# April 23, 2004

# 

#### INSPECTION MEMORANDUM 

TO: William Leidinger

Assistant Secretary

Office of Management

> Jack Martin
>
> Chief Financial Officer
>
> Office of the Chief Financial Officer

FROM: Cathy H. Lewis

> Assistant Inspector General
>
> Evaluation, Inspection, and Management Services

SUBJECT: Inspection Memorandum of the Inspection of the U.S. Department
of Education\'s Contractor Employee Security Clearance Procedures
(ED/OIG I13D0009)

This memorandum provides the results of our inspection of the U.S.
Department of Education\'s (the Department) contractor employee security
clearance procedures. Our inspection focused on five objectives: (1)
what procedures does the Office of Management Security Staff follow to
process contractor employee security clearances and how are those
procedures being implemented? (2) what costs are associated with
security clearances for contractors? (3) how long does it take for
Security Services to initiate the clearance process? (4) what monitoring
is done to ensure that all contractors and their staffs have required
security clearances and that contractor personnel hired after a contract
begins have appropriate security clearances? and, (5) what training do
contractors receive to ensure they are aware of their responsibilities
when dealing with secured information, equipment and locations?

### Executive Summary

The Department's personnel security programs are under the control of
Security Services in the Office of Management. This office processes
security clearance forms and adjudicates Office of Personnel Management
investigation results. To accomplish its mission, Security Services
works with other Department organizations, the Federal Protective
Service, and other local and federal law enforcement organizations to
ensure the safety and security of the Department's information, systems,
and employees.

The Department policy directive OM: 5-101, *Contractor Employee
Personnel Security Screenings* was signed into effect on October 21,
2002. This document establishes the Department's policy regarding the
personnel security screening requirements for all contractor employees.
The policy\'s supplement, which provides specific guidance for the
Office of Management (OM), Contracts and Purchasing Operations (CPO),
and the Principal Offices to follow, was signed into effect on June 26,
2003. This Supplement requires that all Principal Offices establish
their own procedures for complying with the policy within 90 days of the
date of the Supplement. Plans were due to OM no later than September 26,
2003. As of December 15, 2003, only two Principal Offices had forwarded
their procedures to OM Security Services.[^1]

As a result of our inspection, we determined that while OM: 5-101
provides general procedures to be followed in requesting security
clearances for contractors, Security Services does not have its own
internal procedures for processing clearances, which has resulted in
some inconsistencies in file organization and hampered the clearance
process. We also determined that the cost to the Department of
processing security clearances for current contractor employees was
nearly \$3 million, a cost which might be reduced if Security Services
utilized an online request form with edit checks to reduce the number of
incomplete or improperly completed forms. Security Services does not
currently track the status of clearance requests and investigations are
not routinely initiated for all contractors within 14 days as required
by federal regulations and OM policy. Also, Security Services does not
routinely conduct monitoring reviews of pending files to determine
whether background investigations are progressing appropriately and
contractor employeess do not receive specific training on their
responsibility for or how to protect the security of Department systems,
information and buildings. We also determined that no part of the
Department appears to be routinely monitoring to determine if only
cleared contractor employees are performing contractor functions. OCFO
needs to revise its current guidance to address this omission in its
OCFO: 2-108 directive.

## Recommendations 

1.  Security Services should establish its own internal procedures for
    handling and processing contractor employee security clearance
    procedures, including a file protocol.

2.  Security Services should modify or replace its current tracking
    system to enable it to verify that offices are meeting the 14-day
    requirement.

3.  To expedite this aspect of the clearance process, Security Services
    should develop an automated security form with an edit check that
    will ensure the form is fully completed by the requesting office.
    Security Services may want to consider reviewing existing systems
    within other agencies such as the U.S. Department of Energy\'s
    Integrated Safeguards and Security System (issm.doe.gov). This
    system was designed, in part, to decrease the time and money needed
    to process security clearances.

4.  Security Services should publish and implement internal procedures
    for monitoring pending contractor employee security clearance files
    and include the capability for tracking the status of pending
    clearances into its modified or new tracking system.

