What is a Security Contract?
What a security contract covers varies depending on the nature of the security services a client requires. However, regardless of the specific duties a customer may require, some common terms clauses should be included.
Client Information
The Company’s Name. Include the full title of the company. An incorporated company must include its registered name and any "doing business as" names.
Addresses, email, and phone numbers. The mailing address, email address, and primary and secondary contact phone numbers are typically covered.
The Service Address. This is the specific location of the services that the company will be providing to the client. If there are multiple locations, include them in the contract so there is no confusion.
Duties and Responsibilities
General Security Services. This section lists the types of services the security company will be providing. It should be as detailed as necessary to convey services. This section may also state whether the services are being provided on an ongoing or temporary basis.
Responsibilities of the Security Company. These may include:
Responsibilities of the Client. These may include:
Compensation
Terms. Compensation may be based on hours worked or a flat fee per event. If you are providing services at an hourly rate , specify the start time, finish time, and any overtime rates earned.
Payment period. Monthly may be preferable, depending on the overall arrangement with the client.
Payments methods. Include acceptable payment methods. These may include checks, electronic fund transfer, credit card, or other methods.
Early termination. The terms for early termination should be spelled out in detail so the company can make plans accordingly.
Security companies take responsibility for the safety and protection of clients’ premises, employees, and customers. A solid, well-drafted security contract is a vital tool that provides protection to security companies by limiting their liability in the event of an incident.
Building Blocks of a Security Contract
Your security contract should essentially reflect what you’ve proposed to your customer over the course of your sales process. Done correctly, your contract should require the customer to agree to something that is consistent with their purchasing decisions. For example, if you provided a specific security package on the proposal, and all parties agreed on that particular package, it should be clearly noted on the contract. You may even find that customers will sign your contract without any changes once they’ve received your proposal. Several key elements should be included on any standard security contract: a detailed description of services to be provided; duration of service; payment terms and conditions; limitations of liability; force majeure; no third party beneficiary; termination provisions; successful event of default provisions; and confidentiality notices.
For a contract to be valid, there must be an offer by one party for a potential exchange with another party, which is then accepted by the other party. To be valid, the agreement must also provide consideration, which means that something of value is being transferred from one party to the other. Thus, in most states payment for services is considered the most basic essential requirement by both parties to form a valid contract. Other essential elements include the following: parties to the contract are identified by names and contact information; proper date of contract; description of services to be rendered; payment terms and price; privacy policies; limitations of liability; indemnity and liability release provisions; and representations and warranties. The scope of services will also be defined and set forth in the security contract, and may include some or all of the following: central station monitoring and dispatch; service database and password management; service and maintenance; technical support and management; repair and replacement of designated equipment; project and system management; installation and assurance of the proper operation of the system; system design and integration; documentation of the system; on-site equipment and inventory management; and troubleshooting of communications issues.
How to Write a Security Contract
The starting point for security contracts is "what is the risk"? The answer to that question will allow the drafter to determine things like insurance requirements, liability caps, indemnification provisions and additional insureds. Second issue addressed in the analysis is "who is the customer"? This issue is more complicated than it seems and can be particularly difficult with entities for whom the security provider is requested (as opposed to the person or entity requesting the security services) or a government contract where the government is really purchasing the service but a contractor is the named party and subcontractor is being used to provide the services. The remainder of the contract should address all the issues that impact the risk and need to be addressed to protect the client. This can include issues like employee issues, weapons policies, background checks, duties of guards, uniforms, schedules, breaks, post orders, reliefs, hours of service needed per month/year, how shifts get filled, replacement of posts, taxing issues, overtime and many other issues that are related to the security service to be provided. Another key factor in drafting security contracts is duration. At the end of a contract, there are multiple options: renewal, extension, termination, go out for bids or see if another company is better than the existing provider. These options can have a significant and negative impact on the providers of security services. Duration can be a significant factor on the front-end as well. In government contracts, the government can and frequently does change the "statement of work" (SOW) by a modification. In these situations, the government requests that the security company either accept the new SOW or negotiate a new contract with a longer term of service. Modifications to the SOW can significantly alter the scope and cost of services. Also, if a security contract has options for additional "option years," the client may believe it is "stuck" with a poor performing contractor when the provider needs significant price increases and does not merit additional extensions. The options should be balanced by minimum commitments to ensure that both parties understand the risks initially and then realize the risk is shared, thereby reducing conflict when the contract nears its end. The issues covered above are the basics of drafting an effective security contract. There is an assumption (a wrong assumption) that the contract provides "full disclosure" of all issues. For security contracts, the reality is that there are so many variables that many are not specific to a specific contract. This means to really draft an effective contract, one must think "outside the box" and address every relevant efficiency. As has been said before – "the devil is in the details." The trick is to make sure that one can agree to the details before the contract is signed.
