U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

87–892 PDF 2014

DC NAVY YARD SHOOTING: FIXING THE SECURITY 

CLEARANCE PROCESS 

HEARING 

BEFORE THE

COMMITTEE ON OVERSIGHT 

AND GOVERNMENT REFORM 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

FEBRUARY 11, 2014 

Serial No. 113–105 

Printed for the use of the Committee on Oversight and Government Reform 

( 

Available via the World Wide Web: http://www.fdsys.gov 

http://www.house.gov/reform 

(II) 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

DARRELL E. ISSA, California, Chairman 

JOHN L. MICA, Florida 

MICHAEL R. TURNER, Ohio 

JOHN J. DUNCAN, JR., Tennessee 

PATRICK T. MCHENRY, North Carolina 

JIM JORDAN, Ohio 

JASON CHAFFETZ, Utah 

TIM WALBERG, Michigan 

JAMES LANKFORD, Oklahoma 

JUSTIN AMASH, Michigan 

PAUL A. GOSAR, Arizona 

PATRICK MEEHAN, Pennsylvania 

SCOTT DESJARLAIS, Tennessee 

TREY GOWDY, South Carolina 

BLAKE FARENTHOLD, Texas 

DOC HASTINGS, Washington 

CYNTHIA M. LUMMIS, Wyoming 

ROB WOODALL, Georgia 

THOMAS MASSIE, Kentucky 

DOUG COLLINS, Georgia 

MARK MEADOWS, North Carolina 

KERRY L. BENTIVOLIO, Michigan 

RON DESANTIS, Florida 

ELIJAH E. CUMMINGS, Maryland, Ranking 

Minority Member 

CAROLYN B. MALONEY, New York 

ELEANOR HOLMES NORTON, District of 

Columbia 

JOHN F. TIERNEY, Massachusetts 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

JIM COOPER, Tennessee 

GERALD E. CONNOLLY, Virginia 

JACKIE SPEIER, California 

MATTHEW A. CARTWRIGHT, Pennsylvania 

TAMMY DUCKWORTH, Illinois 

ROBIN L. KELLY, Illinois 

DANNY K. DAVIS, Illinois 

PETER WELCH, Vermont 

TONY CARDENAS, California 

STEVEN A. HORSFORD, Nevada 

MICHELLE LUJAN GRISHAM, New Mexico 

Vacancy 

LAWRENCE J. BRADY, Staff Director 

JOHN D. CUADERES, Deputy Staff Director 

STEPHEN CASTOR, General Counsel 

LINDA A. GOOD, Chief Clerk 

DAVID RAPALLO, Minority Staff Director 

(III) 

C O N T E N T S 

Page 

Hearing held on February 11, 2014 ....................................................................... 1 

WITNESSES 

The Hon. Katherine Archuleta, Director, U.S. Office of Personnel and Management 

Oral Statement ................................................................................................. 5 

Written Statement ............................................................................................ 7 

Mr. Stephen Lewis, Deputy Director for Personnel, Industrial and Physical 

Security Policy, Counterintelligence and Security Directorate, Office of 

Under Secretary of Defense for Intelligence, Department of Defense 

Oral Statement ................................................................................................. 12 

Written Statement ............................................................................................ 14 

The Hon. Patrick McFarland, Inspector General, U.S. Office of Personnel 

Management 

Oral Statement ................................................................................................. 18 

Written Statement ............................................................................................ 20 

Ms. Susan A. Ordakowski, Vice President, Contracts and Compliance, 

Keypoint Goverment Solutions 

Oral Statement ................................................................................................. 28 

Written Statement ............................................................................................ 30 

Mr. Michael Rhodes, Executive Vice President, Mission Systems and Service 

Business Group, Caci International, Inc. 

Oral Statement ................................................................................................. 36 

Written Statement ............................................................................................ 38 

Mr. Sterling Phillips, CEO, US Investigations Services, LLC 

Oral Statement ................................................................................................. 42 

Written Statement ............................................................................................ 44 

APPENDIX 

Opening Statement of Elijah Cummings, Ranking Member ................................ 80 

OGR Majority Staff Report ‘‘Slipping Through the Cracks: How the D.C. 

Navy Yard Shooting Exposes Flaws in the Federal Security Clearance 

Process’’ submitted for the record by Chairman Issa ........................................ 82 

OGR Majority Staff Report ‘‘Contracting Out Security Clearance Investigations: The Role of USIS and Allegations of Systemic Fraud’’ submitted 

for the record by Chariman Issa ......................................................................... 127 

The court cases regarding Blake Percival submitted for the record by Chairman Issa ................................................................................................................ 141 

April 4, 2011 letter from OPM’s Branch Chief Steven Anderson to USIS 

VP Field Operations, submitted by Chairman Issa .......................................... 144 

Opening Statement by Rep. Stephen Lynch, submitted for the record ............... 146 

Statement of Rep. Gerald Connolly ........................................................................ 149 

A Statement by Brenda Farrell, GAO ................................................................... 151 

Bonus Chart and list of Altegrity Contracts submitted for the record by 

Rep. Elijah Cummings ......................................................................................... 175 

(1) 

DC NAVY YARD SHOOTING: FIXING THE 

SECURITY CLEARANCE PROCESS 

Tuesday, February 11, 2014, 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, 

WASHINGTON, D.C. 

The committee met, pursuant to call, at 9:35 a.m., in Room 2154, 

Rayburn House Office Building, Hon. Darrell E. Issa [chairman of 

the committee] presiding. 

Present: Representatives Issa, Mica, Turner, Walberg, Lankford, 

Amash, Meehan, DesJarlais, Farenthold, Woodall, Collins, 

Bentivolio, DeSantis, Cummings, Maloney, Norton, Tierney, Lynch, 

Connolly, Speier, Duckworth, Kelly, and Lujan Grisham. 

Staff Present: Jen Barblan, Majority Counsel; Molly Boyl, Majority Deputy General Counsel and Parliamentarian; Lawrence J. 

Brady, Majority Staff Director; Ashley H. Callen, Majority Deputy 

Chief counsel for Investigations; Caitlin Carroll, Majority Press 

Secretary; Sharon Casey, Majority Senior Assistant Clerk; John 

Cuaderes, Majority Deputy Staff Director; Carlton Davis, Majority 

Senior Counsel; Adam P. Fromm, Majority Director of Member 

Services and Committee Operations; Linda Good, Majority Chief 

Clerk; Frederick Hill, Majority Deputy Staff Director for Communications and Strategy; Mark D. Marin, Majority Deputy Staff Director for Oversight; Ashok M. Pinto, Majority Chief Counsel, Investigations; Jessica Seale, Majority Digital Director; Sarah Vance, 

Majority Assistant Clerk; Peter Warren, Majority Legislative Policy 

Director; Rebecca Watkins, Majority Communications Director; 

Jaron Bourke, Minority Director of Administration; Aryele Bradford, Minority Press Secretary; Lena Chang, Minority Counsel; Jennifer Hoffman, Minority Communications Director; Peter Kenny, 

Minority Counsel; Elisa LaNier, Minority Director of Operations; 

Juan McCullum, Minority Clerk; and Dave Rapallo, Minority Staff 

Director. 

Chairman ISSA. The committee will come to order. 

Today’s hearing is entitled DC Navy Yard Shooting: Fixing the 

Security Clearance Process. I will now recognize myself. 

The Oversight Committee exists to secure two fundamental principles: first, Americans have a right to know that the money Washington takes from them is well spent, and, second, Americans deserve an efficient, effective Government that works for them. Our 

duty on the Oversight and Government Reform Committee is to 

protect these rights. Our solemn responsibility is to hold Government accountable to taxpayers because taxpayers have a right to 

know what they get from their Government. It is our job to work 

2 

tirelessly in partnership with citizen watchdogs to deliver the facts 

to the American people and bring genuine reform to the Federal 

bureaucracy. This is our mission. 

I now recognize myself. 

Michael Arnold, Kathy Gaarde, John Roger Johnson, Arthur 

Daniels, Richard Michael Riggell, Martin Bodrog, Vishnu Pandit, 

Kenneth Bernard Proctor, Mary Francis Knight, Gerald Read, Sylvia Frasier, Frank Kohler. Typically, these 12 public servants who 

lost their life on September 16, 2013, when a deranged gunman entered Building 197, the headquarters of the Navy Sea Systems 

Command at the Washington Navy Yard, would not be read in the 

Halls of Congress. But I think today, as we look into why we are 

here, we are not here to embarrass the companies, we are not here 

to embarrass the Office of Personnel Management, but we are here 

to recognize that a horrendous act of violence occurred, one in 

which we believe, in all likelihood, best practices in employment 

could have prevented this. 

But more than that, this was a deranged individual who had a 

security clearance. So more than simply the question of whether or 

not he should have been employed, or should have been in therapy, 

or should have been incarcerated, we are asking the question of 

when we go beyond simply an employment look, but in fact a secured employment look, how could we miss someone who had repeatedly used a weapon in a deranged way: flattening tires with a 

gun, shooting holes in the roof of his own house simply because 

someone was making too much noise? These are not the acts that 

an employer would accept and allow somebody to have access to a 

building and access to a building in which they committed unspeakable acts. 

This hearing will not deal entirely with management practices in 

hiring of Federal employees; it will primarily deal with the 4.9 million Americans holding security clearances, because the standard 

for security clearances should be higher than those for employees. 

But as a former employer, I must tell you I am disappointed that 

the system is not in place to catch every person of this type of history, no matter whether they had a security clearance or not. 

This committee has been conducting a bipartisan investigation 

into the facts and circumstances surrounding this incident. My 

partner, Mr. Cummings, and the entire committee staff on both 

sides, have in fact seen glaring mistakes in the existing Federal security clearance process as a whole. Over the course of our fourmonth investigation, these questions have come up: Why did the 

Federal Government grant security clearance to a man with a 

known violent criminal past, one he attempted to cover up? Why 

didn’t the Federal Government revoke that clearance when his unstable mental condition raised red flags? 

We, again, are not here to point fingers specifically at this, but, 

rather, those 12 names I mentioned are names that should not 

have died in vain without real change. 

I want to thank the ranking member for being my partner in 

this. I want to make it very clear that this is not a problem created 

by this Administration; this is a problem of bureaucracy, longstanding, but no longer can we stand for it. We owe that much to 

the families of each of the victims. 

3 

With that, I now recognize Mr. Cummings for his opening statement. 

Mr. CUMMINGS. Thank you very much, Mr. Chairman. 

There is no doubt that we need to conduct a thorough—and when 

I say thorough, I mean thorough—investigation to determine how 

Aaron Alexis was able to obtain and keep a security clearance 

given his troubling background. We owe this to the families of the 

12 people he killed and the others he injured, as well as all Americans who rely on the background check system to protect our national security. 

Mr. Chairman, I want to thank you and your staff for a bipartisan approach on this investigation. Our work has the potential, 

and I do say the potential, to stand as an important part of this 

committee’s legacy if we follow through on these efforts. 

Here is what we know so far: First, Alexis obtained a security 

clearance from the Navy in 2008, and his background investigation 

was conducted by U.S. Investigation Services, USIS. USIS is the 

single biggest contractor that performs background investigations 

for the Office of Personnel Management, completing more than the 

Government or any other contractor. 

Four years before Alexis got his clearance, he was arrested in Seattle for shooting out the tires of someone’s car. USIS did not obtain a copy of that 2004 report, and OPM did not require one because the City of Seattle refused to cooperate with similar requests 

in the past. Something wrong with that picture. Instead, USIS obtained a summary that omitted references to the weapon and said 

only that Alexis was charged with malicious mischief. If USIS and 

the Government had obtained a copy of that arrest report, perhaps 

Alexis’s clearance would have been denied. Under its contract, 

USIS also was required to conduct a quality review of its background investigation of Alexis. However, nobody has confirmed that 

USIS did that quality review; USIS has not confirmed it, nor has 

OPM, and, interestingly, nor has the inspector general. 

In 2011, a long-time USIS employee, its director of fieldwork 

services, accused USIS of a massive conspiracy to bilk the United 

States taxpayers. Let that sink in. Although USIS was required to 

conduct quality reviews of all of its background investigations, this 

official reported that USIS was ‘‘dumping’’ unfinished cases and 

billing OPM for work anyway. Inexplicably, USIS also had a separate contract with OPM to conduct additional quality reviews on 

behalf of the agency. In other words, USIS was checking its own 

work. 

In January, the committee conducted a transcribed interview 

with Merton Miller, OPM’s associate director of Federal Investigative Services. He accused USIS of using information obtained 

through its second contract to evade detection of its fraud under 

the first. He said this: ‘‘They circumvented OPM’s oversight of their 

performance of their quality review. I am not splitting hairs, but 

they knew how we were auditing.’’ He continued, ‘‘They knew what 

kinds of reports we generated to oversee that they were actually 

performing the activity, so they circumvented our oversight process 

and they falsified records to help do that.’’ 

The Department of Justice has now determined that these allegations have merit and filed a false claims suit seeking more than 

4 

$1 billion from USIS, claiming that the company charged taxpayers 

for work it never performed on, ladies and gentlemen, listen to this, 

on 665,000 background investigations from 2008 to 2012. We are 

better than that. The Department stated, ‘‘USIS management devised and executed a scheme to deliberately circumvent contractually required quality reviews of completed background investigations in order to increase the company’s revenues and profits.’’ 

In 2007, USIS was purchased by a private equity firm known as 

Providence Equity Partners. The committee’s investigation revealed 

that, directly after the acquisition, USIS adopted aggressive new financial incentives to accelerate its work. During this period, USIS 

executives received huge bonuses, including more than $1 million 

for the company’s CEO, Bill Mixon, and about $470,000 for the 

company’s chief financial officer. 

As I close, the Justice Department alleges that both officials were 

‘‘fully aware of and, in fact, directed the dumping practices.’’ USIS 

also received millions of dollars in bonus payments from OPM, and 

I would like to know why that is, for its seemingly incredible 

progress, including $2.4 million in bonuses in 2008, $3.5 million in 

bonuses in 2009, and $5.8 million in bonuses in 2010. That is taxpayer dollars. In the wake of this scandal, the company’s CEO, 

CFO, and nearly two dozen other officials have resigned, been terminated, or left the company. In fact, just yesterday, yesterday, 

USIS informed us that the president of its investigation services division has also now resigned. These revelations cry out for an investigation, but to date the committee has not conducted a single 

transcribed interview of any USIS employee. 

Mr. Chairman, I know you wanted to focus first on OPM’s oversight, and I do too, but given what we have now uncovered, these 

serious allegations must be investigated. While I have no objection 

to Mr. Phillips being here today, he was hired only last year and 

has no firsthand knowledge of these allegations. We should investigate, as we should in any case like this, how bonuses and incentives were paid to USIS executives—and, by the way, I want to 

know that from OPM—as well as the roles played by Providence 

Equity Partners and Altegrity, the holding company formed to 

house USIS. 

Finally, Mr. Chairman, I appreciate that your staff provided us 

with a draft of your report last week, but I regret that you issued 

it yesterday without including most of the information about USIS 

that we asked to be included. For these reasons, I am issuing my 

own staff report today that provides that information, and I ask 

that it may be a part of the record. 

Chairman ISSA. Without objection, the minority comments, in addition to the majority staff report, will be joined, and I share with 

the gentleman that, assuming the Department of Justice will concur, that we will be doing further transcribed interviews. 

Mr. CUMMINGS. Thank you very much. I really appreciate that, 

Mr. Chairman. 

Chairman ISSA. Thank you. 

All members may have seven days to submit opening statements. 

We now welcome our panel of witnesses. 

Mr. Sterling Phillips is the CEO of US Investigations Services, 

LLC; we are joined by the Honorable Katherine Archuleta, who is 

5 

the newly named Director of the U.S. Office of Personnel Management, or OPM; Mr. Stephen Lewis is the Deputy Director of Personnel, Industrial and Physical Security Policy at the Department 

of Defense; the Honorable Patrick McFarland is the Inspector General of the U.S. Office of Personnel Management, again, OPM; and 

Ms. Susan Ordakowski is the Vice President of Contracts and Compliance at KeyPoint Government Solutions; and we are joined by 

Mr. Michael Rhodes, who is the Executive Vice President, Mission 

Systems and Services Business Group, for CACI International, Inc. 

Pursuant to the rules, I would ask that you all please rise and 

take the oath, and raise your right hands, please. Do you solemnly 

swear or affirm that the testimony you are about to give will be 

the truth, the whole truth, and nothing but the truth? 

