oversight

Audit of the Federal Investigative Services' Case Review Process Over Background Investigations

Published by the Office of Personnel Management, Office of Inspector General on 2014-06-04.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                                         U.S. OFFICE OF PERSONNEL MANAGEMENT
                                                               OFFICE OF THE INSPECTOR GENERAL
                                                                                OFFICE OF AUDITS




Final Audit Report
Subject:
                                       AUDIT OF THE FEDERAL
                                      INVESTIGATIVE SERVICES' CASE
                                      REVIEW PROCESS OVER
                                      BACKGROUND INVESTIGATIONS


                                              Report No. 4A-IS-00-13-062


                                                   Date: June 4, 2014




                                                               --CAU TION-
This audit repor t has been distiib uted to Federal officials who are 1·esponsible for the administration of the audited pr ogram . This audit
  repor t m ay contain pr oprietar y data which is protected by Federal law (18 U.S.C. 1905). Therefor e, while t his audit repo11 is available
     under the Fr eedom of Inform ation Act and m ade available to the public on the OIG webpage, caution needs to be exer cised befor e
r eleasing the 1·epo11 to the gener al p ublic as it may contain pr optietary infor m ation that was 1·ed acted from the p ublicly distributed copy.
                                                   AUDIT REPORT




         AUDIT OF THE FEDERAL INVESTIGATIVE SERVICES’
           CASE REVIEW PROCESS OVER BACKGROUND
                        INVESTIGATIONS




                           Report No. 4A-IS-00-13-062                                  06/06/14
                                                                                Date: ____________




                                                                                     ___________________________
                                                                                     Michael R. Esser
                                                                                     Assistant Inspector General
                                                                                       for Audits

                                                            --CAUTION--
This audit report has been distributed to Federal officials who are responsible for the administration of the audited program. This audit
report may contain proprietary data which is protected by Federal law (18 U.S.C. 1905). Therefore, while this audit report is available
under the Freedom of Information Act and made available to the public on the OIG webpage, caution needs to be exercised before
releasing the report to the general public as it may contain proprietary information that was redacted from the publicly distributed copy.
                               EXECUTIVE SUMMARY



          AUDIT OF THE FEDERAL INVESTIGATIVE SERVICES’
            CASE REVIEW PROCESS OVER BACKGROUND
                         INVESTIGATIONS



                    Report No. 4A-IS-00-13-062                   06/04/14
                                                          Date: __________


The Office of the Inspector General (OIG) has completed a performance audit of the Federal
Investigative Services’ (FIS) Case Review Process over Background Investigations. The
objectives of our audit were to determine if: (1) FIS has adequate oversight controls in place to
ensure that US Investigations Services (USIS); CACI International Inc. (CACI); and KeyPoint
Governmental Solutions, Inc. (KGS), hereafter referred to as the “Contractors,” are meeting their
contract requirements; (2) the Contractors’ background review process meets its contract
requirements; (3) FIS has controls in place to ensure the Federally-conducted background
investigations are reviewed; and (4) FIS and its Contractors have controls in place to ensure that
their review personnel are trained to perform their duties.

Our audit fieldwork was conducted from August 26, 2013 through December 2, 2013, at the U.S.
Office of Personnel Management’s (OPM) headquarters located in Washington, D.C.; FIS’s
headquarters in Boyers, Pennsylvania; and contractor sites located in Slippery Rock and Grove
City, Pennsylvania, and Chantilly, Virginia. We determined that OPM needs to strengthen its
controls over its Contractors and the background investigation review process. Our audit
identified five areas requiring improvement, as follows:
A.   General Observations                                                          Procedural

     1.   We identified two areas of improvement that could have a positive
          impact on the background review process. The areas include:

                   Personnel Investigation Processing System (PIPS) events -
                    The PIPS event indicators Display, Modify, and Print are
                    weak controls to ensure all investigative items have been
                    reviewed.
                   Auto-released Reports of Investigations (ROI) - FIS does not
                    have a control in place to verify that the Contractors are
                    conducting a review on auto-released ROIs.

B.   Case Review Process

     1.   Abnormal Number of Reviews                                               Procedural

          Two USIS reviewers completed an abnormally high number of
          reviews on background investigations in a short timeframe. For
          example, one of the reviewers completed 15,152 background
          investigations reviews during a one month timeframe, with most of
          these occurring within minutes of each other on multiple days.

     2.   Report of Investigations (ROI) Not Reviewed                              Procedural

          Seventeen ROIs in our sample were not reviewed by USIS, CACI,
          and KGS prior to submitting them to OPM.


C.   Training

     1.   Reviewer Training Documentation Lacking                                  Procedural

          USIS and KGS were unable to provide support to show that 29 out
          of 100 reviewers and support personnel we reviewed met training
          requirements. Twenty-four of the 29 were USIS employees.




                                             ii
D.   Federal Investigative Services’ Oversight of Contractors

      1.   Oversight Controls over the Contractors Need Strengthening         Procedural

           Based on our audit findings, we have concluded that FIS needs to
           strengthen their controls over USIS, CACI, and KGS’s background
           investigation case review processes.




                                          iii
                          TABLE OF CONTENTS

                                                                            Page

     EXECUTIVE SUMMARY…………………………………….……..                                       i

 I. INTRODUCTION AND BACKGROUND ........................................        1

II. OBJECTIVES, SCOPE, AND METHODOLOGY ............................             5

III. AUDIT FINDINGS AND RECOMMENDATIONS .........................               9

     A. General Observations……………………………...……………..                               9

     B. Case Review Process……………………………………..………                                 11

        1. Abnormal Number of Reviews…….………..…………………                           11

        2. Reports of Investigations Not Reviewed……..………………..                  13

     C. Training…………………………………………...……………….                                     15

        1. Reviewer Training Documentation Lacking……………..……                    15

     D. Federal Investigative Services’ Oversight of Contractors…….…           17

        1. Oversight Controls Over the Contractors Need Strengthening..        17


IV. MAJOR CONTRIBUTORS TO THIS REPORT .............................            19


     APPENDIX        (Federal Investigative Services’ response to our draft report,
                      received March 20, 2014)
                        I. INTRODUCTION AND BACKGROUND
Introduction

This final audit report details the findings, conclusions, and recommendations resulting from our
performance audit of the Federal Investigative Services’ Case Review Process over Background
Investigations. The audit was performed by the U.S. Office of Personnel Management’s (OPM)
Office of the Inspector General (OIG), as authorized by the Inspector General act of 1978, as
amended.

Background

OPM’s Federal Investigative Services (FIS) is responsible for conducting background
investigations on Federal applicants, employees, and contractor personnel for customer agencies
on a reimbursable basis to determine the eligibility of these individuals to hold security
clearances or to be employed in positions with national security sensitivity, eligibility for
accession or retention in the Armed Forces, eligibility for an identity credential, or suitability or
fitness for employment for or on behalf of the Government. FIS also conducts investigations for
other purposes. During fiscal year 2013 FIS contracted with three companies: US Investigations
Services (USIS), CACI International Inc. (CACI), and KeyPoint Governmental Solutions, Inc.
(KGS), hereafter referred to as the “Contractors,” to assist with completing background
investigations.

During fiscal year 2013 and at the time the audit was conducted FIS had an additional contract
with USIS to provide support services. The support services contract covered some of the
following areas that were involved in the review process:

            Preparing background investigations for the closing process and ensuring all
             background investigation data is present (e.g., entering closing codes, placing closing
             forms in background investigations folders, and processing system-closed
             background investigations);

            Assessing automated background investigation closing (e.g., by entering appropriate
             closing actions in the Personnel Investigation Processing System1 (PIPS)); and,

            Ensuring the appropriate review staff looks at the PIPS closed cases, backs out the
             closing when appropriate, and schedules additional item(s) for the System Closed
             Kick Out process, which is a part of the System Closing process.




