732.3

PERSONNEL SECURITY PROGRAM

CHAPTER 1. GENERAL

1\. PURPOSE. This handbook provides instructions and general

operating procedures to ensure that the employment or retention in

employment of any employee in the Department is clearly consistent

with the interests of national security.

2\. AUTHORITY.

a\. Title 5, U.S.C., Sections 3571, 5596, 7531 and 7532;

b\. Executive Order 10450, dated April 27, 1953, as amended, and

modified by a letter dated November 18, 1965, from the

Chairman of the Civil Service Commission;

c\. Chapters 732 and 736 of the Civil Service Commission\'s Federal

Personnel Manual.

3\. DEFINITIONS. In this handbook:

a\. \"National security\" refers to those activities which relate to

the protection and preservation of the military, economic and

productive strength of the United States, including the

security of the Government in domestic and foreign affairs,

from espionage, sabotage, subversion and any other actions or

situations likely to weaken or destroy the United States.

b\. \"Defense information\" means official information which requires

protection in the interest of national defense. The information

is classified by appropriate classifying authority in

accordance with Executive Order 10501 of November 5, 1953, as

amended.

c\. \"Sensitive position\" means any position within the Department

the occupant of which could bring about, by virtue of the

nature of the position, a material adverse effect on the

national security. \"Sensitive position\" is further defined in

paragraph 6.

d\. \"Primary organization\" means any of the components shown in

the Departmental Organization Chart whose heads report directly

to the Secretary or Under Secretary. They are: Assistant

Secretaries, the General Counsel, the Federal Insurance

Administrator, the Inspector General, Regional Administrators

and Staff Heads reporting to the Secretary.

Page 1 1/73

HUD-Wash., D. C.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

732.3

e\. \"Primary Personnel component\" means each of the following for

the organization it services: Headquarters Personnel Operations

Division and Field Personnel Operations Division.

f\. \"National Agency Check and Inquiry\" (NACI) means an investigation

of each new Federal employee consisting of a check of the

fingerprint and investigative files of the Federal Bureau of

Investigation, investigative files of the Civil Service

Commission and the House Committee on Internal Security. In

addition, as appropriate, other checks are made of the Defense

Central Index of Investigations, Naval Investigative Services

Headquarters, Office of Special Investigations (Air Force) and

Coast Guard Intelligence (Department of Transportation). The

definition includes written inquiries to law enforcement

agencies, former employers and supervisors, references, schools

and a check of records of the Immigration and Naturalization

Service, if the person is an alien or a naturalized citizen.

g\. \"Full Field Investigation\" means a National Agency Check plus

personal interviews with present and former employers,

supervisors, fellow workers, references, neighbors, school

authorities and other knowledgeable associates, credit, other

pertinent records, and, when applicable, a check of the State

Department passport files.

4\. PURPOSE OF PERSONNEL SECURITY PROGRAMS.

a\. Executive Order 10450 describes the two principal reasons for

requiring personnel security programs in Federal agencies:

\(1\) The interests of the national security require certain

standards of all persons privileged to be employed in the

Government. They must be reliable, trustworthy, of good

conduct and character and of complete and unswerving

loyalty to the United States.

\(2\) The American tradition that all persons should receive

fair, impartial and equitable treatment at the hands of

the Government requires that the standards and procedures

of the Federal agencies for judging applicants and

employees be mutually consistent and no less than minimum.

b\. The Order and the other authorities in Paragraph 2, taken

together, in essence provide for:

\(1\) The investigation of all new Federal employees, with more

detailed investigations of incumbents of sensitive

positions;

1/73 Page 2

HUD-Wash., D.C.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

732.3

\(2\) The suspension, reassignment or termination of employees

from sensitive positions when necessary in the interests

of national security; and

\(3\) If a suspended permanent or indefinite employee who has

completed his one year probationary or trial period is to

be removed, the opportunity for him to reply to charges,

a hearing, a high-level agency review and a notice of

decision on his case by the head of the agency.

5\. RESPONSIBILITIES.

a\. Section 2 of Executive Order 10450 makes the head of each

agency of the Government responsible for establishing and

maintaining an effective program to ensure that the employment

and retention in employment of any employee within the agency is

clearly consistent with the interests of the national security.

b\. The Inspector General has overall responsibility for promulgating

and administering personnel security policies, standards

and procedures that ensure observance by all employees and

fair, impartial and equitable treatment of all employees.

c\. The Inspector General is designated the Personnel Security

Officer of the Department. He is responsible for developing

and making recommendations concerning the personnel security

policies, standards and procedures for the Department, and has

direct operating responsibility for the personnel security

program of the Department.

d\. The General Counsel is responsible for providing his comments

in connection with any recommendation by the Inspector General

to the Secretary for the suspension of an employee occupying a

sensitive position; for notifying a suspended employee of the

charges for his suspension; and for considering any statements

or affidavits submitted to him by a suspended employee and

jointly with the Assistant Secretary for Administration

recommending disposition of the case to the Secretary (see

Chapter 5).

e\. The Director of Personnel is consulted on the Departmental

procedures to be followed with respect to the suspension,

reassignment and termination of employees occupying sensitive

positions. He is also consulted on individual cases involving the

development of derogatory information on an applicant or employee,

or the suspension, reassignment or termination of an employee.

