results.

“Training and leadership programs must

constantly evolve,” said Gillece. “As our clients’

needs shift, we revise existing or develop new

training programs to ensure our officers are

prepared. Leadership programs are fluid as well

because we must give our leaders the appropriate

tools to match their level of responsibility. Our

offerings have also evolved to utilize technologi-

cal advancements and now include simulated

environments and downloadable learning files.”

AlliedBarton provides comprehensive, cutting-

edge training to all officers in a variety of

formats as well as specialized

training that addresses

emergency situations and

industry specific security

training. n

AlliedBarton Wins Training recognition

aW

ar

D W

Inn

Ing

ChangIng DIreCtIon

The Wackenhut Corporation, a leading global

security solutions provider, has continued its

implementation phases of development and group

structure involving the delivery of its new strategy,

G4S Wackenhut, in major markets around the

world. North America comprises the largest po-

tential for G4S’s expanding solutions. As a result

of this opportunity, the organization made the de-

cision to realign the reporting structure within the

company to allow a greater focus on high-security

facility outsourcing.

Grahame Gibson has taken on the direct line re-

sponsibility for the North American operations,

while retaining his current positions as chief

operating officer and board member for G4S

Wackenhut. With his vast amount of experi-

ence from all aspects of the industry, Gibson

will focus on enhancing the range of solutions

provided by G4S Wackenhut to its growing

customer base.

Gibson replaces Gary A. Sanders, former

president and CEO of G4S Wackenhut. Sanders

helped develop G4S Wackenhut into one of the

leading security companies in the nation. He is a

highly-regarded colleague and security industry

expert. During his tenure at the helm of the

company, G4S Wackenhut delivered consecutive

years of high growth, with a commitment to

employees, excellent customer relationships and

a reputation for quality.

The Wackenhut Corporation, based in Miami,

has 35,000 employees and delivers a range of se-

curity services. Services provided include guard-

ing libraries, transporting immigration detainees

for the Department of Homeland Security and

protecting the government’s Y-12 complex in

Oak Ridge, Tennessee, where

nuclear weapons and

materials are stored

and maintained.

Wackenhut is

owned by the

British firm, Group 4

Securicor. n


in the News

neWly aCquIreD

CA Union Set to Vote on Benefits increase

Murdoch Continues East Coast Acquisitions

Union officials representing thousands of private

security guards in Los Angeles have struck a

landmark deal with several property manage-

ment companies. Combined, these companies

provide security to 80 percent of the

commercial real estate in Los Angeles

County.

According to Faith Culbreath, local

head of the security officers’ branch

of the Service Employees Interna-

tional Union (SEIU), the deal results

in a 40% increase in overall salary

and benefits. The agreement concludes after seven

months of negotiations and was announced by

Los Angeles Mayor Antonio Villaraigosa, who has

championed the security guards’ cause for years.

The contract reflects SEIU efforts in major cit-

ies, where they have campaigned nationwide to

unionize private guards. The union came to local

and national prominence in 2000 after organizing

the weeks-long Justice for Janitors strike against

Murdoch Security Group recently completed

acquisitions of N.Y.-based Lansdell Protective

Agency and A-Z Security & Investigations.

”Lansdell historically has revenues of $20–30 mil-

lion,” said William Vassell, chairman and CEO of

Murdoch. “It is a premium company with a bank-

ing, transportation and maritime client base. This

puts [us] in the transportation and aviation sectors

and solidifies our banking security franchise.”

Staten Island-based A-Z Security & Investigations,

a 20 year old firm, will become Murdoch’s Special

Services Division, offering premium security

services and VIP protection. A-Z Security &

Investigations delivers high-end security services

to companies in the banking, jewelry, maritime

and utility industries.

These deals represent Murdoch’s fourth and

the same property management companies. The

strike resulted in a 25% wage increase over three

years, and is regarded as a turning point in the

local labor movement.

In the current negotiations, the

union sought to bring the guards’

hourly pay and benefits in line

with those of janitors represented

by the SEIU. Union members

held rallies outside the offices

of some of the companies and

unanimously voted to authorize

a strike, if necessary. These actions, combined

with a three-day strike by security guards in San

Francisco in the early fall, pushed building own-

ers to the table.

About 55,000 guards nationwide are currently

represented by the SEIU, and union officials

hope to use the Los Angeles agreement as a na-

tional template. Similar negotiations are ongoing

in Minneapolis and Seattle. n

fifth acquisitions of guard companies since its

founding in 2004. Vassell plans to take Murdoch

public and is actively seeking additional security

partners.

“We believe a company’s strength comes from

continuity of leadership. That’s why we’ve been

able to retain many of the clients from the

companies that join us,” says Vassell. Murdouch

has retained more than 95% of clients following

its acquisitions, whereas some companies lose

up to 40%.

A veteran in the security business, Vassell started

his career as a security officer in 1980 and

founded Command Security Corporation three

years later, guiding its growth into a publicly

traded company with revenue of more than

$100 million. He served as CEO of Command

Security Corporation until 2004. n

on

th

e r

Ise

5F E B R U A R Y / M A R C H 2 0 0 8 • S E C U R I T Y E X E C U T I V E . O R G

Day & Zimmerman Appoints Division president

seCurIng Change

Tri-S Security Awarded Georgia Federal Facilities

a FeDeral Case

Day & Zimmermann, a nationally recognized

provider of products and outsourcing solutions for

government and commercial customers, has named

John Sacht president of its Security Services division.

Sacht will be responsible for the continued success-

ful growth of the Security Services division through

strategic planning, customer relationship manage-

ment, and financial and operational management of

the business.

A 20-year veteran of Day & Zimmermann, Sacht has

held several business management roles within the

company, most recently creating process enhance-

ments, customer relationship management and

increasing growth for the validation business.

“I am looking forward to the opportunity to lead the

Security Services division. There is great potential and

proven industry leadership on our team,” said Sacht.

