Friday, September 14, 2007
U.S. military awards $475 mn. security contract to British firm
Contracts
(Washington Post) - The U.S. military confirmed yesterday that it awarded the largest security contract in Iraq to a private British firm, Aegis Defence Services, in a deal worth up to $475 million over two years. Aegis won the high-stakes derby over six other contenders, said sources who spoke on condition of anonymity because of the confidential nature of the bidding process.
The deal, however, is being challenged by another British company that bid on the contract. Erinys Iraq is seeking an injunction from the U.S. Court of Appeals for the Federal Circuit to stop the Army from carrying out the contract. Erinys, which is also planning a separate appeal of the award to Aegis, had unsuccessfully sought to challenge the Army's decision in protests with the Government Accountability Office and the U.S. Court of Federal Claims.
Members of Congress, meanwhile, continue to raise questions about the use of foreign private security forces, such as Aegis, to protect U.S. commanders and soldiers. Federal lawmakers have requested that the GAO look into the use of private security contractors in Iraq. The Special Inspector General for Iraq Reconstruction also is conducting its second audit of Aegis, based on a request from a member of Congress who has expressed concerns about the firm's chief executive, Tim Spicer. He is a retired British military officer whose previous private military company, Sandline International, had been hired to quell insurgencies in countries such as Papua New Guinea and Sierra Leone.
"We are very pleased to receive this award, which we believe is a fine reflection of both our previous performance and our ongoing commitment to serve our client, the U.S. Army Corps of Engineers Gulf Region Division, to the best of our ability," Spicer said in a statement. Aegis holds the current contract, a three-year deal worth $293 million, to provide intelligence services to the Army and security for the Army Corps of Engineers on reconstruction work in Iraq.
While a military official in Baghdad confirmed Aegis as the contract winner, he did not elaborate; an announcement is expected soon. It was unclear yesterday why Aegis prevailed over what sources said was the other top contender, another British firm, ArmorGroup International. But over the past several months, sources said Aegis worked to show the military that it had a strong track record, stressing that none of its U.S. military clients had been killed in three years while traveling more than 3 million miles in Iraq. Sources also said Aegis underscored to the military that it made little sense to change contractors by bringing in another private firm to oversee a complicated security operation with offices throughout Iraq just as U.S. forces were seeking to scale back and eventually withdraw from the country.
Aegis was not the lowest bidder, but it was close in price to ArmorGroup's proposal, sources said. ArmorGroup, which is one of the largest security firms in Iraq, with more than 1,200 employees, tried to persuade the military that it was a better choice than Aegis in part by stressing its track record for protecting clients in Iraq, sources said. ArmorGroup spokesman Patrick Toyne-Sewell declined to comment.
ArmorGroup also tried to highlight some of the controversies involving Spicer and Aegis, sources said. After winning the first U.S. Army contract, Aegis quickly ran into problems. A special inspector audit found that the company failed to perform adequate background checks on some Iraqi employees. The company said it had just won the contract and immediately addressed the issue.
Erinys, which has about 1,000 employees in Iraq and provides security for some military personnel there under a separate contract, has maintained that the Army did not thoroughly review its proposal and failed to follow procurement rules. An attorney for Erinys declined to comment.
Members of Congress, meanwhile, continue to raise questions about the use of foreign private security forces, such as Aegis, to protect U.S. commanders and soldiers. Federal lawmakers have requested that the GAO look into the use of private security contractors in Iraq. The Special Inspector General for Iraq Reconstruction also is conducting its second audit of Aegis, based on a request from a member of Congress who has expressed concerns about the firm's chief executive, Tim Spicer. He is a retired British military officer whose previous private military company, Sandline International, had been hired to quell insurgencies in countries such as Papua New Guinea and Sierra Leone.
"We are very pleased to receive this award, which we believe is a fine reflection of both our previous performance and our ongoing commitment to serve our client, the U.S. Army Corps of Engineers Gulf Region Division, to the best of our ability," Spicer said in a statement. Aegis holds the current contract, a three-year deal worth $293 million, to provide intelligence services to the Army and security for the Army Corps of Engineers on reconstruction work in Iraq.
