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[Senate Report 114-246]
[From the U.S. Government Publishing Office]

						Calendar No. 453

114th Congress } 					{ Report
 2d Session    }                  SENATE 		{ 114-246
_______________________________________________________________________
 
 SECURITY CLEARANCE ACCOUNTABILITY, REFORM AND ENHANCEMENT ACT OF 2015

                               __________

                              R E P O R T

                                 OF THE

                   COMMITTEE ON HOMELAND SECURITY AND

                          GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE

                              TO ACCOMPY

                                 S. 434

            TO STRENGTHEN THE ACCOUNTABILITY OF INDIVIDUALS
           INVOLVED IN MISCONDUCT AFFECTING THE INTEGRITY OF
          BACKGROUND INVESTIGATIONS, TO UPDATE GUIDELINES FOR
         SECURITY CLEARANCES, TO PREVENT CONFLICTS OF INTEREST
              RELATING TO CONTRACTORS PROVIDING BACKGROUND
 INVESTIGATION FIELDWORK SERVICES AND INVESTIGATIVE SUPPORT SERVICES, 
                         AND FOR OTHER PURPOSES

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                 April 28, 2016.--Ordered to be printed
                 
                 
                               ______________
                               
                               
                       U.S. GOVERNMENT PUBLISHING OFFICE
                            WASHINGTON : 2016                       
_____________________________________________________________________________                 
 
                 
                 
        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                    RON JOHNSON, Wisconsin, Chairman
JOHN McCAIN, Arizona                 THOMAS R. CARPER, Delaware
ROB PORTMAN, Ohio                    CLAIRE McCASKILL, Missouri
RAND PAUL, Kentucky                  JON TESTER, Montana
JAMES LANKFORD, Oklahoma             TAMMY BALDWIN, Wisconsin
MICHAEL B. ENZI, Wyoming             HEIDI HEITKAMP, North Dakota
KELLY AYOTTE, New Hampshire          CORY A. BOOKER, New Jersey
JONI ERNST, Iowa                     GARY C. PETERS, Michigan
BEN SASSE, Nebraska

                  Christopher R. Hixon, Staff Director
                Gabrielle D'Adamo Singer, Chief Counsel
             David S. Luckey, Director of Homeland Security
       William H.W. McKenna, Chief Counsel for Homeland Security
     Brooke N. Ericson, Deputy Chief Counsel for Homeland Security
              Gabrielle A. Batkin, Minority Staff Director
           John P. Kilvington, Minority Deputy Staff Director
               Mary Beth Schultz, Minority Chief Counsel
       John A. Kane, Minority Senior Governmental Affairs Advisor
                     Laura W. Kilbride, Chief Clerk
   

 Mr. Johnson, from the Committee on Homeland Security and Governmental 
                    Affairs, submitted the following

                              R E P O R T

                         [To accompany S. 434]

    The Committee on Homeland Security and Governmental 
Affairs, to which was referred the bill (S. 434), to strengthen 
the accountability of individuals involved in misconduct 
affecting the integrity of background investigations, to update 
guidelines for security clearances, to prevent conflicts of 
interest relating to contractors providing background 
investigation fieldwork services and investigative support 
services, and for other purposes, having considered the same, 
reports favorably thereon without amendment and recommends that 
the bill do pass.

                                CONTENTS

                                                                   Page
  I. Purpose and Summary..............................................1
 II. Background and Need for the Legislation..........................2
III. Legislative History..............................................7
 IV. Section-by-Section Analysis......................................8
  V. Evaluation of Regulatory Impact..................................9
 VI. Congressional Budget Office Cost Estimate........................9
VII. Changes in Existing Law Made by the Bill, as Reported...........10

