What is a Contract Security Provider?

A contract security services provider, commonly referred to as a security guard company, is an independent security firm hired by businesses, institutions, organizations, and individuals to provide professional security personnel and manage the responsibilities associated with operating a security guard program.

Rather than creating and maintaining an in-house security department, a client can contract with a licensed security company to provide the personnel, management, supervision, insurance, training, scheduling, and administrative infrastructure necessary to operate the security function.

Security guards perform a variety of duties depending on the facility, assignment, and established post orders. Their primary purpose can generally be summarized as:

Detect. Deter. Protect. Preserve. Report.

Typical security guard responsibilities may include:

• Monitoring entrances, exits, and other access points
• Controlling access to facilities and restricted areas
• Conducting foot and vehicle patrols
• Observing and reporting suspicious activity
• Monitoring security cameras, alarms, and other security systems
• Enforcing client policies and established security procedures
• Responding to incidents and emergencies within the scope of their training and authority
• Preparing incident reports, activity logs, and other documentation
• Protecting people, property, and assets
• Maintaining a visible security presence to discourage unauthorized or unlawful activity

In New York, individuals performing security guard functions are generally required to maintain the appropriate state security guard registration. Security personnel must also work within the applicable licensing and employment framework established under New York law. Contract security services are provided through appropriately licensed security agencies, while organizations employing their own security guards may be subject to separate proprietary security employer requirements.

Hiring a contract security company transfers many of the operational and administrative responsibilities associated with maintaining a security workforce from the client to the contractor.

Depending on the contract and scope of services, the security provider may be responsible for:

• Agency licensing and regulatory compliance
• Recruiting and screening personnel
• Hiring and onboarding security guards
• Verifying required licenses and registrations
• Training and continuing education
• Uniforms and equipment
• Scheduling and shift coverage
• Supervision and management
• Payroll administration and payroll taxes
• Workers' compensation insurance
• Unemployment insurance
• Employee benefits, when applicable
• Security vehicles and related operating expenses
• Commercial automobile insurance
• Personnel and disciplinary matters
• Replacement of unsuitable or unavailable personnel
• Maintaining required business and liability insurance
• Managing certain claims arising from the acts or omissions of its employees, subject to the applicable contracts, insurance policies, and law

The result is a security program that can be operated without the client having to build the entire administrative infrastructure of an internal security department.

The security contractor handles many of the responsibilities associated with recruiting, employing, scheduling, supervising, training, and managing security personnel.

Instead of separately paying for wages, payroll taxes, workers' compensation, uniforms, recruiting, training, supervision, and other operating expenses, clients generally pay an established contractual bill rate for security services.

Established security companies already maintain many of the systems necessary to deploy security personnel, including management, scheduling, recruiting, training, insurance, uniforms, equipment, and supervisory resources.

This can allow security services to be established considerably faster than building an internal security department from the ground up.

Security requirements change. A contract provider can generally increase, decrease, replace, or reassign personnel according to the client's operational requirements and the terms of the contract.

If a particular guard is not a good fit for a location, the client can typically request that the contractor replace that individual. The security company remains responsible for handling the employment relationship with its employee, subject to applicable employment laws.

Contract security does not eliminate a client's potential liability. However, an appropriately structured contract can allocate certain responsibilities and risks to the security provider.

The contractor typically maintains insurance and assumes responsibility for managing its employees and certain claims involving their actions or omissions, subject to applicable law, contractual indemnification provisions, and insurance coverage.

Using a contractor does not mean surrendering control over your security program.

Clients can establish security objectives, post requirements, policies, performance expectations, reporting requirements, and other contractual standards while allowing the security provider to manage the employment and day-to-day administrative responsibilities of the security workforce.

A bill rate is the amount a security contractor charges a client for each hour of security service provided.

For example, a client may contract for one security officer for 40 hours per week at an established hourly bill rate.

The bill rate is not the same as the security guard's hourly wage.

A professional security company's bill rate must account for the total cost of delivering the service, which may include:

• Security officer wages
• Payroll taxes
• Workers' compensation
• Unemployment insurance
• General and professional liability insurance
• Recruiting and background screening
• Training
• Uniforms
• Equipment
• Scheduling and administration
• Field supervision and management
• Vehicles and transportation expenses, when applicable
• Employee benefits, when applicable
• Regulatory and licensing expenses
• Administrative overhead
• Operating expenses
• Contractor profit

This is why comparing a contract security bill rate directly to an employee's hourly wage does not provide an accurate cost comparison.

A professional security proposal or agreement should explain how overtime, recognized holidays, emergency coverage, special assignments, and other premium-rate services will be billed.

Depending on the contract, these costs may be incorporated into the regular bill rate or billed separately at an established premium rate.

Clients should understand these provisions before entering into a security services agreement so there are no unexpected costs.

It can. The more useful comparison, however, is not simply guard wage versus contractor bill rate. The appropriate comparison is the total cost of operating an in-house security department versus the total cost of contracting the service.

An organization maintaining an in-house security workforce may be responsible for:

• Recruiting and hiring
• Employee wages
• Payroll taxes
• Workers' compensation
• Unemployment insurance
• Benefits
• Training
• Uniforms and equipment
• Scheduling
• Supervisors and managers
• Overtime
• Employee call-outs and replacement coverage
• Regulatory compliance
• Security vehicles
• Vehicle insurance
• General and employment-related liability
• Human resources and disciplinary matters
• Claims, litigation, and settlements arising from the security operation

With contract security, many of these costs and responsibilities are incorporated into the contracted service.

Neither model is automatically appropriate for every organization.

A proprietary or in-house security department can provide an organization with direct employment and management of its security personnel. However, the organization also assumes the responsibilities and costs associated with operating that department.

Contract security allows an organization to retain substantial control over what its security program is expected to accomplish while outsourcing much of the employment, staffing, supervision, compliance, insurance, and administrative infrastructure required to accomplish it.

For many organizations, the question is therefore not simply:

"What does a security guard cost per hour?"

The better question is:

"What does it cost—and what level of risk do we assume—to operate an effective security program?"

That is where a properly structured contract security program can provide significant operational and financial value.