While a military official in Baghdad confirmed Aegis as the contract winner, he did not elaborate; an announcement is expected soon. It was unclear yesterday why Aegis prevailed over what sources said was the other top contender, another British firm, ArmorGroup International. But over the past several months, sources said Aegis worked to show the military that it had a strong track record, stressing that none of its U.S. military clients had been killed in three years while traveling more than 3 million miles in Iraq. Sources also said Aegis underscored to the military that it made little sense to change contractors by bringing in another private firm to oversee a complicated security operation with offices throughout Iraq just as U.S. forces were seeking to scale back and eventually withdraw from the country.
Aegis was not the lowest bidder, but it was close in price to ArmorGroup's proposal, sources said. ArmorGroup, which is one of the largest security firms in Iraq, with more than 1,200 employees, tried to persuade the military that it was a better choice than Aegis in part by stressing its track record for protecting clients in Iraq, sources said. ArmorGroup spokesman Patrick Toyne-Sewell declined to comment.
ArmorGroup also tried to highlight some of the controversies involving Spicer and Aegis, sources said. After winning the first U.S. Army contract, Aegis quickly ran into problems. A special inspector audit found that the company failed to perform adequate background checks on some Iraqi employees. The company said it had just won the contract and immediately addressed the issue.
Erinys, which has about 1,000 employees in Iraq and provides security for some military personnel there under a separate contract, has maintained that the Army did not thoroughly review its proposal and failed to follow procurement rules. An attorney for Erinys declined to comment.
Labels: Aegis Defense Services, Armorgroup, Erinys Iraq, GAO, GRD, Iraq, security contract, Tim Spicer, U.S. military, USACE
Tuesday, July 31, 2007
British firms emerge as finalists for largest U.S. security contract in Iraq
Contracts, Reconstruction
(Washington Post) - Two British firms have emerged as finalists to win the largest U.S. security contract in Iraq, according to sources familiar with the matter. In what has become a contentious competition, Aegis Defence Services and ArmorGroup International are considered top contenders for a contract worth up to $475 million to provide intelligence services to the U.S. Army and security for the U.S. Army Corps of Engineers on reconstruction work in Iraq. Aegis won the initial contract in 2004, a three-year, $293 million deal.
The Army has eliminated another British firm, Erinys Iraq, but that company is contesting the decision in sealed documents filed in the U.S. Court of Federal Claims, said sources who spoke on condition of anonymity because the contract review process is confidential. It was unclear yesterday whether the Army had chosen other finalists, but two other firms confirmed that they, too, are out of the running -- Control Risks of Britain and Blackwater Security Consulting of North Carolina.
The battle for the lucrative contract has drawn the attention of members of Congress who have questioned the use of private security contractors, about 20,000 of whom operate in Iraq, and whether the military should be outsourcing such critical tasks as security and intelligence to private firms. Based on a request from a member of Congress, the Special Inspector General for Iraq Reconstruction is conducting its second audit of Aegis.
Meanwhile, federal lawmakers have requested that the Government Accountability Office, Congress's investigative arm, also look into the use of private security contractors in Iraq. The GAO has begun to review contractors there, building on previous reports, spokesman Paul Anderson said. "We're still early in the process."
"The Army's decision to once again remove Erinys from the bidding process is bad economics and demonstrates the fundamental flaws in this procurement," said an Erinys spokesman. "We are taking steps to ensure that our proposal is given fair treatment on a level playing field, in accordance with applicable government laws and regulations."
ArmorGroup spokesman Patrick Toyne Sewell declined to comment. ArmorGroup already is one of the largest security firms in Iraq, with more than 1,200 employees. Aegis, which also has about 1,200 contractors in Iraq, declined as well to comment on the new contract, but Kristi M. Clemens, the firm's executive vice president, touted its work on the current contract.
The Army is expected to make a final decision soon. "We are proceeding with discussions and preparation for award," said Chuck D. Martino, deputy chief of staff of the Joint Contracting Command-Iraq/Afghanistan in Baghdad.
The Army has eliminated another British firm, Erinys Iraq, but that company is contesting the decision in sealed documents filed in the U.S. Court of Federal Claims, said sources who spoke on condition of anonymity because the contract review process is confidential. It was unclear yesterday whether the Army had chosen other finalists, but two other firms confirmed that they, too, are out of the running -- Control Risks of Britain and Blackwater Security Consulting of North Carolina.
