Posts Tagged control risks

Industry Talk: As The Wars Wind Down, How Will The Industry Adapt?

The most vulnerable firms, many in industry say, may be those who have relied on ongoing U.S. military work that is now drying up as the Pentagon “Operational Contingency Allowance” – the additional funding earmarked for the wars – tapers off.
At its peak, the U.S. Commission on Wartime Contracting, a bipartisan legislative commission established to study wartime contracting in Iraq and Afghanistan, estimated there might have been as many as 260,000 contractors in the two countries...
“At the moment, everyone is looking for work that is not OCA-funded,” one industry executive told Reuters on condition of anonymity, saying he expected an era of mergers and even bankruptcies. “It’s going to be like when the tide goes out at the beach and you suddenly find out who has been naked.”

With this post I wanted to identify some trends in the industry that I am seeing as the wars wind down and budgets get tighter. I have posted a couple of articles below that will give you an idea as to what companies are doing and what their strategies are for survival or for growth.

What is interesting with DynCorp and EODT, is their focus on maintaining dominance as to what they are good at. DynCorp is all about aviation and EODT is all about mine clearing. Although both companies do other things in the industry, it is obvious in the posts below that they are taking actions in the market that position them as leaders in these niches.

EODT merging with Sterling International, to form a new company called Sterling Global International is an example of the kind of mergers the top quote was referring too. What is interesting with this move is that for mine clearing operations in the worst parts of the world, you need all sorts of folks to make that happen. From the security to protect those mine clearing technicians to the logistics tail to support an operation. These are all things that EODT did in Iraq and Afghanistan, and by joining forces with SI, they are able to reach other markets. Here is a hint to what they are looking at.

The release said Sterling manages a $175 million weapons removal and abatement program for the State Department, and Kaye said that in comparison to EODT, the Virginia firm is more involved in the work of nonproliferation.
“While the activities that (EODT does) are nonproliferation, they’re much more in a mass-quantity stockpile reduction,” he said. “Sterling is on the forefront of … assisting countries with treaty compliance (and) establishing mine action centers.”
Kaye said Sterling has approximately 150 employees, and the new company will have about 3,500 employees.
After a round of layoffs earlier this year, EODT said it had 250 American employees and 3,000 foreign nationals.
Kaye said Sterling International’s program manager for conventional weapons destruction will remain in that position with the new company……The release said the combined companies will continue to serve existing customers, but will also expand into markets including energy exploration and development and judicial and criminal justice support.

So this new mega mine clearing company will continue to pursue munitions destruction and assist countries in compliance with treaties. I also imagine the Arab Spring is leaving a lot of unexploded munitions all over the place, which if investors want to do business in some of these places, someone needs to remove this dangerous trash of war.

But the big one that perked me up is the mention of energy exploration that was talked about in the next article. One company mentioned was Garda World and their work in Iraq.

Even with U.S. troops gone from Iraq and the number of government contractors down, some companies say they are finding strong demand from energy firms for protection, particularly around Basra in southern Iraq.
“We are as busy as ever and the need has never been greater,” said Pete Dordal, senior vice president at GardaWorld, a global risk management and security services firm. “I don’t want to say it’s a gold rush, but business is very good.”

A gold rush? Interesting, and I imagine that with unrest in the middle east, all energy companies are looking hard at their security and hardening up.  Iraq is just one example of the kind of risk that energy companies are willing to make when it comes to resource extraction in really bad places. Libya is another example, and capable PMSC’s that can protect these energy companies are essential. (11 plus years of war have definitely produced companies that are certainly capable of providing protection in war zones and third world countries)

Another area mentioned was maritime security and the demand for that. Although I am seeing that market getting extremely saturated with companies, all fighting over contracts. But it is an area to get into and I do not see piracy going away any time soon. An example of that is that piracy increased off the west coast of Africa.

The article made a mention of the whole private navies thing, and they are right. I have not seen this get off the ground yet. It’s close, and we will see if it ever sets sail.

One area of business that was brought up in the article was evacuation of clients from countries that have fallen due to the Arab Spring or other disasters. Check out the contract Control Risks had in Libya, and I imagine the company they did this for, paid a pretty penny.