[Witnesses respond in the affirmative.] 

Chairman ISSA. Please be seated. Let the record reflect that all 

witnesses answered in the affirmative. 

In order to allow time for this large panel, I would ask that you 

all observe strictly the five minute clock. Your entire opening statements are in the record, so your comments may be completely in 

addition to that, if you would like. 

With that, we first recognize the gentlelady, OPM Director Katherine Archuleta. 

WITNESS STATEMENTS 

STATEMENT OF THE HONORABLE KATHERINE ARCHULETA 

Ms. ARCHULETA. Chairman Issa, Ranking Member Cummings, 

and members of the committee, thank you for inviting me to testify 

today regarding the role of U.S. Office of Personnel Management 

in the Federal security clearance process. I appreciate the committee’s oversight of this matter and I want you to know how deeply 

committed I am to ensuring the integrity and the efficacy of our 

programs and our products. 

Understandably, this issue has come under greater scrutiny since 

the tragedy at the Washington Navy Yard, which took the lives of 

12 people and injured 8 more. I want to express my deepest sympathies and condolences to those who lost loved ones in the Navy 

Yard tragedy. I can only imagine the anguish felt by the families 

of those affected by this senseless attack, and those individuals are 

in my thoughts and in my prayers as they move forward in light 

of this awful event. 

OPM plays a critical role in protecting our national security. We 

conduct more than 2 million investigative actions each year for 

over 100 Federal agencies. This represents 95 percent of all background investigations. Each agency is responsible for determining 

whether an individual requires clearance and adjudicating eligibility for access to classified information. OPM provides the background information for many agencies to make an informed decision about security clearances. 

Since arriving at OPM three months ago, I have made this issue 

a top priority. Of central importance to me are addressing legitimate questions about the background investigation process and 

working with DOJ and OPM’s Office of Inspector General to investigate the outrageous allegations of fraud by one of our contractors. 

6 

Let me be clear: OPM does not tolerate and has never tolerated 

fraud in any form. It is wholly inconsistent with OPM’s core values 

and does not reflect the integrity and the dedication of hardworking OPM employees. When any allegation of fraud is brought 

to OPM’s attention, OPM works closely with DOJ and OPM’s OIG 

to bring those involved to justice. 

The case against USIS outlined in the complaint filed by DOJ 

raises grave concerns of an egregious violation of the public trust. 

Since we learned about these issues, OPM has taken steps to improve the oversight of our contracts, remove contractor employees 

from the contract, and strengthen our overall operations. It is imperative that we have a process in place that meets the highest 

standards of quality, efficiency, timeliness, and integrity; the American public expects no less and so do I. 

At the President’s direction, and under the leadership of the director of OMB, OPM has been working with its colleagues on the 

Sustainability and Security Performance Accountability Council to 

review the Federal security clearance and suitability processes. The 

background investigation program is a complex undertaking and 

OPM is vigilant in ensuring the highest standards of quality. 

Mr. Chairman, I have made this issue one of my top priorities. 

Starting last week, I directed that the quality review process conducted by OPM be fully federalized. We no longer have contractors 

participating in our ongoing final federally controlled quality process. Having Federal employees now perform this function acts as 

an internal quality control, preventing any contractor from performing the final quality of review of its own work. 

OPM remains committed to developing effective, long-term policies and processes for ensuring high quality review standards. As 

the largest provider of investigative products, OPM recognizes that, 

in a rapidly changing world, the background investigation program, 

and the security clearance process in particular, must keep up with 

the times while continuing to meet existing demands. 

We continue to work with ODNI as the security executive agent 

and our other reform partners to ensure that we have processes in 

place that meet the high expectations set by Congress, our interagency partners and, most importantly, the American public. As 

the new director of OPM, I look forward to working with this committee to ensure the highest quality of background investigations 

through strong leadership, accountability, and forward thinking. 

Thank you for the opportunity to testify today, and I welcome 

any questions you may have. 

[Prepared statement of Ms. Archuleta follows:] 

7 


Insert offset folio 1 here 87892.001
8 


Insert offset folio 2 here 87892.002
9 


Insert offset folio 3 here 87892.003
10 


Insert offset folio 4 here 87892.004
11 


Insert offset folio 5 here 87892.005
12 

Chairman ISSA. Thank you. At this time I ask unanimous consent that the cases filed in the Alabama court, entitled Blake Percival v. U.S. Investigation Services, Inc., and the second one entitled United States of America ex rel Blake Percival v. U.S. Services 

be placed in the record. Without objection, so ordered. 

Chairman ISSA. We now go to Mr. Stephen Lewis. 

STATEMENT OF STEPHEN LEWIS 

Mr. LEWIS. Chairman Issa, Ranking Member Cummings, and 

distinguished members of the committee, I appreciate the opportunity to appear before you today to address the practices and the 

procedures in the Department of Defense regarding the personnel 

security clearance process. I am here today on behalf of Under Secretary of Defense for Intelligence Michael Vickers, who serves as 

the principal staff assistant to the secretary and deputy secretary 

for security matters. 

In addition, the USDI is the senior official for DOD’s personnel 

security program and has the primary responsibility for providing 

oversight, guidance, and development for policy and procedures 

governing civilian, military, and industrial-based personnel security programs within the DOD. 

In order to address the Department’s personnel security policies 

and practices, I believe it is important to first identify the national 

level policy framework. Executive Order 13467 designates the Director of National Intelligence as the Security Executive Agent 

with the responsibility to develop uniform policies and procedures 

to ensure effective completion of investigations and determinations 

of eligibility for access to classified information or to hold National 

Security Positions, as well as reciprocal acceptance of those determinations. 

In addition, E.O. 13467 designates the Director of the Office of 

Personnel Management as the Suitability Executive Agent with 

similar responsibilities for those who have positions that require 

eligibility for logical and physical access to Federal Government installations and information systems. 

Finally, 13467 creates a Performance Accountability Council, 

chaired by the Deputy Director for Management in the Office of 

Management and Budget, and includes the DNI and the Director 

of OPM with the responsibility to ensure alignment of suitability 

security and, as appropriate, contractor employee fitness investigative and adjudicative processes. 

With regard to the oversight roles and responsibilities within 

DOD, the heads of DOD Components are responsible for establishing and overseeing implementation of procedures to ensure 

prompt reporting of significant derogatory information, unfavorable 

administrative actions, and adverse information related to its personnel; and this information goes to appropriate officials within 

their component and, as applicable, to the DOD Consolidated Adjudication Facility. This responsibility applies to military service 

members, DOD civilians, and embedded contractor personnel. 

Under the National Industrial Security Program, cleared contractors are required to report adverse information coming to their attention regarding their cleared employees. In addition, the Defense 

Security Service is responsible for conducting oversight of compaVerDate Aug 31 2005 14:17 May 30, 2014 Jkt 000000 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 C:\DOCS\87892.TXT APRIL
13 

nies cleared to perform on classified contracts for DOD and 26 

other Federal departments and agencies that use DOD industrial 

security services. 

The Department has worked very hard to create improvements 

that produced greater efficiencies and effectiveness in the phases of 

initiating and adjudicating background investigations. In 2011, the 

Government Accountability Office removed DOD’s personnel security clearance program from its high risk list. 

We have used multiple initiatives to review and confirm the 

quality of the investigative products we receive, the quality of our 

adjudications, and the accuracy and completeness of the documentation of adjudicative rationales in support of oversight and 

reciprocity. In addition, we have implemented a certification process for DOD personnel security adjudicators. 

I thank you for your time and look forward to answering your 

questions. 

[Prepared statement of Mr. Lewis follows:] 

14 


Insert offset folio 6 here 87892.006
15 


Insert offset folio 7 here 87892.007
16 


Insert offset folio 8 here 87892.008
17 


Insert offset folio 9 here 87892.009
18 

Chairman ISSA. Thank you. 

Mr. McFarland, you are recognized for five minutes. 

STATEMENT OF THE HONORABLE PATRICK MCFARLAND 

Mr. MCFARLAND. Good morning, Chairman Issa, Ranking Member Cummings, and distinguished members. 

Recent events, including the horrific actions of Aaron Alexis and 

the unauthorized disclosure of classified information by Edward 

Snowden show how critical it is to continuously improve and 

strengthen the background investigations process. I am grateful 

that the committee is holding this hearing and taking steps to address this issue. 

The U.S. Office of Personnel Management carries an immense responsibility regarding its critical role in safeguarding our Country’s 

national security. There is no other entity of the Federal Government that serves in the capacity of a first responder to such a vast 

linkage of current Federal employees and the constant flow of applicants for Government positions. 

The background investigations OPM performs are the very first 

step in determining whether a person deserves the trust of the 

United States and should be permitted access to restricted areas 

and sensitive information. Director Archuleta has requested several 

briefings from us on the issue and we are very appreciative of her 

strongly stated support for our work. 

We performed an in-depth examination of Mr. Alexis’s background investigation, which was conducted by USIS in its role as 

a contractor for OPM’s Federal Investigative Services. During this 

review, we found that although the OPM procedures in place at 

that time were followed, other steps, such as directly contacting the 

King County District Court, could have provided critical additional 

information. 

The committee’s recently released report entitled Slipping 

Through the Cracks contains a straightforward analysis that shows 

several weaknesses in the background investigation process and 

contains multiple recommendations that I believe will greatly 

strengthen OPM’s program. The Office of the Inspector General is 

ready and willing to offer any assistance we can as the committee 

pursues its reform efforts. 

It has been well publicized that the OIG is the lead investigating 

entity in a civil suit against USIS. My written testimony more fully 

describes the allegations contained in the complaint filed by the 

Department of Justice. In short, the complaint alleges that USIS 

failed to perform quality reviews related to at least 665,000 cases 

as required under its contract with OPM. This permitted USIS to 

release more background investigation cases to OPM, which in turn 

allowed it to increase the company’s bottom line. 

The exact damages suffered by OPM will be determined by the 

court at trial. The penalties imposed under the False Claim Act 

range from $5,500 to $11,000 per false claim or statement. If each 

of these 665,000 cases were considered a false claim or statement, 

penalties could range from approximately $3.7 billion to $7.3 billion. 

In closing, I would like to offer a very sincere thank you to this 

committee and to their staff for crafting the recent legislation entiVerDate Aug 31 2005 14:17 May 30, 2014 Jkt 000000 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 C:\DOCS\87892.TXT APRIL
19 

tled The OPM IG Act. Subcommittee Chairman Blake Farenthold 

and Ranking Member Steven Lynch provided the much needed 

forum for us to explain the dilemma facing our Office of Inspector 

General as a result of an agency funding decision. As you know, 

an unconscionable denial of funding greatly thwarted our efforts to 

properly audit and investigate an OPM program of paramount national security concern, the Federal Investigative Services. Regardless, we utilized as best we could our office’s general appropriation 

funding to accomplish as much oversight as was feasible. 

Chairman Issa and Ranking Member Cummings, you have our 

organization’s pledge, now with access to the OPM Revolving Fund, 

that we will fully engage our audit and investigative resources to 

protect the national security. Thank you. 

[Prepared statement of Mr. McFarland follows:] 

20 


Insert offset folio 10 here 87892.010
21 


Insert offset folio 11 here 87892.011
22 


Insert offset folio 12 here 87892.012
23 


Insert offset folio 13 here 87892.013
24 


Insert offset folio 14 here 87892.014
25 


Insert offset folio 15 here 87892.015
26 


Insert offset folio 16 here 87892.016
27 


Insert offset folio 17 here 87892.017
28 

Chairman ISSA. Thank you. 

Ms. Ordakowski. 

STATEMENT OF SUSAN A. ORDAKOWSKI 

Ms. ORDAKOWSKI. Good morning, Chairman Issa, Ranking Member Cummings, and members of the committee. Thank you for the 

opportunity to be here today to discuss the Federal security clearance process. My name is Sue Ordakowski. I am the Chief Contracts and Compliance Office of KeyPoint Government Solutions, 

and I am also the Acting Program Executive for the KeyPoint OPM 

Background Investigation Program. I joined KeyPoint shortly after 

the company won its first Government contract in 2004, and my 

role is to make sure the company does things the right way. 

The committee initially invited KeyPoint’s President, Jeff 

Schlanger, to testify, and he is here today, but, as we discussed 

with your staff, he recently availed himself of an opportunity to return to public service as the chief of staff to the Manhattan district 

attorney. He remains on KeyPoint’s board, however, and is a key 

advisor to the company. 

Fourteen years ago, KeyPoint was founded as Kroll Government 

Services. In 2004, OPM expanded its contractor pool from just 

USIS and KeyPoint was awarded a position on the IDIQ contract 

for background investigations. In May 2009, the company was spun 

off from Kroll and renamed KeyPoint. 

Over time, KeyPoint has built a high-quality, well-trained network of experienced investigators and a culture of zero tolerance 

for any lapses of integrity. In large part, KeyPoint’s success can be 

attributed to the fact that our company’s focus was and is providing high-quality, fairly priced background investigations to OPM 

and other Government agencies. Today, KeyPoint performs approximately 25 percent of the fieldwork conducted by contractors 

for OPM’s background investigations and we are working hard to 

achieve parity with our major competitor on the contract. 

As this committee assesses the security clearance process, it will 

compare the performance of private enterprises and the Government. We believe this is an important comparison that will help to 

achieve our collective goal of protecting our Nation’s secrets to the 

greatest extent possible. Although this hearing is highlighting 

problems with one contractor, and not the Government, both have 

experienced their share of problems with a process that requires 

constant vigilance, integrity, and improvement. 

KeyPoint has collaborated with various Government agencies, including OPM, to improve the background investigation process. An 

example of this is our Investigator of the Future initiative through 

which we are working collaboratively with OPM to develop a tablet-based tool for collecting field data and providing reference resources directly to investigators in the field. We believe the tool 

will increase quality and efficiency, and protect the large amounts 

of personally identifiable information that we collect and utilize. 

OPM contract requirements are rigorous and complex, and we 

commit significant resources to ensure that we meet or exceed 

OPM standards. Because of our solid performance on the OPM contract, OPM has encouraged KeyPoint to grow its capacity, and we 

have done so. Throughout the years, our primary focus has always 

29 

been on the quality of our case work. We have implemented a comprehensive quality review system to ensure independent review of 

each case before submission to OPM. We have never wavered from 

this focus on quality and never intend to do so. 

It is our understanding that the primary purpose of this hearing 

is to explore ideas for improving the background investigation process. A few key areas where improvements could be made include, 

one, consistency between the requirements set by OPM versus 

those set by agencies with delegated authority; two, the use of technology; three, the use of new sources of information; four, continuous evaluations; five, the contracting process; and, six, increased 

cooperation from State and local authorities. I have provided more 

details on these points in my written testimony. 

In conclusion, I am very proud of the service that KeyPoint has 

provided to the United States Government over the past 14 years 

and look forward to continued growth. KeyPoint will continue its 

work to constantly improve the security clearance investigation 

process and will continue our tradition of providing the highest 

quality investigations at fair prices to our client agencies and to 

the taxpayer. 

I appreciate the opportunity to testify before you and welcome 

your questions. 

[Prepared statement of Ms. Ordakowski follows:] 

30 


Insert offset folio 18 here 87892.018
31 


Insert offset folio 19 here 87892.019
32 


Insert offset folio 20 here 87892.020
33 


Insert offset folio 21 here 87892.021
34 


Insert offset folio 22 here 87892.022
35 


Insert offset folio 23 here 87892.023
36 

Chairman ISSA. Thank you. 

Mr. Rhodes. 

STATEMENT OF MICHAEL RHODES 

Mr. RHODES. Good morning, Chairman Issa, Ranking Member 

Cummings, and members of the committee. Thank you for the opportunity to appear before you today. My name is Michael Rhodes 

and I an Executive Vice President with CACI and Manager of the 

Mission Systems and Services Business Group, the business unit 

within CACI responsible for our work with the Office of Personnel 

Management, or OPM. 

I would like to provide you with a brief introduction to our company and the work we do to assist OPM in the security clearance 

process. 

CACI is an organization of nearly 16,000 professionals working 

in more than 120 offices worldwide, with a very diverse information 

solutions and services customer base. CACI is one of the three contractors currently assisting OPM by conducting fieldwork for security clearance investigations. We perform approximately 11 percent 

of OPM’s fieldwork assignments, which equates to slightly more 

than 1 percent of our company’s overall annual business base. 

Having provided mission support services to the Government for 

the past 50 years, we understand that the process of conducting 

background investigations is fundamental to our national security. 