1
 PIPS is a computer system which maintains a repository containing background investigation records of Federal
employees, military personnel, and contractors.


                                                       1
Background Investigations Process

The background investigations process begins with a request from a customer agency to conduct
a background investigation on an individual, who then completes the FIS electronic form through
the Electronic Questionnaires for Investigations Processing (eQIP) system. For background
investigation types (e.g., Top Secret) requiring fieldwork2 [based on predefined criteria within
PIPS], PIPS assigns the case to a Federal background investigator or to a Contractor. FIS assigns
each background investigation a critical date. The critical date is the deadline for all investigative
items to be submitted back to FIS.

When all assigned fieldwork in PIPS is completed by the Contractors’ background
investigator(s), they will submit the Report of Investigation(s) (ROI) in PIPS and the status is
updated to “Ready to Review” automatically by PIPS. Once the ROI has been through the
fieldwork Contractors’ review process, the ROI’s status will be updated to “Review Complete.”
At that time, PIPS will update the items to the “Complete Status.”

For the Federal background investigator, once complete the ROI’s status is updated to “Report
Transmitted” and then automatically updated to “Complete Status” in PIPS. When all the items
that are in the ROIs for a background investigation are in “Complete Status,” it will go through
the FIS background investigation review and closing process located under FIS’s Quality and
Support Services Group.

Fieldwork Contractors’ Background Review Process for ROIs

Each Contractor is required to have a process in place to conduct a 100 percent pre-submission
quality review of all investigative work products to ensure compliance with contract
requirements and national investigative and adjudicative standards. Once an ROI is marked
“Ready to Review” in PIPS, the reviewer can conduct their review. The Contractors’ reviewers
are responsible for reviewing all ROIs in PIPS. Once the review is completed, the ROI’s status
should be updated to “Review Complete” by the reviewer. FIS utilizes the lack of the events
listed below in PIPS-Reporting as indicators of potential fraud or non-compliance with contract
requirements since these PIPS-Reporting functions should occur before the “Review Complete”
event.

       Display - ROI opened in PIPS;
       Modify - Minor edits made to the ROI; and,
       Print - ROI printed for review.

An exception to this process occurs when ROIs are auto-released. Auto-release is a process that
FIS has designed in PIPS to ensure ROIs do not sit idle in the Contractors queue for a substantial
period of time. The reviewer has 30 days from the “Ready to Review” date to review the ROI.
After 30 days, PIPS will auto-release the ROI and mark it “Review Complete”; thereafter, the

2
 Fieldwork can be defined as investigative coverage obtained primarily through human interactions and can include
personal interviews, communications with record providers, and human searches of databases.


                                                        2
Contractors can only display, modify, or print the ROIs. A review of auto-released ROIs should
be conducted by a reviewer prior to submission to FIS, even though they are marked “Review
Complete” in PIPS.

Once the final ROI’s status on a background investigation has been updated to “Review
Complete” and all fieldwork items have updated on the PIPS Case Assignment Tracking screen
to “Complete Status,” the background investigation is then submitted to FIS and considered
fieldwork finished.

Background Investigation Closing Process

Using predetermined criteria, PIPS will assign the background investigation case to be reviewed
by either a Federal reviewer or USIS’s support services personnel. The Federal staff and USIS
support services personnel will conduct their review to determine if the case meets the
Investigator Handbook requirements and the Operating Procedures Standards. Once their review
has been completed, they will mark the background investigation closed in PIPS and it is ready
to send to the customer agency for their adjudication. If the case does not meet standards it is
sent back for re-work.

Subsequent to our audit, effective February 24, 2014, USIS is no longer involved in the final
quality review process as described above. Only Federal employees will be conducting the final
quality review before the investigative product is sent to the agency for review and adjudication.

Training

Each contract outlines the training, experience, and educational qualifications that an individual
must meet in order to hold a position as a reviewer or support personnel.

FIS’s Oversight over Its Contractors

FIS’s Capacity Development and Oversight Group is responsible for the oversight and
monitoring of its Contractors. Some of their responsibilities include:

              Monitoring the Contractor’s integrity, quality, and timeliness;
              Monitoring compliance with contract requirements through a review of work
               performed;
              Inspecting and testing the services called for in the contract to the extent
               practicable at all times and places during the terms of the contracts; and,
              Assessing the Contractor’s performance based on customer satisfaction,
               statistically valid sampling, random inspections or 100 percent inspection of all
               cases.




                                                 3
The Capacity Development and Oversight Group uses a variety of internal reports and conducts
inspections to ensure the Contractors’ background review processes are in compliance with the
contract.

 FIS's Contractor Adjudications Branch is responsible for scheduling required investigations
 and for adjudicating fitness and national security (or exercising reciprocity when appropriate)
 for all individuals before they may begin work on the OPM contracts. The Contractor
 Adjudications Branch also schedules and adjudicates required reinvestigations for those
 individuals currently working on the OPM contracts.




                                                4
                  II. OBJECTIVES, SCOPE, AND METHODOLOGY

Objectives

The objectives of our audit were to determine if:

    1. FIS has adequate oversight controls in place to ensure that its Contractors are meeting
       their contract requirements.
    2. The Contractors’ background review process meets its contract requirements.
    3. FIS has controls in place to ensure the Federally-conducted background investigations are
       reviewed.
    4. FIS and its Contractors have controls in place to ensure that their review personnel are
       trained to perform their duties.

The recommendations included in this final report address these objectives.

Scope and Methodology

Our performance audit was conducted in accordance with generally accepted government
auditing standards as established by the Comptroller General of the United States. Those
standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to
provide a reasonable basis for our findings and conclusions based on our audit objectives.

The scope of our audit covered background investigations closed from October 1, 2012 to
August 31, 2013.

We performed our audit fieldwork from August 26, 2013 through December 2, 2013 at
OPM’s headquarters located in Washington, D.C.; FIS’s headquarters located in Boyers,
Pennsylvania; and Contractor sites located in Slippery Rock and Grove City, Pennsylvania,
and Chantilly, Virginia.

To accomplish the audit objectives noted above, we:

       Reviewed inspections and various PIPS reports (i.e., Excessive Number of PIPS
        Transactions Report, Report of Review Complete prior to Review Action, Anatomy of
        Case Query, and Deficient Case Query) to ensure FIS is providing adequate oversight
        over its Contractors;
       Reviewed the Random and Closing Authorization and Support Team audits performed by
        the Quality Assurance Group3;
3
 The Quality Assurance Group, which is under Quality and Support Services, is responsible for providing quality
assurance for all background investigations by conducting random reviews.



                                                        5
      Interviewed FIS and the Contractors’ employees to obtain an understanding of the
       background investigation process;
      Performed analytical testing of the Contractors’ reviewers’ “Review Complete” events;
      Sampled background investigations and reviewed PIPS Basic Display and Investigative
       Display screen prints, Case Review Transmittals, and other internal documents to ensure
       the background investigations were reviewed; and,
      Reviewed résumés, training certificates, and other documentation provided to ensure the
       training qualifications were met for the sampled Contractors’ reviewers, USIS’s support
       services personnel, and FIS’s reviewers.

In planning our work and gaining an understanding of the case review process over background
investigations, we considered, but did not rely on, FIS and the Contractors’ internal control
structures to the extent necessary to develop our audit procedures. These procedures were
analytical and substantive in nature. We gained an understanding of management procedures
and controls to the extent necessary to develop our audit objectives. The purpose of our audit
was not to provide an opinion on internal controls, but merely to evaluate controls over the
processes that were included in the scope of our audit. Our audit included such tests of FIS and
the Contractors’ records and other procedures as we considered necessary under the
circumstances. The results of our tests indicate that with respect to the items tested, FIS and its
Contractors need to strengthen controls over the case review process over background
investigations.