                         I. PURPOSE AND SUMMARY

    S. 434, the Security Clearance Accountability, Reform, and 
Enhancement Act of 2015, prohibits re-employment of background 
investigators who engage in misconduct and requires agency 
contractors and subcontractors to report employees who 
intentionally compromise the integrity of background 
investigations to the agency within 24 hours. The bill also 
requires the President, at least every five years, to review 
and update guidance for agencies to use in determining a 
position's level of sensitivity and requisite background 
investigation requirements. Finally, S. 434 prohibits a 
contractor that performs background investigations from 
conducting an agency's final quality review on a background 
investigation conducted by the same contractor. S. 434 is 
modeled after S. 1744 (113th Congress), the Security Clearance 
Accountability, Reform, and Enhancement Act, and S. 2061 (113th 
Congress), the Preventing Conflicts of Interest with 
Contractors Act, which Congress considered but did not enact in 
the 113th Congress.\1\
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    \1\The Committee consulted the reports for S. 1744 (113th Cong.), 
S. Rep. No. 113-276 (2014), and S. 2061 (113th Cong.), S. Rep. No. 113-
257 (2014), in drafting this report.
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              II. BACKGROUND AND THE NEED FOR LEGISLATION

The need for background investigations

    Over 4.5 million Federal employees and contractors are 
eligible to hold a security clearance.\2\ Several recent high-
profile insider threat cases have shown that it is increasingly 
important for the Federal Government to control and have a 
complete understanding of who has access to sensitive 
documents, employees, and facilities.
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    \2\Office of the Dir. of Nat'l Intelligence, 2014 Report on 
Security Clearance Determinations (2014).
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    In general, Federal agencies conduct background 
investigations to determine individuals' suitability for 
employment and access to government facilities, information, 
and information systems.\3\ More exhaustive investigations are 
reserved for determining whether to grant an individual a 
security clearance to access classified materials, or appoint 
an individual to a national security sensitive position or a 
position of public trust.\4\ Individuals who hold national 
security sensitive positions or positions of public trust are 
also required to undergo periodic reinvestigations after their 
initial investigation.\5\
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    \3\See, e.g., Gov't Accountability Office, GAO-14-186T, Personnel 
Security Clearances: Opportunities Exist to Improve Quality Throughout 
the Process 1, 9-10 (2013) (describing the classification of different 
sensitivity levels for access to information) [hereinafter GAO-14-
186T].
    \4\Agency positions are designated at a ``high, moderate, or low 
risk level as determined by the position's potential for adverse impact 
to the efficiency or integrity of the service,'' and ``positions at the 
high or moderate risk levels would normally be designated as `Public 
Trust' positions.'' 5 C.F.R. 731.106 (a)-(b) (2012). OPM's regulations 
explain: ``[s]uch positions may involve policy making, major program 
responsibility, public safety and health, law enforcement duties, 
fiduciary responsibilities or other duties demanding a significant 
degree of public trust, and positions involving access to or operation 
or control of financial records, with a significant risk for causing 
damage or realizing personal gain.'' Id.
    \5\E.g., Memorandum for Heads of Agencies, Aligning OPM 
Investigative Levels with Reform Concepts, from John P. Fitzpatrick, 
Asst. Dep. Director of National Intelligence for Security, Office of 
the Director of National Intelligence, and Kathy L. Dillaman, Assoc. 
Director, Federal Investigative Services, Office of Personnel 
Management (Aug. 24, 2010), available at https://www.opm.gov/