“I will continue to focus on Day & Zimmermann’s

core strategy in the security services space, and ensure

that our investments in safety, continuous improve-

ment and training meet and exceed the diverse needs

of our security business client base.”

Sacht has more than 25 years of experience in the field

services industry with a career spanning process and

industrial, microelectronics and pharmaceutical mar-

kets. He holds a bachelor’s in business administration

from Augusta State University in Augusta, Ga.; and an

MBA from Queens College in Charlotte, N.C. n

Tri-S Security Corporation, a provider of security

services and equipment for government and private en-

tities, wholly-owned subsidiary, Paragon Systems, Inc.,

was awarded a new contract with the Department of

the Homeland Security for the state of Georgia valued

at $58 million. The five-year contract begins Apr. 1,

2008 and is estimated at $11.6 million per year.

Paragon will deploy more than 250 armed security

guards to provide security for federal government

facilities throughout the state of Georgia. This contract

raises the total awards for Paragon to more than $146.2

million; increasing growth 101% for the year.

“Not only does this contract continue to show the

federal government’s confidence in Paragon, but it also

provides the company with a larger footprint across the

Southeast,” said Ronald Farrell, CEO, Tri-S Security

Corporation. “In 2007, Paragon won new contracts

in each financial quarter and as our pipeline of new

contract bids increases, we hope to continue this trend

in 2008.”

Based in Atlanta, Ga.,

Tri-S Security Corpora-

tion’s services include

uniformed guards,

electronic monitor-

ing systems, person-

nel protection, access

control, crowd control

and the prevention of

sabotage, terrorist and

criminal activities. n

“After seeing

you in an airport

a few months

ago you took my

card and offered

to add me to

the Security

Executive

subscription

list. I’ve been

reading the

magazine and

find it very

informative

and useful.

Thank you.”

—Thomas J. Dolan, Jr., chief security officer, Dunbar Armored, Inc.


in the News

We provided the “Fairness Opinion” forthe benefit of the seller and advised

during the negotiations.

A TRANSACTION IN THE SECURITY GUARD INDUSTRY

www.ligouri.com

www.universalpro.com

tel: [email protected]

has acquired the business of

NASCO Facilitates CEO Forum with icons

The National Association of Security Companies

(NASCO), the nation’s largest contract-security

trade association representing firms employing

more than 500,000 security officers, provided

testimony in front of the Education and Labor

Subcommittee on Health, Employment, Labor

and Pensions regarding H.R. 2703, Private

Security Officer Employment Authorization Act

(PSOEAA) of 2007. The act amends existing law

to create a third party clearing house to better

facilitate access to FBI Criminal History Records

Information (CHRI) checks for security guards

in every state. NASCO Executive Director Joseph

Ricci, CAE, represented the association.

NASCO testimony focused on the importance of

these checks to protect our homeland, its critical

infrastructure and the overall lack of state support

for facilitating these checks. Ricci cited problems

associated with processing checks in the ten states

that do not license or regulate security, as well

as many other states that simply do not have the

resources to process and conduct fitness determi-

nations for the nearly two million security guards

employed nationwide.

“Following the passage of the PSOEAA, we had

hoped that every state would begin processing

background checks for all security guards,” Ricci

testified. “Unfortunately, little has changed since

its passage and, given public policy and compel-

ling homeland security reasons for this existing

law, NASCO is actively pursuing opportunities

to increase the facilitation of FBI CHRI checks

for security guards through education, dialogue

and legislation.”

NASCO acknowledged the efforts of Subcom-

mittee Chair Andrews (D-NJ), who has worked

to improve access to background checks, and

pledged to work with the Representative and

others to improve access to and facilitation of

background checks as well as fitness determina-

tions for security guards in every state.

Other panelists included:

• WeldonKennedy,vicechairman,Guards-

mark, LLC

• MarkdeBernardo,partner,JacksonLewis,

LLP

• DonnaUzzell,chairwoman,NationalCrime

Prevention and Privacy Compact Council

• FloydClarke,member,BoardofManagers,

Allied Security Holdings

In 2007, NASCO passed a resolution to actively

work with Representative Andrews, his staff

and others to increase access and support of

the concept that a third party channeler could

process and conduct fitness determinations. The

organization has also met with the Department

of Justice, Subcommittee Minority Counsel,

House Judiciary Committee staffers and others

to discuss methods needed to improve access.

Ricci’s testimony also cited reports indicating

that states such as California, which process FBI

CHRI checks for security guards, demonstrate

an 8-10 percent denial of security guard appli-

cants based on the results of these checks.

“Using third party channelers to process FBI

CHRI checks works for other industries,” stated

Ricci. “And, while there is no exact model to fol-

low for checking security guards based on state

regulation, and the required fitness determina-

tion criteria varies between states, we believe

these discussions will highlight the issue and

eventually develop a means to improve access

to FBI CHRI checks for employers of security

guards for which the PSOEAA granted legal

access to in 2004.” n

NASCO Testifies on FBi Background Check legislation

Ch

eC

K o

n It

lIvIng legenDs

Nearly 30 CEOs from national and regional con-

tract security companies participated in NASCO’S

CEO Forum, held in Coral Springs, Fla. in Febru-

ary. Issues raised and discussed included industry

trends, best practices and networking. In addition,

a special evening “fire-side chat” with Don Walker,

chair, Securitas Security Services USA and Thomas

Wathen, former owner of Pinkerton, was held to

provide participants with an expert perspective on

the industry.

The forum was developed by NASCO through

the support of Frank Argenbright, chairman,

SecurAmerica and NASCO membership chair.

“We wanted to develop an environment for CEOs

of security companies to share information and

actively participate in shaping the future of the

contract security industry,” said Argenbright.

“Our focus was on ensuring that there was plenty

of time and social opportunities for networking.”

The day program focused on presentations and

interactive discussions regarding federal and state

legislation and regulation. Topics raised centered

around licensing, screening and training, the sales

tax on security services, available access to federal

criminal checks, labor issues and benchmarking.