In conducting the audit we relied to varying degrees on computer-generated data. Due to the
nature of the audit, we did not verify the reliability of the data generated by the system involved.
However, nothing came to our attention during our audit testing utilizing the computer-generated
data to cause us to doubt its reliability. We believe that the data was sufficient to achieve our
audit objectives.


In order to accomplish our audit objectives, we selected a number of samples from the universe
of closed background investigation cases from October 1, 2012 to August 31, 2013. Sample
sizes were designed to verify adherence to the various processes tested, not to project outcomes
from the processes. Our audit universe consisted of background investigation cases closed by
Federal reviewers and USIS’s support services personnel. We determined that the closed
background investigation cases from the Federal reviews consisted of 419,409 cases completed
by the Contractor background investigators and 79,704 cases completed by the Federal
background investigators. The closed background investigation cases from the USIS support
service’s review consisted of 789,636 closed background investigation cases.




                                                 6
Background Investigations Review Process

In order to verify that USIS’s support services personnel were adhering to their background
investigations review process, we used Interactive Data Extraction Analysis (IDEA) software to
select the following random samples:

       50 out of 29,102 background investigation cases closed by USIS’s Closing Authorization
        and Support Team’s (CAST) Cursory review process4 from July 1, 2013 to August 31,
        2013;
       50 out of 39,915 Automated5 closed background investigation cases from July 1, 2013 to
        August 31, 2013; and,
       50 out of 380,025 System6 closed background investigation cases from October 1, 2012
        to August 29, 2013.

Federal Background Investigations Review Process

We randomly sampled 15 out of 79,704 closed background investigation cases completed by the
Federal investigators to ensure that FIS has controls in place over the Federally-conducted
background investigation cases.

In addition, to test the Federal review process over the Contractors’ background investigation
cases, we judgmentally selected 45 out of 328 Contractor background investigation cases
sampled in Finding B2: No Reviews of Reports of Investigations. For each Contractor, using
Microsoft Excel, we sorted the background investigation cases by case type. Then, we excluded
ANACI7 and NACLC8 case types because they include limited or no fieldwork. The resulting
number of case types varied per Contractor. For each case type, using Excel, we took the total
number of cases and divided by three to select the sample. For example, USIS had 19 SSBI9
cases, so we divided by three and selected every sixth case.

Reviewer Training

We used IDEA to test a random sample of 25 out of 277 FIS reviewers to determine if training
requirements were met to perform their duties.



4
  Cases are presorted to identify those targeted for full review and sent to Federal Review. The remaining cases are
reviewed by USIS during the Cursory review process and separated into cases that are ready to close or cases that
need correction, Federal Review, or have other issues.
5
  Cases subject to Automated Closing are those where investigations have limited or no fieldwork. The
investigations are mostly National Agency Check searches, inquiries, and limited fieldwork (record checks and
special interviews).
6
  System Closings are cases that are closed by PIPS. These are cases that are complete and do not contain any issues
and/or derogatory information.
7
  ANACI is an Access National Agency Check and Inquiries background case.
8
  NACLC is a National Agency Check with Law and Credit background case.
9
  SSBI is a Single Scope Background Investigation case.


                                                         7
FIS’s Oversight over the Contractors

In order to verify that FIS conducted oversight inspections of the Contractors’ background
investigation review processes, we selected the following random samples:

      25 cases from each of the following monthly Closing Authorization and Support Team’s
       audit reports: November 2012; March 2013; June 2013; and August 2013;
      6 out of 67 quality inspections performed over CACI;
      7 out of 75 quality inspections performed over KGS;
      7 out of 127 quality inspections performed over USIS’s fieldwork;
      11 out of 63 quality inspections performed over USIS’s support services; and,
      11 out of 723 timeliness inspections performed over USIS’s support services.

In addition,

      We judgmentally selected 75 out of 1,790 cases from the quarterly random review reports
       performed by FIS’s Quality Assurance from October 1, 2012 through September 30,
       2013. Using the quarterly reports, we selected the months (March 2013, April 2013 and
       July 2013) that had the highest percentage of cases that were below standards. Then we
       selected 25 cases from each month: March 2013 by selecting every 15 th case; April 2013
       by selecting every 20 th case; and July 2013 by selecting every 10 th case.
      We randomly selected 15 out of 328 cases from our selected sample of background
       investigations completed by the Contractors to determine if FIS’s oversight controls over
       the auto-released ROIs were effective. For each Contractor, we selected five background
       investigation cases that contained auto-released ROIs.

The remainder of our samples are discussed in the body of our findings. The results from the
various samples were not projected to the population.




                                               8
         III. AUDIT FINDINGS AND RECOMMENDATIONS
   The areas requiring improvements are described below. For those Contractors not specifically
   identified in a finding below, it was determined that their process was adequate for that particular
   issue.

A. General Observations

   During our audit we identified two areas of improvement that we feel could have a positive
   impact on the background review process. The areas that came to our attention include: PIPS
   events and auto-released ROIs.

   The Government Accountability Office’s (GAO) Standards for Internal Control in the
   Federal Government states that management is responsible for developing control activities,
   which are the policies, procedures, techniques and mechanisms that enforce management’s
   directives. Control activities occur at all levels and functions of an entity and include a wide
   range of activities, such as approvals, authorizations, verifications, reconciliations,
   performance review, and the creation and maintenance of related records which provide
   evidence of execution of these activities, as well as appropriate documentation. Some
   examples of control activities are: reviews by management at the functional or activity
   levels, controls over information processing, proper execution of transactions and events, and
   appropriate documentation.

      PIPS Events are Weak Controls

      We consider the PIPS events used by the Contractors (the Display, Modify, and Print
      indicators in the system) to be weak controls over determining if an investigative item has
      been reviewed. The reliance on these PIPS events is not sufficient to show that a review
      actually occurred on the investigative items. For example, if an authorized user logs into
      PIPS to research a case, PIPS will mark the item “Display.” In this example the user is
      only doing research and not performing a review; however, under the current control that
      action would constitute a review. We believe requiring the Contractors’ reviewers to
      mark all investigative items as “Review Complete” in PIPS will help solidify that an
      actual review occurred. In addition, this action would document that the reviewer is
      taking ownership that the review took place .

      Recommendation 1

      We recommend that FIS require the Contractors to mark all investigative items as
      “Review Complete” in PIPS to indicate when they have completed their review.



                                                9
FIS’s Response:

“OPM FIS partially concurs with this recommendation. OPM FIS concurs that the
process to document the contractors’ pre-submission quality review needs improvement
and is currently exploring multiple options to remedy this involving system changes and
contract changes. OPM FIS does not concur that requiring the contractors to mark all
investigative items RC [Review Complete] in PIPS is the best avenue for improving this
process. See response for Recommendation #2 for OPM FIS’ plan of action.”

OIG Comment:

We are pleased that FIS agrees that the process to document the Contractors’ pre-
submission quality review needs improvement. FIS has communicated in its response to
recommendation 2 the options that they are considering to make these improvements;
however, we are concerned that not all of the options may provide adequate assurance
that a pre-submission quality review has occurred.


Controls Over Auto-Released Reports of Investigations are Weak

FIS does not have a control in place to verify that the Contractors are conducting a review
of the auto-released ROIs. We identified ROIs where no review occurred prior to
submission to OPM. See Finding B2: Reports of Investigations Not Reviewed for the
details. In this finding, we determined that 15 out of the 17 ROIs not reviewed were
auto-released. Therefore, it is clear to us that the Contractors are not conducting a pre-
review of all investigative items as required by the OPM contract.