Private security firms, insiders say, evacuated the vast majority of the thousands of foreign nationals plucked from Libya as its civil war erupted early last year. Most were contracted by other private firms, although governments also used them heavily. London-based Control Risks told Reuters last year that China hired it directly to fly hundreds of its nationals out by airliner.

Other areas mentioned or business that I think will add to the market is supporting UN missions like AMISOM, or supporting the post-reconstruction efforts in countries after wars or disasters. Yet again, thanks to the Arab Spring and the wars, and the destruction that has come out of that struggle, there are plenty of places requiring the services of capable companies.

The article ended with an excellent point by Edmond Mulet.

“In some places, contractors might be more effective than some of the troops from contributing nations,” said Edmond Mulet, U.N. Assistant Secretary General for Peacekeeping Operations.
“But the U.N. is simply the sum of its member states and some of them are opposed to the use of contractors in some roles,” he told the conference.

For companies to be marketable, they will have to continue to fight this poor image that the industry is painted with–thanks to the actions of the few. Things like the ISO standards or the ICoC are great for promoting the idea that the industry is trying to correct itself, but there is one thing missing in the industry that I have been hammering on since the beginning of this blog. Leadership.

I believe the secret sauce to the success for all companies, is a focus on fielding good sound leadership to support contracts. It is the leader that will ensure the contract is followed and that operations are sound. It is the leader that will work hard to take care of his people and prevent any actions that might embarrass the company or client. And it is the act of a smart company that supports or grows or hunts down outstanding leaders–and rewards these folks. Leadership, leadership, leadership, and I cannot say it enough.

Clients need good capable contracting leaders as well. Someone that actually cares about constructing a sound contract and cares more about best value and less about what is cheapest. You need a contracting officer who cares–who acts like they are constructing a contract for a doctor who would be assigned to their mother–or a body guard who would be assigned to their mother. Budget constraints will be difficult, but folks must have the courage to do what is right with this stuff.

So the final article is about Dyncorp’s Steven F. Gaffney and his thoughts on the future. I always like hearing what the leaders of companies say, and you can get a real feel sometimes as to what they are optimistic about or concerned about. Here are his thoughts on leadership and what is working in his company.

What have you been focusing on?
It really comes down to: Do you have the right people doing the right things? Are you organized the right way? And the business systems that you have in place — are they strong enough to support the pressures of the business? About 90 percent of our top three levels of leadership are either new to the company or they’re new in position. In two years, we’ve restructured twice around getting to the right market-focused, customer-focused type of organization. We stood up a new business development organization, and we were able to move our win rates from the low teens to close to 50 percent of everything that we bid.

This is very interesting, because he has identified a weakness of the company (I imagine it applies to other companies as well). 90 percent of your top three levels of leadership being new to the company or new in position is not something to cheer about. That is great that the company has re-organized and has achieved a higher ‘win’ rate for contracts, but how can these leaders possibly be effective in carrying out policy if they haven’t a clue about the company’s history or lacks any memory or experience working for the company?

I would also be curious as to why so many new leaders? Is that because of high attrition or is this because of expansion? That is great that the company is winning so many contracts, but if you do not have capable and experienced leaders to implement that stuff, the company is going to have problems.

The other part of interest was the future of the company as the wars wind down?

What’s your strategy as the wars in Iraq and Afghanistan wind down?
I joined the company knowing full well that the changes were going to happen in Iraq and Afghanistan. In fact, many of the programs that we have today — the goal is really to put yourself out of a job. In 2003, when we became one of the largest trainers of police in the Middle East, we knew that the goal was to train a country so that they could perform the function themselves. We’ve been thinking about this issue around what’s next for some time, and that’s why we’ve been working to rebalance our portfolio since I got here. Our aviation business, for instance — today it’s a third of our revenues and half of our earnings. That wasn’t the case two short years ago. A couple months ago, we made a small acquisition in the aviation business to fill a gap that we had, not for the business that we have today but to compete for business two years from now and also get us into the commercial space.

That’s their plan–to rally around aviation. Which is their ‘bread and butter’ and totally makes sense to me, but it would have been nice to hear the other areas of interest.