On a daily basis, CACI employees work side-by-side with those people whose lives depend upon us getting the security clearance process right. Like them, our primary commitment is to protecting our 

national security. Quality, accuracy, and thoroughness must come 

first. 

Our business practices and model under the OPM contract demonstrate the emphasis we place on quality. CACI investigators are 

expected to conduct their fieldwork in accordance with OPM guidelines, and we conduct an robust internal review of investigations 

for quality, accuracy, and thoroughness prior to submission to OPM 

for final review and approval. 

Now, our business model is based upon four key principles: first, 

our corporate culture, the character of the company and its employees, and the importance we place on ethics and integrity; second, 

having the right policies and procedures for oversight; third, effective and continual training; and, fourth, a constant auditing and 

monitoring. 

Now, to be clear, we do not grant clearances or make recommendations as to who should receive a security clearance. Our 

primary role in the investigation process is fact-finding, ensuring 

that we conduct background investigations in accordance with 

OPM guidelines and contract requirements. We provide the results 

of our investigation to the Government for their approval and use 

in making their final clearance determinations. 

We know firsthand about the importance of an effective security 

clearance process, as more than half of our employees hold clearances that are critical to the work they perform for our Country. 

Even though we were not the investigators for Snowden or Alexis, 

we were deeply impacted, most notably by the incident at the Navy 

37 

Yard, where we have a substantial number of CACI employees. We 

collectively mourn with our Nation when these tragedies happen. 

We at CACI are committed to best practices and continuous improvements in the security clearance process. In this regard, we 

have suggestions in three areas: first, making background investigations more efficient; second, more effectively capturing information; and, third, strengthening contractor oversight. 

On behalf of my company, and as a former active duty Army officer and a security clearance holder for over 30 years supporting the 

intelligence community, I thank you for the opportunity to present 

CACI’s input on these matters, and I appreciate the courtesies extended to us by you and your staff during the course of this inquiry. Thank you for inviting me to testify today, and I look forward to your questions. 

[Prepared statement of Mr. Rhodes follows:] 

38 


Insert offset folio 24 here 87892.024
39 


Insert offset folio 25 here 87892.025
40 


Insert offset folio 26 here 87892.026
41 


Insert offset folio 27 here 87892.027
42 

Chairman ISSA. Mr. Phillips. 

STATEMENT OF STERLING PHILLIPS 

Mr. PHILLIPS. Chairman Issa, Ranking Member Cummings, and 

members of the committee, my name is Sterling Phillips, and since 

January of 2013 I have served as CEO of USIS, a Federal contractor headquartered in Falls Church, Virginia. As part of a 

wholesale leadership change at the company, I joined USIS after 

more than 30 years in senior management positions with Federal 

contractors. 

I am here today representing more than 6,000 USIS employees 

dedicated to excellence in supporting the missions of our Government customers. That number includes 2,000 field investigators 

across the Country who conduct background investigations, as well 

as nearly 400 of their colleagues involved in assuring the quality 

of our work. 

Over the past nine months, the disclosure of classified material 

by Edward Snowden and the Navy Yard tragedy caused by Aaron 

Alexis have caused a great deal to be written and said about the 

security clearance process in general and USIS specifically. Much 

of this public commentary has been factually inaccurate. Today I 

hope to correct these inaccuracies and clarify the role contractors 

like USIS play in the Nation’s security clearance process so as to 

provide you with better insight as to how this process might be improved. 

In order to understand the process, it is critical to recognize that 

USIS and OPM’s other contractors have no role in deciding whether an individual actually receives or retains a security clearance. 

We only collect and report information, and we do not even make 

a recommendation. The decision-making process is known as adjudication, and that authority lies solely with the agency requesting 

the clearance. 

All OPM background investigations, whether conducted by contractors or Federal employees, follow specific procedures and protocols established by OPM. Contractors like USIS rigorously adhere 

to the established investigative process and have no flexibility in 

terms of how an investigation is conducted. 

Once an investigation is complete and accepted by the Government, our work is done and we have no further role in the oversight or monitoring of cleared personnel. In fact, contractors are 

not allowed to maintain any of the case materials or information, 

all of which are returned to OPM. 

Our performance goals for all cases, including Snowden and 

Alexis, are to strictly follow the OPM process and to meet all OPM 

standards for quality in our work. If we ever fail to do so, we are 

promptly notified by OPM with a detailed description of any defects. All indications to USIS are that we met all standards on each 

of these two cases. 

Mr. Chairman, in my 13 months at USIS, I have been impressed 

with the dedication and professionalism of our investigators and 

other employees. They understand that they are performing a sensitive and vital national security function. Many of our investigators came to us from the military or law enforcement. They understand their responsibilities and take them seriously. 

43 

It is important to note that all investigations are fixed-price 

products. USIS has an extensive and costly quality review system, 

and all of our work is subsequently reviewed by OPM and the adjudicating agency. At any time, the USIS National Quality Team, 

OPM, or the requesting agency can send the case back for additional work at no extra cost to the Government. The cost to USIS 

of quality defects and re-work is high. Both short-and long-term, it 

is in the best financial interest of the company to do the job right 

the first time. 

In any enterprise of this size, however, from time to time there 

are individuals who fail to meet our high standards, but I submit 

to you that in USIS those individuals are an aberration, and not 

the norm. 

When USIS suspects that an individual investigator has misrepresented or falsified his or her work product, we immediately 

suspend that investigator and launch an internal investigation. If 

our investigation determines that work has been falsified or misrepresented, we proactively report and refer those cases to OPM 

and cooperate with the U.S. Attorney’s Office for subsequent prosecution. 

As you know, the U.S. Department of Justice has intervened in 

a civil false claims suit against USIS. That matter is ongoing and 

has not been resolved. 

I was not at USIS when the alleged conduct in that case occurred, but I can tell you that the allegations in the complaint relate to a small group of individuals over a specific time period and 

are inconsistent with our values and strong record of customer 

service. Since learning of these allegations nearly two years ago, 

the company has acted decisively to ensure the quality of USIS 

work and compliance with OPM requirements. New leadership has 

been installed, oversight has been enhanced, and internal controls 

strengthened. From the outset, the company has fully cooperated 

with the Government’s investigation and will continue to do so. 

Finally, I hope this hearing is helpful to you as you assess possible policy changes in America’s security clearance process. USIS 

and our 6,000 employees are prepared to assist you in any way 

that we can. Thank you. 

[Prepared statement of Mr. Phillips follows:] 

44 


Insert offset folio 28 here 87892.028
45 


Insert offset folio 29 here 87892.029
46 

Chairman ISSA. Thank you. 

I will recognize myself. 

Director, we received a list of 450 cities that do not cooperate 

fully, it is part of an OPM list of cities that simply will not answer 

questions, in all or in part, as to criminal backgrounds and so on 

of individuals. We were also given a redacted version, which basically takes out all the names and is useless. Would you agree that 

the 450 cities not willing to cooperate should be, in the public interest, made available? 

Ms. ARCHULETA. Mr. Chairman, there are about 18,000 jurisdictions that exist across the United States that are—— 

Chairman ISSA. Right, there are 18,000, many of which are not 

on this list. You have 450 jurisdictions, including, at the time of 

Aaron Alexis, Seattle, Baltimore, New York, Los Angeles, and 

Washington, D.C. that were not cooperating. Aaron Alexis was, in 

fact, somebody for whom OPM had on the list, to our understanding at the time, that Seattle was not going to give you that 

information that ultimately we didn’t have as to the shooting that 

Aaron Alexis had already done. My question to you is can you give 

this committee any reason that the names of those municipalities 

should be withheld from the public. 

Ms. ARCHULETA. Those 450 names have been discussed and mentioned, and we would work with you to provide those names of the 

cities that are not in—— 

Chairman ISSA. Okay, well, we have a list. We would like to 

make it public. We believe that it says—and I am respecting the 

status that was on it—it says ‘‘Sensitive Law Enforcement Information for House Use Only’’ that was stamped on our copy. It is this 

chairman’s opinion that this is information the public has a right 

to know, that their city is not providing criminal information when 

somebody is receiving a security clearance, such as Aaron Alexis. 

Ms. ARCHULETA. Mr. Issa, we would be glad to work with you to 

release those names. 

Chairman ISSA. Thank you. I appreciate that. As I previously 

said, obviously, at the time that Aaron Alexis was being checked, 

Seattle wasn’t compliant or participating. Is it possible that, in 

fact, the inspector—and I am not trying to defend anybody here— 

the inspector that was doing the sheet looked and said this is on 

the list of cities that are already not compliant, it is not reasonable 

for us to go and ask for that record? 

Ms. ARCHULETA. I couldn’t speculate to the mind-set of the investigator at that time. 

Chairman ISSA. Do you believe this committee should empower 

OPM and the Department of Justice—this question is for Mr. 

Lewis—to have leverage over cities to ensure that if they are not 

going to comply, that Federal funds that help them build those 

very databases be withheld or in some other way use Federal clout 

to ensure that we do get full information when trying to clear individuals for sensitive information? Mr. Lewis. 

Mr. LEWIS. I can’t comment on—— 

Chairman ISSA. Would you like to have tools to see that that 

happens? 

Mr. LEWIS. We would like to have access to that information, yes, 

sir. 

47 

Chairman ISSA. Okay. Well, it is the committee’s intention to 

provide tools to the Executive Branch to encourage that compliance. 

For the director, Ms. Archuleta, what have you done in order to 

reduce the amount of that list. Have you taken, in those three 

months, any material actions that might cause cities, other than 

being on a list that we might publicly disclose, to want to cooperate 

more fully? 

Ms. ARCHULETA. Most recently, the District of Columbia has 

agreed to provide that information and Mr. Miller, as the director 

of FIS, has been working within the compact to continue discussions with some of those major cities who have not been providing 

the information. We will continue to pursue that; it is an important 

relationship and information that would be most helpful in our 

background investigations. 

Chairman ISSA. Thank you. 

I have one question that perplexes me a little bit, and it is kind 

of a billion dollar question here. My understanding, and, Mr. 

McFarland, you probably know the case history on it, OPM discovered and was working with Department of Justice prior to January 

of 2011, was aware of the dumping that went on at Mr. Phillips’s 

company, is that correct? 

Mr. MCFARLAND. I believe that is. 

Chairman ISSA. So the United States Government discovered 

dumping prior to the filing in Alabama by Blake Perceval of a qui 

tam case, is that correct? 

Mr. MCFARLAND. Yes, that is correct. 

Chairman ISSA. And yet when—I put this in the record already, 

but when the Director of Personnel Manager, OPM Director, said 

that Department of Justice had filed, that wasn’t true. Department 

of Justice joined the case in which the recipient will be a private 

individual that will receive large amounts of money if, in fact, there 

is a payment from Mr. Phillips’s company, is that correct? 

My question to anyone on the panel is is there any good reason 

for the Government to discover that they had been wronged by a 

company and then allow an insider to become a qui tam recipient 

of millions of dollars because the Government doesn’t act, and then 

have the Government join the case much later with righteous indignation, when in fact, in my review of this case filed by Department of Justice against USIS, all they have really done is asserted 

the same things previously asserted in the qui tam case. Anyone 

want to comment on that? Because there are a lot of U.S. dollars 

that are going to go to outside lawyers and an individual who, in 

fact, doesn’t appear to be the first to discover or have some rights 

in this case? 

Ms. ARCHULETA. Mr. Issa, in April of 2011, Mr. Miller and his 

staff noticed an anomaly in the cases that were being sent forth 

from USIS and began a dialogue with USIS to discover why that 

was happening. They had introduced some new automation that 

was indicating to them that the number of cases being reviewed 

were much higher than—— 

Chairman ISSA. Okay, my time has expired. I just want to very 

quickly say was that discovery based on Blake Perceval’s information? 

48 

Ms. ARCHULETA. No, it was not. 

Chairman ISSA. So the Government discovered that, in fact, it 

had been wronged, potentially, and yet we have an individual with 

a billion dollar qui tam case that the Government is in second position on, is that correct? If I am wrong in any way, I would like to 

understand that. 

Ms. ARCHULETA. Again, I would reiterate that in April we began 

to uncover that anomaly. 

Chairman ISSA. Okay. Well, I am going to take the privilege of 

referring this over to the committee next door, to Judiciary, because I am deeply concerned that the Government is not, in this 

case, potentially protecting its own right to get a recovery in its entirety and not share it with a third party. 

Mr. Cummings. 

Mr. CUMMINGS. Thank you very much. I want to join with the 

chairman with regard to this whole issue of law enforcement officers cooperating with your agency, Ms. Archuleta. I learned that 

there were some in my own district, and I am going to be urging 

them to cooperate. I think this is so very, very important. 

I want to go to you, Mr. Phillips. You said something in your 

written statement and I think you said it in your oral statement, 

you said, but I can tell you that the allegations in the complaint 

relate to a small group of individuals over a specific time period 

and are inconsistent with our values and strong record of customer 

service. I can understand that; it makes sense. But would you 

agree that the top people are gone? I mean, they have either been 

fired or they left, right? They were the ones who were orchestrating 

this. Hello? 

Mr. PHILLIPS. The people associated with the allegations are gone 

from the company. 

Mr. CUMMINGS. Yes, they are gone; they have been either fired 

or they left. 

Mr. PHILLIPS. And they were at multiple levels in the company. 

Mr. CUMMINGS. Multiple levels. So, you know, when you say just 

a few bad apples, I mean, this is a little bit more than that, and 

we would not have that many people having left. And I don’t think 

the Justice Department would be doing what it is doing if it were 

just a few bad apples. Now, I am not talking about probably 95 

percent of the employees, but when you have key people—and from 

what we have learned they were key—doing certain things, making 

certain decisions, you wonder about statements like the one you 

just made. But we will come back to you. 

Director Archuleta, records produced by OPM to this committee 

show that during the period of the alleged fraud OPM was paying 

bonuses to USIS for what you thought was very rapid progress in 

clearing cases. Between 2008 and 2012, OPM paid about $16 million to USIS just for bonuses under these contracts. Director, if 

USIS was defrauding OPM to meet its revenue targets, and if it 

met timeliness goals only by not, not doing quality reviews 40 percent of the time, what is OPM doing to recover those ill-gotten bonuses? 

Ms. ARCHULETA. The bonuses that were paid to USIS, which 

were last provided in 2010, were bonuses that were provided to 

them under the performance-based standards within the contract. 

49 

The Government attempting to recover those bonuses is part of the 

civil action that has been filed, and no bonuses have been awarded 

to USIS under the current leadership. 

Mr. CUMMINGS. So you are saying Justice is trying to get those 

bonuses back, is that what you are telling me? 

Ms. ARCHULETA. Yes, as part of the civil action charging fraud, 

that is part of the recovery. 

Mr. CUMMINGS. Would the staff put up the chart for the USIS 

bonuses? 

[Chart.] 

Mr. CUMMINGS. Director Archuleta, we asked the committee to 

provide us with the bonuses that were paid to employees who were 

involved in the alleged fraud. Now, here is some of what they told 

us. You have the chart there. The CEO received almost $500,000 

in the first year of the alleged fraud. Director Archuleta, OPM does 

not approve these bonuses to individual people at USIS, is that correct? 

Ms. ARCHULETA. They are performance-based within the contract, and not to individuals, but to the company. 

Mr. CUMMINGS. So OPM doesn’t decide who gets the check; you 

just basically make sure that they get money, the company gets 

money and then they—— 

Ms. ARCHULETA. Based on its performance. 

Mr. CUMMINGS. All right, so let’s ask the company. 

Mr. Phillips, I know you are relatively new at USIS and I know 

you have a tough job. You were brought in to clean up this mess. 

But as the CEO of USIS, you have a boss, do you not? 

Mr. PHILLIPS. Yes, sir. 

Mr. CUMMINGS. And that boss is Altegrity, the privately held 

holding company that owns USIS, is that right? 

Mr. PHILLIPS. Yes, sir. 

Mr. CUMMINGS. Altegrity is a big company, is it not? 

Mr. PHILLIPS. The holding company is a relatively small organization. 

Mr. CUMMINGS. Well, but through its subsidiaries it has received over $2 billion from contracts from a dozen Federal agencies. That 

is pretty big to me, $2 billion. Would you agree that is pretty big 

for the Federal Government? 

Mr. PHILLIPS. Yes. 

Mr. CUMMINGS. And that is what we have tallied. Altegrity was 

also the boss of your predecessor, the president and CEO who is 

alleged to have directed the fraud. Now, he got some big bonuses. 

