Bloomberg News

Contractor for Snowden Background Check Under Investigation (1)

June 20, 2013

A federal contractor that conducted a background check on Edward Snowden, the former national-security worker who leaked secret documents on U.S. surveillance programs, is under criminal investigation, a lawmaker said.

USIS, a unit of Falls Church, Virginia-based Altegrity Inc., performed the check in 2011, Senator Claire McCaskill, a Missouri Democrat, said at a congressional hearing today.

The probe by the federal Office of Personnel Management’s inspector general is tied to the company’s “systemic failure to adequately conduct investigations,” McCaskill said.

USIS conducts about 45 percent of the background checks contracted out by the personnel office. Closely held Altegrity was awarded $451 million in federal contracts last year.

Snowden, who held a top-secret clearance, is a former National Security Agency contractor who worked for Booz Allen Hamilton Holding Corp. (BAH:US) His disclosures have drawn attention to the government’s process of vetting people who handle classified material.

Passing a background check is a requirement before a federal employee or contractor can be granted a security clearance. The personnel office is responsible for most of them, conducting more than 2 million investigations a year. The federal government spends more than $1 billion annually on clearance probes, according to McCaskill.

Snowden Review

Patrick McFarland, inspector general of the Office of Personnel Management, said he believed there may have been problems with USIS’s review of Snowden.

While the inspector general’s office is investigating the company, McFarland declined after the Senate hearing to say whether it was a criminal probe or whether the investigation was tied to the Snowden matter.

USIS was responsible for a “re-investigation” of Snowden that was tied to his clearance renewal, McFarland said. It isn’t clear who conducted Snowden’s original investigation, which wasn’t done by the personnel office, according to the inspector general’s office.

“USIS has never been informed that it is under criminal investigation,” according to a company statement released after the hearing.

USIS said it received a subpoena in January 2012 from the inspector general of the personnel office. It complied with the subpoena and has “cooperated fully with the government’s civil investigative efforts,” the company said.

Contractor Probe

USIS has been under investigation since late 2011, said Michelle Schmitz, assistant inspector general for investigations.

“A complicated contract fraud case typically takes several years,” Schmitz said at the hearing of two Senate Homeland Security and Governmental Affairs subcommittees. She declined to offer details on why the 2011 probe was initiated.

McFarland said he has been alarmed about the lack of oversight for background investigations. “Our resources remain woefully inadequate, preventing us from performing the level of oversight that such an important program requires,” he said.

In one case, a worker fabricated 1,600 credit checks before it was discovered her own background investigation had been falsified, according to McFarland’s prepared testimony. The company wasn’t identified.

Of 3,500 investigative reports the Pentagon used to make security clearance decisions, 87 percent were missing required documents, a review by the U.S. Government Accountability Office found in 2008.

While 18 investigators, including contract and government employees, have been convicted of falsifying reports since 2006, McFarland said the inspector general’s office lacks the resources to clear a backlog of an additional 36 cases.

He said he believes there may be more fraud beyond the 18 cases.

To contact the reporters on this story: Nick Taborek in Washington at ntaborek@bloomberg.net; Kathleen Miller in Washington at kmiller01@bloomberg.net

To contact the editor responsible for this story: Stephanie Stoughton at sstoughton@bloomberg.net


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