One area that was not talked about too much in all of these articles was the future of government service contracts as the war winds down. The US government still has a presence in places like Iraq and Afghanistan, and embassies and consulates there and around the world will still require armed security services and logistics. These contracts will continue to be highly competitive as the US continues to reduce involvement in those countries and the available re-construction/COIN related contracts decrease. Training gigs will still be present, but as budgets get tighter and involvement in those countries continues to be politically difficult, eventually that will go away. But we will see how it goes, and there will still be investments in those countries, and the US and it’s partners will still have interest there.

Pretty interesting stuff and we will see how it goes. If anyone has any other ideas or things that I have missed here, by all means please add to the post by commenting below. -Matt

 

Peruvian private security guard, Green Zone Iraq. -Artist Steve Mumford

 

EOD Technology merges with Sterling International
By Josh Flory
October 24, 2012
An East Tennessee defense contractor has joined forces with a Virginia firm.
Lenoir City-based EOD Technology announced Wednesday that it has merged with Reston, Va.-based Sterling International to form Sterling Global Operations.
The new company will be based in Lenoir City, and EODT CEO Matt Kaye will serve as president and CEO of the new venture.
Kaye said Wednesday that the combined companies form “the world’s preeminent conventional munitions disposal organization.”
Asked about the benefits of the deal to EODT, Kaye said that “it really diversifies our customer base. It strengthens our footprint around the world and provides us greater breadth and depth of resources.”
EODT got its start in 1987 as a company specializing in explosive ordnance disposal, and for years specialized in cleaning up contamination at former U.S. military sites. During the George W. Bush administration, EODT branched out into security operations and eventually became a major player in that market.
The company has also received some unwelcome scrutiny in connection with that work, though. In 2010, a U.S. Senate committee criticized EODT for its hiring practices in Afghanistan, and the following year it was revealed that the U.S. State Department had fired the company from a contract to guard the U.S. Embassy in Kabul.
EODT was raided by federal agents in 2010, although no charges have been filed in connection with that episode.
According to a news release, EODT’s employee stock ownership plan acquired Sterling International. Terms of the deal were not disclosed.
The release said Sterling manages a $175 million weapons removal and abatement program for the State Department, and Kaye said that in comparison to EODT, the Virginia firm is more involved in the work of nonproliferation.
“While the activities that (EODT does) are nonproliferation, they’re much more in a mass-quantity stockpile reduction,” he said. “Sterling is on the forefront of … assisting countries with treaty compliance (and) establishing mine action centers.”
Kaye said Sterling has approximately 150 employees, and the new company will have about 3,500 employees.
After a round of layoffs earlier this year, EODT said it had 250 American employees and 3,000 foreign nationals.
Kaye said Sterling International’s program manager for conventional weapons destruction will remain in that position with the new company.
Sterling’s website does not identify the company’s top executives, and Kaye declined to identify the founder or CEO of the company. “He’s asked not to be named,” Kaye said, adding that the individual would stay on as an executive adviser.
The release said the combined companies will continue to serve existing customers, but will also expand into markets including energy exploration and development and judicial and criminal justice support.
The new company will have annual revenues of $150 million.
Story here.
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As Iraq, Afghan wars end, private security firms adapt
Sun, Oct 21 2012
By Peter Apps
On a rooftop terrace blocks from the White House, a collection of former soldiers and intelligence officers, executives and contractors drink to the international private security industry.
The past decade – particularly the U.S.-led wars in Iraq and Afghanistan – provided rich pickings for firms providing private armed guards, drivers and other services that would once have been performed by uniformed soldiers.
But as the conflicts that helped create the modern industry wind down, firms are having to adapt to survive. They must also, industry insiders say, work to banish the controversial image of mercenary “dogs of war” that bedevil many firms, particularly in Iraq.

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Jobs: Team Members-Maritime Security, South Africa

This is cool. Control Risks is opening up shop in South Africa and flying some maritime security positions. This probably coincides with the latest news about South Africa’s view on foreign security companies and maritime security.