The evening fire-side chats with Walker and

Wathen, two private security industry icons that

achieved tremendous professional and personal

success in the industry, were compelling and

full of energy. Walker and Wathen each spent

thirty minutes reviewing the highlights of their

respective careers followed by a joint question and

answer period. Discussions focused on the highs

and lows of building large, multi-national security

companies from small, regional businesses and the

impact of employee relations, customer relations

and financing.

“The feedback from the CEO Forum has been

very positive; especially the Evening with Legends

fire-side chat,” said Joseph Ricci. “We are already

working to develop next year’s CEO Forum and

seeking recommendations regarding living legends

to participate in the program.” n


NASCO update

NASCO Elects New Board Members

leaDIng the Way

NASCO recently

nominated and elected

two new Board members.

Julie Payne, senior vice

president and general

counsel, The Wackenhut

Corporation, will serve

as secretary and Donald

Bottom, chairman and

CEO, Security Engi-

neers, Inc. will serve as

the organization’s at-large

member.

Payne joined Wackenhut in 2005 as senior vice

president and general counsel. She is respon-

sible for the provision of all legal services to The

Wackenhut Corporation and its subsidiaries

throughout the United States. Prior to joining

The Wackenhut Corporation, Payne was senior

counsel for Bayer CropScience, LLP. Additional-

ly, she has worked for Barton Protective Services,

Inc. as vice president and general counsel, and

was an attorney for APAC, Inc., formerly a

subsidiary of Ashland Inc. She also serves on The

Wackenhut Corporation Board of Directors.

Bottom has nearly 40 years of experience in con-

tract security and currently serves as the CEO of

Security Engineers, Inc. Before joining Security

Engineers, Inc., Bottom was an investment

banker and consultant, group vice president for

Figgie International and the regional manager

for Pinkerton’s, Inc.

“We welcome Julie’s and Don’s valuable experi-

ence and industry perspectives to the NASCO

Board,” said Martin Herman, NASCO chair

and president, Special Response Corporation.

“Their knowledge of contract security will add

to our discussions regarding issues important

to the continued growth and prosperity of the

industry.”

Each elected officer serves a two-year term

beginning at the conclusion of NASCO’s

October General Membership meeting except

the treasurer whose term ends Dec. 31 of the

same year. n

julie

payne

Donald B

ottom

9F E B R U A R Y / M A R C H 2 0 0 8 • S E C U R I T Y E X E C U T I V E . O R G

10

CONStrUCtINgAPLAN

F E B R U A R Y / M A R C H 2 0 0 8 • S E C U R I T Y E X E C U T I V E . O R G

FEATURED ARTICLE : : constructing A PlAn


thePast,PresentandFutureofM&A’s

Mergers. Acquisitions. Consolidations. Roll-Ups.

Regardless of how it is described, the conclusion is the

same—fewer companies now represent a larger revenue share of

the total security guard market—and, the effect on the nation’s

market has been very dramatic.

Consider that before the industry starting consolidating nine years

ago the Security Letter list of the largest security guard companies

operating in the United States had annual revenues of approxi-

mately $5 billion. Ten companies accounted for this revenue in-

cluding Burns, Pinkertons, Wackenhut, AHL Services, American

Protective Services, Guardsmark, U.S. Security Associates, Inc.

Allied, Spectaguard and Initial. The only foreign-owned company

in the group was Initial, which represented 3% of the revenue for

the top 10 list.

The most recent Security Letter list showed the annual revenue for

the top 10 companies at approximately $8.5 billion; however, the

leader list has changed dramatically. Only four of the companies

appearing on the list nine years ago are on the most recent list.

The six newcomers to the list have one common revenue building

action—they are some of the most aggressive acquirers in the

industry. Three of the firms on the current list are owned by a

foreign company and represent approximately 65% of the revenue

for the entire top 10; and, they represent 40% of the revenue for

the total U.S. security guard market, which is now estimated at

approximately $16 billion.

Only nine years ago the total security guard industry was estimat-

ed to be $13 billion. Knowing this, the conclusion is that not only

did these new market leaders obtain their position in the U.S.

by acquiring other market leaders, but they also made numerous

acquisitions of smaller companies appearing below the top ten list.

Change is inevitable

There are several factors that have caused a dramatic change in

the domestic security guard market. First, large international

corporate clients moved away from awarding security contracts

on a national basis to awarding contracts internationally. Many of

these international security firms had to compete for contracts on

an international level. Because they did not have a presence in the

U.S., they had to purchase a flagship company that already had an

effective management organization, which understood this new

market.

For example, Securitas purchased Pinkertons in 1999 and Burns

in 2000, two of the most recognized names in the domestic

security guard market. Following these two major acquisitions,

Securitas continued to purchase several large and small guarding

companies and grew organically as it reached its current status of

being the largest security guard company in the nation.

In the beginning, Securitas continued to operate under the

Pinkertons and Burns names. However, the company later

dropped these recognized names as a part of its plan to make

CONStrUCtINgAPLAN

By Robert H. Perry


leading the Change: The Build vs. Buy Comparison

For years companies have been formulating growth plans by comparing the

cost of growing through internal sales versus through acquisitions. Although

some companies boast that they have built volume without a single acquisi-

tion, most of the larger private and public companies have needed a healthy

mix of acquisitions and internal sales as a way to achieve continued growth.

Electronic security alarm companies watch the creation factor very closely

when deciding to grow through spending money on acquisitions or through

internal sales. This creation factor is published as a service by the alarm

association and is formulated using all the costs involved for an average

alarm company to sell and install an alarm. The industry goes through a very

detailed calculation to arrive at the creation factor multiple. Specifically, the

alarm association takes into account the labor to install the alarm, the cost

of the alarm and the marketing cost of the company as well as the incidental

costs not normally associated with the cost of selling a product.

The alarm industry has determined that, on average, the total cost for an in-

ternally generated account is around 28 times the monthly billing. Therefore,

when the firm buys another company for 35–40 times the monthly billings

to the account, the price it is paying is not that much more than what it

would have cost to generate the account internally. It is important to note;

however, that acquisitions enable a company to grow dramatically faster and

cover the fixed overhead expenses.

