special report on embassy security contracts

Lowest-priced security 

not good enough

for war-zone embassies

Unlike other federal agencies, the U.S. Department of State is forbidden by law to select 

anything but the lowest price and “technically acceptable” offer when awarding contracts to 

protect its overseas buildings—even if this means passing up offers from firms offering higher 

quality and better experience. In contingency operations like those in Iraq and Afghanistan, 

this prohibition can have negative consequences for security, wartime mission objectives, and 

America’s image.1

The Commission recommends removing this lowest-price restriction so that State Department 

contracting officers can—like their counterparts in other government agencies—use their 

professional judgment to select from the entire continuum of “best value” criteria and make 

appropriate trade-offs between cost or price and other relevant factors. When American lives 

and American interests are at stake, quality and experience must be considered along with 

price. 

The Commission on Wartime Contracting in Iraq and Afghanistan reached this conclusion 

based on research, travel to Afghanistan, and its September 14, 2009, hearing that focused 

on recent allegations of misconduct among employees of the State Department’s contractor, 

ArmorGroup North America (AGNA). AGNA, a unit of Wackenhut Services, Inc., contracted to 

protect the U.S. Embassy and personnel in Kabul, Afghanistan. The company attracted intense 

media scrutiny when a watchdog group released photos showing AGNA employees in alcoholfueled acts of sexual misconduct and degradation of subordinate staff.

background

Applicable law

Since 1990, the State Department has operated under restrictions imposed by 22 USC 4864. The 

law has been amended, but its intent remains: “to ensure maximum competition for local guard 

1. 10 USC 101. A contingency operation is defined as a military operation that may involve U.S. armed forces in 

hostilities, or that affects active-duty status of military personnel in time of war. 

CWC Special Report 2 October 1, 2009

Commission on Wartime Contracting

 in I raq and A fghanistan

“With respect to local 

guard contracts for 

a Foreign Service 

building which exceed 

$250,000 and are 

entered into after 

February 16, 1990, 

the Secretary of 

State shall ... award 

contracts to the 

technically acceptable 

firm offering the lowest 

evaluated price.”

Source: 22 USC 4864.
2

contracts abroad concerning Foreign Service buildings.” The law requires State Department 

officials to provide special care and handling for U.S. firms when procuring guard services for 

U.S. embassies and other Foreign Service buildings. For example, it prescribes a 10 percent 

downward adjustment to the offer price of U.S. firms in evaluation for a contract award; it 

requires helping U.S. firms acquire local licenses and permits; and, where dealing in local 

currency could impose a hardship on U.S. firms, it requires solicitations to be stated and 

payments made in U.S. dollars. 

The concern for this report, however, is the mandate in 4864(c)(3) that all offers be evaluated 

on a lowest-price, technically acceptable (LPTA) basis: “With respect to local guard contracts 

for a Foreign Service building which exceed $250,000 and are entered into after February 

16, 1990, the Secretary of State shall ... award contracts to the technically acceptable firm 

offering the lowest evaluated price.”2

Lowest-priced technically acceptable evaluation

Within the continuum of best-value evaluation techniques, the lowest-priced technically 

acceptable (LPTA) evaluation technique is a useful approach for clearly identifiable contract 

requirements where the risk of unsuccessful performance is small. The Federal Acquisition 

Regulation 15.101-2 states that an LPTA evaluation is “appropriate when best value is 

expected to result from selection of the technically acceptable proposal with the lowest 

evaluated price.”

Essentially, the LPTA evaluation technique presumes the lowest price is the best value. 

This makes sense in cases when the government is buying a routine product or simple 

service that does not require special attributes and where a competitive base of acceptable 

contractors exists, as with office supplies or cleaning services. When the requirement is more 

complex or the environment more troublesome, the best value may not always be achieved 

through the LPTA technique. Under LPTA competitions, companies all too often “buy-in” with 

unrealistically low prices. Conversely, higher-quality companies with possibly higher-priced 

offers may choose not to compete.

