Routine security checks leave Navy contractors jobless

It's a worker's worst nightmare: After years on the job, your company asks you to fill out paperwork for a routine background check. You have nothing to hide, so you sign the papers and forget about it.

Months later, bosses tell you the investigation turned up some problems. They provide no details, just a three-word assessment: "no determination made."

Within weeks, without explanation or recourse, in the middle of a recession, you're fired.

That's the situation facing at least 18 local Navy contractors who, until August, worked in fuel operations at local bases. It's unclear how many additional contractors could be affected by the Navy's implementation of federal homeland security requirements, but one expert said he has heard of similar situations elsewhere, also involving the Navy.

The problem seems to stem from a disconnect between various Navy commands about how to interpret the results of newly required background checks for government contractors. Unlike military members and government employees, contractors at naval installations have fewer rights when the checks uncover potentially damaging information. And they appear to have no protection from mistakes in the investigation process - meaning they might be fired based on information that's outdated or wrong.

If that happens, they're out of luck: The process does not allow them to appeal.

Those are some of the frustrations of out-of-work former employees of LB&B Associates who have handled fuel at local bases for years. Eighteen LB&B employees, many of them military veterans, were fired in August. Without favorable background investigations, they were told, they could no longer work on the company's $38 million contract providing fuel to ships, aircraft and tankers in Portsmouth, Norfolk, Virginia Beach and Yorktown. Overnight, the company shed 15 percent of its local workforce.

The Maryland-based firm had no other option. A recent supplement to its contract requires it to remove all employees in positions of trust "when a favorable determination is not made."

A spokeswoman for the Naval Supply Systems Command in San Diego, which oversees fuel operations, said the contractors' no-determination ruling can't be appealed. And the government won't re-examine the results, because the contractors were terminated and no longer have LB&B sponsoring them through the background investigation process.

"They just threw us to the curb," said Randy Zellefrow, former night shift supervisor for LB&B at the Navy's Yorktown Fuel Terminal. "It's like the government is this big machine with no heart. Throw us by the wayside and get some other guys. They don't care that they're crashing families, ruining our lives."

The questionnaire they submitted - required for contractors this year for the first time - said background investigations are done to show "whether you are reliable, trustworthy, of good conduct and character, and loyal to the United States." The checks can include academic, residential, achievement, performance, attendance, disciplinary, employment history, criminal history and financial and credit information.

No one told the fired workers what their background checks uncovered, or what kinds of personal problems might render them ineligible to hold so-called "positions of trust."

They suspect that financial issues - unpaid bills, liens, bad credit - are the root of the problem. After LB&B learned in July it might lose so many employees - including the site manager of the fuel depot at Craney Island, the Navy's largest such terminal in the continental United States - it ran credit checks on some of them.

The credit check on site manager Frank Johnson showed a judgment against him for not paying about $950 in dues to his homeowners association. Once he found out, Johnson quickly rectified the lapse - only to discover that he actually hadn't forgotten to pay the bill. His wife tracked down a receipt. The homeowners' association had never cashed the check.

Johnson is one of the lucky ones. Because of his position, the company kept him on and resubmitted his SF-85P - the standard federal form that serves as the basis of background investigations for contractors in positions of "public trust" or "noncritical sensitive" jobs.

The investigations conducted on Johnson and his former colleagues are different from what is required for security clearance, which involves a different level of scrutiny and allows applicants to appeal unfavorable decisions.

The closest Johnson came to losing his job was being forced to take two days of vacation recently while he waited for the re-investigation to be finished.

A 20-year Navy veteran who has worked at Craney Island for 12 years, Johnson shudders to think that one lost check might have cost him his job.

"I'm all for homeland security," Johnson said. "But this whole process - I just don't understand."

James "Frank" Thomas doesn't understand, either.

Thomas spent 10 years as an enlisted sailor handling fuel from Navy barges. Within weeks of leaving active duty, he found similar work as a fuel contractor at Joint Expeditionary Base Little Creek.

After 14 years on the job, and without any financial problems that he knows of, Thomas was terminated in late August. Like Johnson, his background investigation came back labeled "no determination made."

"I feel like we've been blindsided," Thomas said.

Thomas, a married father of three, doesn't claim to have perfect credit.

"You might have a bill or two you done forgot," he said. "Everybody has bills. If you don't have bills, it means you're rich."