5.  The CPO Director should ensure that OCFO: 2-108 directive is revised
    to specify the need to provide routine monitoring of contractor
    employees and provide guidance to the Contracting Officer
    Representatives (CORs) or other program officials on how best to
    ensure that only appropriately cleared contractor employees are used
    to fill the security-sensitive positions on a contract.

6.  The CPO Director should work with training providers and the
    Principal Offices to develop a training module for CORs and other
    program officials concentrating on the security responsibilities of
    contractor employees.

### Background

Security Services in the Office of Management (OM/SS) oversees The
Department's personnel security programs, including processing security
clearance forms and adjudicating Office of Personnel Management (OPM)
investigation results. OM/SS works with other Department Principal
Offices, the Federal Protective Service, and other local and Federal law
enforcement organizations to ensure the safety and security of the
Department's information, systems, and employees.

Until October 2002, Security Services relied upon Handbook 11,
*Personnel Security-Suitability Program*, dated November 3, 1992 for
processing contractor employee security clearances. In 2000, Security
Services and the Personnel Security Working Group recognized the need to
have policies and procedures specifically for contractor employees and
began working on a policy. This collaboration resulted in OM: 5-101
Policy, *Contractor Employee Personnel Security Screenings*

For our inspection, we selected offices based upon the amount of
contract dollars and whether the office had contractor employees that
required clearances. Based upon these criteria, we identified OIG, OCIO,
IES, and FSA for inclusion in our study.

Objective 1: What procedures does the Office of Management Security
Services staff follow to process contractor employee security clearances
and how are these procedures being implemented?

Security Services has not established its own internal procedures for
processing contractor employee security clearances, which has resulted
in some minor inconsistencies in file organization.

OM: 5-101 provides general guidance to each Principal Office about
processing security clearances for contractor employees; however,
Security Services has not yet established its own internal procedures
for processing security clearance requests.

Absent internal processing procedures, Security Services does not have a
standardized file format, which contributes to delays in processing
requests. In the 15 files we reviewed, there were inconsistencies in all
files in documenting action dates and in overall file organization.
Security Services staff expressed the need for internal policies and
procedures to help them consistently review contractor employee files.
These tools should prove helpful to staff to perform routine monitoring
reviews in preparing files for the clearance examination.

**Objective 2: What are the costs associated with gaining security
clearances for contractors?**

Based on the estimates of time provided by Department personnel and the
2003 averaged hourly rate for responsible staff, the Department's
expense for the 8,343 current[^2], active and pending contractor
employees was about \$2,777,541.[^3]

To obtain as complete an estimate on the cost of contractor security
clearances, we included the following possible factors: (1) the
estimated time Department employees use to process the clearance forms;
(2) the cost of their time based on an average salary amount with
benefits; (3) the time and cost associated with the adjudication
process; (4) OPM's charge to process the background checks for current
and pending contractor employee clearances; and (5) the individual steps
involved in the clearance process. A detailed discussion of how cost was
determined is attached in the Appendix to this report.

While the Department needs to ensure that contractor employees are
properly cleared before working with the Department information or
systems, given the cost of the clearance process, only those contractor
employees who will actually perform the work (and have access to the
Department's systems) should be put through the clearance process,
rather than all contractor employees on a team. Security Services has
issued guidance to the Principal Offices, however the decision is up to
the Principal Office on which contractor employees to submit for
clearance. Because individual CORs are in the best position to know
which contractor employees need clearance, we suggest that CFO work with
the CORs and the Principal Offices to determine the best way to reduce
costs without compromising security concerns.

Objective 3: How long does it take for Security Services to initiate the
security clearance process?

Contractor employee clearance forms should be forwarded to Security
Services within 14 days of employment, however, requests are frequently
not processed this quickly and Security Services does not currently
track the time it takes for clearance request forms to reach them.

Under 5 CFR 731.106(c) and OM: 5-101, section III.5, contractor employee
clearance request forms[^4] are supposed to be forwarded to Security
Services for investigation within 14 days of the contractor employee
being placed into position. Currently, Security Services does not track
the amount of time that elapses between when a contractor employee
begins working on a project to the time the clearance forms actually
reach Security Services.[^5] Without the ability to track such
information, contractor employees may be allowed to work for some time
before Security Services initiates an investigation.