My staff asked USIS for the company’s bonus policies during the 

years of the alleged fraud, and what we got back were documents 

marked ‘‘Altegrity.’’ So the bonuses awarded to the top officials at 

USIS during the alleged fraud were made according to a formula 

devised by the parent company, Altegrity, is that right? 

Mr. PHILLIPS. Yes, sir. 

Mr. CUMMINGS. According to Altegrity, bonus formula, between 

20 percent and 25 percent of an executive bonus, was dependent 

upon whether he met his objectives and whether he performed 

well. So if you are the CEO of USIS, Altegrity determines your 

bonus, is that right? They determine yours. 

Mr. PHILLIPS. Yes, they do. 

50 

Mr. CUMMINGS. Who evaluates your performance as the CEO? 

Mr. PHILLIPS. Altegrity and the board of directors. 

Mr. CUMMINGS. And so do we have any names? 

Mr. PHILLIPS. We are in the process of reorganizing Altegrity. 

The board of directors is comprised of principals with Providence 

Equity, the owners of the company. So I report directly to the 

board, today. 

Mr. CUMMINGS. So somebody doesn’t call you and check on you, 

the whole board calls you? I mean, how does that work? I mean, 

somebody is going to make sure you get a bonus, and if you deserve 

a bonus, I know you are going to insist that you get a bonus. Does 

that mean you go to the board to ask for the bonus or do you answer to someone? 

Mr. PHILLIPS. The board of directors would determine my bonus. 

We have monthly board meetings, so there is currently—there is no 

CEO of Altegrity, as there was in the past. 

Mr. CUMMINGS. Okay. 

Mr. PHILLIPS. So the board does, in fact, to your question, the 

board does, in fact, evaluate my performance and determine whether I will get a bonus. 

Mr. CUMMINGS. Well, who specifically at Altegrity approved the 

more than $1 million in bonuses for your predecessor, former CEO 

Bill Mixon, who has been accused of directing this fraud? 

Mr. PHILLIPS. Specifically, I do not know who was CEO at the 

time these bonuses were paid. I would have to look at the timing. 

There have been a series of CEOs over the last 10 years at 

Altegrity. 

Mr. CUMMINGS. Well, as I close, let me say this. Mr. Chairman, 

I think that Mr. Phillips’s testimony today raises the question 

about whether or not officials at Altegrity knew about the alleged 

fraud and when did they know it, and what, if anything, did they 

do about it. Altegrity is a big Federal contractor through its subsidiaries, and the American people have a right to know just what 

kind of people are managing those subsidiaries to which the Government gave over $2 billion in recent years. 

Now, Mr. Chairman, I would like to put the bonus chart and the 

list of Altegrity contracts in the record. The bonus chart is right 

here. 

Mr. MICA. [Presiding.] Without objection, the bonus chart will be 

part of the record. 

Mr. CUMMINGS. And the contracts of Altegrity. 

Mr. MICA. And the contracts of Altegrity referenced to it. 

Mr. CUMMINGS. Thank you very much 

Mr. MICA. Thank you. Without objection, so ordered. 

Mr. MICA. Okay, let me recognize myself. 

Well, we are here because one of the most horrible and failure 

of some of the systems that we have in place to protect us failed 

and a lot of people died. Just an incredible tragedy. Some of it is 

the result of the failure of adequate contract management. We have 

heard some issues raised about some other failures in contract 

management. We also have a failure of the security clearance process, obvious in some way. And then if you look at the final action 

of the depraved individual in this case, a failure of our mental 

51 

health system; someone who was troubled obtained a weapon and 

destroyed the lives of a number of people. 

First of all, Mr. Phillips, you said you collect data and you give 

it to OPM, so you are a data collection agent basically? 

Mr. PHILLIPS. Yes, sir. 

Mr. MICA. Ms. Archuleta, you have about what, 2.3 million people you do clearance on? Is that annually or is that just—— 

Ms. ARCHULETA. That is annually, sir. 

Mr. MICA. Annually. So that is a huge amount. Just for the 

record, I was in Congress, actually chaired civil service when we 

created the initial ESOP. We gave the Federal employees the right 

to run that initial company, which evolved into Mr. Phillips’s company. We now have three companies, private companies, that do 70 

percent of the work, is that correct? 

Ms. ARCHULETA. Yes, the—— 

Mr. MICA. It would be almost impossible for OPM to do it all 

itself, given 2.3 million, so we rely on contractors and contract 

management to execute those clearances, is that right? 

Ms. ARCHULETA. That is correct, sir. 

Mr. MICA. Okay, so they are collecting the data. The problem is 

it is sort of garbage in, garbage out, and we have flaws in the system. We see Mr. Alexis—and I went back and read the report. The 

2004 incident he was, really, even if Seattle reported, he was never 

adjudicated with a felony or even a misdemeanor; the charges were 

dropped, is that correct, Mr. Phillips? 

Mr. PHILLIPS. That is correct. 

Mr. MICA. Okay, so then the question is the failure of the system 

to periodically review folks. Now, he was in the Navy, but he went 

on to a private contractor, is that correct, too? Are you aware of 

that, Mr. Phillips? 

Mr. PHILLIPS. That is my understanding. 

Mr. MICA. Okay. And I see there is a 5 to maybe 15 year review. 

Do you think that is adequate for these clearances, Ms. Archuleta? 

Ms. ARCHULETA. I am very supportive of a continuous evaluation—— 

Mr. MICA. We should do that. The problem I have is Ms. 

Ordakowski here, she gave us some recommendations. Technology, 

we could easily compare the data coming in. We probably should 

look at some stages, because, again, the ultimate decision, Mr. 

Lewis, is given by the agency for the clearance, is that correct? 

Mr. LEWIS. That—— 

Mr. MICA. And you gave that. This individual was a Navy person, first got it as a Navy, then he shifted to a contract person, 

where he committed the deed. Is that correct, Mr. Lewis? 

Mr. LEWIS. That is correct. 

Mr. MICA. Okay. So I think we ought to look at some point at 

which there is a re-review. Certainly what the chairman brought 

up in entities not reporting, again, garbage in, garbage out, we 

won’t know, but I think for improvement we need to look at if they 

shift positions, the contractor should do a review. It could easily be 

run through technology, although, dear God, I have the greatest 

reservation about OPM and technology now chairing the Government Operations Subcommittee, seen $271 million, almost a third 

of a billion dollar fiasco in trying to just keep the records of Federal 

52 

employees for retirement, etcetera. Are now still doing that by 

hand, ma’am? Do you know? 

Ms. ORDAKOWSKI. I do not know. 

Mr. MICA. Do you know, Ms. Archuleta? Do you know the failure 

of trying to institute technology for records for retirement? 

Ms. ARCHULETA. That is why I have instituted an IT modernization plan. 

Mr. MICA. Okay, well, we spent hundreds of millions and it is a 

fiasco. This is also back to contract management, the top person at 

OPM in managing contracts. We have three contracts for these 

folks; we have contracts for IT. Certainly, technology could give us 

a better handle on reviewing. You know, people are normal today. 

Look at this panel, they all look pretty normal, don’t they? But 

they could flip out on you in a few years, particularly some. So we 

do need some mechanism to review people periodically as they take 

on new roles. Wouldn’t you say that would be good, Ms. Archuleta? 

Ms. ARCHULETA. Yes, sir, I would say that. 

Mr. MICA. Mr. Phillips, what do you think? 

Mr. PHILLIPS. I agree. 

Mr. MICA. Don’t tie your shoelaces now. What? 

Mr. PHILLIPS. No, I agree. 

Mr. MICA. Okay. 

Mr. Lewis? 

Mr. LEWIS. Very much agree. 

Mr. MICA. Okay. 

Mr. McFarland? 

Mr. MCFARLAND. Yes, I agree. 

Mr. MICA. Okay. And then we haven’t even talked about the failure of mental health. Government employees, be they military, private contractors, do not go out and shoot multiple people. There is 

something wrong. Again, this individual had incidents of severe 

mental health problems, and yet obtained a weapon. And we have 

to look at also how you get a sawed-off shotgun into a Government 

facility and then kill people. 

I would like, also, if you could please provide a copy of the IT 

modernization plan to the committee. I guess we will ask Ms. 

Archuleta for that. Can you do that? 

Ms. ARCHULETA. It is my intent to discuss the IT modernization 

plan with the committee, yes. 

Mr. MICA. I am over slightly, but not as much as Mr. Cummings. 

Let me yield next to Ms. Norton, with trepidation. Thank you. 

And joy. Good to see you. 

Ms. NORTON. All right. Now that that has been corrected, thank 

you, Mr. Chairman. 

You know, this city was somehow spared in 9/11, and there are 

theories as to how that occurred, yet we were hit very hard at the 

Navy Yard, and we were hit by a deranged man who, as I understand it, had the second highest security clearance. 

Mr. Lewis, is that the second highest security clearance you can 

get? 

Mr. LEWIS. There is secret and top secret, so, yes. 

Ms. NORTON. So he was pretty much up there. As we look back 

over his history, it had some arrests, they weren’t reported from 

Seattle. He was arrested in Georgia for disorderly conduct the 

53 

same year that he got his security clearance, apparently; and then 

in 2010 in Texas for firing a gun through the ceiling of his downstairs neighbor. And then just a month—and here is where the 

tragedy that we are still feeling in this city is—just a month before 

the Navy Yard incident, the Rhode Island police were cognizant 

enough, intelligent enough—I am not sure they knew, in fact, I believe they did not know, because they were called to the hotel, and 

here is the hotel who had the consciousness, because Alexis had apparently called down saying he was hearing voices. So here we 

have people without security clearances that understand there was 

something wrong with this man. 

Now, first, let me ask about Alexis’s run-ins with the law in 

Georgia and Texas. Did any part of the Federal Government, Mr. 

Lewis, did you know, did the Government know about either of 

these run-ins with the law in Texas and Georgia? 

Mr. LEWIS. Well, because there is a 10-year interval between investigations, that information, unless it became known to the commander or supervisor of Mr. Alexis, would not have been reported 

to the Department of Defense. 

Ms. NORTON. Are you saying it was not reported, then? 

Mr. LEWIS. That is correct. 

Ms. NORTON. Had it been reported, would those incidents have 

been investigated? 

Mr. LEWIS. Upon the receipt of derogatory information, the DOD 

consolidated adjudications facility would have made a determination does this clearance need to be suspended or revoked; is additional investigation required. So additional action would have been 

taken. 

Ms. NORTON. Well, first of all, as you indicated, this man had a 

security clearance that enabled him to go for 10 years without review. I can’t understand the original set of the 10-year notion. 

Even the most stable person has incidents in his life in a decade. 

Where did the 10-year period come from? 

Mr. LEWIS. The 10-year period is part of the current Federal investigative standards that are in place today. These standards are 

under review, most prominently with the suitability and security 

processes review that is ongoing as we speak. 

Ms. NORTON. You are not telling me where it came from. Again, 

here we have a series of people who have no expertise, who understood that this man probably needed help, and yet the Government 

sets a 10-year period during which it doesn’t have to—I will get to 

the report in a moment, but it doesn’t have to investigate to see 

if there has been any deterioration in the person. You don’t know 

where this came from. Would you find the paperwork that indicated the rationale for the 10-year period and write that within a 

30-day period to the chairman of this committee? 

The Rhode Island incident is the most troubling because Alexis 

was working as a contractor for a company called Experts. Was Experts aware of this erratic behavior? 

Mr. LEWIS. Experts did become aware of this information. They 

were required to report it; they failed to do so. 

Ms. NORTON. What has happened to Experts in the meantime? 

Is Experts still a contractor with the Federal Government? 

54 

Mr. LEWIS. I don’t know if they are still a contractor, but their 

security clearance has been adversely impacted. They were invalidated—— 

Ms. NORTON. Ms. Archuleta, do you know if Experts is still—excuse me? 

Ms. ARCHULETA. I apologize. I would rely on Mr. Lewis’s assessment of that. It seems that their contract has been suspended. Is 

that what I heard, Mr. Lewis? 

Mr. LEWIS. Their security clearance has been suspended. 

Ms. ARCHULETA. Their clearance has been suspended. 

Ms. NORTON. So that means they can’t do this work any longer. 

I thank you, Mr. Chairman. 

Mr. MICA. Thank you. 

Ms. NORTON. It seems clear that—and that is why I asked the 

report to the chairman—we have to know the basis for the 10 years 

and we have to assure that there is continuous monitoring of anybody who has a security or a top security clearance. 

Mr. MICA. I thank the gentlelady for an excellent line of questioning. 

Let me yield to the distinguished gentleman from Ohio, Mr. 

Turner. 

Mr. TURNER. I would like to echo what the chair said. I think Ms. 

Norton gave us a great description of what we see as the disintegration of the individual and raised two very important issues, on 

the 10-year evaluation process and also the issue of failure of reporting requirements or failure to report when the requirement existed. 

But I would like to do the follow-on, then, to Ms. Norton’s line 

of questioning. I understand that even when you get to the 10-year 

period and when you get to the review of someone to reaffirm their 

classified status that there is difficulty with the cooperation with 

State and local government officials. Now, I served as a mayor for 

the City of Dayton. I am also on the Armed Services Committee 

here, in addition to this committee, so the issue of clearances, as 

we look to Snowden and the other things that are going on, obviously the issue of the Navy Yard is one that gives us a picture of 

our continuous vulnerability, not just this incident. 

But I am concerned that it is my understanding that there are 

also issues of State and local law enforcement sharing information 

with the Federal Government in the security process; that although 

there is a requirement for disclosure and for full cooperation, that, 

in fact, there may be some impediments. 

Ms. Archuleta, if you could please speak on that issue. Do you 

have State and local agencies, governments that do not take this 

issue as seriously and that particular at varying levels, and is that 

an impediment for you? 

Ms. ARCHULETA. I wouldn’t classify it in just one category; I 

would say that there are some that have not provided the information, choose not to provide. Others are smaller jurisdictions that, in 

fact, may not have the capability of providing that information; others, because of just the small size of their jurisdiction, may not 

have the records that are complete records going several years or 

many years back. So there are many reasons why local law enforcement agencies are not providing the information, but the most imVerDate Aug 31 2005 14:17 May 30, 2014 Jkt 000000 PO 00000 Frm 00058 Fmt 6633 Sfmt 6633 C:\DOCS\87892.TXT APRIL
55 

portant part here is that we must take every step, and I would be 

supportive of looking at how we can work with local law enforcement agencies and the courts to provide this information. This is 

part of the President’s 120-day PAC review and of the Quality Assessment Working Group that is ongoing right now. 

Mr. TURNER. Okay, well, even though you sort of side-stepped it 

there for a moment, I think your answer is still very troubling, so 

let’s back up for a moment and review your answer. You said there 

are jurisdictions that choose not to share the information. 

Ms. ARCHULETA. Yes. 

Mr. TURNER. Although you indicated that there are jurisdictions 

that perhaps don’t have the resources, that there are those who 

just are not sharing the information with you. And I think you 

would acknowledge to this committee that the information is critical, is it not? 

Ms. ARCHULETA. Yes, that is correct, sir. 

Mr. TURNER. And then the issue of resources. Although there are 

communities that would indicate that the period of time of the review may be difficult for them for their record-keeping, we are talking only—we are in present day; we are talking 10-year periods, we 

are not going to the 1800s, correct? I mean, these are present 

records that we are asking for information on. 

Ms. ARCHULETA. I can’t comment as to why they believe their resources aren’t there, sir. 

Mr. TURNER. I see. It is troubling for you, though, correct? 

Ms. ARCHULETA. Yes, it is. 

Mr. TURNER. Are you concerned at all that the amount of classified material post-9/11 may be resulting in a proliferation of individuals having clearance; the fact that the data that we now consider to be classified is so voluminous that, in fact, it is pushing 

the system in providing increased classified status to individuals? 

Ms. ARCHULETA. I know that the director of national intelligence 

is looking at this very serious issue as to the standards for granting clearances and also who should receive those clearances; it is 

an ongoing review that he takes very seriously and we are working 

with him in every way. 

Mr. TURNER. But you do consider that the amount of classified 

material certainly is a factor that is pushing, a driver of the issue 

of the number of classified status—— 

Ms. ARCHULETA. Who is eligible to receive a clearance is a decision of the DNI. 

Mr. TURNER. Ms. Archuleta, is there a difference between the 

manner in which contractors and Government employees go 

through the clearance process? 

Ms. ARCHULETA. No. The same standards for Federal investigations or background investigations is the same for both contractors 

and Federal employees. 

