In the past, the U.S. government has often looked to private corporations to address urgent matters of national security or help overcome strategic shortfalls in times of need. From the establishment of the Pinkerton National Detective Agency in 1850, to the use of General Motors factories for weapons systems manufacturing during World War II, and finally to the massive increase in federal contracting in the years since September 11th, 2001 the United States has had a long and tumultuous relationship with federal contractors.
The advantage of these business relationships is that they have enabled the US Government to contract out for services or goods that could not be as adequately acquired through federal acquisition practices. In short, critical needs were met. The fact that fraud also increased was not lost on either the government or contractors, but it was not until contingency operations slowed that accountability was catalogued through the Gansler , SIGIR , and SIGAR  reports. Indeed, the US government has struggled with the speed, efficiency, and bureaucracy of its acquisition practices for some time. Evidence of this is seen in the expanding and contracting of government regulations, especially with respect to the current preferences to utilize commercial practices whenever possible . Some of this is obvious as the government cannot fire and hire as quickly as a private company due to personnel regulations and unions, and therefore cannot increase employee numbers as part of a response to an emergency or shortfall like a private company. In some ways the private model is uniquely adaptable to contingencies in that temporary employment agreements, a tool not usually available to the government and only recently in the form of term appointments, allows vendors to increase and decrease manning commensurate with the contingency.
However, there are some significant disadvantages to outsourcing. The fact that contractors work for the government, often in government offices, but are employees of contractors has muddied the waters. This legal tension has resulted in much controversy over the use of contractor employees to perform functions that are considered inherently governmental . These prohibited activities are listed in sub-part 7.503 of the Federal Acquisition Regulation , but even developing this list has been fraught with confusion and interpretation issues. Additional issues arise when the line between contract employees and government employees is blurred . With USIS, the full range of issues involved with contracting out critical services is on display.
USIS was created in 1996 when the Office of Personnel Management privatized its’ investigate branch as part of a larger government downsizing initiative and grew significantly through rounds of capital investment (notably from the Carlyle Group) and public sale to Altegrity . In FY 2012 USIS received $253 Million of its revenue from OPM, which accounted for 67% of total revenue . The September 11, 2001 terrorist attacks on the United States not only changed the country, but also changed the fate of USIS. After these events the government greatly increased its scope, spending and action around the world ; which eventually resulted in the named contingency operations Operation Iraqi Freedom and Operation Enduring Freedom. Due to the all of this activity the US government found that its infrastructure to hire, vet and place employees was insufficient .
With regard to security clearances the DOD office responsible for clearances and the OPM were found to be falling significantly short of targets, with stories of initial clearance investigations and clearance renewals taking up to a year . This was found to be endangering multiple missions and congress passed the Intelligence Reform and Terrorism Prevention Act of 2004, which mandated new more aggressive timelines for investigation and adjudication of clearances . It was not until the events of the last year and a half that it became clear that this push for faster investigation and adjudication has caused some issues.
While the federal government focus has been on decreasing clearance wait times , two other seminal events have shifted that focus to accuracy in investigations and clearance determinations. The first was the tragic Navy Yard Shooting of September 16, 2013 and the second were the revelations of widespread surveillance by the National Security Agency revealed by Edward Snowden. USIS was subsequently found to have had a part in both investigations.
While these issues highlighted the out-sourcing of security clearance investigations, USIS was already under “criminal investigation” as early as June 2013 . The DOJ brought charges against USIS in January, 2014 for circumventing quality reviews, which led to the charges of false claims for the invoiced work that was not actually completed . This was compounded by a cyber-attack in the summer of 2014 .
For USIS this turned out to be the last straw. Their existing unilateral option contracts with the Office of Personnel Management were not renewed when they expired in September of 2014 ; these contracts were cumulatively valued at $2,456,500,000 (maximum) for three contractors: OPM15-11-C-0015 USIS; OPM15-11-C-0016 KeyPoint Government Solutions; and OPM15-11-C-0017 CACI Premiere . While other agencies have current contracts with USIS, it will be difficult for future government agency contracts considering the responsibility requirements of FAR 9.405 .
The damage done to the United States security clearance process is not fully known, but it is clear that the government is no longer able to meet its security clearance needs. Whether other contracts will be awarded to address the shortfall remains to be seen, but in any case, the future likely holds longer delays for security clearances as the government searches for the balance between bureaucracy and accuracy.
photo: insidepanama.com (license)