SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Security Clearance Reform Act of 
2014''.

SEC. 2. SECURITY CLEARANCE PROCESS REFORM PLAN.

    (a) Plan.--Not later than 6 months after the date of enactment of 
this Act, the President shall submit a strategic plan to the 
appropriate congressional committees to improve security clearance and 
background investigation activities carried out by the Federal 
Government.
    (b) Contents of Plan.--The plan submitted under subsection (a) 
shall--
            (1) develop and establish a continuous evaluation or 
        monitoring system that shall--
                    (A) on a continual basis, access Federal, State, 
                and local government and commercially available 
                information, including financial credit history, 
                currency transactions, court records, traffic 
                violations, arrest records, terrorist and criminal 
                watch lists, foreign travel, and online social media;
                    (B) provide real-time updates or notifications with 
                respect to information relevant to adjudication 
                guidelines concerning whether a cleared individual is 
                eligible for such individual's security clearance; and
                    (C) reduce or eliminate the scope or schedule of 
                any periodic reinvestigation of a cleared individual;
            (2) ensure that--
                    (A) the background of each cleared individual is 
                monitored on a continual basis; and
                    (B) any covered individual who is not a cleared 
                individual is not subject to continuous evaluation or 
                monitoring;
            (3) ensure the effective, efficient, and timely completion 
        of background investigations relating to a covered individual's 
        eligibility for a security clearance;
            (4) improve procedures to require information sharing 
        between agencies concerning--
                    (A) potentially derogatory security information 
                regarding a covered individual that may impact the 
                eligibility of any such individual for a security 
                clearance; and
                    (B) adjudications with respect to any covered 
                individual;
            (5) enhance cooperation and information sharing between any 
        State or local law enforcement agency and any agency;
            (6) enhance methods for reducing or eliminating manual 
        processes with respect to security clearance background 
        investigations, and automating and integrating the elements of 
        such investigations and adjudication processes, including--
                    (A) the security clearance application process;
                    (B) field investigator reporting;
                    (C) investigation case management;
                    (D) the collection, analysis, storage, retrieval, 
                and transfer of data and records;
                    (E) the submission of any background investigation 
                report to an agency for adjudication; and
                    (F) records management for security clearance 
                adjudication determinations;
            (7) reduce or eliminate the use of databases and 
        information sources that cannot be accessed and processed 
        electronically, or modify such databases and information 
        sources to enable electronic access and processing;
            (8) increase the use of digitally processed fingerprints as 
        a substitute for ink or paper prints to reduce error rates and 
        improve portability of data;
            (9) develop Federal Government-wide performance measures, 
        based on the Federal Investigative Standards (as promulgated by 
        the Director and the Director of National Intelligence), to 
        measure the quality of background investigations conducted by 
        the Federal Government;
            (10) require that, with respect to any background 
        investigation activities, a Federal employee conducts--
                    (A) any final quality or integrity assurance review 
                conducted by an agency of a background investigation;
                    (B) any interview of a covered individual with 
                respect to a background investigation; and
                    (C) any background investigation of a covered 
                individual to determine the person's eligibility for a 
                security clearance at the Top Secret level or higher;
            (11) develop procedures that ensure that any information 
        collected pursuant to the plan with respect to a covered 
        individual, including information collected from online social 
        media, shall be verified for authenticity; and
            (12) provide a detailed description of the estimated costs 
        of implementing the plan.
    (c) Delegation.--The President may select at least one agency to 
develop or implement the plan required under this section. In the 
preceding sentence, the term ``agency'' means--
            (1) any agency as that term is defined in section 6(1), but 
        does not include any military department (as that term is 
        defined in section 102 of title 5, United States Code); or
            (2) the Suitability and Security Clearance Performance 
        Accountability Council (as established by Executive Order No. 
        13467).
    (d) Levels of Scrutiny.--The plan required under this section may 
require different levels of continuous evaluation scrutiny with respect 
to Confidential, Secret, or Top Secret or higher security clearances.
    (e) Use of Pre-Existing Systems or Databases.--In carrying out the 
requirements of this section, the President may incorporate or enhance 
any systems or databases operated by the Federal Government, including 
the database established under section 3001(e) of Public Law 108-458.
    (f) Implementation.--The President shall fully implement the plan 
required under this section not later than 1 year after the date of 
submission of such plan to the appropriate congressional committees.

SEC. 3. ORGANIZATIONAL CONFLICT OF INTEREST.

