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By Nick Wakeman

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Nick Wakeman

Did a contracting officer's mistakes kill USIS's contract?

As U.S. Investigative Services has fought to save its business, it has argued that its background investigation work is a separate business from the rest of the company.

But that argument fell flat with the Government Accountability Office as the agency ruled in favor of a bid protest involving a $210 million contract USIS Professional Services Division Inc. won with the U.S. Citizenship and Immigration Service.

The professional services business is a separate legal entity from USIS LLC, which does the background investigation work that has been at the heart of the controversy surrounding USIS. The Justice Department has joined a False Claims Act whistleblower lawsuit that claims that USIS LLC was deeming investigations complete when they weren’t. In other words, committing fraud.

The incumbent on the U.S. Citizenship and Immigration Service contract, FCi Federal, claimed that the contracting officer with the Homeland Security Office bureau didn’t properly consider the impact of the Justice Department lawsuit, and was wrong to find USIS a “responsible” contractor by awarding it the contract.

USIS has argued consistently that the professional services division was not a party to the Justice Department lawsuit. In a statement they sent me today, the company said, "As is common in corporate America, USIS LLC provides back office support to its subsidiaries, such as accounting, payroll and benefits administration, but no operational functions were, or are, shared in the performance of contracts."

But GAO saw it differently when it looked at USIS's proposal. GAO quotes the proposal where the company states that its divisions “do not operate independently or even semi-independently from each other or from the parent company.”

The company goes on to say, “We have one integrated command and control structure. We share a set of common policies and procedures across the corporation.”

Given the notoriety of the allegations against USIS investigation business, those kinds of statements should have been a red flag to the contracting officer overseeing the procurement. GAO takes the contracting officer to task in the decision, because she didn’t do more to determine what the Justice Department investigation was about, and how it could potentially impact USIS’ performance on contract.

“The contracting officer failed to obtain and consider the specific allegations of fraud alleged by the Department of Justice,” GAO wrote in its decision. She did not read the complaint that was filed by the Justice Department and instead the contracting officer relied on media reports and a representation by her agency's attorney.

Her actions -- or lack thereof -- were probably the biggest strike against the award to USIS.

GAO also criticized the contracting officer who “apparently misunderstood the legal standards related to affirmative responsibility determinations.”

In other words, the contracting officer didn’t know what authority and responsibility she had to explore the allegations against USIS.

Some other issues I’ll be trying to explore next week is the impact the decision has on USIS’s business going forward because the Office of Personnel Management effectively killed the company’s background investigation work when it cancelled USIS's contracts. The GAO decision now seriously threatens the company’s ability to win other business while the Justice lawsuit remains unresolved.

I'll also continue to follow USIS and how it fights back against the GAO decision, either through filing for a reconsideration or appealing the decision to the Court of Federal Claims.

Posted by Nick Wakeman on Oct 24, 2014 at 9:22 AM

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