Schools security contract gets nod

A D.C. government panel is allowing Hawk One Security Inc. to begin work on a contract to post guards in the District’s public schools while it decides whether to overturn the two-year, $30.3 million award.

The contract was frozen after the outgoing contractor, Watkins Security Agency of DC Inc., filed a legal challenge last month that criticized the bidding process and raised questions about Hawk One’s finances.

In a June 27 ruling, the D.C. Contract Appeals Board lifted a temporary stay issued on the contract after the protest was filed.

“There is no allegation that the transition of performance of services … cannot be made smoothly,” the board stated in its three-page ruling.

However, the future of the contract remains uncertain.

The ruling means that Hawk One can take over the schools security contract while the appeals board decides whether to overturn the award and give it back to Watkins Security, according to legal documents.

Watkins officials had asked the board to suspend the Hawk One contract until the board decides on Watkins’ protest.

But the board denied the request, saying the contract still could be transferred back to Watkins if it wins its challenge.

“There is no indication that the transition from the awardee [Hawk One] back to the protester [Watkins] would not be handled equally well if the protest is sustained,” the board ruled.

In arguing to keep the contract, Watkins officials have said that D.C. officials ignored Hawk One’s unpaid income taxes and did not properly handle the bidding process.

Hawk One owes more than $1 million in unpaid taxes to the Internal Revenue Service, according to city records.

However, city officials have said the company’s finances should not disqualify it because it recently secured a line of credit worth about $20 million.

In addition, Hawk One officials have said that most of the company’s debt stems from losses during the 1980s and 1990s under a different management.

Details of Hawk One’s financial backing have not been disclosed. But city records show that the company signed over a securities interest in assets, including its accounts receivable, or the unpaid customer invoices, to Commerce Funding Corp., of Vienna, Va.

Such agreements, sometimes known as “factoring” or “accounts receivable financing,” provide companies quick access to cash, said Rebecca McEnally, an accounting analyst who has served as a consultant to financial institutions in the United States, Europe and Asia.

“Factoring is very common among small business, especially when they’re having cash flow challenges,” said Miss McEnally, who was not familiar with the Hawk One contract. “It’s one way to raise cash, but it can come at a cost.”

An official at Commerce Funding said last month that the lending company has provided D.C. officials with information about its business relationship with Hawk One.