2009

Stakeholder Report

Defense Security Service
The editorial content of this publication was prepared, edited, and approved by 

the Director, Defense Security Service. The views and opinions expressed do not 

necessarily reflect those of the Department of Defense. To comment, contact the DSS 

Office of Communication at (703) 325-9471 or email at ocpa@dss.mil.
2009 Stakeholder Report

3

MESSAGE FROM DSS DIRECTOR

I am pleased to present the first Stakeholder Report of the Defense Security Service (DSS). When I meet 

with Congressional staffers or acquisition personnel in the Department of Defense (DoD), I’m often 

asked, “What is the clearance backlog?” Since DoD transferred the personnel security investigation 

mission to the Office of Personnel Management in 2005, it is clear to me that DSS needs to do a much 

better job at keeping all of you — our agency stakeholders — better informed of what is happening at 

DSS and where we are going. 

DSS underwent a major transformation over the past two years. DSS is now streamlined and has 

reorganized and refocused on two core missions — oversight of the National Industrial Security Program 

(NISP) and delivering Security Education to the government and industry security communities. We are 

making great strides in this regard. In these pages, you will learn about our most recent successes and 

our focus for the future. We’ve also presented case studies that show how DSS is refining its processes 

to be more operationally agile and flexible in responding to requirements. In the final case study, there 

are a number of lessons learned that we will apply across the agency to ensure we are doing everything 

possible to identify and mitigate the insider threat.

The NISP is the cornerstone in the Department of Defense to protect our leading edge research and 

technology from compromise. DSS takes its community responsibility as the NISP Executive Agent 

seriously. We understand that globalization and the active efforts of our friends and adversaries to 

acquire restricted technologies have not abated. The challenges for DSS have increased accordingly. I 

am committed to the continued transformation of DSS from the troubled agency of the recent past, to 

a more robust, healthy organization that it is quickly becoming. 

Thank you for reading and I look forward to sharing more of the changes at DSS with you in future 

Stakeholder Reports. 

Kathleen M. Watson

Director
4

VISION:

MISSION:

“ 

”

DSS is the premier provider of personnel and industrial security 

services in the Department of Defense (DoD), improving the security 

of our nation and its warfighters.

DSS supports national security and the warfighter, secures the 

nation’s technological base, and oversees the protection of U.S. and 

foreign classified information in the hands of industry. 

We accomplish this mission by: Clearing industrial facilities, personnel 

and associated information systems; collecting, analyzing and 

referring threat information to industry and government partners; 

managing foreign ownership, control, or influence in cleared industry;

providing advice and oversight to industry; delivering security 

education and training; and, providing information technology 

services that support the industrial security mission of DoD and its 

partner agencies.

The basic nature of man and the 

iron realities of nations have not 

changed. What has changed is that 

the international environment today 

is more complex, and more dangerous, 

than it has been in many decades.

SECDEF Robert M. Gates
2009 Stakeholder Report

5

“ ”

Information is our greatest 

strategic asset. 

Honorable John Grimes,

 ASD(NII) / DoD CIO

The Defense Security Service (DSS), formerly known as the Defense 

Investigative Service (DIS) was established on Jan. 1, 1972. DSS was 

created in response to President Richard M. Nixon’s approval of 

proposals suggesting the reorganization of the national intelligence 

community and the creation of an “Office of Defense Investigation” 

to consolidate Department of Defense (DoD) personnel security 

investigations (PSI). Prior to this consolidation, such work was 

accomplished through U.S. military departments by four major DoD 

investigative agencies. They were: 1) the U.S. Army Intelligence 

Command, 2) the U.S. Army Criminal Investigative Command, 

3) the Naval Investigative Service, and 4) the Office of Special 

Investigations, Air Force. 

DSS was an organization whose manpower, facilities and operational 

structure were almost entirely borrowed from the Army, Navy and 

Air Force and the initial months of the agency’s existence proved 

turbulent. As DSS matured, military personnel gradually returned 

to their parent services and the workforce became entirely civilian. 

Additional security functions were transferred to DSS, to include the 

transfer of administration of the Defense Industrial Security Program 

from the Defense Logistics Agency (DLA) to DSS on Oct. 2, 1980.

HISTORY:

STRATEGIC GOALS:

Establishment of the Defense Security Service

The Early Years

To Think and Act Strategically

To Earn and Maintain Stakeholder Support

To Achieve Operational Excellence

To Consistently Satisfy our Customers
6

“ 

”

The Department of Defense will have to plan 

for a future security environment shaped by the 

interaction of powerful strategic trends. These 

trends suggest a range of plausible futures, some 

presenting major challenges and security risks. 

2008 National Defense Strategy

In 1985, Secretary of Defense, Caspar Weinberger, established the 

Stilwell Commission in response to the alarming increase of espionage 

cases against the U.S. government. The Stilwell Commission was 

directed to review and evaluate security policies and procedures 

in DoD. The Commission’s recommendations directly impacted DSS, 

as they believed increased priority should be given to DoD security 

efforts and that necessary resourcing must be made available. As a 

result, Congress increased DSS funding by $25 million in fiscal year 

1986, with an emphasis on Periodic Reinvestigations.