Successful guarding companies go through the same build versus buy

exercise. In the guard industry the computation is more complicated and

is not usually as reliable. This is because there are more variables and, the

measurement is not based on consistent billing to each customer as it is in

the alarm industry.

The reason for the computation, even if it is based on informed estimates, is

still the same. It usually makes more economic sense to enter a new vertical

or geographic market through buying a company already established in a

market than it does to set up and staff a new office.

Acquisitions as part of the Growth plan

As companies become larger, acquisitions become an integral part of the

growth plan. The challenge for these companies is to maintain a desirable

amount of growth, while replacing business that is lost through normal at-

trition. For example, if a company is billing $500 million per year and loses

10% of its revenue it would have to replace the $50 million lost and add $25

million of additional business in order to sustain a modest 5% net growth.

Ensuring $75 million of new business can be a daunting task, even for lead-

ing companies with a well-organized marketing department and a talented

sales team.

An aggressive acquisition program, supplemented with an internal sales plan

is typically the only way a company can meet its growth goal. The executives

leading these companies have a difficult challenge in deciding how much

effort and financial resources should be spent in each area to ensure that

volume is also producing profits.

Securitas the leading worldwide brand as a single source security provider.

Second, in order for foreign companies to truly be international they

had to be in the U.S. market—the largest security market in the world.

When the ISS Group purchased Sanitors, which was headquartered in San

Antonio, Tex., in 2007, the CEO clearly communicated to the world that

the ISS Group was now an international corporation.

Headquartered in Denmark, the ISS Group is a $12 billion facilities

services conglomerate with more than 410,000 employees stationed in 50

countries. It is one of the world leaders in the manned guarding business

outside of the U.S.

Before the acquisi-

tion, Sanitors was

primarily a facility

services company that

operated a smaller se-

curity guard division.

When announcing

the acquisition,

Jorgen Lindegaard,

the CEO of ISS,

stated: “…by starting

up operations in the

United States, ISS

has fulfilled one of its

most important strategic goals. We cannot pursue our ambition to lead

facility services globally without operating in the world’s biggest economy.

The U.S. economy has enormous potential for outsourced facility services,

and ISS wants to explore these opportunities as an important part of the

Group’s continued expansion.”

G4S and Securitas made a similar announcement when they acquired

large security guard companies. Prior to its expansion in the U.S., G4S

was the result of two European headquartered global leaders, Group 4

Falck and Securicor, that merged before it purchased Wackenhut in 2002.

Finally, acquirers that are public companies improve their earnings per

share value by buying companies at multiples of earnings less than the

trading multiple of the acquiring company’s shares. In the financial mar-

ket this is known as an accretive acquisition. The immediate advantage of

an accretive acquisition is that it usually increases the value of the acquir-

ing company’s stock. This makes the shareholders very happy and the

company becomes a favorite of the investing community, which attracts

more investment capital.

This accretive factor is a win/win situation for purchasers and sellers. The

buyers’ stock, which was trading in the lower 20s or higher at the time

of the purchase, allowed the buyer to pay premiums for companies and

still realize significant advantages of the accretive buy. However, smaller

acquisitions do not affect the stock price since the earnings contributed by

the seller are an insignificant portion of the buyers’ earnings, but does not

offer the buyer other advantages as presented later in this article.

An Aggressive

Acquisition progrAm,

supplemented BY An

internAl sAles plAn

is tYpicAllY the onlY

wAY A compAnY cAn

meet its growth

goAl.

FEATURED ARTICLE : : constructing A PlAn


When a company decides to spend efforts on internal sales as a way

to meet huge growth requirements, they must place an emphasis on

acquiring large accounts; and, the larger accounts are usually awarded

through aggressive bidding processes that result in razor thin margins to

the winning company (typically between 5–8%). The margins for smaller

accounts are usually between 18–20%. In this case, buying the smaller

company that has relationships with higher-margin customers becomes

more financially prudent than chasing larger, albeit less profitable, high

profile accounts.

Selling the privately-Held Company

Selling a privately-held company is the ultimate payday for its owners,

and it results in a supply of purchase candidates for aggressive acquirers.

Regardless of market changes, there will come a time when the owner

of a firm will want to sell his or her company. In the life cycle evolution

of a company, all owners eventually reach retirement age, have financial

difficulty or simply become tired of the headaches that come with running

a cash and labor intensive company. When this time comes, the owner

will look to pass the company to family members, or liquidate. These are

both undesirable options, but the option of selling the company to a third

party is a financially beneficial move that rewards the owner for his or her

hard work. With close to 7,000 privately-held companies with revenues of

less than $10 million, there will always be an abundant supply of purchase

candidates for the aggressive acquirer.

Acquiring large Accounts

Large security guard companies have acquired large national and inter-

national accounts through the acquisition of smaller companies—and

this will continue. Sometimes it’s the smaller company that has the close

relationship with the security decision makers at large accounts. The com-

pany is doing a very good job in a few locations for the client, but cannot

service the many locations outside the smaller company’s operating area.

As mentioned earlier, when the larger companies acquire the large ac-

counts through acquiring smaller companies that have the special relation-

ships with the accounts, usually the margins are very attractive because the

account did not go through the bid process in making the change.

Security as an investment

The security guard industry has been an investment of choice for some

investment groups using the buy/build/sell process to pass high returns

onto its investors. There are approximately 2,000 fund managers in the

country today that manage the investments for wealthy individuals, insur-

ance companies, pension funds and/or institutions. These fund managers

distribute the monies received from the investors among several types of

investments with varying degrees of risk.

The higher the risk of the investment, the higher the return on the invest-

ment the fund manager must have for participants in the fund. In the

past, security guard companies have not been the investment of choice

for most of these groups because of the high liabilities, small margins, low

barrier to entry and problems associated with low-wage personnel and

30-day cancellation clause in most customer contracts.

