By Doina Chiacu
WASHINGTON, Feb 11 (Reuters) - Democratic lawmakers on Tuesday sought an investigation of the largest U.S. government contractor for security checks, saying it received huge bonuses during the time it is accused of bilking the government of millions of dollars.
Representative Elijah Cummings said a congressional report found United States Investigations Services "adopted aggressive new financial incentives to accelerate its work" in 2007 and took shortcuts in its review of background checks while charging the federal government for the full service.
The company, the largest private provider of security checks for the government, was accused in a Justice Department lawsuit last month of bilking the government of millions of dollars through improper background checks.
The contractor also received millions of dollars in bonuses from the Office of Personnel Management, including $2.4 million in 2008, $3.5 million in 2009 and $5.8 million in 2010, said Cummings, the ranking Democrat on the House of Representatives Oversight and Government Reform committee.
Dozens of USIS officials, including its two top executives, have resigned or been fired since the scandal broke.
"These revelations cry out for an investigation, but to date the committee has not conducted a single transcribed interview of any USIS employee," Cummings told a hearing on the federal security clearance process.
The OPM's inspector general, Patrick McFarland, told the committee his office believed "that USIS' fraud may have caused serious damage to national security."
OPM Director Katherine Archuleta said contractors were no longer allowed to check their own background reports. Last week, she ordered the quality review process be done only by federal employees. Her agency is in charge of background investigations for security clearances for non-intelligence personnel.
The hearing was prompted by the September killings of 12 people at the Washington Navy Yard. Shooter Aaron Alexis was a Defense Department contract employee who received a "secret" clearance in 2008 despite his involvement in a series of violent incidents and his erratic behavior.
U.S. Representative Darrell Issa, the committee's Republican chairman, opened the hearing by reading out names of the Navy Yard victims. He said its goal was not to target a company or agency but to improve the clearance process.
But criticism quickly turned to USIS when Cummings introduced a Democratic staff report that included information he said was not in the Republican version.
USIS vetted both Alexis and former National Security Agency contractor Edward Snowden, who disclosed secrets about U.S. government surveillance before taking refuge in Russia.
"So why in the world are we continuing the contract with this company?" Democratic Representative Carolyn Maloney asked. "Is the contract too big to suspend?"
The new chief executive of USIS, Sterling Phillips, said all employees implicated in wrongdoing had been let go and the leadership of the company had changed.
"Today, USIS is a strong, responsible contractor," he told the committee.
USIS was bought in 2007 by Providence Equity Partners, a private equity firm.
The Republicans' committee report said possible legislative fixes included requiring continuous evaluation of clearances, which now have to be re-evaluated every five or 10 years.
It said the government needed to determine how Alexis got clearance despite red flags, which included a warning from his mother to his employer that he had "a history of paranoid episodes and most likely needed therapy."
Much of Alexis' background information was not passed on to the adjudicator who granted his clearance, the report said.
Lawmakers suggested federal investigators be allowed to tap tools ordinary Americans use to find out about a specific person: Facebook, Twitter and Google.
The OPM places an almost blanket restriction on internet use, the report said, but social media and search sites "contain a treasure trove of information about their users."
"Is it wise in this day and age not to at least look at the Internet before each and every person is hired?" Issa asked.
Lawmakers also sought ways to ensure that local law enforcement offices fulfill their obligation to provide specific information to background investigators.
The report said local police departments were required by law to cooperate in federal security clearance investigations, but more than 450 offices around the country, including New York, Los Angeles and Washington, do not.