In May 1993, DSS established a counterintelligence (CI) office in response 

to the dramatic changes taking place in the defense marketplace and 

the growing need for current and relevant intelligence-threat data by 

the DSS workforce and industrial managers.

The personnel security investigation (PSI) mission transferred from 

the DoD to the Office of Personnel Management (OPM) effective Feb. 

20, 2005. DSS retained the function, on behalf of DoD, to oversee 

the OPM billing and financial reconciliation process for PSIs for the 

entire Department. Additionally, DSS retained the adjudication of 

personnel security clearances for industry, the projection of industry 

personnel security clearance requirements, and funding of industry 

clearance investigations.

On Jan. 15, 2009, the Deputy Secretary of Defense signed a 

memorandum directing DSS to move forward on enhancing the 

National Industrial Security Program and reinvigorating the 

Security Education Training and Awareness Program, in an effort to 

“strengthen and refocus DSS to meet 21st century industrial security 

and counterintelligence needs.” 

The Year of the Spy

Significant Enhancements during the Last Decade 
2009 Stakeholder Report

7

“ 

”

The national security and economic health of the 

United States depend on the security, stability, 

and integrity of our Nation’s cyberspace, both 

in the public and private sectors. The President 

is confident that we can protect our nation’s 

critical cyber infrastructure while at the 

same time adhering to the rule of law and 

safeguarding privacy rights and civil liberties. 

Assistant to the President for Counterterrorism 

and Homeland Security John Brennan

The three divisions of the shield refer to the three basic requirements 

of all investigations: patient inquiry, observation, and careful 

examination of the facts.

The eagle, adopted from that used in the seal of DoD, alludes to 

keenness of vision, strength, and tenacity that symbolizes DSS.

The three arrows, also adopted from the seal of DoD, refer to the 

Armed Services, comprising the military components of DSS. In 

crossing over and protectively covering the Pentagon, these 

arrows represent the DoD wide aspects of the DSS mission.

The color dark blue, the National color, represents the United 

States, and the color light blue represents DoD, the shade 

of blue being used by the Defense Department. The pattern 

indicates the integral unity of the U.S., DoD, and DSS. The color 

gold (or yellow) is symbolic of zeal and achievement.

On a white disc within a border of blue with gold outer rim is the 

shield of DSS in full color blazoned above a wreath of laurel and 

olive proper (as depicted on the DoD seal). Inscribed at top of the 

white disc is “Defense Security Service” and in the base, in smaller 

letters, is “United States of America,” all letters gold.

The laurel and olives symbolize merit and peace; the color white 

signifies “deeds worthy of remembrance.”

DSS Seal
8

Organizational

overview:

Director

Command

& Staff

Industrial Security

Field Operations

Counterintelligence

Industrial Security 

Policy & Programs

Security Education, 

Training & 

Awareness

Chief Information 

Officer

“ 

”

Our transformation to a 21st century, Net Centric force 

is, therefore, dependent upon ultimate delivery of the 

critical enabling capabilities that will: 

Allow information to be accessed and shared, ensure 

partners can collaborate, and support decision makers 

at all levels to make better decisions faster and to take 

action sooner. 

Honorable John Grimes, ASD(NII) / DoD CIO
2009 Stakeholder Report

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00110101010001111 DSS Headquarters is located in Northern Virginia, with offices across the country

Capital Region, Arlington, VA

Ft. Meade, MD

Linthicum, MD

Arlington, VA

Chantilly, VA

Quantico, VA

Northern Region, Boston, MA

Groton, CT

New Haven, CT

Boston, MA

Devens, MA

Wilmington, MA

Livonia, MI

Minneapolis-Fort Snelling, MN

Mt. Laurel, NJ

Picatinny Arsenal, NJ

Buffalo, NY

Syracuse-Liverpool, NY

Watervliet, NY

Westbury, NY

Cincinnati, OH

Cleveland, OH

Columbus, OH

Wright-Patterson AFB, OH

Annville, PA

Boyers, PA

Philadelphia, PA

Pittsburgh, PA

Milwaukee, WI

Southern Region, Irving, TX

Huntsville, AL

Homestead, FL

Hurlburt Field, FL

Orlando, FL

Patrick Air Force Base, FL

Tampa, FL

Smyrna, GA

Des Plaines, IL

Indianapolis, IN

Kansas City, KS

St. Louis, MO

Charlotte, NC

Offutt Air Force Base, NE

Oklahoma City, OK

Charleston, SC

San Antonio, TX

Houston, TX

Irving, TX

Hampton, VA

Virginia Beach, VA

Western Region, San Diego, CA

Anchorage, AK

Phoenix, AZ

Tucson, AZ

Camarillo, CA 

Dublin, CA

Encino, CA

Huntington Beach, CA

March Air Force Base, CA

Palmdale, CA

Pasadena, CA

San Diego, CA

Santa Barbara, CA

Sunnyvale, CA

Travis Air Force Base, CA

Colorado Springs, CO

Denver, CO

Honolulu, HI

Albuquerque, NM

El Paso, TX

Seattle, WA
10

“ ”

Intelligence and information sharing have 

always been a vital component of national 

security. Reliable information and analysis, 

quickly available, is an enduring challenge. 

