2007 Petrochemical Security Summit South Shore Harbor Resort & Conference Center R. Ronald Sokol, C.S.P. Executive Director Contractors Safety Council of Texas City

 Update on Safety Council Security Consortium (SCSC) Activities  Brief overview of SCSC and the components of the contractor background screening program  Review current performance of contractor background screening program  Introduce the Integrated Contractor Management System (ICMS) Presentation Topics

Safety Council Security Consortium Who are we and when did we begin? What is our purpose? What programs do we administer? What effect have we had on the contractor background screening process? What benefits do we provide to industry?

Who are we and when did we begin? –Organized August 2005 –Informal structure –Meet on an as-needed basis –14 Members integrated with Vendor Services provided by First Advantage Major Markets Served: Beaumont, Baytown, Texas City, Brazosport, Lake Charles, Houston, Mobile, New Orleans, East Texas, Texas Panhandle, Austin, Shreveport, Chicago, Charleston, WV, Tennessee Valley

Purpose: Establish reciprocal industry standards for consistent, systemic, contractor screening and identity verification process Mission Statement: Provide the highest level of security for councils, owners and contractors by adhering to a reciprocal, quality background screen process What is our purpose?

Goals/Objectives: Develop contractor background screening solution to meet the following Petrochemical Industry objectives:  Create Reciprocal Solution  Create Cost Savings for Industry  Reduce Time to Hire  Deliver Quality Product  Compliance with FCRA  Owner Auditing Capability Establish Vendor requirements What is our purpose?

Vendor Requirements Include : –Control over adverse action –Adhere to all FCRA regulation including site inspection requirement –ISO 9000 certified –Procedure to purge data –Verification and confirmation of accurate records through an audit process –Mandatory audit/review of agents and results –Separation of data gathering and grading process

Cost of Noncompliance Cost of noncompliance is high Federal Trade Commission (FTC) fines –Choice Point fined $15M Jan –Lawsuits due to failure to protect personal information/data

Level 1 – Social Security Verification (SSV) Program which links a government issued photo identification to the consumers social security number Level II – Background Screening Program –Background Check Graded (BCG) provides a numeric score based upon the consumers criminal history over the most recent 7 year period What programs do we administer?

2002:  Concept Planning with Southeast Texas Plant Managers Forum (SETPMF)  Basic Package Program approved  Pilot Program launched 2003:  Proof of Concept validated  Social Security Verification (SSV) Program  OwnerPass introduced 2005:  Background Check Graded  Safety Council Security Consortium (SCSC) formed Brief History of Background Screening Programs:

Identity Verification Authorization granted by consumer to SCSC members Social Security Verification Process (SSV) Purpose: match government issued photo identification to Social Security number for identity verification. Reports are returned in the following status:  Approved – Name and SSN Match  Rejected – No Record Found  Provisional – No Match, Deceased, SSN Invalid  Error – Number outside of Social Security Administration (SSA) Matrix Level I Security Assessment

~350,000 SSV conducted-no expiration on SSV Rejected/Provisional status account for approximately 12% of searches Failure rates currently less than 1% Safety Council is considered the end user in this process and handles FCRA compliance issues SSV is reciprocal with SCSC members Best Practice in certain areas ties SSV to SSA, local Law Enforcement, F.B.I., District Attorney Results of SSV program

SSN SEARCH STATISTICS (.6%) (7.7%) (88.1%) (3.6%) 352,366 Total

Offense is a Felony with punishment of up to 10 years in prison and a $10,000 fine Signage from CSCTC

 Safety Council: Background Check Graded (BCG) Contractor screening package  Prior Background Check Database of contractor background screens  OwnerPASS Plant Owner access to contractor background screens Level II Background Screening Program

Safety Council (Website):  Ordering and order status portal  Client relationship with Contractor Packages and Reports Available: 1.Background Check Graded (BCG) 2.Prior Background Check Report 3.A La Carte Search Reports (sample)  Federal Search  Prior Employer Verification  Motor Vehicle Report, etc. Background Check Searches

: 1) Background Check Graded – Components: –Social Security Verification –County Criminal Searches –Motor Vehicle Report –Patriot Act Search –Graded Package Result Report Background Check Graded:

Social Security Report  Processed through Experian  Inquiry Does Not Adversely Affect Credit Rating County Criminal Report  Criminal search performed in jurisdiction of current residency  Convictions, Pending, Outstanding Warrants & Deferred Adjudication  Felony and Misdemeanors where available in highest court Motor Vehicle Report  Processed by State where Consumer is Licensed Background Check Graded:

