F E B RU A RY / M A RC H 2 0 0 8

SECURITY
EXECUTI VE
A P u b l i c a t i o n o f t h e Na 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 mpa n i e s

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 Table of Contents
Features

F E B R U A R Y / M A R C H 2 0 0 8 • V o l ume 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
 
Editorial
Publisher
Constructing a Plan Joseph Ricci, CAE

10
jricci@nasco.org
The past, present and future of M&As. Editor
Written by Robert H. Perry Elizabeth Tetkoski
 
Design & Production
Art Director
Jacki Silvan
Think Tank Creative
art@securityexecutive.org

A d v e r t i s i n g Sa l e s
Measuring Up Joan Daly

14
Evaluating client and employee survey joan@securityexecutive.org
applications.
Board of Directors
Written by Mark Dillenbeck
Chair: Martin Herman, Special Response Corporation
1st Vice Chair: Heather O’Brien, Security Forces, Inc.
2nd Vice Chair: James McNulty, Securitas Security Services USA
3rd Vice Chair: Stephen I. Kasloff, Guardsmark, LLC
Treasurer: Lynn C. Oliver, American Security Programs, Inc.
In every issue Secretary: Julie Payne, The Wackenhut Corporation
Directors-At-Large
Dennis Roberts, SecTek
2 Calendar of Events David Buckman, AlliedBarton
Donald Bottom, Security Engineers, Inc.

4 In the News Executive Director: Joseph Ricci, NASCO

Past Chair: G. R. Massimei, U.S. Security Associates, Inc.

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 NASCO Update
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 editor@securityexecutive.org. Include your full
name, address and phone number.

For questions regarding subscriptions, please call 703.519.0912.

check on it: NASCO Testifies on FBI Background Check Legislation
Postmaster: Send address changes to Security Executive,
living legends: NASCO Facilitates CEO Forum with Icons 1651 Prince Street, Suite B, Alexandria, VA 22314.

18 Legislative Update
Overview review: 2007 Legislative Overview and 2008’s Focus

National Association of Security Companies

1651 Prince Street, Suite B | Alexandria, VA 22314
www.nasco.org
Cover Photograph: Jason Smith | Agency: Dreamstime.com

FEBRUARY/MARCH 2008 • SECURITYEXECUTIVE.ORG

1
 Calendar of Events

April 2–4 April 22–24

ISC West The TFM Show
Las Vegas, Nev. Chicago, Ill.
www.iscwest.com www.todaysfacilitymanager.com/tfmshow

APril 23–24 April 30

GovSec Security Expo 2008, ASIS Boston Chapter
Washington, D.C. Boston, Mass.
www.govsecinfo.com www.asis-boston.org

MAY 12 MAY 13–14

2008 ASIS NYC/IFMA GNY Solutions 3rd Annual Contract Security Summit &
Expo, ASIS New York Hill Day
New York, N.Y. Washington, D.C.
www.asisnyc.org/tradeshow www.nasco.org

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 NASCO 3rd Annual

Contract Security Summit & Hill Day

May 13–14, 2008 • Washington, D.C.

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.

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.
 In the News
AlliedBarton Wins Training Recognition
AWARD WINNIng
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.
G4S Wackenhut Takes New 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.
FEBRUARY/MARCH 2008 • SECURITYEXECUTIVE.ORG
4
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
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
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
Changing Direction
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
 Newly Acquired

Murdoch Continues East

Coast Acquisitions
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
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 5IF
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has retained more than 95% of clients following
its acquisitions, whereas some companies lose
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his career as a security officer in 1980 and 7HYDOMORETHANHALFOFTHETOP
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founded Command Security Corporation three
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traded company with revenue of more than KNOWSTHESECURITYBUSINESSBETTERTHAN
$100 million. He served as CEO of Command WEDO
Security Corporation until 2004. n