According to Security Services staff, for every 55 requests for security
action they receive, 8 to 10, on average (18 percent), have to be
returned to the Principal Office for correction of omitted forms, data
or dates. None of those returned for correction are tracked to determine
whether the 14-day requirement is being exceeded. To ascertain if
compliance with the 14-day timeframe is being met, we reviewed the
sampled contractor employee files and identified the time elapsed
between the date the contractor employee signed the security clearance
request forms and the time the Principal Office signed a Request for
Security Action. Of the 15 files, seven did not meet the 14-day
timeframe. [^6]

Security Services recognizes the need to track the time it takes
Principal Offices to submit the contractor employee investigation forms.
The office is considering modifying its current tracking system to
include this information and to developing monitoring procedures.
Security Services also recognizes that it would benefit greatly from an
automated (on-line) security form with an automatic edit function. A
system like this would automatically and immediately flag any missing
information or improperly completed forms.

Before Security Services makes a decision on revising its current system
or developing its own on-line form, we suggest they review tracking
systems used by other agencies such as the U.S. Department of Energy\'s
Integrated Safeguards and Security System (issm.doe.gov). This system
was designed, in part, to decrease the time and money needed to process
security clearances.

**Objective 4: What type of monitoring is being conducted to ensure all
contractor staff have required security clearances and that contractor
personnel hired after a contract begins have appropriate security
clearances?**

Security Services does not routinely review pending files to determine
whether or not the appropriate level of background investigations are
occurring in a reasonable amount of time.

Currently, Security Services does not regularly monitor the status of
pending clearance requests to track whether investigations are
progressing and if follow-up with OPM is needed. This creates the
potential for unsuitable (uncleared) contractor employees to work on
security-sensitive projects. During our review of 15 contractor employee
files, we identified one that had been in \"pending\" status, awaiting
OPM\'s investigation results, for over a year. The request for security
action was dated May 7, 2002, and as of our review on July 3, 2003, the
file remained pending. The file did not contain any notes or other
indications of any Security Service reviews during the pending period.
Because this contractor employee applied for clearance before OM:5-101
was instituted, Security Services was not required to conduct the
pre-screening of the contractor employee. This contractor employee was
allowed to work in a high-risk position with computer systems for over a
year without clearance.

We brought this file to the immediate attention of Security Services
staff, who explained that their current tracking system does not show
the length of time a file is in pending status. Staff also explained
that they do not have internal procedures for monitoring files. We
discussed the possibility of programming the current tracking system to
include a query and report to show the age of the pending files and
Security Services agreed that the system could be programmed to produce
such a report.

We determined during our inspection that there is apparently no routine
monitoring done to ensure that contractor employees working in the
Department have appropriate clearances to do the work they are assigned.
Security Services views such monitoring as outside of their scope of
responsibility. OCFO has responsibility for monitoring contractors once
the initial clearance has commenced; however, neither its current
directive, OCFO:2-108 *Contract Monitoring for Program Officials*, or
the June 24, 2003, supplement to this directive specify the need for
program officials, *i.e.,* CORs and program managers, to monitor active
contractor employees for appropriate clearances.

None of the four Principal Offices we sampled consistently conduct
routine monitoring of contractor employees to ensure that only cleared
contractor employees are accessing Department information, systems, and
buildings. One Principal Office Systems Security Officer performs site
visits, but does not routinely monitor to determine if only cleared
contractor employees are the ones performing the contracted functions.
Some of the contracts currently in place have as many as 200 or more
cleared contractor employees working at any given time. Without some
routine monitoring, it is impossible to adequately ensure that only
cleared personnel are accessing Department information, systems, and
buildings. To address this omission, the CPO Director should ensure that
OCFO: 2-108 directive is revised to specify the need to provide routine
monitoring of contractor employees, as well as to provide guidance to
the CORs or other program officials on how to ensure that only
appropriately cleared contractor employees are fulfilling the
security-sensitive positions on contracts.

> **Objective 5: What training do contractors receive to ensure they are
> aware of their responsibilities when dealing with secured information,
> equipment and locations?**

Contractor employees completing work on Department contracts do not
receive specific training on how they should access Department systems,
information or buildings and their responsibilities for ensuring their
security.