Patriot Act Search  Database Search of Office of Foreign Assets Control  Designated Nationals  Terrorists  Drug Traffickers  Blocked Persons Background Check Graded:

Grade:Charge/Conviction Type: 00 –Clear record 01 – “non-violent” misdemeanors (not on list) 02 – “violent” misdemeanors (included on list) 03 – “lesser” felonies (not on graded list) 04 – felonies in “03” and misdemeanors in “02” 05 – “higher” felonies (included on list) 06 – felonies in “05” and misdemeanors in “02” 07 – Patriot Act “hits” Program Components:

GRADED PKG RESULTOWNER AOWNER BOWNER C NO CONVICTIONS = 0000 MISDEMEANORS (NOT ON LIST) = LISTED MISDEMEANORS = 0202 FELONIES (NOT ON LIST) = 0303 FELONIES (NOT ON LIST) AND LISTED MISDEMEANORS = LISTED FELONIES = 0505 LISTED FELONIES AND LISTED MISDEMEANORS = PATRIOT ACT SEARCH HIT = 0707 Grading Scenario

Graded Package Result

GRADED PACKAGE RESULTS

COUNTY CRIMINAL AVERAGE TURN AROUND TIME Blue = 2006 Pink = 2007

2) Prior Background Check:  Tool for Contractor Reciprocity and Owner Review  Report Available Within Seconds  Eliminates redundant screens  Creates cost savings  Available to Contractors & Owners  FCRA letter of notification sent to consumer Prior Background Check

Prior Background Check Sample

When to Order:  Council Notification  When Ordering the Background Check Graded  Review of Council’s Training History  Applicant/Employee Badge Prior Background Check

3) Ala Carte Searches  SSN Verification  County Criminal Search  State Criminal Search  Federal Criminal Search  Prohibited Party Search  Prior Employer  Education Verification  MVR and others upon request Ala Carte Searches

Phase 1  Prior to Ordering Searches  Provide Disclosure to Consumer  Obtain Authorization from Consumer  Keep Authorization on File for Five Years Fair Credit Reporting Act Compliance

Phase 2  Pre-Adverse Action Process  Provide Copy of Report to Consumer and  Provide Summary of Rights to Consumer  Allow Reasonable Amount of Time for Consumer to Dispute Information  Adverse Action Process  Provide Notice of Adverse Action to Consumer Fair Credit Reporting Act Compliance

Set Up Process:  Customize Letters or Use Vendor’s Standard Letters (Pre-Adverse & Adverse Action)  Name and Title of Person Signing Letters  Letters can be customized to use your Company Logo  Web Users allowed Access to FCRA Web List FCRA Web Module

What is the effect of the contractor background screening process? –Over 215,945 Workers Background screened –Over 141,510 Background Checks graded –Over 3,300 Contractor companies enrolled in process –Over 75 Plant Owners participating in process –Program is growing in new market areas and additional owners are participating in existing market areas

Reciprocity Example:  Previous Model:  1 worker x 4 employers per year  $60 screening event per employer ($60 x 4)  $240 per worker per year x 100,000 workers  $24 million in screening costs  Current Safety Council Model:  1 worker x 4 employers per year  $60 first time screening event ($12 x 3 additional)  $96 per worker per year x 100,000 workers  $9.6 million in screening costs What is the effect of the contractor background screening process?

Cost Savings to Industry: Year 1: $14.4 million! ($24 M - $9.6M = $14.4M) Year 2: $33.6 million! ($48M - $14.4M = $33.6M) Reciprocity for Contractor Background Screening

 Identity Verification Services  Background Screening services by qualified vendor  FCRA Compliance  Reciprocity  Cost Savings  More secure workplace  Development of new products (i.e. Integrated Contractor Management System) What benefits do we provide to industry?

ICMS: Benefits for Safety Council –Consolidated data source on trainees –Streamlines reciprocity “look-up” process –Effective solution to more positively ID students and assure demographic credentials are associated with an authenticated individual/trainee

ICMS: Benefits for Contractors –Consolidated data source for current and future workforce –Convenient, web-based data source to qualify and assess “ready to work” workers –Effective tool to manage contract worker compliance requirements for owner sites

ICMS: Benefits for Owners –Consolidated resource to monitor training, security, fit-for-duty worker compliance at corporate and plant level –Effective tool to manage contractor company compliance (PQF, certifications, etc.) –Flexible solution that allows for customized Owner requirements, at corporate and/or plant level –Allows for data links with additional “qualified” 3rd party providers