Other federal entities do use LPTA evaluations in the contingency environment. For 

example, the Joint Contracting Command-Iraq/Afghanistan (JCC-I/A) uses LPTA extensively 

to promote contracting with local-national contractors who might not have the skills to 

correctly respond to more complex evaluation criteria. However, JCC-I/A contracting officers 

are not prohibited from using best-value trade-off evaluations when they consider them 

appropriate, as long as they obtain written concurrence from their contracting director.3 

Using the LPTA evaluation technique may have two serious unintended consequences for 

contract performance: 

 An offeror who “under-bids” to win an LPTA competition may be motivated to use 

every means possible to limit costs afterwards in order to achieve a higher profit 

under difficult circumstances. Such post-award cost-cutting may include hiring a 

less qualified workforce, skimping on the quantity and quality of needed materials 

and equipment, and obtaining inexpensive and poor-quality subcontractors. Most 

importantly, under-bidding may also involve reduced levels of management oversight. 

In an interview with the Commission earlier in 2009, the CEO of a security firm said 

2. 22 USC 4864, Increased participation of United States contractors in local guard contracts abroad under 

diplomatic security program.

3. JCC-I/A Acquisition Instruction, 15.101-100, April 1, 2009.

Under LPTA 

competitions, 

companies 

all too often 

“buy-in” with 

unrealistically 

low prices. 
3

the LPTA evaluation technique created a “race to the bottom that drives 

security service providers to the lowest-cost solution.”

 High-quality contractors, whose services are likely to be more 

expensive, anticipate their competitors’ willingness to buy-in to the 

contract with an unrealistically low price. Knowing that their chances of 

winning an award are low, the most highly qualified contractors often 

decide not to expend their limited resources on responding to LPTA 

solicitations—a de facto restriction of competition. For example, in 

contracting security for the U.S. Embassy in Afghanistan, the government 

received only two offers deemed “technically acceptable,” even though 

dozens of security companies operate in Iraq and Afghanistan. As a result, 

the State Department struggles with a poorly performing contractor.

Under the current statutory mandate, State Department contracting officers do 

not have the freedom to consider these unintended consequences.

Best-value trade-off evaluation

A best-value evaluation allows a trade-off among technical factors, the 

contractor’s past performance, management, and cost or price. It is intended to 

achieve the best overall benefit to the government (and taxpayers) in instances 

when the use of cost or price alone is not good enough for reaching the desired 

outcome. A best-value evaluation does consider cost or price, but also allows 

the contracting officer to evaluate and make trade-offs between cost or price 

and other factors such as past performance, quality, delivery, management 

expertise, technical approach, experience of key personnel, management 

structure, and risk.

Best-value evaluation in a contingency environment such as Iraq or Afghanistan 

would give due weight to the needs of operational commanders. For example, 

it could include evaluating a contractor’s ability to hire and manage a workforce 

whose actions will reflect favorably on—or at least not discredit—the United 

States. Evaluating a contractor’s management approach can be difficult without 

an opportunity to compare offers using such factors as the contractor’s past 

performance and analyzing the degree of risk to contract performance. A bestvalue evaluation provides that opportunity. 

The wartime security mission

In 2004, when the military removed its guards from U.S. embassies in both 

Iraq and Afghanistan, the Department of State was faced with contracting 

for security for two embassies in a contingency environment vulnerable to 

hostile acts. Because contractors supporting contingency operations are 

perceived as representatives of the United States, it is critically important that 

agency contracts include requirements for proper employee behavior. Local 

nationals seldom distinguish among military personnel, civilian employees, or 

contractors: the Afghan on the street simply sees an American. 

The AGNA security contract to protect the U.S. Embassy in Afghanistan has 

six specific contractual requirements of exemplary behavior by the contractor 

AGNA Contract 

Requirements

 Contractor personnel shall be 

expected to perform and conduct 

themselves with proper decorum, 

subject to the U.S. Chief of Mission. 

 Each Contractor employee or 

subcontractor employee is expected 

to adhere to standards of conduct 

that reflect credit on themselves, 

their employer, and the United States 

Government. 

 The Government requires a favorable 

image and considers it to be a major 

asset of a protective force in particular. 

