ABM Security challenging USPS $250 million contracts awarded to Command Security Corporation

ABM Security challenging USPS $250 million contracts awarded to Command Security Corporation

February 1, 2015 – On December 31, 2014, USPS notified Command Security Corporation of the contract awards for approximately $20 million per year to provide security services at 50 USPS locations in 18 states, Puerto Rico and the District of Columbia. The award included a four year base contract and three two-year options. In addition, the USPS awarded the Company a contract valued at approximately $5 million per year contract to operate two USPS National Law Enforcement Communication Centers (NLECC) at Dulles International Airport, VA and in Ft. Worth, TX. The combined value of both contracts were up to $250 million over 10 years.

The Company was initially scheduled to commence a one month transition period for both contracts on February 1, 2015, and assume operational responsibility on March 1, 2015.

ABM Security Services (ABM) had been the security guard services contractor for over 10 years. Pinkerton (a division of Securitas Security Services) is the incumbent contractor for the NLECC services. ABM and Pinkerton’s contracts expired January 31,2015.

Although ABM submitted a proposal under the Solicitation for award of the new consolidated USPS contract –they lost out to CSC.

Earlier this month ABM filed a bid protest (business disagreement) with the USPS contracting officer.

A few of ABM allegations/claims in its protest:

CSC does not meet the Solicitation’s criteria for Supplier Capability, given CSC’s dismal record for integrity and business ethics and its precarious financial position.

CSC’s record of integrity and business ethics should render the company ineligible for award of the USPS contract. CSC has a history of over-billing federal and state government agencies, of questionable internal business practices, and of failures to provide quality service that seriously undermine its ability to perform this contract. Its subsidiary has even been convicted for making false statements to the Federal Aviation Administration (FAA).

ln addition to over-billing he FAA, CSC’s aviation division, Aviation Safeguards, has been found to have lied to the FAA on security matters.

These false statements led to a criminal prosecution of the company and a plea agreement resulting in a conviction of one count of Making False Statement.

CSC touts Aviation Safeguards on its websites “Government” webpage. Having been criminally convicted for lying to  FAA regarding security issues, and having been found to have over-billed the FAA, CSC hardly can be deemed to satisfy the’ record of integrity and business ethics’ required by the USPS.

On June 16, 2003, the New York State Attorney General’s office issued a report of its audit on the use of statewide security guard services contracts. CSC was among the companies audited, and its performance resulted in a settlement and significant payment to New York state for violations of the contract. Particularly troubling for purposes ot USPS’ requirement that the supplier demonstrate a record ot integrity and business ethics, the New York audit concluded that'[t]here were several red flags that caused us to raise the issue of fraud in the invoices from the guard companies.’

CSC has also demonstrated questionable labor practices. On September 19, 2012, twenty members of Congress wrote a letter to Craig Coy, the CEO of CSC, objecting to the company’s failure, among other things, to comply with the City of Los Angeles’s Living Wage ordinance.

In June 2014, FedEx declined to extend a major contract with CSC.

The bid protest was denied and ABM filed an administrative appeal on January 22,2015.

On January 28, 2015 ABM filed with the US Federal court of Claims for a temporary injunction to halt transition of CSC into the security guard services.  However, USPS issued a stay of the contract to CSC pending resolution of ABM’s business disagreement proceedings with USPS. It is expected that this case will be dismissed.

Command Security Corporation issued the following press release:

HERNDON, Va., Jan. 30, 2015 (GLOBE NEWSWIRE) — Command Security Corporation (NYSE MKT:MOC) today announced that on January 29, 2015, the U.S. Postal Service (“USPS”) issued a stay of the transition of the two contracts recently awarded to Command Security Corporation (“Command Security” or the “Company”) pending the resolution of a dispute over the award of such contracts. The contracts at issue were disclosed in a press release issued by the Company on January 6, 2015, and in a Form 8-K filed by the Company with the Securities and Exchange Commission on January 12, 2015. On January 27, 2015, the Company was notified by the USPS that ABM Security Services (“ABM”) had lodged a protest with the USPS seeking to overturn the contracts that were awarded to the Company. Also on January 27, 2015, the Company learned that the USPS denied ABM’s protest on January 20, 2015, ruling that ABM’s grounds for its protest are all without merit. ABM has appealed USPS’s ruling. On January 29, 2015, the Company was notified that ABM had filed an action with the U.S. Court of Federal Claims seeking an injunction to stop the transition of such contracts to Command Security.

The Company strongly disagrees with ABM’s assertion that the contracts were improperly awarded to the Company, and intends to vigorously defend its rights with respect to the contracts awarded to it.

Until the USPS issued its stay on January 29, 2015, the Company was to assume operational responsibility for these contracts on February 1, 2015 and March 1, 2015, respectively. The Company cannot determine how long the stay of the transition of the contracts to the Company will remain in effect or predict the outcome of the dispute, including whether the transition will occur.

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