FIS stated that they are working with their Information Technology department to
enhance the PIPS Report of Review Complete Prior to Review Action to capture the auto-
released ROIs. We believe if the enhancements are made to include the auto-released
ROIs in the Report of Review Complete Prior to Review Action and they use this report
consistently to monitor the ROIs, it will increase FIS’s effectiveness in ensuring the
Contractors are conducting a review of all investigative items.

Recommendation 2

We recommend that FIS implement an internal control to ensure the Contractors are
reviewing the auto-released ROIs and that they document a review took place.

FIS’s Response:

“OPM FIS concurs with this recommendation. OPM FIS concurs that the process to
document the contractors’ pre-submission quality review needs improvement and is
                                        10
      currently exploring multiple options to remedy this involving system changes and
      contract changes, which will allow for enhancement of the oversight of the contractors’
      review process as necessary.”

      FIS states that it is exploring four options and they plan to make a decision by May 1,
      2014; however, they are unable to give a date as to when the selected option will be
      implemented due to the complexities with changing the IT systems.

      OIG Comment:

      We will evaluate FIS's decision of May 1, 2014 to determine the adequacy of the
      corrective action that they select.

B. Case Review Process

   1. Abnormal Number of Reviews

      We found that two USIS reviewers completed an abnormal number of background
      investigation case reviews in a short timeframe. For our audit, we concluded that an
      abnormal review of a background investigation case is when the reviewer signs off with
      the “Review Complete” code on multiple cases in a very short timeframe. While we
      understand it is possible for a reviewer to “Review Complete” cases in bulk, we find the
      rate at which these reviewers reviewed the cases to be abnormal. For example, one
      reviewer completed 15,152 case reviews during a one month timeframe, with most of
      these occurring within minutes of each other on multiple days. Details of our review
      were provided to FIS separate from this report.

      We obtained the Federal review audit universe of 419,409 closed background
      investigation cases from October 1, 2012 through August 31, 2013. We analyzed the
      audit universe of closed background investigation cases where there was a “Review
      Complete” event in PIPS by the Contractors. Specifically, we looked for trends where
      reviewers completed reviews on multiple cases in an abnormally short timeframe.

      We noted that FIS was aware that abnormal reviews were being completed by USIS
      reviewers and had previously identified one of the two reviewers as completing abnormal
      reviews. FIS had taken administrative action on the one reviewer identified prior to this
      final audit report.

      FIS’s contract with USIS, Section C.7 (a) of OPM15-11-C-0015, states that “The
      Contractor shall conduct a pre-submission quality review by a qualified reviewer of all
      OPM-FIS products and shall maintain an inspection and evaluation system to ensure that
      all investigative work products and other deliverables submitted to OPM conform to
      contract requirements, [and] national investigative and adjudicative standards. The
                                              11
Contractor shall not submit for payment any case that does not meet the requirements of
this contract.”

GAO’s Standards for Internal Control in the Federal Government states that “Control
activities are the policies, procedures, techniques and mechanisms that enforce
management’s directives … Control activities occur at all levels and functions of the
entity. They include a wide range of diverse activities such as approvals, authorizations,
verifications, reconciliation, performance reviews, maintenance of security, and the
creation and maintenance of related records which provide evidence of execution of these
activities as well as appropriate documentation.” Examples of control activities are:
reviews by management at the functional or activity level, controls over information
processing, proper execution of transactions and events, and appropriate documentation
of transactions and internal control.

Allowing the Contractors’ reviewers to sign off on multiple background cases at the same
time could result in background investigation cases being processed as reviewed when no
substantive review occurred.

Recommendation 3

We recommend that FIS require USIS to strengthen their internal controls over reviewers
to prevent them from designating a large numbers of cases as being reviewed in a short
timeframe.

FIS’s Response:

“OPM FIS concurs that USIS’ internal controls to catch abnormal reviews have not
always provided the desired results. Because the methods by which contractors will
provide oversight and quality assurance of contract requirements are determined by the
contractor and not the Government, FIS will recommend to USIS that it consider
reevaluating its internal controls to determine how the company might improve its
oversight of its reviewers, and will request that USIS identify its remedial action plans for
any substandard performance. FIS will also assess whether a change to its requirements
such as specifying the number of cases that may be RC’d [Review Complete] within a
specified timeframe, would improve the results if modified into the contract. Because
this is a Performance Based Contract, USIS must devise the methods in which it will
ensure compliance with contract requirements and how to achieve the performance
standards.”




                                         12
     2. Reports of Investigations Not Reviewed

        We found 3 ROIs from USIS, 4 ROIs from CACI, and 10 ROIs from KGS that were not
        reviewed by the Contractors prior to submitting the background investigations to OPM.
        Details of our review were provided to FIS separate from this final audit report.

        We obtained FIS’s Federal review of 419,409 background investigations closed from
        October 1, 2013 through August 31, 2013. We selected a sample of 328 background
        investigation cases to verify a review occurred on each ROI prior to submission to OPM.
        Specifically, we selected:

           108 out of 221,673 background investigation cases reviewed by USIS;
           110 out of 126,091 background investigation cases reviewed by CACI; and,
           110 out of 135,436 background investigation cases reviewed by KGS.

        CACI confirmed that their four ROIs in question were not reviewed and stated that they
        do not know why no review took place. KGS stated that their 10 ROIs in question are
        law check (e.g., criminal history) ROIs and if a background investigator codes an ROI as
        “Completed No Record” or “Completed Referred,” then the reviewer does not expect to
        see an ROI for review and will allow PIPS to auto-release the ROI. USIS stated that a
        Review Workload Leader10 may have marked “Review Complete” by accident for one of
        their three ROIs; however, they were unable to provide a cause for the remaining ROIs in
        question.

        FIS’s three contracts, Section C.7 (a) of OPM15-11-C-0015 (USIS); OPM15-11-C-0016
        (KeyPoint); and OPM15-11-C-0017 (CACI) each state that “The Contractor shall
        conduct a pre-submission quality review by a qualified reviewer of all OPM-FIS products
        and shall maintain an inspection and evaluation system to ensure that all investigative
        work products and other deliverables submitted to OPM conform to contract
        requirements, [and] national investigative and adjudicative standards. The Contractor
        shall not submit for payment any case that does not meet the requirements of this
        contract.”

        GAO’s Standards for Internal Control in the Federal Government states that “Control
        activities are the policies, procedures, techniques and mechanisms that enforce
        management’s directives. Control activities occur at all levels and functions of the entity.
        They include a wide range of diverse activities such as approvals, authorizations,
        verifications, reconciliation, performance reviews, maintenance of security, and the

10
  A Review Workload Leader uses information from USIS’s workload management system to assess reviewer
availability and existing individual workload levels, and assigns new cases to reviewers.
                                                   13
creation and maintenance of related records which provide evidence of execution of these
activities as well as appropriate documentation.” Some examples of control activities
are: reviews by management at the functional or activity level, controls over information
processing, proper execution of transactions and events, and appropriate documentation
of transactions and internal control.

As a result of no reviews occurring on these ROIs prior to submission to OPM, the
Contractors have not complied with contract requirements and have been paid for work
that was not reviewed. In addition, the lack of reviews can lead to inadequate work being
performed and background investigation cases being potentially compromised.

Recommendation 4

We recommend that FIS require the Contractors to implement internal controls to ensure
that all ROIs within a case have been reviewed prior to submission to OPM.

