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95–869 PDF 2004

WHAT’S THE HOLD UP? A REVIEW OF SECURITY

CLEARANCE BACKLOG AND RECIPROCITY

ISSUES PLAGUING TODAY’S GOVERNMENT AND

PRIVATE SECTOR WORKFORCE

HEARING

BEFORE THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED EIGHTH CONGRESS

SECOND SESSION

MAY 6, 2004

Serial No. 108–199

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.gpo.gov/congress/house

http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

TOM DAVIS, Virginia, Chairman

DAN BURTON, Indiana

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

MARK E. SOUDER, Indiana

STEVEN C. LATOURETTE, Ohio

DOUG OSE, California

RON LEWIS, Kentucky

JO ANN DAVIS, Virginia

TODD RUSSELL PLATTS, Pennsylvania

CHRIS CANNON, Utah

ADAM H. PUTNAM, Florida

EDWARD L. SCHROCK, Virginia

JOHN J. DUNCAN, JR., Tennessee

NATHAN DEAL, Georgia

CANDICE S. MILLER, Michigan

TIM MURPHY, Pennsylvania

MICHAEL R. TURNER, Ohio

JOHN R. CARTER, Texas

MARSHA BLACKBURN, Tennessee

PATRICK J. TIBERI, Ohio

KATHERINE HARRIS, Florida

HENRY A. WAXMAN, California

TOM LANTOS, California

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

CHRIS VAN HOLLEN, Maryland

LINDA T. SANCHEZ, California

C.A. ‘‘DUTCH’’ RUPPERSBERGER, Maryland

ELEANOR HOLMES NORTON, District of

Columbia

JIM COOPER, Tennessee

——— ———

———

BERNARD SANDERS, Vermont

(Independent)

MELISSA WOJCIAK, Staff Director

DAVID MARIN, Deputy Staff Director/Communications Director

ROB BORDEN, Parliamentarian

TERESA AUSTIN, Chief Clerk

PHIL BARNETT, Minority Chief of Staff/Chief Counsel

(III)

C O N T E N T S

Page

Hearing held on May 6, 2004 ................................................................................. 1

Statement of:

Shenoy, Sudhakar V., chairman, Northern Virginia Technology Council;

Bobbie G. Kilberg, president, Northern Virginia Technology Council,

accompanied by Gary Nakamoto, NVTC; and Douglas Wagoner, chairman, Intelligence and Security Task Group, Information Technology

Association of America ................................................................................. 83

Wilshusen, Gregory C., Acting Director, Defense Capabilities and Management, U.S. General Accounting Office; Stephen C. Benowitz, Associate Director, Division for Human Resources Products and Services,

U.S. Office of Personnel Management; Heather Anderson, Acting Director of Security, Office of the Under Secretary of Defense for Intelligence; and J. William Leonard, Director, Information Security Oversight Office .................................................................................................... 12

Letters, statements, etc., submitted for the record by:

Anderson, Heather, Acting Director of Security, Office of the Under Secretary of Defense for Intelligence, prepared statement of ......................... 50

Benowitz, Stephen C., Associate Director, Division for Human Resources

Products and Services, U.S. Office of Personnel Management, prepared

statement of ................................................................................................... 43

Davis, Chairman Tom, a Representative in Congress from the State of

Virginia, prepared statement of ................................................................... 4

Leonard, J. William, Director, Information Security Oversight Office, prepared statement of ........................................................................................ 63

Shenoy, Sudhakar V., chairman, Northern Virginia Technology Council,

prepared statement of ................................................................................... 85

Wagoner, Douglas, chairman, Intelligence and Security Task Group, Information Technology Association of America, prepared statement of ..... 120

Waxman, Hon. Henry A., a Representative in Congress from the State

of California, prepared statement of ........................................................... 8

Wilshusen, Gregory C., Acting Director, Defense Capabilities and Management, U.S. General Accounting Office, prepared statement of ........... 15

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WHAT’S THE HOLD UP? A REVIEW OF

SECURITY CLEARANCE BACKLOG AND RECIPROCITY ISSUES PLAGUING TODAY’S GOVERNMENT AND PRIVATE SECTOR WORKFORCE

THURSDAY, MAY 6, 2004

HOUSE OF REPRESENTATIVES, COMMITTEE ON GOVERNMENT REFORM, Washington, DC.

The committee met, pursuant to notice, at 10:24 a.m., in room

2154, Rayburn House Office Building, Hon. Tom Davis of Virginia

(chairman of the committee) presiding.

Present: Representatives Tom Davis of Virginia, Platts, Schrock,

Miller, Blackburn, Waxman, Maloney, Cummings, Tierney, Clay,

Watson, Van Hollen, and Norton.

Also present: Representative Moran of Virginia.

Staff present: David Marin, deputy staff director and director of

communications; Ellen Brown, legislative director and senior policy

counsel; Robert Borden, counsel and parliamentarian; John

Cuaderes, senior professional staff member; Mason Alinger, professional staff member; Teresa Austin, chief clerk; Brien Beattie, deputy clerk; Jason Chung, legislative assistant; Kristin Amerling, minority deputy chief counsel; Earley Green, minority chief clerk;

Jean Gosa, minority assistant clerk; and Andrew Su, minority professional staff member.

Chairman TOM DAVIS. Good morning. A quorum being present,

the Committee on Government Reform will come to order.

I want to welcome everybody to today’s hearing on the issues

surrounding the Federal Government’s ability to issue security

clearances in a timely manner. This hearing continues the committee’s review of personnel security clearance processing and reciprocity. I want to thank Chairman Shays and his staff for their work

on this issue.

Today we are concentrating on clearances granted to the defense

contractor community and how delays in the process cause major

inefficiencies, which eventually lead to higher costs for taxpayers

and ultimately harms national security. This hearing will also

delve into the issue of reciprocity, more specifically, how despite

Executive orders and Presidential directives mandating reciprocity,

turf battles and trust issues have plagued our Government’s agencies, resulting in delays and contributing to the overall backlog.

As a result of the terrorist attacks of September 11, 2001, the

country has increased the awareness of threats to our national seVerDate 11-MAY-2000 11:28 Oct 26, 2004 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 D:\DOCS\95869.TXT HGOVREF1 PsN: HGOVREF1
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curity. We have developed new programs, new technologies, and

even new government agencies to deal with the threats appropriately. It is not surprising, then, that the demand for security

clearances for both Government employees and industry personnel

has dramatically increased over the last few years. Unfortunately,

the Government mechanisms that investigate and adjudicate personnel security clearances have not caught up with the necessity

to process security clearance requests for industry personnel quickly and efficiently. Industry personnel face additional challenges

once they have a security clearance from one agency but then need

to work on a project on behalf of a different agency. Often agencies

do not recognize clearances granted by their sister agencies and

therefore require industry personnel to go through the security

process once again, which contributes more to the backlog.

As a result, many defense contractor companies are unable to

hire otherwise qualified employees because the security clearance

process is requiring, on average, over a year to complete, with all

signs pointing to continued increases if something does not change.

Defense contractor companies often rely on hiring, almost at a premium already cleared employees from other firms, thus increasing

contract costs, which are then passed on to the taxpayer. Ultimately, these backlogs hurt national security. When industry employees are hired to work in security programs but cannot work on

projects while they are waiting to be cleared, the contracts are not

being completed and national security is jeopardized.

The security clearance process is composed of four parts: pre-investigation, initial investigation, adjudication, and periodic reinvestigation. The General Accounting Office, Department of Defense,

Office of Personnel Management, and the private sector all agree

that there are serious problems in each of these stages. As of the

end of March 2004, DOD has identified roughly 188,000 backlog

cases affecting contractors. To put this number into proper context,

DOD has stated that the number of overdue requests for reinvestigations of clearances is unknown, and was believed to have grown

from 300,000 in 1986 to 500,000 in 2000.

DOD’s performance for completing the security clearance process

is 75 days for an initial secret clearance, 120 days for an initial top

secret, and 180 days for a reinvestigation of a top secret clearance.

Yet in fiscal year 2003, on average, it took 375 days for a security

clearance to make its way through the whole process. So let me be

blunt: 375 days for a security clearance is unacceptable, and I am

hoping that today we will all agree on a solution, or solutions, not

only to reduce the backlog but also to process clearances efficiently

and effectively from here on out.

To a certain extent, the backlog is caused by a human capital

shortage in the investigation state of the process. In an effort to

improve the security clearance issuing process, in November 2003,

Congress authorized a proposed transfer of DOD’s personnel security investigative functions and more than 1,800 investigative employees to the Office of Personnel Management [OPM]. To date,

this transfer has not occurred, and it is my understanding that an

even larger backlog is developing because this hand-off has not

been completed. I hope that by the end of the day this committee

will get some concrete answers as to why the transfer has not

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taken place, and even more importantly when it is going to occur.

I hope more than a mere interagency disagreement is to blame.

There are other ways to reduce our backlog shortage. In many

ways the clearance process is still highly dependent on an outdated

system in which paper shuffling is still king. We need to bring this

process into the 21st century. An effective, all-encompassing, electronic system which allows for seamless information collection and

extraction will go a long way in reducing backlog and, more importantly, reducing the time it takes to get a security clearance. I understand that DOD and OPM have on their plates aggressive plans

to get us away from a paper driven process to one that is electronically accessible. This last Monday, OPM announced the progress it

has made in the programs supporting the e-Clearance initiative. I

am hopeful the witnesses here today can expand on these programs

and tell this committee when we will see the seamless automation

of information gathering and sharing promised under the initiative.

Finally, the committee is aware that the lack of true reciprocity

is a major factor in the backlog. For agencies to deny a transfer

just because of turf issues is just inexcusable. The mandate from

the 1995 Executive Order 12968 that background investigations

and eligibility determinations would be mutually and reciprocally

accepted by all agencies needs to be strictly enforced, and since it

is not, perhaps legislation mandating reciprocity should be in the

offing.

Throughout this hearing we will also hear proposals for improvements, not just from the agencies but from our private sector witnesses as well. We should take heed of these suggestions, and if

they make sense we should embrace them.

Through this hearing, the committee hopes to learn about the

processes that are in place to alleviate some of the backlog the system now faces. Furthermore, what standards are in place where

reciprocity may be granted across Federal agencies? What metrics

exist to measure an agency’s compliance with reciprocity requirements? What are DOD and OPM doing to ensure that clearances

are granted in a timely manner? What measures have they

planned under the e-Government Initiatives to provide for reciprocity and a reduction of the backlog? What communication is taking

place between industry and Government to provide for a better understanding of these issues? The committee also hopes to learn

what policy guidance is needed from the administration in order to

provide for reciprocity and cohesiveness between agencies.

We have two impressive panels of witnesses before us to help us

understand the issues surrounding the backlog of security clearances. First, we are going to hear from the General Accounting Office, followed by the Office of Personnel Management, and then the

Department of Defense and the Information Security Oversight Office. We will then hear from our second panel of witnesses, representing the Northern Virginia Technology Council, and the Information Technology Association of America. I want to thank all of

our witnesses for appearing before the committee. I look forward to

their testimony.

[The prepared statement of Chairman Tom Davis follows:]

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Chairman TOM DAVIS. I ask unanimous consent that Representative Moran be allowed to sit and ask questions of the panel. And

without objection, so ordered.

I now yield to the Ranking Member, Mr. Waxman.

Mr. WAXMAN. Thank you, Mr. Chairman. I am pleased you are

holding this hearing. Like you, I am concerned about the increasing

backlog in processing security clearance requests and I want our

committee to continue to focus on this issue.

An effective security clearance system is integral to our national

security. We need a sufficient pool of individuals who can carry out

the research, investigations, and other myriad tasks necessary to

protect our citizens, and we need to know that security clearances

are up to date so we can be confident that untrustworthy individuals cannot access our Nation’s sensitive information. That is why

the tremendous backlog regarding the processing of security clearance applications and renewals is so troubling. Qualified applicants, whether they are civil servants, service members, or industry contractors, should not have to wait over a year to obtain the

necessary clearance to start their work. Yet, that is exactly where

we stand today. The estimated backlog of security clearances is

hundreds of thousands of applications, and this is simply unacceptable.

I look forward to learning more about how we can address this

problem from today’s hearing and working with you and our colleagues on this committee so that we can change the situation.

[The prepared statement of Hon. Henry A. Waxman follows:]

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Chairman TOM DAVIS. Thank you very much. Any other Members wish to make opening statements? Mr. Schrock.

