DOD Personnel Clearances: Improved Annual Reporting Would Enable More Informed Congressional Oversight
Published: 2008-02-13T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Department of Defense (DOD) industry personnel security clearance program has long-standing delays and backlogs in completing clearance requests and difficulties in accurately projecting its future needs for investigations to be conducted by the Office of Personnel Management (OPM). In 2006, Congress mandated that DOD report annually on the future requirements of the program and DOD's efforts to improve it, and that GAO evaluate DOD's first report. Specifically, GAO was required to report on (1) the extent to which the report responds to the issues in the mandate, (2) the number and cost of clearance investigations and adjudications in fiscal years 2000-2006, and (3) the extent to which DOD has developed procedures to estimate future needs, plans to reduce delays and backlogs, and plans to provide funding for the program. To accomplish these objectives, GAO obtained and reviewed laws, executive orders, policies, reports, and other documents related to the security clearance process and interviewed officials from a range of government offices concerned with the clearance process.
section_title: What GAO Found
paragraphs: Although DOD's first annual report responded to the issues specified in the mandate, it did not include certain important information that was available on funding, processing times, and quality. DOD's report limited the funding requirements information for its industry security clearance program to 2007 and 2008, even though the department asserted before Congress in May 2007 that it would need tens of millions of dollars in the future to maintain the infrastructure supporting the program and to cover operating costs. While DOD reported the average total time for DOD industry clearances and the average time to complete all clearance investigations, it did not include information on the time to complete any of the other phases (e.g., adjudication). GAO's September 2006 report suggested that longer delays are found in some phases of the process than in others and that quantifying those delays would be useful. The DOD report was largely silent on measures of quality in the clearance process, which is crucial if agencies are to accept the validity of clearances from other agencies. By not including these types of information, DOD limited the information available to Congress as it oversees the effectiveness of DOD's industry personnel security clearance program. GAO was unable to report the number and unit cost of investigations and adjudications for fiscal years 2000 through 2004 because data were either unavailable or insufficiently reliable. However, DOD reported that OPM conducted 81,495 and 138,769 investigations of industry personnel in fiscal years 2005 and 2006, respectively, and DOD granted clearance eligibility to 113,408 and 144,608 industry personnel in fiscal years 2005 and 2006, respectively. In estimating unit costs, DOD and OPM did not account for all factors affecting the cost of a clearance--factors that would have made the DOD-provided estimates higher. These factors included (1) the cost of special interviews that are sometimes necessary to resolve discrepancies in information and (2) that top secret clearance adjudications normally take about twice as long as those for secret/confidential clearances. DOD's procedures and plans are evolving, including procedures for projecting the number of future investigations it will need and plans to reduce backlogs and delays, as well as steps to fund the industry clearance program. In ongoing efforts to address the continued inaccuracy of its projections of future clearance needs, DOD has taken several steps. For example, DOD made its voluntary annual survey of contractors performing classified government work accessible through the Internet in 2006 and began encouraging industry staff to complete it. The response rate increased to 86 percent of industry personnel in 2007. Further, while DOD does not have its own plan to address the funding of its clearance program and its delays in processing clearances, it is currently participating in a governmentwide effort to make clearance processes more efficient and cost-effective. Streamlining and improving the efficiency of its clearance process is also one of DOD's top transformation priorities. In its 2004 report, GAO recommended that DOD implement a comprehensive plan and improve its estimates of future investigation needs.

section_title: Letter
paragraphs: The Department of Defense’s (DOD) long-standing delays and backlogs  (i.e., cases that have exceeded government timeliness requirements) in  completing clearance requests, as well as other impediments that hindered  DOD’s ability to accurately estimate and eliminate its clearance backlog,  led us to begin designating DOD’s personnel security clearance program as  a high-risk area in January 2005. We have also noted that it is crucial for  officials granting security clearances to be scrupulous in their decision  making because of the potential damage to national security and foreign  relations that could result if personnel with security clearances fail to  adequately safeguard classified information. In April 2006, DOD briefly  stopped processing applications for clearance investigations for industry  personnel, attributing the stoppage to a large volume of industry clearance  requests and funding problems. In 2006, the John Warner National Defense  Authorization Act of 2007 mandated that DOD report annually on the  future requirements of the industry personnel security clearance  investigations program and that we evaluate DOD’s first report in response  to this mandate.