We reviewed the COR training manuals provided by Houseman and Associates
and the Department. We also interviewed CORs concerning the training
that they received. Neither the training manuals nor the classroom
training content provided guidance on how the CORs or other responsible
persons should make the contractor employees aware of their
responsibilities. Some contractor employees have their own internal
\"rules of behavior\" that they give to their employees. However,
Department employees do not review this information to determine whether
or not it fulfills Department needs for ensuring security. If contractor
employees do not know the expectation of the Department for handling
information and accessing systems and buildings, the Department is
vulnerable to unauthorized access and usage of its information, systems,
and buildings.

## Conclusion

Security Services must ensure that contractor employees who have access
to Department information, systems and buildings have appropriate
security clearance. Security Services could enhance its ability to
perform this function by establishing its own internal procedures for
processing requests, and modifying its tracking system so that it can
track the status of requests for clearance and to ensure that background
investigations are progressing appropriately. Costs of the current
process might be reduced by the introduction of an online clearance
request form that could minimize internal processing errors and further
information on how to determine exactly which contractors require
clearance. Also, the training provided for contractor employeess needs
to be improved to include training on their responsibilities for
protecting the security of Department systems, information and
buildings. Finally, steps need to be taken to clearly vest
responsibility for ensuring that only appropriately cleared contractor
employees are fulfilling security-sensitive positions on Department
contracts.

**Objectives, Scope, and Methodology**

Because of the signature dates on the policy and its supplement, we did
not perform a compliance review. Rather, we inspected current procedures
in place and have focused on areas either not covered by the supplement
or on making suggestions for OM Security Services and the Principal
Offices to use when implementing the supplement. The specific objectives
for our inspection were to:

1\. Identify and analyze applicable laws, regulations, procedures, and
directives pertaining to personnel security clearances for contractor
employees and their staffs. We will also determine how these procedures
are implemented.

We focused on:

-   Security levels;

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-   Adjudication processes;

-   Reinvestigation for past security clearances; and

-   Training of CORs to increase awareness of security procedures for
    contractor employees.

2\. Identify the costs incurred for security clearances of contractor
employees. We will also determine if contractor employees pay a premium
to expedite their clearances.

> 3\. Determine the time needed to process the different security
> clearance levels for contractor employees.
>
> 4\. Identify the types of monitoring conducted to ensure that all
> contractor employees and their staffs have the required security
> clearances. We will also determine if the monitoring is completed as
> needed at both headquarters and regional levels.

5.  Determine how ED officials ensure that contractor personnel hired
    after the contract begins receive appropriate security clearances
    before working on the project.

6\. Identify and document the training that contractor employees receive
to ensure they are aware of their responsibilities when dealing with
secured information, equipment, and locations.

To focus our fieldwork, we randomly selected six Principal Offices using
November 2002 contract dollars as a basis to stratify. We selected OIG,
OCR, OCIO, OVAE, IES, and FSA. Because OVAE and OCR do not currently
have contractor employees that require clearances, our inspection
focused on the procedures followed within OIG, OCIO, IES, and FSA. We
also reviewed applicable procedures in OM/SS.

We began our primary fieldwork March 24 and concluded it on July 25,
2003. Our work included reviews of applicable laws and regulations,
contractor employee files, interviews with OM/SS, responsible Principal
Office, CPO personnel, and observations of systems used and physical
location of files. We also used the current list of active and pending
contractor employee security clearances for contractor employees as
provided by OM/SS.

Our inspection was performed in accordance with the 1993 President\'s
Council on Integrity and Efficiency Quality Standards for Inspections
appropriate to the scope of the inspection described above.

### Department Response

The Office of Management responded to recommendations 1-4.

**Recommendations**

**1. Security Services should establish its own internal procedures for
handling and processing contractor employee security clearance
procedures, including a file protocol.**

On November 1, 2002, all OM SS Personnel Security Staff received a copy
of the Standard Operating Procedures (SOP) for preliminary screenings of
contractors assigned to high risk IT level positions. Internal
procedures are currently being developed to address all facets of the
contractor employee personnel security screening process.