I am not the POC or recruiter for this and please follow the directions below if you would like to apply. Also, I have no idea about the weapons and equipment for this contract, or any of the other particulars. So definitely ask those questions when talking with the recruiter. Good luck and I will keep my eyes and ears open for any other companies that set up in South Africa for maritime security work. -Matt

 

Team Members – Maritime Security
Control Risks
Control Risks is a global risk consultancy specialising in helping organisations manage political, integrity and security risks in complex and hostile environments.
We are a medium sized, rapidly growing company. Since our inception in 1975, we have worked with more than 5,000 clients in over 135 countries worldwide. Our renowned expertise, the breadth of our services and the geographical reach of our organisation enables us to help our clients meet their challenges and realise new business opportunities across the world.
Employer Vision:
People should come to work with us because we provide real benefit to many of the world’s leading organisations. In doing so we give our people direct responsibility, career development and the opportunity to work on some fascinating projects in a rewarding, diverse and enjoyable environment.
Job Title:
Team members- Maritime Security
Location:
Mobile, but hub location will be South Africa
Type of Engagement:
Fixed Term Contract
Department:
Crisis Security Consulting (CSC) Middle East
Manager:
Operations Manager, Maritime
Job Purpose:
To provide security services and general guidance to the Master and crew of merchant vessels in transit.
Tasks and Responsibilities:
-Provide general guidance to the Crew and carry out drills, training and preparations for the Transit as agreed with the Master
-Advising and/or assisting with the hardening of the Vessel in accordance with Owners’ instructions and, where applicable, in accordance with the guidance of BMP
-Monitor suspicious vessels or craft during the Transit

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Industry Talk: The EU’s EEAS To Spend €15mn On Private Security Firms This Year

Ashton’s €15-million-a-year special security budget is tiny compared to what member states shell out. According to foreign office figures provided to EUobserver, the UK between mid-2006 and mid-2010 spent €196 million on private security in Iraq alone.

Excellent news for the guys across the pond. In this article they list a bunch of the PSC’s that the EU uses in it’s foreign missions. It also lists the countries that they are using private security in.

The list of companies and the countries goes as follows:

Page Group: Afghanistan

Argus: Haiti, Lebanon, Libya, Yemen and Saudi Arabia.

Control Risks: Israel. 

Saladin: Pakistan.

*The EU foreign corps last year put Argus and Page, as well as French company Geos, Canadian firm GardaWorld and British company G4S on a special shortlist. The listing means that if a new job comes up, the EEAS can hire one of them in a decision which takes just two weeks, instead of a year-or-so, as with a normal EU tender.(from article below)

Very cool and I didn’t know that Argus was such a player in this game?  Here is a clip from their bio page:

Over time the company has specialized in protection, risk assessment and crisis management for international corporations and their foreign branches, but also for international organizations and diplomatic entities located in volatile countries.
Shortly before the end of the conflict in Bosnia and Herzegovina, the company established its business in Budapest, Hungary for strategic and geographic reasons. However, 97% of its activities are currently conducted outside of the European Union.
Argus Security Projects Ltd. currently has 600 staff members permanently deployed worldwide.

What I also like about this list of companies, to include the short list, is that you get an idea as to what the EU thinks is an acceptable company to work with. Both in cost, reputation, experience and capability. Although I will save my judgement on these companies, just because they could have been chosen because they are the cheapest?… It also shows what countries the EU has interest in and that they are compelled to hire private security to accomplish that mission.

The Saudi Arabia mission is obvious for it’s oil. Places like Libya have oil too, and Europe needs that oil bad. So getting into that country and securing their folks while they do their thing is a priority–all so they can influence and get a place at the ‘trough’ there. Before the revolution in Libya, Europe had a high amount of oil imports from Libya, and I imagine that they would like to get that back. Not only that, but get that source back to the level of ‘secure and dependable’. That is not easy and it takes some work in the diplomacy department to get that done. Interesting stuff. -Matt

 

