The committee’s probe comes following a former employee’s whistleblower lawsuit, also joined by the Justice Department, alleging that the company, USIS, had improperly signed off on hundreds of thousands of background investigations that had never been properly vetted — a practice known as “flushing” or “dumping” records. All told, according to the Jan. 22 DoJ complaint, the company dumped more than 665,000 background investigations between 2008 and 2012.
The company currently holds a $2.46 billion contract with OPM to conduct the fieldwork for background investigations. However, the company also holds a much smaller support-services contract — up to $288 million depending on work requested — under which it is responsible for conducting final quality review of those same investigations.
A report published Tuesday by Rep. Elijah Cummings (D-Md.), the ranking member of the committee, reveals that OPM officials interviewed by committee staff allege that USIS “misused” that secondary contract “to obtain information about OPM’s oversight efforts and evade detection of its alleged fraudulent activities for more than four years.”
In a Jan. 8 interview with committee staff, Merton Miller, director of OPM’s Federal Investigative Services division said: “I’m not splitting hairs, but they knew how we were auditing. They knew what kind of reports we generated to oversee that they were actually performing the activities.” Miller also said the company “circumvented our oversight process, and they falsified records to help do that.”
Appearing before the committee Tuesday, the current CEO of USIS, Sterling Phillips, who was not with the company when the alleged misconduct occurred, said the allegations stem from only a small group of employees.
“Since first learning of these allegations two years ago, the company has acted decisively to ensure the quality of USIS’s work and compliance with OPM requirements,” Phillips said in his prepared remarks. “New leadership has been installed, oversight has been enhanced and internal controls strengthened.”
The Justice Department’s complaint alleges that high-level executives, including the former president and CEO of the company, were aware of and even directed the dumping of cases to maximize profits.
“The top people are gone,” Cummings said. “They’ve either been fired or they left, right? They were the ones that were orchestrating this … When you say just a few bad apples, I mean, this is a little bit more than that.”
Cummings said he wants a broader review of USIS, including USIS’ holding company Altegrity, which was formed by Providence Equity Partners after the private equity firm purchased USIS in 2007 for $1.5 billion.
OPM: Contractors won’t perform final reviews
OPM Director Katherine Archuleta told the committee that the agency is phasing out the role of USIS — and any other contractor — in conducting final quality reviews. Currently, about 50 USIS employees perform final checks. But starting Feb. 24, that work will be absorbed by OPM employees. OPM first announced the move last week.
OPM Inspector General Patrick McFarland criticized the practice of contractors performing final quality reviews, telling committee members it was “an absolute conflict” and saying it did “quite a job on the quality” of thousands of background investigations.
OPM has vouched for the quality of the cases that USIS allegedly dumped because all background investigation cases eventually underwent final quality reviews.
But that view is “premature and overly confident,” McFarland said in his prepared remarks. “OPM is assuming that the final closing reviews conducted at the time were sufficient despite the fact that, as OPM’s support contractor, USIS personnel were performing many of the final closing reviews.”
OPM suspended individual USIS employees from working on the contract when it first learned of the allegations, Archuleta told committee members. However the agency hasn’t yet decided whether it will pursue suspending or debarring the contactor, which would block the company from new federal work.
OPM’s actions to bring in house the final quality reviews do not negate the other parts of the underlying support-services contract USIS holds with OPM.
State and local police a hurdle in investigations
Aside from the allegations of fraud, another hurdle in the security clearance process identified by committee leaders is an unwillingness on the part of state and local police departments to share information with background investigators.
As part of a background-investigation process, investigators seek to obtain information from local law enforcement jurisdictions. But because of fuzzy legal interpretations and uncooperative police departments, many local jurisdictions do not share records with federal background investigators.
In fact, OPM maintains a list of 450 jurisdictions nationwide that do not cooperate, “ranging from small counties to entire states, and including numerous areas with large populations,” according to a separate report also released Tuesday by Rep. Darrell Issa (R-Calif.), the chairman of the committee.
That includes the Los Angeles Police Department and the New York City Police Department, which according to OPM records, “does not cooperate in any way, shape or form,” Issa’s report stated.
In some areas, arrest records can only be obtained through court records, but these are frequently incomplete and may not include records of people who are arrested but never charged with a crime.
In the case of Navy Yard shooter Aaron Alexis, who was investigated in 2007, investigators using the FBI database uncovered a 2004 arrest for malicious mischief — when he shot out the tires of a neighbor’s truck — even though Alexis had not volunteered the information. However, the limited data obtained by investigators showed only the arrest and that the charges had been dropped. The actual arrest record contained much more detailed information about the case, including the fact that Alexis told police he shot out the car tires during a “‘black-out’ fueled by anger,” according to the police report. Alexis’ father also later told police he believed his son suffered from post-traumatic stress disorder.
Neither of these details were included in the final background investigation file provided to the Navy, which granted Alexis a secret-level clearance.
During Tuesday’s hearing, Issa mulled over the idea of allowing the government to withhold federal funding from local jurisdictions that withhold information during investigations as one possible solution.
“It is the committee’s intention to provide tools to the executive branch to encourage that compliance,” Issa said.