Government agency outsourcing firms don't respect private data, GAO reports

Critics of the U.S. government's outsourcing practices have one more bullet to fire at proponents of the practice. According to a Government Accountability Office study, government agencies that use information services firms for everything from law enforcement to counterterrorism data-gathering do not protect the privacy of the citizen data they use.

The Washington Post and other outlets reported Wednesday that the GAO analyzed the Justice Department, the Department of Homeland Security and two other agencies that use outside companies to collect and maintain billions of electronic files about American's current and past addresses, family members and associates, buying habits, personal finances, listed and unlisted phone numbers, and other information, and found those agencies often do not limit the collection or use of information about law-abiding citizens, as required by the Privacy Act of 1974.

The agencies also don't ensure the accuracy of the information they are buying, according to the GAO report. That's in part because of a lack of clear guidance from the agencies and the Office of Management and Budget on guidelines known as "fair information practices," the report said.

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Critics of the U.S. government's outsourcing practices have one more bullet to fire at proponents of the practice. According to a Government Accountability Office study, government agencies that use information services firms for everything from law enforcement to counterterrorism data-gathering do not protect the privacy of the citizen data they use.

The Washington Post and other outlets reported Wednesday that the GAO analyzed the Justice Department, the Department of Homeland Security and two other agencies that use outside companies to collect and maintain billions of electronic files about American's current and past addresses, family members and associates, buying habits, personal finances, listed and unlisted phone numbers, and other information, and found those agencies often do not limit the collection or use of information about law-abiding citizens, as required by the Privacy Act of 1974.

The agencies also don't ensure the accuracy of the information they are buying, according to the GAO report. That's in part because of a lack of clear guidance from the agencies and the Office of Management and Budget on guidelines known as "fair information practices," the report said.

At the same time, contractors are not bound by those "fair information practices," and they often don't comply with all of them, the report said. Companies do not notify individuals when information is collected, they curb individuals' access to their own records, and they generally don't let individuals correct mistakes, the report said.

The 83-page report ultimately recommends Congress set some more stringent rules regarding the use of private information. The report is also topical in wake of the IRS' recent award of contracts to outsource its debt collection tasks.

The IRS in March awarded the contract to The CBE Group; Linebarger Goggan Blair & Sampson; and Pioneer Credit Recovery. Over 30 companies competed for the contract.

This week two of the companies that didn't win the contract -- Diversified Collection Services and GC Services -- filed protests with the Government Accountability Office over the IRS' contract selection process.

Published reports note the National Treasury Employees Union has been critical of the outsourcing initiative since its inception, noting what it calls the IRS' historic weak oversight of private contractors. Others say the move will increase costs and open up privacy issues.

"Accuracy that is good enough for marketing is not necessarily good enough to detain a suspect," said Peter Swire, a law professor at Ohio State University and former privacy councilor with the Clinton administration. Swire told a congressional panel this week that the government needs to ensure that the information it buys is accurate while giving people a chance to correct mistakes.