Mr. TURNER. Going back to the issue of communities that do not 

participate or choose not to participate, what actions do you take 

to try to encourage their participation? 

Ms. ARCHULETA. We work directly with those jurisdictions and 

also with our counsels and with other Federal agencies to persuade 

and encourage their cooperation with our investigations. 

Mr. TURNER. Sorry, Mr. Chairman, if I could just one more. 

56 

It does inhibit, though, the process, does it not? 

Ms. ARCHULETA. We attempt to get as much information as we 

can, and the records from local law enforcement is very important 

to us, so, as I said before, I am very supportive of ways that we 

can encourage these entities to provide us the information. 

Mr. MICA. I thank the gentleman and the witness. 

We will go to Mr. Lynch, the gentleman from Massachusetts. 

Mr. LYNCH. Thank you, Mr. Chairman. 

I want to thank the witnesses, as well, for your attendance. 

This was a terrible tragedy and I just want to get at the depth 

of this tragedy. I am going to mention the 12 individuals who were 

killed during this attack. 

Michael Arnold, age 59, had been a pilot with the Navy for many 

years. He had a wife and two grown sons. 

Martin Bodrog, age 54, graduate of the United States Naval 

Academy at Annapolis. He was a surface warfare officer in the 

Navy. He left a wife and three daughters. 

Arthur Daniels, age 51, left a wife and five children. 

Sylvia Frasier, age 53, she had five sisters and a brother. She 

worked at the Naval Sea Systems Command. She also served as a 

deaconess and altar counselor at the Rhema Christian Center 

Church in Washington, D.C. Loved by many. 

Kathleen Gaarde, age 62, she worked as a financial analyst at 

the Navy Yard. She and her husband had an adult son and daughter. 

J.J. Johnson, age 73, he was father to four adult daughters and 

had 11 grandchildren. 

Mary Francis DeLorenzo Knight, age 51, she and her husband 

had two daughters. 

Frank Kohler was only 50 years old, left behind his wife and two 

daughters. He was a big time Rotary Club participant. 

Vishnu Pandit, age 61. Mr. Pandit and his wife, Anjali, had become grandparents recently, when one of their two sons had a 

daughter. 

Kenneth Proctor, age 46, left behind a wife and two teenage sons. 

Gerald Read, 58, he and his wife, Kathy, have a grown daughter, 

Jessica, and she has three granddaughters. Well, they have three 

granddaughters. 

And Richard Michael Riggell, age 52. Mr. Riggell was working as 

a security officer at the Navy Yard, after having worked several 

years in Iraq on behalf of our Country. His wife and his three 

daughters remember him as a brave man and a great father. 

So this process, this current security clearance process allowed 

this to happen. It allowed Mr. Alexis to get in there and do what 

he did. 

I have some legislation that I drew up last night, H.R. 4022. It 

is the Security Clearance Reform Act of 2014. It will introduce a 

continuous review of security clearances, rather than these period 

events that we are seeing. It also withholds some Federal funding, 

a penalty, if you will, for jurisdictions that do not cooperate with 

us when somebody from their jurisdiction applies for a security 

clearance from the Federal Government. It also gets at a problem 

that we had with USIS, which is there was a conflict there. USIS 

had two contracts, one was an investigative contract and one was 

57 

a review, another contract, a support services contract that allowed 

USIS to review their own work. That is how this was allowed to 

remain hidden for a long period of time, because the USIS reviewers that were reviewing USIS investigations basically sandbagged 

the reviews and allowed the dumping to occur. That is a real problem. So the legislation that I have, among many other things, also 

gets at that issue, that conflict issue. 

Mr. McFarland, you are a frequent-flyer to this committee. Sorry 

to see you here today, but do you think that this dual contract situation, where you have a contractor reviewing its own work, does 

that contribute to the reduced quality of those reviews and does it 

introduce a conflict into the system? 

Mr. MCFARLAND. It is an absolute conflict, no question about it. 

Mr. LYNCH. Okay. 

Mr. MCFARLAND. It did quite a job on the quality. 

Mr. LYNCH. Okay, thank you. I just want to say that I know we 

have a lot of partisan issues before this committee sometimes. This 

is not one of those cases. We have had great cooperation from majority staff and minority staff; we have had great cooperation between the members on both sides of the aisle. This is the way it 

is supposed to work. We are honestly, I think, embarked on an effort to fix this situation and, like I say, I have some legislation 

here, H.R. 4022. I would welcome cosponsors from both sides of the 

aisle and any changes or improvements to that bill would be welcome, and I yield back. 

Mr. BENTIVOLIO. [Presiding.] Thank you. 

At this time I will recognize myself. 

I would like to thank the witnesses for appearing today. 

I believe one of the primary tasks of the Federal Government is 

to maintain our national security. As the tragic shooting at the 

Navy Yard clearly shows, the clearance process is deeply flawed 

and the American people have suffered as a result. It is essential 

that we now determine the best way to fix the loopholes in this 

process and prevent a tragedy such as this shooting from ever happening again. 

Clearance holders must self-report derogatory information that 

could impact their clearance. In practice, such self-reporting is 

rare. 

Mr. Lewis, are security clearance holders required to report any 

derogatory information once they have obtained a clearance? 

Mr. LEWIS. Yes, they are required to do such self-reporting, as 

well as their supervisors. 

Mr. BENTIVOLIO. What types of information should be reported? 

Mr. LEWIS. An example would be bankruptcy, if they are arrested, things of that nature. 

Mr. BENTIVOLIO. Do a clearance holder’s commanding officers or 

employers have an obligation to report any derogatory information? 

Mr. LEWIS. Yes, they do. 

Mr. BENTIVOLIO. How often is such derogatory information actually reported? And I want to emphasize actually reported. 

Mr. LEWIS. Sir, we have looked at data that is reported into the 

DOD system of record for security clearances, and it is in the 

50,000 reports a year range. There are many reports of derogatory 

information. 

58 

Mr. BENTIVOLIO. You said 50,000? 

Mr. LEWIS. YES. 

Mr. BENTIVOLIO. What is the Department of Defense doing to 

incentivize reporting of derogatory information? You said 50,000 

actually reported, but how do we determine what wasn’t reported? 

Mr. LEWIS. You speak to a fundamental issue, which is partially 

educating commanders and supervisors as to their responsibilities; 

and then the second half of that equation would be holding individuals accountable for failure to execute their responsibility. 

Mr. BENTIVOLIO. Okay, let’s see if I understand this right now. 

Somebody is hired, they have a security clearance. And it is reviewed how often? 

Mr. LEWIS. Currently, at the top secret level it is a 5-year reinvestigation process. At the secret and below level it is 10 years. 

That is going to be transitioning to a 5-year recurring review. And 

we do believe that continuous evaluation, ongoing reviews of available records should occur as well. 

Mr. BENTIVOLIO. Okay, in the review process are you permitted 

to check the social media, like Facebook, a person’s Facebook, if 

they have one? What else? Like what is on them on Wikipedia or 

something? 

Mr. LEWIS. Social media is not a tool that is currently being 

used; however, it is being studied. And one of the challenges of 

using social media is validating the information that is available on 

the Web. 

Mr. BENTIVOLIO. Okay. And what do you do with the information 

of a previous investigation that is maybe 10 years old? 

Mr. LEWIS. Well, as part of the reinvestigation process, the previous investigation is looked at for any derogatory information 

there, looking for trends, looking for ongoing concerns; and it is all 

part of a whole person concept where you look at what has happened in the person’s life, what challenges they have faced, whether or not they have had issues with credit or alcohol, and that is 

part of the adjudicative process. 

Mr. BENTIVOLIO. Thank you very much. 

The chair now recognizes Mr. Connolly from Virginia. 

Mr. CONNOLLY. I thank the chair. 

Mr. BENTIVOLIO. Oh, I am sorry. I apologize. Ms. Duckworth. 

Ms. DUCKWORTH. Thank you, Mr. Chairman. 

The Justice Department’s complaint against USIS alleges that 

between March 2008 and September the company dumped the 

background investigations by submitting them to OPM as complete 

for payment, but without ever completing the quality review. We 

have discussed this, but I am really struck by how massive the 

scale of this fraud is. Approximately 665,000 cases were dumped 

over the four and a half year period. 

The fact that the Justice Department alleges that USIS dumped 

cases knowing that there could potentially be quality issues associated with those dumped, we have seen from the Aaron Alexis case 

the damage that one person can inflict. 

Inspector General McFarland, in your prepared remarks you express concern about the overall effect of USIS’s alleged fraud. You 

stated that you believe that USIS’s fraud may have caused serious 

59 

damage to national security. Can you elaborate that on and why 

are you concerned? 

Mr. MCFARLAND. Yes, I would be happy to. The overall concern 

that national security is damaged is sometimes hard to find a specific example. I guess a good example that we are dealing with 

today, though, would be the Aaron Alexis case, because so often 

you will see the plaque that says if you see something, say something. Well, I think this case is a perfect example of people that 

saw something, but didn’t say anything. And going back to the police department that refused to give a record, even that is awfully 

hard to understand. I did hear at one time that part of their reason 

was that they felt it was a liability to give out something if there 

was not a conviction. Well, I applaud the committee for thinking 

in the big terms of doing something about it, because it is going 

to take a big operation to change all of this. 

The Navy, as an example, they were told that there was an arrest, and they were also told that he was not truthful on his clearance papers. I would think that that probably should have been 

enough not to give him a secret clearance; at least to look into it 

further. 

There is a lot of wrongdoing going on; nothing more stunning, of 

course, than what USIS did. It is just kind of unbelievable to me 

that somebody can come to work one day and basically call in some 

supervisor that says, well, we are really going to put the screws to 

the people now; let’s not do this or that, let’s just feather our nest. 

That is just an absolute shame today to have to witness something 

like that. 

Anyway, the bottom line is I hope that the committee can go forward. The draft report that they just finished writing, I think that 

pretty much says it all about the conditions of things. 

Ms. DUCKWORTH. Can you speak to the fact that USIS also performed the quality review for those very same cases that they 

dumped? So basically you have the single contractor both performing the investigations and then another branch of the same 

company verifying that they had reviewed. Do you think it is a conflict of interest to have the same company conduct a background 

investigation and a final quality review? 

Mr. MCFARLAND. I absolutely do. 

Ms. DUCKWORTH. This is really a very serious concern. 

I would like to provide Director Archuleta the opportunity to respond to this. Director Archuleta, do you know whether the 665,000 

that were alleged dumped by USIS underwent sufficient quality reviews? 

Ms. ARCHULETA. Yes. There is a three-stage, there is a multilayered process for reviewing a background investigation. The contract requires that USIS would conduct its own quality review before sending it on for a final quality review either conducted by the 

contractor in the support services or by the Federal employee. 

With regard to the Alexis case, I might add that both our internal review and the IG’s review stated that USIS followed the 

standards that were in place for the background investigation. 

However, this does not negate the outrageous behavior that the 

previous management engaged in during 2008 through 2012 of the 

dumping of the cases. 

60 

Let me just add that last week I took steps to federalize that 

process so that now only Federal employees are reviewing in that 

last stage those background investigations. 

Ms. DUCKWORTH. Let’s hope you get the resources to do that as 

well. 

I am over time. Mr. Chairman, thank you. 

Mr. BENTIVOLIO. Thank you. 

The chair now recognizes the gentleman from Texas, Mr. 

Farenthold. 

Mr. FARENTHOLD. Thank you very much, Mr. Chairman. I have 

two areas I want to hit on. 

Ms. Archuleta, we have heard a lot of questions and testimony 

with respect to local authorities not providing the level of information that you guys are needing. Could you tell the reasons for that? 

I understand some may be financial. Are there other reasons they 

are not giving that information? 

Ms. ARCHULETA. Yes, sir. Sometimes they choose not to; other 

times resources are unavailable for them to do so. 

Mr. FARENTHOLD. As a former member of the Homeland Security 

Committee, we do a lot of grants to local police departments. It 

seems like if they don’t want to help us, we might be a little bit 

more reluctant to help them. Would you have a problem with us 

withholding all or some funds to police departments that don’t cooperate? 

Ms. ARCHULETA. I am supportive of making sure that we can get 

these records; it is a very important part of our background investigations and I know that the work of this committee, as well as 

the President’s PAC, is looking at this very serious issue. 

Mr. FARENTHOLD. As far as the overall guidelines—and I don’t 

mean to rush; I have a limited amount of time. With respect to 

overall guidelines, do you know the date of the guidelines for what 

is done in a background check? When were those last reviewed, the 

procedure and what is checked? 

Ms. ARCHULETA. I don’t know, sir, but I would be glad to get that 

for you. 

Mr. FARENTHOLD. As part of the background check, do you all 

Google the person? 

Ms. ARCHULETA. The use of social media is a technique that is 

being reviewed right now and recommendations have been provided by the DNI and supported by OPM. 

Mr. FARENTHOLD. But currently you don’t check—— 

Ms. ARCHULETA. They are under review right now. 

Mr. FARENTHOLD. Or news stories on Google or anything like 

that? 

Ms. ARCHULETA. I think just making sure that the quality and 

the validation of that information is secure. 

Mr. FARENTHOLD. All right, let’s talk a little about the ongoing 

investigations. We have heard several people list some of Mr. 

Alexis’s very questionable behavior; shooting out his ceiling and an 

arrest and some other issues there. There is nothing in place now, 

right, to do that? The only way you were to find out about it is if 

he self-reported? 

Ms. ARCHULETA. That is exactly right, sir. 

61 

Mr. FARENTHOLD. Now, doesn’t the FBI get information about arrests and convictions, and things like that, automatically? Are you 

aware of that? 

Ms. ARCHULETA. I am not aware of that, sir. I would be glad to 

find out for you. 

Mr. FARENTHOLD. All right. You know, there is no routine ongoing checking somebody’s credit score. You get in trouble, you are 

susceptible to corruption by a foreign government or whatever. So 

there is no ongoing as easy as a credit score. 

Ms. ARCHULETA. There are credit scores, but there is not continuous evaluation. So once the first background investigation is conducted, in Mr. Alexis’s case it would be 10 years later. But the 

issue of continuous evaluation is one that is very important to me 

and to the President’s PAC, as well as the ODNI. 

Mr. FARENTHOLD. It seems like that is something that could, at 

a very simple level, be automated. You have their name, you have 

their date of birth, you have their social security number. Okay, 

after Healthcare.gov, I am questionable about the Government’s 

ability to automate anything or compute its way out of a paper bag, 

but that seems like a relatively trivial—— 

Mr. Phillips, your company does background checks, albeit we 

had some issues there. But is that something you all could easily 

automate, you think? 

Mr. PHILLIPS. Are you asking about the—— 

Mr. FARENTHOLD. Just checking somebody’s credit score on a regular basis or polling databases to see if somebody’s name pops up. 

Mr. PHILLIPS. In my view, that would be a fairly straightforward 

application of technology to continuous monitoring. 

Mr. FARENTHOLD. Mr. McFarland, you are the IG there, you have 

your hands in the water. You have some other things that can really easily and inexpensively be done to do ongoing checks? 

Mr. MCFARLAND. Well, the point that you just made about isn’t 

there someway you can reach out, I think the FBI, they collect a 

tremendous amount of arrest records throughout the Country—— 

Mr. FARENTHOLD. Mr. Lewis, you are with the DOD. The holding 

of a security clearance isn’t a right, it is a privilege. We don’t have 

to wait until something is finally adjudicated, whether you are convicted or not. Shouldn’t an arrest be enough to just raise a red flag? 

Mr. LEWIS. Certainly there is information in arrest records that 

is worthy of consideration for whether or not someone should continue to have a clearance. 

Mr. FARENTHOLD. And sometimes between arrest and conviction 

could potentially be years. Meanwhile, that person still has access 

to sensitive information, is that not correct? 

Mr. LEWIS. That is a concern, very much so. 

Mr. FARENTHOLD. All right, I see my time has expired, but I do 

want to join with the other side of the aisle and the rest of this 

committee in coming up with a solution to give you guys the tools 

that you need to help keep our Country safe and make this process 

much more streamlined, much more automated, and much more responsive to the needs so we avoid another tragedy like Navy Yard. 

I yield back. 

Mr. BENTIVOLIO. Thank you. 

62 

The chair now recognizes the gentleman from Virginia, Mr. 

Connolly. 

Mr. CONNOLLY. Thank you, Mr. Chairman, and welcome to our 

panel. 

