For the first time in 20 years, the U.S. Army is asking private security firms to provide new security services for domestic military facilities. Issued on June 27, an Army Contracting Agency (ACA) request for proposal (RFP) outlines a program that may employ 500 or more private security officers for $20-25 million.

The RFP follows a recent change in the law. Under Title 10 of the U.S. Code, the Department of Defense (DoD) has not been permitted to hire private security firms to provide guards for domestic military installations unless it was renewing contracts that began before Sept. 24, 1983. The 2003 Defense Authorization Act, signed last December, amends Title 10 to permit the use of private security for certain functions until December 2005.

Specifically, private firms may now handle new security needs that surfaced after Sept. 11 attacks. “If it is additive — something that the DoD has done to bolster security since the Sept. 11 attacks — then the Department can contract with private security firms,” says James Long, vice chairman and president of Wackenhut Services Inc., Palm Beach Gardens, Fla.

Legislators ultimately agreed to allow the guards because Reserve and National Guard forces were primarily handling increased Homeland security responsibilities. “If you look down the road, you will have people that won't join the Reserves and National Guard because they won't be willing to do this kind of guard work,” Long says.

Long and other industry observers also believe that Congress may eventually decide to extend the change beyond three years, if private security satisfies the new DoD requirements. The Army, meanwhile, is filling new security posts at a dozen or more Army bases, including Fort Hood in Texas, Fort Lewis in Washington, and Fort Riley in Kansas. According to Long, the Army previously opened up its bases far more than other services in recent years. “Before Sept. 11, you could drive onto a lot of army bases without passing a military police gate with a guard,” he says. “These bases aren't open anymore. They've been secured with military personnel that weren't (previously) performing those kinds of activities.” Because these security functions arose as a result of Sept. 11, they may be handled with private security.

Naval, Marine and Air Force bases have maintained strict security at base entrances, Long adds, so it makes sense that Army bases would be the first to require help from private security firms.

Security executives that have studied the Army's RFP, however, say it raises a number of questions. While asking firms to supply about 500 guards to provide basic coverage at a dozen installations, the RFP also requires swift staffing increases when the domestic threat levels rise.

“When threat levels rise, everyone needs extra people, and it is always difficult to find them,” one security company official says. “Suppose an increased threat means that a facility needs 50 more security guards. No one will have 50 people just standing around — and that means the security firm could be asked to absorb tremendous overtime costs.”

While fixed-price government contracts often require suppliers to provide flexibility, most of them pay for it. The Army's security guard RFP, however, sets the fee for security firms at 5 percent above the cost of labor and supplies. “That's a risky contract,” says another security firm owner. “Most contracts requiring that level of flexibility allow fees of 10 percent.”

Executives from most firms agree that while the RFP raises questions, the concept behind it represents an important business opportunity for the security industry. “There is the potential for these kinds of contracts to be quite large,” Long says.