Mr. SCHROCK. Mr. Chairman, I can do it now or I can wait until

the time comes, although if it takes my time I would rather do it

now.

Chairman TOM DAVIS. Go ahead.

Mr. SCHROCK. OK. Thanks, Mr. Chairman, for holding this hearing. This is a topic I hear a lot about with the folks that I represent

in the Hampton Roads area of Virginia. Let me thank the witnesses for coming here today and helping us address and improve

a program that is really quite vital to our national security. In today’s world, I am hard pressed to think of any issue more important than ensuring that our national secrets are protected and

shared with only those citizens who truly have a need to know and

who are vetted as trustworthy.

In my naval career I was frequently confronted by the issue of

security clearances and have seen many improvements in programs

over the years. I recall once upon a time when a full scope investigation required that every interview be conducted in person and

that each and every reported investigation included long narrations

of each interview. Such a report was reviewed by an adjudicator

who then made clearance recommendations based upon what was

referred to as the ‘‘whole person’’ concept. The process, understandably, was lengthy, manpower intensive, and time consuming. Today’s investigations have been significantly streamlined and reports, unless derogatory issues surface, are brief and to the point.

The investigative process has been expedited and in many cases

reference interviews can be conducted over the telephone.

The age of computers is here and so much more can be done, and

should be done, electronically. This fact, too, should be contributing

to an expedited security clearance process. It stands to reason that

the investigative process should be considerably shorter than in the

past, yet I am confounded to hear that an average investigation

can now exceed a full year.

We in Congress have a duty to ensure our Federal expenses are

appropriate and getting us the best return on our dollar. National

security should not be compromised as a function of saving money.

However, we are duty bound to oversee that the executive agencies

are wisely spending such funds and providing the taxpayer the best

return on investment. Such cases as Ames, Nicholson, and Hansen

of only a few years ago are daily reminders of the importance of

the security clearance process and we must ensure the integrity is

fully integrated into that process.

I had the occasion to speak at length with a former Defense Investigative Service agent about this matter. I had some deficits in

the program brought to my attention. Probably the greatest was

the accountability of the field agents to produce. While all sorts of

statistics relative to productivity are maintained, rarely are field

agents admonished in a meaningful way for lack of productivity,

and similarly, nor are their supervisors. While I would never encourage statistics to be the lone factor in the investigative process,

recognizing that more difficult or, as they are called, derogatory

cases take considerably more time, field agents need to be held accountable for their productivity. Continued Federal employment

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and, indeed, our national security which suffers as a result of backlog investigations should depend on it. I expect that the witnesses

would agree with me. And when my time comes I will have several

questions. Thank you, Mr. Chairman.

Chairman TOM DAVIS. Thank you very much. Any Members wish

to make statements? Mr. Moran.

Mr. MORAN. Thank you very much, Mr. Chairman, and thank

you for once again bringing to light an issue that desperately needs

to be addressed. I think we have a crisis situation here and it is

a national security issue because we have such a backlog. We have

heard from a great many new and innovative firms that have services that are undoubtedly invaluable to the Federal Government,

but they are getting benched because it is going to take up to a

year to be cleared for security reasons. We were notified last month

that DOD has a backlog of 188,000 cases for defense industry personnel. As a result, things have bogged down and it is hurting us

in the field in any number of areas.

As the chairman knows, I am on the Defense Appropriations

Subcommittee and, as DOD knows, they have not asked us for any

personnel to fix the situation. Here we are told that you wants to

contract out basically to OPM to do the investigative process. But

that is going to take more than a year before that transfer is completed. We do not know what the cost is going to be. We do not

even know that OPM is going to be able to do it more efficiently

and effectively. We have another appropriations hearing today. I

want to find out why you have not asked for the people that could

have relieved this backlog when it really has substantially affected

the ability of DOD to carry out its mission. Thank you, Mr. Chairman.

Chairman TOM DAVIS. Thank you. Any other Members wish to

make statements? Ms. Watson.

Ms. WATSON. Thank you so much, Mr. Chairman. I, too, must

join with my colleague. We are hearing that there is going to be

a request for anywhere from $25 billion to $50 billion for Iraq. I

am wondering if there is some way we can put into that appropriation money for security, not only there but here as well. As I read

the analysis in front of us, it says that defense contract companies

are unable to hire. And the contractors—and I have a question

about them which I will raise later—but we need to be sure that

we are contracting with people with integrity, people with character, and so on. It takes time. It takes money. And so I am going

to ask as you make your presentations, if there are proposals for

additional funding so that we can have the man and woman power

to be able to staff the security sites adequately.

I want to thank you, Mr. Chairman, for holding this hearing.

Now is the time, and what is the hold up? Thank you.

Chairman TOM DAVIS. Thank you. Mr. Van Hollen.

Mr. VAN HOLLEN. Thank you, Mr. Chairman. Thank you for

holding this hearing because I, too, am hearing from lots of people

in my district on this issue, and not just from the contracting community, but also people who are working in the administration. I

do think that we are seeing lots of initiatives designed to protect

our homeland security, to protect our defenses being stalled as a

result of this backlog.

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It is kind of a strange irony that the security clearance process

and the backlogs in the security clearance process would actually

be hindering our efforts to enhance the security of our country. And

again, we are hearing not just from people and companies who

have innovative ideas, but also from representatives from the U.S.

Government, Department of Defense, Department of Homeland Security, who want to engage these contractors and they are experiencing this terrible backlog with security clearances. So it seems to

me the answer, obviously, is not to shortcut the security clearance

process or to change those standards, but the obvious answer is to

put the resources that we need into getting this done.

I just want to thank the chairman and my other colleagues here

for moving ahead on this issue, because every day that the backlog

grows is a day that important initiatives to protect homeland security go unmet. Thank you.

Chairman TOM DAVIS. Thank you very much.

We now move to our first panel of witnesses. I want to thank

Gregory Wilshusen, Acting Director of Defense Capabilities and

Management, U.S. General Accounting Office; Stephen Benowitz,

the Associate Director of the Division for Human Resources Products and Services, U.S. Office of Personnel Management; Heather

Anderson, Acting Director of Security, Office of the Under Secretary of Defense for Intelligence; and J. William Leonard, Director, Information Security Oversight Office, for taking time from

their busy schedules to be here today. It is a policy of this committee that all witnesses be sworn before you testify. So if you would

rise and raise your right hands.

[Witnesses sworn.]

Chairman TOM DAVIS. Let me just identify Mr. Wilshusen from

GAO has brought a couple of assistants.

Mr. WILSHUSEN. Mark Pross and Jack Edwards.

Chairman TOM DAVIS. OK. Mark Pross and Jack Edwards have

taken the oath, too. Thank you very much.

The rules of the committee is your entire testimony is part of the

record and questions will be based on that. You have a clock of

sorts in front of you, when it is green, it is go; when it is yellow,

it means that 4 minutes are up, when it is red it means 5 minutes

are up, and if you could move to summary as you get the red light

things could move expeditiously. Again, thank you all for being

with us.

Mr. Wilshusen, we will start with you and move straight down

the table.

STATEMENTS OF GREGORY C. WILSHUSEN, ACTING DIRECTOR, DEFENSE CAPABILITIES AND MANAGEMENT, U.S. GENERAL ACCOUNTING OFFICE; STEPHEN C. BENOWITZ, ASSOCIATE DIRECTOR, DIVISION FOR HUMAN RESOURCES PRODUCTS AND SERVICES, U.S. OFFICE OF PERSONNEL MANAGEMENT; HEATHER ANDERSON, ACTING DIRECTOR OF SECURITY, OFFICE OF THE UNDER SECRETARY OF DEFENSE FOR

INTELLIGENCE; AND J. WILLIAM LEONARD, DIRECTOR, INFORMATION SECURITY OVERSIGHT OFFICE

Mr. WILSHUSEN. Thank you, Mr. Chairman and members of the

committee. I am pleased to be here today to discuss our prelimiVerDate 11-MAY-2000 11:28 Oct 26, 2004 Jkt 000000 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 D:\DOCS\95869.TXT HGOVREF1 PsN: HGOVREF1
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nary observations on the Department of Defense’s process for determining the eligibility of industry personnel for security clearances.

Individuals working for industry are taking on a significant role

in national security work for DOD and other Federal agencies. Because many of these jobs require access to classified information,

industry personnel need security clearances. As of September 30,

2003, industry workers held about one-third of the approximately

2 million DOD-issued clearances.

The timeliness of the Department’s personnel security clearance

process has historically been at issue. Our reviews, as well as those

of others, including this committee, have identified backlogs and

delays in determining clearance eligibility for service members,

Federal employees, and industry personnel. In response to your request, we reviewed DOD’s process for determining clearance eligibility for industry personnel, and a report with our recommendations is forthcoming.

Mr. Chairman, based on our preliminary observations, my main

message today is that DOD continues to experience sizable backlogs and delays in processing clearance requests for industry personnel, and that these delays can have adverse effects for national

security and contractors performing classified work.

As of March 31, 2004, the backlog for industry personnel was estimated to be roughly 188,000 cases. To provide perspective on the

size of the backlog, DOD made about 100,000 eligibility determinations for industry personnel in fiscal year 2003. DOD is also taking

longer to determine clearance eligibility. From fiscal year 2001

through 2003, the average time increased by 56 days to over 1

year, significantly exceeding the timeframes established for making

these determinations.

Delays in completing reinvestigations of industry personnel and

others who are doing classified work can increase national security

risks because the longer individuals hold clearances, the more likely they are to be working with critical information and systems. In

addition, delays in determining clearance eligibility can affect the

timeliness, quality, and cost of contractor performance on defense

contracts.

Several factors impede DOD’s ability to eliminate the backlogs

and delays. These include the large number of clearance requests,

an increase in the proportion of requests for top secret clearances,

inaccurate workload projections, and an imbalance between the investigative and adjudicative work forces and their workloads.

In addition, industry contractors cited under-utilization of reciprocity as an obstacle to timely eligibility determinations. Although

reciprocity of clearances appears to be working throughout most of

DOD, reciprocity of access to certain information and programs

within DOD and by certain agencies is sometimes problematic for

industry personnel.

DOD is considering several initiatives that might reduce the

backlogs and processing times. For examples, DOD is considering

conducting phased reinvestigations, establishing a single adjudicative facility for industry, and reevaluating investigative standards

and adjudicative guidelines.

Although DOD has several plans to address elements of the

backlog problem, it does not have an integrated, comprehensive

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management plan for eliminating the backlog, reducing delays, and

overcoming the impediments that allow such problems to recur.

Without such a comprehensive plan, DOD’s success in eliminating

the backlog may be limited.

Mr. Chairman, this concludes my opening statement and I will

be happy to answer any questions you or other members of the

committee may have.

[The prepared statement and accompanying report of Mr.

Wilshusen follow:]

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Chairman TOM DAVIS. Thank you very much.

Mr. Benowitz.

Mr. BENOWITZ. Mr. Chairman and members of the committee, I

am pleased to testify today on behalf of Office of Personnel

Mangement [OPM] Director Kay Coles James on this important

topic. Personnel background investigations play an important and

unique role in determining whether individuals are suitable for

Federal employment, and contribute to an agency’s ability to decide

whether security clearances can be granted. Taken in this light, the

background investigation process is a vital part of our national security efforts, helping ensure that employees and contractors who

work for the Federal Government possess the loyalty, experience,

training, and skills that our citizens expect and deserve and pose

no risk to national security or public trust.

OPM Director James has made the personnel background investigation process a high priority for all Federal agencies, and has

taken a leading role in ensuring that OPM staff and each of the

agencies understand and take seriously their responsibilities under

the Executive order governing security requirements for Government employement. She has worked closely with the heads of all

executive branch departments and agencies in this effort to

strengthen every link in this program and to aggressively remind

her colleagues of the vital need to keep OPM fully informed of the

adjudication decisions as prescribed by that Executive order.

OPM conducts background investigations for many Federal agencies on a reimbursable basis. Since the late 1990’s, OPM has also

performed a substantial number of background investigations for

the Department of Defense [DOD]. We receive about 1.1 million investigation requests a year from our client Federal agencies. We

witnessed a spike in fiscal year 2002, following the September 11

terrorist attacks on our Nation, when we received nearly 2 million

requests. We provide a variety of investigative services, ranging

from the basic investigation to determine if individuals are suitable

for positions that do not require security clearances, to those for positions which are among the most sensitive in Government. The

former are performed largely through our modern and sophisticated computer systems and by mail contacts with State and local

police departments, colleges, and universities to confirm education,

and former employers to check on experience. For positions requiring a higher level of clearance, we also conduct field investigations

that often reach across the country and even to other nations.

