US contractor fined Rs 21 crore for outsourcing work to Indian Technology company

Washington DC: A US contractor has been ordered to pay a hefty fine of $3.1 million (around Rs 20.6 crore) for illegally outsourcing government-funded work to a subcontractor based in India.

Focused Technologies Imaging Services, its sole owner Charles Tobin and former co-owner Julie Benware agreed to pay the penalty and fees under an agreement with New York State Attorney General Eric Schneiderman after admitting that they violated New York federal laws by illegally outsourcing the work to a subcontractor based in Mumbai in 2008 and 2009.

Authorities said the Indian company, which was unaware it had got the work illegally, fully and voluntarily cooperated with the investigation.

The agreement arises from a $3.45 million (Rs ​22.9 crore) contract in 2008-09 between 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 paid the Indian company just over $82,000 for this indexing between October, 2008 and September, 2009.
Authorities stressed that there is no evidence the Indian company, nor any of its employees, knew it had obtained the work illegally.
Authorities said 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% of the labour hours of the contract be performed by individuals with disabilities.
Overall, the Indian company performed approximately 37.5% of the work on the contract, Schneiderman said.
In the first-of-its-kind agreement obtained by Schneiderman concerning a government contractor illegally shipping jobs overseas, Focused and Tobin will pay USD 3.05

million in penalties, fees and costs, and Benware will pay $50,000.
Given the confidential nature of the information of the 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.
It was also prohibited from subcontracting any of the work to any other entity.
In October 2008 and continuing to about September 2009, 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.
Focused and Tobin produced false records to conceal the outsourcing.

Posted by on March 25, 2016. Filed under Technology. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.