2008 National Defense Strategy

Industrial Security Field Operations (ISFO) works with cleared 

industry on a daily basis to protect U.S. and foreign classified 

information

350 Industrial Security Representatives spread across the United States

◦ Provide advice and assistance

◦ Inspect facilities for compliance with established guidelines

◦ Report security incidents and provide remediation 

Information System Security Professionals (ISSP) 

◦ Provide technical expertise to identify key threats facing industry today

◦ Certify and accredit industry information systems

Defense Industrial Security Clearance Office adjudicates clearances for industry personnel 

12,647 active, cleared facilities in NISP

• 9,100 facility security inspections (FY08)

• 1,791 new facility clearances granted (FY08)

• 14,000 accredited systems in industry

• Average time for system accreditation: 33 days

Adjudicate Industry Security Clearances (DISCO)

• 1,278,299 cleared personnel

• 180,651 Personnel Security Adjudications (FY08)

• 16 days to adjudicate all initial clearances by IRTPA* measures

*Intelligence Reform and Terrorism Prevention Act of 2004 mandated specific goals for 

improving timelines for both personnel security investigations and adjudications.

ISFO Facts:

Industrial Security Field Operations:
2009 Stakeholder Report

11

“ 

”

The globalization of technology is no longer a choice 

for governments planning to modernize their military 

forces; it is a characteristic of the environment in 

which military capabilities will be developed and 

produced for the foreseeable future. 

William Schneider, Jr., 

Chairman of the Defense Science Board

The DSS Counterintelligence (CI) Office works in concert with ISFO to 

identify threats to cleared industry

CI Specialists collect suspicious contact reports (SCRs) from industry

◦ Conduct an initial analysis

◦ Refer cases to the appropriate investigative agency for follow-up

◦ Use these SCRs to educate industry

◦ Provide information to the Intelligence Community

Focused on key threats to industry

◦ Cyber 

◦ Insider threat

◦ Hard target nations

Supports all DSS operations

◦ Threat assessments for Foreign Ownership Control or Influence (FOCI) mitigation process

◦ Integrated into training courses at DSS Academy

• 5,017 CI Suspicious Contact Reports (SCRs) (FY08)

• 1,403 CI Investigations or operational activities by other Government Agencies 

based on DSS SCR referrals 

• 23 DSS referrals resulted in investigations by FBI, ICE, DCIS, NCIS, or Army

• 431 Personnel security clearances that were denied access eligibility based on 

input from DSS CI

• 124 SCRs with suspected foreign cyber attacks directed against unclassified systems 

within the Defense Industrial Base

• 389 Intelligence Information Reports 

• 2,012 adjudicative files referred with legitimate CI or security concerns

• 17,207 cleared industry personnel received Counterintelligence Threat Awareness Briefings 

Counterintelligence:

CI Facts:
12

Industrial Security Policy and Programs office (ISPP) supports ISFO with

• Adjudication of foreign ownership, control or influence (FOCI)

• Implementation of FOCI countermeasures

• Administration of international programs

• Industrial and personnel security policy 

• Projections for industry personnel security investigations

• Support SAP oversight at industrial facilities

• Analytic support

• 643 FOCI facilities 

• 240 FOCI mitigation agreements

• Support to 65 Foreign Countries

• NISP Support to 23 Government Agencies

INDUSTRIAL SECURITY 

POLICY AND PROGRAMS

ISPP Facts:

“ 

”

Information is a strategic asset. It must be given the same 

priority and protection as any mission critical system 

or platform. Success in day-to-day peacetime functions, 

during stability and support operations, and armed 

conflict will be dependent upon our ability to connect 

people with information and create an information 

advantage for our team and our mission partners. 

Honorable John Grimes, ASD(NII) / DoD CIO
2009 Stakeholder Report

13

SETA delivers security education and training to DoD and the 

cleared contractor community through formal classroom, webbased and correspondence/distance learning

Security education includes core security disciplines 

◦ Personnel

◦ Physical

◦ Industrial

◦ Special Access Programs

Accreditation for security professionals

◦ Special Access Programs

◦ Adjudicators

◦ DSS workforce

◦ Facility Security Officers

Integrate counterintelligence and information systems security into all courses 

• 35,419 students trained to date (FY09)

• 53,569 students trained (FY08)

• 362% increase over FY04

• Deployed 10 new courses FY08/09

• 28 courses currently under development in conjunction with stakeholders 

or at request

• Deployed 8 new security information/job aid videos

• Developing 11 additional security information/job aid videos

• Fielded web accessible Resource Tool for Security Professionals

SECURITY EDUCATION 

TRAINING AND AWARENESS

SETA Facts:

“ ”

The ASD NII/DoD CIO provides the leadership 

that is turning the vision, deliver the power of 

information, into reality. 