However, many of the investment groups that have bought companies in the

security guard industry have done very well for investors when they exit at the

appropriate time. These groups were successful because they were selective in

choosing the flagship company from which to enter the industry. A flagship

company with experienced executives leading the organization has the ability

to handle a large growth demand from investors. With a proper mix of inter-

nal sales and acquisitions and a successful transition process, leading executives

will put the right formula in place for making accomplished acquisitions.

Investors will receive their money back when the company is sold at a price

that is usually higher than what the fund managers paid for all the individual

companies that were bought in building the organization. Even if the selling

multiples were equal to or a little less than the acquisition multiples, the

return to investors can still be very attractive. Assuming that the investment

group managed the process and kept the company profitable during the time

it owned the firm including using the profits to pay down the debt it took to

build the organization.

Future Trends

According to most reports, the growth in the guarding sector will range

between 5–7% over the next 5 years. This is not nearly as exciting as the

projected double digit growth expectation of the electronic security industry,

but it is still much higher than the growth rates for the general population of

business sectors. For these reasons, investment groups will continue to pursue

investments in the guarding industry as a way to give attractive returns to

investors. The level of aggressiveness; however, depends on what happens in

the capital markets. If the cost of borrowed money keeps rising, the multiples

groups pay to maintain their promised returns to their investors will diminish.

For synergistic buyers, at least in the near future, mergers and acquisitions will

continue to play an important part of the change and growth in the industry.

Although, there are a couple of possible influences on the horizon that could

affect what happens with merger and acquisition activity in the marketplace.

Specifically, if the taxes sellers pay on the sale increases or decreases there

could be a slow down or an acceleration in merger and acquisition activity

and there could be a change in the way transactions get taxed depending on

which presidential candidate gets elected in November. Two of the candidates

are proposing significant increases, while another is promising to continue the

current tax rate. Secondly, if the dollar continues to decline, foreign security

companies will see the domestically-headquartered firms as bargains. As a

result, further consolidation will continue to take place within the industry.

With the significant changes that have affected the security guard industry in

the last decade, and the increasing development of a global marketplace, one

can only make assumptions on how our industry will transform and evolve in

the future. SE

Robert Perry is the principal of Robert H. Perry Associates (www.roberthperry.com). He has advised and managed the sale, merger and acquisition of more than 150 security guard companies across five continents.


MEASUrINgUP


FEATURED ARTICLE : : MeAsuring uP


EvaluatingClientandEmployeeSurveyApplications

By Mark Dillenbeck

Whether a security contract is retained or lost often

rests on the degree to which a company accu-

rately gauges client perceptions. Client perceptions that are

inadequately measured are inadequately managed. Surveys are

increasingly becoming a popular mechanism for measur-

ing client satisfaction and loyalty. Since service quality is

ultimately a function of staff performance, security contract

companies frequently utilize surveys to evaluate employee

loyalty and commitment.

NASCO and OCM Quality Assurance Inc. collaborated in a

research project that evaluated market research methods used

by security contract companies. The study specifically focused

on the use of client and employee surveys.

OCM found that nine out of ten security contract firms solicit

feedback from both its clients and its employees. Of these

companies, six out of ten use client surveys and one-third use

employee surveys to acquire feedback.

In-person interviews and conventional pen and paper

formats were the most frequently used methods for gathering

feedback, but telephone and Internet surveys were also very

common. Companies with more than one thousand employ-

ees were more likely to use client and employee surveys than

smaller companies.

NASCO members and security contract company senior man-

agers on NASCO’s mailing list were invited to respond to an

on-line survey. 58 out of 589 people responded, providing us

with a response rate of 10%. In order to accurately determine

whether the non-responding population differed from the

responding population, OCM contacted 32 non-participating

companies by telephone. Company representatives were then

asked whether they conducted surveys of any type and, if so,

what type. 53% of the companies contacted by telephone use

client, employee or end-user (i.e. tenant) surveys, compared to

64% of the Internet respondents. This suggests that the find-

ings from the Internet survey were somewhat biased towards

survey users; however, the difference between Internet survey

responders and the general population of security contract

companies, although statistically significant, was not great.

Do you conduct…phone responses

internet responses

any kind of surveys? 53% 64%

client surveys? 47% 57%

employee surveys? 38% 34%

Client Survey Findings

Of the security contract firms that were contacted in this

study, 93% solicit feedback from their clients. Among the

companies that solicited client feedback, 61% used client

surveys to accomplish their goal.

Steve Jones, executive vice president and COO of Universal

Protection Services, says “client surveys have helped us to stay

ahead of the curve. If things are trending in the wrong direc-

tion, we can make corrections and then gauge the impact of

those corrections.”

MEASUrINgUP


“A large number of our recruits are referred by current employees. So, on

our employee surveys we ask ‘Would you encourage a friend or colleague

to work at this company?’” says Jim McNulty, executive vice president of

Securitas Security Services USA.

The frequency of employee surveys varied as well, but most companies

who use this mechanism surveyed their employees at least once a year.

Typically, companies offer clients different ways to respond to surveys.

In-person interviews and conventional pen and paper forms were the most

frequently used approaches (69% and 63%). A significant number of

companies also used telephone and Internet surveys (29% and 20%).

Employee Survey Findings

The percentage of security contract companies that solicit feedback from

employees, 92%, is about the same as it is for those that solicit feedback

from clients. Most companies solicit employee feedback in a variety of

ways including written suggestions or complaints, team meetings and/or

one-on-one meetings. Among the companies that encouraged employee

feedback, surveys were widely used (38%), but they were used less com-

monly for employees than they were for clients.

Len Kline, COO of Weiser Security Services, Inc., knows that “when you

ask employees if their opinions seem to matter, their responses correlate

well with account retention.”

For companies that survey their employees, a variety of mechanisms are

used. The most common include pen and paper surveys and in-person

interviews.

FEATURED ARTICLE : : MeAsuring uP

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How Often Do You Gather Client Feedback?