Security Contract Sample
SECURITY CONTRACT
This Contract is made this day of ________ between __________________ ("Client") and __________, its assigns, at Address, City, State Zip.
Contract Commencement: This agreement shall commence on the ___ day of _____, 20__ and shall consist of the services outlined herein. The renewal of this agreement shall be subject to termination under the provisions of this agreement.
Services Provided: ____________, a licensed security company registered with the State of Texas, hereby agrees to provide security services to protect the Client’s property and assets at: Address, City, County, State Zip.
Client Responsibilities: The Client shall furnish any materials and/or equipment required by the guards to effectively perform their duties as outlined in this contract. The guards shall be responsible for any security devices or equipment provided by the Client.
Contract Amount: FOR AND IN CONSIDERATION OF THE CONTRACTED SERVICES, the Client agrees to pay the Total Amount Fee to _____________ the number of guards listed in the "Services Provided" section. Payments are due on the ___ day of each month.
Official Authorization: This contract may not be assigned, transferred, modified or altered without written consent of both parties or their duly authorized agents. Both parties are duly authorized agents. This agreement constitutes the entire understanding of the parties. This contract, in its entirety, shall be the sole basis for determining the rights of the parties. This contract shall be binding upon the heirs, administrators, representatives, successors or assigns of the parties hereto.
Terms of Payment 1. Unless otherwise specified herein, payment for security services contracted shall be made once a month, in advance, beginning on __________________ _. If a prorated calculation is required because the day of the month was not specified, the amount will be calculated based on _________ hours per day, at the hourly rate and multiply by the number of days as specified by the Client. 2. Payment may be made once every two weeks for construction sites at the same terms and conditions set forth locally. I certify that I have read and agree to the terms of my security contract. I further certify that I have the authority to enter into the contract on behalf of the company I represent, if applicable.
Contract Signatures Client Signature: ________________________________________________________ Client Name (printed): _______________________________________________________
Date: __________________ Contractor Signature: ______________________________________________________ Contractor Name (printed): _______________________________________________________ Date:___________________________ Where appropriate, you can add additional clauses to your security contract, such as a "Governing Law" clause, Confidentiality, Indemnity or Liability waivers, and more.
Security Contracts for Specific Situations
Each security situation is unique; therefore, the checkbox style security contracts may seem too restrictive for some situations. Residential security companies expect to be hired for long-term contracts, and commercial and event security companies need contracts that can accommodate their needs. At the risk of putting the cart before the horse, if you want to craft a win-win contract, you need to begin with a comprehensive security proposal. It is well worth your time to strategize what you offer and how you present it before you put pen to paper. A copy of our 20+ page security proposal template is here to help.
Here are some ideas for customizing your security contract:
- If you are a residential/area patrol and perform a guard tour every time you drive down a street or patrol an area, you are going to have a more aggressive cancellation policy than a company that visits a business or neighborhood on an irregular basis. Some companies make the patrol tour available online to allow the Clients to see actual activity to reduce cancellations.
- Commit to specific hours for staff and insist that your Client commit to the same in order to provide adequate time for training and scheduled employees in advance. No one likes to work overtime or be on call. They will be happier with a more pre-scheduled assignment.
- Give your Client options. Unless you are a smaller company who relies solely on subcontractors , you can have a backup person. When you need a substitute, you need one quickly. Do not rely on your employees to sub for each other. They will take advantage of each other. It is best to have a list of qualified people who can fill in at a moment’s notice. Create a system to reach these people at all hours of the day and night.
- Be clear about the type of communication your Client can expect from you. Just tell them the truth. If you can you be reached any time of the day or night, say so. If your staff is expected to perform their own training, use alternate staff for vacations, etc., or if they may be required to fill in at other locations, let your Client know ahead of time. Later it will do nothing but cause trouble.