FIS’s Response:

FIS partially concurs with this recommendation. “Because the methods by which
contractors provide oversight, internal controls, and quality assurance are determined by
the contractor and not the Government, FIS will recommend to USIS that it consider
reevaluating its internal controls to determine how the company might improve its
compliance with ROI review requirements, and will request that USIS identify its
remedial action plans for any substandard performance. … OPM FIS has required each of
the fieldwork contractors to update quality control plans to further ensure that this
contractual review is conducted on each product submitted and a certification from the
program director of each contract company that the review of each product submitted has
occurred on a monthly basis. These quality control plans are currently being reviewed
and coordinated with the Contractors. OPM FIS has also created a new inspection team
whose focus is to oversee contractual compliance including this area of the contract.

Further, OPM FIS clarifies that the Fieldwork contractors’ review is one part of OPM’s
quality assurance process. In addition to the required fieldwork contractual review, all
cases were reviewed by either federal review staff or the support contractor review with
federal oversight of that process prior to being sent to the customer agencies. As of
February 24, 2014, all cases will receive a review by Federal staff. Therefore, the effect
of the contractors’ lack of reviews does not lead to background investigations being
potentially compromised.”




                                        14
      OIG Comment:

      While we agree that the fieldwork Contractors’ review is only one part of OPM’s Quality
      Assurance (QA) process, we believe in order for a QA process to be effective, all parts of
      that QA process must work as designed. Since the fieldwork Contractors’ review is a
      part of the overall QA process and it is not working as designed, there is a potential risk
      that a background investigation could be compromised.

C. Training

   1. Reviewer Training Documentation Lacking

      We were unable to verify that 5 KGS and 24 USIS reviewers and support personnel met
      training requirements. The names of the reviewers and support personnel were provided
      to FIS separately from this report.

      We randomly selected a total of 100 Contractor reviewers and support personnel to
      determine if they met the qualifications to perform their duties. Specifically, we selected:

             25 out of 80 CACI Reviewers;
             25 out of 323 USIS Fieldwork Reviewers;
             25 out of 54 USIS Support Personnel; and,
             25 out of 78 KGS Reviewers.

      Based on the results of our review it is clear that USIS lacks internal controls over the
      retention of training documentation, as they could not provide the required training
      documentation for almost half of the personnel we reviewed (24 of 50). In addition, KGS
      did not have any formal records of their reviewers’ initial training.

      FIS’s contracts with USIS and KGS, Section C.3(c) of OPM15-11-C-0015 (USIS) and
      OPM15-11-C-0016 (KGS), each state that “OPM requires that certain personnel
      performing work under this contract possess minimum qualifications and training, as
      specified in Attachment 2 (Attachment 2-Résumé Format, Qualifications, and Training
      Requirements), and reserves the right to review these qualifications, determine if the
      minimum requirements are met, and whether the individual shall be permitted to perform
      work on the contract.” Attachment 2 of the contracts includes the following training
      topics:

         1.   Investigators Handbook Training
         2.   EPIC Training
         3.   Mock Interviews
         4.   Supervised Live Work

                                               15
   5.   Mock Case Reviews
   6.   Security Briefing (Includes proper Handling/Storage of Case Materials)
   7.   Professional Conflict
   8.   Issue Resolution

FIS’s Support Services contract, Section C.3 (3.1) of OPM15-11-C-0004, states that “the
Contractor shall develop and implement an OPM approved program for initial, periodic,
and update training to ensure staff proficiency. It must include initial and yearly
refresher training to identify and correct problems in proficiency by its personnel working
under this Contract, training for any changes in technology, policies, procedures,
Investigator’s Handbook, and the Annual IT Security and Privacy Awareness training.”

GAO’s Standards for Internal Control in the Federal Government states that “Internal
control and all transactions and other significant events need to be clearly documented,
and the documentation should be readily available for examination.”

GAO’s Standards for Internal Control in the Federal Government also states that “All
personnel need to possess and maintain a level of competence that allows them to
accomplish their assigned duties, as well as understand the importance of developing and
implementing good internal control. Management needs to identify appropriate
knowledge and skills needed for various jobs and provide needed training. . . .
Management should ensure that skill needs are continually assessed and that the
organization is able to obtain a workforce that has the required skills that match those
necessary to achieve organizational goals. Training should be aimed at developing and
retaining employee skill levels to meet changing organizational needs.”

The absence of documentation to support that all reviewers and support personnel have
been trained increases the risk that there are reviewers and support personnel who have
not been properly trained to perform their duties. Individuals that are not properly trained
to review background investigations can lead to deficient cases being forwarded to FIS.

Recommendation 5

We recommend that FIS require all the Contractors to implement internal controls to
ensure that all reviewers have the required training.

FIS’s Response:

FIS partially concurs with the recommendation. “Because the methods by which
contractors provide oversight, internal controls, and quality assurance are determined by
the contractor and not the Government, FIS will recommend to USIS that it consider
reevaluating its internal controls to determine how the company will validate that its

                                        16
      reviewers have received the required training, and will request that USIS identify its
      remedial action plans for any substandard performance identified. In addition, OPM FIS
      is preparing change documents for the contracts to ensure that the Contractors maintain
      formal, complete training records and require that full documentation be provided within
      24 hours of an OPM request. OPM FIS plans to submit a final modification to OPM
      Contracting for implementation for fiscal year 2015, which should occur no later than
      September 30, 2014 for all contracts.”



D. Federal Investigative Services’ Oversight of Contractors

    1. Oversight Controls over the Contractors Need Strengthening

       Based upon the results of this audit, we have concluded that FIS needs to strengthen
       their controls over the Contractors’ background investigation case review process. We
       found the following as a result of our testing the Contractors’ background review
       processes: (1) two USIS reviewers performed an abnormal number of reviews in a short
       timeframe, only one of which was identified by FIS’s oversight control; (2) support was
       not provided to show that the Contractor reviewers and support personnel met training
       requirements; and (3) not all ROIs were reviewed by the Contractor reviewers prior to
       submitting cases to OPM.

       FIS’s three contracts, Section C.6 of OPM15-11-C-0017 (CACI); OPM15-11-C-016
       (KGS); and OPM15-11-C-0015 (USIS), each state that “OPM will initiate a contract
       performance assessment program that evaluates the quality and timely performance of
       the contract requirements and require corrective measures as appropriate. OPM will
       ensure compliance with contract requirements through various means such as a review
       of administrative and managerial processes and investigative practices, on-site
       inspections, an assessment of employees while conducting work (check rides), and a
       quality review of completed fieldwork investigations.”

       FIS’s Support Services contract, Section C.5 (5.1) of OPM15-11-C-0004, states that
       “OPM may inspect and test the services called for by the Contract to the extent
       practicable at all times and places during the term of the Contract. OPM may vary the
       levels of surveillance depending on the Contractor’s conformance to the Performance
       Standards (Attachment 3). This may include, but is not limited to, assessment of the
       Contractor’s performance based on customer satisfaction, statistically valid sampling, or
       100% inspections. OPM will monitor the Contractor’s Integrity, Quality, and
       Timeliness.” Section C.5 (5.3) of the contract also states that “OPM will monitor
       compliance with Contract requirements through a review of work performed. Any

                                              17
reports OPM relies on for purposes of evaluating the Contractor’s performance under
this Contract may be shared with the Contractor as they are produced. OPM may modify
existing or develop new reports as necessary to operate and enhance OPM’s oversight of
Contractor performance. Quality standards are listed in Attachment 3.”

GAO’s Standards for Internal Control in the Federal Government states that “Control
activities are the policies, procedures, techniques and mechanisms that enforce
management’s directives. Control activities occur at all levels and functions of the
entity.” Some examples of control activities are: reviews by management at the
functional or activity level, controls over information processing and appropriate
documentation of transactions and internal control.

Weak controls over the Contractors’ background investigation case review processes
increases the risk of background investigations being compromised.

Recommendation 6

We recommend that FIS strengthen their oversight controls over the Contractors’ review
processes to ensure the contract requirements are being met.