    Beginning on the date of the enactment of this Act for contracts 
entered into after such date, the Director of the Office of Personnel 
Management may not award a contract for--
            (1) investigative support services to an entity if that 
        entity also has, at the time of award of the contract or at any 
        time during the performance of the contract, another contract 
        in effect with the Federal Government (or with another 
        contractor of the Government at any tier) to provide background 
        investigation fieldwork services; or
            (2) background investigation fieldwork services to an 
        entity if that entity also has, at the time of award of the 
        contract or at any time during the performance of the contract, 
        another contract in effect with the Federal Government (or with 
        another contractor of the Government at any tier) to provide 
        investigative support services.

SEC. 4. STATE AND LOCAL COOPERATION.

    (a) Report.--Not later than 90 days after the date of enactment of 
this Act and each year thereafter, the Director shall submit a report 
to the appropriate congressional committees listing any State or local 
entity covered by the definition of ``criminal justice agency'' in 
section 9101(a)(1) of title 5, United State Code, that has failed to 
cooperate with three or more requests of the Director issued under 
section 9101(b)(1) of such title.
    (b) Withholding of Byrne-JAG Funds.--
            (1) In general.--For any fiscal year after fiscal year 
        2015, a jurisdiction that fails, as determined by the Director 
        to substantially comply with criminal history record 
        information requests shall not receive the percentage specified 
        in paragraph (2) of the funds that would otherwise be allocated 
        for the subsequent fiscal year to the jurisdiction under 
        subpart 1 of part E of title I of the Omnibus Crime Control and 
        Safe Streets Act of 1968 (42 U.S.C. 3750 et seq.). The Director 
        shall provide the Attorney General with a list of any 
        jurisdictions that failed to substantially comply with the 
        criminal history record information requests in the prior 
        fiscal year and the Attorney General shall make the appropriate 
        amount of reductions.
            (2) Applicable percentages.--The applicable percentages are 
        as follows:
                    (A) First year of noncompliance.--Except as 
                provided in subparagraph (B), for each fiscal year that 
                a jurisdiction fails to substantially comply with 
                criminal history record information requests, the 
                percentage specified is 10 percent.
                    (B) Subsequent year of noncompliance.--For each 
                succeeding consecutive fiscal year after a fiscal year 
                referred to in subparagraph (A) that a jurisdiction 
                fails to substantially comply with criminal history 
                record information requests, the percentage specified 
                is 10 percent multiplied by the number of such 
                consecutive fiscal years that the jurisdiction has 
                failed to substantially comply with criminal history 
                record information requests (not to exceed 100 
                percent).
            (3) Reallocation.--Amounts not allocated under a program 
        referred to in this section to a jurisdiction for failure to 
        substantially comply with criminal history record information 
        requests, shall be reallocated under that program to 
        jurisdictions that have not failed to substantially comply with 
        criminal history record information requests, or may be 
        reallocated to a jurisdiction from which they were withheld to 
        be used solely for the purpose of complying with section 
        9101(b)(1) of title 5, United States Code.
            (4) Noncompliance.--For purposes of this subsection, the 
        term ``fails to substantially comply with criminal history 
        record information requests'' means failure to comply with 3 or 
        more requests received during a fiscal year under section 
        9101(b)(1) of title 5, United States Code, during that fiscal 
        year.
            (5) Rule of attribution.--In the case of a jurisdiction 
        that fails to substantially comply with criminal history record 
        information requests, if that jurisdiction is subject to the 
        requirements of section 505(d)(4) of the Omnibus Crime Control 
        and Safe Streets Act of 1968 (42 U.S.C. 3755(d)(4)), then the 
        amount of funds that would be provided to other jurisdictions 
        that are party to the joint application required under such 
        section 505(d)(4) may not be reduced and only the funds for the 
        jurisdiction that has failed to substantially comply may be 
        reduced.
    (c) Requests From Contractors Acting on Behalf of Covered Agencies; 
Clarification of Police Records.--Section 9101 of title 5, United 
States Code, is amended--
            (1) by adding at the end the following new subsection:
    ``(g) Criminal justice agencies shall accept and comply with 
requests for criminal history record information pursuant to this 
section regardless of whether a request is submitted directly by a 
covered agency or by a contractor of a covered agency acting on the 
agency's behalf.''; and
            (2) in subsection (a)(2),
                    (A) after ``criminal charges'', by inserting the 
                following: ``(including descriptions of the incidents 
                or events leading to or on which the arrests, 
                indictments, informations, or other formal charges are 
                based)''; and
                    (B) by adding at the end the following: ``The term 
                also includes information pertaining to arrests that do 
                not result in the arrestee being charged with or 
                convicted of a criminal offense.''.

SEC. 5. REPORTS.

