OPM terminating USIS background-check contract

The Office of Personnel Management plans to terminate its contract with U.S. Investigative Services.

The Associated Press, which first reported the development, quotes an OPM official saying that "following a careful and comprehensive review," the agency will not renew the contract. A spokeswoman for Sen. Jon Tester (D-Mont.), who chairs the Senate subcommittee that oversees the federal workforce, said OPM told Tester that USIS's work could conclude at the end of September.

USIS confirmed that "OPM is declining to exercise its remaining options on USIS' Background Investigation Fieldwork and Background Investigation Support Services contracts that expire on September 30, 2014." In n released statement that was not attributed to a specific individual, the company said it was "deeply disappointed with OPM's decision. While we disagree with the decision and are reviewing it, we intend to fulfill our obligations to ensure an orderly transition."

USIS, which began as a component of OPM that was privatized in 1996, has long conducted a large share of the background checks used to determine security clearances for both federal employees and government contractors. 

The firm was targeted by hackers this summer, and suffered a data breach that may have affected up to 25,000 federal employees. USIS described that incident as having "all the markings of a state-sponsored attack," and maintained that it should not be punished for having "self-detected this cyber-attack and reported it immediately to OPM, to other government agencies and to federal law enforcement authorities." 

That incident, however, came when USIS was already under scrutiny for other alleged problems, and appears to have been the final straw. OPM must now find other contractors and internal staff resources to handle the roughly 21,000 background investigations per month that -- come Oct. 1 -- USIS will no longer be conducting.