State Department Award Of Embassy Contract 'Improper'

A sole-source contract offered by the U.S. State Department to a firm to handle security at U.S. embassies was awarded improperly, according to a government watchdog agency.

In March 2003, State awarded a sole-source contract to EmbSEC, a Virginia limited liability corporation, for work at U.S. embassies. The contract currently has a ceiling price of $354 million, according to the Government Accountability Office (GAO), the nonpartisan investigative arm of Congress.

The contractor is required to install and maintain technical security equipment, such as alarms, cameras, and controlled-access equipment; establish X-ray capability for special projects; and maintain and repair physical security products. The contractor also procures equipment and materials and operates the warehouse where they are stored, GAO says.

State relied on a waiver of competitive thresholds, granted by the Small Business Administration, to award the sole-source contract to EmbSEC.

"However, the waiver was improper because SBA was not authorized to grant it," GAO says.

The waiver was not tied to a specific procurement, but was a blanket waiver that could be applied to any contract pertaining to security at diplomatic posts, GAO found.

"According to contracting officials, they have struggled to administer this contract and exercise appropriate oversight," the agency says. "For example, after the contractor notified State of accidental errors it had made in pricing its proposals, the contracting office took initial steps in November 2005 to request an audit by the Defense Contract Audit Agency due to concerns about the pricing errors and other aspects of the contract, such as travel costs. However, the office has not followed up to actually get the audit under way because it lacked the staff to do so. Much of the contracting officer's time has been taken up with resolving disagreements with the contractor."

In July, EmbSEC complained to State about a large number of outstanding requests for adjustments to task order prices, some of which are more than a year old, and $2.8 million in work completed or partially completed without a corresponding contractual document under which it could submit invoices.

"State officials told us they have recently taken actions in response, such as permitting partial funding for work begun before final negotiations on all price components are complete," GAO says.