Honorable John Grimes, ASD(NII) / DoD CIO
14

The Office of Chief Information Officer (CIO) provides information 

technology services to DSS employees in 75 locations

• Classified and unclassified network connectivity

• Office automation and web services

• Computer security

• Information assurance/computer network defense

The CIO manages and maintains IT systems that support the industrial 

security and personnel security missions

• Joint Personnel Adjudication System (JPAS)*

• Industrial Security Facilities Database (ISFD)

• Defense Central Index of Investigations (DCII)*

• ENROL 

*Scheduled to transition to Defense Manpower Data Center (DMDC)

• 100,000+ worldwide users

• 6 Legacy Security Systems

• 5 System Enhancements in Development

CHIEF INFORMATION OFFICER

CIO Facts:

“ 

”

I will never abandon - and I will vigorously defend 

- the necessity of classification to defend our 

troops at war; to protect sources and methods; and 

to safeguard confidential actions that keep the 

American people safe.

President Barack Obama
2009 Stakeholder Report

15

DSS continually assesses its oversight of the industrial security program 

to ensure the most robust mechanisms for the protection of classified 

information in industry are in place. During the past year DSS can cite 

many successes.

Once a company is cleared, DSS has oversight authority to evaluate 

the security operations of the organization for compliance with the 

National Industrial Security Program. DSS developed a Facility of 

Interest List (FIL) in order to align resources towards a risk based 

inspection process. 

The list determines the level of risk for over 12,000 facilities as they 

relate to the overall foreign threat specific to key technologies. This 

approach supports the National Counterintelligence Strategy of the 

United States as well as the DoD Counterintelligence Strategy.

The list established by DSS considered such factors as: 

 

• Poor security ratings

• Invalidated facility clearances

• Foreign ownership

• Counterintelligence concerns

• Special Access Programs

• Arms, Ammunition and Explosives programs

• Critical Infrastructure Programs

• Critical National Assets

• Critical Program Information

• Trusted Foundries

The latest FIL was published on April 2, 2009 and identified 1,000 facilities. 

DSS will continue to refine the risk factors to better incorporate 

assessments of counterintelligence threats to the cleared U.S. Defense 

Industry. The goal is a coordinated, integrated visit from DSS to the 

right facility, at the right time with appropriate resources resulting in 

a more effective, meaningful inspection.

ACHIEVEMENTS 

& CASE STUDIES

Facilities of Interest

Better oversight of cleared industry 
16

DSS adopted a team approach to its oversight and inspection of 

cleared facilities. Day-to-day tactical control of Industrial Security 

Representative (IS Reps), field Counterintelligence Specialists and 

Information System Security Personnel (ISSPs) now rests with the 

local Field Office Chief and one of four Regional Directors. The result 

is a team-based approach to facility oversight by the personnel most 

familiar with the facilities and its challenges. Each high-risk facility 

will be assigned a team of experts who will work together to provide 

integrated oversight and support. During 2008, 193 of the 240 team 

inspections conducted by DSS were at FIL facilities.

DSS deployed FOCI and International Specialists to the field to provide 

increased expertise at the local level in these complex areas. These 

specialists work the front-end FOCI process by putting together less 

complex mitigation agreements and are fully integrated members 

of the field team. Their knowledge and insights result in better 

mitigation arrangements and oversight of companies under FOCI.

The Counterintelligence (CI) team has aligned its focus to counter 

those dangers that pose the greatest threat to our nation’s most 

critical assets:

• Hard Target Nations

• Insider Threats

• Cyber Threats

• Internal and External Training

DSS also adopted a risk-based approach to providing cleared defense 

contractors with tailored counterintelligence services supported 

by a realistic assessment of threats to classified information and 

technology resident at each facility. To close the functional gaps 

that exist, DSS will continue to integrate field Counterintelligence 

Specialists, Industrial Security Representatives and Information 

System Security Personnel to proactively mitigate against espionage 

and collection attempts by foreign intelligence and security service 

threats.

DSS is developing CI Training Requirements and Competencies to 

assist in the identification of job qualifications, core competencies 

and training requirements specific to DSS personnel. By educating 

Industrial Security Representatives and Information System Security 

Personnel on basic CI competencies and skills, DSS will enhance the 

“every person is a sensor” concept and serve as a tremendous force 

multiplier in the field for DSS.