Our work flow is always dynamic. New investigation requests are

received, as current workload is completed. Our staff members and

contract field investigators and support staff team to perform the

various tasks associated with the process. Our current pending

workload is approximately 340,000 cases, representing a mix of investigation types in various stages of work, ranging from complete

case submissions just received from our client agencies to cases

where all of the investigative work has been completed and are undergoing the final quality control checks.

Taken together, the total national resources for conducting background investigations for Federal agencies are stretched as a result

of the increases we have experienced since fiscal year 2002. Simply

put, the demand for background checks currently exceeds our caVerDate 11-MAY-2000 11:28 Oct 26, 2004 Jkt 000000 PO 00000 Frm 00045 Fmt 6633 Sfmt 6633 D:\DOCS\95869.TXT HGOVREF1 PsN: HGOVREF1
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pacity to provide these services. Under Director James’ leadership,

we have issued a Request for Proposal [RFP], to increase the number of qualified contractor staff to conduct investigations. National

capacity has been an issue the Director has consistently raised,

along with strong reservations over the lack of a large base of

qualified competition in the investigative industry. We are currently analyzing the proposals and expect to make award decisions

fairly soon. Under the requirements of this RFP, the bidders must

demonstrate how they will actually increase the number of investigators available. That is, we expect them to recruit and retain

new staff to this field, and not simply raid their competitors for employees. The RFP requirement is at least one step toward developing additional trained capacity within the industry. Our estimate

is that on a Government-wide basis, we need to increase our field

investigation staff by up to 50 percent to meet current and projected demand.

As part of the Defense Authorization Act of 2004, legislation was

enacted that would permit Director James, at her discretion, to accept a transfer of function of the DOD investigative staff. She has

not yet determined whether she will accept this transfer. However,

as part of our efforts to improve the overall coordination of background investigation work in the Federal Government, in February

2004, Director James agreed to provide pending case management

and automated processing services for the Department of Defense

background investigation program. Under this agreement, Defense

Security Service [DSS] staff prioritize their incoming workloads,

and forward them to OPM, and they are scheduled on our automated case management system, the Personnel Investigation Processing System [PIPS]. We are training DSS staff at this time to use

the system and we expect that training will be completed by June

30, at which time DOD will be able to manage all of their new

cases on PIPS.

Mr. Chairman, this concludes my remarks and I would be happy

to respond to any questions the committee may have.

[The prepared statement of Mr. Benowitz follows:]

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Chairman TOM DAVIS. Thank you, Mr. Benowitz.

Ms. Anderson.

Ms. ANDERSON. Chairman Davis and members of the committee,

I appreciate the opportunity to testify today regarding the improvements the Department of Defense [DOD] is making in the personnel security process and the status of the investigations backlog at

the Defense Security Service. I have met with many industry representatives to discuss their concerns and to explain our ongoing

initiatives and have received positive feedback. I believe that the

improvement initiatives detailed in my prepared statement will resolve the fundamental problems that have plagued this program for

several years, including the issues that industry will mention

today.

First and foremost, I want to assure the committee members that

we understand the impact from the inefficiencies that have been

inherent in the past personnel security process. As you know, we

have been working to identify and solve these fundamental problems and have been actively working to implement our solutions.

Briefly, let me address the following: Reciprocity for industry, the

investigations backlog, and our key initiatives to improve the personnel security process.

On reciprocity. Department of Defense implements reciprocity as

defined in the National Industrial Security Program operating

manual that identifies security requirements for industry. DOD ensures reciprocity through established security policies and procedures that are detailed in my statement. Basically, DOD accepts

any previously granted clearance from any other Federal agency.

Our policy of issuing interim clearances on a routine basis mitigates the lengthy processing of the final investigation and adjudication. Additionally, our policies permit industry to put their employees to work immediately once their company confirms the individual’s clearance from their prior employer or agency. We understand

our industry partners are working on special access and sensitive

compartmented information programs may not currently experience the same benefit, and we are working with these communities

to improve reciprocity. Our Joint Personnel Adjudication System

will further improve this process and will virtually eliminate any

time delay, since industry will be able to obtain clearance eligibility

and access information online through this web-based system.

On the investigative backlog. Our backlogs in investigations from

prior years has been nearly eliminated. While the overall work in

process remains near 400,000 cases DOD-wide, DSS currently only

has 86,700 prior year investigations in their inventory, of which

28,600 are industry cases, and many of these are in the hands of

DSS’ private sector contractors. Through an interim arrangement

and agreement with the Office of Personnel Management [OPM],

the current fiscal year investigations are being processed using

OPM’s case management system and they are being worked by

DSS investigators. Due to the increase in demand for investigations, we expect our on-hand inventory to remain at this relatively

high level until we are able to put more resources on task. To that

end, DOD is currently working to increase the number of Federal

investigators and we will continue to augment these resources with

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private sector providers. It may well take up to 24 months to increase the capacity to that required level.

Next I will cover four initiatives to improve the process for personnel security investigations.

The first is the phased periodic reinvestigation for single scope

background investigations. It is basically a two-phased approach

where the second phase of field work is conducted only when significant potentially derogatory information is uncovered during the

first phase. The pilot test and analysis show that substantial resources will be saved with a minimal loss of adjudicatively significant information. The personnel security working group of the National Security Council is currently considering this two-phased

method for Government-wide implementation.

Our second process improvement is the Department of Defense

automated continuing evaluation system. This automated assessment tool will allow the Department to identify issues of potential

security concern. Currently in beta test, this system will be used

initially to check our cleared population between reinvestigations,

but ultimately will allow the Department to take an event-driven

managed risk approach to reinvestigation, thereby eliminating

purely periodic reinvestigations.

Third is DOD’s adoption of OPM’s Web-based personnel security

questionnaire for Government-wide use. We expect to implement eQIP within the Department as soon as possible, currently anticipated to be August 2004.

And, last, is the electronic reports for adjudication. The DOD

Personnel Security Research Center is conducting a study on our

behalf on how to develop criteria for electronic adjudication. The

backbone of this effort will be an electronic report for adjudication

that allows online review and adjudication DOD-wide. It will also

allow for automated sorting and tracking of cases based on issue

and complexity.

These initiatives will result in a personnel security process that

is easier to use, more efficient, and take less time.

We were also asked to comment on the status of the transfer. As

my colleague, Mr. Benowitz, has already mentioned, DOD stands

ready to finalize any actions related to the transfer of the PSI function to OPM, should the Director of OPM choose to accept this

function from the Department of Defense. The interim agreement

in place with OPM allows for DOD to use their case management

system and provides for agent training. The training has already

begun and will be completed by the end of June 2004.

In conclusion, we have been working diligently for several years

to meet the needs of our DOD customers, including industry. We

owe a great deal to our industry partners who keep us informed of

their concerns and upon whom we rely heavily for recommendations and feedback. Although slow in coming, I believe that significant progress has been made in improving the PSI process and that

industry will soon benefit from our key initiatives. There is much

more to accomplish, and we will continue to work with industry to

ensure we understand and address their concerns as well as keep

them informed of our progress on PSI process improvements.

Mr. Chairman, I ask for your continued patience, support, and

assistance as we proceed to implement the improvements in the

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PSI process. This concludes my testimony. I appreciate the opportunity to appear before you today and will answer any questions

you may have. Thank you.

[The prepared statement of Ms. Anderson follows:]

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Chairman TOM DAVIS. Thank you very much.

Mr. Leonard.

Mr. LEONARD. Chairman Davis, members of the committee,

thanks very much for the opportunity to be here with you this

morning. As Director of the Information Security Oversight Office,

one of my responsibilities is to oversee Government agency actions

with respect to the National Industrial Security Program [NISP].

In addition, I serve as the Chair of the National Industrial Security

Program Policy Advisory Committee [NISPPAC], which is comprised of both Government and industry representatives. The

NISPPAC advises me on all matters concerning the policies of the

NISP and serves as a forum for discussing policy issues.

The overall framework for the NISP is set forth in Executive

Order 12829. This Presidential directive recognizes the obvious imperative to ensure that classified information in the hands of industry is properly safeguarded. However, what is equally significant is

its recognition that our industrial security program must also promote the economic and technological interests of the United States.

As such, an essential element of the NISP is its acknowledgement

that redundant, overlapping, or unnecessary requirements imposed

upon industry can imperil national security as readily as can the

improper safeguarding of classified information. A common cause of

unnecessary requirements is the inability of agencies to reciprocally honor a similar action taken by another agency, such as a

personnel security investigation or a personnel security clearance

involving the same individual—a practice commonly referred to as

reciprocity.

Before the creation of the NISP, each agency had its own individual industrial security program. Each program had processes that

were unique. The NISP has helped to create an atmosphere of cooperation for both Government and industry by eliminating duplicative processes. More than 10 years after its inception it would be

hard to imagine an environment without the NISP. However, notwithstanding past successes, today’s challenges require constant attention and effort from participating agencies in order for the NISP

to achieve its full potential in promoting the economic and technological interests of our Nation. This is especially so in recognizing

industry’s critical role both in the current war efforts as well as

many of the transformational activities currently underway in

much of the Federal Government. In this regard, agencies’ inability

to accomplish actions such as clearing defenses contractor employees in a prompt manner, or to honor reciprocally a similar action

by another Government agency has a significant and deleterious

impact upon cleared industry’s capability to support their Government customers.

Oftentimes, agencies cite fear of accepting an unknown potential

security risk as a basis for not embracing reciprocity. I know of no

empirical basis to support a claim that reciprocity reduces security

or increases risk. Instead, I contend that the failure to achieve full

reciprocity can actually increase the overall security risk for the

Nation. Lack of reciprocity needlessly distracts limited resources

that can be devoted to the current unacceptable delays in processing new, initial clearance requests, as well as the backlog periodic

reinvestigations.

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In addition, reluctance on the part of Government agencies to

forego some agency prerogatives and fully embrace all the tenets

of the NISP, especially reciprocity, hampers industry’s ability to recruit and retain the best and the brightest in their disciplines as

well as its capability to rapidly deploy and field the latest technology when performing on classified contracts. As a result, contractors are hampered in putting forth the best conceivable efforts

in both cost and capability in supporting their Government customers’ needs. The Government effectively ends up with less for

more.

In order to assist in reducing clearance delays in industry, my

office, through the NISPPAC, has served as a forum for industry

to provide their concerns and recommendations to the Government’s current working groups addressing personnel security clearances. Even more specifically, we have recently initiated a renewed

effort to have NISPPAC issue and publicize a clear articulation of

what reciprocity is, and is not, with enough specificity and substance that industry can hold Government agencies accountable for

their actions in this area. I am pleased to report that we have succeeded in garnering senior level support within NISP Government

agencies for these efforts and I anticipate formal promulgation

within a matter of weeks. This declaration is not a silver bullet.

However, it should allow contractors who experience reluctance on

the part of a Government program or contract office to honor reciprocally a clearance action by another Government agency to seek

immediate redress.

Again, thank you for inviting me here today, Mr. Chairman. I

would be happy to answer any questions.

[The prepared statement of Mr. Leonard follows:]

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Chairman TOM DAVIS. Thank you very much.

In 1981, GAO issued a report citing the national security threat

posed by the backlog as well as the contract cost overruns caused

by the delay, and they estimated at that point it was about $1 billion a year. Since that time my son has been born, he is graduating

from college this year, and the Federal Government is in the same

boat, in fact, the backlog has increased during that time. Let me

start with you, Ms. Anderson, why is the Federal Government in

relatively the same boat with the same issues 23 years later? I

know you were not old enough to work for the Government 23

years ago, so you were not part of it then but you are there now.

[Laughter.]

Ms. ANDERSON. Thank you, sir. The Department of Defense has

taken a really hard look, certainly within our purview, at the end

process. One of the fundamental problems with security clearances,

and it really was highlighted after September 11, is that you need

people immediately. We are in the business of being agile and to

have a defined process that requires you to go through a lengthy

vetting is inherently mismatched with the immediate need. This is

compounded by the belief, I believe historically, that this year was

always going to be the peak year.

