ADT Security Services: Spread Far and Thin

Government customers still like ADT Security Services. But its accounting missteps have plagued its credibility.


Gobble up everything in sight, and you may get indigestion. Parent company Tyco International was already collecting security firms when it bought ADT in 1998—and then went right on munching.

Tycos accounting during the growth spurt has been the subject of close scrutiny, and ADT was the source of substantial mistakes. Tyco recently took more than $600 million in charges for the way it amortized ADT customer contracts and handled a dealer program "connect fee." Still, despite the distraction, ADT has kept busy—and apparently in the governments good graces.

The U.S. Marshals Service, for example, has been an ADT customer since before Tyco bought it, hiring ADT to design security systems for judges chambers and detention areas, in bankruptcy courts, military courts, and tax courts. ADT just completed one such project, for $3 million, and has embarked on a similar $2.5 million effort in Seattle.

John Kraus, the Marshals Services chief of judicial contracts, says bidding for federal gigs used to be a lot more competitive. Now, the industry has consolidated, with General Electric, for instance, buying Interlogic and Tyco itself picking up ADT, SecurityLink and Sensormatic. "There arent too many choices anymore," Kraus says, "All those other companies disappeared."

The one-time American District Telegraph Co. is the largest security player left, and has locked up contracts to lock down a wide variety of public facilities, including some of the nations most critical ports.