http://www.businessweek.com/news/2013-09-19/contractor-behind-snowden-vetting-did-washington-shooter-check

Bloomberg News

Company Behind Snowden Vetting Did Washington Shooter Check (2)

September 19, 2013

Washington Navy Yard

Military personnel walk towards the Washington Navy Yard in Washington, D.C. Photographer: Matt McClain/The Washington Post via Getty Images

The U.S. government contractor that vetted Edward Snowden, who leaked information about national surveillance programs, said it also performed a background check on the Washington Navy Yard shooter.

USIS, a unit of Falls Church, Virginia-based Altegrity Inc., owned by Providence Equity Partners LLC, did Aaron Alexis’s background investigation in 2007, Ray Howell, a USIS spokesman, said in an e-mail. “Today we were informed that in 2007, USIS conducted a background check of Aaron Alexis” for the U.S. Office of Personnel Management, Howell said.

Howell said yesterday that USIS hadn’t vetted Alexis, who killed 12 people at the Navy Yard on Sept. 16 and then died in a shootout with police. Alexis had a secret-level clearance that would have enabled him to get an access card needed to get on the base.

The company can’t comment further because it’s contractually prohibited from retaining information gathered during its background checks for the personnel office, he said.

U.S. lawmakers immediately called for fixes to the government’s vetting system.

“From Edward Snowden to Aaron Alexis, what’s emerging is a pattern of failure on the part of this company, and a failure of this entire system, that risks nothing less than our national security and the lives of Americans,” Senator Claire McCaskill, a Missouri Democrat, said in a statement.

Nation’s Secrets

“What’s most frightening is that USIS performs a majority of background checks for our government,” McCaskill said. “We clearly need a top-to-bottom overhaul of how we vet those who have access to our country’s secrets and to our secure facilities. I plan to pursue such an overhaul, and won’t rest until it’s achieved.”

U.S. Senator Rob Portman, an Ohio Republican, said there is “inadequate oversight of the background check process” that must be fixed through legislation.

“If this doesn’t make it even more clear that this has to be fixed, I don’t know what will,” Portman said in an e-mailed statement.

Patrick McFarland, inspector general of the personnel office, has said there may have been shortcomings in USIS’s vetting of Snowden, a former Booz Allen Hamilton Holding Corp. (BAH:US) employee who worked for the National Security Agency.

Snowden, who leaked information about U.S. electronic surveillance programs, faces federal charges of theft and espionage and is in Russia under temporary asylum.

Criminal Investigation

During a June congressional hearing on background checks, which are required for security clearances, McCaskill said USIS was under criminal investigation.

Merton Miller, associate director for federal investigative services at the Office of Personnel Management, said that the agency “has reviewed the 2007 background investigation file for Aaron Alexis, and the agency believes that the file was complete and in compliance with all investigative standards.”

Once an investigation is complete, Miller said, it’s submitted to the “adjudicating agency” -- in Alexis’s case, the Defense Department -- for review. The personnel office’s involvement with Alexis’s security clearance ended when it submitted the case to the Defense Department.

The Pentagon “did not ask OPM for any additional investigative actions after it received the completed background investigation,” Miller said.

Inspector General

Susan Ruge, associate counsel to the Office of Personnel Management inspector general, today declined to answer questions about whether her office was conducting a criminal investigation of USIS.

Four lawmakers, including Portman and McCaskill, yesterday asked the personnel office’s inspector general to scrutinize Alexis’s background investigation.

The personnel office, which conducts most federal background investigations, paid USIS $253 million for its work last year. The company is the top provider of background checks to the government, which has increasingly outsourced the work.

USIS performs about 65 percent of all background investigations conducted by contractors, and more than half of all investigations conducted by personnel office, according to McCaskill’s office.

Almost 5 million people held security clearances as of Oct. 1, 2012, according to a report from the Office of the Director of National Intelligence. Federal clearances and background checks by the personnel office cost taxpayers about $1 billion last year, with the expense expected to rise to $1.2 billion by 2014, according to McCaskill’s office.

‘Performing Poorly’

The boost in security clearances has led “invariably to corners being cut and contractors performing poorly,” said Neil Gordon, an investigator at the Project on Government Oversight, a Washington-based watchdog group. “This company has a history of employees getting in trouble for performing falsifying background checks.”

This incident, compounded with Snowden’s vetting, “is definitely going to hurt their reputation,” Gordon said of USIS.

The contractor competes with CACI International Inc. (CACI:US) and Keypoint Government Solutions Inc., a unit of Veritas Capital, a New York-based private equity firm.

USIS’s prominence as a background check contractor is due to its origin as the Federal Investigations Division of Office of Personnel Management. The unit, originally known as U.S. Investigations Services Inc., was privatized in 1996 as part of then-Vice President Al Gore’s effort to “reinvent” government by reducing the size of the civil service, according to a 2011 report by the Congressional Research Service.

Save Money

Contracting out security reviews was designed to help save the government money and secure new work for about 700 investigators who would no longer be needed because of a declining security clearance workload due to the end of the Cold War.

USIS was given a non-competitive, three-year contract for investigative work with the government personnel office and granted free access to federal computer databases that weren’t available to other firms.

The Carlyle Group LP (CG:US), a Washington-based private equity firm, and New York-based Welsh, Carson, Anderson & Stowe LP invested in USIS. They agreed in 2007 to sell USIS to Providence, Rhode Island-based Providence Equity Partners for about $1.5 billion.

Falsifying Records

Ten background-check workers employed by contractors have been convicted or pleaded guilty to falsifying records since 2006, according to the personnel office’s inspector general. Eight of them worked for USIS.

In one case, Kayla M. Smith, a former investigative specialist for USIS, submitted some 1,600 falsified credit reports, according to the inspector general’s office.

She pleaded guilty in August 2009 to falsifying one out of three credit checks she performed during an 18-month period, according to a Justice Department statement.

The investigator who had vetted Smith was convicted in a separate falsification case, McFarland said at a June 20 Senate hearing.

On Sept. 16, Alexis, a 34-year-old Navy contractor, entered the Naval Sea Systems Command headquarters with a valid access card. He had a secret-level clearance obtained from the Navy in March 2008.

After leaving the Navy in January 2011, Alexis retained the clearance even with three arrests, a history of mental illness and a record of military misconduct. His clearance was good for 10 years and wasn’t subject to a reinvestigation, according to a defense official who wasn’t authorized to speak publicly and asked not to be identified.

To contact the reporter on this story: Danielle Ivory in Washington at divory@bloomberg.net

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


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