The government contractor in charge of conducting a background check of the man who later leaked details about classified National Security Agency programs is now under investigation.

Patrick McFarland, the inspector general of the Office of Personnel Management, confirmed to a Senate subcommittee Thursday that his office has been investigating USIS, the government’s largest contractor for background-investigation services, since late 2011.

McFarland and his deputy Michelle Schmitz, assistant inspector general for investigations, declined to provide specifics of the focus of the ongoing investigation, although Schmitz did confirm USIS performed a periodic reinvestigation of Edward Snowden in 2011, which predated the start of the IG’s investigation.

Sen. Claire McCaskill (D-Mo.), chair of the Financial and Contracting Oversight Subcommittee, said the probe is a criminal investigation and is related to “USIS’ systematic failure to adequately conduct investigations under its contract” with OPM.

In a statement released Thursday evening, USIS said it has never been informed it is under criminal investigation.

“In January 2012, USIS received a subpoena for records from the U.S. Office of Personnel Management’s (OPM) Office of Inspector General (OIG),” according to the statement. “USIS complied with that subpoena and has cooperated fully with the government’s civil investigative efforts.”

IG points to ‘insufficient oversight’

The news of the investigation kicked off a Senate subcommittee hearing into lax oversight of the security-clearance process.

Since 2007, at least 18 investigators have been convicted of falsifying investigations, according to testimony. In addition, there are more than 40 additional active inquiries into fabricated investigations.

“These convictions call into question hundreds of top secret-level clearances as well as hundreds of lower-level clearances,” McCaskill said.

In fiscal 2011, OPM conducted 2 million background investigations, according to agency statistics. Currently some 4.9 million government employees and contractors hold security clearances.

However, McFarland said there there is “alarmingly insufficient oversight” of the security-clearance process. There may be “considerably more” fraud that hasn’t been uncovered, he said, because the IG is limited in its ability to investigate OPM’s Federal Investigative Services, which performs 90 percent of the government’s background investigations.

“I don’t believe that we’ve caught it all by any stretch,” he told senators on the committee.

OPM charges individual agencies to perform background checks for their employees and contractors — the first step in obtaining a security clearance. The funding that OPM receives to conduct the checks then funnels into its revolving fund, which the IG is currently barred from using to finance investigations and audits. That has forced the IG to take money originally slated for itS employees’ salaries and expenses to fund the few audits it does of the security-clearance process.

“The lack of independent verification of the organization that conducts these important background investigations is a clear threat to national security,” McFarland testified. “If a background investigation is not conducted properly, all other steps taken when issuing a security clearance are called into question.”

Quantity over quality?

Just 10 years ago, OPM was struggling under a backlog of more than 350,000 open background-investigation cases. Congress stepped in with a 2004 law requiring the agency to process 90 percent of cases within 60 days — spending no more than 40 days on the actual investigating and 20 days adjudicating and otherwise closing out the case.

In the past few years, OPM has consistently met that deadline, which, in part, led the Government Accountability Office to remove security clearances from its annual High Risk List in 2011.

However, the watchdog agency believes OPM is focusing too much on speed and not enough on quality, said Brenda Farrell, director of defense capabilities and management at GAO.

“We have seen results to speed up the processing of initial clearances,” she testified. “But we have not seen results to finish developing metrics for quality of investigations, implement those metrics or report on those metrics’ findings. We have reason for concern about the quality of investigations.”

For example, in a 2009 report, GAO reexamined 3,500 background investigations and found 87 percent of them were missing proper documentation. OPM has, so far, failed to implement GAO’s recommendations to improve the quality of investigations, Farrell said.

“There are challenges associated with capturing every element of a background investigation,” said Merton Miller, the head of OPM’s Federal Investigative Services.

For example, employment history is often hard to piece together, he said, either because an applicant’s previous employer no longer exists or refuses to cooperate with investigators.

Miller said he’s working on an interagency working group — made up of OPM and the Defense Department — to set up consistent quality metrics.

“Today, quality is in the eye of the beholder, depending on the agency, depending on the adjudicator whether it’s complete or not,” he said. “So, there’s a lot of gray area.”

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