Mr. McFarland, we had a colloquy earlier between Ms. Archuleta 

and the chairman of 450 municipalities or jurisdictions that do not 

exchange information, background information with us when we 

are doing a security check-in. One wonders what could go wrong 

with that. So, for example, if they are not exchanging information 

with the Federal Government on a background check, could that 

mean that arrest records are not known at all? 

Mr. MCFARLAND. Yes, that is right. 

Mr. CONNOLLY. Could it mean that somebody is a child predator 

and we don’t know that at all? 

Mr. MCFARLAND. That is correct. 

Mr. CONNOLLY. There could be some kind of recorded deviant behavior and we wouldn’t know that at all. 

Mr. MCFARLAND. That is correct. 

Mr. CONNOLLY. Well, that is an extraordinary hole in the system, 

is it not? 

Mr. MCFARLAND. It truly is. 

Mr. CONNOLLY. I would remind my Republican friends who 

raised the question of maybe we should make certain kinds of Federal assistance contingent on their full cooperation, a desirable 

goal, but in light of the Supreme Court ruling in the Affordable 

Care Act on Medicaid, that tactic of encouraging cooperation may, 

in fact, be unconstitutional. So we may have to look for other ways 

to do that. 

Ms. Archuleta, I assume you share Mr. McFarland’s concern that 

this is a big hole in the system. 

Ms. ARCHULETA. Yes. And that discussion, sir, as I mentioned before, is happening right now within the President’s PAC, as well 

as within the Quality Assessment Working Group that includes 

OPM and the DNI. 

Mr. CONNOLLY. The Democratic staff have done a report I have 

just seen, and I haven’t had a chance to go through it all, but I 

guess the question that this raises for me is where was OPM, 

though? It seems to me that one of the things we focused on, an 

admirable goal, was the backlog problem. Do you want to remind 

us what the backlog was? 

Ms. ARCHULETA. Oh, I am sorry, sir. I wasn’t here at the time 

and I don’t remember the number. 

Mr. CONNOLLY. Mr. McFarland, do you remember? 

Mr. MCFARLAND. I assume you are speaking of the retirement 

backlog? 

Mr. CONNOLLY. Well, also just the backlog on security clearances. 

One of the goals of OPM was try to reduce the backlog. 

Mr. MCFARLAND. Yes. 

Mr. CONNOLLY. It was quite considerable. 

Mr. MCFARLAND. I think it was. 

Mr. CONNOLLY. And so maybe we focused so heavily on that metric. The ranking member put up the bonus chart for former executives of this organization that we had outsourced to, but they were 

63 

getting bonuses because that was the metric they were being measured by, was it not? Ms. Archuleta? 

Ms. ARCHULETA. I am sorry, sir. The metric was timeliness and 

quality. 

Mr. CONNOLLY. But weren’t we also pressing heat into that backlog? 

Ms. ARCHULETA. I am told that it was about half a million in the 

backlog. 

Mr. CONNOLLY. Right. 

Ms. ARCHULETA. The result of which we were trying to reduce 

that backlog so that Government could continue with employees 

that were seeking that clearance. 

Mr. CONNOLLY. When Ronald Reagan was going to Iceland, he 

invoked a Russian expression, dovre noprovre; trust, but verify. It 

looks to me, in this case, that OPM fell down on the job of the 

verify piece. I mean, if you are going to be looking at sort of rapid 

delivery of security clearances, where is the random auditing to 

make sure they are what they say they are supposed to be? 

Ms. ARCHULETA. I would just mention, sir, that during the process, it is a multilayered process, and all of those cases that were 

dumped went through another review; they didn’t go directly from 

the contractor to the adjudicator, but there was a third and final 

review, or second and final review was taken. 

Mr. CONNOLLY. But for years we weren’t catching the fact that 

people were dumping. 

Ms. ARCHULETA. The egregious behavior of USIS in hiding this 

is is part of the justification for the civil suit that is being conducted right now. 

Mr. CONNOLLY. But irrespective of a civil suit, how are we going 

to correct it, moving forward? What are the measures you are putting in place to safeguard the fact that nobody can do that again, 

at least not easily. 

Ms. ARCHULETA. Well, once we learned that there, in fact, had 

been this behavior, we took immediate steps for strengthening our 

oversight. We now conduct oversight on—— 

Mr. CONNOLLY. Ms. Archuleta, my question, though, was what 

was the oversight at the time. It seems like it was pretty thin. 

Ms. ARCHULETA. I wasn’t here at the time, sir, but I can comment, going forward, that I am doing everything I can—— 

Mr. CONNOLLY. No, Ms. Archuleta. My question is about what 

went wrong. How are we going to correct it moving forward if we 

don’t understand what went wrong, from the Federal Government’s 

point of view, from OPM’s point of view, or from our point of view 

about OPM? We were relying on OPM to manage this. It is not 

good enough to say I wasn’t there, so I can’t answer any of that. 

Ms. ARCHULETA. No, I agree with you, sir. But I have to take a 

look at what I can learn from what happened, as you mentioned, 

and, going forward, how I can prevent that from happening again. 

Mr. CONNOLLY. Forgive me, Mr. Chairman, just pressing this one 

more time. 

Is it your view, Ms. Archuleta, and I know you are new on the 

job, that something went terribly wrong and that we do need to put 

corrective measures in based on what went wrong—— 

Ms. ARCHULETA. Absolutely, sir, I agree with you. 

64 

Mr. CONNOLLY. Okay. I thank you and I thank the chair. 

Mr. BENTIVOLIO. Thank you. 

The chair now recognizes the gentleman from Georgia, Mr. 

Woodall. No questions? 

Mr. Lankford? 

The chair now recognizes the gentlelady, Ms. Kelly. 

Ms. KELLY. Thank you, Mr. Chair. 

Good morning. The most frequent question that has been asked 

about the Aaron Alexis incident is how this young man could have 

received a security clearance in 2008, given his 2004 gun-related 

arrest in Seattle. 

Mr. McFarland, I understand that your office reviewed the background investigation conducted on Alexis by USIS and found that 

a copy of the police report was not included in the investigation. 

Can you explain for us why the police report was not included in 

the investigation report? 

Mr. MCFARLAND. Well, my assumption is that the history of the 

Seattle police department to provide that type of information was 

that they would not get it, so OPM or the Federal investigative 

service had created what they referred to as a workaround, allowing the investigator to take other avenues of approach, such as 

databank information; and that is the reason that they didn’t come 

up with the information on the gun. But I also understand that the 

police department was hesitant to give any information out because 

of liability concerns if there wasn’t already a conviction attached to 

it, and in this case there was not a conviction at that point. 

Ms. KELLY. And, Mr. Lewis, is it possible that if details of the 

2004 gun-related arrest had been included in his background investigation report, he may not have received a secret level clearance? 

Mr. LEWIS. That sort of information could have led to the denial 

of his clearance. 

Ms. KELLY. Director Archuleta, is the Seattle police department 

one of a number of State and local jurisdictions that does not cooperate with investigative requests for criminal history information? 

Ms. ARCHULETA. Seattle is now cooperating. 

Ms. KELLY. Oh, they are now cooperating? 

Ms. ARCHULETA. They are now cooperating, since 2011. 

Ms. KELLY. Since 2011. And how many are on that list, what was 

that number? 

Ms. ARCHULETA. It is about 450. 

Ms. KELLY. And do you see any of the others changing like Seattle? 

Ms. ARCHULETA. As I mentioned, the District of Columbia has recently come on board as a cooperating law enforcement district. 

Ms. KELLY. That is just one out of many. 

Ms. ARCHULETA. We are working very closely with others to persuade them to participate. 

Ms. KELLY. Okay. How do we address situations like the Alexis 

case, where the workaround apparently did not capture some of the 

very critical information? 

Ms. ARCHULETA. I think there are two issues that you raise here. 

The first one is with the continuous evaluation, so that we are getting this information not once every 10 years, but we are continVerDate Aug 31 2005 14:17 May 30, 2014 Jkt 000000 PO 00000 Frm 00068 Fmt 6633 Sfmt 6633 C:\DOCS\87892.TXT APRIL
65 

ually provided information about anyone who holds a secret or top 

secret clearance. Secondly, I think it is the relationships that we 

have with the local law enforcement agencies, and that needs to be 

strengthened, and I look forward to working with this committee 

in support of that. 

Ms. KELLY. And, panel members in general, there is existing 

Federal law that requires State and local law enforcement agencies 

to comply with a request for criminal history information, but there 

is no enforcement mechanism under that law. Ranking Members 

Lynch and Cummings have introduced legislation that would 

strengthen compliance, or at least disincentivize noncompliance. Do 

you agree that there is need for such legislation? Any of you. 

Mr. RHODES. Yes, we absolutely concur with that. 

Ms. ORDAKOWSKI. We do as well. 

Mr. MCFARLAND. Also agree. 

Mr. LEWIS. We need to get the information, that is true. 

Ms. ARCHULETA. I think the Administration, working with this 

committee, would be very interested in reviewing such legislation. 

Mr. PHILLIPS. And we would welcome anything that would increase the cooperation with local law enforcement. 

Ms. KELLY. I know we are here today talking about secret level 

clearance and how this person got it and we didn’t know his background, but I also feel, not to do with you guys, but that also 

speaks to the importance of background checks, period. So thank 

you. 

I yield back. 

Chairman ISSA. [Presiding.] I thank the gentlelady. 

We now go to the gentleman from Oklahoma, Mr. Lankford. 

Mr. LANKFORD. Thank you, Mr. Chairman, and thank you all for 

being here for the long day. You have gone through a lot of questioning already. 

I have a couple questions just on insourcing once we get to the 

OPM process. Obviously a lot of this was taken out of OPM and 

moved to private contractors, 70 percent of it back in the 1990s. 

Now there is some thought about does it need to move back into 

it. I would like to ask the director what your thoughts are about 

that. Do you believe the Federal security clearance background investigations performed by OPM employees, do you think they 

should be performed solely or mostly, I would even say, by OPM 

employees, or do you think the current model of outsourcing is a 

good model still? 

Ms. ARCHULETA. As I mentioned earlier, sir, the enormity or the 

large numbers of clearances requested and background investigations that are conducted by OPM is a very large number, and I 

don’t think that right now there is the numbers with Federal employees within FIS to conduct those, that is why we rely on contractors to assist us. 

Mr. LANKFORD. So it should continue, in your perspective; not 

what it is now, but that should continue? 

Ms. ARCHULETA. I believe that with strong quality performance 

standards that we could rely on contractors to help us. 

Mr. LANKFORD. Okay. Have a question as well, again. Before 

OPM sends the background investigation files out to the client 

66 

agencies, there is a final quality review to ensure the file is complete, is that correct? I am tracking with that correctly? 

Ms. ARCHULETA. Yes, that is correct. 

Mr. LANKFORD. What percentage of those files are returned back 

to OPM by the client agencies because the file is incomplete? 

Ms. ARCHULETA. About one percent. 

Mr. LANKFORD. Okay. Can you explain just that quality review 

process, how that works, mechanically? 

Ms. ARCHULETA. Yes. After a background investigation is completed, the contractor is required to perform a quality review. Once 

that quality review is completed, it is sent to OPM or FIS, and another quality review is conducted. It is sent then to the adjudicator, 

who then reviews all of the information, determines whether a 

clearance will be given. 

Mr. LANKFORD. Thank you. 

Mr. Lewis, can I ask you that same question? What percentage 

of cases do you estimate that you get from OPM that are incomplete? 

Mr. LEWIS. There are two layers to that. The cases that get rejected back to OPM are about a one percent rate. There are cases 

that come through that are missing information, but they are not 

missing information because OPM failed to carry out a complete investigation; they are instances where employers refused to talk to 

the OPM investigator and give information. So it is greater than 

the one percent, but—— 

Mr. LANKFORD. Give me a guess on a percentage there. 

Mr. LEWIS. The last number I heard was in the 30 percent rate. 

But, again, these are instances where the failure of a source to provide information was adequately documented and we were able to 

continue with—— 

Mr. LANKFORD. So what do you do with that? How do you finish 

that out? Obviously, you have an incomplete file. Can you give me 

an example of something that might be missing from that? And 

then what do you do with it? 

Mr. LEWIS. Well, for example, at the top secret level there is a 

requirement for neighborhood checks, and particularly in this area 

people move and there may not be anybody who knew the subject 

of the investigation who is available, so we have given guidance to 

the DOD consolidated adjudication facility, which identifies the 

types of information which may not be available and which would 

still allow the DOD CAF to do their adjudication. 

Mr. LANKFORD. But you are saying right now, once you get it 

over, you are still able to navigate that. 

Mr. LEWIS. Yes. 

Mr. LANKFORD. Okay. 

Mr. Rhodes, can I ask you just a question about OPM investigations for a contract investigator if there is a misconduct issue? 

Sometimes that investigation occurs and it is my understanding 

that sometimes you don’t even know that a person is being investigated that you have contract responsibility for. Is that correct or 

not correct? 

Mr. RHODES. That is correct. 

Mr. LANKFORD. Then my understanding is that at some point you 

get a bill, when you find this has occurred; they have done an inVerDate Aug 31 2005 14:17 May 30, 2014 Jkt 000000 PO 00000 Frm 00070 Fmt 6633 Sfmt 6633 C:\DOCS\87892.TXT APRIL
67 

vestigation, you get billed for the investigation, there is misconduct 

that has occurred with someone that is under your purview as well. 

I would like to know just how you handle that, how you process 

that as a contractor that is trying to oversee people. How would it 

improve your workflow to be able to be in the loop on that? 

Mr. RHODES. Thank you, sir, for that question. If there is a—and 

typically it will be identified by us, that there may be a falsification 

of data through the rigorous quality processes that we have in 

place within CACI; a series of re-contacts, re-checks, re-record 

checks. So if that is suspected, by contract terms, we report that 

to OPM immediately within 24 hours. OPM makes the decision 

what to do with that person. If, in fact, there is further investigation that is required, essentially at that point, and you are correct, 

sir, that we basically get the bill for the amount of re-work that 

is required, yet we don’t have insight into that. We have requested 

additional details to allow us to have insight into what the support 

data is on that. We welcome additional detail on that when we do 

get those bills. 

Mr. LANKFORD. Just the detail of what the cost is, you are saying? So not just being in the loop in it, but actually getting a detailed here is what I am paying for? 

Mr. RHODES. Absolutely, yes, sir. 

Mr. LANKFORD. Okay. Thank you. 

I yield back. 

Chairman ISSA. I thank the gentleman. 

We now go to the gentlelady from California, Ms. Speier. 

Ms. SPEIER. Mr. Chairman, thank you, and thank you to all of 

the witnesses for your participation today. 

Let me start off by asking Mr. McFarland if you would like to 

clarify a statement you made earlier. Did OPM know about the 

fraud before the whistleblower filed their lawsuit? 

Mr. MCFARLAND. Actually, the Government was not aware of the 

extent of the fraud until the qui tam was filed in July of 2011; and 

then our office came into that information August of 2011. 

Ms. SPEIER. So what is really clear to me in general is that we 

have a contractor that had two contracts that created a conflict of 

interest, they knew it created a conflict of interest, they used it to 

their advantage, and the penalty imposed upon them is to continue 

to have a contract with the U.S. Government. 

Let me start with you, Director Archuleta. My understanding is 

that they circumvented OPM’s oversight of their performance in 

quality review. This is a statement made during the audit: I am 

not splitting hairs, but they knew how we were auditing; they 

knew what kind of reports we generated to oversee that we were 

actually performing the activity, so they circumvented our oversight process and they falsified records to help do that. 

Why did OPM allow USIS to hold both contracts? 

Ms. ARCHULETA. The first contract on the background investigations was split between USIS, CACI, and KeyPoint, and then the 

support contract was only bid by USIS. 

I might just mention as well that as soon as we found out about 

the egregious behavior, we took immediate action. 

Ms. SPEIER. So USIS no longer has the support contract, is that 

correct? 

68 

Ms. ARCHULETA. I took action last week to federalize that, the 

support contract. 

Ms. SPEIER. All right. But why would we initially have done it 

in the first place? It is just a fundamental conflict of interest. 

Whether it is acted upon or not, it creates an environment so that 

the kind of activity and the dumping of 40 percent of these reviews 

was able to take place for over four years. So why would we ever 

do that? 

Ms. ARCHULETA. I don’t disagree with you and, as I stated, I took 

action to change that. 

Ms. SPEIER. So can we agree that you will never have a support 

contract being provided to an entity that also has a function? 