investigations/background-investigations/federal-investigations-
notices/2010/aligning_opm_investigative_levels.pdf; Office of Mgmt & 
Budget, Suitability and Security Processes Review: Report to the 
President 2 (2014) [hereinafter Suitability and Security Report].
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    Positions within an agency are designated as ``sensitive 
positions'' if an individual occupying a position could bring 
about ``a material adverse effect on the national 
security.''\6\ Most sensitive career civil service positions 
and some others are categorized by three levels of sensitivity: 
``Noncritical-Sensitive,'' ``Critical-Sensitive,'' and 
``Special-Sensitive.''\7\ Positions that require access to 
classified information are always considered sensitive 
positions.\8\ Aside from whether a position may have an impact 
on national security, positions within an agency are ``moderate 
risk public trust'' positions or ``high risk public trust 
positions,'' depending on the level of risk that someone in the 
position could harm the efficiency or integrity of the 
agency.\9\
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    \6\See Exec. Order No. 10,450, 3 C.F.R. Comp. 936 (1953).
    \7\See Office of Personnel Mgmt, Position Designation Tool, 
Position Designation of National Security and Public Trust Positions 
(2010), http://www.opm.gov/investigations/background-investigations/
position-designation-tool/oct2010.pdf.
    \8\Id.
    \9\See 5 C.F.R. 731.106 (2012).
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    By definition, classified national security information is 
information which could reasonably be expected to damage our 
national security if disclosed to an unauthorized person.\10\ 
Therefore, the Federal Government only issues an authorization 
to access classified national security information--a security 
clearance--after a satisfactory background investigation.\11\ 
All classified national security information is classified at 
one of three collateral classification levels--``Top Secret,'' 
``Secret,'' or ``Confidential.''\12\ An individual's security 
clearance level, and therefore the scope of the individual's 
background investigation, corresponds to the highest level of 
classified national security information the person is 
authorized to access.\13\ Information classified at the lowest 
collateral classification level--confidential--is information 
that could reasonably be expected to cause damage to national 
security if disclosed to an unauthorized person.\14\ 
Information classified at the next level up--secret--is 
information that could reasonably be expected to cause serious 
damage to national security if disclosed to an unauthorized 
person.\15\ Information classified at the highest collateral 
classification level--top secret--is information that could 
reasonably be expected to cause exceptionally grave damage to 
national security if disclosed to an unauthorized person.\16\ 
Particularly sensitive information, such as Sensitive 
Compartmented Information and information on Special Access 
Programs, may be protected by controlled access programs which 
further limit dissemination.\17\
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    \10\Exec. Order No. 13,526, 3 C.F.R. 298 (2009).
    \11\See GAO-14-186T, supra note 3 at 1-2.
    \12\See Exec. Order No. 13,526.
    \13\See e.g., Office of the Dir. of Nat'l Intelligence, 
Intelligence Community Policy Guidance Number 704.1, Personnel Security 
Investigative Standards and Procedures Governing Eligibility for Access 
to Sensitive Compartmented Information and Other Controlled Access 
Program Information (2008) (describing the scope of background check 
standards ``A'', ``B'', and ``C'') [hereinafter ODNI Guidance 704.1]; 
see also GAO-14-186T, supra note 3 at 8.
    \14\See Exec. Order No. 13,526; see also Office of Personnel MGMT, 
supra note 7 at 1.
    \15\See sources cited supra note at 14
    \16\See id.
    \17\E.g., ODNI Guidance 704.1, supra note 13; Exec. Order No. 
12,958 Sec. 4.1(h), 4.4 (1995).
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Responsibility for background investigations