One of the problems is we have looked at this series of requirements year over year. One of the things we are finally going to bite

the bullet on is to actually verify the requirement as it is submitted. It is the one place where we will have the opportunity to actually get conformed data. We are going to introduce both macro economic models and bottom-up models to actually try to get the projection correct.

Chairman TOM DAVIS. So you said you are afraid to staff up because you may not need the people in the out years?

Ms. ANDERSON. If you go back into a lot of the responses historically, there has been some of that indicated. One of the reasons

that we believe that a partnership between Federal investigators

and contractor augmentation is actually to allow more flexibility

with that number. But who is kidding who? The number of clearances has not gone down in quite a while and we seem to move

more and more in that direction.

Chairman TOM DAVIS. Well, understand this, somebody with a

security clearance, we are paying them a lot more than taxpayers

ought to be paying because there are so few people that are eligible

to do it. We cannot get work done. Taxpayers are paying more

money. DOD is going to come up here for another $25 billion in a

supplemental this year. It was $1 billion in 1981, it is several billion dollars it is costing taxpayers today. My opinion is that nobody

is really paying attention. Everybody is shuffling things back and

forth. This is a huge problem. It is costing us billions of dollars and

we are sitting here with OPM and pointing back and forth. Congress, we can pass a very strong bill, we take it away from both

of you. I am not sure how we handle this, but it is costing a lot

of money at this point and it is jeopardizing security. I understand

how we got there. What are we going to do about it?

Ms. ANDERSON. Interestingly enough, as I alluded to in my

verbal statement and in my written testimony, we are in the process of putting more investigators on the street. The strategic partVerDate 11-MAY-2000 11:28 Oct 26, 2004 Jkt 000000 PO 00000 Frm 00074 Fmt 6633 Sfmt 6633 D:\DOCS\95869.TXT HGOVREF1 PsN: HGOVREF1
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nership between OPM and DOD, their Request for Proposal that is

being evaluated now, the DSS PSI program has reengineered their

organizational structure and their business processes to allow more

of their people to be on the street doing investigations. We recognize that is not enough. Also understand that part of the inherent

lag is it takes a good 6 months to train an investigator. So while

we are recruiting these people now, they will not be up to full productivity for probably at least 6 months.

Chairman TOM DAVIS. We have given additional Civil Service authority to the Department of Defense. We passed this last year. A

tough vote for a lot of us. OK? You can bring people who used to

do this back into Government. You can do these kind of things and

you do not have to retrain them.

Ms. ANDERSON. Correct, sir. We believe that organizationally,

and I will defer to my colleagues from OPM to confirm this, we believe that we have tapped out the number of people who were prior

investigators coming back to do this work.

Chairman TOM DAVIS. Have you brought prior investigators back

in? Do you know how many?

Ms. ANDERSON. I do not have the facts with me.

Chairman TOM DAVIS. Can you get that to us?

Ms. ANDERSON. Yes. But that is primarily what the contractor investigators, that is what their resource pool is.

Chairman TOM DAVIS. OK. From the testimony you would think

industry personnel were able to get the clearances they need quickly. You said contractor companies can apply for a clearance up to

180 days in advance of an employee starting work, they can obtain

an interim secret clearance within 3 to 5 days of applying for a

clearance, they can nearly automatically transfer a clearance when

a worker moves from one job to another. But we continue to receive

complaints, the GAO has confirmed it, Mr. Leonard says the same

thing, that the process is not working. Now you recognize the process is broken?

Ms. ANDERSON. Yes, sir.

Chairman TOM DAVIS. How about you, Mr. Benowitz, do you recognize the process is broken, or is everything just fine over there?

Mr. BENOWITZ. Mr. Chairman, we believe the process is one that

needs substantial improvement. Director James is as concerned

with national security as DOD, and the contractors who will testify

later today. My colleague, Ms. Anderson, has spoken of some of the

steps we are taking. My view of the RFP that OPM has under evaluation right now is that we will begin to see substantial increases

in the number of contract investigators on the streets trained and

doing the work about 6 months after the contracts are awarded.

Our intent there, if possible, is to make multiple awards to multiple firms so that we can increase that contractor base.

Chairman TOM DAVIS. Let me just make one point before I yield.

There is an article yesterday in Government Executive.Com that

basically talks about you are holding off on the plan to absorb the

unit of DOD. This is a move that some experts had thought might

speed up the backlog security clearance process. You had planned

last year to take over Defense Security Services, now an OPM official said the agency decided not to bring the unit under its umVerDate 11-MAY-2000 11:28 Oct 26, 2004 Jkt 000000 PO 00000 Frm 00075 Fmt 6633 Sfmt 6633 D:\DOCS\95869.TXT HGOVREF1 PsN: HGOVREF1
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brella, that the DSS business practices were not up to the standard

we had hoped for.

You have discussed the transfer of the investigative functions

from DOD to OPM. But it appears that DOD views this transfer

as a complete divestiture and OPM views it more as a partnership.

I guess the question is, which one is it? In addition, as I said, yesterday OPM announced it would not accept the transfer this year.

Why was this decision made? And does DOD have a backup plan

for dealing with the backlog?

Mr. BENOWITZ. Mr. Chairman, when the Director of OPM and

the Secretary of Defense agreed to explore such a transfer of function, which began before the legislation was enacted, we began

sharing information with each other. We determined subsequent to

that that this should be staged. The first stage, as I indicated

today, was that we have given DOD access to our online case management system, PIPS, that their staff will be fully trained by the

end of June, and they will be managing all of their new caseload

on this system. We began this in advance of a formal agreement

that was signed in February of this year. We will be conducting

evaluations of the productivity of the DSS staff in June and September when they will have had an opportunity to perform their

work under PIPS, and we are——

Chairman TOM DAVIS. But everybody is still studying everything.

Is that what I take away from this, that we are still studying this

and it is going to take a few more months?

Mr. BENOWITZ. I expect that we will have information available

for our final evaluation by the end of the fiscal year.

Chairman TOM DAVIS. So that is October. You are still studying

it and hope to get something.

Ms. Anderson, can you give us any encouragement here? Again,

just to go back to the report, in 1981 this was identified in the report, and we hope to get some information by the end of the fiscal

year and maybe get the top honchos together. Can you give me any

encouragement here?

Ms. ANDERSON. Sir, in reference to your earlier question about

DOD’s plan while we discuss the transfer function, the Department

of Defense is processing its current caseload. A significant proportion of that is already on OPM’s system and is being worked by the

DSS investigators. OPM is processing the military accessions and

the civil populations, as they have the civilians for a number of

years now. The industry cases, in particular, are being worked by

the DSS agents off of the OPM system. We can work in this configuration for a length of time, an indeterminant length of time

under the current agreement with OPM. So the cases are being

worked. We are tightening down as far as trying to improve the efficiencies, improve the reporting, improve the insight into the process while we look at and reexamine all of our policies and procedures to make sure that we are the most efficient organization we

can be.

Chairman TOM DAVIS. Do we have a chart blown up on this? Let

me ask our representative from GAO, what do you think of all of

this? I have a chart I want to put up here that talks about all the

rigmarole we are going through to get a clearance now in this sysVerDate 11-MAY-2000 11:28 Oct 26, 2004 Jkt 000000 PO 00000 Frm 00076 Fmt 6633 Sfmt 6633 D:\DOCS\95869.TXT HGOVREF1 PsN: HGOVREF1
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tem. We are just going to have more of a backlog if we keep going.

What do you think, Mr. Wilshusen?

Mr. WILSHUSEN. Looks like a rather elaborate chart. [Laughter.]

Chairman TOM DAVIS. This chart is actually simplified from

what really happens.

Mr. WILSHUSEN. What this chart appears to show, Mr. Chairman, is that there are a number of agencies involved in determining what the requirements for clearances are and that they appear

to be going over to OPM and DSS in terms of having the investigations performed. It looks as though that as part of that, the chart

shows some of the activities that both OPM and DSS have to conduct and the volume of pages of information they review.

Chairman TOM DAVIS. They are the bottlenecks though basically,

are they not?

Mr. WILSHUSEN. There are a few bottlenecks, yes, sir. And the

chart shows each of the three processes of determining the requirements, the investigation stage as well as adjudication stage.

Chairman TOM DAVIS. Do you hear any encouragement in what

we are hearing today about any immediate relief? Or do we just

say to the contractors and taxpayers you are just going to have to

pay a little more because the people that we put in these positions

are still studying this?

Mr. WILSHUSEN. I think in terms of some of the initiatives that

DOD is considering, some of them do hold promise. One of the recommendations that we may be making as part of our draft report

is that they continue to look at those initiatives to see if they are

feasible and implementable.

Chairman TOM DAVIS. That is long term. What do you do short

term to bring this thing down for the guy who has been waiting

a year for a clearance and still does not have a job, and the task

needs to be performed for the country?

Mr. WILSHUSEN. Well, one of the things that DOD has done is

issued interim clearances. But there are some problems in terms

of interim clearances in that often they do not allow access to certain types of information or for certain programs. In addition, there

is also an inherent security risk in issuing an interim clearance,

because you are allowing an individual access to classified information without going the full range of investigation over that individual which could yield some derogatory information.

Chairman TOM DAVIS. Essentially, this is manpower-driven, is it

not?

Mr. WILSHUSEN. No question about it.

Chairman TOM DAVIS. And we do not have enough people on it.

Mr. WILSHUSEN. The underlying reason for many of these things

and the No. 1 challenge is for them to match the size of their adjudicative and investigative work forces with their workload.

Chairman TOM DAVIS. And is it not cheaper to have people at the

front end getting these clearances done than paying more at the

back end because we do not have enough people to do it and so we

overpay? Does that make sense?

Mr. WILSHUSEN. Well, it does indeed. It is very important to

make sure that process is done in a timely and effective manner.

Chairman TOM DAVIS. Yes. It is a people problem. I do not think

it is a budget issue.

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Ms. Watson, your questions, then we will get Mr. Schrock, and

then Mr. Moran.

Ms. WATSON. I want to move away from the backlog and into the

responsibilities and accountability of the Department of Defense

Security Services. I will address my questions to Ms. Heather Anderson, Acting Deputy Director. Once you are able to complete the

process, background check and certifying, clearing this person, who

has the oversight? Who is accountable? Who then holds the control

of this employee after this employee goes into the investigative

mode? In reading from your statement, you are suggesting that the

responsibility for conducting leads overseas will be with the Department of Security Services. Is that correct?

Ms. ANDERSON. Currently, the overseas leads are executed by the

military services. One of the things that we have taken an initiative on is to augment the military services, who are rather busy

around the globe, especially in certain theaters, and put Defense

Security Service agents who are trained investigators to run those

leads in their place in order to reduce the number of longstanding

cases and in order to process cases in general.

Ms. WATSON. You say in your statement, ‘‘To compensate, during

March 2004, DSS began sending investigative personnel to Europe

and to the Far East on an intermittent basis to conduct overseas

leads.’’ And that DSS is now developing a long-term plan to address the conduct of overseas investigations.

Ms. ANDERSON. What it is, as part of our national standards

there are certain leads, like neighborhood checks, subject interviews, that are run. In cases in particular where the subject is

overseas, we want an investigator to be there to do the subject

interview. Historically, those leads have been run by the military

services and then the results of those leads written up and returned to Defense Security Service for inclusion in the reports for

adjudication. What we are considering is whether or not it would

be more efficient and more practical to have either a series of travel assignments overseas or a standing group of investigators overseas to service those leads. It is not so much——

Ms. WATSON. If I might interrupt you for a minute. You are saying that you have already done this, you have started.

Ms. ANDERSON. Yes.

Ms. WATSON. That, at least, is what your written statement says.

Ms. ANDERSON. Right. They were authorized to do a pilot to look

at the feasibility and utility of it. The initial results from that pilot

were very encouraging and the services welcome the opportunity

for DSS to run those leads. So now we are working through how

we implement it and substantiate it.

Ms. WATSON. You say in your written statement, ‘‘DOD is also

working with the State Department to update and refine the scope

and sources of overseas investigations.’’ Who is responsible for

those investigators, interrogators, the security forces that you have

sent overseas to investigate leads?

Ms. ANDERSON. In the case where we are talking about the investigators from Defense Security Service, they are under the cognizance of the Director of Defense Security Service. We have not

sent them into areas where there is conflict. The two pilot programs where there was the largest body of leads outstanding were

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in the Pacific theater, specifically Korea and Japan, and so we have

teams there, and also in the European theater, particularly in Germany and the U.K.