- Be clear about what your staff will wear and carry: bullet proof vests, guns, pepper spray or none of the above, and what facilities will be provided to them (e.g., office space, lockers, restrooms, etc.)
- Be clear on how Client can request an additional service. Set a time frame for your Client to submit an additional service request via email. Consider the cost of miscellaneous services. It can be helpful to create a rate sheet for optional services.
Legal Aspects and Compliance
When creating a security contract, it’s essential to hammer out the details in compliance with all applicable local, state and federal laws. Many of the requirements may be applicable to either the work being done, or the personnel being hired for the job.
Some legal considerations to keep in mind:
Compliance with ADA. When a business is hiring security personnel, it’s important to understand that all jobs should be posted with the assumption that any job triggers the protections of the Americans with Disabilities Act. This could include the need to make reasonable accommodations for those with disabilities that can perform the basic job functions of the position.
Licensing and training. Different states have different licensing and training requirements for private security agencies. You’ll need to confirm with state and local authorities that all training and licensing requirements have been met before using your contracted services.
Insurance. Depending on what sort of work security personnel will be doing, you may need additional insurance. For instance, if they’ll be dealing with money, the company may need to add them to a loss of money or robbery endorsement.
Fair Labor Standards Act. If a contracted company isn’t paying workers minimum wage or providing a safe working environment, you could be held legally responsible. Make sure the contracted company has its own workers compensation insurance and maintains minimum requirements according to the Fair Labor Standards Act.
Terms of termination. As with any contract, the details of termination should be spelled out before the contract is signed. Under what conditions can either party terminate the contract? Be sure to make it clear whether a specific period of notice is required, in what way the termination must be communicated, and whether payment is due after termination.
Consideration of subcontractors. Will the company performing the security hiring subcontractors and what insurance and clearance procedures should be followed under the law if they do?
Pitfalls and How to Avoid Them
When creating a security contract, there are some common pitfalls that can lead to problems down the road. In this section of the article, we’ll explore these mistakes and how to avoid them to ensure a solid, enforceable agreement.
A. Lack of specificity defined in the scope of services. It is critical that you clearly set forth the security services that the contractor is going to be performing. If you do not, your contractor may attempt to perform uncontracted for services and then attempt to collect under the contract for those services.
If they haven’t provided a quote to you on the specific services that you are hiring them to perform, don’t use them, period.
If they perform some service they then try to collect for, provide them their own invoice showing the contracted service next to the service they performed they believe you contracted them for in bold and blacked out.
B. Failure to have accident/emergency procedures in the contract. You should require the contractor to immediately report any accidents/incidents to you and then the contractor must file a detailed written report with you within 24 hours after any incident. If they respond to an accident they need to prepare their own report. If you have your own report you would rather use and they use theirs, ask them "why is it you have your company logo on my station".
C. Failure to state who will be responsible for accidents. You need to pay for their liability insurance in the contract which covers your buildings, parking lots, stores, or plazas.
D. Time clearing officer to arrive at duty station. If you do not have specific times that they need to be at the starting station at , then they may randomly appear at any time they feel like it at that station.
E. Payment Terms and Time of Payments – monthly, bi-weekly, and when payment is due. If you do not have in writing exactly when payment is made!!! They may request payment to be made at different times or longer periods of time. You limit the term by a specific number of days after receipt of invoice or check per worked hours and day reporting.
F. Limit expenses to a specified amount (e.g. postage, license renewals, uniforms). If you have not included in the contract who is going to cover any expenses, the company may try to overcharge you for expenses at any time. You need to state that they will need to provide you with proof of the expense (e.g. for uniforms, a weekly vending machine type printer receipt for all uniforms requested by them). You can also keep track of what is used and have them sign when they pick up.
The contractor may also try to charge you for expenses that you did not contract for. For example, if they are providing station guards and company cars for patrol, you contract that the contractor provides the cars, but not the gasoline for the cars. However, contractors have attempted to charge for gas.
G. Late fees. If you do not know what the late fees are, they may try to charge you a higher fee for late payment or bill you later for late fees on previous terms and you may end up paying more than you should have.
H. White out charged fees. Using a pencil shows you that they were previously written in pen. Using white out is transparent and allows you to see what was covered up.