FIS’s Response:

“OPM FIS concurs with the recommendation. As of February 2014, OPM FIS has
realigned the Capacity Development and Oversight (CDO) office to strengthen the focus
on oversight and inspecting for compliance. The restructure of CDO has allowed us to
identify high risk areas to ensure we are focusing our efforts on those most important
areas for the background investigation process. We have streamlined our processes and
strengthened our methodologies. We have also provided 19 individuals with auditor
training. OPM FIS will continuously evaluate the oversight controls to reasonably
ensure the contractors are in compliance with the contracts.”




                                      18
            IV.    MAJOR CONTRIBUTORS TO THIS REPORT


Internal Audits Group

             , Auditor
             , Auditor
                  , Auditor
                  , Auditor
                , Auditor
                  , Lead Auditor
                , Lead Auditor
                   , Auditor-in-Charge
                        , Senior Team Leader
                      Chief




                                               19
                                                                    APPENDIX

Received response on March 20, 2014

MEMORANDUM FOR
                         CHIEF, INTERNAL AUDITS GROUP

FROM:                    MERTON W. MILLER
                         ASSOCIATE DIRECTOR, FEDERAL INVESTIGATIVE SERVICES

Subject:                 Draft Report on the Audit of the Federal Investigative Services' Case
                         Review Process over Background Investigations
                         (Report No. 4A-IS-00-13-062)

Summary of OPM Position

We have reviewed your draft audit report on OPM’s Federal Investigative Services’ (FIS) Case
Review Process over Background Investigations program and are in concurrence with the
findings and recommendations identified in the report.

While OPM FIS is in concurrence with the findings and recommendations, it should be noted
that effective February 24 th, only federal employees are conducting the final quality review
before the investigative product is sent to the agency for review and adjudication. The action to
federalize the final quality review process is part of Director Archuleta's ongoing effort to
strengthen the background investigation process.

We recognize that even the most well run programs can benefit from an external evaluation and
we appreciate the input of the Office of the Inspector General as we continue to work to enhance
our Case Review Process over Background Investigations program. Specific responses to your
recommendations are provided below

Response to Recommendations

Finding #A1: General Observations/PIPS Events

We consider the PIPS events used by the Contractors (Displayed, Modified, and Printed) to be
weak controls over determining if an investigative item has been reviewed. The reliance on these
PIPS events is not sufficient to show that a review occurred on the investigative items. For
example, if an authorized user logs into PIPS to research a case PIPS will mark the item
"Displayed". In this example the user is only doing research and not performing a review;
however, under the current control that action would constitute a review. We believe requiring
the Contractors' reviewers to mark all investigative items RC in PIPS will help solidify that the
review occurred. In addition, it documents that the reviewer is taking ownership that the review
took place.

RECOMMENDATION #1: We recommend that FIS require the Contractors to mark
all investigative items RC in PIPS.

MANAGEMENT RESPONSE: OPM FIS partially concurs with this recommendation. OPM
FIS concurs that the process to document the contractors’ pre-submission quality review needs
improvement and is currently exploring multiple options to remedy this involving system changes
and contract changes. OPM FIS does not concur that requiring the contractors to mark all
investigative items RC in PIPS is the best avenue for improving this process. See response for
Recommendation #2 for OPM FIS’ plan of action.

For clarification, it should be noted that there is only one PIPS event that indicates that the
review of the report occurred and it is Review Complete (RC). The other functions noted:
Display (DR), Print (PR), or Modify (MO) are PIPS-R methods for access to a report. We utilize
the lack of these events in PIPS-R as indicators of potential fraud or non-compliance with
contract requirements since the PIPS-R functions mentioned above should occur before the RC
event.

FINDING #A2: General Observations/Auto-Released Reports of Investigations

FIS does not have a control in place to verify that the Contractors are conducting a
review of the auto-released ROIs. We identified ROIs where no review occurred prior to
submission to OPM. See Finding B2: No Reviews of Reports of Investigations for the
details. We determined that 15 out of the 17 ROIs were auto-released. Therefore, the
Contractors are not conducting a pre-review of all investigative items as required by the
OPM contract.

FIS' stated that they are working with their Information Technology department to
enhance the Report of "RC" prior to Review Action to capture the auto-released ROIs.
We believe if the enhancements are made to include the auto-released ROIs in the Report
of "RC" prior to Review Action and they use this report consistently to monitor the ROIs,
it will increase FIS' effectiveness in ensuring the Contractors are conducting a review of
all investigative items.

RECOMMENDATION #2: We recommend that FIS implement an internal control to
ensure the Contractors are reviewing the auto-released ROIs and that they document a
review took place.
                            DELETED BY OPM-OIG
                     NOT RELEVANT TO THE AUDIT REPORT

MANAGEMENT RESPONSE:
OPM FIS concurs with this recommendation. OPM FIS concurs that the process to document
the contractors’ pre-submission quality review needs improvement and is currently exploring
multiple options to remedy this involving system changes and contract changes, which will allow
for enhancement of the oversight of the contractors’ review process as necessary.

There are currently 4 options being explored.
Option #1: OPM FIS is exploring the capability of enhancing our automated system to allow for
it to accept an additional RC event after the ROI is auto-released and then requiring the
contractor to enter this event after the review of the ROI. This change would then allow the
contractors to record in our system that a pre-submission quality review had been conducted
even after the ROI had auto-released. Our oversight staff could then more easily monitor
reports to apply penalties for those cases that contain ROIs that did not have an RC event by the
contractor.

Option #2: OPM FIS is also exploring a separate enhancement that will allow for the whole
case review, inclusive of all contractor ROIs. This enhancement would identify when all ROIs
have been completed and will place the case in status that allows for the contractor’s review of
the entire case instead of individual ROIs. This would ensure accountability of the contractors
and provide the visibility needed for OPM FIS to conduct proper oversight at the case level
rather than the individual ROI level.

Option #3: OPM FIS is also exploring the increase of the auto-release time constraints from 30
days to 99 days for each ROI which would allow the contractor more than adequate time to
review each ROI and should virtually eliminate any auto-release. Of course, we need to carefully
consider this option so as to not have an adverse impact on meeting the congressionally
mandated timeliness requirements.

Option #4: With OPM FIS’ recent decision to federalize all final quality review under the
support services contract, we are conducting an assessment of the cost and value added of the
contract requirement of the pre-submission quality review. Many other Federal agencies that
contract out similar work do not require a pre-submission quality review. OPM FIS
acknowledges that this requirement may provide added value to our process, but this needs to
be carefully weighed with the cost of this requirement, the oversight that is needed to monitor
this requirement, the system changes to support this requirement, the federal review process we
have in place, and the ultimate benefit that is received. The removal of this requirement does not
alleviate the contractor from submitting a product to OPM FIS that is compliant with contract
requirements, nor does it prevent a contractor from using its own internal quality control and
quality assurance processes and procedures to meet or exceed such contract requirements. .

OPM FIS will assess all of these options above and any additional options to render a decision
by May 1, 2014. OPM FIS is unable to give a date as to when the selected option will be
implemented due to the complexities with changing the IT systems.


OPM FIS also provides further clarification regarding the auto-release function. In February of
2008 new system functionality was added to our workflow to facilitate better contractor
management of quality review. This system adjustment assigned codes to track when portions of
the investigative case are transmitted by investigator(s) and ready for contractor quality review
(RV), and when the quality review is completed (RC). This adjustment enhanced the ability of the
contractor supervisors and reviewers to manage their quality review workload, and also
provided data points supporting more robust system reports for management purposes.

The adjustment included a feature to automatically change the status code of a report from "RV"
(Ready for Review) to "RC" (Review Complete) at a pre-determined time in the event the report
has not been released in a timely manner. The feature (termed auto-release) was a necessary
fail-safe to eliminate workflow backlogs and move work along in deference to timeliness
mandates.