Ashton to spend €15mn on private security firms
March 9, 2012
By Andrew Rettman
Catherine Ashton’s External Action Service (EEAS) is to spend €15 million on private security firms this year as part of broader efforts to protect diplomats overseas.
The money is to cover “fully integrated security services” at its outposts in Beirut, Benghazi, Islamabad, Jerusalem, Kabul, Port-au-Prince, Ryiadh, Saleh and Tripoli.
It will spend another €35 million on hiring day-to-day security staff for the rest of its 136 foreign delegations. Some other places are also considered risky (diplomats are asked not to take families to Baghdad and Monrovia), but do not qualify for the “fully integrated” treatment.
The Afghanistan mission is currently protected by armed, company-logo-wearing ex-military types, including former Nepalese Gurkhas, supplied by London-based firm Page Group. When the EU ambassador leaves his compound, he travels in a convoy of three cars with seven bodyguards. Last year, someone took a pot-shot at his office window while he was briefing staff. In 2010, he was nearly hit by a rocket at a tribal congress.

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Cool Stuff: The Control Risks CEO Blog

     Now this is what I like to see!  The smart company is one that can apply effective strategic communications to their specific market.  This is just one tool that can help you to achieve that kind of communications.

     It is also a way for companies to correct the record or express views on a constantly changing market and world. From business owners/bloggers like Tim Lynch of Free Range International to CEO Eeben Barlow of Executive Outcomes fame, blogs are an excellent tool for both that individual to set the record straight or to attract new business for whatever projects they are working on.

     This simple act also gives potential clients and researchers information that will further help them to make better choices or to create more factual publications/articles. Bravo to Control Risks and CEO Richard Fenning for setting this up and this blog is definitely on my Google RSS Reader. -Matt

Hello and welcome to my blog

December 8, 2010

By Richard Fenning

The aim of this blog is to provide you with an informed perspective, as well as personal observations, on the complex and dynamic challenges faced by ambitious organisations operating on a global stage fraught with risk.

This first blog outlines some of the key global trends that will characterise 2011 and beyond. Urbanisation and mega-cities, the worldwide enforcement of anti-corruption legislation and the dominance of China will all have an impact on global business in the year ahead.

It is easy to feel a sense of weariness when contemplating all these challenges. In part, with good reason; the world can seem perilous and increasingly fragile. And at Control Risks, it can be all too easy to see the world through an excessively risk–shaped prism. Like doctors who think the world is full of sick people, and dentists who must feel that there is nothing else to life than crumbling molars, we encounter some of the most hazardous predicaments on a daily basis. So, in this blog I hope to demonstrate that as well as complexity and hostility, our world is more full of opportunity, and occasional bursts of optimism, than ever before in the planet’s history.

Control Risks CEO Bio

Richard Fenning is the Chief Executive Officer of Control Risks. Before becoming CEO, Richard held a number of other roles with Control Risks including Chief Operating Officer, head of the New York office and Business Development Director. He is a regular speaker on how geo-political risk can impact a company’s operations and on the role of the private sector in fragile and post-conflict states. Richard is also a director of emergency medical relief charity, Merlin.

Link to blog here.

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Disaster Response: PSC’s Come To The Rescue For Massive Evacuations In Libya

     Governments and private companies around the world scrambled Thursday to evacuate citizens and workers from violence-hit Libya, as Italy braced for a “biblical” exodus of up to 300,000 migrants.

     Fears of a full-scale civil war in the North African country prompted countries from Canada to China to scramble to charter ferries and planes to secure their citizens’ safety despite poor communication links and growing violence.

     Thousands of foreigners packed Tripoli’s airport hoping to leave the widening chaos behind.

     I am only scratching the surface here on what private security companies are actually doing in Libya. But to say the least, what they are doing is incredible and life saving.  There are thousands of citizens and clients trapped in Libya, and it is a massive evacuation effort to get them all out. From the oil workers and engineers, to the diplomats and businessmen from all over the world–there is a massive exodus going on in Libya and private security companies are a crucial part of this evacuation.

    One of the pieces of news that jumped out at me was the mention of the British SAS working with PSC’s to rescue British citizens.  There are many of that country’s expats working in Libya, and they are scrambling forces to get in there and rescue folks.  The PSC’s are on the ground already and many are prior service folks with connections to special forces units from all over. It makes perfect sense that they would coordinate with groups like the SAS.  The point I wanted to emphasize here is that it isn’t just private industry or government doing this alone. This is an ‘all hands on deck’ moment, and it takes private industry and government working together to accomplish the task.