The employee or subcontractor’s 

attitude, courtesy, and job knowledge 

are influential in creating a favorable 

image. 

 The use of abusive or offensive 

language, quarreling, intimidation by 

words, actions, or fighting is considered 

unacceptable performance under this 

contract. Participation in disruptive 

activities that interfere with normal and 

efficient Government operations is also 

considered unacceptable performance. 

 The security guards must not 

participate in or support any activities, 

which would be disruptive to the 

performance of their duties or would 

decrease the efficiency of the security 

force operation. 

 Support of the U.S. and Host 

Government Relation: The security 

guards must not become involved in 

any activities which would prompt 

public criticism, or cause discredit or 

interference with U.S.–Host Government 

Relations. 

Source: Contract between State Department 

Office of Acquisition Management and AGNA, 

contract number S-AQMPD-07-C-0054, section H 

and exhibit B.
4

security force. At its September 14 hearing, the Commission heard testimony that AGNA 

management had failed to live up to their contractual responsibilities for both contract 

performance and workforce behavior. The LPTA methodology may have significantly 

contributed to these failures. 

contractor failures

Government got what it paid for

According to the litany of complaints about poor contract performance and behavior by 

AGNA, the company’s in-country leadership team was slow to respond to problems and 

improperly performed their duties as a contingency contractor. Further, as the lowestpriced contractor, AGNA appears to have bought in to the security guard contract at the 

U.S. Embassy in Afghanistan. 

Evidence of this buy-in was discussed at the September 14 hearing, when Mr. Samuel 

Brinkley, Vice President, Homeland Security and International Security Services, Wackenhut 

Services Inc., testified that Wackenhut’s offer was about $80 

million more than AGNA’s.4 At the time the contract was competed, 

Wackenhut—which now owns AGNA—was a competitor.

The State Department contract file indicates that Wackenhut’s offer was 

actually $110 million more than AGNA’s. That $110 million, amounting 

to almost 60 percent of the actual contract award of $189 million, 

could have bought more guards, more ammunition, improved training, 

and provided better management of employees—all required under 

the contract, regardless of the price.

Contract performance

The State Department has struggled for more than two years with 

AGNA’s poor contract performance. The contracting officer issued a 

cure notice and multiple letters outlining ongoing concerns and citing specific deficiencies 

in an attempt to improve AGNA’s performance. From the onset, AGNA failed to provide the 

number and quality of security guards required. Over three dozen members of the embassy 

guard force had inadequate English language proficiency and could not effectively 

communicate with embassy personnel or visitors to the compound. 

Further, AGNA failed to provide acceptable food services, proper documents for newly 

hired employees, adequate training, or enough guard uniforms—all of which were 

required in the contract. There were other failures. Letters from the State Department to 

the contractor described these conditions as undermining “performance of the contract to 

such a degree that the security of the U.S. Embassy in Kabul is in jeopardy.”5

4. Hearing transcript, Commission on Wartime Contracting in Iraq and Afghanistan, September 14, 2009, 237, 

http://www.wartimecontracting.gov/images/download/documents/hearings/20090914/CWC_State_Dept_

Contractor_Oversight_Transcript_2009-09-14.pdf

5. Letter dated July 19, 2007, from State Department to AGNA, Subject: Cure Notice Issued per FAR 49.402-3 / 

Contract No. S-AQMPD-07-C0054. Other letters from State Department to AGNA include one dated September 

21, 2008, Subject: Show Cause Notice for Continued Weaknesses in Performance Under Contract No. SAQMPD07-C0054, and another dated April 1, 2009, Subject: TCN Senior Guards Resume Approval.

State Department witnesses 

at Commission’s Sept. 14, 

2009, hearing on DoS contract 

oversight.
5

Workforce behavior

The unintended consequences of using the lowest-price technically acceptable 

technique were highlighted in testimony at the Commission’s September 14 hearing as 

witnesses described alcohol-fueled acts and lurid behavior. Where was the contractor’s 

management during this time? In some instances, management participated in these 

incidents; in others, it ignored them. 