What Survey Mechanisms Are Employed?

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End-User Survey FindingsIn addition to surveying clients, many companies also survey end-users, or

the broader constituency of people who benefit from a security company’s

services. End-users include residents, building tenants, factory workers

and others. Approximately one-third of all companies conduct end-

user surveys. The methods used are similar to the client and employee

interviews: in-person interviews (77%), pen and paper (50%), telephone

(38%) and the Internet (32%).

At Universal Protection Services, “we want to gauge the level of satisfac-

tion. Are customers satisfied, or very satisfied? We have conditioned our

clients to participate in this process and they understand its value” says

Steve Jones.

Making Surveys Work for You

Most companies that conduct client survey reports have been able to

retain and/or save accounts as a result of the timely information received.

Surveys are the most useful when they are designed to produce quantifi-

able and actionable information. 86% of companies that conduct client

surveys and 73% of companies that use employee surveys are able to

gather quantifiable ratings of various service attributes and aspects of em-

ployee experiences. Companies that are not collecting measurable data can

add value to existing processes by asking their clients for ratings, which

can be converted into performance metrics.

Surveys are a more frequently used management tool at large security

contract firms than they are at small companies. 80% of companies with

more than a thousand employees surveyed their clients as compared to

52% for companies with less than one thousand employees.

Similarly, 67% of the larger companies surveyed employees as compared

to 30% at the smaller companies. This follows a pattern seen in other

business sectors. Management teams in smaller companies may feel close

enough to their clients and employees to make surveys seem unnecessary.

As organizations grow, however, it becomes increasingly difficult for top

level management to maintain quality control over their expanding client

base. Having objective, measurable feedback enables management to spot

problems and address them in a timely manner rather than waiting for

bad news to filter up through the company hierarchy. Most companies

that conduct client surveys report that they have been able to save ac-

counts as a result of timely information received.

In addition to providing a useful snapshot of client perceptions at an

account or facility level, survey data can also be aggregated and analyzed

on a company-wide or regional level. Management can use this informa-

tion to determine where specific strengths and opportunities lie within

the organization. Researchers can also analyze data to determine which

service attributes or employment conditions tend to drive client loyalty

or employee commitment. The use of this information helps identify

operational priorities for improvement, and client loyalty is particularly

important because it tends to be closely linked to profits.

For example, in the case of client surveys, specific service attributes that

are key drivers of client loyalty, but are also low performers, should be the

focus of improvement efforts. After remedial actions are agreed upon and

implemented with an action plan, follow up surveys can be used to gauge

the impact of the plan on client or employee perceptions.

It was beyond the scope of the current research project to determine how

surveys can be used operationally, but follow up interviews by OCM and

experience with other industry sectors suggest there are a great range of

applications.

Although some companies collect data and fail to use it, most companies

use the data generated to address problems revealed at the account level,

with employees and the relationships between the organization and the

account and the employees and upper management. Many companies

take analyses one step further by aggregating data to reveal trends at a

company or regional level. Other applications of survey data results are in

salary review and year-end bonus calculations. Managers whose accounts

perform well are rewarded accordingly.

Kline says, “it’s one thing to survey employees and another thing to do

something about it. It’s not a pencil-whipping exercise. If you don’t do

anything with the results, the process will be counter-productive.” SE

Mark Dillenbeck is CEO of OCM (www.ocmqa) a quality assurance firm. He has 17 years of experience in quality assurance in service industries.

client satisfaction surveys are an integral part of the management approach at universal protection ser-vice, one of the top ten security contract companies in the united states. the company is exceptional in that it has been able to approach 100% response rates for client surveys. they accomplish this, in part, by offering their clients three ways to respond: pen and paper surveys, in-person interviews and internet surveys.

more importantly, universal protection service’s clients understand that the company places great emphasis on their feedback. over time, client willingness to respond to surveys is undoubtedly reinforced by the experience of having the company managers and staff respond to issues raised in the survey results.

universal protection service surveys its clients twice a year. the results are compiled and analyzed at the account, division, branch, regional and company levels. Bonuses are tied to customer satisfaction ratings, giving managers a strong incentive to make sure clients are pleased with the service.

Approaching 100%


Legislative update

18

Read Feb. 28, 2008. Placed on the calendar.

AL

HB

54

0 Creates the State Security Regulatory Board that provides for membership, powers, and duties of the Board; provides for certification of security officers and trainers; provides fees for licensing and certification; provides training requirements; provides for the reciprocity between states regarding the employment and deployment of security officers, minimum standards, licensing, and regulating of nonexempt persons and entities.

In Senate Feb. 26, 2008.

AZ

SB 1

176

Relates to technical correction requiring eight hours of pre-assignment training and eight hours of refresher training for renewals, as well as 16 hours of initial firearm instruction and eight hours of annual firearms instruction for armed security guards.

Sent to Committee Feb. 20, 2008.

CA

SB

120

9

Authorizes a person, registered or licensed as a security guard in another state with substantially equivalent requirements and employed by a private patrol operator in another state to perform certain functions in this state during an emergency declaration.

Law effective Jan. 28, 2008.

DC

17-

199

The Enhanced Professional Security Amendment Act of 2007 sets a prevailing wage for security officers as established US Secretary of Labor and requires overtime rates for hours in excess of 40 hours a week.

Referred to Committee Oct. 3, 2007.

US

HR

30

68

Prohibits the award of contracts to provide guard services under the contract security guard program of the Federal Protective Service to a business concern that is owned, controlled, or operated by an individual who has been convicted of a felony.

Supportive

Supportive

Supportive

Vetoed Jan. 15, 2008.

US

HR

158

5 Section 332 of the Senate version of the 2008 Defense Authorization Act extends the temporary authorization for contract performance of security guard functions at DoD installation from 2009 to 2012; however, it also continues to phase down the total number of personnel employed under such contract by 2012 to 50% of 2006 levels. NASCO opposes these restrictions and continues to support permanent authorization.

