We have heard from a number of security executives about a very disturbing trend taking place when contracting out various services to support security programs. These reports indicate that a decline may be occurring in the integrity and ethical standards of a number of security services providers.
Apparently, a new trend is occurring after a security supplier wins a contract and begins to provide services. Once they have begun, they approach the security executive and advise that they cannot provide the services for which they have been contracted for at the originally agreed-upon fee schedule. The advantage the vendor has is that they know how disruptive it is to change contract security personnel services and the complicating factors surrounding security system component warranties if you change security system integrators. They are willing to roll the dice because they are pretty sure that security executives do not want to have to explain why they are changing vendors so soon and that the corporate legal department does not have the time to deal with disputes that do not involve huge sums of money.
So, let’s examine some of the root causes behind this phenomenon. Procurement organizations in many enterprises have taken control of purchasing decisions relative to outsourced services such as security personnel contracts and security systems integrators. In many cases, the security executive responsible for managing the vendor may not even be allowed to participate in the vendor selection process. The approach of the majority of procurement organizations is focused primarily on squeezing pricing concessions out of their vendors. After all, procurement organizations are generally measured (and rewarded) by how much they have reduced outsourcing and supply chain costs for the enterprise. As the old saying goes, short-term thinking produces short-term results. Few, if any, procurement organizations are measured by the results produced by a vendor during their second, third or fourth year of any agreement.
Another factor is that many enterprises require an automatic discount of two percent or more from security vendors and other suppliers against invoices, simply for the honor of being allowed to do business with the enterprise. Other enterprises charge their vendors a “subscription” or “processing” fee for actually paying invoices associated with the services for which they contracted. The worst part is that many times these fees are not disclosed to the vendor until the vendor actually “registers” as a supplier with the enterprise.
The best course for security executives is to take control of the security supplier selection process. This does not mean blocking procurement from the process, but simply having procurement play a supporting role versus them taking total control of the process. Ultimately, the security executive is the one held accountable… not procurement. If you are interested in taking control of your security supplier procurement process, please e-mail Lynn Mattice at firstname.lastname@example.org, and he will send you a free model process to utilize.