At the September 14 hearing, Samuel Brinkley, 

Wackenhut Services, addressed the behavior of 

his employees, stating “I am not here to defend 

the indefensible.”6

 Mr. Brinkley continued: 

“Certain of our personnel behaved very 

badly. I am personally embarrassed by their 

misbehavior.” Commissioner Grant Green told 

the Under Secretary of State for Management 

that he viewed AGNA employees’ rogue behavior as “a reflection on the company’s 

culture at all levels ... [and] a reflection in the end on our country at a very critical time 

when we are attempting to win the hearts and minds of the Afghan people.”7

6. Hearing transcript, Commission on Wartime Contracting in Iraq and Afghanistan, September 14, 2009, 

172, http://www.wartimecontracting.gov/images/download/documents/hearings/20090914/CWC_State_

Dept_Contractor_Oversight_Transcript_2009-09-14.pdf

7. Hearing transcript, Commission on Wartime Contracting in Iraq and Afghanistan, September 14, 2009, 

36, http://www.wartimecontracting.gov/images/download/documents/hearings/20090914/CWC_State_

Dept_Contractor_Oversight_Transcript_2009-09-14.pdf

“I am not here to 

defend the 

indefensible.”

Witnesses 

described 

alcohol-fueled 

acts and lurid 

behavior. 

Industry panel at Commission’s 

Sept. 14, 2009, hearing, l-r: 

William Ballhaus, DynCorp; 

Doug Brooks, IPOA; Samuel 

Brinkley, Wackenhut.

Commissioners pose questions 

during the Sept. 14, 2009, 

security-contract hearing.
6

finding:

Lowest-price mandate is inappropriate 

for security at war-zone embassies

As a result of the Commission’s work in September, we find that mandating the 

LPTA evaluation process is inappropriate for contracts involving security of U.S. 

embassies in contingency environments such as Iraq and Afghanistan. Mr. Doug 

Brooks, President of IPOA,8 testified at the September hearing of “a need to have some 

flexibility and [a] need to be able to adjust the resources depending on the level of risk.”9

The State Department is responsible for making U.S. embassies secure, yet the law limits 

their ability to do so in hostile environments by mandating the lowest-price contract rather than 

encouraging the acquisition of best value through trade-offs between price and other evaluation 

factors. The government is forced into an untenable choice between contract termination and a 

re-competition under the same evaluation constraints, or continuing a bad bargain and accepting 

repeated poor performance.

recommendation:

Amend the law to permit best-value competition

The Commission recommends that Congress amend 22 USC 4864 to authorize the Department of 

State to award security service contracts using the full continuum of best-value trade-off evaluation 

techniques as provided in the Federal Acquisition Regulation. 

A new competition is approaching for the U.S. Embassy in Iraq. A decision must also soon be 

made about the future direction of the guard-service contract requirements at the U.S. Embassy in 

Afghanistan. 

Without legislative relief from this restrictive mandate, our embassies will be forced once again to 

struggle with managing low-price, low-quality security contracts. The Commission urges a quick 

response to this recommendation.

8. IPOA was previously known as the International Peace Operations Association.

9. Hearing transcript, Commission on Wartime Contracting in Iraq and Afghanistan, September 14, 2009, 242, http://www.

wartimecontracting.gov/images/download/documents/hearings/20090914/CWC_State_Dept_Contractor_Oversight_

Transcript_2009-09-14.pdf

The Commission on Wartime Contracting is an independent, bipartisan legislative commission established in Section 841 of the National 

Defense Authorization Act for Fiscal Year 2008 (Public Law 110-181) to study federal agency contracting for reconstruction, logistical support, 

and security functions in Iraq and Afghanistan.

C o mmi ss i o n e rs

Michael J. Thibault, Co-Chair; Christopher H. Shays, Co-Chair

Clark Kent Ervin, Grant S. Green, Linda J. Gustitus, Robert J. Henke, Charles Tiefer, Dov S. Zakheim

Executive Director: Robert B. Dickson

1401 Wilson Boulevard, Suite 300

Arlington, VA 22209

703-696-9362

www.wartimecontracting.gov