Ms. ARCHULETA. I believe that the review of quality has to be 

done by FIS, and I would agree with you on that. 

Ms. SPEIER. By that you mean by the Federal Government or by 

a third party? 

Ms. ARCHULETA. By the Federal Government, the Federal Investigative Services of OPM. 

Ms. SPEIER. All right. Has anyone done an analysis—I think Mr. 

Lankford was pursuing a set of questions about continuing to privatize some of this function. He and I may disagree a little bit, but 

has anyone done an analysis to see how much we spend with private contractors that the market seems ready, willing, and able to 

invest in—private equity is all over USIS and others—versus doing 

it internally? I don’t think we pay bonuses of $375,000. And this 

is bonuses the taxpayers of this Country paid to these contractors. 

Let’s be really clear about it. This isn’t money coming out of their 

pockets, it is money coming out of the taxpayers. 

So have you done an analysis to see whether or not it is actually 

cost-effective to continue to privatize some of the reviews? 

Ms. ARCHULETA. To my knowledge, there hasn’t been such an 

analysis. 

Ms. SPEIER. So why wouldn’t we do that? 

Ms. ARCHULETA. I would certainly like to discuss that with you 

further. 

Ms. SPEIER. Mr. Chairman, I think before we continue to privatize the function—I think if we ask the American people do you 

think that private contractors should be determining whether or 

not top secret clearances are given to various contractors and various Federal employees, they would probably be alarmed to know 

that we privatize that function. But, more importantly, at the very 

least we should determine whether or not it is cost-effective. 

Chairman ISSA. I agree. If the gentlelady would yield. I agree 

with the gentlelady that we should do a thorough review of the history that began, quite frankly, in the Clinton Administration, when 

this was originally outsourced, and I would look forwards to working with the lady both on the effectiveness and the cost. USIS, as 

you know, was spun off, effectively, from an in-house service, and 

the idea that we should periodically look at a program. 

I also share with the gentlelady that although I do not object to 

a potential contractor doing the review, there needs to be real separation between those doing something and those auditing something. And the same should be true, as you know, in my opinion, 

69 

when Government entities audit themselves. We need to have a 

level of independence of those auditors. 

Ms. SPEIER. Thank you, Mr. Chairman. Reclaiming my time. 

I am also concerned that we are wimps in the Federal Government, that even when we are taken to the cleaners by contractors, 

we go back for more, and that there aren’t any penalties that are 

imposed of any significance. 

So my question to you, director, is has USIS or Experts been penalized at all? 

Ms. ARCHULETA. The civil case against USIS is requesting treble 

damages, up to treble damages. 

Ms. SPEIER. Are there no administrative actions you can take, 

fines that you can impose? 

Ms. ARCHULETA. We have withheld all of the bonuses since 2010 

and, as we move forward with this case, we will be working closely 

with DOJ. 

Chairman ISSA. The gentlelady’s time has expired. I thank the 

gentlelady. 

We now go to the gentleman from Georgia, Mr. Woodall. 

Mr. WOODALL. Thank you, Mr. Chairman. I would like to yield 

my time to you, if I may. 

Chairman ISSA. I am deeply pleased to accept that. 

Following up on a couple of questions for the director. One question is can you fire a Federal employee at will, any time, if they 

did similar failures to perform to what Mr. Phillips’s employees 

did? 

Ms. ARCHULETA. The merit system protects Federal employees 

and there is a process where there is—— 

Chairman ISSA. Just shortcut it for this committee that is familiar with it. Mr. Phillips’s 20 people have been fired. They could be 

fired or forced to resign at a moment’s notice. Isn’t it true that 

every one of his employees, each of these contractor’s employees 

you could individually disqualify without any lengthy administrative process, thus that, if you see wrongdoing by any of these contractor’s individual employees, you can terminate their ability to 

work on these contracts? 

Ms. ARCHULETA. Each of the contractors that were accused of 

this egregious behavior were immediately suspended from the contract. 

Chairman ISSA. I think that is an important thing for Ms. Speier, 

is that the flexibility of your quickly taking somebody out who even 

slightly loses your confidence is something you have within the contractor industry where, quite frankly, people would be on administrative leave with pay for a long period of time, at best, and you 

would be denied their services but still paying, isn’t that true? 

Ms. ARCHULETA. The merit system protects Federal employees, 

as you know, sir. 

Chairman ISSA. Okay. I will take that as a yes. 

Mr. McFarland, I want to make sure the record is clear, and I 

think it isn’t clear. Ms. Speier asked you a question about the investigation in which your answer implied to me that Mr. Blake 

Perceval brought the case before you understood the magnitude. Is 

that correct? 

Mr. MCFARLAND. Yes, before we understood the magnitude, yes. 

70 

Chairman ISSA. Okay. I would like to bring your attention to an 

April 4, 2011 document, and I would ask unanimous consent it be 

placed in the record. It is to the USIS VP Field Operations, Mr. 

Robert Calamia, and it bears Steven Anderson’s signature, the 

Branch Manager, Federal Investigation Oversight Branch. Are you 

familiar with that letter? 

Mr. MCFARLAND. No, I am not. 

Chairman ISSA. Well, we will have a copy given to you. In a nutshell, on April 4, 2011, the United States Office of Personnel Management lays out a serious complaint, not necessarily all the 

650,000 or four years, a serious complaint, and you are talking 

about thousands of these dumpings. And the reason that I am so 

concerned that the Government is getting a bad wrap on this qui 

tam case is one of the cc’s is Mr. Blake Perceval. So he is cc’d about 

a major investigation, a deep area of concern that OPM has discovered on April 4. Three months later he files a billion dollar lawsuit. 

I will give you a copy of that, and I would like to follow up after 

you have had a chance to look at it. But from what I can tell, OPM 

notified the complainant of their deep concern and an open investigation. He seized on the magnitude of it ahead of time, but not 

on the basic discovery. Since Abraham Lincoln, qui tam cases were 

intended to discover that which would otherwise not be discovered, 

not simply to amplify, prosecute, and benefit financially by it. It is 

a deep area of concern. I have to tell you if Mr. Phillips’s company 

owes us $1 billion, I want the billion dollars. But, quite frankly, I 

don’t want to share it with somebody who was cc’d on a letter three 

months before they filed the case. At least on the surface this kind 

of thing should be a deep concern to all of us. 

Chairman ISSA. With that, I have probably only one other question. 

Mr. Rhodes, there have been a lot of questions. Mr. Phillips’s 

company is in the spotlight, but isn’t it true that, in fact, the level 

of flexibility and cost, and the ability to up—also for Ms. 

Ordakowski—your companies can scale up to meet demand quicker 

than the Federal workforce, isn’t that true? 

Mr. RHODES. Yes, sir. 

Ms. ORDAKOWSKI. Yes, sir. 

Chairman ISSA. And if, tomorrow, we were to have a reduction 

in the level of need, you would also lay people off immediately, isn’t 

that true? 

Ms. ORDAKOWSKI. Yes. 

Mr. RHODES. Yes, sir, and we have. 

Chairman ISSA. During the shutdown, the so-called shutdown of 

the Government, were your people paid? 

Mr. RHODES. Sir, we typically have a backlog of cases that range 

about two months, so we were pressing down on that and coming 

close to actually having no backlog. 

Chairman ISSA. So you continued to work without an assurance 

of being paid, is that correct? 

Mr. RHODES. Yes, sir, to meet the mission. 

Chairman ISSA. And you only got paid for work done. Had we not 

authorized it when we opened back up, you wouldn’t have been 

paid. 

Mr. RHODES. That is correct, sir. 

71 

Chairman ISSA. Okay. Did either of your companies, any of the 

three companies lay anyone off? 

Mr. RHODES. We were close at that time; we were working down 

our backlog. But I do not believe specifically because of the shutdown we laid anyone off. 

Chairman ISSA. Okay. So I just want to make it clear, if you had 

furloughed anybody, they wouldn’t have been paid even when we 

turned back on, because they wouldn’t have accomplished work. 

You are only paid for work you do, not for days in which people 

are employees, but laid off. 

Mr. RHODES. Yes, sir. 

Chairman ISSA. True of all your companies? 

Ms. ORDAKOWSKI. Yes. 

Mr. PHILLIPS. Yes. 

Chairman ISSA. Okay. I want to make that clear because it is 

very, very clear that Federal workers are not an easily raised or 

lower level, and I share with the director the desire to make sure 

that the stable force, the long-term force of people auditing and reviewing are inherently governmental. I want to be a little careful 

not to rush to bring everything in-house when, in fact, we are not 

very good in the Federal Government at increasing or reducing 

workloads the way your companies can be asked to do. 

For the director, is that pretty consistent with your view of best 

case for OPM? You mentioned earlier that you were not in a position to take on all the workforce if you were to eliminate these contractors. 

Ms. ARCHULETA. I think there is a critical balance the work that 

the Federal employee can perform, as well as in partnership with 

private contractors. 

Chairman ISSA. I thank the gentlelady. 

We now go to the gentlelady from New York. 

Mrs. MALONEY. Thank you. 

There are allegations of fraud. This is serious allegations. I am 

wondering are we looking at a case of too big to suspend? You have 

suspended workers, but you haven’t suspended the company. And 

I understand that grounds to suspend is that the contracting officer 

could suspend the contract due to fraud, and by all indications it 

appears that fraud is there. Would anyone like to answer that? Ms. 

Archuleta? 

Ms. ARCHULETA. USIS has taken the steps to remove all those 

individuals who were—— 

Mrs. MALONEY. I said that, they removed people. 

Ms. ARCHULETA. They removed them and we—— 

Mrs. MALONEY. But it was the company and the atmosphere in 

the company that allowed this to happen. May I just read one internal email from April 2010? It stated, ‘‘Shelves are as clean as 

they could get. Flushed everything out like a dead goldfish.’’ Were 

you aware of this email? 

Ms. ARCHULETA. No. 

Mrs. MALONEY. Was anyone aware of this email? 

Mr. MCFARLAND. I was aware of it. 

Mrs. MALONEY. You were aware of it. And seeing that evidence 

today, do you believe that USIS was honest with OPM, Mr. McFarland? 

72 

Mr. MCFARLAND. No, I don’t believe they were honest at all. 

Mrs. MALONEY. Do you think they were honest, Ms. Archuleta? 

Ms. ARCHULETA. USIS, at that time, was not honest and had 

worked and engaged in fraud. 

Mrs. MALONEY. So why in the world are we continuing this contract with this company? Is it too big to suspend? Who could suspend this, the contracting officer, Mr. McFarland? 

Mr. MCFARLAND. Yes, the contracting officer could do that. 

Mrs. MALONEY. Is the contracting officer on the panel? 

Mr. MCFARLAND. No. 

Mrs. MALONEY. Well, is there a concrete standard that we have 

that would point out when something could be suspended? 

Ms. ARCHULETA. The procurement officer and the design of the 

contract holds the contractor accountable, and that is why we were 

able to remove the individuals who conducted this egregious behavior and why we have been able to take immediate steps to—— 

Mrs. MALONEY. Well, I would say the contracting law, as I remember it, says contracts can go to responsible bidders. Does anyone think that USIS has been a responsible bidder in this? Does 

anyone think they have been a responsible bidder in any way, 

shape, or form? 

Mr. PHILLIPS. May I respond to that? 

Mrs. MALONEY. Sounds like they were defrauding the Government. 

I just have another question. I want to make sure I get my questions in before yielding to you, Mr. Phillips. 

There is a system, actually, I wrote the law, called VENDEX, 

where you have to check the performance of contractors before you 

award a contract; and in that is whether or not they meet the contract criteria, whether or not they get the contracts done on time, 

whether they have cost overruns repeatedly, if they have a track 

record. I wrote this after a $25 million contract was given to a company that didn’t exist when I was on the city council in New York. 

I am not kidding. So it just basically looks at the performance. 

And at the very least, Mr. Chairman, we should have part of the 

VENDEX file whether or not they defrauded the Government. I 

would say that this is a grounds of not being a responsible contractor. 

Now, I understand that this is a big company; you spun off from 

the Government. So my basic question is do you think that they 

are too big to be suspended, Mr. McFarland. 

Mr. MCFARLAND. No, I don’t think that they are too big to be 

suspended; I think they could be suspended and others would take 

over. But there would be an interim of a problem area, for sure. 

But I don’t know that that would be enough to suggest that they 

shouldn’t be suspended. 

Mrs. MALONEY. Well, they created a national security threat. 

Mr. MCFARLAND. Yes, I agree. 

Mrs. MALONEY. Absolutely created a national—I would call that 

very serious. 

Mr. MCFARLAND. It is very serious. 

Mrs. MALONEY. Extremely serious. And I think at the very least 

this performance should be tagged on their VENDEX review and 

that anybody who gives them a contract has to expressly say why 

73 

in the world are they giving it to someone who defrauded the Government and created a national security threat to our Country. 

Anyone else like to comment on this? 

Mr. Phillips? 

Mr. PHILLIPS. Thank you. When these allegations—and, by the 

way, they are just allegations at this point, we have not had our 

day in court. When these allegations first came to the company’s 

attention in January of 2012, the company moved aggressively to 

cooperate with the investigation, which was initially led by the 

OPM IG, subsequently joined by DOJ. Any employees who were 

found to have any responsibility related to those allegations were 

quickly separated from the company. Over the past two years the 

company has taken aggressive and effective action to increase controls, enhance procedures, place new leadership in place, and today 

USIS is a strong, responsible contractor providing a cost-effective 

and high-quality service for OPM; and that is after two years of 

hard work, including separating of anybody who had any responsibility for the behavior alleged in the complaint. 

Chairman ISSA. I just want to make sure, before I go to Ms. Grisham, the director, you said something I think you want to correct 

the record. You said they committed fraud. Do you want to correct 

that to—— 

Ms. ARCHULETA. Yes. I actually did say afterwards, but I didn’t 

say it loud enough, an allegation of fraud. Thank you, sir. 

Chairman ISSA. Okay. Thank you. 

The gentlelady from New Mexico. 

Ms. LUJAN GRISHAM. Thank you, Mr. Chairman. 

Director Archuleta, welcome. Point of personal privilege, Director 

Archuleta is from my district, sort of, and definitely from my home 

State. 

Chairman ISSA. She very proudly told me that in our one-on-one 

meeting, so she does not make it a secret one bit that she is in a 

much colder and less hospitable climate here. 

Ms. LUJAN GRISHAM. Sometimes. In any event, Mr. Chairman, 

thank you for that. 

And congratulations on your job. By virtue of the content and the 

discussion in this hearing, it is an important role with many, many 

challenges that do not go unaddressed; we continue to have these 

significant and serious threats and issues to our security, so I appreciate very much your high level attention and your willingness 

to tackle the issues that have been presented today, and others. 

I want to take a different tact, and I don’t want anyone to assume that I don’t agree with many of the statements by my colleagues on both sides of the aisle about focusing in on improving 

practices and minimizing all of our security breaches and threats, 

and getting our criminal background checks and related issues on 

track, and safeguarding that information and making sure that we 

have actors on behalf of the Federal Government that are able to 

do that job, and that we feel safeguarded by virtue of having that 

information vetted and dealt with appropriately. 

But in the context of mental health, there is an interesting and 

I think a very difficult balance, and I want to talk about it for a 

minute, and that is that we want folks to disclose, we want folks 

to disclose prior to a criminal background screening, and we want 

74 

them to disclose after. Some emotional illnesses or emotional problems are not a specific diagnosis and have something to do with 

what happens in your environment, in your life later, after a security clearance; and I would guess that most people aren’t going to 

disclose that because you lose your security clearance for reasons 

that I think aren’t easy to talk about. But if people get the right 

kind of help, they may not be a security threat and might get the 

kind of help that they need. So it is a very delicate balance. 

We don’t want to create any more problems where people fall 

through the cracks and we create these problems and security 

threats and loss of life. They are absolutely unacceptable. But I am 

interested in where we draw some of these balances and how we 

can do a much better job screening and getting folks to want to 

participate in that screening. 

Are you wrestling with these issues currently? 

Ms. ARCHULETA. Yes. These very serious issues are being discussed right now, and I appreciate your comments and would seek 

to have further discussions with you. Issues of balancing privacy 

and national security are very difficult, but the issues of mental 

health are also and play an important role in our background investigations and the granting of security clearances. So I would appreciate the opportunity to have further discussions with you as 

these ongoing issues are being reviewed by both OPM and ODNI 

through the Quality Assessment Working Group. 

