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DOJ Sues Firm That Screened Edward Snowden and Navy Yard Shooter

On Wednesday, the Justice Department filed its long-awaited complaint in a False Claims Act lawsuit against background check contractor U.S. Investigations Services (USIS). In October last year, Justice announced it had intervened in the lawsuit, which was filed in 2011 by former USIS employee Blake Percival. Percival’s complaint is posted here.

The government claims that, from March 2008 through September 2012, USIS defrauded the government by submitting at least 665,000 incomplete background investigations of current or prospective federal and contractor employees, which were used to determine eligibility for access to classified information and suitability for sensitive jobs. Specifically, the government accuses USIS of engaging in a practice known inside the company as “dumping” or “flushing,” through which it allegedly submitted investigations that it falsely claimed were complete and had undergone quality review. The government paid USIS between $95 and $2,500 for each of these 665,000 investigations (about 40 percent of USIS’s total workload during that time period) and also paid USIS more than $11.7 million in annual performance bonuses.

USIS made national news last year as the firm responsible for the background investigations of Navy Yard shooter Aaron Alexis and NSA surveillance program whistleblower Edward Snowden. It is not clear from the government’s complaint whether USIS’s 2011 investigation of Snowden is among the thousands USIS allegedly falsified. (USIS’s investigation of Alexis, conducted in 2007, is presumably outside the scope of the lawsuit.) It also does not state whether USIS’s alleged fraud resulted in any serious security breaches or if any of the allegedly tainted background investigations had to be reopened.

USIS is the federal government’s largest contract provider of background investigations. It has received more than $5 billion in federal contracts since fiscal year 2000. The company was founded in 1996 when it was spun off from the Office of Personnel Management (OPM) as part of the Clinton administration’s effort to “reinvent” government. As The New York Times reported at the time, there was considerable opposition to President Clinton’s plan to privatize background investigations, with members of Congress and even some of USIS’s first employees expressing concerns about quality control. Those concerns grew over the years as private equity firms gradually took over the company, and as USIS faced an increasing backlog of background investigations resulting from the post-9/11 surge in national security hiring.

In addition to the False Claims Act lawsuit, USIS faces criminal investigations by the OPM Inspector General and a federal grand jury over its alleged “dumping”/“flushing” scheme. The scheme is believed to be related to the spate of prosecutions of individual USIS employees in recent years for fabricating background checks. USIS is also mired in civil litigation alleging unfair labor practices by former employees who claim they were forced to work off the clock and during unpaid breaks to keep up with the company’s hectic work schedule. One such lawsuit, a class action filed in California in 2011, reportedly settled out of court for $900,000.

Given the dire legal situation of USIS, we must take this opportunity to again question the wisdom of the government’s policy of outsourcing security clearance work. Are we comfortable with giving contractors such a large role in determining who gets access to the country’s most closely guarded secrets?