(Reuters) - The U.S. Government Accountability Office (GAO) on Monday upheld portions of a protest filed by vetting firm FCi Federal Inc against a $190 million contract awarded to a unit of U.S. Investigative Services LLC (USIS) earlier this year by the Department of Homeland Security.
FCi Federal has filed the protest, arguing that federal fraud charges filed against USIS LLC by the U.S. Justice Department for "dumping" 665,000 background check cases without conducting proper reviews should have disqualified it from winning the contract.
The GAO recommended that the DHS reasonably consider whether the USIS unit, USIS Professional Services Division (PSD), can be viewed as a responsible contractor, taking into account its relationship with and the allegations of fraud against the parent company.
"If, at the end of this review, USIS is found to be other than responsible, we recommended that DHS terminate USIS's contract and make award to FCi, if otherwise appropriate. We also recommended that FCi be reimbursed its protest costs," GAO said in its review.
The DHS must advise GAO whether it will comply with its recommendations.
The DHS was not immediately available for comment outside regular U.S. working hours.
"We are pleased with GAO's decision to sustain our protest of the FOSS contract award to USIS. We believe GAO's decision is the right one," said FCi Federal CEO Sharon Virts.
A USIS spokesman said in an email response to Reuters that USIS PSD does not perform background checks and is not a party to the DOJ complaint.
"PSD won this contract from the incumbent contractor after a rigorous two-year competition, which followed long-standing government procurement procedures, and, since the contract award decision, United States Citizenship and Immigration Services has graded PSD's performance on another significant contract as exceptional or very good across the board," USIS spokesman said.
USIS, which carried out the background checks on former NSA contractor Edward Snowden and Navy Yard shooter Aaron Alexis, has faced growing scrutiny in recent years.
(Reporting by Shivam Srivastava in Bangalore; Editing by Gopakumar Warrier)