By Matt Haldane and Mark Hosenball
WASHINGTON, June 20 A U.S. government watchdog
is examining a contractor that conducted a 2011 background
investigation into Edward Snowden, the source of recent leaks
about U.S. secret surveillance programs.
Patrick McFarland, the inspector general for the U.S. Office
of Personnel Management, told lawmakers on Thursday that his
office is probing USIS, a Falls Church, Virginia-based company
that is the largest private provider of federal government
The USIS investigation predates the Snowden scandal, but
McFarland told the homeland security subcommittee hearing that
there are now concerns that USIS may not have carried out its
background check into Snowden in an appropriate or thorough
The hearing helped underscore questions lawmakers have
about the widespread use of contractors in sensitive
intelligence work and the oversight of those employees.
Not only is much intelligence work handled by contractors,
but private contractors also conduct roughly 75 percent of
federal government background checks, according to lawmakers.
Snowden, who disclosed details of the U.S. government's vast
phone and Internet surveillance, was a contractor formerly
employed by Booz Allen Hamilton who worked at a National
Security Agency facility in Hawaii.
USIS conducts federal employee background checks for the
Office of Personnel management, the government agency primarily
responsible for overseeing such investigations.
"Yes, we do believe that there - there may be some
problems," McFarland said of Snowden review.
Senator Rob Portman said the government has a history of
flaws in how it deals with security clearances, and said it is
particularly critical to properly vet contractors. "Done poorly
it can be incredibly damaging," said the Republican from Ohio.
Senator Claire McCaskill described the probe into USIS as a
criminal investigation into allegations the company systemically
failed to adequately conduct investigations under its contract.
But USIS said in a statement that it has never been informed
that it is under "criminal investigation". It said it received a
subpoena for records from McFarland's office in January 2012.
"USIS complied with that subpoena and has cooperated fully
with the government's civil investigative efforts," the
statement said. Regarding Snowden, USIS said it does not comment
on confidential background investigations.
Snowden, who is believed to be hiding in Hong Kong, went
public in a video released by Britain's Guardian newspaper on
June 9 as the source of documents about the U.S. government's
An Icelandic businessman said on Thursday he has readied a
private plane to take Snowden to Iceland if the government
grants him asylum.
Snowden had a Top Secret/Sensitive Compartmented Information
Senators at the hearing on Thursday said they were concerned
about whether people receiving top secret clearances are being
"It is a reminder that background investigations can have
real consequences for our national security," McCaskill said of
Snowden's leaks. McCaskill, a Democrat from Missouri, chairs the
contracting oversight subcommittee of the Senate's Homeland
McCaskill said she was worried that there appears to be a
pattern of falsified background checks. She pointed to how at
least 18 investigators handling the checks have been convicted
of falsifying investigations since 2007.
Senators also raised concerns about a 2009 watchdog
investigation that found about 87 percent of OPM investigative
reports used to make clearance decisions had incomplete
Merton Miller, an official in OPM's Federal Investigative
Services unit, said the high number was the result of employers
not cooperating or subjects being deployed to hostile areas
where investigators could not conduct interviews.
He acknowledged his agency needs clearer quality standards.
"Quality is in the eye of the beholder," Miller said.
Separately, Senator Bill Nelson on Thursday called for a
Senate Intelligence Committee investigation into how contractors
are handling employees with top secret clearance.
The Democrat from Florida is concerned there is a pattern of
disturbing incidents. He pointed to a previous scandal in which
Booz Allen Hamilton had hired an employee convicted of lying to
the U.S. government for a position in which he would handle
Senate Intelligence Chair Dianne Feinstein has already
called for legislation that would limit contractors' access to
highly classified information.
McCaskill said USIS also has a contract to support the OPM
by managing and overseeing background investigations, an
arrangement she said appears to put USIS in a position of
oversight of its own work. She added that the company received
$200 million last year from OPM.
Security investigations for federal employees used to be
conducted mainly by a large staff of full-time investigators who
were civil servants at the OPM.
In 1996, the investigative functions of OPM were privatized
and the resulting company, USIS, was awarded a contract with OPM
to conduct background investigations for security clearances on
employees of more than 95 federal agencies.
On its website, USIS says it presently has 100 federal
USIS is owned by a larger investigative company called
Altegrity, which in turn is principally owned by private equity
firm Providence Equity Partners.