When a report nears the time it will move out of review status, the contractor receives multiple
notices to complete the review. Reports that move automatically out of RV to RC can still be
reviewed by the contractor. The work stays available for contractor review until the last item of
the case is identified as RC. At that point, the entire case status changes and the case is
removed from contractor control by indicating it is complete and ready for OPM FIS’ federal
review.

If the contractor entity allows a completed case with auto-released ROI's to go to OPM's
Federal review process, and the case is determined to not meet quality standards, the work is
returned to the contracting entity for rework and penalties are applied.


FINDING B1: Case Review Process/Abnormal Reviews

We found that two USIS reviewers completed abnormal BIC reviews in a short
timeframe. For our review, we concluded that an abnormal review of BIC is when the
reviewer signs off as RC on multiple cases in a very short timeframe. While we
understand it is possible for a reviewer to RC in bulk, we find that the rate at which these
reviewer RC'd the cases to be abnormal. For example, one reviewer completed 15,152
case reviews during a one month timeframe, with most of these occurring within minutes
of each other on multiple days. Details of our review were provided to FIS separate from
this report.
We obtained the Federal review audit universe of 483,200 CBIC from October 1, 2012
through August 31, 2013. We analyzed the audit universe of CBICs where there was a RC
event in PIPS by the Contractors. Specifically, we looked for trends where reviewers
completed reviews on multiple cases in an abnormal timeframe.

We noted that FIS was aware that abnormal reviews were being completed by USIS
reviewers and had previously identified one of the two reviewers as completing abnormal
reviews. FIS had taken administrative action prior to this draft report.

FIS' contract with USIS, Section C.7 (a) of OPM15-11-C-0015 states that "The
Contractor shall conduct a pre-submission quality review by a qualified reviewer of all
OPM-FIS products and shall maintain an inspection and evaluation system to ensure that
all investigative work products and other deliverables submitted to OPM conform to
contract requirements, national investigative and adjudicative standards. The Contractor
shall not submit for payment any case that does not meet the requirements of this
contract."

GAO's Standards for Internal Control in the Federal Government states that "Control
activities are the policies, procedures, techniques and mechanisms that enforce
management's directives,…Control activities occur at all levels and functions of the
entity. They include a wide range of diverse activities such as approvals, authorizations,
verifications, reconciliation, performance reviews, maintenance of security, and the
creation and maintenance of related records which provide evidence of execution of these
activities as well as appropriate documentation. Examples of control activities are:
reviews by management at the functional or activity level, controls over information
processing, proper execution of transactions and events, and appropriate documentation
of transactions and internal control."

Allowing the Contractor' reviewers to sign off on multiple background cases at the same
time could result in being BIC being processed as reviewed when no review occurred.

RECOMMENDATION 3: We recommend that FIS require USIS to strengthen their
internal controls over reviewers to prevent them from RC'ing large numbers of cases in a
short timeframe.

                            DELETED BY OPM-OIG
                     NOT RELEVANT TO THE AUDIT REPORT
MANAGEMENT RESPONSE: OPM FIS concurs that USIS’ internal controls to catch
abnormal reviews have not always provided the desired results. Because the methods by which
contractors will provide oversight and quality assurance of contract requirements are
determined by the contractor and not the Government, FIS will recommend to USIS that it
consider reevaluating its internal controls to determine how the company might improve its
oversight of its reviewers, and will request that USIS identify its remedial action plans for any
substandard performance. FIS will also assess whether a change to its requirements such as
specifying the number of cases that may be RC’d within a specified timeframe, would improve
the results if modified into the contract. Because this is a Performance Based Contract, USIS
must devise the methods in which it will ensure compliance with contract requirements and how
to achieve the performance standards.

                             DELETED BY OPM-OIG
                      NOT RELEVANT TO THE AUDIT REPORT

OPM FIS will assess all of the options noted in response to Recommendation #2 and any
additional options to render a decision by May 1, 2014. OPM FIS is unable to give a
date as to when the selected option will be implemented due to the complexities with
changing the IT systems. However, 60 days after the option is implemented, OPM FIS
will design oversight mechanisms to monitor these functions and require our contractors
to detail to OPM FIS the internal controls they will implement as a result of this change
as warranted.

FINDING B2: Case Review Process/ No Reviews of Reports of Investigations

We found 3 ROIs from USIS, 4 ROIs from CACI and 10 ROIs from KGS that were not
reviewed by the Contractors prior to submitting the background investigations to OPM.
Details of our review were provided to FIS separate from this report.

We obtained FIS' Federal review of 483,200 background investigations closed from
October 1, 2013 through August 31, 2013. We selected a sample of 328 background
investigation cases to verify a review occurred on each ROI prior to submission to OPM.

Specifically, we selected:

• 108 out of 221,673 BIC reviewed by USIS.
• 110 out of 126,091 BIC reviewed by CACI.
• 110 out of 135,436 BIC reviewed by KGS.
CACI confirmed that the ROIs were not reviewed and stated that they do not know why
no review took place. KGS stated that the ROIs in question are law check ROIs. If an
investigator codes a ROI as "Completed No Record" or "Completed Referred", then the
reviewer does not expect to see a ROI for review and will allow PIPS to auto-release the
ROI. USIS stated that a work leader may have marked RC by accident for one of the
ROIs; however, they were unable to provide a cause for the remaining ROIs in question.

FIS's three contracts, Section C.7 (a) of OPM15-11-C-0015 (USIS); OPM15-11-C-0016
(KeyPoint); and OPM15-1 l-C-0017 (CACI) each state that "The Contractor shall
conduct a presubmission quality review by a qualified reviewer of all OPM-FIS products
and shall maintain an inspection and evaluation system to ensure that all investigative
work products and other deliverables submitted to OPM conform to contract
requirements, national investigative and adjudicative standards. The Contractor shall not
submit for payment any case that does not meet the requirements of this contract."

GAO's Standards for Internal Control in the Federal Government states that "Control
activities are the policies, procedures, techniques and mechanisms that enforce
management's directives. Control activities occur at all levels and functions of the entity.
They include a wide range of diverse activities such as approvals, authorizations,
verifications, reconciliation, performance reviews, maintenance of security, and the
creation and maintenance of related records which provide evidence of execution of these
activities as well as appropriate documentation. Some examples of control activities are:
reviews by management at the functional or activity level, controls over information
processing, proper execution of transactions and events, and appropriate documentation
of transactions and internal control."

As a result of no reviews occurring on the ROIs prior to submission to OPM, the
Contractors have been paid for work that was not reviewed. In addition, the lack of
reviews can lead to inadequate work being performed and BIC being potentially
compromised.

RECOMMENDATION 4: We recommend that FIS require the Contractors to
implement internal controls to ensure that all ROIs within a case have been reviewed
prior to submission to OPM.

                             DELETED BY OPM-OIG
                      NOT RELEVANT TO THE AUDIT REPORT

MANAGEMENT RESPONSE: Following a discussion with the OPM Senior Procurement
Executive OPM FIS partially concurs with this recommendation. Because the methods by which
contractors provide oversight, internal controls, and quality assurance are determined by the
contractor and not the Government, FIS will recommend to USIS that it consider reevaluating its
internal controls to determine how the company might improve its compliance with ROI review
requirements, and will request that USIS identify its remedial action plans for any substandard
performance. OPM FIS had already identified this area as an issue based upon routine
inspections of the contractors’ review process. OPM FIS has required each of the fieldwork
contractors to update quality control plans to further ensure that this contractual review is
conducted on each product submitted and a certification from the program director of each
contract company that the review of each product submitted has occurred on a monthly basis.
These quality control plans are currently being reviewed and coordinated with the Contractors.
OPM FIS has also created a new inspection team whose focus is to oversee contractual
compliance including this area of the contract.