He is responsible for ensuring that applicants and employees

submit the forms necessary to initiate the appropriate security

Page 3 1/73

HUD-Wash., D.C.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

732.3

investigation, and that the Inspector General is advised

whenever any employee is separated or the reassignment of an

employee from a nonsensitive to a sensitive position is

proposed. If, during the course of necessary record and

reference checks by the Office of Personnel, any derogatory

information is developed, or it is disclosed that reports of

investigation are in existence, the Director of Personnel is

responsible for promptly advising the Inspector General

accordingly.

f\. The head of a primary organization is responsible for providing

his views in connection with any recommendation by the

Inspector General to the Secretary for the suspension,

reassignment or termination of an employee occupying a sensitive

position. He is also responsible for identifying positions in

his organization that should be designated sensitive. (See

paragraphs 7 and 18).

6\. CATEGORIES OF SENSITIVE POSITIONS. For the purpose of conducting

investigations, the Civil Service Commission requires that sensitive

positions (defined in paragraph 3(c)) are to be divided into

two categories: critical-sensitive positions and noncritical-sensitive

positions.

a\. Critical-sensitive positions are positions the duties of which

include any of the following:

\(1\) Access to TOP SECRET defense information;

\(2\) Development or approval of war plans, plans or particulars

of future or major or special operations of war, or critical

and extremely important items of war;

\(3\) Development or approval of plans, policies or programs

which affect the overall operations of an agency; that is,

policy-making or policy-determining positions. It is

Departmental policy to include all supergrade positions.

It is also Departmental policy to include the heads and

associate heads or assistant heads of all primary

organizations;

\(4\) Investigative duties, the issuance of personnel security

clearances, or duty on security hearing boards;

\(5\) Fiduciary, public contact, or other duties demanding the

highest degree of public trust. It is Departmental policy

to include all heads of HUD Area Offices and HUD

Insuring Offices.

1/73 Page 4

HUD-Wash., D. C.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

732.3

b\. Noncritical-sensitive positions are positions the duties of

which:

\(1\) Do not include any of the duties listed in subparagraph

a.; and

\(2\) The occupant of which could bring about by virtue of the

nature of his position, a material adverse effect on the

national security; and

\(3\) The duties of which may include access to SECRET or

CONFIDENTIAL defense information.

7\. DESIGNATION OF CRITICAL-SENSITIVE AND NONCRITICAL-SENSITIVE

POSITIONS.

a\. The head of each primary organization is responsible for

identifying each position in his organization meeting the

description of a critical-sensitive or noncritical-sensitive

position in paragraph 6. Each organizational head shall make

an effort to hold to a minimum the number of positions

designated. He is also responsible for notifying the Inspector

General of the identifications. The Inspector General, if he

concurs, designates each position as critical-sensitive or

noncritical-sensitive, as appropriate.

b\. When the Inspector General designates a position as sensitive,

he shall issue a notification to that effect to:

\(1\) The head of the primary organization in which the position

is located;

\(2\) The Director of Personnel; and

\(3\) The incumbent of the position, if the position is

encumbered at the time of its designation as sensitive.

8\. CHANGE IN OR REVOCATION OF DESIGNATIONS.

a\. The Inspector General shall make an annual review of the

positions designated as sensitive to determine whether:

\(1\) The duties assigned a critical-sensitive position no

longer require that the position be designated as

critical-sensitive, but do require that it be designated

as noncritical-sensitive;

Page 5 1/73

HUD-Wash., D.C.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

732.3

\(2\) The duties assigned a noncritical-sensitive position

require that its designation be changed from

noncritical-sensitive to critical-sensitive; or

\(3\) The duties assigned a critical-sensitive or

noncritical-sensitive position no longer require that the

position be designated as sensitive.

b\. When the Inspector General finds, as a result of his review or

upon the advice of the head of a primary organization, that

the duties of a sensitive position have been changed so as to

warrant one of the three types of action described in subparagraph

a., the Inspector General shall take the necessary action

to change or revoke the designation, as appropriate. He shall

issue a notification to that effect to:

\(1\) The head of the primary organization in which the position

is located;

\(2\) The Director of Personnel; and

\(3\) The incumbent of the sensitive position, if the position

is encumbered at the time of its change in or revocation

of designation.

1/73 Page 6

HUD-Wash., D.C.