Coordinated Inspection Process

Refocused Priorities

Counterintelligence
2009 Stakeholder Report

17

Contractors cleared under the NISP have an obligation to identify and 

report suspicious contacts and potential collection attempts to DSS, 

as outlined in the National Industrial Security Program Operating 

Manual (NISPOM). DSS prioritizes the Suspicious Contact Reports 

(SCRs) received from cleared industry into four categories, with the 

most serious being Category I (Targeting Confirmed) and Category 

II (Targeting Probable). Category I & II SCRs are promptly reported 

to DSS’s Field Counterintelligence Specialists so the information 

can be quickly shared with the larger DoD CI and Law Enforcement 

communities. This prioritization effort means critical information is 

getting to DSS field personnel and industry more quickly to identify 

and counter CI threats.

DSS publishes a report detailing suspicious contacts occurring within 

the cleared defense contractor community. This reports is based 

on an analysis of Suspicious Contact Reports (SCRs) from cleared 

industry that DSS considers indicative of efforts by entities to 

target defense-related personnel, and information and technologies 

developed or maintained by the Cleared Defense Community. This 

year, DSS published both a classified and an unclassified version of 

the “2008 Targeting U.S. Technologies: A Trend Analysis of Reporting 

from Defense Industry.” Since the number and danger posed by cyber 

threats continues to increase, the 2008 Trends included a special 

section about the use of cyber space as a collection medium. 

Prioritizing Suspicious Contact Reports

Publication of the trend analysis report

“ 

”

Another underlying theme in the budget 

recommendations is the need to think about future 

conflicts in a different way. To recognize that the 

black and white distinction between conventional 

war and irregular war is an outdated model. In 

reality, the future is and will be more complex. 

Where all conflict will range along a broad 

spectrum of operations and lethality. Where 

even near-peer competitors will use irregular 

or asymmetric tactics and non-state actors may 

have weapons of mass destruction or sophisticated 

missiles.

Secretary of Defense Robert M. Gates
18

The Office of the Designated Approving Authority (ODAA) is the 

government entity responsible for approving and accrediting cleared 

contractor information systems (IS) to process classified data 

nationwide. As a part of the accreditation process, the ODAA ensures 

IS security controls are in place to limit the risk of compromising 

national security information. In particular, the ODAA is strengthening 

cleared defense industry managed IT systems and has promulgated 

system security controls and user access controls to mitigate cyber 

threats and protect classified information. DSS is working with 

industry to implement these procedures which will help DSS better 

protect against threats to classified IT systems in industry.

DSS is also developing a cyber security strategy designed to make 

classified IT Systems in Industry impenetrable. We anticipate the 

strategy will include education and training, enhanced policy and 

procedures, enhanced information sharing, cooperative intelligence 

analysis, collective use of expertise, and collaboration. 

DSS published Industrial Security Letter 2009-01 to clarify the 

safeguarding standards used in determining if an Information 

System in industry is eligible for accreditation. Two documents — 

“Manual for the Certification and Accreditation of Classified Systems 

under the National Industrial Security Program Operating Manual 

(NISPOM)” and, “Standardization of Baseline Technical Security 

Configurations” contain a set of safeguards that DSS will apply when 

making an accreditation decision. The ISL highlights and outlines 

the expectations set by these standards. The safeguards outlined 

in both the ODAA Manual and Baseline Standards will not apply to 

every information system and after a full review, DSS will consider 

deviations from the standards on a case-by-case basis. Both the 

Manual and the Baseline Standards will be updated and published 

by DSS as necessary.

Accreditation of information systems

“ 

”

Information technology is moving fast, creating 

as many threats as opportunities. Our adversaries 

are evolving and learning rapidly, and we must 

stay ahead. 

Dennis C. Blair, DNI

Office of the Designated Approving Authority
2009 Stakeholder Report

19

Foreign investment plays an important role in maintaining the 

vitality of the U.S. industrial base. While it is the policy of the U.S. 

Government to allow foreign investment consistent with the national 

security interests of the United States, foreign investment in U.S. 

defense industry poses a unique risk to the protection of classified 

information. A company is considered to be operating under FOCI 

whenever a foreign interest has the power, direct or indirect, 

whether or not exercised, and whether or not exercisable, to direct 

or decide matters affecting the management or operations of that 

company in a manner which may result in unauthorized access to 

classified information or may adversely affect the performance 

of classified contracts. DSS adjudicates FOCI factors of cleared 

contractors participating in the National Industrial Security Program 

(NISP) on behalf of DoD and 23 non-DoD government agencies. 

DSS greatly improved its handling of FOCI cases resulting in a more 

operationally agile process. DSS field employees are empowered 

to adjudicate cases requiring minor FOCI mitigation arrangements. 

The result is a more efficient and expedient process. DSS has also 

integrated field personnel into complex FOCI cases to ensure that the 

proposed mitigation mechanisms are reasonable and inspectable. 

The Office of the Designated Approving Authority (ODAA) developed 

a process to assist in FOCI reviews that will assess the electronic 

communication plan and information system infrastructure for 

those companies that fall under FOCI. The process was developed 

to mirror and leverage as much as possible the certification and 

accreditation process performed for the Defense Industrial Base. 

