USIS and its problems with Congress and the Justice Department over alleged problems with how it conducted certain security clearances reminds me a lot of the NCAA and how it handles violations of its rules.
Now, I’m not making light of the allegations against USIS, but I’m just wondering why there isn’t a better way to handle it.
In the NCAA, you see it time and again; a program gets in trouble, the coach moves on to another college, while the program gets fines and sanctions. Wins and titles are vacated.
Meanwhile, the coach moves on, for the most part untarnished, but his former school may take years to recover its reputation. In the case of the Southern Methodist University football program, you can argue it’s never recovered from a scandal that rocked the school in the mid-1980s.
USIS has three different allegations being leveled at it.
The company did the background investigations of Edward Snowden, the NSA leaker, and Aaron Alexis, the Navy Yard shooter.
In both of those cases, the company has been cleared of any wrongdoing. The investigations followed all the procedures laid out by the Office of Personnel Management.
Contrary to popular belief, USIS doesn’t “clear” anyone, nor does it make recommendations; it passes the information on to the appropriate agency, and that agency makes the determination – called adjudication – of whether a clearance should be granted.
Sterling Phillips, USIS CEO, tried to make that clear in his testimony Feb. 11 before the House Oversight and Reform Committee.
The third allegation involves the Justice Department and a False Claims Act lawsuit filed against USIS.
Here is where USIS predicament most closely parallels the NCAA, at least in my mind.
While the Justice Department only joined the lawsuit in the fall, the case was filed in July 2011 by former USIS employee Blake Percival.
He claimed that the company had a process to circumvent final reviews and release the results of its investigations more quickly, saving money and increasing profits. To the agencies that hired USIS, it looked like they were receiving a full review, according to the lawsuit.
It looks like there is some truth to his allegations, but a lot has happened to USIS since 2011.
First, the company has new senior leadership in Phillips and others. He took over at the company in January 2013 and brought a new management team with him.
At every opportunity, he and others at the company have argued that the allegations involve a small group of people who are no longer with the company. USIS has also instituted new controls and oversight procedures. The company is cooperating with the investigation.
And more recently, OPM, which is the agency that makes the vast majority of clearance requests, said that no contractor will conduct final reviews. The final reviews will be conducted by the government. The final review is the last step before the adjudication process for granting the clearance.
I’ve seen nothing that indicates that USIS is a bad actor today and hasn’t been since Phillips took the reins.
The bigger question is what to do now. Is a punishment needed? A suspension or debarment seems like overkill to me, because the bad behavior has stopped and those responsible are no longer with the company.
So, who exactly should be punished?
The easy out is to force USIS into a settlement where they pay millions fines but do not admit guilt. We’ve seen a lot of those settlements over the years, and it’s never been clear to me who benefits from that result.
I wonder if the Justice Department should target individuals rather than a company. That’s probably a much harder and expensive case to win, but it seems more appropriate to me.
After all, companies don’t make decisions; people do. And with the alleged wrongdoers long gone from USIS, it seems unfair that those left behind should be the ones to suffer.
Posted on Feb 14, 2014 at 11:53 AM1 comments
I had the opportunity this week to hear Mike Daniels speak about his new book on Network Solutions Inc. and the early days of the Internet.
Network Solutions is one of the great success stories of any industry. Daniels, who was a Science Applications International Corp. executive when SAIC bought Network Solutions in 1995 for $4.7 million, was its chairman and CEO.
At the time of the acquisition, it was a small company with a five-year, $4.2 million cooperative agreement with the National Science Foundation to manage Internet domain names.
These were the pioneer days of the Internet, and while SAIC sensed it would be a good growth opportunity, no one had any idea that it would turn into the blockbuster it was, Daniels said.
He and SAIC founder Robert Beyster co-wrote the book about those heady days called Names, Numbers and Network Solutions: The Monetization of the Internet.
I haven’t read the book, but I know enough that “monetization” is an understatement.
Think about that $4.7 million purchase price in 1995. Over the next five years, SAIC recouped that initial investment manyfold. Network Solutions became a public company in 1997, and on the day of the initial public offering, SAIC made $9 million.
SAIC also retained a 76 percent interest in the company. In 1999, SAIC sold 9 million shares, reducing its stake to 45 percent and raising $776 million.
A follow-on offering in early 2000 raised another $2.3 billion, and then, on March 7, VeriSign announced it was buying Network Solutions for $19.3 billion. SAIC’s stake was worth $3.4 billion.
Beyster and Daniels modestly write in the book that the deal with VeriSign provided an “excellent return on investment for SAIC’s employee shareholders – and one that was not anticipated when the company acquired Network Solutions.”
I layout this rather long-winded description of Network Solutions’ and SAIC’s financial success because it’s powerful backdrop for one of the messages I think Daniels was trying to deliver when he talk to a group of IT executives gathered by the real estate firm CBRE, the accounting firm Baker Tilly and Marymont Group, an executive search firm.
Network Solutions' success wouldn’t have been possible without the federal government. First, the Defense Department and what was then known as Advanced Research Projects Agency built the foundation of the Internet.
The National Science Foundation spearheaded the privatization of the Internet.
Close cooperation between industry and government officials including, yes, Al Gore, and Secretary of Commerce Bill Daley laid the foundation for how the Internet is managed today -- a management structure that is under threat today, but that’s a whole other story.
But Daniels’ message was clear: Without the cooperation between government and industry, many of the technological advances we take for granted today wouldn’t have happened, not to mention the tremendous economic growth we’ve experienced over the last 15 years.
On one level, it’s a no-brainer message, but in today’s environment where anti-government and anti-industry rhetoric is so high on both ends of the political spectrum, it is always good to be reminded how powerful cooperation can be.
And when you think about the serious issues we face globally, from economic growth to environmental issues to health care to security threats, there has probably never been a better time for that kind of cooperation as there is now.
Posted on Feb 13, 2014 at 9:09 AM1 comments
ManTech International and a small business, Research Analysis & Maintenance Inc., are embroiled in a bid protest fight for an Army training contract to support the Operational Test Command at Fort Hood in Texas.
The $50 million contract was originally awarded in April to Combined Technical Services LLC, a joint venture formed by Westech International and Trax International.
ManTech and Research Analysis & Maintenance, which goes by the acronym RAM, filed separate protests shortly after the award was made.
According to Deltek, RAM of El Paso, Texas, is the incumbent on the contract and has pulled in $191 million in task orders since 2007. The solicitation for the new contract says that the contract has a ceiling of $50 million over three years.
The Army withdrew the award to Combined Technical Services, so the Government Accountability Office dismissed the protests.
In November, ManTech and RAM again filed protests presumably after the Army awarded the contract again to Combined Technical Services.
This week, GAO again dismissed the protests. So, it looks like the Army is again taking a second look at its award decision.
Interestingly, Combined Technical Services was formed solely to support the test command at Fort Hood, according to its website.
The joint venture makes no bones about going after an incumbent contract, saying that it “looks forward to meeting with all incumbent employees.”
The contract in the dispute is for data management, data collection, instrumentation and logistics support to “operational tests events,” according to the solicitation.
Posted on Feb 13, 2014 at 9:37 AM1 comments