The Department of Justice headquarters

The Department of Justice headquarters J. David Ake/AP

Top Contractor for Background Checks Charged With Fraud

Justice Department takes on whistleblower’s suit against USIS.

The contractor that performed federal background checks on such headline personalities as National Security Agency leaker Edward Snowden and Navy Yard shooter Aaron Alexis has been accused of fraud by the Justice Department.

Falls Church, Va.,-based USIS, which had already been the subject of a False Claims Act suit filed by former employee Blake Percival, drew the intervention from Justice’s Civil Division because it “failed to perform quality control reviews in connection with its background investigations for the U.S. Office of Personnel Management,” Justice said in a complaint filed Wednesday.

Under the False Claims Act’s qui tam, or whistleblower provisions, a private party is eligible to sue on the government’s behalf and may receive a financial settlement. After a preliminary investigation of Percival’s claims, the department asked a U.S. District Court in Alabama to allow it to file its own complaint against USIS by Jan. 22.

“We will not tolerate shortcuts taken by companies that we have entrusted with vetting individuals to be given access to our country’s sensitive and secret information,” Assistant Attorney General Stuart Delery said in the complaint, which was prepared last fall. “The Justice Department will take action against those who charge the taxpayers for services they failed to provide, especially when their nonperformance could place our country’s security at risk.”

USIS, which has 6,000 employees, has worked for OPM since 1996. Under a contract signed in 2006, the company was required to assign a trained professional to conduct background checks in accordance with OPM’s standards. Instead, USIS used a practice called “dumping,” in which it deployed a proprietary computer software program to automatically release to OPM partially completed background investigations “to meet revenue targets and maximize its profits,” Justice alleged. OPM was billed for as many as 665,000 investigations without knowledge of the dumping, the complaint said.

“This is a clarion call for accountability,” Patrick McFarland, inspector general of OPM, said in a statement in October.“As recent events have shown, it is vital for the safety and security of Americans to have these background investigations performed in a thorough and accurate manner. We can accept no less. Those responsible for any malfeasance that compromises the integrity of the background investigations process must be held accountable.”

In a Thursday statement to Government Executive, OPM Director Katherine Archuleta said, “The case outlined by the Department of Justice is an egregious violation of the public trust, and OPM does not tolerate fraud within our programs. From the moment we learned that there might be an issue with USIS, OPM has worked closely with the Department of Justice and OPM’s inspector general, in addition to conducting our own internal reviews. Given the importance of the background security clearance process, it is imperative that we take steps to hold bad actors accountable and to ensure such practices never happen again . . . In addition to removing USIS employees from the contract, OPM has already implemented a number of reforms to our contracting oversight and operations to strengthen the process.”

An OPM spokesman defended much of the agency’s background check process. “There is a multilayer quality review process in place ensuring that even though this one step in the process was not followed, all 665,000 cases underwent subsequent quality reviews,” he said. “Upon receipt of the cases by OPM, all cases were subject to OPM’s established quality review processes.  Furthermore, once the cases are sent to the agencies, they conduct their own reviews prior to adjudication.  Therefore, regardless of whether a case was or was not dumped by USIS, all of these cases were subjected to a subsequent quality review process.” 

A USIS spokesman said in an email, “The alleged conduct referenced in the civil complaint is contrary to our values and commitment to exceptional service. These allegations relate to a small group of individuals over a specific time period and are inconsistent with the strong service record we have earned since our inception in 1996.  Since first learning of these allegations nearly two years ago, we have acted decisively to reinforce our processes and management to ensure the quality of our work and adherence to OPM requirements.  We appointed a new leadership team, enhanced oversight procedures, and improved control protocols.”

Justice’s move was applauded by Sen. Claire McCaskill, D-Mo., chair of the Senate Homeland Security and Governmental Affairs Subcommittee on Financial and Contracting Oversight, who earlier had disclosed that USIS was under criminal investigation. “By now, the stunning failures of this company -- and the resulting threats to our national security -- are well-documented,” she said in a statement. “But we can’t wait for the next disaster before tackling something as serious as lapses in protecting our nation’s secrets and our secure facilities.”

Legislation to allow OPM to use its revolving fund to audit and probe contractors performing background checks has passed both the House and Senate, but is awaiting reconciliation in conference.