CA Union Set to Vote on

ON the rise

Benefits Increase
Union officials representing thousands of private the same property management companies. The
security guards in Los Angeles have struck a strike resulted in a 25% wage increase over three 1PE
#JPNFUSJDT

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.
BASEDIDENTIlCATION
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.
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.
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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
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 5BLJOH
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in Minneapolis and Seattle. n 8PSLGPSDF
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FEBRUARY/MARCH 2008 • SECURITYEXECUTIVE.ORG

5
 In the News
securing change

Day & Zimmerman Appoints

Division President
Day & Zimmermann, a nationally recognized “I will continue to focus on Day & Zimmermann’s
provider of products and outsourcing solutions for core strategy in the security services space, and ensure

“After seeing government and commercial customers, has named

John Sacht president of its Security Services division.
Sacht will be responsible for the continued success-
you in an airport ful growth of the Security Services division through
strategic planning, customer relationship manage-
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

a few months
ment, and financial and operational management of services industry with a career spanning process and
the business. industrial, microelectronics and pharmaceutical mar-
kets. He holds a bachelor’s in business administration

ago you took my A 20-year veteran of Day & Zimmermann, Sacht has
held several business management roles within the
from Augusta State University in Augusta, Ga.; and an
MBA from Queens College in Charlotte, N.C. n
company, most recently creating process enhance-

card and offered ments, customer relationship management and

increasing growth for the validation business.

to add me to “I am looking forward to the opportunity to lead the

Security Services division. There is great potential and

the Security proven industry leadership on our team,” said Sacht.

Executive
a federal case
subscription
list. I’ve been Tri-S Security Awarded Georgia
Federal Facilities
reading the Tri-S Security Corporation, a provider of security Southeast,” said Ronald Farrell, CEO, Tri-S Security

magazine and
services and equipment for government and private en- Corporation. “In 2007, Paragon won new contracts
tities, wholly-owned subsidiary, Paragon Systems, Inc., in each financial quarter and as our pipeline of new
was awarded a new contract with the Department of contract bids increases, we hope to continue this trend

find it very the Homeland Security for the state of Georgia valued
at $58 million. The five-year contract begins Apr. 1,
in 2008.”

2008 and is estimated at $11.6 million per year. Based in Atlanta, Ga.,

informative Paragon will deploy more than 250 armed security

Tri-S Security Corpora-
tion’s services include

and useful.
guards to provide security for federal government uniformed guards,
facilities throughout the state of Georgia. This contract electronic monitor-
raises the total awards for Paragon to more than $146.2 ing systems, person-

Thank you.” million; increasing growth 101% for the year. nel protection, access
control, crowd control
“Not only does this contract continue to show the and the prevention of
federal government’s confidence in Paragon, but it also sabotage, terrorist and
—Thomas J. Dolan, Jr., provides the company with a larger footprint across the criminal activities. n
chief security officer,
Dunbar Armored, Inc.

FEBRUARY/MARCH 2008 • SECURITYEXECUTIVE.ORG

6
A TRANSACTION IN THE SECURITY GUARD INDUSTRY

www.universalpro.com

has acquired the business of

www.ligouri.com

We provided the “Fairness Opinion” for

the benefit of the seller and advised
during the negotiations.

tel: 336.272.2266
rhpa@roberthperry.com
www.roberthperry.com
 NASCO Update
NASCO Testifies on FBI Background
CHECK ON IT
Check Legislation
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
NASCO Facilitates CEO Forum with Icons
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
FEBRUARY/MARCH 2008 • SECURITYEXECUTIVE.ORG
8
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:
• Weldon Kennedy, vice chairman, Guards-
mark, LLC
• Mark deBernardo, partner, Jackson Lewis,
LLP
• Donna Uzzell, chairwoman, National Crime
Prevention and Privacy Compact Council
• Floyd Clarke, member, Board of Managers,
Allied Security Holdings
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
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
LIVING LEGENDS
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 Elects New Board Members
NASCO recently
nominated and elected
two new Board members.
julie payne
Julie Payne, senior vice
president and general
counsel, The Wackenhut
Corporation, will serve
as secretary and Donald
Bottom, chairman and
Donald Bottom
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
FEBRUARY/MARCH 2008 • SECURITYEXECUTIVE.ORG
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.
leading the way
“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
9
FEATURED ARTICLE :: CONSTRUCTING A PLAN