But Thomas refinanced the mortgage on his Virginia Beach home last year and the lender didn't find any significant blemishes.

The Navy veteran is disgusted that the termination letter he received from LB&B said that the federal government found him "unfavorable" for the work.

"It's like I'm bin Laden's cousin or something," he said. "How can I not be favorable to work on a naval installation where I served 10 years?"

Thomas can only guess what the background investigation that cost him his job turned up. But he has a theory.

A few years ago, he said, one paycheck came with a much smaller dollar amount than usual. The payroll department told him his wages had been garnisheed for nonpayment of child support.

There was just one problem - he was happily married and lived with his children.

It turned out that another man named James Thomas, also employed by LB&B, was in arrears for child support, Thomas said. He got the mix-up straightened out right away - but now he suspects the child support confusion came back to haunt him.

William Henderson, a

retired government investigator who has written two books about federal background checks and security clearance issues, thinks the Navy is wrongly applying the regulations.

Here's how the system is supposed to work: The command that oversees contractors - in this case, Norfolk's Fleet Logistics Center, part of Naval Supply Systems Command - has each employee fill out an 11-page SF-85P, the standard form for individuals holding positions of public trust. It submits the form to the Office of Personnel Management, which handles the background investigation.

OPM sends its results to the Department of the Navy's Central Adjudication Facility (DONCAF), an agency within the Naval Criminal Investigative Service. If OPM's investigation comes back clean, DONCAF informs the command of a favorable determination, allowing the person to receive the necessary ID card to enter military facilities.

When an OPM background investigation finds that problems might exist for contractors in public trust positions, DONCAF returns that file to the command with a label of "no determination made."

That's where the involved agencies disagree about what happens next - and where the problem seems to start for the employees. None of the offices involved will take responsibility for the outcome.

Nannette Davis, a spokeswoman for the Naval Supply Systems Command's global logistics service in San Diego, said the command considers "no determination made" to be an unfavorable result.

The command's various branches "do not employ trained adjudicators and therefore do not have the expertise to make trustworthiness determinations," Davis wrote in an email.

According to Ed Buice, a spokesman for NCIS, DONCAF doesn't make a favorable or unfavorable ruling on public trust cases with potential problems. Instead, it notifies the command of issues warranting further attention by the command's hiring authorities.

Buice said it's up to the Navy command or its human resources department to decide whether the potential problems uncovered by the check are significant enough to deny employment, or whether the individual can be hired anyway.

"Hiring decisions are made by the command, not DONCAF," Buice wrote in an email to The Pilot after discussing the process with the agency's director. "There is a clear misunderstanding by anyone who indicates something different."

Information from the Navy's top officer seems to echo Buice's position.

A 2008 memo from the office of Adm. Gary Roughead, then the chief of naval operations, specifies that Navy commanders - not DONCAF - have responsibility for making final decisions on whether a contractor in a public trust position who receives "no determination made" is eligible for work.

"If issues (in investigations for public trust positions) are discovered DONCAF will place a 'no determination made' in the (computer system) and forward the investigation to the submitting office for the commander's final determination," reads the instruction, dated Oct. 9, 2008.

But Davis said her bosses interpret the process differently.

"Final determinations are NOT made by NAVSUP commands," she wrote, using the acronym for Naval Supply Systems Command. "After all attempts to upgrade a no determination made... have been exhausted, the contractor company is advised to replace the employee with a 'no determination made' with an employee who holds a favorably adjudicated background investigation."

"This situation is very unfortunate," Davis acknowledged. But ultimately, she said, it's a company's responsibility to terminate employees who don't receive favorable background checks. If they don't, they aren't meeting the terms of the contract.

She also said that the LB&B employees are held to a higher standard than positions of "public trust." Davis said all command positions are considered "national security sensitive" jobs, which require DONCAF's approval.

That doesn't square with LB&B's website, which lists a public trust background check as a prerequisite for three fuel jobs and a grounds maintenance position in Norfolk.

It also doesn't make sense to Henderson, who spent more than 20 years as an investigator for OPM and is the author of "Security Clearance Manual" and "Issue Mitigation Handbook," as well as a contributor to ClearanceJobs.com. Background checks for national security sensitive jobs are handled through a different agency and require applicants to submit an SF-86, he said, not an SF-85P.