    (a) Quality Review.--Not later than 90 days after the date of 
submission of the plan under section 2 and each year thereafter, the 
Director shall submit a report to the appropriate congressional 
committees that--
            (1) evaluates the quality of background investigations 
        conducted by OPM during the previous year based on the 
        performance measures developed pursuant to the plan submitted 
        under section 2; and
            (2) includes information on the percentage of background 
        investigations conducted by OPM that meet Federal Investigative 
        Standards (as promulgated by the Director and the Director of 
        National Intelligence).
    (b) Reports Under the Intelligence Reform and Terrorism Prevention 
Act of 2004.--Section 3001(h)(1) of the Intelligence Reform and 
Terrorism Prevention Act of 2004 (50 U.S.C. 3341(h)(1)) is amended by 
striking ``through 2011''.

SEC. 6. DEFINITIONS.

    In this Act:
            (1) Agency.--Except as provided otherwise in this Act, the 
        term ``agency'' has the meaning given that term in section 
        3001(a)(1) of Public Law 108-458 and includes the United States 
        Postal Service and the Postal Regulatory Commission.
            (2) Appropriate congressional committees.--The term 
        ``appropriate congressional committees'' means--
                    (A) the Committee on Oversight and Government 
                Reform of the House of Representatives;
                    (B) the Committee on Homeland Security and 
                Governmental Affairs of the Senate;
                    (C) the Permanent Select Committee on Intelligence 
                of the House of Representatives; and
                    (D) the Select Committee on Intelligence of the 
                Senate.
            (3) Background investigation.--The term ``background 
        investigation'' means any investigation or reinvestigation 
        required for the purpose of determining whether a covered 
        individual may hold a security clearance issued by an agency.
            (4) Background investigation fieldwork services.--The term 
        ``background investigation fieldwork services'' means the 
        investigatory fieldwork conducted to determine a covered 
        individual's eligibility for a security clearance, including 
        interviews of the applicant or friends and family of such 
        applicant, reviews of educational or employment records, law 
        checks, or reviews of credit history.
            (5) Cleared individual.--The term ``cleared individual'' 
        means an individual, including any employee of an agency, 
        member of the uniformed services, contractor of an agency, or 
        individual employee of such a contractor, who holds a valid 
        security clearance issued by an agency.
            (6) Covered individual.--The term ``covered individual'' 
        means an individual, including any employee of an agency, 
        member of the uniformed services, contractor of an agency, or 
        individual employee of such a contractor, who--
                    (A) is being considered by an agency for a security 
                clearance; or
                    (B) is a cleared individual.
            (7) Director.--The term ``Director'' means the Director of 
        the Office of Personnel Management.
            (8) Federal employee.--The term ``Federal employee'' has 
        the meaning given the term ``employee'' in section 2105 of 
        title 5, United States Code, and includes--
                    (A) any member of the uniformed services; and
                    (B) any officer or employee of the United States 
                Postal Service or the Postal Regulatory Commission.
            (9) Investigative support services.--The term 
        ``investigative support services'' means the clerical, 
        administrative, and technical support services provided to 
        various functions critical to the background investigative 
        process, including initial processing and scheduling of 
        investigative requests, performing file maintenance, imaging 
        case documents, processing mail, performing quality review of 
        background investigations, and executing case closing 
        processes.
            (10) Jurisdiction.--The term ``jurisdiction'' means a State 
        or unit of local government, as such terms are defined in 
        section 901 of the Omnibus Crime Control and Safe Streets Act 
        of 1968.
            (11) OPM.--The term ``OPM'' means the Office of Personnel 
        Management.
Security Clearance Reform Act of 2014 - Directs the President to submit a strategic plan to the House Committee on Oversight and Government Reform and the Senate Committee on Homeland Security and Governmental Affairs and the intelligence committees of Congress (appropriate congressional committees)&nbsp;to improve security clearance and background investigation activities. Sets forth the required contents of such plan, including the development of a continuous evaluation or monitoring system of information used for security clearances, improvement of information sharing procedures between agencies, and the reduction or elimination of databases and information sources that cannot be accessed and processed electronically. Prohibits the Director of the Office of Personnel Management (OPM) from awarding a contract to any entity&nbsp;for investigative support services or background investigation fieldwork services if such entity has another contract in effect with the federal government to provide such services. Requires the OPM Director to report to the appropriate congressional committees listing any&nbsp;state or local entity covered by the definition of "criminal justice agency" that has failed to cooperate with three or more criminal history record information requests of the Director. Reduces criminal justice&nbsp;grant funding&nbsp;to state and local entities that fail to substantially comply with such requests.
Security Clearance Reform Act of 2014