Ms. WATSON. All right. Let me get directly to where I am going.

I see that you are involved with intelligence. Would your department, would you with the people under you have anything to do

with the interrogators that would have been sent to Iraq as contract employees to do the investigation, interrogations, questioning,

etc?

Ms. ANDERSON. Under the Under Secretary of Defense for Intelligence, we do have oversight for a large piece of the service intelligence organizations. More specifically to your question with regard to contractor investigators, the investigations on those personnel, the background investigations on those personnel may very

well have been done by Defense Security Service.

Ms. WATSON. By your unit?

Ms. ANDERSON. But not the unit that was overseas necessarily.

For the most part, they would have been United States.

Ms. WATSON. Well who would have done that? Who do they answer to? Who oversees them? Who has a responsibility for them?

I am trying to follow a trail. We have a very elaborate chart here,

very graphically done, artistically done, but I am trying to follow

a trail and I cannot get there from here.

Ms. ANDERSON. I will start from the beginning. If, in this case,

the Army were going to let a contract for services with a contractor

provider, they would let the contract, depending on what the clearance level required, so let us assume it is secret, they are going to

write the contract with security requirements in it. The contractor

then, as part of the execution at the stand-up of that contract, will

put in their employees for background investigations. Those background investigations would be sponsored under this because of the

NISPAM, the Industrial Security program, they will be processed

by DSS, they are funded for centrally because there is a number

of benefits to that, the results of an investigation would go to the

Defense Industrial Security Clearance Office for adjudication. If

there were derogatory issues that needed to be determined from a

statement of reasons or from an eligibility, it may very well go to

the Defense Office of Hearings and Appeals. They will render a determination of eligibility. That is then returned to the contractor

who is told, if it is favorable, that they may access the person to

secret information. The oversight of the execution of a contract belongs to the entity that let the contract.

Ms. WATSON. And that is?

Ms. ANDERSON. In this case, you are talking about the Army. We

have contracts for Navy. I have people on my staff where they are

contractor support, we sponsor them and we are responsible for the

oversight. The security manager from the company also has some

responsibility to make sure that person is adequately aware of

their responsibilities and duties as a cleared person. Does that help

answer your question? Probably not from the look.

Ms. WATSON. No.

Chairman TOM DAVIS. OK. Thank you. Followup?

Ms. WATSON. Can they give orders to our troops, your

contractees?

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Ms. ANDERSON. Not normally, ma’am.

Ms. WATSON. Thank you.

Chairman TOM DAVIS. OK. Mr. Schrock.

Mr. SCHROCK. Mr. Chairman, I am so confused at this point I am

not sure what I should ask. I was doing great until I got this thing.

[Laughter.]

I do not know if anybody here created this, but I sure would like

to get into that person’s mind.

Chairman TOM DAVIS. I think it came from DOD. Ms. Anderson,

not to point fingers here, but you are the DOD rep.

Mr. SCHROCK. I do not have a clue what this means. All these

nice little lightening strikes and all that, there are going to be

lightening strikes all right, but it is not going to be on this chart.

This is nonsense, really. I heard Mr. Wilshusen say, as I understood him, there is no plan to get rid of the backlog. I heard Mr.

Benowitz say that there is an RFP out there and if it gets addressed or awarded, it is going to take 6 months to get it in place.

And I heard Ms. Anderson say there are 180,000 folks in DOD

backlogged, 24 months to increase capacity, and for us to be patient

and that we have to be agile. Folks, we are not agile, we are comatose right now. I do not know what the answer is to this. Chairman

Davis is going to have a grandson graduating from college before

this gets done. [Laughter.]

I know it sounds funny, but this is ridiculous. At some point we

have to get this thing resolved. I am wondering to what extent are

field agents held responsible, those in the field, to get productivity

done. And study, study, study, gosh, that is all we do. The pillars

of this Government stand on studies. I feel certain we have studied

this thing to death. At what point do we knock off the studies and

start putting pen to paper and get this work done. Who is being

held accountable for this? And how many agencies are doing it? Mr.

Moran, Mr. Davis, and I have thousands and thousands of constituents who are negatively impacted by the inactivity in all this stuff.

At some point the rubber has to meet the road. How do we get this

resolved not 6 months, not 24 months, but tomorrow. How do we

get this resolved? The silence is deafening.

Chairman TOM DAVIS. GAO, what would you recommend?

Mr. SCHROCK. Yes, what do you recommend?

Chairman TOM DAVIS. The GAO is the neutral party here.

Mr. WILSHUSEN. Indeed, there are a number of actions that DOD

can do to address this issue. First and foremost, as we recommended in our February report, they need to match the size of

their investigative and adjudicative work forces with their respective workloads. And closely attendant to that is developing the capability and improving their models for projecting what their future requirements are going to be. Until you know what your requirements are—in fact, at present, DOD has not been able to even

determine what their full backlog is DOD-wide, not just industry

contractors but DOD-wide, what their full backlog is. That is definitely a first step.

Chairman TOM DAVIS. Would the gentleman yield. Let me just

ask, statutorily, what could we do? We have a defense authorization bill coming up before the House. We are obviously involved in

that from this committee’s perspective. What could you do very

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quickly to put some mandates on this and make it move over the

short term? If you want, we will let you get back to us.

Mr. WILSHUSEN. Yes, Mr. Chairman, we will do so.

Chairman TOM DAVIS. But I think we are as frustrated as taxpayers are, as contractors are, as people who are awaiting clearances are in terms of how we get out of this.

Mr. SCHROCK. Mr. Chairman, may I?

Chairman TOM DAVIS. It is your time.

Mr. SCHROCK. May I give you an example of how ludicrous this

is. I several months ago hired a young man who had been in the

nuclear navy, probably had the highest clearance any human being

on the face of the Earth could have, but he left the Navy 1 day and

came to work with me the next day and, suddenly, his clearance

was not any good. Now what happened to him overnight to make

him a risk? And he had to go through this whole process again.

That is nonsense.

Mr. WILSHUSEN. Yes, sir, that is one of the problems.

Mr. SCHROCK. Why is that the case? Can DOD answer why that

is the case?

Ms. ANDERSON. Sir, your background investigations and your adjudications are not done by the Department of Defense. Within the

Department of Defense, we are taking the steps to make sure that

does not happen. Under our Joint Personnel Adjudication system,

we are specifically making sure that the entities that are the gaining and losing entities have flexibility, the gaining entity in particular, whether that is a contractor, a military service, any organization within our affiliation structure, that as soon as they have an

obligation document, so in your case, when your employee agreed

that he was going to come to work for you, which is generally just

by tradition sometimes a few weeks if not a month in advance, at

that point your security manager could actually identify the association, at that point you are a part owner, as it were, in that process. So if an investigation were ongoing, or if you needed to access

that person, we make sure that it does not fall through the cracks.

We are devolving that responsibility down to the lowest level because they are generally the ones that know what is going on. That

is exactly why we have taken that step. But with regard to your

specific example, I am afraid I do not have a good answer.

Mr. LEONARD. If I could add, Congressman.

Mr. SCHROCK. Please, Mr. Leonard.

Mr. LEONARD. You are absolutely right, it is ludicrous. And it has

been the policy for over 10 years now that situation should not

occur. There is a long history in terms of agency prerogatives and

this and that. One of the things that I am somewhat optimistic on,

and I temper that optimism with a lot of reality, but I am optimistic in terms of I personally within the past several months have

visited with all the senior security officials of the NIST signatories,

at least dealing with industry, and everyone recognizes that reciprocity is just plain good Government and makes good sense. But

today, it makes even better sense when there are so many perturbations and strains on a personnel security process. I got a commitment from all four senior security officials to convene a working

group, which we have done within the past month.

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That working group has offered up a declaration, a specific articulation of exactly what reciprocity is, that I anticipate that we

shall be able to promulgate hopefully within a matter of weeks.

This will be publicly disseminated. All of industry will get it. They

will know exactly what the standards are. They will know precisely

when a Government agency is failing to comply with it. And part

and parcel of this will be a single point of contact with every agency in terms of when a program office fails to comply who do I go

to in DOD, CIA, DOE, or whatever, with a copy to my office and

we will followup on that. Now this is not a silver bullet. It is not

going to address all the issues. But at least this will get us away

from wasting resources on people we have already determined to

be trustworthy and reliable.

Mr. SCHROCK. I agree. Mr. Chairman, just let me make one more

comment. It is kind of ironic, but everybody that sits from that

desk back, the minute we get sworn in we can get any briefing we

want, no matter how good or bad we have been before we got here.

So there is a fallacy in the thing right now. Maybe some of us

should not have clearances.

Mr. LEONARD. Actually, the vetting process I think you went

through, Congressman, is a whole lot more than we go through.

Mr. SCHROCK. Well, I was a career naval officer, so I went

through that process. But there are a lot of people here that I look

at and say, Hmm, should they have it. [Laughter.]

Chairman TOM DAVIS. I do not think we need to go there.

[Laughter.]

Mr. SCHROCK. But that shows how out of whack this whole system is.

Chairman TOM DAVIS. Let me also just tail on. What if we codified the Executive order for reciprocity, would that help?

Mr. WILSHUSEN. That is certainly a valid option to try. One of

the things that have not been able to quantify is the extent to

which these reciprocity issues exist. But, certainly, that would be

one option.

Chairman TOM DAVIS. We are going to hear on the next panel

some issues. I am going to recognize Mr. Moran now, who is on the

Defense Appropriations Committee, and that may be something

that we would want to work on, Jim. We could get an authorization, you could put some language there that would help in some

of these areas. I am going to recognize my friend from Virginia who

has been very active on this issue as well. Mr. Moran.

Mr. MORAN. Thank you very much, Mr. Chairman. I know that

you and apparently Ed as well, our district offices are inundated

with these security issues. My district office director, and I have to

believe it is exactly the same in your district office and probably

with Ed’s in the Tidewater area, said there are hundreds of people.

And we are only taking the most egregious, the ones that do not

make any sense. If there is any rationality to the process, we tell

them you have just got to trust the system and at some point you

are going to get the clearance. But we are only taking the egregious

ones that do not make sense and we are overwhelmed with them.

There is something wrong. Something has been wrong for quite a

while here.

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You have been giving us numbers and promises, and when I say

us I am talking about the Congress. Chairman Davis is only holding this hearing because it has gone way past the point of any reasonable expectation of patience and deferring it to the executive

branch. But DOD’s performance standard, and there has been a lot

of emphasis, sitting on Defense Appropriations, everybody that

comes up talks about all the performance standards they are implementing and they are shaping everything up at DOD, and we have

managers in there and we are going to do it right, and so on. So

the DOD performance standard is 75 days for the initial secret

clearance, 120 days for an initial top secret, and 180 days for reinvestigation of top secret. I wonder why it has to be 6 months for

a reinvestigation. But the timeframe is now 375 days in fiscal year

2003, more twice than what the performance standard is. And this

has been going on for years.

One of the problems is that there was an Executive order that

was issued in 1995 that mandated that there be mutually and reciprocally accepted by all agencies. And yet, for some reason, this

administration decided in April 2001 to disband that Executive

order and to issue a brand new one. It was supposed to set up a

different organization that was going to streamline this and it did

just the opposite. And we now have a national security issue. We

have a war going on and you are telling us to be patient—that is

the word you used, Ms. Anderson—be patient, we are working it

out, maybe next year we will transfer it over to OPM but we are

still studying whether they can do the job or not. That is not acceptable. When you have almost 200,000 personnel that need to get

to work serving this country and they cannot get their security

clearance, it really is inexcusable. If you were on the other side of

the aisle and you were looking at this, you would say somebody is

not doing their job.

You have known this was the problem. As Chairman Davis has

said, this was a report in 1981. But we have a war now, we have

two wars going on and we cannot get the people we need out in

the field. You come up here and tell us, well, we are working on

it, be patient, we are studying it. The answer should be, ‘‘No excuses, sir.’’ And what is most frustrating, you have never asked for

any people. The Secretary never identified this, did not want anymore people provided to get the job done. Why? Why did you not

ask for any people to get the job done? You know that we have an

almost 200,000 backlog and you do not want any more people to

do it. Do you want the backlog? Is there something we are missing

here? Is there some explanation we are not figuring out, that you

do not want these people cleared? Ms. Anderson, what?