Henderson, who lives in California, said he thinks the staffs at Norfolk's Fleet Logistics Center or San Diego's Naval Supply Systems Command don't understand the process or don't want to be held accountable for deciding whether the affected LB&B employees are security risks.

"This is not the way the system was intended to work," Henderson said. "They're circumventing the system by not making a decision."

He said he's heard about Navy contractors in other states having similar issues with background checks, but it doesn't seem to be a problem for Army or Air Force contractors.

Henderson said he wouldn't expect a company to fight too hard for its fired employees because it wants to stay in the Navy's good graces.

"They're not going to rock the boat," Henderson said.

But with more than a dozen positions at local fuel terminals unfilled, LB&B still has a problem on its hands. Finding employees with favorable background checks isn't easy.

According to Vern Stella, assistant regional fuel superintendent at LB&B, the company has been unable to fill 15 of the 18 open positions created by the mass firing. A local recruiting event attracted 100 applicants, he said. More than a dozen met the company's standards, which included a credit check. Just three received the required "favorable" determination from government investigators.

"We're scrambling around, trying to fill these billets," Stella said. "Everybody we're looking at interviewing can't pass the credit check."

Stella, who spent 31 years in the Navy, said the security-check process needs to be tweaked.

"It's very hard, and we know it's happening across the country, and we understand some portion of it," he said. "But at least come back to the individual and say, 'Hey, we see this blemish, what caused this blemish, and is it still there?' More thought needs to be put into the people that they say can't work here anymore. They were all very good people, good citizens and then, bam."

One of the fired workers - Zellefrow, who worked in Yorktown - is certain he knows why he was labeled "unfavorable."

Zellefrow and his wife declared bankruptcy in 2009 after a series of medical emergencies depleted their savings. Both underwent emergency surgeries, and his pregnant wife spent 31 days in the hospital before losing the baby.

Before he declared Chapter 13 bankruptcy, he specifically asked his lawyer whether doing so might affect his job. No, his lawyer told him, not if he didn't handle money as part of his job.

That was not part of his duties as night shift supervisor at the Yorktown fuel terminal, where he was in charge of the control center, all fuel movements and up to eight employees.

Zellefrow, who first handled fuel for the Army as an enlisted soldier, loved the job. He worked for LB&B for seven years - in addition to a side job as a security officer at the nearby Coast Guard base in Yorktown.

The side job helped make up the $820 a month deducted from his LB&B paycheck that went to pay off his creditors. He looked forward to finally being debt-free in two and a half years.

But in August, LB&B fired him because of his "unfavorable" rating.

Zellefrow's attorney, Philip Boardman, said firing an employee who's declared bankruptcy is illegal.

"The code is clear," Boardman said, citing a section of federal law: "No employers may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title."

The law applies to both government and private employers, Boardman said. "It does not make an exception."

If his client doesn't get his LB&B job back, Boardman said he would considering filing a lawsuit.

Zellefrow might not need to do that. His Coast Guard job - now his full-time gig - also required him to fill out an SF-85P in order to get a new government ID card.

He submitted it, electronically, three days before he was fired at LB&B. Last week, he got word that the application was approved.

He doesn't understand how one agency cleared him to work as an armed security officer at a Yorktown military facility while another considers him untrustworthy of working at the fuel terminal a few hundred yards away.

"I can't figure it out," Zellefrow said.

Thomas can't, either.

He hopes to land a job soon as a truck driver handling hazardous material.

Since losing his job with LB&B, Thomas obtained certification to transport hazardous materials and got a federal transportation worker credential, both issued by the Department of Homeland Security's Transportation Security Administration. Both require a fingerprint-based criminal history records check and security threat assessment.

How can he be cleared to transport hazardous materials and access port facilities across the United States, but not work at Little Creek?

"No one seems to know, or wants to give you any information," Thomas said. "If this is something related to 9/11, that was a decade ago. This is something that should have been in place before now."

After months of angst and questions, Zellefrow and Thomas might get some sort of explanation soon.

Responding to a request from Johnson, the Craney Island site manager, and inquiries from The Virginian-Pilot, Sen. Mark Warner has asked the Secretary of the Navy, Ray Mabus, to look into the contractors' issue. A spokeswoman for Mabus said he hopes to have some answers in coming weeks.

Kate Wiltrout, (757) 446-2629, kate.wiltrout@pilotonline.com