This new process provides a formal, documented process to evaluate 

the IT posture of companies under FOCI.

Streamlining the Process

Foreign Ownership, Control or Influence

“ 

”

We will safeguard what we must to protect the 

American people, but we will also ensure the 

accountability and oversight that is the hallmark 

of our constitutional system.

President Barack Obama
20

DSS stood up an Analytic Branch to analyze and apply all available 

information to the mitigation strategies for companies under FOCI. 

The branch collects data on individual companies to create effective, 

specific mitigation strategies for companies under FOCI. The branch 

also monitors trends to provide a strategic analysis of the types of 

foreign investment vehicles and the U.S. companies or technologies 

sought by foreign investors. 

Of particular concern to DSS and the Department are the impact 

of sovereign wealth funds (SWF), hedge funds, and other financial 

arrangements. These financial tools can combine to provide capital to 

acquire and manage large corporations, while the ultimate source of the 

capital is difficult to trace. DSS must better understand their impacts 

and make adjustments in security organization, doctrine, training and 

personnel. Emerging financial arrangements like these highlight the 

increasingly complex burden of determining the appropriate foreign 

investment countermeasures in support of national security. 

Accreditation is a status granted to an educational institution or 

program that assures quality and assists in the improvement of 

the institute or program. The standards for national accreditation 

are set by the Council on Occupational Education (COE) and are 

outlined in the council’s Handbook of Accreditation. The DSS 

Academy was reaccredited for six years by the COE in February. 

A team from the COE visited the Academy to review the 

Academy’s accreditation self-study exhibits, and then interviewed 

SETA/DSS Academy staff and students to ensure compliance. 

The COE Team determined that the DSS Academy is in full compliance 

with all eleven standards of accreditation and the conditions of 

accreditation. 

Analyzing data, monitoring trends

Reaccreditation

Training

“ 

”

Cyberspace has become a key domain - in a similar 

context to land, air, and sea - through which 

government and military leaders can pursue, 

achieve, and enhance their objectives... and, this has 

changed at a pace few would have anticipated.

Secretary of Defense Robert M. Gates
2009 Stakeholder Report

21

The demand for professional security training continues to grow. To 

meet this demand, the DSS Academy expanded its course offerings, 

seeking news ways to provide training and creating tools to support 

security education. SETA is moving from classroom-based training 

to more web-based training, which allows DSS to deliver training to 

those who need it, when they need it. During the last year, 10 new 

courses were offered by SETA, including:

• Security Classification Guidance 

• Original Classification 

• Derivative Classification

• Business Structures in the NISP

• Industrial Security Facilities Database for DSS Users

• Physical Security Measures Course

• Getting Started Seminar for New Facility Security 

Officers (FSO) 

The courses were developed in response to identified requirements. For 

instance, a course could be in response to a regulatory/policy mandate, 

a DoD stakeholder (Military Service Component, Defense Agency or 

DoD Industrial Contractor Community) articulated a formal request, 

or as a request for an intervention needed for security professionals/

practitioners to meet a competency level associated with a DoD 

Community approved skill standard in one of the security disciplines 

(i.e., physical, personal, industrial, or information security).

The DSS Academy schedules regular and recurring security curriculum 

planning and review meetings to directly engage security community 

representatives in the testing and evaluation of courseware and content 

prior to deployment.

SETA established a certification program for the DoD security adjudicator 

community and the Special Access Program (SAP) community. SETA is 

working on a similar program for DoD Security Professionals, as well as 

certifications for DSS Security Professionals. 

More courses

“ 

”

... we cannot achieve resilience or reach 

our full potential without security. This is 

tremendously important given the kind of 

threats the North American continent faces 

at the dawn of the 21st century. 

SECDEF Robert M. Gates
22

In addition to formal courses, the Academy expanded its training products 

and services, providing eight new security information/job aid videos, 

with 11 more in development. Two new videos offered by SETA include a 

new security awareness training video, “Need-To-Know,” which provides 

a short video vignette regarding the fundamental need-to-know security 

principle, and a video describing the transformation of the Facility Security 

Officer (FSO) curriculum into a distance learning format. 

In April 2008, DSS deployed its annual web-based survey to 10,953 cleared 

Industry Facility Security Officers representing 12,189 cleared facilities 

for the purposes of projecting PSI-I requirements. The projections are 

the key component in Future Years Defense Program (FYDP) DSS/DoD 

program planning and budgeting for NISP security clearances. With more 

than 83 percent of cleared contractor facilities responding, representing 

92 percent of the cleared contractor population, the survey is a highly 

effective tool in projecting contractor security clearance requirements. 

Projections provided from the survey in FY07 were 103.9 percent of 

actual submissions. At the close of FY08, industry clearance eligibility 

submissions were .9 percent above projections, which is well within the 

Office of Management and Budget mandate that the survey results be +/- 

5 percent of actual submissions.