Passed the House on Oct. 3, 2007 and placed on the Senate calendar.

US

HR

274

0 MEJA Expansion and Enforcement Act of 2007 amends the Military Extraterritorial Jurisdiction Act (MEJA), which criminalizes offenses committed outside the U.S. by members of the Armed Forces and certain Defense Department contractors, to cover all contractors providing services in an overseas military operation. The bill removes jurisdiction over security contractors from the UCMJ to the MEJA. Supportive

Hearing held Feb. 26, 2008. NASCO testified.

US

HR

270

3

Amends the Private Security Officer Employment Authorization Act of 2004 to require states to conduct federal criminal record checks for convictions during the previous 10 years and requires checks to be completed within three days; employment qualification will be based on federal parameters and state regulations. NASCO passed a resolution to work with Congressman Andrews and others to expedite access by contract security companies to FBI CHRI checks.

Referred to Committee, Nov. 16, 2007.

US

HR

410

2

Phases out the use of private military contractors by the U.S. overseas. Currently, 48,000 private security contractors are reported to be in Iraq. The Department of State’s funding for private security and law enforcement contractors is estimated to have increased from $1,000,000,000 to $4,000,000,000.

OPPOSED

SUM MARy AND WHAT I T MEANS TO NASCO MEMBERS B I L L STATUSNASCO’S V IEW

fed

er

Al

leg

islA

tio

ns

tAt

e l

eg

isl

At

ion

All information is accurate as of press time.

Introduced Mar. 3, 2008.

Referred to Rules Committee, Dec. 3, 2007.

FL H

B 14

3IL

S.B

. 4

63

Allows licensed security officers to detain certain individuals until the arrival of law enforcement officers; providing limits on such detention and authorizing limited searches of persons detained or about to be detained. Also FL S.B. 2172.

Amends Private Detective, Private Alarm, Private Security, and Locksmith Act of 2004. Adds provisions concerning continuing education for employees of licensed private security contractors. Beginning Jan. 1, 2009, Mandates 20 hours of classroom basic training within 30 days of employment in the areas of identification of terrorists, acts of terrorism and terrorist organizations.

Supportive


In Senate, Feb. 21, 2008; Draft sent to Counsel.

UT

SB 9

8

Establishes new classifications for armored car companies and security officers; requires liability insurance; relates to transportation of currency, valuables, jewelry, food stamps or any other high-value items that require secured delivery; relates to carrying of firearms.

Referred to Committee, Feb. 21, 2008.

NJ

SB 1

20

0

Removes 7% tax on investigation and security services from sales and use tax.

Reported favorably out of House, Feb. 20, 2008.

GA

HB

120

2 Relates to the Georgia Ports Authority; changes certain provisions for the application of traffic laws and enforcement by security guards employed with the Ports Authority; requires that employees who are authorized to exercise the powers of arrest shall be certified peace officers subject to the Peace Officer Standards and Training Council.

Referred to Committee, Feb. 28, 2008.

Ny

SB 7

02

4

Creates standards for the licensing and registry of security guards for the City of New York.

SUM MARy AND WHAT I T MEANS TO NASCO MEMBERS B I L L STATUSNASCO’S V IEW

stA

te

le

gis

lA

tio

n

Supportive

ove

rvI

eW

revI

eW

In 2007, there was a relatively high degree of

congressional interest in the private security guard

industry, the training and regulation of guards

was a major focus of House Homeland Security

Committee hearing on the Federal Protective

Service (FPS). The training, regulation and screen-

ing of guards were also the subjects of a national

AP news story highlighting the difficulty guard

companies have in conducting background checks

on their employees, and soon after, legislation

was introduced in the House of Representatives

seeking to better facilitate security employer access

to FBI criminal history record information checks.

NASCO was involved in House hearing on FPS

and is working with the sponsor of the House

legislation on background checks. During 2007,

NASCO also had extensive contacts with DOJ,

the FBI and Congress in efforts to provide infor-

mation on and enlist assistance with important

industry issues. In 2008, NASCO will continue

to work with Congress, the Executive Branch,

State organizations and other relevant groups to

improve the quality and effectiveness of private

security services and provide greater opportunities

within the federal government for the industry.

Below are some of the key issues which NASCO

worked on in 2007:

that all contract security officers should be

replaced with federal officers. NASCO Execu-

tive Director Ricci provided the Committee

with information about the screening, training

and regulation of private security guards in the

private and public sector. He also discussed the

efforts of the NASCO/FPS working group to

resolve FPS related problems.

Later in the year, Congress took two actions

related to FPS. First, the House of Representa-

tives passed the “Federal Protective Service

Guard Contracting Reform Act of 2007”

(H.R. 3068) which would put a prohibition

on award of FPS contracts to any business

concern owned, controlled, or operated by an

individual convicted of a felony. The bill is

awaiting Senate action. Second, in final FY ’08

Homeland Security Appropriations, Congress

mandated that FPS be staffed at levels that

would nullify the Administrations proposed

personnel cut.

In 2008, NASCO will continue to work with

FPS and interested members of Congress to

deal with any concerns about the use private

security guards by FPS and strengthen the

working relationship between FPS and the

security guard industry.

The Use of Security Guards by the Federal protective Service (FpS) and Federal regulation of the industry

Currently, there are 15,000 contract security

guards protecting thousands of federal facilities

under contracts with the Federal Protective

Service (FPS). In the FY ’08 budget submitted to

Congress in February, the Administration — as

part of a plan to internally restructure FPS and

focus more on investigative functions — pro-

posed to eliminate approximately 250 federal

FPS police officers. This proposed cut in federal

personnel, in conjunction with reports of prob-

lems with some of the FPS private security guard

contracts, triggered congressional scrutiny of FPS

and its use of contract security guards. In May,

the House Homeland Security Committee held

a hearing titled “The Direction and Viability

of FPS” at which NASCO Executive Director

Joseph Ricci was a witness. At the hearing, the

proposed cut in federal officers combined with

the reports of problems with FPS non-federal

contract security lead committee members to

focus on the adequacy, role, training and per-

formance of FPS contract security guards. Some

members went so far as to suggest unrealistically

2007 legislative overview and 2008’s focuswritten by steve Amitay


Legislative update

20

ove

rvI

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revI

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Congressional reductions in the Number of private Security Guards at DoD installations

In 2003, responding to the need for increased

security after 9/11 and the deployment of forces

overseas, Congress temporarily authorized the use

contract security guards to protect U.S. military

bases and installations. Over 130 DoD installa-

tions (the majority being Army facilities) are using

or have used contract security officers since then.