> [OIG Response]{.underline}: We find that the comments are responsive
> to the finding and should address the problem when the internal
> security procedures are developed and implemented. No change has been
> made to the finding or recommendation.

**2. Security Services should modify or replace its current tracking
system to enable it to verify that offices are meeting the 14-day
requirement.**

OM SS is working to update the Security Tracking System. The services of
an In-House Consultant have been requested to help OM SS develop a new
tracking system to better serve their needs. The system will help OM SS
ensure that paperwork is submitted within 14 days of notification that a
new contractor has started at the Department. However, OM SS does not
know when a new contractor is assigned or reassigned except when they
require an ID card to enter a particular departmental facility, or
unless a COR submits a security forms package for the individual, or OM
SS is otherwise notified by a PO.

The ID system is programmed for the ID to expire in 14 days if OM SS
does not receive a security forms package. Each individual is given a
memorandum when they are issued an ID card regarding the need to
complete and submit their forms within 14 days, and the consequences if
they fail to do so; their ID card will be deactivated.

> [OIG Response]{.underline}: We find that the comments are responsive
> to the finding and should address the problem when the Security
> Tracking System is updated and a new tracking system is developed and
> implemented. No change has been made to the finding or recommendation.

**3. To expedite this aspect of the clearance process, Security Services
should develop an automated security form with an edit check that will
ensure the form is fully completed by the requesting office. Security
Services may want to consider reviewing existing systems within other
agencies such as the U.S. Department of Energy's Integrated Safeguards
and Security System (issm.doe.gov). This system was designed, in part,
to decrease the time and money needed to process security clearances.**

The Assistant Secretary for Management recently executed an inter-agency
agreement with the Office of Personnel Management (OPM) to implement the
e-QIP (Electronic Questionnaires for Investigations Processing) system
at the Department of Education. Initially, applicants, employees and
contractors will be able to complete the SF 86 -- Questionnaire for
National Security Positions form on-line. However, in the near future
OPM will be adding the SF 85P -- Questionnaire for Public Trust
Positions, and the SF 85 -- Questionnaire for Nonsensitive Positions to
the system. The e-QIP system will ensure that individuals complete the
forms properly before they are submitted to the Department for
processing.

> [OIG Response]{.underline}: We find that the comments are responsive
> to the finding and should address the problem when the Electronic
> Questionnaires for Investigations Processing (e-QIP) system is fully
> functional in the department and can process the SF 86 --
> Questionnaire for National Security Positions, the SF 85P --
> Questionnaire for Public Trust Positions, and the SF 85 --
> Questionnaire for Non-sensitive Positions forms are on-line. No change
> has been made to the finding or recommendation.

**4. Security Services should publish and implement internal procedures
for monitoring pending contractor employee security clearance files and
include the capability for tracking the status of pending clearances
into its modified or new tracking system.**

OM SS has requested the services of the in-house consultants. They need
to review the current system and help OM SS develop a new system. This
new system will be designed to alert OM SS when cases are clearly
delinquent.

> To date, four Principal Office's (PO) have submitted their
> implementing procedures to OM SS, as required by the "Contractor
> Employee Personnel Security Screenings" policy (OM: 5-101). Those POs
> who have complied are: OELA, OCR, OM, and OPE. OM SS will contact the
> Executive Officers of the remaining POs to determine the status of
> their implementing procedures.
>
> [OIG Response]{.underline}: We find that the comments are responsive
> to the finding and should address the problem when a new tracking
> system is developed and implemented. No change has been made to the
> finding or recommendation.

The Office of the Chief Financial Officer (OCFO) and Contracting and
Purchasing Office (CPO) responded to recommendations 5-6.

**5. The CPO Director should ensure that OCFO: 2-108 directive is
revised to specify the need to provide routine monitoring of contractor
employees and provide guidance to the Contracting Officer\'s
Representative (CORs) or other program officials on how best to ensure
that only appropriately cleared contractor employees are used to fill
the security-sensitive positions on a contract.**

> **OCFO/CPO Response:** CPO concurs with your recommendation that
> specific guidance is needed. CPO will modify the contracting
> monitoring directive to address this issue.
>
> [OIG Response]{.underline}: We find that the comments are responsive
> to the finding and should address the problem when the directive is
> revised and implemented. No change has been made to the finding or
> recommendation.