Ms. ANDERSON. Sir, certainly, we want the people cleared. We

will do nearly a million investigations this year. The request for additional personnel at Defense Security Service has been a longstanding debate within the Department of Defense. We believe that

the decision to use more contractor resources will allow us the

same degree of quality, better flexibility, and improved ability to

increase the capacity.

Mr. MORAN. It sounds like I am reading something from a brochure, frankly. We believe that using more contractor personnel,

why has it not happened? If you think that contract personnel are

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going to fix it, then why did you not just fix it? If you are not asking for more people or Federal employees because you are going to

contract it out, then why is it not contracted out? Why is it not getting done?

Ms. ANDERSON. DSS does have three contracts with contractor

providers that have been immeasurably useful in helping reduce

the numbers outstanding.

Mr. MORAN. Immeasurably useful.

Chairman TOM DAVIS. If the gentleman would yield?

Mr. MORAN. Yes, I would be happy to yield.

Chairman TOM DAVIS. GAO has identified this as a manpower

problem to a great extent. So if you are not going to staff up because you are concerned about the ebb and flow, which you testified, and the highs and the lows, then over the short term you can

contract this out. And it is unlimited. It would seem to me this is

where, over a short term, you fire a contractor like that. But, clearly, you need more people for what is going on. And we do not have

them. And what I am telling you, what Mr. Moran is telling you,

and Mr. Schrock is telling you, we could get a lot of people in here

to say let us get on with it. Let us not study it and get back by

the end of the fiscal year, and then we can try maybe to hire somebody to put in a computer system. That is not going to cut it.

This backlog is huge and it is costing us more money everyday

for people that we should not have to pay. You are taking money,

my mother worked two jobs, she was a waitress at night and took

care of other people’s kids during the day, and you are taking

money out of people like her’s paycheck and overpaying,

misspending it because you will not hire the people up front to do

it. It is wrong. We want you to address it. This is serious.

Mr. MORAN. I could not have expressed it as well as you did, Mr.

Chairman. Do you think for a moment that Defense Appropriations

Committee, if you told us we need some staff or we need more

money to contract out, you would not have gotten it? It is a $421

billion request. We will give you anything you need to get it done,

and yet you do not want it. It is inexplicable and it is inexcusable.

I do not know whether you are going to take this back to the Secretary, but somebody needs to write a note to the Secretary that

we are going to present this stuff to the staff, and the Secretary

is going to be pretty upset when he finds out that the Government

Reform Committee had this hearing, Defense Appropriations wants

to know what is going on, and he has never asked for anything

from us to fix the situation. The situation is broken. The word is

‘‘broken.’’ It is not working and you have to fix it. And it is going

to take more than sweet talk and nodding. It has to be done now.

We have soldiers out in the field. They did not wait for a year.

They were sent out there, some of them without adequate equipment, and we have contractors who could help them a whole heck

of a lot with the technology we have available and they cannot go

out because they have to wait more than a year for a security

clearance. They have to go do other things. Most people that we

really need are not going to wait around for a year till they get

their security clearance. Thanks, Mr. Chairman.

Chairman TOM DAVIS. Thank you. Let me just make a comment.

I remember the District of Columbia a few years ago was running

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short on police. So to do their background checks, they just let everybody in and a couple of years later we had a huge scandal when

a lot of these people who did not go through the clearances ended

up stealing money and everything. So that is not the answer. The

answer is we have to go through this. It does take some time. But

we need personnel to do it. Get back to us, tell us what you need.

And these decisions are made at a higher level. I do not mean to

beat up on you. You drew the short straw today and you are here.

[Laughter.]

We understand it and we appreciate your being here. And legislative action is coming. But this is costing us a lot of money and

we are not as secure a country because of this, too. So, basically,

the end result is we are getting less security and it is costing us

more. So we need to address it.

And to OPM, this has to be given a high priority. This cannot

be whenever. Everybody has a lot of priorities. We want to move

this to the top of the stack because long term we cannot afford it.

Since 1981 it has been a problem. But now fighting a war on terror, it is very serious and the repercussions could be strong. And

I do not want to get into what Ms. Watson got into about contracting and Iraq; I know where she was trying to go with this. Believe

me, something goes wrong on this, it is going to come back to the

clearances being backed up and everything else and there are serious ramifications. And from a cost-avoidance point of view, you

ought to be up here at least asking for the money, and then if you

do not get it, you are on record.

So thank you for being here. We appreciate it.

Mrs. Maloney, do you want to ask any questions? I will just yield

to my friend from Virginia first, and then we will get to you, Mrs.

Maloney.

Mr. MORAN. Just 30 seconds. D.C. is an excellent analogy. For

years they went without hiring people, all kinds of bureaucracy,

the few people there were overpaying them, they were sitting behind a desk. Reach a crisis situation and then we over-react and

we dumped all these people without adequate training. And that

could be what happens here. We are saying do the security clearances but figure out how to do them responsibly and expeditiously.

Thank you, Mr. Chairman.

Chairman TOM DAVIS. The gentlelady from Manhattan, Mrs.

Maloney.

Mrs. MALONEY. I thank the chairman for yielding. I would like

to be associated really with the comments of Mr. Moran and Mr.

Davis. It could not be stated more clearly. This is a scandal. You

have to get on this and put the proper people, hire more people.

Just get the job done.

I would like to raise one question of security clearance that deals

specifically with Iraq. When I was there with the chairman on two

oversight visits, some of the generals and top people really requested more people who spoke the language that they could trust.

They felt they sometimes were, and there were even allegations of

spies in some of their units and so forth, relying on people they did

not really know to be interpreters. Maybe it has gotten better. But

very few people really spoke the language. We have two, State Department and DOD, schools. I want to know how many people are

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we training to speak the language? And are we getting people over

there? That was a specific request to our delegation, to get more

people over there who spoke the language who they would trust to

interpret appropriately and would trust with inside information on

where they are moving their vehicles and so forth. So, specifically,

security clearance and training for language-speaking officials for

Iraq and Afghanistan, where does that stand?

Ms. ANDERSON. Ma’am, we understand the importance of having

trusted, vetted individuals in country to serve as the linguists. I

know that the Defense Intelligence Agency has put the vetting of

those individuals at the top of their list. We know that the services

and agencies are recruiting people within their own ranks. I do not

have specific numbers with me, but we are happy to get those over

here.

Mrs. MALONEY. But my question—they said they are trying to

vet as best as they can, but it was a real weakness in our operation

over there and that they needed more people speaking the language. And they requested us to go back and get more people

trained out of America or in Qatar or some place that they could

get over there. And I just wonder, are our language schools focusing on that? How many people are we training in the language

now? They obviously are going to have security clearance coming

from our country. So if you could get back to us maybe on how we

are training in our country or in Qatar or wherever to get people

over there that they can trust and they can work with. Thank you.

Chairman TOM DAVIS. Thank you. Anyone want to add anything

at this point? You want to get out of here, don’t you? [Laughter.]

Thank you all for being with us.

We will take about a 2-minute recess as we get our next panel

ready.

For our second panel we have a very distinguished panel. We

have Sudhakar V. Shenoy, chairman of the Northern Virginia

Technology Council, a graduate of the Indian Institute of Technology. We have Bobbie Kilberg, president of the Northern Virginia

Technology Council. And Bobbie, I understand that Gary Nakamoto

is going to be sworn in as well. If we have any tough questions,

we can go to Gary, our go-to guy. And also with us is Douglas Wagoner, the chairman of the Intelligence and Security Task Group of

the Information Technology Association of America. You all have

heard the previous testimony. I almost wish that I could have put

you first so that they could, instead of no problem, we are working

on it, they could understand the seriousness of this. I know Mr.

Moran is going to be back, Members are going to be back. We may

have a vote in between, but I want to get the testimony here on

the record as quickly as we can. So I need to swear you in. Mr.

Nakamoto, you are there as well.

[Witnesses sworn.]

Chairman TOM DAVIS. I think you know the rules on the lights.

Mr. Shenoy, we will start with you. Thank you very much for

being here and for coming forward. I know you are speaking for a

lot of businesses, not just in Northern Virginia but all across the

country, that are experiencing these difficulties.

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STATEMENTS OF SUDHAKAR V. SHENOY, CHAIRMAN, NORTHERN VIRGINIA TECHNOLOGY COUNCIL; BOBBIE G. KILBERG,

PRESIDENT, NORTHERN VIRGINIA TECHNOLOGY COUNCIL,

ACCOMPANIED BY GARY NAKAMOTO, NVTC; AND DOUGLAS

WAGONER, CHAIRMAN, INTELLIGENCE AND SECURITY TASK

GROUP, INFORMATION TECHNOLOGY ASSOCIATION OF

AMERICA

Mr. SHENOY. Thank you, Mr. Chairman. Good morning, Mr.

Chairman and committee members. The Northern Virginia Technology Council wants to personally thank you for holding this hearing and for your leadership on national security and the issues

raised by the Federal Government’s present security clearance

process.

I appear before you this morning as chairman of the Northern

Virginia Technology Council [NVTC], and also as chairman and

CEO of Information Management Consultants, Inc., a northern Virginia based company. I am accompanied by Bobbie Kilberg, who is

the president of NVTC. The Northern Virginia Technology Council

is the membership and trade association for the technology community in northern Virginia and is the largest technology council in

the Nation, with over 1,200 member companies representing about

160,000 employees.

From the late 1990’s through 2001, the northern Virginia region

saw an incredible boom in business driven largely by investment

in technology. Our community saw enormous expansion of existing

companies and the creation of hundreds of new entities. Our work

force needs exceeded the supply of available workers and unemployment rates dipped as low as 1.5 percent. NVTC’s work force

initiatives sought to attract talented and qualified workers to the

region through various incentives and programs.

Since the tragic events of September 11, northern Virginia, like

many other high-tech regions, experienced downturns in investment and significant lay-offs of employees. Fortunately for the region, many of the businesses have been able to retool and innovate

in areas that can be of assistance to the national security efforts

of the United States. Our companies have been able to develop new

technologies for use in the defense of our country and have been

able to pull out of a recessionary climate through participation in

Federal Government contracts. Herein lies the work force dilemma.

After thorough consultation with NVTC’s technology company

members, the NVTC Workforce Committee has determined that the

major causes for the delays in the security clearance process are as

follows: Lack of resources at the agency level to timely process applications; unnecessary increases in the level and number of security clearances involved in many contracts; inability to move a secured worker from one agency contract to the contract of another

agency without going through another separate clearance process;

disparate adjudication methods at the agencies; antiquated methods of conducting background checks; and lack of technology-based

processing of contractor security clearances.

The inability of NVTC member companies, which are Federal

Government contractors or wish to enter that market, to obtain security clearances in a timely and efficient manner has the following

ramifications: Inability of companies to enter the Government conVerDate 11-MAY-2000 11:28 Oct 26, 2004 Jkt 000000 PO 00000 Frm 00087 Fmt 6633 Sfmt 6633 D:\DOCS\95869.TXT HGOVREF1 PsN: HGOVREF1
84

tracting arena because of the lack of a cleared work force; inability

of companies who are Government contractors to fill many open positions by hiring highly skilled workers, who have been laid off in

the region and who would qualify for these open positions, because

of the excessive length of time required to obtain security clearances. Companies cannot afford to keep skilled workers ‘‘on the

bench’’ while awaiting the completion of a security clearance; competition for workers with security clearances is intense with Government contractors hiring away each others’ employees at ever increasing wages; cleared workers are recruited away from the military and other Government agencies where they are performing

important functions; and increased costs to companies for hiring

cleared workers translate into increased costs presented in contract

bids to Government agencies.

In December 2003, NVTC conducted a security clearance survey

of its membership to formalize the anecdotal evidence we had compiled. We developed a 15 question electronic survey which we sent

to 703 of our member companies, receiving an overall response rate

of 22.5 percent. We found that more than one half of the respondent companies had over 50 percent of their business in Government

contracting. We also found that small businesses were highly represented in the survey sample. In response to questions about the

number of unfilled positions due to inability to find cleared workers, 73 percent of the responders reported open positions in secret,

top secret, and sci/poly clearance categories. In response to questions about the ability of companies to find cleared employees, the

majority of respondents indicated that it was either ‘‘somewhat difficult’’ or ‘‘very difficult’’ to find cleared workers. When asked about

hiring methods for finding new employees with clearances, nearly

70 percent of the respondents reported that they recruit directly

from the Government or other Federal contractors. In addition,

more than half of the respondents said they paid a minimum 10

percent premium to recruit cleared workers for their companies. If

a security clearance application was submitted, 50 percent of the

respondents were required to wait 6 months or longer for a response. For the top secret and sci/poly clearances, our members indicated a 12 to 18 month wait period.