In 2006, the Government Accountability Office

released a report that uncovered various problems

and deficiencies with the program and GAO made

recommendations for corrective action. Later in the

year, as part of the FY 2007 Defense Authorization

Act Congress extended the authority of the contract

guard program, but also reduced the total number

of contract guards that DoD could hire for upcom-

ing fiscal years. Congress also mandated that DoD

provide a report to Congress on the effectiveness

of the program and the progress of DoD in imple-

menting the GAO recommendations.

In February 2007, DoD provided its report “Con-

tractor Performance of Security Guard Functions”

to Congress. In the report, DoD affirmed the

ability of contract guards to successfully perform

required tasks as well as military counterparts. DoD

also stated it was implementing the recommenda-

tions of the GAO Report to make the program

more efficient. The DoD Report concluded that

“the authority for the use of contracted security

guards at military installations gives DoD a viable

and effective way to meet and adjust the require-

ments of increased security guard functions.”

However, despite the DoD report evidence that

the contract security guard program was neces-

sary, effective and being improved, Congress, in

the FY 2008 Defense Authorization Act, once

again reduced the number private security guards

authorized for use by DoD in future years. Thus, by

2012, the total number of private guards authorized

for the program will be 50% of the number of

private guards being used in October 2006. With

American military forces still deployed in large

numbers overseas, the rationale for the reductions is

not clear, and congressional staff has only said that

the military services have not objected to the reduc-

tions. Conversely, there are reports that military

bases using private guards are scrambling to find

ways to deal with the reductions and also that the

to meet with the Council and DOJ to further

explore the “channeler” outsourcing option.

NASCO though also has committed to pursue

federal legislative options to resolve the prob-

lem. At its October annual meeting, NASCO

adopted a resolution supporting the amending

of the PSOEAA to allow private security officer

employers a non-state avenue (“using a third

party intermediary”) to obtain PSOEAA checks.

This effort was spurred not only by frustra-

tion with the current situation but also by the

introduction of legislation in June by Rep.

Rob Andrews (D-NJ) (H.R. 2703, the “Private

Security Officer Employment Authorization

Act of 2007”) which among other things would

create the option for security guard employers

to use a non-state third party entity to obtain

PSOEAA checks. While there are substantive

and drafting issues with the Andrews legislation

that require fixing, NASCO and its members

are already working with Rep. Andrews office to

resolve these problems and produce a bill that

will be supported by all the involved parties.

In 2008, NASCO plans to work closely will

all the various parties that will be involved in

any legislative fix (House Judiciary Commit-

tee, Senate sponsors of the original PSOEAA,

Senate committees of jurisdiction) as well as

with state groups, the FBI, and relevant interest

groups. A hearing on the Andrews bill and the

problems with the PSOEAA could take place in

early 2008 in the House Education and Labor

Subcommittee on Health, Employment, Labor,

and Pensions (HELP). H.R. 2703 was referred

to this Subcommittee, as well as the House Ju-

diciary Subcommittee on Crime, and Andrews

is the Chairman of the HELP Subcommittee. .

Throughout its efforts in 2008, NASCO will

make the point that private security officer

employers already have been granted federal

authorization to request FBI CHRI checks

through the PSOEAA, so there should not

be congressional objections to legislation that

would facilitate this pre-authorized access.

2007 was a busy year for NASCO in Washing-

ton and 2008 should also be busy and hopefully

result in some big wins for the industry. n

reductions are politically motivated.

In 2008, NASCO will seek to obtain an accurate

assessment of the situation and work with decision

makers in DoD and Congress on making sure that

the facts on the ground and the needs of military

installations are the primary considerations in

regulating the number of guards allowed in the

program.

Efforts to Implement Existing Statutory Authority

to Conduct FBI criminal history record informa-

tion (CHRI) checks on Security Officers

In 2004, NASCO and its members worked with

Congress to enact the Private Security Officers

Employment Authorization Act (PSOEAA) which

granted employers of private security officers’

federal authority to request that states screen their

security officers against FBI CHRI. In January

2006, DOJ issued an Interim Final Rule on the

PSOEAA outlining the procedures under the Act.

Unfortunately, states have not taken the necessary

steps and actions pursuant to the PSOEAA to

enable private security officer employers’ access to

FBI CHRI, and as a result, private security officer

employers cannot regularly screen prospective and

current employees against the national database.

This state inaction has frustrated the intent and

plain language of the PSOEAA and only serves

to increase the likelihood that a convicted felon

could slip through the security officer screening

process.

In 2007, NASCO and its members met with

the Department of Justice, the FBI, Congress,

and state groups to try to find solutions to this

impasse. While DOJ pledged to provide ad-

ditional information and guidance to the states

about the PSOEAA, DOJ officials also warned

NASCO that the reluctance and refusal of states

to undertake FBI background screening was likely

to continue given past history with similar situa-

tions. DOJ suggested that it might be possible for

states unwilling or unable to undertake PSOEAA

checking and screening on behalf of security

guard employers to “outsource” their PSOEAA

responsibilities to a third-party, non-state agency

“channeler” pursuant to recent federal regulations

issued by the National Crime Prevention and

Privacy Compact Council. DOJ and FBI officials

have offered to work as a go between NASCO and

the Compact Council and in 2008, NASCO plans

2007 legislative overview and 2008’s focus, cont.written by steve Amitay

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