More job aids

Personnel Security Investigations for Industry 

(PSI-I) Requirements Survey

Improvements in PSI-I processing

“ 

”

I believe that we cannot solve the challenges of 

our time unless we solve them together. We will 

not be safe if we see national security as a wedge 

that divides America — it can and must be a cause 

that unites us as one people and as one nation. 

We’ve done so before in times that were more 

perilous than ours. We will do so once again.

President Barack Obama
2009 Stakeholder Report

23

The Defense Industrial Security Clearance Office adjudicates PSIIs on behalf of DoD and 23 other Federal agencies in the National 

Industrial Security Program. During FY08, the pending case 

inventory at DISCO declined from 34,630 to 3,394, marking a 90 

percent reduction in pending adjudication inventory.

The Intelligence Reform and Terrorism Prevention Act of 2004 (IRTPA) 

mandated specific goals for improving timeliness of both personnel 

security investigations and adjudications. DISCO exceeded the 

mandated IRTPA guidelines for completion of adjudications. DISCO also 

achieved significant success in reducing average adjudication process 

times as well as increasing the number of adjudications completed. 

• In FY08, DISCO completed 90% of initial adjudications 

in 20 days. This exceeded the 25-day intermediate 

IRTPA goal established by the Office of Management 

and Budget by five days.

• DISCO increased the number of initial personnel 

security clearance adjudications measured by IRTPA 

by 35% from FY07 to FY08 (from 111,415 in FY07 to 

150,333 in FY08).

• DISCO increased the number of all adjudications (initial 

and other) by 38%, from 139,345 in FY07 to 191,914 in 

FY08. 

• DISCO increased the number of interim personnel 

security clearance eligibilities granted by 11%, from 

82,550 in FY07 to 92,350 in FY08.

• DISCO increased the number of personnel security 

clearance eligibilities granted by 30%, from 139,407 in 

FY07 to 181,179 in FY08.

Reducing the PSI-I backlog

FY08 DISCO Pending Adjudications Chart

Case Type Oct-07

(Start of Q1)

Mar-08

(End of Q2)

Jun-08

(End of Q3)

Sep-08

(End of Q4)

Delta

(Q1 vs Q4)

NACLC 11,449

9,337

4,899

8,945

34,630

488

5,625

3,752

4,923

14,788

240

30

5,973

4,210

10,453

1,953

354

757

330

3,394

-83%

-96%

-85%

-96%

-90%

SSBI

SBPR

PPR

Total

Pending

IRTPA Guidelines
24

All initial national security investigations require the submission of 

fingerprints as part of the request for investigation to the Office of 

Personnel Management. Secure Web Fingerprint Transmission (SWFT) 

is a program that permits electronic submission of fingerprints for 

Personnel Security Investigations for Industry. SWFT can capture 

fingerprint images, upload the images to the DSS server, temporarily 

store these electronic files on the server, and then release the file to 

OPM. In July 2008, DSS launched a pilot with a test group of industry 

partners, who provided the first electronic fingerprint files via the 

DSS secure web connection to the DSS system. DSS forwarded these 

files to OPM’s fingerprint system, completing the end-to-end system 

connection. The pilot proved successful and the system is expected 

to be fielded in July 2009. The system can store in excess of 15,000 

fingerprint submissions, notify industry users of the transmission 

status, and provide account management and metrics collection 

features. When fully deployed, the system will reduce fingerprint 

rejection rates as well as improve investigative timeliness. Industry 

is supplying the equipment to capture the electronic fingerprints.

Automated fingerprint submission

Automation initiatives

“ 

”

Future adversaries will continue to employ 

new readily available technologies in sinister 

ways. They will adapt and develop new tactics, 

techniques, and procedures as fast as they can 

imagine ways to gain any advantage over us, to 

better understand our decision cycle. This kind 

of warfare will require innovative, versatile 

leaders and capabilities with the maximum possible 

flexibility and agility to deal with the widest

possible range of conflict.

Secretary of Defense Robert M. Gates
2009 Stakeholder Report

25

Lesson learned:

Whether government contracting 

authority, program manager or 

cleared defense industry, think 

of DSS early in the process. DSS 

personnel are flexible and will 

work to ensure the mission is not 

affected. DSS can ensure delivery 

of the best product possible when 

given adequate time to address 

an issue.

Lesson learned:

DSS has the flexibility and tools 

to mitigate the foreign influence 

on most any business structure. 

Again, involve DSS early in the 

process to ensure valuable time 

and resources are not wasted. 

In November 2008, Missile Defense Agency (MDA) program personnel contacted the 

DSS Southern Region Designated Approving Authority (RDAA) concerning plans for 

accreditation of a wide body airborne platform (WASP) information system. This 

system supported an MDA mission critical test that was scheduled for December 

5 on the west coast and MDA was relying on the WASP system to collect data for 

analysis of the planned test.