Cons

FEBRUARY/MARCH 2008 • SECURITYEXECUTIVE.ORG

10
onstructing
a PLAN
The Past, Present and Future of M&A’s
By Robert H. Perry

M ergers. 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.
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.

Consider that before the industry starting consolidating nine years Change is Inevitable
ago the Security Letter list of the largest security guard companies
There are several factors that have caused a dramatic change in
operating in the United States had annual revenues of approxi-
the domestic security guard market. First, large international
mately $5 billion. Ten companies accounted for this revenue in-
corporate clients moved away from awarding security contracts
cluding Burns, Pinkertons, Wackenhut, AHL Services, American
on a national basis to awarding contracts internationally. Many of
Protective Services, Guardsmark, U.S. Security Associates, Inc.
these international security firms had to compete for contracts on
Allied, Spectaguard and Initial. The only foreign-owned company
an international level. Because they did not have a presence in the
in the group was Initial, which represented 3% of the revenue for
U.S., they had to purchase a flagship company that already had an
the top 10 list.
effective management organization, which understood this new
market.
The most recent Security Letter list showed the annual revenue for
the top 10 companies at approximately $8.5 billion; however, the
For example, Securitas purchased Pinkertons in 1999 and Burns
leader list has changed dramatically. Only four of the companies
in 2000, two of the most recognized names in the domestic
appearing on the list nine years ago are on the most recent list.
security guard market. Following these two major acquisitions,
The six newcomers to the list have one common revenue building
Securitas continued to purchase several large and small guarding
action — they are some of the most aggressive acquirers in the
companies and grew organically as it reached its current status of
industry. Three of the firms on the current list are owned by a
being the largest security guard company in the nation.
foreign company and represent approximately 65% of the revenue
for the entire top 10; and, they represent 40% of the revenue for
In the beginning, Securitas continued to operate under the
the total U.S. security guard market, which is now estimated at
Pinkertons and Burns names. However, the company later
approximately $16 billion.
dropped these recognized names as a part of its plan to make

FEBRUARY/MARCH 2008 • SECURITYEXECUTIVE.ORG

11
FEATURED ARTICLE :: CONSTRUCTING A PLAN

Securitas the leading worldwide brand as a single source security provider. Leading the Change: The Build vs. Buy
Comparison
Second, in order for foreign companies to truly be international they
For years companies have been formulating growth plans by comparing the
had to be in the U.S. market— the largest security market in the world.
cost of growing through internal sales versus through acquisitions. Although
When the ISS Group purchased Sanitors, which was headquartered in San
some companies boast that they have built volume without a single acquisi-
Antonio, Tex., in 2007, the CEO clearly communicated to the world that
tion, most of the larger private and public companies have needed a healthy
the ISS Group was now an international corporation.
mix of acquisitions and internal sales as a way to achieve continued growth.