It is of critical importance that this committee require reform of

the Nation’s security clearance system and we recommend that the

following reforms be instituted through administrative and/or legislative action: 1Reciprocity among agencies—codification of Executive Order 12968; portability between agencies—again, codification

of Executive Order 12968; re-evaluation of clearance requirements

to be certain they are necessary; provision for self-initiated preprocessing of security clearance with a Letter of Intent to hire; reexamination of funding sources to pay costs for clearances; re-examination of the factors for disqualification; and investment in and

better use of technology to conduct efficient, secure, and consistent

background checks.

NVTC and its member companies are willing to assist in any

way that is helpful to the committee, and we thank you for inviting

us to testify before you today. Thank you.

[The prepared statement of Mr. Shenoy follows:]

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Chairman TOM DAVIS. Thank you very much.

Ms. Kilberg.

Ms. KILBERG. I took some notes based on the testimony before

from the Government and I would love to spend a few minutes just

making some comments.

Chairman TOM DAVIS. OK. I would love to hear you.

Ms. KILBERG. OK. No. 1, one of the things we have not focused

on but we should is that much of the innovation and cutting-edge

technology to fight terrorism comes from small- and mid-sized companies. The security clearance debacle means that it is simply not

competitive for most of those companies to be able to get those contracts. They shy away from competing because with the security

clearance problem they cannot succeed. That is not good for innovative solutions and we really need to look at that.

Second, I want to take a few minutes to go through our member

company survey just to give you a real indepth feel. For secret level

clearances, our companies report that more than 6 months is required from our member companies’ perspectives. Fifty-nine percent said it takes more than 6 months to get those clearances. Top

clearance level, 70 percent say it takes 12 to 18 months, and 33

percent said it takes 18 months or longer. Sci/poly clearance level,

90 percent said it takes more than 12 months, and 56 percent said

it takes 18 months or longer.

Third, I think I heard the gentleman from OPM saying that they

now have a RFP out for contractors. I think that is a way, an approach to deal with this issue. However, the investigators that the

contractors are going to use themselves have to be cleared themselves. And if I heard him correctly, in the RFP the contractor applying cannot raid or recruit people from the Government or other

contractors. So if they cannot themselves get people who are already cleared to be the investigators to do the clearances, you are

just going to get yourself more and more in a catch–22.

Next point, DOD. Twenty-five months for reform. As Congressman Schrock said, that is just frightening. That is truly, truly

scary.

Next point, and I was not going to bring it up but Congressman

Moran mentioned it, what do our companies do in this region when

they have people problems? They go to their Congressmen. They go

to all of you and they put insistent pressure and say help us, help

us, we cannot get cleared. That is not the way the system should

work. But that is their only way to get clearances in a timely manner now, and that is going on throughout the country.

Codifying Executive orders. That is very important. But, as Congressman Davis said, if that is not accompanied by additional Federal money, we are only codifying something on paper and nothing

is going to change.

Two final points. I do not mean to be pejorative, but obviously,

as Congressman Davis said, Heather Anderson drew the short

straw and that is why she is here today. And I worry about how

long it is going to take her to get through the Department of Defense bureaucracy to let Secretary Rumsfeld know what happened

today at this hearing. And if it takes her 6 months to do that, you

are another 6 months behind.

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And finally, we need to use technology to help solve this problem

and we are not presently using it as effectively as we can. One very

quick example. One of the things that was not discussed but is obviously important is re-clearances, a person has a clearance and

then they have to be re-cleared. One of the things that the White

Paper which ITAA, NVTC and all of us in the coalition developed,

discusses is the fact that, if you could develop a standard structure

for security clearance requirements, then you could facilitate a system to monitor the continuing validity of clearances. And given the

technology you have today in data mining, you could have an ongoing data base that would be able to tell you immediately whether

there is a change in status—an arrest, a bankruptcy, an unexplained affluence—things that might indicate a potential security

risk even before you normally would do that re-clearance or that

reevaluation. If you could do that and you could identify potential

security issues quickly and efficiently through technology, then you

could reduce reinvestigation time and you could free up resources

to focus on new clearances.

Those are just some points from my notes and from listening this

morning. Thank you.

Chairman TOM DAVIS. Thank you very much. My instinct is that

Secretary Rumsfeld probably has other things on his mind today

than just worrying about expediting security clearances. But we

can get this word to the appropriate people in Defense that can

take action, it does not have to start at that level, and we intend

to do that. So I appreciate your remarks.

Mr. Wagoner, thank you for being with us.

Mr. WAGONER. Mr. Chairman and members of the committee,

thank you for inviting ITAA to testify today on the challenges industry faces in obtaining Federal security clearances. This panel is

a positive step forward for creating actionable solutions to challenges that have plagued this process for decades, a process that

keeps highly qualified people from working in high paying jobs of

national importance. My name is Doug Wagoner, and I serve as

chairman of the ITAA Security Clearance Task Group. I also bring

the perspective as a small business IT executive from Fairfax

struggling with this issue everyday.

As you may know, ITAA is the Nation’s leading trade association

focused on the IT industry, providing public policy and national

leadership to promote its growth. ITAA represents firms large and

small, including virtually every major Federal contractor. I have included more detail on ITAA’s solutions to this problem in my written statement along with a copy of the detailed White Paper that

ITAA and seven other industry associations prepared that provides

five recommendations on how to improve this complicated process

without sacrificing security.

While the pressures placed on an already stretched system have

significantly increased following September 11, the challenges we

face have been the same for decades. Since the 1980’s, Congress,

the executive branch, and GAO have been looking at the problem

with no reformed policy to make substantive changes. The Government rightfully demands high standards from its contract personnel, and ITAA does not want to reduce the standards to obtain a

clearance. National security is priority one for industry.

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I would like to focus on three main issues in ITAA’s recommendations to improve this process. ITAA recently completed a

survey of its membership on clearances and I will highlight the results in this statement.

The first issue is with consistently elongated time to grant initial

clearances. As with NVTC, 70 percent of respondents state that it

is taking more than 270 days to obtain a top secret clearance, and

that is for a clean case, and 16 months for those needing more extensive investigations or polygraph. These delays are costing people

jobs. Almost 22 percent of our survey respondents had over 500

open positions right now, and 70 percent are saying that they have

seen significant increase in the need for these cleared personnel

over the last 5 years. With an increasing demand and a constrained supply, industry is poaching employees where they can,

sometimes paying referral bonuses of up to $10,000 per cleared person. Fifty-three percent of our respondents state that they primarily recruit cleared personnel away from other contractors, 10

percent say they primarily hire away from Government. That

means almost two-thirds of the cleared people industry hires leave

another cleared opening to be filled. Government has created a

zero-sum game that creates instability in critical programs and

drives up cost to both industry and Government, as I will discuss

in more detail.

ITAA recommends several solutions. First, we recommend that

agencies work through the procurement process to authorize bench

strength of cleared personnel. An example of this is if a contract

requires 20 cleared slots, we recommend that procurement officials

authorize 24. These ready replacements would ensure that critical

programs stay on schedule and do not get bogged down because of

staff turnover. An industry-wide bench strength would also increase the supply of cleared people, removing the zero-sum game

and price pressures.

Second, ITAA would recommend that a statutory performance

metric of 120 days be established to complete a top secret clearance, and that a Government industry advisory panel be tasked to

create the policies and reforms to achieve that metric. Standardization and reciprocity are also enormous issues. ITAA has identified

more than 20 agencies in the Federal Government that have clearance requirements and most with unique items of inquiry. Often a

clearance is granted at one agency that will not be recognized by

another. For example, at DOJ, a DEA clearance is not honored by

FBI, and vice versa, because of different requirements even though

they are within the same Department. This also creates problems

for our first responders who need multiple clearances to share information with the Federal Government. It would seem logical, Mr.

Chairman, that when one Federal agency grants you a clearance it

should be honored by all of government to work at the same security level.

ITAA recommends that a consistent baseline requirement be established across Government to specify data requirements and investigation methods. The Defense Science Board could also be

tasked to create policies governing security clearances for the defense and intelligence community.

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Cost is the third issue that we need to consider. High demand

and low supply of cleared people is rapidly increasing labor costs.

Over half of the people in our survey said that they pay up to 25

percent more for a cleared employee who performs the same job as

an employee without a clearance. This, coupled with increased recruiting costs, creates higher costs for Government in the form of

higher labor rates and contract delays due to unstable work force.

Clearance delays significantly affect a company’s ability to grow.

Twenty-two percent of our survey told us that the clearance process

alone impacts annual revenue by $10 million. It has prevented the

growth in my small business by 20 percent this year. GAO has estimated the cost to Government in the billions of dollars annually.

But more importantly, Mr. Chairman, GAO and others have pointed to direct risks to national security. It is clear that business as

usual cannot continue. Changes to policy, technology, and management processes must exist to reform this antiquated process.

Two final snippets from our survey. Ninety-six percent told us

that if Government could issue a top secret clearance in 120 days

or less, they could better serve the national security needs. And 85

percent told us it would be easier to bring the best and the brightest to Government if we could get that 120-day mark.

ITAA members value their partnership with Government and are

committed to improve this process that is critical to national, economic, and personal security. Thanks again for your invitation, and

I am happy to answer your questions.

[The prepared statement of Mr. Wagoner follows:]

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Chairman TOM DAVIS. Thank all of you for your testimony and

for some very specific recommendations for what we might do. It

is incredible to me that the representatives from the Federal Government did not have specific recommendations except to keep

studying, when you have given I think some fairly quick fixes and

which everybody identifies as being human capital, manpower related. I am not sure as followup to this we ought to insist on DOD

sitting down with a group of contractors, understanding what these

problems are; everybody is talking about it but there is no communication.

DOD has told us about some clearance facilitation programs that

it says assists industry contractors. Some of these include the ability to apply for security clearance up to 180 days before an employee starts a job, quick turnaround on interim secret and top secret clearances, and nearly automatic transfers of clearances when

an employee moves from one job to another. That is what they testify is working. Does this work?

Mr. SHENOY. Right now, based on the testimony that the lady

gave, I think it is mathematically impossible for them to meet some

of those goals they have. For example, the 75 days for a secret

clearance, by my calculation, they have a little over 4,000 people

who do these investigations, there were 86,700 cases pending,

which means that it is an average of 22 cases per investigator, and

if they take even 15 days per case, each of those investigators have

over 330 days worth of work. So which means that after the fifth

person has been cleared, the rest are all going to be outside that

range.

Chairman TOM DAVIS. You also made a good point I think in

your testimony that some of the work that is required for secret

clearances and top secret clearances does not really need to be designated that way. The Government could get this job done, they

could get the product done at lower cost to them, higher quality

product by not requiring this. So are they going overboard on what

is required as secret?

Mr. SHENOY. One of the problems I think is in the definition of

what secret and what top secret constitutes. My company has

clearances with various agencies and every time we get another

project which has certain level of clearance, that agency may not

accept the other agency’s clearance. On one occasion I asked the investigator who was there who had come to interview me about one

of my employees, I said, ‘‘Why do you need to do this again?’’ And

he explained to me that what is top secret at a particular agency

may not be top secret at another one, so that is the reason why

they have to redo the investigations. I think what we need is a

Government-wide definition of what secret is and what top secret

is. I do not believe that exists.

Chairman TOM DAVIS. Does the contractor decide if it is going to

be, in this case, the Government agency decides or the procurement

officer decides what is needed to be secret and top secret?

Mr. SHENOY. I believe the program office decides what it needs

to be and the contracting officer basically passes it down.

Chairman TOM DAVIS. Let me ask you this, all of you, have your

organizations had informal discussions with DOD about this, calling attention to the problems and the waste?

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Mr. WAGONER. Yes.

Chairman TOM DAVIS. And what has been their response, what

we heard today?

Mr. WAGONER. Basically, we are working on the issue. Here is

our plan. Here are the things we want to do. But we ask, well,

what is the specific timeframe? OK, you are going to put this new

system in place. When? What is the specific timeline? And that is

where it breaks down.

