WASHINGTON -- Before Edward Snowden began leaking national security secrets, he twice cleared the hurdle of the federal government's background check system -- first at the CIA, then as a systems analyst at the National Security Agency.
Snowden's path into secretive national security jobs has raised concerns about the system that outsources many of the government's most sensitive background checks to an army of private investigators and pays hundreds of millions of dollars in federal contracts to companies that employ them.
"You can't outsource national security," said Robert Baer, a former CIA veteran who worked in a succession of agency stations in the Mideast. "As long as we depend on the intel-industrial complex for vetting, we're going to get more Snowdens."
The company with the biggest share of contracts is under a federal investigation into possible criminal violations involving its oversight of background checks, officials familiar with the matter told The Associated Press. They spoke on condition of anonymity because they were not authorized to discuss the investigation.
How Background Checks Work
Even with fresh congressional scrutiny, the federal government appears wedded to the incumbent screening system. Nearly three-quarters of the government's background checks are done by private companies, and of those, more than 45 percent are handled by the U.S. Investigations Services, or USIS, according to the U.S. Office of Personnel Management, the agency overseeing most of the government's background checks.
USIS, which started out with 700 former government employees in 1996 and is now run by a private equity fund, dominates the background check industry, taking in $195 million in government payments last year and more than $215 million already this year.
The OPM turned to private security screeners in the late 1990s because of growing backlogs that were snarling the government's hiring process. A force of 2,500 OPM investigators and more than 6,700 private contract screeners has sliced into those backlogs, reducing the time it takes on average for background screening by 9 percent in 2010.
As of 2012, more than 4.9 million government workers held security clearances. Senior federal appointments are still carefully investigated by FBI agents, and the FBI and the CIA still maintain strong in-house screening staffs to vet their own sensitive positions.
But privatization efforts started during the Clinton administration keep farming out work to contractors. The Defense Department turned over its screening work to OPM in 2004 and even intelligence agencies that conduct their own investigations relegate some checks to private companies.
Rising Cost of Background Checks
The OPM's success has come with mounting government expenditures. The average cost of a background investigation rose from $581 in 2005 to $882 in 2011, according to the Government Accountability Office. At the same time, a $1 billion "revolving fund" paid by federal agencies for most background checks has remained off-limits to outside audits. The White House pledged only recently to provide money for an inspector general's office audit of the fund in the 2014 budget.
The inspector general appointed to watch over the OPM, Patrick McFarland, said at a Senate hearing last month that there were problems with Snowden's most recent screening before he was hired to work for defense contractor Booz Allen Hamilton Inc. as an NSA computer systems analyst.
McFarland did not specify the problems, but he said Snowden was screened and approved last year by USIS. McFarland's office, aided by the Justice Department, is investigating whether USIS exaggerated the extent of its internal reviews of background checks, said two government officials who spoke on condition of anonymity because they were not authorized to discuss details of the two-year inquiry.
Ray Howell, a spokesman for USIS, declined to confirm or discuss the investigation. The company recently said in a statement that it was "not aware of any open criminal case against USIS." Howell did say the company "is cooperating and will work closely with the government to resolve the matter."
Sen. Claire McCaskill, D-Mo., cited the "criminal investigation" of USIS during a June 21 hearing by a Senate Homeland Security and Governmental Affairs subcommittee. Drew Pusateri, a staff spokesman, said McCaskill "stands by her characterization to the subcommittee that we were informed the company is the target of criminal investigation." McCaskill and other senators are pressing for more answers on Snowden's screenings and USIS' performance.
The Washington Post reported that the investigation is focused on whether USIS skipped mandatory internal reviews for at least half its cases between 2008 and 2012 and did not notify the OPM. USIS said it performed nearly 2 million background checks for the government in 2011 alone. The Post also reported, citing anonymous sources, that McFarland's office is considering advising the OPM to sever its massive government contract with USIS.
USIS is one of three top security companies -- the others are KeyPoint Government Solutions Inc. and CACI Premier Technology Inc. -- working under a five-year contract with the OPM worth a total of $2.4 billion.
The inquiry into USIS' conduct is unusual in its focus on an entire company, but law enforcement authorities repeatedly have zeroed in on individual background check investigators in recent years for falsifying reports. At least seven private contract and 11 government investigators have been convicted since 2005, authorities said. Currently, authorities are probing nearly 50 separate cases of alleged falsification by screeners.
The prosecutions have included a young CIA background investigator sentenced to two months in jail in 2010 for fabrications in 80 different reports, and two USIS screeners convicted separately in January and in April for making false statements in background check reports. One convicted USIS screener, Bryan Marchand, had not conducted the interview or obtained the record in more than four dozen reports he submitted to federal agencies, according to the U.S. attorney's office in Washington.
Congress Wants Speedier Screenings
But even as Congress raises alarms about background check problems, it still pushes for speedier screenings. The OPM said the only realistic response is using more workers from private companies.
"Our contractor workforce permits us to expand and contract operations as the workload and locations dictate," said Merton Miller, OPM's associate director of investigations, during a congressional hearing last month.
A series of spot checks on the OPM's screening system in 2009 and 2010 by McFarland's office hinted at lapses by USIS and other private companies. The inspector general warned the OPM that USIS did not flag misconduct issues to OPM within the required time frame.
When OPM was warned that contractors weren't double-checking that documents were valid, the agency responded by modifying its requirement to eliminate the record-check requirement.
A spokeswoman for OPM, Lindsey S. O'Keefe, said the agency adopted 12 of 14 recommendations for improvements.
Baer, who underwent numerous screenings as a CIA operative and whose wife once worked as a background investigator, said that private contract screeners are often paid low wages and pressured by their bosses to meet crushing deadlines -- working conditions that could lead to sloppy investigations and cover-ups. Several former background investigators have sued government contractors in recent years for lost overtime and other wages.
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