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

Electronic security alarm companies watch the creation factor very closely
services conglomerate with more than 410,000 employees stationed in 50
when deciding to grow through spending money on acquisitions or through
countries. It is one of the world leaders in the manned guarding business
internal sales. This creation factor is published as a service by the alarm
outside of the U.S.
association and is formulated using all the costs involved for an average
Before the acquisi-
An aggressive alarm company to sell and install an alarm. The industry goes through a very
tion, Sanitors was
detailed calculation to arrive at the creation factor multiple. Specifically, the
acquisition program, primarily a facility
alarm association takes into account the labor to install the alarm, the cost
supplemented BY an services company that
of the alarm and the marketing cost of the company as well as the incidental
operated a smaller se-
internal sales plan costs not normally associated with the cost of selling a product.
curity guard division.
is typically the only When announcing
The alarm industry has determined that, on average, the total cost for an in-
the acquisition,
way a company can ternally generated account is around 28 times the monthly billing. Therefore,
Jorgen Lindegaard,
when the firm buys another company for 35–40 times the monthly billings
meet its growth the CEO of ISS,
to the account, the price it is paying is not that much more than what it
stated: “…by starting
goal. would have cost to generate the account internally. It is important to note;
up operations in the
however, that acquisitions enable a company to grow dramatically faster and
United States, ISS
cover the fixed overhead expenses.
has fulfilled one of its
most important strategic goals. We cannot pursue our ambition to lead
Successful guarding companies go through the same build versus buy
facility services globally without operating in the world’s biggest economy.
exercise. In the guard industry the computation is more complicated and
The U.S. economy has enormous potential for outsourced facility services,
is not usually as reliable. This is because there are more variables and, the
and ISS wants to explore these opportunities as an important part of the
measurement is not based on consistent billing to each customer as it is in
Group’s continued expansion.”
the alarm industry.

G4S and Securitas made a similar announcement when they acquired

The reason for the computation, even if it is based on informed estimates, is
large security guard companies. Prior to its expansion in the U.S., G4S
still the same. It usually makes more economic sense to enter a new vertical
was the result of two European headquartered global leaders, Group 4
or geographic market through buying a company already established in a
Falck and Securicor, that merged before it purchased Wackenhut in 2002.
market than it does to set up and staff a new office.

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.
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.

FEBRUARY/MARCH 2008 • SECURITYEXECUTIVE.ORG

12
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.
FEBRUARY/MARCH 2008 • SECURITYEXECUTIVE.ORG
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.
13
FEATURED ARTICLE :: MEASURING UP

Measur

FFEEBBRRUUAARRYY//MMAARRCCHH 22000088 •• SSEECCUURRI ITTYYEEXXEECCUUTTI IVVEE. .OORRGG

14
ring UP
Evaluating Client and Employee
Survey Applications
By Mark Dillenbeck

W hether 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
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
inadequately measured are inadequately managed. Surveys are
client, employee or end-user (i.e. tenant) surveys, compared to
increasingly becoming a popular mechanism for measur-
64% of the Internet respondents. This suggests that the find-
ing client satisfaction and loyalty. Since service quality is
ings from the Internet survey were somewhat biased towards
ultimately a function of staff performance, security contract
survey users; however, the difference between Internet survey
companies frequently utilize surveys to evaluate employee
responders and the general population of security contract
loyalty and commitment.
companies, although statistically significant, was not great.

NASCO and OCM Quality Assurance Inc. collaborated in a

research project that evaluated market research methods used Phone Internet
Do you conduct… Responses Responses
by security contract companies. The study specifically focused
on the use of client and employee surveys. any kind of surveys? 53% 64%

OCM found that nine out of ten security contract firms solicit client surveys? 47% 57%
feedback from both its clients and its employees. Of these
employee surveys? 38% 34%
companies, six out of ten use client surveys and one-third use
employee surveys to acquire feedback.
Client Survey Findings
In-person interviews and conventional pen and paper
Of the security contract firms that were contacted in this
formats were the most frequently used methods for gathering
study, 93% solicit feedback from their clients. Among the
feedback, but telephone and Internet surveys were also very
companies that solicited client feedback, 61% used client
common. Companies with more than one thousand employ-
surveys to accomplish their goal.
ees were more likely to use client and employee surveys than
smaller companies.
Steve Jones, executive vice president and COO of Universal
Protection Services, says “client surveys have helped us to stay
NASCO members and security contract company senior man-
ahead of the curve. If things are trending in the wrong direc-
agers on NASCO’s mailing list were invited to respond to an
tion, we can make corrections and then gauge the impact of
on-line survey. 58 out of 589 people responded, providing us
those corrections.”
with a response rate of 10%. In order to accurately determine
whether the non-responding population differed from the

FEBRUARY/MARCH 2008 • SECURITYEXECUTIVE.ORG

15
FEATURED ARTICLE :: MEASURING UP

How Often Do You Gather Client Feedback? How Often Do You Gather Employee Feedback?