     It is also important to note that we are hearing the same kinds of pleas coming from the folks trapped in Libya, that we heard in places like New Orleans during the Hurricane Katrina disaster.  That too was a massive evacuation effort that dwarfed the capabilities of the government and what was available to deploy right then and there. During that disaster, PSC’s were called upon to participate in a massive evacuation effort as well, and their use was driven by the concept of ‘do whatever it takes’ to save people.  That included using private security along with the thousands of fire/police/military units from across the US. Plus, PSC’s can deploy extremely fast and can scale up or down pretty fast to meet the needs on the ground.

     Now on to the future of PSC’s in Libya.  After everyone is evacuated, the next step will be either extracting equipment or protecting it in place.   There are millions, if not billions of dollars worth of equipment in the oil fields of Libya and I just can’t see the companies that either own or leased that equipment willing to just throw it away or leave it to be pillaged and neglected. Not to mention the money lost in oil revenues.  So will we see future contracts like when EO was contracted back in the early nineties to rescue equipment for Ranger Oil in Angola?  Who knows, but I do know that these oil company assets are definitely exposed and extremely vulnerable right now.

     Finally, bravo to SOS International, Control Risks, Blue Mountain Group and all of the other PSC’s for all the work they are doing out there. These guys are saving lives in an an extremely dangerous and chaotic environment and they are the unsung heroes of this historic uprising spreading like fire across the Middle East and Africa. -Matt

BREAKING NEWS… Successful Libyan Evacuation

Control Risks supports clients in wake of Egypt protests

International SOS responds to unrest in Libya

SAS ready to rescue desert Britons

Countries rush to evacuate citizens from Libya

BREAKING NEWS… Successful Libyan Evacuation

Blue Mountain Group News

February, 2011

BLUE MOUNTAIN TEAM HAVE SUCCESSFULLY COMPLETED A SAFE EVACUATION OF CLIENT PERSONNEL FROM LIBYA.

*****

Success has its own rewards, growth is one of them, welcome to the new Blue Mountain Group website.

The Blue Mountain Group is a Special Forces based company that has evolved into four distinct operational divisions (click on the links to the left) specialising in Security, Maritime Security, Driver Training and Adventure.

Each division is specialised and focused on delivering unique quantifiable services which are customer driven and client  focused (please review our news column below and on each of the four main home pages where some of our recent activity can be seen).

In a market saturated with companies offering the ‘best available’ we stand or fall on our reputation.

Please review the services that you are interested in and then allow us to validate these services through demonstration of capability and through our historic client recognition.

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Maritime Security: Firearms An Odd Casualty Of Piracy

     Interesting little article. It kind of reminds me of how some German shipping companies are registering under flags of convenience in order to accomplish the goal of getting armed security on a boat. Desperate times require desperate measures.

     Still, I had no idea that guards on some of these boats were being instructed to throw their weapons overboard before coming into port.  It makes sense to a degree, but it still makes me wince that a weapon is being treated like a disposable razor. Perhaps a new market might emerge for renting guns out in international waters? That way these weapons could continue to be of good use to those that need them. (although maybe that is illegal–who knows?)

     Also, a few companies were listed in this article worth mentioning. They are the OrchidGroupWhisperingBell, and ControlRisks. -Matt

Firearms an odd casualty of piracy

Bradley Hope

Feb 6, 2011

Thousands of guns are being dumped in the ocean by private security companies hired to protect ships against pirate attacks, top security executives say.

As Somali pirates grow bolder and launch attacks further into the Indian Ocean, shipping companies and yacht owners are increasingly using armed security to protect their vessels.

But there are varying laws and regulations about taking weapons into ports across the region, leading some security companies to cut costs and save time by getting rid of their guns before arriving in various countries’ territorial waters.

“This is happening on a daily basis,” said Richard Skinner, the Dubai director at the security company the Orchid Group. “I suspect there are literally thousands of semi-automatic and automatic weapons down there at the bottom of the Red Sea for fish to swim around.”

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