The battle for the lucrative contract has drawn the attention of members of Congress who have questioned the use of private security contractors, about 20,000 of whom operate in Iraq, and whether the military should be outsourcing such critical tasks as security and intelligence to private firms. Based on a request from a member of Congress, the Special Inspector General for Iraq Reconstruction is conducting its second audit of Aegis.
Meanwhile, federal lawmakers have requested that the Government Accountability Office, Congress's investigative arm, also look into the use of private security contractors in Iraq. The GAO has begun to review contractors there, building on previous reports, spokesman Paul Anderson said. "We're still early in the process."
"The Army's decision to once again remove Erinys from the bidding process is bad economics and demonstrates the fundamental flaws in this procurement," said an Erinys spokesman. "We are taking steps to ensure that our proposal is given fair treatment on a level playing field, in accordance with applicable government laws and regulations."
ArmorGroup spokesman Patrick Toyne Sewell declined to comment. ArmorGroup already is one of the largest security firms in Iraq, with more than 1,200 employees. Aegis, which also has about 1,200 contractors in Iraq, declined as well to comment on the new contract, but Kristi M. Clemens, the firm's executive vice president, touted its work on the current contract.
The Army is expected to make a final decision soon. "We are proceeding with discussions and preparation for award," said Chuck D. Martino, deputy chief of staff of the Joint Contracting Command-Iraq/Afghanistan in Baghdad.
Labels: Aegis Defense Services, Armorgroup, Blackwater Security Consulting, Chuck D. Martino, contracts, Control Risks, Erinys Iraq, GAO, Iraq, Iraq reconstruction, USACE
Monday, April 02, 2007
quarter of U.K. Iraq aid budget spent on private security companeis
Security, Finance
(BI-ME) - The UK authorities have spent US$330 million on hiring private security companies in Iraq in the past four years, the equivalent to around a quarter of the entire Iraq aid budget, it has emerged. A further US$80 million has been spent on private guards in Afghanistan since 2004. The security costs, mainly for guards for British staff and facilities, were revealed in a parliamentary answer from the Foreign Office Minister Kim Howells. They reflect the huge quantities of money that the UK and the US have had to divert from humanitarian and reconstruction resources to deal with the deteriorating security environment in both countries.
In Iraq, a total of £145 million (US$290 million) has been spent on security guards to protect UK assets, with a further £20 million (US$40 million) going on police training and security advisers to the Iraqi government. The UK Iraqi aid budget over the same period was £644 million (US$1,288 million). The big beneficiaries have been the New York-based risk consulting company Kroll and the UK companies ArmorGroup and Control Risks. ArmorGroup, which is headed by the Conservative MP Sir Malcolm Rifkind, earned 50% of its revenues from Iraq last year.
Five years ago the UK government published a Green Paper on regulating private security companies but political action has not been forthcoming. John Hilary, Campaigns Director of War on Want, which has been pressing for legislation, says there is political resistance at the top. "As the pressure mounts on Blair and Brown to withdraw troops from Iraq, there is a growing possibility that their role will be increasingly taken up by these private military companies," he said. "It's easier for the government to allow this privatisation of war and turn a blind eye to regulation. It may be politically expedient but this flies in the face of a more ethical approach to actions of British companies overseas."
The rising cost of security at the expense of development aid reflects the American experience. According to the latest audit of US spending, 34% of the US$21 billion allocated for Iraqi reconstruction has been diverted to security, an increase from US$4.56 billion to US$6.31 billlion. For private contractors, the cost of security is now running at an average of 12% for each contract.
Chunks of the UK's Department for International Development's aid budget have also been diverted, according to latest figures from officials in Baghdad. In the last financial year more than £6 milllion (US$12 million) has been spent on private security companies. Over the four-year period, almost US$100 million has been allocated to the Foreign Office-led programme aimed at reforming the Iraqi police and prison service. The programme has yet to achieve its main objective of cleaning up the militia-infiltrated police in Basra, the UK policed area in the South of Iraq.
In Iraq, a total of £145 million (US$290 million) has been spent on security guards to protect UK assets, with a further £20 million (US$40 million) going on police training and security advisers to the Iraqi government. The UK Iraqi aid budget over the same period was £644 million (US$1,288 million). The big beneficiaries have been the New York-based risk consulting company Kroll and the UK companies ArmorGroup and Control Risks. ArmorGroup, which is headed by the Conservative MP Sir Malcolm Rifkind, earned 50% of its revenues from Iraq last year.
