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ContractorsBackground-checks company lays off 2,500 after losing government contracts

Published 10 October 2014

USISof Falls Church, Virginia has laid off more than 2,500 employees after it lost contracts with the Office of Personnel Management(OPM) and DHS. Until recently, USIS performed many of the background checks for federal security clearances, but after the firm suffered a cyberattack in August, OPM decided not to renew two major contracts which expired on 30 September 2014.

USIS of Falls Church, Virginia has laid off more than 2,500 employees after it lost contracts with the Office of Personnel Management (OPM) and DHS. Until recently, USIS performed many of the background checks for federal security clearances, but after the firm suffered a cyberattack in August, OPM decided not to renew two major contracts which expired on 30 September 2014.

“The termination of these two contracts eliminates more than 2,500 USIS jobs across the country effective today. For each of the OPM contracts, there are successor contractors who will perform the work. It is our expectation that most, if not all, employees leaving USIS and who are interested will receive job offers by the successor contractors,” a spokesman for USIS said in an e-mailed statement.

According to the Washington Post, the August cyberattack against USIS potentially exposed the records of thousands of government employees. OPM’s in-house team has since been performing some work previously assigned to USIS. The agency also announced that it was exploring other contractors.

CACI International and KeyPoint Government Solutions, both USIS competitors, have seen their background-check work increase. “CACI is actively expanding our workforce to accommodate the anticipated increased level of support to OPM,” Mike Rhodes, CACI’s executive vice president and general manager of background investigations business, said in a statement. KeyPoint chief executive Eric Hess also acknowledged that “recent changes in the supplier channel” have increased the amount of background-check work for his company.

The cyberattack is only one of several problems USIS has had to battle in its federal background-check division. In October 2013, the Justice Department filed a lawsuit against USIS accusing it of defrauding the government over incomplete background checks. Yet, some government agencies, including DHS, continued to issue contracts to USIS. In one case, a separate division of USIS won a $190 million contract from DHS for work other than background checks after the Justice Department lawsuit was filed.

In a letter, Representative Elijah Cummings (D-Maryland), the ranking Democrat on the House Committee on Oversight and Government Reform, requested DHS secretary Jeh Johnson to explain why USIS was awarded the contract. “The purpose of our inquiry is to determine whether the Department considered this billion-dollar fraud suit against USIS before awarding the company a new government contract worth hundreds of millions of dollars,” Cummings said in a statement. “If not, we want to know why not, and whether legislative reforms may be necessary.”

The Government Accountability Office is expected to rule on the case in December.