89%
80 80

77%
70% 67%
60 65% 60 65%
61%

Representative
via Union or
40 40

Feedback
38%
Focus Groups
Communications

or Complaints
20 20

One-on-One
Suggestions
Telephone/
Complaint/

21%
In-Person

Other
Meetings

Meetings

Meetings
Incident

Internet
Reports

Surveys

Surveys
Written

Team
9% 6%

Typically, companies offer clients different ways to respond to surveys. “A large number of our recruits are referred by current employees. So, on
In-person interviews and conventional pen and paper forms were the most our employee surveys we ask ‘Would you encourage a friend or colleague
frequently used approaches (69% and 63%). A significant number of to work at this company?’” says Jim McNulty, executive vice president of
companies also used telephone and Internet surveys (29% and 20%). Securitas Security Services USA.

What Survey Mechanisms Are Employed? What Survey Mechanisms Are Employed?

80 80
79%
69%
60 60
63%
60%

40 40
Pen and Paper
Pen and Paper

with Optical
Internet
Survey

Telephone
with Optical

Internet
Survey
29%
Scanner

Surveys
Scanner
Pen and Paper

Pen and Paper

20 20
Telephone

20%
In-Person

In-Person
Interview

Interview

16%
Surveys

2% 7% 14%

Employee Survey Findings The frequency of employee surveys varied as well, but most companies
who use this mechanism surveyed their employees at least once a year.
The percentage of security contract companies that solicit feedback from
employees, 92%, is about the same as it is for those that solicit feedback
How Often are Employees Surveyed?
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 3%
feedback, surveys were widely used (38%), but they were used less com- 8% More than once
monly for employees than they were for clients. per year

Once per year

Len Kline, COO of Weiser Security Services, Inc., knows that “when you 46%
ask employees if their opinions seem to matter, their responses correlate Once every
well with account retention.” 44% two years

Less than once

For companies that survey their employees, a variety of mechanisms are every two years
used. The most common include pen and paper surveys and in-person
interviews.

FEBRUARY/MARCH 2008 • SECURITYEXECUTIVE.ORG

16
End-User Survey Findings
In 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.
Approaching 100%
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.
FEBRUARY/MARCH 2008 • SECURITYEXECUTIVE.ORG
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.
17
 Legislative Update

S ummar y and what it means to N A S C O members NASCO’s VIEW B I L L STAT U S

MEJA Expansion and Enforcement Act of 2007 amends the Military Extraterritorial Jurisdiction Act (MEJA), Passed the House
US HR 2740

which criminalizes offenses committed outside the U.S. by members of the Armed Forces and certain Defense on Oct. 3, 2007 and
Department contractors, to cover all contractors providing services in an overseas military operation. The bill placed on the Senate
removes jurisdiction over security contractors from the UCMJ to the MEJA. Supportive calendar.

Section 332 of the Senate version of the 2008 Defense Authorization Act extends the temporary authorization
US HR 1585

for contract performance of security guard functions at DoD installation from 2009 to 2012; however, it also
Vetoed Jan. 15, 2008.
FEDER A L LEGISL A TION

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.