    The Office of Personnel Management's (OPM) Federal 
Investigative Services (FIS) conducts the vast majority of 
background investigations for other agencies.\18\ OPM and other 
agencies use a mix of contractors and Federal employees to 
conduct background investigations and support those 
investigations by gathering information on the subjects of 
investigations.\19\
---------------------------------------------------------------------------
    \18\See Suitability and Security Report, supra note 5, at 3 (noting 
that OPM conducts approximately 95 percent of all background checks 
across government).
    \19\See id.
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    Background investigations typically include interviews of 
friends, family, and coworkers; reviews of educational, 
employment, and mental health records; and criminal history and 
credit checks, all of which can be conducted by either Federal 
employees or contractors.\20\ However, final adjudication rests 
with the Federal Government--in other words, the decision 
whether an individual is suitable for Federal employment and 
the decision whether to grant a security clearance is an 
inherently governmental function and must be made by a Federal 
employee (generally an employee of the requesting agency).\21\
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    \20\See generally ODNI Guidance 704.1.
    \21\Id. at 3.
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Integrity of background investigations conducted by Federal and 
        contractor employees

    Because agencies rely on background investigations to 
adjudicate an employee's suitability for a sensitive position 
or clearance, errors or falsifications in those background 
investigations can lead to inaccurate assessments of an 
employee's suitability for a sensitive position or a security 
clearance. Such investigations may omit or incorrectly 
characterize derogatory information upon which an adjudicator 
would have denied suitability or a security clearance. Quality 
assurance is therefore an essential part of the investigative 
process. Such quality reviews ensure that investigations are 
thorough and comply with all applicable standards.
    Unfortunately, recent investigations and events have 
highlighted serious errors and falsifications in background 
investigations over a period of many years. Some cleared 
Federal employees and contractors have even used their 
privileges to commit serious crimes, highlighting the need for 
better investigations and quality controls on those 
investigations.\22\ As then--OPM Inspector General (IG) Patrick 
McFarland testified in 2013:
---------------------------------------------------------------------------
    \22\See Dep't of Defense, Internal Review of the Washington Navy 
Yard Shooting (2013) [hereinafter DoD Internal Review]; Dep't of 
Defense, Security from Within: Independent Review of the Washington 
Navy Yard Shooting (2013) [hereinafter DoD External Review], available 
at http://www.defense.gov/Portals/1/Documents/pubs/Independent-Review-
of-the-WNY-Shooting-14-Nov-2013.pdf.

          One of the most flagrant criminal violations that we 
        encounter is the falsification of background 
        investigation reports [. . . .] There are situations 
        where the Federal Investigative Services' background 
        investigators, either Federal employees or contractors, 
        report interviews that never occurred, record answers 
        to questions that were never asked, and document 
        records checks that were never conducted. For example, 
        a record searcher fabricated 1,600 credit checks that 
        she never actually completed. Ironically, her own 
        background investigation had been falsified by a 
        background investigator convicted in a different 
        fabrication case.\23\
---------------------------------------------------------------------------
    \23\See Safeguarding our Nation's Secrets: Examining the Security 
Clearance Process: Joint Hearing Before the S. Subcomm. on Efficiency 
and Effectiveness of Federal Programs and the Federal Workforce and the 
S. Subcomm. on Financial and Contracting Oversight, of the S. Comm. on 
Homeland Sec. & Governmental Affairs, 113th Cong. (2013) [hereinafter 
Safeguarding our Nation's Secrets Hearing] (statement of Patrick 
McFarland, Inspector General, U.S. Office of Personnel Management).

    In October 2013, the Department of Justice joined a qui tam 
False Claims Act complaint by a former employee of OPM's then 
primary background investigations contractor, U.S. 
Investigative Services (USIS). At the time, USIS was OPM's 
largest background investigation contractor by number of 
investigations.\24\ In its complaint, the United States alleged 
that,
---------------------------------------------------------------------------
    \24\Notice of Election to Intervene by United States of America, 
United States Ex Rel Blake Percival v. U.S. Investigations Services, 
LLC, No. 11-CV-527 (M.D. Ala. Oct. 24, 2013).

          Beginning in at least March 2008, and continuing 
        through at least September 2012, USIS management 
        devised and executed a scheme to deliberately 
        circumvent contractually required quality reviews of 
        completed background investigations in order to 
        increase the company's revenues and profits. 
        Specifically, USIS devised a practice referred to 
        internally as ``dumping'' or ``flushing,'' which 
        involved releasing cases to OPM and representing them 
        as complete when, in fact, not all [Reports of 
        Investigation] comprising those cases had received a 
        quality review as required by the Fieldwork Contracts. 
        [. . . .] During the time period March 2008 through 
        September 2012, USIS released at least 665,000 
        background investigations to OPM and represented them 
        as complete when, in fact, one or more of the [Reports 
        of Investigation] comprising those background 
        investigations had not received a quality review as 
        required by the Fieldwork Contracts. This represented 
        approximately forty percent of the total background 
        investigations conducted by USIS during that time 
        frame.\25\
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    \25\United States' Complaint, United States Ex Rel Blake Percival, 
No. 11-CV-527.