**6.** **The CPO Director should work with training providers and the
Principal Offices to develop a training module for CORs and other
program officials concentrating on the security responsibilities of
contractor employees.**

> **OCFO/CPO Response:** CPO will examine current course offerings for
> COR certification to determine where the inclusion of security
> responsibilities of contractor employees is most appropriate. CPO will
> also work with the Office of Management to explore methods on
> providing information to contractors of their responsibilities when
> accessing departmental systems, facilities, and secured information.
>
> [OIG Response]{.underline}: We find that the comments are responsive
> to the finding and should address the problem when the training for
> CORs and other program officials is modified to include the security
> responsibilities of contractor employees. No change has been made to
> the finding or recommendation.

####### Other comments from the Office of Management

> The OIG's suggestion in the Executive Summary that POs might want to
> consider submitting only those contractors who will have system access
> for clearance contradicts a June 30, 2003 "OIG Investigative Program
> Advisory Report (IPAR) Contracted Mailroom Services of Vistronix,
> Inc.", wherein OIG recommended that "all mailroom positions be
> designated at least Moderate Rick (MR) positions". Most mailroom
> positions do not require system access. Furthermore, OM: 5-101
> requirements are not limited to contractor employees who will have
> system access.
>
> [OIG Response]{.underline}: This point is well taken. The June 30,
> 2003 "OIG Investigative Program Advisory Report (IPAR) Contracted
> Mailroom Services of Vistronix, Inc." includes important
> recommendations that we did not intend to contradict. We have
> therefore deleted from the executive summary the cost saving
> suggestion to submit for clearance only those contractors who have
> access to the department's systems.

**[Administrative Matters]{.underline}**

This inspection was performed in accordance with the President's Council
on Integrity and Efficiency (PCIE) Quality Standards for Inspections
(1993).

We appreciate the cooperation given to us during the inspection. If you
have any questions or wish to discuss the contents of this report,
please call Deb Schweikert, Director, Evaluation and Inspection Division
at 202-205-5569. Please refer to the control number in all
correspondence relating to this report.

**Appendix**

**The Cost of Contractor Security Clearances**

\(1\) To determine the approximate time associated with processing the
clearance forms, we interviewed responsible staff. We learned that none
of the Principal Office staff interviewed directly track the amount of
time they expend, but were able to provide estimates. All of those
interviewed explained it took them approximately 15 minutes, review each
form for accuracy and approximately 5 minutes to forward each form to
the next level. FSA uses an internal database to capture information on
FSA\'s contractor employees. This extra step adds an additional 15
minutes to the FSA processing time. The approximate times to process an
individual contractor employee are as follows:

-   115 minutes to process properly completed clearance forms.

-   160 minutes at a minimum to process forms that are not properly
    completed. (This time frame can vary greatly dependent upon the
    inaccuracies in the forms.)

-   130 minutes for FSA to process clearance forms that are properly
    completed. (FSA has an additional step that the other Primary
    Offices we reviewed did not.)

-   175 minutes for FSA to process clearance forms that are not properly
    completed.

\(2\) To determine the cost, we identified the pay grade levels of
responsible staff and averaged their hourly salary. Based on the 2003
OPM pay table and applying a 27.1 percent increase to cover benefits,
the average hourly salary is \$39.19 or \$.6532 per minute.[^7] We used
the approximate times identified in paragraph (1) and developed the
following estimated costs to process forms for an individual contractor
employee:

-   \$75.12 to cover salaries and benefits of the staff members
    processing properly completed forms.

-   \$104.51 to cover salaries and benefits of the staff members
    processing improperly completed forms.

-   \$84.92 to cover salaries and benefits of the FSA staff members
    processing properly completed forms.

-   \$114.31 to cover salaries and benefits of the FSA staff members
    processing improperly completed forms.