Ms. LUJAN GRISHAM. Thank you. Maybe in that Quality Assessment Working Group how do we today, notwithstanding that I 

hope that these processes get greatly improved, how do you ensure 

that employees who reach out now about mental health or mental 

health-related issues, that they are actually getting the assistance 

that they need? And it is really a two-part issue, because, one, you 

want to make sure that you are responding correctly in balancing 

those privacy issues, but then if there is a treatment course, you 

want to make sure that that employee is, to the highest degree possible, notwithstanding their own legal protections, that they are adhering to those, because if not then you have to minimize, potentially, any of those threats internally or externally that you are required to eliminate or mitigate to the highest degree? 

Ms. ARCHULETA. Certainly the support of OPM for any employee 

around mental health issues is there, and offering not only whatever support we can as employers, but also helping to refer those 

individuals to doctors or other practitioners who can help. 

Ms. LUJAN GRISHAM. And I am assuming also that with your 

agency’s involvement, that the inspector general, that all related 

players would be weighing in on trying to strike that very delicate 

balance. 

Ms. ARCHULETA. I know they already are, and I appreciate your 

support for this issue and would look forward to further discussions 

with you. 

Ms. LUJAN GRISHAM. Thank you. 

I am out of time, so I do hope, Mr. Chairman, that we can continue to have these kinds of discussions, because the best possible 

practice isn’t going to get at all of these issues, and even in law 

enforcement—I know I am taking up time I don’t have, so I appreciate your patience with me—there are the screening tools that are 

75 

prepared by mental health professionals, and it depends on the jurisdiction about how effective those tools are at screening people in 

or out appropriately, or inappropriately, and I don’t think it is an 

area that we have been all that effective at. And given what has 

tragically occurred, we have to do something about it immediately. 

Chairman ISSA. Well, for the gentlelady, one advantage of going 

last is you are unlikely to see a heavy, quick gavel on your time. 

But I join with the gentlelady in recognizing that mental health 

after somebody is an employee is critical. Part of what we are concerned about here today, of course, is Aaron Alexis was somebody 

whose mental health should have made them not an employee, as 

it turns out. But I share with you that sort of screening desire and 

treatment as appropriate. 

Ms. LUJAN GRISHAM. Thank you, Mr. Chairman. 

Chairman ISSA. Thank you. 

The gentlelady from the District of Columbia has one final question. 

Ms. NORTON. Mr. Chairman, I just want to clear up what seems 

to be a circular process here, but I do want to say I think this may 

be the first hearing, I may be wrong, in the House on the Navy 

Yard shooting, and I want to thank you very much for this hearing. 

I am certain I speak not only for my own district. There were people from—they have had to rename the building, this was such a 

tragic occurrence. 

But I was puzzled, really, that apparently OPM barred the president of USIS investigative division from working on contracts. You 

can understand OPM is doing that, though. But then USIS protests, essentially implicating OPM in the fact that the man was 

promoted in the first place. I have no idea whether or not, perhaps 

Ms. Archuleta, OPM reconsidered its decision. All we know is that 

the committee was informed that this man has resigned. 

Perhaps I should go to Mr. McFarland. Do you think he should 

have been suspended? Should OPM have been implicated in his 

promotion, as apparently USIS says and was shocked that the implication was so deep that OPM would then bar him from working 

on the contract? 

Mr. MCFARLAND. I am not familiar with that aspect that you are 

talking about right now. 

Ms. NORTON. Ms. Archuleta, you are aware that this man has resigned now. Was OPM involved, as USIS says, in promoting him 

to president? 

Ms. ARCHULETA. No, we weren’t. I think he may be talking about 

the process of uncovering who was involved in the alleged fraud, 

and the individuals were removed over a sequence of time, and as 

we learned of—— 

Ms. NORTON. All I am trying to find out is do you have any say 

on who gets promoted or not promoted. 

Ms. ARCHULETA. No. 

Ms. NORTON. So you didn’t have anything to do with that, with 

the resignation. How did the resignation come about? Now he is 

gone. You tried to make him gone, now he is gone. Did you request 

his resignation? 

Ms. ARCHULETA. We suspended him from the contract. What he 

did afterwards was up to the company itself. 

76 

Ms. NORTON. I just want to suggest that this—if you have such 

a close relationship, Mr. McFarland, maybe this is inherently a 

governmental matter. It looks like they are in bed, virtually, with 

USIS, and if they are in bed with them, it may be that it involves 

secure matters, and that they can’t really separate themselves from 

the company. So one wonders whether this is appropriately given 

to a contractor. 

Mr. MCFARLAND. Are you saying that the suggestion is that that 

person was in bed with OPM hierarchy? 

Ms. NORTON. I am suggesting that the company may be in bed 

with OPM, because it worked so closely and apparently has to work 

so closely because it is inherently governmental work because it involves secure matters, and despite the mistakes that have been 

made here, it looks like they are going to be working even more 

closely with the company. One wonders whether there is a distinction between the Government and the company sometimes. 

Thank you, Mr. Chairman. 

Chairman ISSA. I thank the gentlelady. 

We now will go to the ranking member for his closing. 

Mr. CUMMINGS. Mr. Chairman, I again want to thank you for 

this hearing. To the panel, I want to thank you too. 

Just a few years ago I chaired a subcommittee in the Transportation Committee, and that committee was called Coast Guard and 

Maritime Matters, and we had a situation there where literally the 

Government was purchasing boats that didn’t float, literally. You 

know, when I listen to the testimony here and I hear things like 

665,000 dumped files, Mr. McFarland, it is shocking to the conscience, it really is. You know, sometimes I think that when people 

do these things, they need to understand that there are consequences. They may not live long enough to see the consequences, 

they may not ever hear about them, they may never be brought to 

justice, but there are consequences. And when we, as entities and 

individuals, create a—and doing our individual jobs that we are 

supposed to do—move to a culture of mediocrity or negligence or 

pure fraud and greed, it causes all kinds of problems. And we have 

to put in, unfortunately, we have to put in the mechanisms to protect ourselves from ourselves. And I am hoping that there are a lot 

of lessons learned here. 

We cannot bring back those individuals who were killed, but 

hopefully we can put things in place, and I know we are continuing 

to do it, Ms. Archuleta and others, I know we are trying to do that, 

but we need to kind of make sure it happens fast. And nobody, and 

I know the chairman will agree with me, nobody is trying to put 

a negative light on all the folks who work for these various companies. No. It only takes a few, but the few can do mighty damage. 

Mr. Phillips, as I said to you a little bit earlier, you have a tough 

job. You really do. And maybe it has been made easier by a lot of 

people taking the exit ramp and getting out of the company for one 

reason or another. But surely many of them will be brought to justice. And as I sat here, I could not think that the chairman and 

I were just talking about our various districts and I think about 

the people on my block. I live not too far from the Ravens Stadium 

in Baltimore, and I have said this many times, if somebody in my 

block, and there are people there who, if they stole a bike, they get 

77 

a record for a lifetime. If they steal a bike, $150 bike. Record, lifetime, where they may won’t be able to get jobs, won’t be able to 

live in certain places, won’t be able to get certain education opportunities like scholarships and whatever. 

And then when I look at stuff like this, where people are not 

doing their jobs and I am sure the investigation will reveal what 

it will reveal, but I am sure there are some criminal activity here. 

You know, I want to make sure that we get to that, and I am sure 

the Justice Department will, because I think not only must we do 

it to make sure that these incidents don’t happen again, but one 

of the things that the chairman talks about in his statement when 

he gives the purpose of the committee, he talks about trust in Government and making sure that tax dollars are spent properly and 

making sure that people feel good, feel that we are making sure 

that their tax dollars are spent effectively and efficiently. So this 

is a bipartisan effort because this is about making sure that those 

people who are given clearances deserve them. After all, we don’t 

come up with this concept of clearances just to be doing it; there 

is a purpose for this. 

So, again, I want to thank all of you for what you have contributed. 

I know I went a little longer than I expected to, Mr. Chairman, 

but I think this is just so very, very important because there are 

consequences. Thank you very much. 

Chairman ISSA. I thank the gentleman. 

In closing, a couple of things. First of all, Mr. Phillips, Mr. 

Rhodes, and Ms. Ordakowski, we are going to be looking at your 

companies on an ongoing basis. This committee has the primary jurisdiction for the Federal workforce and their contractors, and it is 

an area of interest that we are going to do on an ongoing basis. We 

certainly want to make sure that what Mr. Phillips says has been 

straightened out at his organization has been. We also are going 

to want to make sure that best practices continue to evolve at both 

of yours. 

I am of the opinion that Government does best what it checks 

somebody else doing, and does worse what it does in-house and 

then tries to hold itself accountable. That has been a problem of 

Government for a long time, is are we an honest broker of what 

works and what doesn’t. 

Director, you are the honest broker, and it is extremely important that, in fact, first, we see if the systems that failed us, including the software that wasn’t in place for many years, that ultimately discovered that case files were being opened and quickly 

closed, now dubbed dumping, that kind of work, that kind of IT forward-leaning, something that the ranking member and I have been 

working on trying to modernize Federal IT procurement so that 

you can have those systems, we need to work with you to make 

sure you have it, those management tools, because we think it is 

important. 

I think here, on both sides of the aisle today, we became very 

aware that there are two problems we are dealing with. One has 

to do with how security clearances occur, and for which there are 

some legal changes that this committee is going to have to work 

on. But, director, there is something that I am more concerned 

78 

about, and that is that it is a policy not to look at the Internet as 

an investigative tool. This is an area within your jurisdiction that 

I strongly encourage you make your best effort, recognizing that 

there are some questions of whether you will be sued for doing it 

and so on, that both in the case of security clearances you free up 

your in-house people and these contractors to at least begin looking 

at this tool for what could be important information that would 

then lead to further investigation that would not necessarily be on 

the Internet. 

And, secondly, that you ask the question from a standpoint of the 

entire Federal workforce, is it wise in this day and age not to at 

least look at the Internet before each and every person is hired; 

that some sort of a pro forma that is done objectively not occur, because I think that it is important that we say we have done due 

diligence on every person that comes to work for the Federal Government so that if they have an anger management problem, like 

shooting tires out, that we don’t wait and ask did they get a clearance wrong, but we ask should this individual, Aaron Alexis, ever 

been hired to work for any Federal work organization or contractor. 

And we could have gotten into Snowden and had a similar discussion about that. 

Lastly, Mr. Lynch dropped a bill the other day. The committee 

has been working on a completely bipartisan basis. Most of what 

is in his bill and some other items are items that we have brought 

to the attention both of OPM and Department of Defense, and we 

have gotten unofficial answers and some comments. At this point, 

based on your discussion today, we would ask that you work with 

committee staff, both majority and minority, on all aspects to give 

us, if you will, final answers on the proposals we are making so 

that we can draw up a comprehensive bipartisan bill. The majority 

did not offer a bill, figuring that it was much better to have this 

hearing and then get your final comments, but I think it is now 

appropriate to do so. 

Lastly, I meant it deadly seriously, I believe in qui tam. I believe 

that whistleblowers bringing us new information where the Government is being wronged is critical. I also believe that, whenever 

possible, the Federal Government should find its own problems, 

correct them, and any amount owed to the Federal Government 

flows to us, without an outside piece of litigation. For that reason, 

I am deeply concerned that the evidence in the case of this particular lawsuit appears on its face to be an individual filing a case 

months after he was cc’d on what I would have considered to be 

the smoking gun; and I would ask that you be aware of that. We 

will be making an additional referral to Judiciary Committee and 

to Department of Justice, asking them to at least give us a legal 

evaluation of whether or not this qui tam may, in fact, be inappropriate, not the suit, but the qui tam. 

If you have any final questions or statements, I would be happy 

to take them now; otherwise, we are concluded. Seeing none, I 

thank you all for your presence. We are adjourned. 

[Whereupon, at 12:51 p.m., the committee was adjourned.] 

(79) 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

80 


Insert offset folio 30 here 87892.030
81 


Insert offset folio 31 here 87892.031
82 


Insert offset folio 32 here 87892.032
83 


Insert offset folio 33 here 87892.033
84 


Insert offset folio 34 here 87892.034
85 


Insert offset folio 35 here 87892.035
86 


Insert offset folio 36 here 87892.036
87 


Insert offset folio 37 here 87892.037
88 


Insert offset folio 38 here 87892.038
89 


Insert offset folio 39 here 87892.039
90 


Insert offset folio 40 here 87892.040
91 


Insert offset folio 41 here 87892.041
92 


Insert offset folio 42 here 87892.042
93 


Insert offset folio 43 here 87892.043
94 


Insert offset folio 44 here 87892.044
95 


Insert offset folio 45 here 87892.045
96 


Insert offset folio 46 here 87892.046
97 


Insert offset folio 47 here 87892.047
98 


Insert offset folio 48 here 87892.048
99 


Insert offset folio 49 here 87892.049
100 


Insert offset folio 50 here 87892.050
101 


Insert offset folio 51 here 87892.051
102 


Insert offset folio 52 here 87892.052
103 


Insert offset folio 53 here 87892.053
104 


Insert offset folio 54 here 87892.054
105 


Insert offset folio 55 here 87892.055
106 


Insert offset folio 56 here 87892.056
107 


Insert offset folio 57 here 87892.057
108 


Insert offset folio 58 here 87892.058
109 


Insert offset folio 59 here 87892.059
110 


Insert offset folio 60 here 87892.060
111 


Insert offset folio 61 here 87892.061
112 


Insert offset folio 62 here 87892.062
113 


Insert offset folio 63 here 87892.063
114 


Insert offset folio 64 here 87892.064
115 


Insert offset folio 65 here 87892.065
116 


Insert offset folio 66 here 87892.066
117 


Insert offset folio 67 here 87892.067
118 


Insert offset folio 68 here 87892.068
119 


Insert offset folio 69 here 87892.069
120 


Insert offset folio 70 here 87892.070
121 


Insert offset folio 71 here 87892.071
122 


Insert offset folio 72 here 87892.072
123 


Insert offset folio 73 here 87892.073
124 


Insert offset folio 74 here 87892.074
125 


Insert offset folio 75 here 87892.075
126 


Insert offset folio 76 here 87892.076
127 


Insert offset folio 77 here 87892.077
128 


Insert offset folio 78 here 87892.078
129 


Insert offset folio 79 here 87892.079
130 


Insert offset folio 80 here 87892.080
131 


Insert offset folio 81 here 87892.081
132 


Insert offset folio 82 here 87892.082
133 


Insert offset folio 83 here 87892.083
134 


Insert offset folio 84 here 87892.084
135 


Insert offset folio 85 here 87892.085
136 


Insert offset folio 86 here 87892.086
137 


Insert offset folio 87 here 87892.087
138 


Insert offset folio 88 here 87892.088
139 


Insert offset folio 89 here 87892.089
140 


Insert offset folio 90 here 87892.090
141 


Insert offset folio 91 here 87892.091
142 


Insert offset folio 92 here 87892.092
143 


Insert offset folio 93 here 87892.093
144 


Insert offset folio 94 here 87892.094
145 


Insert offset folio 95 here 87892.095
146 


Insert offset folio 96 here 87892.096
147 


Insert offset folio 97 here 87892.097
148 


Insert offset folio 98 here 87892.098
149 


Insert offset folio 99 here 87892.099
150 


Insert offset folio 100 here 87892.100
151 


Insert offset folio 101 here 87892.101
152 


Insert offset folio 102 here 87892.102
153 


Insert offset folio 103 here 87892.103
154 


Insert offset folio 104 here 87892.104
155 


Insert offset folio 105 here 87892.105
156 


Insert offset folio 106 here 87892.106
157 


Insert offset folio 107 here 87892.107
158 


Insert offset folio 108 here 87892.108
159 


Insert offset folio 109 here 87892.109
160 


Insert offset folio 110 here 87892.110
161 


Insert offset folio 111 here 87892.111
162 


Insert offset folio 112 here 87892.112
163 


Insert offset folio 113 here 87892.113
164 


Insert offset folio 114 here 87892.114
165 


Insert offset folio 115 here 87892.115
166 


Insert offset folio 116 here 87892.116
167 


Insert offset folio 117 here 87892.117
168 


Insert offset folio 118 here 87892.118
169 


Insert offset folio 119 here 87892.119
170 


Insert offset folio 120 here 87892.120
171 


Insert offset folio 121 here 87892.121
172 


Insert offset folio 122 here 87892.122
173 


Insert offset folio 123 here 87892.123
174 


Insert offset folio 124 here 87892.124
175 

Æ 


Insert offset folio 125 here 87892.125