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GAO-07-33R 1 (2006-11-08)

handle is hein.gao/gaocrptatyt0001 and id is 1 raw text is: Aeour.tability * Integrity -Rellablfty United States Government Accountability Office Washington, DC 20548 November 8, 2006 The Honorable Stephen C. Preston Administrator Small Business Administration Subject: State Department Contract for Security Installation at Embassies Awarded to 8(a) Joint Venture Dear Mr. Preston: 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/prot~g6 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/prot~g6 relationship is to enhance the capabilities of the prot~g6 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 prot~g6, 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.2 Results in Brief State relied on a waiver of 8(a) competitive thresholds, granted by SBA in 2001, to award the sole-source contract to EmbSEC. However, the waiver was improper because SBA was not authorized to grant it. SBA can authorize sole-source 8(a) awards above the competitive thresholds (1) for specific 1 The purpose of GAO's FraudNET is to facilitate reporting of allegations of fraud, waste, abuse, or mismanagement of federal funds. Allegations are received via e-mail at fraudnet@gao.gov. ' GAO, Department of State Contractfor Security Installation at Embassies, (AO-07-34.1, (Washington, D.C.: Nov. 8, 2006). GAO-07-33R State Department 8(a) Contract Page 1

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