The contractor involved did not properly plan for accreditation and had not 

developed a system security plan (SSP) for DSS to review. MDA requested DSS 

assistance so they could proceed with the test. 

ODAA personnel assisted the contractor in preparing the SSP. This entailed significant 

coordination between ODAA and the contractor, including an explanation of the 

requirements and guidance/support for reviews and corrections prior to a final 

submission. DSS issued an Interim Approval to Operate on Dec. 1, 2008, allowing 

MDA to proceed with their test

Last fall, a large cleared U.S. company went through the Committee on Foreign 

Investment in the United States (CFIUS) process as part of being acquired by a 

foreign company. The foreign company is effectively controlled by its foreign 

government based on foreign government stock ownership and voting rights. The 

U.S. company has a large number of proscribed contracts (Top Secret, COMSEC, 

RD, SAP, or SCI) with multiple government customers.

Under 10 USC 2536, DoD is prohibited from issuing contracts requiring access to 

proscribed information to companies under foreign government control unless the 

Secretary of Defense grants a waiver. 

DSS is implementing special field inspection teams to ensure consistency of 

enforcement across all the company’s cleared facilities.

The following case studies provide lessons learned for DSS, 

the cleared defense community and Government Contracting Activities.

Accreditation of Missile Defense Agency (MDA) 

Wide Body Airborne Platform (WASP)

FOCI Case Study
26

Lesson learned:

DSS reviewed the shortfalls in 

this case and is implementing 

a proposed mechanism for 

capturing, reporting and in the 

near future linking information 

from violations /administrative 

inquiries more quickly. 

Company A notified DSS, that a former employee had mishandled classified 

information on their unclassified network. During the course of the administrative 

inquiry, the company discovered:

• Hidden and encrypted files under the employee’s last name

• More than 800 folders containing more than 10,000 files

• The folders were hidden from view and permissions denied to Network 

Administrators as well as anyone else

• These permissions had to be set manually and deliberately

• No incident report was made in JPAS

The Administrative Inquiry revealed a previous security violation by the employee 

who had created a classified document on a Company laptop. Again, no incident 

report was made in JPAS.

A second company notified DSS of a suspicious contact report that detailed an 

employee who was observed “placing things in a backpack,” in an area where this 

behavior appeared out of the norm. This occurred two weeks after the original 

notification and as it turned out, both reports were on the same individual. 

The appropriate government agency was notified and an investigation initiated. 

During the initial phases of the investigation, it was discovered that this same 

individual allegedly stole proprietary information from a third company. This third 

company did not pursue the information for fear of “bad” or “negative press” since 

the employee had departed the company. 

Search warrants were issued for the individual’s home, car, and work space. 

Thousands of documents, computer media, etc, at all three locations were 

discovered; much of it classified (Top Secret, Secret, and Confidential). It may take 

up to one year to go through all of the confiscated media to determine the number 

of charges that should be levied. 

This case shows several good things:

• Hidden files were discovered at the first company 

• Once discovered, the hard drive was handled in accordance with the highest 

level of classification pending DSS retrieval and/or disposal directions

• The Facility Security Officer did a great job alerting the right folks and 

working closely with DSS

And many not so good things:

• The first company had no mechanisms in place to prevent this individual 

from hiding several thousands files and encrypting them on their 

unclassified LAN

• The company did not follow-up when the employee turned in a laptop 

after “wiping” the hard drive – an unauthorized practice

• The companies chose not to report or utilize JPAS concerning the initial 

security violations committed by the employee, because the employee no 

longer worked for them 

• DSS did not follow-up on the hard-drive retrieval in a timely manner

• DSS did not initially pursue because there was no apparent foreign nexus.

It was deemed a security violation.

Mishandling of classified information
2009 Stakeholder Report

27

For the coming year, DSS will continue to enhance and expand the 

National Industrial Security Program and reinvigorate the Security 

Education Training and Awareness Program. Our priorities are:

DSS will aggressively focus on cyber threats — an increasing threat 

and complex challenge. DSS will continue to expand its CI staff 

to better assist customers in mitigating espionage and collection 

attempts by foreign intelligence and security services, to include 

exploitation of cyber space and the threat posed by insiders.

DSS will continue to improve on the FOCI process. DSS commissioned 

an outside study of the FOCI process to look for improvements and 

once identified, proposed improvements will be implemented as 

soon as possible. 

The DSS Academy is constantly searching out innovative methods 

to deliver training and increasing the scope of the training offered. 

Currently, there are more than 25 courses in development, which 

includes building a curriculum for certification of the DSS work 

force.

While proud of our successes, DSS continuously seeks to improve our 

performance as the premier provider of personnel and industrial 

security services in the Department of Defense (DoD). Through new 

ideas, innovations and expanded technology, DSS will continue to 

ensure the security of our nation and our warfighters. 

DSS PRIORITIES & 

PREPARING FOR 

THE FUTURE

Counterintelligence 

FOCI

Training

Preparing for the future
Defense Security Service

www.dss.mil