DOD’s Office of the Under Secretary of Defense for Intelligence   has responsibility for determining eligibility for clearances for  servicemembers, DOD civilian employees, and industry personnel  performing work for DOD and 23 other federal agencies. That  responsibility includes obtaining background investigations, primarily  through the Office of Personnel Management (OPM). Within OUSD(I), the  Defense Security Service (DSS) uses OPM-provided investigative reports  to determine clearance eligibility of industry personnel. As of May 2006,  industry personnel held about one-third of the approximately 2.5 million  DOD-maintained personnel security clearances. Individuals working for  private industry play a growing role in national security work conducted  by DOD and other federal agencies—as a result of the increased  awareness of threats to our national security stemming from the terrorist  attacks on the United States on September 11, 2001, and increased efforts  over the past decade to privatize federal jobs.
Our prior work has shown that there have been delays in processing  clearances for industry personnel. For example, in our September 2006  report, we found that industry personnel contracted to work for the  federal government waited more than 1 year on average to receive top  secret clearances. Specifically, our analysis of about 2,300 cases showed  the clearance process took an average of 446 days for initial top secret  clearances and 545 days for renewals of top secret clearances. While the  government’s goal for the application-submission phase of the process is  14 days or less, this phase took an average of 111 days.
Problems in the clearance program can negatively affect national security.  For example, delays in renewing security clearances for personnel who  are already doing classified work can lead to a heightened risk of  disclosure of classified information. In contrast, delays in providing initial  security clearances for previously noncleared personnel can result in other  negative consequences, such as additional costs and delays in completing  national security-related contracts, lost-opportunity costs, and problems  retaining the best-qualified personnel. The Intelligence Reform and  Terrorism Prevention Act of 2004 provided timeliness guidelines that  currently require adjudicative agencies to make a determination on at least  80 percent of all applications for a security clearance within an average of  120 days after the date of receipt of the application, with 90 days for the  investigation and 30 days for the adjudication. Moreover, as we noted in  our prior reports, when clearance investigations or adjudications  (determination of eligibility for a clearance) were inadequately or  inconsistently documented, DOD was unable to demonstrate that it had  fully considered all significant adverse conditions that might call into  question an individual’s ability to adequately safeguard classified  information.
The John Warner National Defense Authorization Act for Fiscal Year 2007  required DOD to include in its annual budget submission to Congress a  report on DOD’s industry personnel clearance investigations program.  Specifically, the law required that DOD report on five items: (1) the  funding requirements of the investigations program and the ability of the  Secretary of Defense to fund it, (2) the size of the investigation process  backlog, (3) the length of the average delay for an individual case pending  in the investigation process, (4) any progress made by the Secretary of  Defense in implementing planned changes in the investigation process  during the 12 months preceding the report date, and (5) a determination,  certified by the Secretary of Defense, of whether the investigation process  had improved during the 12 months preceding the report date. The  mandate specified that DOD shall include this report annually in the  defense budget justification documents it submits to Congress. DOD  submitted its 2007 report on August 20, 2007, about 6 months after it  submitted its budget justification documents to Congress.
