Buyer beware: The fallacy of hiring contract guards based solely on price
Note: This article is presented for informational purposes only and is not intended to constitute legal advice.
When it comes to contracting for various services, organizations seek to get the best deal possible but everyone knows that a contractor who comes in with the lowest bid is often not the best one to hire for a given job based on a variety of different factors. Unfortunately, too many companies today are making their decision to purchase security guard and patrol services with price being the primary consideration. In the contract security services industry, the ole adage “you get what you pay for” is very true and buyers should shop around to determine which ones provide the best deal relative to quality and price.
Outsourcing of security is becoming more common in the private sector and for a wider number of security issues, including protection of premises, facilities, assets, processes, special events, and personnel. This essentially implies the delegation of many former in-house or public service functions to contract security services companies, involving not only security tasks for private purposes but also, in an exponentially increasing way, a significant number of sensitive security tasks in relation to public safety and security.
The increasing market share of competitive security projects along with budget cuts in private and public spending means that industry standard rates are largely set by buyers in terms of the price paid for services. This has significant impact on the working conditions and salaries in the sector, company hiring pool and therefore on the quality of the service provided. There is an ongoing concern, raised during years of economic and financial crisis, among the industry service providers representing employers and workers in the contract security services sector that the application of the principle of awarding contracts to the lowest bidder is leading to a gradual lowering of quality standards.
Our experience in submitting proposals indicates that for most buyers in purchasing contract security services, there is increasing pressure on price. This is particularly alarming especially when contract security services companies are increasingly taking over and/or supporting both low- and high-risk private and former public service functions.
The risks of lowest price competition must be viewed by buyers in the context of the organization’s own security, the way they view the value and worth of their own environment, their public image and the additional litigation costs resulting from a failure to provide a high standard of service. As a buyer, if you inspire to ensure good quality, it is a win-win situation in the end – quality contract security services will make your job easier when security is guaranteed. It also has to be mentioned that buyers are not always the ones that want to go for the lowest price but are obliged by existing security industry competition to do so.
Companies and institutions that outsource security services to specialized firms do so under the assumption that these firms possess the insurance, licensing, qualification, knowledge and expertise in the client industry needed to supply the requested services on the most economical advantageous terms. However, this does not automatically mean that the contract security services companies can deliver the required services for the lowest price. On the contrary, the increasing responsibilities being taken up or being put upon contract security companies need massive and heavy investments in staffing, development, training, equipment, tools and procedures. Quality in the field of security is not compatible with the lowest price for reasons highlighted below.
What are the Risks of Selecting a Guard Services Provider Based on Price Alone?
1). Compromised performance of contract. Choosing the lowest price service provider can result in early termination of the contract as the costs of performing the original contract may become unsustainable for the contract security company.
2). Create unfair competition: If you choose a low-quality service provider, you will contribute to slave labor wages, underbidding and unfair competition on the market. This is the case because the lowest bidder will not be able to provide good quality services which will lead to companies competing solely on price and not the quality level of services. It will also have a damaging effect for you as a buyer as it will limit your choice of good quality companies to choose from.
3). Wrongful use of subcontracting: To cut costs, private security services companies will oftentimes revert to employing guards as independent contractors. The use of sub- contracting for the sole purpose of circumventing wages and taxes is also becoming more frequent, which can become particularly dangerous if the subcontracting work is awarded to low bidding service providers. These practices can have a negative impact on you as a buyer.
4). Regulations neglect. Evidence can be found that some of the lowest price service providers neglect contract security regulations to cut costs. This often includes lack of mandatory licensing, insurance and training, diminishing the quality of services provided. Non-compliance can also have a negative impact on the buyer.
5). You get what you pay for: Choosing for lowest price service provider will have a detrimental effect regarding the quality of services provided because low cost cannot justify quality of pay, necessary training and employment conditions for security officers. Consequently, a race to the bottom in terms of quality of contract security services will be observed in the market. As a result, security end-users will have less choice of good quality companies to choose from to ensure that their goals are achieved in terms of security services rendered. The alternative of choosing the lowest price service provider with a low level of security contributes substantially towards lowering the image of the industry in the eyes of the public. This also lowers positive public perception of the buyer.
About the Author:
Grayling D. Livingston is the founder and president of Get A Security Quote (GASQ), a search for hire, lead generation, and sales support-type service that support contract security firms, to include security consulting, sales and marketing activity. GASQ work with end-users of contract security services who don’t want to own a full-time security staff and are looking for the best value for their money and expect the services to match the fees or services. For more information, visit www.gasq.us.