Amends the Private Security Officer Employment Authorization Act of 2004 to require states to conduct federal
Hearing held
criminal record checks for convictions during the previous 10 years and requires checks to be completed within
US HR 2703

Feb. 26, 2008.

three days; employment qualification will be based on federal parameters and state regulations. NASCO passed
NASCO testified.
a resolution to work with Congressman Andrews and others to expedite access by contract security companies to
FBI CHRI checks.
US HR 3068

Prohibits the award of contracts to provide guard services under the contract security guard program of the Referred to
Federal Protective Service to a business concern that is owned, controlled, or operated by an individual who has Committee
been convicted of a felony. Oct. 3, 2007.
Supportive
US HR 4102

Phases out the use of private military contractors by the U.S. overseas. Currently, 48,000 private security Referred to
contractors are reported to be in Iraq. The Department of State’s funding for private security and law Committee,
enforcement contractors is estimated to have increased from $1,000,000,000 to $4,000,000,000. Nov. 16, 2007.
OPPOSED
Creates the State Security Regulatory Board that provides for membership, powers, and duties of the Board;
AL HB 540

Read Feb. 28,

provides for certification of security officers and trainers; provides fees for licensing and certification; provides
2008. Placed on the
training requirements; provides for the reciprocity between states regarding the employment and deployment of
calendar.
security officers, minimum standards, licensing, and regulating of nonexempt persons and entities. Supportive
AZ SB 1176

Relates to technical correction requiring eight hours of pre-assignment training and eight hours of refresher
In Senate
training for renewals, as well as 16 hours of initial firearm instruction and eight hours of annual firearms
Feb. 26, 2008.
instruction for armed security guards.
ST A TE LEGISL A TION

CA SB 1209

Authorizes a person, registered or licensed as a security guard in another state with substantially equivalent
Sent to Committee
requirements and employed by a private patrol operator in another state to perform certain functions in this
Feb. 20, 2008.
state during an emergency declaration.
Supportive
DC 17-199

The Enhanced Professional Security Amendment Act of 2007 sets a prevailing wage for security officers as Law effective
established US Secretary of Labor and requires overtime rates for hours in excess of 40 hours a week. Jan. 28, 2008.

Allows licensed security officers to detain certain individuals until the arrival of law enforcement officers;
FL HB 143

Introduced
providing limits on such detention and authorizing limited searches of persons detained or about to be detained.
Mar. 3, 2008.
Also FL S.B. 2172.
Supportive
Amends Private Detective, Private Alarm, Private Security, and Locksmith Act of 2004. Adds provisions
IL S.B. 463

Referred to Rules
concerning continuing education for employees of licensed private security contractors. Beginning Jan. 1, 2009,
Committee,
Mandates 20 hours of classroom basic training within 30 days of employment in the areas of identification of
Dec. 3, 2007.
terrorists, acts of terrorism and terrorist organizations.

All information is accurate as of press time.

FEBRUARY/MARCH 2008 • SECURITYEXECUTIVE.ORG

18
 S ummar y and what it means to N A S C O members NASCO’s VIEW B I L L STAT U S

Relates to the Georgia Ports Authority; changes certain provisions for the application of traffic laws and
GA HB 1202

enforcement by security guards employed with the Ports Authority; requires that employees who are authorized Reported favorably
to exercise the powers of arrest shall be certified peace officers subject to the Peace Officer Standards and out of House,
Training Council. Feb. 20, 2008.
ST A TE LEGISL A TION

NJ SB 1200

Referred to
Removes 7% tax on investigation and security services from sales and use tax. Committee,
Feb. 21, 2008.
Supportive

Referred to
NY SB 7024

Committee,
Creates standards for the licensing and registry of security guards for the City of New York.
Feb. 28, 2008.

Establishes new classifications for armored car companies and security officers; requires liability insurance; In Senate, Feb. 21,
UT SB 98

relates to transportation of currency, valuables, jewelry, food stamps or any other high-value items that require 2008; Draft sent to
secured delivery; relates to carrying of firearms. Counsel.

2007 Legislative Overview and 2008’s Focus

overview review

Written by Steve Amitay

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:
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
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.