The mandate further specified that we review the initial DOD report and  provide additional information to Congress. This additional information is  the number and unit cost of each type of clearance investigation and  adjudication for industry personnel performed in fiscal years 2000 through  2006; the amount of any surcharge DOD paid to OPM for conducting an  investigation; a description of procedures DOD used to estimate the  number of investigations to be conducted annually; and a description of  DOD’s plans to reduce delays and backlogs, adequately fund the  investigative process, and establish a more effective and stable  investigations program. Therefore, this letter answers the following  questions: (1) To what extent does DOD’s August 2007 report to Congress  address the five issues specified in the mandate? (2) What were the  number and cost of each type of clearance investigation and adjudication  for industry personnel performed in fiscal years 2000 through 2006? (3) To  what extent has DOD developed procedures to estimate the number of  investigations to be conducted; plans to reduce delays and backlogs in the  clearance program, if any; and provide funding? This report contributes to  a larger GAO body of work on DOD’s personnel security clearance  program. (See the list of related GAO products at the end of this report.)
Our scope was limited to industry personnel whose clearance  investigations or adjudications occurred in fiscal year 2000 or later and  were the responsibility of OUSD(I). For all three questions, we reviewed  laws, executive orders, and policies related to top secret, secret, and  confidential security clearance investigations and adjudications. Those  sources provided most of the criteria we used to assess the DOD report on  personnel security clearances for industry and for the data and planning  we examined to address our other two researchable questions. We gained  additional insights about causes and effects to explain our findings from  reports (e.g., GAO and DOD Office of the Inspector General) and  documentary and testimonial evidence from interviews we conducted with  personnel associated with a variety of government offices: OUSD(I), DSS,  DOD’s adjudication facilities for industry personnel clearances, the Office  of the Under Secretary of Defense for the Comptroller , and  DOD’s Personnel Security Research Center. To determine the extent to  which DOD’s report to Congress addressed the five issues specified in  Public Law 109-364 (Sec. 347), we compared the findings in the DOD  report to the mandated requirements and governmentwide and DOD-wide  data quality standards. To determine the number and cost of each type of  clearance work performed for industry personnel in fiscal years 2000  through 2006, we obtained and analyzed investigations-related data from  DSS and OUSD(C), as well as adjudications-related data from DOD’s two  adjudication facilities for industry personnel clearances. When we  assessed the reliability of the data pertaining to numbers and costs of  investigations and adjudications, we found that some of the information  was not available, could not be assessed, or contained discrepancies when  compared with data from other sources. Since the data for fiscal years  2000 through 2004 were not sufficiently reliable, we have reported  numbers and costs for only fiscal years 2005 and 2006, which were  sufficiently reliable for the purposes of this report. To determine the  extent to which DOD has implemented plans to make its clearance  program more effective and stable by better estimating the numbers of  industry clearances needed, reducing delays and backlogs, and providing  adequate funding, we reviewed planning documentation that OUSD(I) and  DSS officials provided. Additional information on our scope and  methodology is presented in appendix I. We conducted this performance  audit from May 2007 through February 2008 in accordance with generally  accepted government auditing standards. Those standards require that we  plan and perform the audit to obtain sufficient, appropriate evidence to  provide a reasonable basis for our findings and conclusions, based on our  audit objectives. We believe that the evidence we obtained provides a  reasonable basis for our findings and conclusions based on our audit  objectives.
subsections: section_title: Background
paragraphs: DOD obtains nearly all of its clearance investigations through OPM, which  is currently responsible for 90 percent of the personnel security clearance  investigations for the federal government. DOD retained responsibility for  adjudicating clearances of servicemembers, DOD civilians, and industry  personnel. Two DOD offices are responsible for adjudicating cases  involving industry personnel. The Defense Industrial Security Clearance  Office (DISCO) within DSS adjudicates cases that contain only favorable  information or minor issues regarding security concerns (e.g., some  overseas travel by the individual). The Defense Office of Hearings and  Appeals (DOHA) within the Defense Legal Agency adjudicates cases that  contain major security issues (e.g., an individual’s unexplained affluence  or criminal history) which could result in the denial of clearance eligibility  and possibly lead to an appeal.