Further, OPM FIS clarifies that the Fieldwork contractors’ review is one part of OPM’s quality
assurance process. In addition to the required fieldwork contractual review, all cases were
reviewed by either federal review staff or the support contractor review with federal oversight of
that process prior to being sent to the customer agencies. As of February 24, 2014, all cases will
receive a review by Federal staff. Therefore, the effect of the contractors’ lack of reviews does
not lead to background investigations being potentially compromised.

For clarification, it should be noted that there is only one PIPS event that indicates that the
review of the report occurred and it is Review Complete (RC). The other functions noted:
Display (DR), Print (PR), or Modify (MO) are PIPS-R methods for access to a report. We utilize
the lack of these events in PIPS-R as indicators of potential fraud or non-compliance with
contract requirements since the PIPS-R functions mentioned above should occur before the RC
event.

FINDING C1: Training/Reviewer Training

We were unable to verify that 5 KGS and 24 USIS' reviewers and support personnel met
training requirements. The names of the reviewers and support personnel were provided
to FIS separately from this report.

We randomly selected a total of 100 Contractors' reviewers and support personnel to
determine if they met the qualifications to perform their duties. Specifically, we selected:

• 25 out of 80 CACI Reviewers.
• 25 out of 323 USIS Fieldwork Reviewers.
• 25 out of 54 USIS Support Personnel.
• 25 out of 78 KGS Reviewers.
USIS lacks internal controls over the retention of training documentation. KGS did not
have any formal records of the reviewers' initial training.

FIS' two contracts, Section C.3(c) of OPM15-11-C-0015 (USIS) and OPM15-11-C-0016
(KGS); each state that "OPM requires that certain personnel performing work under this
contract possess minimum qualifications and training, as specified in Attachment 2
(Attachment 2-Resume, Format, Qualifications, and Training Requirements), and
reserves the right to review these qualifications, determine if f the minimum requirements
are met, and whether the individual shall be permitted to perform work on the contract."
Attachment 2 of the contracts includes the following training topics:

1. Investigators Handbook Training
2. EPIC Training
3. Mock Interviews
4. Supervised Live Work
5. Mock Case Reviews
6. Security Briefing (Includes proper Handling/Storage of Case Materials)
7. Professional Conflict
8. Issue Resolution

FIS' Support Services contract, Section C.3 (3.1) of OPM15-11-C-0004 states that "the
Contractor shall develop and implement an OPM approved program for initial, periodic,
and update training to ensure staff proficiency. It must include initial and yearly
refresher training to identify and correct problems in proficiency by its personnel
working under this Contract, training for any changes in technology, policies,
procedures, Investigator's Handbook, and the Annual IT Security and Privacy Awareness
training."

GAO's Standards for Internal Control in the Federal Government states that "Internal
control and all transactions and other significant events need to be clearly documented,
and the documentation should be readily available for examination."

GAO's Standards for Internal Control in the Federal Government also states that "All
personnel need to possess and maintain a level of competence that allows them to
accomplish their assigned duties, as well as understand the importance of developing and
implementing good internal control. Management needs to identify appropriate
knowledge and skills needed for various jobs and provide needed training. . . .
Management should ensure that skill needs are continually assessed and that the
organization is able to obtain a workforce that has the required skills that match those
necessary to achieve organizational goals. Training should be aimed at developing and
retaining employee skill levels to meet changing organizational needs."

The absence of documentation to support that all reviewers and support personnel have
been trained increases the risk that there are reviewers and support personnel who have
not been properly trained to perform their duties. Individuals that are not properly
trained to review background investigations can lead to deficient cases being forwarded
to FIS.

RECOMMENDATION 5: We recommend that FIS require all the Contractors to
implement internal controls to ensure that all reviewers have the required training.

                            DELETED BY OPM-OIG
                     NOT RELEVANT TO THE AUDIT REPORT

MANAGEMENT RESPONSE: Following a discussion with the OPM Senior
Procurement Executive OPM FIS partially concurs with the recommendation. Because
the methods by which contractors provide oversight, internal controls, and quality
assurance are determined by the contractor and not the Government, FIS will
recommend to USIS that it consider reevaluating its internal controls to determine how
the company will validate that its reviewers have received the required training, and will
request that USIS identify its remedial action plans for any substandard performance
identified. In addition, OPM FIS is preparing change documents for the contracts to
ensure that the Contractors maintain formal, complete training records and require that
full documentation be provided within 24 hours of an OPM request. OPM FIS plans to
submit a final modification to OPM Contracting for implementation for fiscal year 2015,
which should occur no later than September 30, 2014 for all contracts.

FINDING D1: FIS Oversight of the Contractors/ Oversight Controls over the
Contractors

FIS needs to strengthen their controls over the Contractors' BIC review process. We
found the following as a result of our testing the Contractors' background review
processes: (1) A USIS reviewer performed abnormal reviews in a short timeframe; (2)
support was not provided to show that the Contractors' reviewers and support personnel
met training requirements; and (3) all ROIs were not reviewed by the Contractors'
reviewers prior to submitting cases to OPM.

FIS' three contracts, Section C.6 of OPM15-11-C-0017 (CACI); OPM15-11-C-016
(KGS); and OPM 15-1 l-C-0015 (USIS) each state that "OPM will initiate a contract
performance assessment program that evaluates the quality and timely performance of
the contract requirements and require corrective measures as appropriate. OPM will
ensure compliance with contract requirements through various means such as a review of
administrative and managerial processes and investigative practices, on-site inspections,
an assessment of employees while conducting work (check rides), and a quality review of
completed fieldwork investigation."

FIS' Support Services contract, Section C.5 (5.1) of OPM15-1 l-C-0004 states that "OPM
may inspect and test the services called for by the Contract to the extent practicable at all
times and places during the term of the Contract. OPM may vary the levels of
surveillance depending on the Contractor's conformance to the Performance Standards
(Attachment 3). This may include, but is not limited to, assessment of the Contractor's
performance based on customer satisfaction, statistically valid sampling, or 100%
inspections. OPM will monitor the Contractor's Integrity, Quality, and Timeliness."
Section C.5 (5.3) of the contract also states that "OPM will monitor compliance with
Contract requirements through a review of work performed. Any reports OPM relies on
for purposes of evaluating the Contractor's performance under this Contract may be
shared with the Contractor as they are produced. OPM may modify existing or develop
new reports as necessary to operate and enhance OPM's oversight of Contractor
performance. Quality standards are listed in Attachment 3."

GAO's Standards for Internal Control in the Federal Government states that "Control
activities are the policies, procedures, techniques and mechanisms that enforce
management's directives. Control activities occur at all levels and functions of the entity.
Some examples of control activities are: reviews by management at the functional or
activity level, controls over information processing and appropriate documentation of
transactions and internal control."

Weak controls over the Contractors' BIC review processes, increases the risk of being
compromised.

RECOMMENDATION 6: We recommend that FIS strengthen their oversight controls
over the Contractors to ensure the contract requirements are being met.

                             DELETED BY OPM-OIG
                      NOT RELEVANT TO THE AUDIT REPORT

MANAGEMENT RESPONSE: OPM FIS concurs with the recommendation. As of
February 2014, OPM FIS has realigned the Capacity Development and Oversight (CDO)
office to strengthen the focus on oversight and inspecting for compliance. The
restructure of CDO has allowed us to identify high risk areas to ensure we are focusing
our efforts on those most important areas for the background investigation process. We
have streamlined our processes and strengthened our methodologies. We have also
provided 19 individuals with auditor training. OPM FIS will continuously evaluate the
oversight controls to reasonably ensure the contractors are in compliance with the
contracts.

cc:
IOC