FEBRUARY/MARCH 2008 • SECURITYEXECUTIVE.ORG

19
 Legislative Update
2007 Legislative Overview and 2008’s Focus, cont.
overview review
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
FEBRUARY/MARCH 2008 • SECURITYEXECUTIVE.ORG
20
Written by Steve Amitay
reductions are politically motivated.
to meet with the Council and DOJ to further
explore the “channeler” outsourcing option.
In 2008, NASCO will seek to obtain an accurate
NASCO though also has committed to pursue
assessment of the situation and work with decision
federal legislative options to resolve the prob-
makers in DoD and Congress on making sure that
lem. At its October annual meeting, NASCO
the facts on the ground and the needs of military
adopted a resolution supporting the amending
installations are the primary considerations in
of the PSOEAA to allow private security officer
regulating the number of guards allowed in the
employers a non-state avenue (“using a third
program.
party intermediary”) to obtain PSOEAA checks.
This effort was spurred not only by frustra-
Efforts to Implement Existing Statutory Authority
tion with the current situation but also by the
to Conduct FBI criminal history record informa-
introduction of legislation in June by Rep.
tion (CHRI) checks on Security Officers
Rob Andrews (D-NJ) (H.R. 2703, the “Private
In 2004, NASCO and its members worked with
Security Officer Employment Authorization
Congress to enact the Private Security Officers
Act of 2007”) which among other things would
Employment Authorization Act (PSOEAA) which
create the option for security guard employers
granted employers of private security officers’
to use a non-state third party entity to obtain
federal authority to request that states screen their
PSOEAA checks. While there are substantive
security officers against FBI CHRI. In January
and drafting issues with the Andrews legislation
2006, DOJ issued an Interim Final Rule on the
that require fixing, NASCO and its members
PSOEAA outlining the procedures under the Act.
are already working with Rep. Andrews office to
Unfortunately, states have not taken the necessary
resolve these problems and produce a bill that
steps and actions pursuant to the PSOEAA to
will be supported by all the involved parties.
enable private security officer employers’ access to
In 2008, NASCO plans to work closely will
FBI CHRI, and as a result, private security officer
all the various parties that will be involved in
employers cannot regularly screen prospective and
any legislative fix (House Judiciary Commit-
current employees against the national database.
tee, Senate sponsors of the original PSOEAA,
This state inaction has frustrated the intent and
Senate committees of jurisdiction) as well as
plain language of the PSOEAA and only serves
with state groups, the FBI, and relevant interest
to increase the likelihood that a convicted felon
groups. A hearing on the Andrews bill and the
could slip through the security officer screening
problems with the PSOEAA could take place in
process.
early 2008 in the House Education and Labor
Subcommittee on Health, Employment, Labor,
In 2007, NASCO and its members met with
and Pensions (HELP). H.R. 2703 was referred
the Department of Justice, the FBI, Congress,
to this Subcommittee, as well as the House Ju-
and state groups to try to find solutions to this
diciary Subcommittee on Crime, and Andrews
impasse. While DOJ pledged to provide ad-
is the Chairman of the HELP Subcommittee. .
ditional information and guidance to the states
about the PSOEAA, DOJ officials also warned
Throughout its efforts in 2008, NASCO will
NASCO that the reluctance and refusal of states
make the point that private security officer
to undertake FBI background screening was likely
employers already have been granted federal
to continue given past history with similar situa-
authorization to request FBI CHRI checks
tions. DOJ suggested that it might be possible for
through the PSOEAA, so there should not
states unwilling or unable to undertake PSOEAA
be congressional objections to legislation that
checking and screening on behalf of security
would facilitate this pre-authorized access.
guard employers to “outsource” their PSOEAA
responsibilities to a third-party, non-state agency
2007 was a busy year for NASCO in Washing-
“channeler” pursuant to recent federal regulations
ton and 2008 should also be busy and hopefully
issued by the National Crime Prevention and
result in some big wins for the industry. n
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
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