OPM’s breakup with USIS could be a seminal moment

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The Office of Personnel Management’s decision to terminate contracts with background-check-provider U.S. Investigative Services last month could be a watershed moment in government-contractor relations, according to Robert Nichols, a lawyer specializing in government contracts.

Despite having other reputational issues prior to recently suffering a high-profile data breach, which reportedly affected at least 25,000 government employees, "ironically, [it] was a state-sponsored cyberattack on USIS's network that led OPM to say . . . 'We don’t consider you to be a responsible government contractor,'" Nichols, a partner at Covington & Burling LLP, said Oct. 7 at a conference hosted by the National Defense Industrial Association.

The aftermath of those lost contracts could see USIS become a sacrificial lamb to the cause of data security as federal agencies place higher demands on contractors securing their work with government data, he said.

Falls Church-based USIS was no stranger to controversy before it revealed on Aug. 6 it had been the victim of a likely state-sponsored data breach. The Justice Department had joined a civil lawsuit in January alleging the firm left at least 665,000 background checks incomplete over a 4 1/2-year period. The firm also did the background checks for former National Security Agency contractor Edward Snowden and Navy Yard shooter Aaron Alexis, though a company lawyer is quick to point out the government found no wrongdoing in those background checks.

Given that government contractors often handle sensitive, classified data, their margin for error may be smaller than big retail firms that handle civilian customer data, according to Nichols.

"When Target was breached, the interesting thing is everybody still got up and went to Target the next day to shop," he said, referring to when the personal information of between 70 million and 110 million customers was stolen from the retail giant last year. "When a government contractor gets breached, or if they simply don’t have enough systems in place to meet these standards for 'adequate security,' the government cuts them off and that contractor’s out of business, and it may lose its business for years."

The recent cyberattack dealt a significant blow to USIS's business; the firm announced Oct. 7 that it had laid off 2,500 workers as a result of lost contracts with OPM.

On the sidelines of Nichols' presentation at NDIA, John Toomer, director of intelligence, information and cyber systems at Boeing, agreed that the USIS breach and the firm’s loss of government business could shake up security among contractors. Some of the smaller suppliers that Boeing works with were looking at ways of tightening up their cybersecurity since the USIS breach, he said.

About the Author

Sean Lyngaas is an FCW staff writer covering defense, cybersecurity and intelligence issues. Prior to joining FCW, he was a reporter and editor at Smart Grid Today, where he covered everything from cyber vulnerabilities in the U.S. electric grid to the national energy policies of Britain and Mexico. His reporting on a range of global issues has appeared in publications such as The Atlantic, The Economist, The Washington Diplomat and The Washington Post.

Lyngaas is an active member of the National Press Club, where he served as chairman of the Young Members Committee. He earned his M.A. in international affairs from The Fletcher School of Law and Diplomacy at Tufts University, and his B.A. in public policy from Duke University.

Click here for previous articles by Lyngaas, or connect with him on Twitter: @snlyngaas.

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Reader comments

Thu, Jun 25, 2015

I'm a background investigator and do a quality job for a low price and much more efficient and more professional than a federal agent. All the complainers on here deserved to lose their jobs.

Mon, May 25, 2015

The entire security clearance investigation process, in EVERY way, shape,and form,is a complete joke, and a flat out conundrum!!!! I have worked for USIS, Keypoint, and CACI; they're all the same (same turds different smell). This line of work should have never been privitized and incentivized.

Mon, Oct 20, 2014

That's what you get for privatizing government work, especially inherently government work like security clearance investigations!!! So much for the Republican nonsense dishonest rhetoric regarding private companies doing the work "cheaper" and "more efficient." I was a background investigator for CACI and it was a living hell. Worked off the clock and fair labor standards act violations rampant. CACI, like all the rest of the greedy contract companies, care not for the importance of the work they perform but for the $$$ and big fat bonuses paid for executives who do nothing but sit on their rear ends pressuring individuals beneath them to "get the job done." None of these awful private companies have any business placing their greedy fingers anywhere near this important national security function. Absolutely disgusting that we don't really have a government anymore but a secret privatized government siphoning tax dollars from the treasury into the company bank accounts for shoddy work. National security investigations are a complete joke and not anywhere near the covert, expansive, methodical investigations which the public believes them to be. So glad to escape such a god awful corrupt greedy industry. Shame on corrupt OPM for not doing their job to supervise the contract. Shame on the American public for watching Fox News and believing the lies that privatizing the government is a winning move.

Fri, Oct 10, 2014

USIS had been warned for years about security...3 strikes and your out. No one at OPM was compromised just DHS because of their non-compliance.

Fri, Oct 10, 2014

As a former USIS employee, there is plenty of valid issues to use to go after them, but the Snowden/Alexis cases aren't those reasons. By all accounts, these cases were done correctly and signed off by the government. USIS deserves a lot of blame in cutting corners and their horrific track record on employee labor abuses, but not on these two cases.

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