USIS was founded in 1996 after the investigative branch of the OPM was privatized. Its creation was due to an effort of Vice President of the United StatesAl Gore's effort to reduce the size of the civil service. Originally known as U.S. Investigations Services Inc.,[3] it was at first an employee-owned company. Around 2000 the Carlyle Group invested in USIS and in 2003 Welsh, Carson, Anderson & Stowe committed capital to them. In 2007 Carlyle announced that it would sell USIS to Providence Equity Partners, a private equity firm, for US$1.5 billion.[4] In the fiscal year 2012 the company received $253 million for the contract work of the OPM, 67% of the OPM's contract spending for the fiscal year.[3]
In 2007 an OPM contract investigator employed by USIS conducted the field work for the OPM-FIS background investigation[5] on Aaron Alexis, who has been accused of killing twelve people at the Washington Navy Yard on Monday, September 16, 2013.[6]
In 2011, OPM contract investigators employed by USIS conducted the field work for the OPM security clearance re-investigation on Edward Snowden, who leaked classified documents beginning on June 5, 2013.[7] On June 18, 2013, the Subcommittee on Efficiency and Effectiveness of Federal Programs and the Federal Workforce and the Subcommittee on Financial and Contracting Oversight, both of the U.S. SenateHomeland Security and Governmental Affairs Committee, held a joint hearing.[8] Michelle B. Schmitz, the OPM assistant inspector general for investigations, testified that USIS had been under investigation since late 2011, stating that it involves a "complicated contract fraud case."[8] Patrick McFarland, the OPM inspector general, did not reveal the reason for the investigation of USIS, and said when asked about Snowden's security clearance re-investigation, "We do believe there may be some problems."[7]
In a September 8, 2014, media release, the company insisted that, despite being "the target of inaccurate and misleading public allegations," USIS is a responsible government contractor. It labeled as myth reports that USIS botched its field work for OPM background investigations on Aaron Alexis and Edward Snowden, calling the claim "absolutely false." The company asserted that "OPM confirmed in sworn testimony before Congress on February 11, 2014 that the investigative file compiled by USIS on Aaron Alexis 'was complete and in compliance with all investigative standards.'" USIS also said it followed all OPM-mandated procedures and protocols in its background investigation of Edward Snowden. The company further clarified that it "does not grant security clearances and plays no role in making those determinations." The decision to grant or renew a clearance, said USIS, "is the sole responsibility of the federal government agency that requested the background investigation."[9]
In June 2013 the office of Senator Claire McCaskill stated that USIS was "under active criminal investigation".[8] A statement from USIS stated that it was unaware that it was under criminal investigation.[8] It added that "USIS complied with that subpoena and has cooperated fully with the government's civil investigative efforts".[10] USIS, as the government's No. 1 provider of background checks for the United States, earned $253 million in awards this year alone.[11]
On January 23, 2014, the U.S. Department of Justice filed fraud charges against USIS. The suit was originally filed by a long time USIS employee, whistleblower Blake Percival. The suit, United States of America, ex rel Blake Percival vs USIS alleges that beginning in at least March 2008 and continuing through at least September 2012, USIS management devised and executed a scheme to deliberately circumvent contractually required quality reviews of reports of investigation of completed background investigations in order to increase the company's revenues and profits. USIS responded that the faulty checks "relate to a small group of individuals over a specific time period."[12]
On July 7, 2014, the company said it was hit by a cyber attack prompting the US government to suspend its work with the firm. Experts who have examined the hack "believe it has all the markings of a state-sponsored attack," but did not detail possible suspects.[13][14]
On September 9, 2014, the OPM confirmed it would not renew any of its contracts with USIS upon their expiration at month's end. USIS said it was "deeply disappointed with OPM's decision," which affects 3,000 employees handling a caseload that averaged about 21,000 background investigations a month for total fees of $320 million during the last fiscal year.[15]