Procurement of security services

Conducting a successful tender process (procurement) or requesting a quote for security or hospitality services is no easy task. For both the contracting authority and the bidder, this is time-consuming and therefore costly. The outcome must always be that the services to be procured align with the company’s objectives and that it is recognized that these services are an integral part of the organization.

Before preparing a procurement procedure or request for proposals, it is essential to ask the following questions:

•  Do we actually want to put this out to bid?
•  Do we need to put this out to bid?
•  Why are we putting this out to bid?

The reasons for putting a contract out to bid can vary widely. These range from the procurement policy to be followed, EU procurement rules, and changes in the scope of services, to a security provider that is not performing adequately.

Once the above questions have been answered, it is advisable to formulate procurement objectives that clearly articulate the client’s changing circumstances or the market situation. It can also serve as a starting point for contracting a security provider that can grow and evolve alongside the client’s changing circumstances. Experience shows that tendering in the present day and in the current private security market is often a matter of price and offers little differentiation. The prevailing sentiment is that it is a matter of purchasing a commodity, and thus price is the only issue.

If we look back a few years, the private security market was dominated by a handful of large players and a high proportion of “suit-and-tie” types. The shift toward providing serious security services—such as protecting businesses and properties against terrorism and serious crime—and expanding into hospitality services is now being pursued and developed by only a few companies. The mindset of thinking in terms of “delivering hours” rather than offering a security solution is still the norm.

To determine how well a security company aligns with the contracting authority, here are several key considerations that can be taken into account during a procurement process. The goal is always to select the right contractor.

The duration of a contract has a significant impact on the supplier in terms of execution and continuity. If the contract term is sufficiently long, investments can be made in the employees who carry out the contract. Performing security work is a people-oriented task and a matter of investing in the relationship, thereby offering sufficient prospects within the scope of the work and ensuring the continuity of service delivery. To manage these investments responsibly, the contract term is a significant factor influencing these costs. Additionally, the length of the contract naturally affects the payback period, which applies particularly to investments such as training, uniforms, onboarding, etc.

How is the contract implemented in terms of the management model, management oversight, development opportunities for security guards, service launch, and reporting? In addition to these operational issues, it is important to understand how a security organization handles complaint management and process improvement. Cultural aspects play a major role in this. The cultures of the contracting organization and the supplier must be a good “fit” in order to achieve the best results together. Both parties play a crucial role in this.

Topics that are playing an increasingly important role in a (security) organization include:

•  Reserve capacity of the security guard pool.
•  How is consistency in quality ensured?
•  How does the organization approach Social Return on Investment (SROI) and Corporate Social Responsibility (CSR)?
•  Personal characteristics of staff regarding physical fitness, attitude, behavior, and personal hygiene.

Provide a clear description of what the service entails in terms of hours, tasks, responsibilities, onboarding, required training, and additional requirements. This provides insight into both the scope and the actual nature of the assignment. In addition, this provides important insight, allowing a security organization to assess whether “the assignment is a good fit.” The clearer and more specific the request for proposal is, the more transparent the proposal can be. A transparent proposal ultimately leads to clear execution of the work and full compliance with the client’s desired profile. This results in fewer areas of ambiguity between the client and the security provider.

Another key consideration in a request for proposals is, of course, cost control and budget monitoring. The security industry is required to comply with the nationally binding collective bargaining agreement of the Dutch Security Industry. It is advisable to note in advance which collective bargaining agreement applies and its impact on the rate. Consider, for example, the transfer of security guards from the outgoing supplier, irregular hours allowance, overtime allowance, and shift allowance. When requesting quotes, it is advisable to provide clarity on the method of indexation. Clarity also ensures a fair comparison among all bidders.

Ensure that you have a clear contract that transparently outlines not only the agreed-upon scope of the assignment but also the obligations each party has toward the other. Equality definitely makes a positive contribution to the execution of the assignment, as well as to the relationship between the parties. This still means that the terms must be properly aligned and documented in legal terms.

Clarity regarding quality is a key consideration when it comes to perception and experience. During the implementation phase, it is important to clearly communicate expectations to one another and to verify them against measurable data.

The use of penalty clauses is becoming increasingly common. While the purpose of penalties and their effect are clear, it is important to consider the scope, magnitude, and impact of the penalty. The justification for imposing a penalty should be based on the overall performance of the service. Furthermore, the penalty should lead to an improvement in quality and not merely serve as a payment formula. To measure this effectively, it is advisable to establish clear agreements during the contract’s implementation phase regarding what, where, when, and how to measure.

In addition to imposing fines, one might consider offering a bonus for outstanding performance to show appreciation to the supplier and its employees and to reward them for going the extra mile.

Communication plays a key role in the execution of security operations. In particular, when it comes to the deployment of personnel within the client’s core operations, there is a great deal of communication across various levels and roles.

It is important to consider and understand in advance (even during the proposal phase) how communication will take place. This includes the various forms of communication at the strategic, tactical, and operational levels. An important issue to keep in mind is how frequently communication takes place, how the various communication flows are documented, and by whom.

To move away from the “pay-by-the-hour” model, it’s important to evaluate the vendor’s contributions based on creativity and added value. Leverage the expertise and experience of security vendors to ensure the right level of service and the opportunity to collaboratively develop new solutions.