Five years ago the UK government published a Green Paper on regulating private security companies but political action has not been forthcoming. John Hilary, Campaigns Director of War on Want, which has been pressing for legislation, says there is political resistance at the top. "As the pressure mounts on Blair and Brown to withdraw troops from Iraq, there is a growing possibility that their role will be increasingly taken up by these private military companies," he said. "It's easier for the government to allow this privatisation of war and turn a blind eye to regulation. It may be politically expedient but this flies in the face of a more ethical approach to actions of British companies overseas."
The rising cost of security at the expense of development aid reflects the American experience. According to the latest audit of US spending, 34% of the US$21 billion allocated for Iraqi reconstruction has been diverted to security, an increase from US$4.56 billion to US$6.31 billlion. For private contractors, the cost of security is now running at an average of 12% for each contract.
Chunks of the UK's Department for International Development's aid budget have also been diverted, according to latest figures from officials in Baghdad. In the last financial year more than £6 milllion (US$12 million) has been spent on private security companies. Over the four-year period, almost US$100 million has been allocated to the Foreign Office-led programme aimed at reforming the Iraqi police and prison service. The programme has yet to achieve its main objective of cleaning up the militia-infiltrated police in Basra, the UK policed area in the South of Iraq.
Labels: Armorgroup, Control Risks, Foreign Office Minister Kim Howells, Kroll, private security companies, Sir Malcolm Rifkind
Wednesday, March 21, 2007
ArmorGroups' profits fall after failure to win more Iraq contracts
Business, Security
(Financial Times) ArmorGroup's profit fell sharply last year after the armed security provider failed to win new contracts for its Iraqi training camp. David Seaton, chief executive at the Westminster-based company, blamed the lack of business at the Camp Ghassan facility on a "slowdown in coalition-funded training of Iraqi security forces and a continued lack of funds for training from Iraq's ministries".
In 2005, profit was boosted by a contract to train close protection officers for the Iraqi judiciary. However, this was not replaced with new business. As a result, pre-tax profit fell in the year to December 31 to $9.5m (£4.85m), down from $12.1m the previous year. The training problems overshadowed an improvement in Armor's protective security division, which accounts for most of its sales.
The company reduced its reliance on Iraq, cutting revenues from 59 per cent of group sales to 49 per cent after winning new contracts in the Middle East, Afghanistan and Africa. It also managed to improve margins in Iraq by reducing costs, hiring more locals and lowering capital investment.
Sales rose 17 per cent to $273.5m ($233m) on the back of growing business in protective security in Iraq, Afghanistan and Nigeria. Earnings per share were 13.35 cents (16.24 cents) and the recommended final dividend is 1.5p, giving a yearly total of 2.75p, the same as 2005. Its shares, which have rallied 43 per cent in the past three months because of the improved Iraq performance, fell 3p to 87p yesterday.
In 2005, profit was boosted by a contract to train close protection officers for the Iraqi judiciary. However, this was not replaced with new business. As a result, pre-tax profit fell in the year to December 31 to $9.5m (£4.85m), down from $12.1m the previous year. The training problems overshadowed an improvement in Armor's protective security division, which accounts for most of its sales.
The company reduced its reliance on Iraq, cutting revenues from 59 per cent of group sales to 49 per cent after winning new contracts in the Middle East, Afghanistan and Africa. It also managed to improve margins in Iraq by reducing costs, hiring more locals and lowering capital investment.
Sales rose 17 per cent to $273.5m ($233m) on the back of growing business in protective security in Iraq, Afghanistan and Nigeria. Earnings per share were 13.35 cents (16.24 cents) and the recommended final dividend is 1.5p, giving a yearly total of 2.75p, the same as 2005. Its shares, which have rallied 43 per cent in the past three months because of the improved Iraq performance, fell 3p to 87p yesterday.
The private security market has expanded from $900m in 2003 to $2.6bn last year, with about half of that outside Iraq, showing that the industry is maturing. However, operating margins of 4.7 per cent in the armed guard business, while good for the industry, are slim, especially for a company that experienced 450 "hostile actions" against staff last year. Armor's future attractiveness will lie in higher margin training work and consulting services, similar to those of Control Risks, its non-listed rival.
Labels: Armorgroup, Camp Ghassan, contracts, David Seaton, private security companies