\(3\) To determine the time and cost associated with the adjudication
process, we interviewed the OM Security Services Security Officer who
explained that it is difficult to estimate the time involved. In
reviewing the OPM investigation results, OM Security Services
adjudicating staff may have to conduct its own investigation of issues
that OPM identified. Staff may have to request additional information
from the individual, from OPM, or another source. This additional
investigation adds time and expense to the adjudication process.
However, if the OPM investigation results do not have additional issues,
the adjudication process can take as few as 45 minutes. For the purpose
of providing an indication of the minimum cost associated with the
adjudication process, we will use 45 minutes and apply the minute rate
of \$.6532. Therefore, the adjudication process for each contractor
employee without issues costs approximately \$29.39. When we provided
this information to OM Security Services, the Special Assistant to the
Assistant Secretary of OM made the observation that it costs more for
handling and processing the forms than it takes for the actual
adjudication process.

\(4\) The OPM charges from \$75 to about \$3,000 for the different types
of background investigations.[^8] As of June 25, 2003, the Department
had 9,214 contractor employees[^9] with either current or pending
security clearances. Of this total, 871 had current background checks
with OPM and did not require additional ones, so the costs we developed
relate to the remaining 8,343. Therefore, \$29.39 for the adjudication
plus \$75.12 equals \$104.51 estimated minimum processing costs.
Multiplying this amount times the total number of current and pending
contractor employees requiring security clearances brings this portion
of the clearance processing to about \$871,927. Adding this amount to
the estimated cost of OPM investigations (\$1,905,614) brings The
Department's expense for processing 8,343 contractor employee security
clearances to approximately \$2,777,541.

# 

[^1]: The due date for Principal Offices to develop and implement their
    internal procedures consistent with OM: 5-101 and the June 26, 2003
    policy supplement occurred after our exit interview with Security
    Services; however, we encourage Security Services to follow up with
    each Principal Office that employs contractors that require a
    security clearance that has not yet complied with the policy
    supplement.

[^2]: Security Services provided the lists of active and pending
    contractors on June 25, 2003. We did not independently verify the
    accuracy or completeness of this list but did use it to develop an
    estimate of costs associated with processing contractor security
    clearances.

[^3]: As the Department moves forward with the One-ED strategic
    investment process, we note that the cost of security clearances is
    not currently being taken into account in the business case cost
    models. According to the President's Management Agenda, \"\[T\]o
    compare the cost of in-house performance to private sector
    performance, detailed estimates of the full cost of government
    performance to the taxpayer have to be calculated.\" These costs
    need to be included in any cost assessment prepared by bidders
    (where the staff who would work on the contract would need
    clearances).

[^4]: Standard Form (SF) 85 is used for all low risk positions. SF 86 is
    used for moderate and high-risk positions.

[^5]: None of the primary offices included in our sample track this
    information either.

[^6]: In its internal examination, [Department CIO Contractor Security
    Clearance Study]{.underline} (June 2003), OCIO reported that 124 out
    of 538 contractor employees (23 percent) did not have their
    preliminary clearance forms initiated within the 14-day requirement.

[^7]: The pay grades range from GS-11 to GS-14. We used the hourly rates
    for the Washington, DC metropolitan area as specified in the 2003
    pay tables provided by OPM. We used the 27.1 percent rate used by
    OIG in FY 2003 to cover benefits.

[^8]: The costs for the different types of background checks are
    National Agency Check, National Agency Check with Inquiries, and
    Single Agency Check= \$75; National Agency Check with Inquiries and
    Credit = \$100; National Agency Check with Law and Credit = \$148;
    Access National Agency Check and Inquiries = \$163.50; Periodic
    Reinvestigation = \$415; Periodic Reinvestigation and Residence
    Coverage = \$1,050; Periodic Reinvestigation for Single Scope
    Background Investigation = \$1,640; Minimum Background Check =
    \$405; Limited Background Investigation = \$2,136.67; Background
    Investigation = \$2,627.67; Single Scope Background Investigation =
    \$2,910; and Upgrade Limited Background Investigation from a Minimum
    Background Investigation completed = \$1,732.

[^9]: OM/SS provided the lists of active and pending contractors on June
    25, 2003. This list included contractor employees who were hired as
    early as 1992 through June 25, 2003. We did not independently verify
    the accuracy or completeness of this list but did use it to develop
    an estimate of costs associated with processing contractor security
    clearances.