    In a 2013 letter to then-Ranking Minority Member Tom 
Coburn, the acting Director of OPM explained that some lower-
level investigations may be reviewed by contract employees 
rather than Federal employees.\26\ This type of work, in fact, 
was performed by former OPM investigations contractor USIS 
under its support contract with OPM and had previously been 
identified by the OPM IG as raising quality concerns.\27\
---------------------------------------------------------------------------
    \26\Letter from Acting Director Elaine Kaplan, U.S. Office of 
Personnel Management, to Ranking Member Tom Coburn, Committee on 
Homeland Security and Governmental Affairs (Oct. 31, 2013).
    \27\Office of Inspector General, Office of Personnel Management, 
4A-IS-00-09-060, Audit of the Quality Assurance Process Over Background 
Investigations 10-11 (2010).
---------------------------------------------------------------------------
    There have even been several examples in the past few years 
of cleared Federal employees and contractors who committed 
grave crimes. For example, on September 16, 2013, Aaron Alexis, 
a cleared United States Navy contractor killed 12 employees and 
wounded several others in a mass shooting at the Washington, 
D.C., Navy Yard.\28\ When Alexis first applied for a security 
clearance in 2007, he failed to disclose a Seattle arrest for 
``malicious mischief'' after shooting the rear tires of a 
vehicle.\29\ Alexis was required to disclose this arrest on his 
SF-86 form and when the incident was uncovered during the 
course of Alexis' investigation, he claimed to have simply 
``deflated'' the tires on a vehicle.\30\ However, the police 
report from Seattle was never obtained during Alexis' 
background investigation.\31\ Alexis was subsequently granted a 
clearance by adjudicators who had never reviewed the police 
report despite knowing he had misled them on his SF-86.\32\
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    \28\S. Rep. No. 113-276 (2014); see DOD Internal Review, supra note 
22; DOD External Review, supra note 22.
    \29\See DOD Internal Review, supra note 22, at App'x B (Seattle 
Police Department Incident Report and Related Documents); DOD External 
Review, supra note 22, at 36.
    \30\DOD External Review, supra note 22, at 36.
    \31\DOD External Review, supra note 22, at 12, 36.
    \32\Id.
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    Additionally, in June, 2013, computer systems administrator 
Edward Snowden leaked 50,000-200,000 classified documents that 
he obtained from the National Security Agency while working for 
intelligence contractors Dell and Booz Allen.\33\
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    \33\S. Rep. No. 113-276 (2014); see Safeguarding our Nation's 
Secrets, supra note 23; Current and Projected National Security Threats 
to the United States: Hearing Before the S. Comm. on Intelligence, 
113th Cong. (2014) (statement of James R. Clapper, Director, National 
Intelligence); Mark Hosenball, NSA chief says Snowden leaked up to 
200,000 secret documents, Reuters, Nov. 14, 2013, available at http://
www.reuters.com/article/us-usa-security-nsa-idUSBRE9AD19B20131114; see 
also Mark Hosenball, Snowden Downloaded NSA Secrets While Working for 
Dell, Sources Say, Reuters, Aug. 15, 2013, available at http://
www.reuters.com/article/2013/08/15/usa-security-snowden-dell-
idUSL2N0GF11220130815.
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Conflicts of interest

    One of the requirements for background investigations is a 
final quality review of the investigation to ensure its 
integrity, completeness, and accuracy. Until recently, 
contractors could conduct the final quality review of 
background investigations, resulting in a potential conflict of 
interest where a contractor reviewed its own work or the work 
of a competitor. This meant that a contractor that conducted a 
review could show bias toward approving its own work or against 
approving the work of its competitors. For example, according 
to the Department of Justice complaint, USIS management, in 
organizing its reviews of its own reports of investigation, 
established a priority level system to identify the risk that a 
report of investigation would be reviewed by Federal agencies. 
The management then passed this information to their 
investigative branch, instructing them to dump cases likely to 
be federally reviewed.\34\
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    \34\United States' Complaint, supra note 25.
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    In February 2014, OPM announced a change in this policy--by 
requiring that only Federal employees conduct final 
investigative quality reviews.\35\ However, the decision does 
not preclude OPM from reverting the policy in the future to 
allow contractors to conduct the final quality-review of their 
own work. In order to prevent such conflicts of interest, this 
bill prohibits contractors from conducting the final quality 
review of background investigations in which the contractor 
participated. It does not prohibit a contractor from reviewing 
its work for internal quality control. However an independent 
third party or Federal employee must conduct the final quality 
review.
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    \35\Suitability and Security Report, supra note 5, at 13.
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Accountability measures for misconduct

