Embattled contractor USIS is facing another challenge as its $210 million contract to provide field support services to the Homeland Security Department is in question.

The Government Accountability Office wants the Citizenship and Immigration Services directorate to reevaluate USIS to determine if it’s indeed a responsible contractor in light of allegations of defrauding the government and an investigation by the Justice Department on those charges.

CIS awarded USIS a contract in July to provide administrative support services to 68 agency field offices and 10 asylum offices. FCi Federal protested the award to GAO saying CIS failed to consider the government’s allegations of fraud by the parent company before making a decision that USIS was a “responsible contractor.”

GAO agreed with FCi Federal’s claims.

“GAO sustained FCi Federal’s protest after concluding that DHS’s affirmative determination of USIS’s responsibility was not reasonable because the agency failed to consider pending allegations of fraud by the awardee’s parent company under another federal contract,” said Ralph White, GAO’s managing associate general counsel for procurement law, in a statement. “An affirmative determination of responsibility is the legal term that describes the threshold finding, inherent in the award of every federal contract, that the company awarded the contract has the capacity, ability, and requisite integrity to perform a contract for the government.”

White said GAO recommended that CIS “reasonably consider whether USIS can be viewed as a responsible contractor, taking into account USIS’s description of its relationship with its parent company, USIS LLC, as well as the specific allegations of fraud raised by the Justice Department against USIS LLC.”

GAO says if USIS is found to be “other than responsible” then DHS should terminate the contract and make award to FCI, if appropriate.

“We are pleased with GAO’s decision to sustain our protest of the FOSS contract award to USIS,” said Sharon Virts, CEO and founder of FCi Federal, in an email statement. “We believe GAO’s decision is the right one and is in the best interest of U.S. Citizenship and Immigration Services and American taxpayers. While DHS determines its next steps, we remain committed to providing the highest level of service in support of this country’s immigration system.”

A USIS spokeswoman said the GAO ruling doesn’t make sense in the light of the facts that USIS’ Professional Services Division (PSD) received an “outstanding” rating during the bid evaluation process.

“PSD won this contract from the incumbent contractor after a rigorous two-year competition, which followed long-standing government procurement procedures, and, since the contract award decision, USCIS has graded PSD’s performance on another significant contract as exceptional or very good across the board,” the spokeswoman said. “As we have stated previously, PSD is not a party to the DOJ civil complaint. The decision in the end is contrary to the best interests of the government and the American taxpayer. We intend to seek reconsideration of GAO’s decision.”

CIS’ award to USIS came under immediate scrutiny by lawmakers, who demanded to know whether or not DHS considered USIS’ history when evaluating proposals.

GAO has not released the full protest decision because it contains sensitive acquisition information. GAO will release a redacted version in the coming weeks.

USIS has been on the hot seat for most of the year when allegations that it submitted at least 665,000 background investigations to the Office of Personnel Management that hadn’t been properly reviewed came to light.

OPM decided not to pick up the option in USIS’ contract for background investigation fieldwork and background investigation support services in September.

In a separate incident, USIS also was victim of a cyber attack that exposed the data of more than 25,000 DHS employees.

USIS has tried to set the record straight after what is said was negative news articles that were misleading and inaccurate.

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