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State Department Contract for Security Installation at Embassies Awarded to 8(a) Joint Venture

GAO-07-33R Published: Nov 08, 2006. Publicly Released: Nov 08, 2006.
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Highlights

In March 2003, the Department of State (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. 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. EmbSEC was created as a joint venture, mentor/protege partnership under the Small Business Administration's (SBA) 8(a) business development program. A joint venture in the 8(a) program is an agreement between an 8(a) participant and one or more businesses to work together on a specific 8(a) contract. SBA regulations state that the purpose of the mentor/protege relationship is to enhance the capabilities of the protege and to improve its ability to successfully compete for contracts. The EmbSEC joint venture is comprised of RDR, Inc., the mentor, and BP International (BPI), the protege, an 8(a) firm at the time the contract was awarded. State had awarded 8(a) contracts to RDR for the same type of work in 1992 and 1998. We received a tip on our fraud hotline regarding the EmbSEC contract. The objectives of our review, conducted under the authority of the Comptroller General to conduct evaluations on his own initiative, were to determine (1) State's basis for awarding the contract to EmbSEC without competition and (2) the extent to which SBA has monitored the roles and responsibilities of the companies under the joint venture arrangement. We are sending a separate management letter to State regarding this contract.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Small Business Administration The Administrator of SBA should retract the September 2001 waiver of 8(a) competitive thresholds granted to the Department of State.
Closed – Implemented
On May 9, 2007, the SBA administrator sent a letter to GAO stating that, pursuant to our recommendation, SBA has retracted State's waiver. The letter retracting the waiver was attached.
Small Business Administration The Administrator of SBA should direct the Washington district office to review the roles and responsibilities of BPI versus those of RDR under the EmbSEC 8(a) joint venture to determine whether the joint venture is meeting the intent of the SBA program.
Closed – Implemented
On May 9, 2007, the administrator of SBA sent GAO a letter stating that SBA's Washington Metropolitan Area District Office had conducted an assessment and determined that the intent of the mentor/protege program and resultant joint venture agreement had not been met. However, the mentor/protege relationship and joint venture agreement ended with the expiration of the EmbSec contract on March 11, 2007.

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Topics

EmbassiesFacility securityFederal procurementFraudImproper award of contractJoint venturesSecurity services contractsSole source procurementWaiversSmall business development programs