    OPM's usual response to misconduct by a contractor--
administrative removal of the employee from the contract--has 
been ``insufficient'' according to former Inspector General 
McFarland.\36\ Such an action does not prohibit the same 
individual from performing background investigations for the 
Federal Government under another contract. This bill would 
prevent these types of abuses by demanding better 
accountability from OPM and its contractors through timely 
reporting of misconduct, stiffer penalties for misconduct, and 
improved reporting to Congress.
---------------------------------------------------------------------------
    \36\See Safeguarding our Nation's Secrets Hearing, supra note 23 
(statement of Patrick McFarland, Inspector General, U.S. Office of 
Personnel Management).
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Guidance for designating the sensitivity level of positions

    Inconsistent and outdated guidance for agencies in 
designating the sensitive level for national security sensitive 
positions also creates a potential vulnerability in the 
security clearance process. Current guidance is ambiguous and 
has led to Federal agencies inconsistently and sometimes 
incorrectly designating a position's sensitivity level.\37\ 
Both overstating and understating a position's sensitivity 
level is problematic.
---------------------------------------------------------------------------
    \37\Id. (statement of Brenda S. Farrell, Director, Defense 
Capabilities and Management, Government Accountability Office).
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    As a result, the Government Accountability Office (GAO) 
recommended that Federal agencies establish ``clearly defined 
policies and procedures'' in ``determining if Federal civilian 
positions require a security clearance'' or designation as a 
national security position.\38\ GAO also recommended periodic 
review of the designation of these positions since 
circumstances change over time.\39\ According to GAO, 
regulations OPM and the Director of National Intelligence 
promulgated in December, 2010, would result in clearly defined 
policies and procedures for determining whether civilian 
positions need security clearances.\40\
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    \38\Gov't Accountability Office, GAO-12-800, Security Clearances: 
Agencies need clearly Defined Policy for determining Civilian Position 
Requirements 20 (2012).
    \39\Id. at 21.
    \40\Id.; see Safeguarding our Nation's Secrets Hearing, supra note 
23 (statement of Brenda S. Farrell, Director, Defense Capabilities and 
Management, Government Accountability Office).
---------------------------------------------------------------------------
    S. 434 would adopt similar requirements to those 
recommended by GAO. Specifically the bill would require the 
President, acting through relevant agencies, to review and 
update guidance for agencies to use in determining the 
sensitivity designation of positions and the appropriate 
background investigation to initiate for each position 
designation. The bill also requires that at least every five 
years the President review and revise position designations in 
accordance with the guidance if necessary.

                        III. LEGISLATIVE HISTORY

    On February 10, 2015, Senator Tester introduced S. 434, the 
Security Clearance Accountability, Reform, and Enhancement Act 
of 2015, with Senators McCaskill and Vitter, which was referred 
to the Committee.
    S. 434 is based on two acts from the previous Congress: S. 
1744 (113th Congress), the Security Clearance Accountability, 
Reform, and Enhancement Act, and S. 2061 (113th Congress), the 
Preventing Conflicts of Interest with Contractors Act. Both S. 
1744 and S. 2061 were reported out of the Committee and passed 
the Senate by voice vote, but were not taken up in the House 
before the end of the Congress.
    The Committee considered S. 434 at a business meeting on 
May 6, 2015 and ordered the bill, without amendment, reported 
favorably by voice vote. Senators present for the vote were: 
Johnson, McCain, Portman, Lankford, Ernst, Sasse, Carper, 
McCaskill, Baldwin, Heitkamp, and Peters.

        IV. SECTION-BY-SECTION ANALYSIS OF THE BILL, AS REPORTED

Section 1. Short title

    This section provides the bill's short title, the 
``Security Clearance Accountability, Reform, and Enhancement 
Act of 2015.''

Section 2. Table of contents

    This section provides a table of contents for the bill.