Chairman TOM DAVIS. I did not want to really embarrass anybody today on the first panel. But if you take a look at the GAO

report that came out in 1981 and you hear the responses from the

agencies at that point, it was that we are working on it then, too.

Sooner or later, you just get tired of them working on it.

Mr. WAGONER. The seats still warm here, Mr. Chairman.

Chairman TOM DAVIS. Yes. OK. [Laughter.]

From the testimonies it is clear that a pseudo black market exists when it comes to employees with security clearances. Can you

tell the committee how the dynamics work between large, medium,

and small companies? It would seem that the small and medium

companies would always lose out to larger companies in these bidding wars or at least have a propensity to lose out. And Mr.

Nakamoto, before you testify, I do want to note for the record, I

think a positive thing, that we still have GAO and DOD still here.

I think they are listening to this. So at least the people we have

here today are interested or they would not still be here. The question may be in filtering this up higher. But in this case, talk about

the pseudo black markets that exist. I think it is important for

these agencies to understand why we end up paying more money

for a product, why taxpayers end up paying more money for a product. Gary, if you want to sit at the end, we will get a chair there

for you. I think that is a warm seat, too.

Mr. NAKAMOTO. I think one of the things that happens is a

smaller company may have fewer employees to spread out their

cost. So a larger company may go in and bid, actually just pay the

cleared employee a higher rate and spread that over the cost of the

contract. So your smaller and medium-size companies will lose out

to that employee. But what that means to the taxpayer and the

Government overall is what was alluded to earlier in testimony, is

that the actual cost escalations for security-type projects continues

to grow, and it means that companies that may have open slots on

smaller projects remain unfilled. So what you have is an imbalance

both in cost escalation and the fact that there are not services

being provided to the Government agency.

So I think overall, at the very end of the day, when you weigh

these two components out, as well as all the other turmoil that it

may cause for a smaller vendor, I think it hurts the business’ ability to make money, I think it hurts the Government’s ability to

have service provided to them, and I think it hurts the taxpayers’

investment because they are paying more for a service that they

should not have to pay. And when you have a situation where business loses, Government loses, and the taxpayer loses, it is the

worst of all worlds.

Chairman TOM DAVIS. Let me understand this. Maybe you hire

somebody, your company, a good company but you are not LockVerDate 11-MAY-2000 11:28 Oct 26, 2004 Jkt 000000 PO 00000 Frm 00149 Fmt 6633 Sfmt 6633 D:\DOCS\95869.TXT HGOVREF1 PsN: HGOVREF1
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heed-Martin. You are a good level, performing well, good small or

mid-size company, you hire somebody for $75,000 a year and they

have a clearance and they start working on a contract. But there

are thousands of other jobs that require people with clearances.

And what can happen then, as I understand it, is one of these

other companies will come in, they need somebody with a clearance, they go after your guy and they can pay him more.

Mr. NAKAMOTO. That is right.

Chairman TOM DAVIS. And then you cannot complete your aspect

of the contract, or you get in a bidding war for somebody that is

worth something, but the clearance is what makes it worthwhile.

It ends up costing money, contracts do not get completed on time,

and the work product suffers. Is that fair?

Mr. NAKAMOTO. Yes, it is. And the other dilemma is, for instance,

touching on the one situation where someone will get an interim

clearance at one agency and be able to perform an appropriate level

of work, and then another agency will make that employee wait

even though they have an interim clearance and there is work that

they could perform, they are still sitting on the bench. And I would

say that it affects all levels of business—large, small, and medium.

So I think the situation is deep and it is widespread. I really do

believe that it does begin with the manpower situation, human

power, but I also believe that it is going to take the Government

to recognize the problem and act.

Chairman TOM DAVIS. I had the CEO of Northrop Grumman in

my office yesterday just saying the same thing. They probably have

an advantage in bidding over you, but they cannot get the people

either. So you have these contracts just drying on the vine. The

Government needs the service now. They cannot get it now. And

what they are getting they are overpaying for.

Ms. Kilberg.

Ms. KILBERG. Mr. Chairman, we talked before about much of the

cutting-edge technology coming from small- and mid-size companies, most of our companies of that size cannot afford to put people

just on the bench in a hold while they are waiting for their clearances, where the large companies can if they have to.

The other thing is, in our survey, nearly 70 percent of the respondents recruit only cleared workers from Government or other

contractors—70 percent. So that tells the story right there.

Chairman TOM DAVIS. So what do you do if you want to get in

the business, you are a smart person, you do not have a clearance?

It is hard to get a clearance if you do not have a contract lined up.

Ms. KILBERG. You cannot.

Chairman TOM DAVIS. You cannot just go up and say, you know,

I have just graduated from college, I want to get a security clearance. It does not work that way.

Ms. KILBERG. That is the chicken and egg, that is your catch–

22.

Mr. SHENOY. That is where the problem comes in. A small company cannot afford to have a bench.

Chairman TOM DAVIS. Because you have to carry them in the

meantime and you cannot bill them.

Mr. SHENOY. You have to carry them. And every time we have

one person on the bench, the cost to the Government for that perVerDate 11-MAY-2000 11:28 Oct 26, 2004 Jkt 000000 PO 00000 Frm 00150 Fmt 6633 Sfmt 6633 D:\DOCS\95869.TXT HGOVREF1 PsN: HGOVREF1
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son goes up by almost 8 percent for every month for that first year.

Basically, his cost goes into overheads.

Chairman TOM DAVIS. I guess the way I would understand it, it is kind of like Albert Bell getting $11 million sitting on the bench

last year for the Orioles. You just cannot afford to do that.

Mr. SHENOY. Yes. Something like that. [Laughter.]

Chairman TOM DAVIS. I am just trying to put it in terms, you

understand. Mr. Schrock and then Mr. Moran.

Mr. SCHROCK. Thank you, Mr. Chairman. I think everything has

pretty much been said. I really appreciate all of your coming here

today. It sounds to me like standardized clearances might be, Gary,

what you just said, standardized clearances would probably help

this situation. I guess it is because there are not enough people to

do the clearances and that is why it takes so long; is that the basic

problem, Bobbie?

Ms. KILBERG. Well, it is partially that you do not have enough

people doing the clearances, and it is also partially that you are reinventing the wheel every time. Your example of the young employee who came out of the military, that is not unusual. That is

normal for the course.

Mr. WAGONER. And if I may, sir. I think Bobbie brought up a

good point, which is that the folks here are dealing with policy that

was written probably in the Eisenhower administration on how to

do these clearances. And you take a look at data mining, how much

can we just off-load, at least do triage on some of these cases and

so if the person has bad credit, they have a criminal conviction,

have the data mining find that first and get them out of the system.

Mr. SCHROCK. We heard the last panel talk about studies. How

do you account for all the studies? What are they studying? I mean,

it seems pretty cut and dry. There is a problem, we know what it

is, we need to get it fixed. What are they studying?

Ms. KILBERG. I think they are studying the inevitability of giving

up their own bureaucratic turf in different agencies and departments.

Mr. SCHROCK. Bingo.

Ms. KILBERG. But then I am not very politically correct usually.

Mr. SCHROCK. Well I am not either, so that is fine. That is why

you and I have always gotten along.

That is all I have to say, Mr. Chairman.

Chairman TOM DAVIS. OK. Mr. Moran.

Mr. MORAN. Thank you, Mr. Chairman. I think Ms. Kilberg answered it quite accurately. This is in large part a matter of turf

and trust, particularly with regard to reciprocity. There are just so

many things that seem inexplicable here. Why, when somebody has

just gotten out of the military or some other position where we

know they have already been screened, why you cannot facilitate

the process of review, why you have to go all the way back. And

then, even worse, when another Government agency has already

gone through the process but yet the new agency will not accept

the work that they have done. Talk about inefficiency and waste.

Of course, the worst waste is the end result, where we are paying

so much more for people and where our ability to fight wars, to

provide needed services and technology to troops in the field and

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to make this country’s citizens more secure is not being accomplished because we have gotten ourselves inundated in this mountain of paperwork, much of it unnecessary.

Now it was mentioned, I think you just mentioned it, Mr. Wagoner, about the technology that is available. Why you cannot do an

initial screening, we have all that information available, we do it

for other purposes currently—DOT, in intelligence—we are doing

it, we have the software, you can immediately kick out people that

have criminal convictions, people that have associations with organizations or individuals that are suspect. You can immediately kick

those people out. What you are then left with is a group that

should probably be given the benefit of the doubt but at least you

should be able to facilitate an investigation of those. And yet, we

are not doing it. What we are doing for 6 months, actually, it is

375 days, so for a full year to spin wheels, reinventing the wheel

is just beyond us.

I guess I want to ask witnesses here, before this became such a

problem, did you have any people that you found compromised your

mission, your operations, your ability to meet the Government

specifications and requirements?

Mr. WAGONER. If I may. One point I do not think we have talked

about is most of our members do our own pre-screening even before, and it is another cost that we have not talked about, because

we do not want to take the time and the money to send somebody

that we know is going to be rejected. Almost every single one of our

companies does at least a credit and a criminal conviction check

that we pay for, and many more even do a drug check as well. And

then on top of that, to answer your question, from what we understand, the rejection rate is less than 1 percent. So there is not a

lot of cases being rejected here.

Mr. MORAN. So, and that is really the bottom line, how likely is

it that we are going to find any problems when the corporations

have already done the screening. And it would be insane for you

to take chances with anybody that you thought might be a security

risk, because not only does it jeopardize that contract, it jeopardizes your credibility in being able to go after other contracts. So you

are going to do everything possible to screen the people you are hiring anyway. And so now we go through this overlay of more and

more investigations, lack of reciprocity, and what seems to be an

unjustifiable bureaucratic delay.

I think the chairman has identified something that is in desperate need of correction. And if you have some suggestions, we can

put some language in defense appropriations. You hate to have to

do that. You wish that the executive branch would fix their own

problem. But it looks like it is time to mandate that it be fixed with

timeframes and providing whatever resources are necessary, even

though I know DOD is going to say we do not need any more

money. But if you want to work with us on some language that

would go through Chairman Davis so that it would be consistent

with what the authorizing committee wanted to see, I am confident

that the Defense Appropriations Committee would be happy to put

it in that and/or the defense authorizing committee.

Mr. WAGONER. We would be happy to do that. And we already

have, as I mentioned in my testimony, our White Paper is already

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signed by nine other organizations and so we will work with that

coalition we already have together to take you up on the opportunity, and we appreciate that.

Mr. SHENOY. I just wanted to make a comment on what Mr.

Wagoner just said. Many companies do their background research

but most small companies do not go through that process. It is prohibitively expensive for smaller companies to do. So we will not try

to second guess what goes on in the investigative process; however,

we do feel it is necessary that the investigations are to be thorough

and properly done. The kind of investigations that we as companies

do is probably not adequate. I just want to throw that in there.

Mr. MORAN. But you and Mr. Nakamoto, for example, would be

looking at an employee pool that in some ways would have been

pre-screened. I mean, you are not looking at groups of people to

hire that would be likely security risks.

Mr. SHENOY. Absolutely. But there is another problem here.

Even when we hire people with top secret clearance from another

company, it still takes between 2 to 4 weeks to have that person

start on the project simply because there is a process that you are

to go through on each task order. It is not like we can pick up the

phone, call the contracting office and say, OK, I have hired a top

secret guy and we are going to start him on the project. That does

not happen.

Mr. MORAN. If you can give us some suggested wording, maybe

we can do that, if it meets with the approval of the chairman of

this committee.

Mr. SHENOY. Thank you.

Chairman TOM DAVIS. I think one of the things we can do is

start by codifying, maybe closing some loop holes in the Executive

order on reciprocity and moving some of that. And then you have

the manpower, I guess, more appropriately, I would call it the dedicated human capital resources that are needed in this as well.

Those are some things that we will try to address.

In the meantime, I just hope that OPM and DOD will continue

to meet with industry and look at ways that on their own, without

congressional intervention, they can move this along. It is a serious, serious problem that every day makes our country less safe

and costs taxpayers unneeded billions of dollars.

We appreciate your being here to set the record straight from

your perspective and to lend what I think are some very fruitful

ideas in terms of how we may be able to correct this over the short

term. The long term, who knows, it has been since 1981. So we

need to do some things immediately that can move this backlog.

Thank you all for being here today.

The meeting is adjourned.

[Whereupon, at 12:25 p.m., the committee was adjourned, to reconvene at the call of the Chair.]

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