Contractor responsible for checks on Snowden, Navy Yard gunman cuts 1,200 jobs
The beleaguered company that conducted background checks on former National Security Agency contractor Edward Snowden and Washington Navy Yard gunman Aaron Alexis slashed 1,200 jobs in Butler and Mercer counties this week, days after the federal government ended contracts with the firm worth hundreds of millions of dollars.
The U.S. Attorney's Office in the Middle District of Alabama sued U.S. Investigative Services in January for fraud and breach of contract, claiming the Falls Church, Va.-based company billed taxpayers for at least 665,000 background checks that weren't completed. In July, hackers targeted the company, and the federal government stopped working with it.
Government contracts with USIS expired Tuesday.
At least 400 of the jobs USIS cut are in the Grove City area. The others are at the Iron Mountain facility in Marion in Butler County, company and local officials said.
A U.S. Office of Personnel Management spokeswoman said some investigative work will be shifted to federal workers. The agency extended contracts to KeyPoint Governmental Solutions, with offices in Mercer County, and CACI, with an office in Pittsburgh.
When the Office of Personnel Management cut background check contracts, it cost USIS slightly less than $264 million, or 68 percent of the $388 million in federal government orders it had in 2013, said Brian Friel, government contracts analyst with Bloomberg Intelligence.
Government sanctions for incomplete background checks “could have a more severe impact than losing the contract,” said Tom Devine, legal director for the Government Accountability Project, a nonpartisan public interest law firm.
The government's lawsuit says the company could be liable for three times the damages the government claims.
There's little hope that the company, privatized from the Office of Personnel Management in 1996, can win back background check business in the short term, Friel said.
“They can lobby Congress, but there are no sympathetic ears in Congress right now,” Friel said.
NT Concepts, based in Vienna, Va., signed a contract with the federal government Wednesday to provide support work on background checks, including case screenings, maintaining case files and screening investigative materials, company spokeswoman Susan Forbes said.
The company hired 800 people and plans to hire between 150 and 200 more. Forbes did not say how much the contract was worth, and the government didn't provide amounts.
USIS said it has more than 2,000 employees in a division offering government agencies litigation support, construction surveillance, security consulting and other services.
The federal government paid USIS $11.7 million in performance bonuses each year from 2008 through 2010, according to the government's lawsuit, at the same time its workers were “dumping” background checks, saying they were complete when they weren't.
USIS said in January that it replaced its top management, reinforced its processes and improved protocols.
The company was averaging about 21,000 background check cases a month, according to government records.
Court records show the government lawsuit moved in April from Alabama to U.S. District Court in Washington. Since then, the government has filed and the court has approved several sealed motions that apparently have stayed the case.
John Lechner, chairman of Mercer County commissioners, said USIS employees not hired by other companies might have to relocate to find another job in their career field or go through retraining to get a different job in Mercer County.
“The good news is because of oil and gas industry up here, in spite of all this, our economy is growing. That's no comfort to the people that have lost their jobs, but I'm hoping that the impact to them is going to be short and minimal, that they'll be able to secure employment in their field or in an alternative field,” he said.
Local leaders were relieved to hear that overall job losses apparently will be minimal.
“That was of great concern, because they are good-paying jobs, and they drew from a wide area,” said Ken Raybuck, executive director of the Butler County Community Development Corporation.
The Pennsylvania Department of Labor and Industry said it did not receive a layoff notice, or WARN notification, before USIS cut staff. The U.S. Department of Labor said it didn't have jurisdiction over WARN notices.
A USIS spokesperson said the company met all legal and regulatory requirements but did not comment further.
Staff writer Rachel Farkas contributed. Bill Vidonic is a staff writer for Trib Total Media. Reach him at 412-380-5621 or email@example.com.