WASHINGTON (Reuters) - The State Department will not renew the contract of a security company embroiled in a scandal involving the U.S. Embassy in Kabul, where guards were accused of drunken conduct and sexual hazing.
State Department spokesman Mark Toner said on Tuesday Virginia-based ArmorGroup would not have its contract renewed when it expires in June, although it will receive a six-month extension to allow the contract to be put up for new bids.
Toner said officials had reviewed the contract and "concurred that the next option year should not be exercised and that work begin immediately to compete a new contract."
He said the review included both recent misconduct allegations against ArmorGroup personnel and the company's "history of contract compliance deficiencies."
This week a report by the non-partisan Government Accounting Office identified a number of shortcomings in the State Department's Bureau of Diplomatic Security including staffing shortage and increased reliance on contractors in high-risk posts.
The Kabul embassy scandal broke in September, when a watchdog group accused ArmorGroup of jeopardizing security at the embassy by understaffing the facility and ignoring lewd, drunken conduct and sexual hazing by some guards -- and provided graphic photos as evidence.
ArmorGroup North America, now owned by Florida-based Wackenhut Services, was also hit by a federal whistle-blower lawsuit that said it had ignored brothel visits by guards and other misconduct because of what a lawyer said was a "myopic preoccupation with profit" in its five-year, $187 million contract with the State Department.
State Department officials said the safety of embassy staff was never in jeopardy.
But they subsequently said 12 embassy guards had been removed or resigned, ArmorGroup's entire senior Kabul management replaced and alcohol banned at the group's camp. Secretary of State Hillary Clinton ordered a thorough review of how contractors are used.
The GAO report noted that worldwide, the U.S. diplomatic security budget had grown to $1.8 billion in 2008 from just $200 million in 1998, when truck bomb attacks on U.S. Embassies in Kenya and Tanzania killed more than 300 people including 12 Americans.
The bureau's workforce has also doubled over the same period but is failing to keep pace with rising security threats including those faced in Iraq and Afghanistan, it said.
"Staffing shortages in domestic offices and other operational challenges -- such as inadequate facilities, language deficiencies, experience gaps, and balancing security needs with State's diplomatic mission -- further tax its ability to implement all of its missions," the report said.
The report urged the State Department to develop a strategic plan to directly address the rising demands of diplomatic security including increased staffing.
Editing by Cynthia Osterman