  TITLE I--SECURITY CLEARANCE ACCOUNTABILITY, REFORM, AND ENHANCEMENT

Section 101. Definitions

    This section defines terms used in the title including 
``appropriate agency,'' ``appropriate congressional 
committees,'' ``covered contract,'' ``covered individual,'' and 
``covered misconduct.''

Section 102. Accountability of individuals involved in misconduct 
        affecting the integrity of agency background investigations

    Subsection (a) states that a Federal employee who engages 
in covered misconduct is unfit for Federal employment and bars 
the individual from working on background investigations.
    Subsection (b) similarly bars a Federal contractor who 
engages in covered misconduct from the contract and from 
working on background investigation under any contract. This 
section also requires current and future contracts for 
background investigations include a provision requiring 
disclosure of misconduct to the contracting agency within 24 
hours of discovery, and referral of the allegation for agency 
investigation within 5 days.
    Subsection (c) requires an annual report from the President 
on implementation of this section.

Section 103. Review and update of position designation guidance

    This section requires that--within 180 days and every five 
years thereafter--the President update guidance for agencies to 
use in determining the sensitivity designation of positions and 
background investigation necessary for the position. This 
section also requires a report from the President within 30 
days of each required review.

      TITLE II--PREVENTING CONFLICTS OF INTEREST WITH CONTRACTORS

Section 201. Definitions

    This section defines terms used in the title

Section 202. Limitation on contracting to prevent organizational 
        conflicts of interest

    This section prohibits a contractor from performing the 
agency's final quality review of the contractor's own work. 
This provision is intended to prevent conflicts of interest 
that might otherwise undermine the impartiality and objectivity 
of the quality review or give a contractor an unfair 
competitive advantage over other contractors.

                   V. EVALUATION OF REGULATORY IMPACT

    Pursuant to the requirements of paragraph 11(b) of rule 
XXVI of the Standing Rules of the Senate, the Committee has 
considered the regulatory impact of this bill and determined 
that the bill will have no regulatory impact within the meaning 
of the rules. The Committee agrees with the Congressional 
Budget Office's statement that the bill contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act (UMRA) and would impose no costs 
on state, local, or tribal governments.

             VI. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

                                                      May 21, 2015.
Hon. Ron Johnson,
Chairman Committee on Homeland Security and Governmental Affairs, U.S. 
        Senate Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 434, the Security 
Clearance Accountability, Reform, and Enhancement Act of 2015.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Matthew 
Pickford.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

S. 434--Security Clearance Accountability, Reform, and Enhancement Act 
        of 2015

    S. 434 would amend federal law to reform the security 
clearance process. A security clearance is a determination that 
a federal employee or contractor is eligible for access to 
classified national security information. The bill would 
require all federal agencies to terminate or place on 
administrative leave any employee that is involved in 
misconduct involving the security clearance process and 
prohibit employees of contractors and subcontractors involved 
in similar misconduct from performing background 
investigations. S. 434 also would prevent security clearance 
contractors from reviewing and approving their own background 
investigations.
    Based on information from the Office of Personnel 
Management, which oversees the private firms that conduct the 
majority of investigations needed for security clearances, most 
of the provisions of the legislation would codify and expand 
current federal policies and practices regarding security 
clearances. Therefore, CBO estimates that implementing this 
legislation would have an insignificant cost. Enacting S. 434 
could affect direct spending by some agencies (such as the 
Tennessee Valley Authority) because they are authorized to use 
receipts from the sale of goods, fees, and other collections to 
cover their operating costs. Therefore, pay-as-you-go 
procedures apply. Because most of those agencies can adjust the 
amounts they collect, CBO estimates that any net changes in 
direct spending by those agencies would not be significant. 
Enacting the bill would not affect revenues.
    S. 434 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.
    The CBO staff contact for this estimate is Matthew 
Pickford. The estimate was approved by H. Samuel Papenfuss, 
Deputy Assistant Director for Budget Analysis.

       VII. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    Because this legislation would not repeal or amend any 
provision of current law, it would make no changes in existing 
law within the meaning of clauses (a) and (b) of paragraph 12 
of rule XXVI of the Standing Rules of the Senate.

                                  [all]
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