US contractor fined $3.1 mn for outsourcing work to India

26 Mar 2016


US authorities have imposed a hefty $3.1 million fine on a US contractor for illegally outsourcing a $3.4 million US government-funded work to a sub-contractor based in India.

Charles Tobin, owner of Focused Technologies Imaging Services and its former co-owner Julie Benware have been slapped with the penalty and fees for outsourcing the work to a subcontractor based in Mumbai in 2008 and 2009.

The two have signed an agreement with New York State Attorney General Eric Schneiderman, after admitting that they violated New York federal laws by illegally outsourcing work.

The authorities said they collected information from an unwary Indian company, which fully and voluntarily cooperated with the investigation and admitted it had got the work illegally.

Focused Technologies had, in 2008-09, been awarded a $3.45 million contract by the New York State Industries for the Disabled (NYSID) and the New York State Division of Criminal Justice Services (DCJS), to digitise and index approximately 22 million fingerprint cards into a searchable database.

The cards contained critical personal data, including social security numbers, date of birth and basic physical characteristics.

Focused got the work done by paying the Indian sub-contractor just over $82,000 for this indexing between October 2008 and September 2009.

Neither the Indian company, nor any of its employees were aware that the sub-contract was illegal, the US authorities stressed.

The outsourcing was illegal because Focused sent personal information of over 16 million people to the Mumbai-based subcontractor that was unauthorised to receive this information.

The outsourcing also resulted in the failure of Focused to adhere to a requirement that over 50 per cent of the labour hours of the contract be performed by individuals with disabilities.

Overall, the Indian company performed approximately 37.5 per cent of the work on the contract, Schneiderman said.

Focused and Tobin will pay $3.05 million in penalties, fees and costs, and Benware will pay $50,000, in the first-of-its-kind agreement obtained by Schneiderman concerning a government contractor illegally shipping jobs overseas

Since the work involved confidential information, including fingerprint cards, Focused was required to perform all of the work in New York and it could only use employees that had passed a criminal background check.

But, in violation of these security requirements, Focused and Tobin secretly solicited and retained a document-handling business located in Mumbai to perform the indexing of more than 16 million of the 22 million fingerprint cards.

Tobin secretly arranged for scanned images of the DCJS fingerprint cards to be uploaded onto a server to be accessed by employees of the Indian company in Mumbai for indexing.

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