Like servicemembers and federal workers, industry personnel must obtain  a security clearance to gain access to classified information, which is  categorized into three levels: top secret, secret, and confidential. The level  of classification denotes the degree of protection required for information  and the amount of damage that unauthorized disclosure could reasonably  be expected to cause to national security. For top secret information, the  expected damage that unauthorized disclosure could reasonably be  expected to cause is “exceptionally grave damage;” for secret information,  it is “serious damage;” and for confidential information, it is “damage.”
section_title: DOD’s Report Responded to the Mandated Issues but Did Not Include Certain Important Data on Some Issues
paragraphs: DOD provided information on each issue specified by the mandate, but  certain important information on funding, processing times, and quality  was limited or absent. DOD divided its nine-page report into five sections,  corresponding to the five sections of the law. DOD began with a  discussion of the personnel security clearance investigation funding  requirements—$178 million for fiscal year 2007 and approximately $300  million for fiscal year 2008—and indicated that funds exist to cover the  fiscal year 2007 projected costs. In section two, DOD reported the size of  the investigative backlog by showing that 21,817 (48 percent) of the  applications for clearance investigations for industry personnel which  were still pending as of July 14, 2007, were more than 90 days old. In  section three, DOD reported OPM statistics that showed the average  number of days required to complete investigations as of May 2007. An  initial top secret clearance took an average of 211 days; top secret  renewals, an average of 334 days; and all secret/confidential initials and  renewals, an average of 127 days. The fourth section of DOD’s report  highlighted seven areas that DOD characterized as progress toward  implementing planned changes in the process. These areas included  timeliness-improvement actions that were DOD-specific (e.g., adding a  capability to electronically submit the applicant’s form authorizing the  release of medical information) and governmentwide (e.g., submitting all  requests for clearances using OPM’s Electronic Questionnaires for  Investigations Processing). In the fifth section, the Under Secretary of  Defense for Intelligence certified that the department had taken actions to  improve the industry personnel clearance program during the 12 months  preceding the report date. DOD supported this finding by including a  table showing that the monthly average number of completed industry  investigations increased from 13,227 in July 2006 to 16,495 in July 2007.
Certain important information on three of the mandated issues—the  program funding requirements, the average processing time, and quality in  the clearance process—was limited or absent. First, DOD reported  program-funding requirements covering less than 2 years. DOD reported  an annualized projected cost of $178.2 million for fiscal year 2007, a  projected funding requirement of approximately $300 million for fiscal  year 2008, and a department statement indicating that it was able to fund  the industry personnel security clearance program for the remainder of  2007. The mandate directed DOD to report its funding requirements for the  program and the Secretary of Defense’s ability to fulfill them. While the  report described DOD’s immediate needs and ability to fund those needs,  it did not include information on (1) the funding requirements for fiscal  year 2009 and beyond, even though the survey used to develop the funding  requirements asked contractors about their clearance needs through 2010;  and (2) the tens of millions of dollars that the DSS Director testified to  Congress in May 2007 were necessary to maintain the infrastructure  supporting the industry security clearance program. The OUSD(I) Director  of Security and the DSS Director told us that the department did not  include funding requirements beyond fiscal year 2008 because of concerns  about the accuracy of the data used to identify the requirements. They told  us that the funding requirements of the program depend on the estimates  of the future number of investigations that DSS will obtain from OPM,  which DSS determines using its annual survey. They, as well as the report,  indicated that because projections made farther into the future are more  likely to be inaccurate, DOD decided not to include funding projections  beyond 1 future year in the report. The report also stated that the data  used to construct the projected funding requirements are available  through fiscal year 2010, but the report did not include that information.  DOD regularly submits longer-term financial planning documents to  Congress. Specifically, the future years defense program (FYDP), which is  submitted annually to Congress, contains detailed data projections for the  budget year in which funds are being requested and at least the 4  succeeding years. The FYDP is a long-term capital plan and as such  provides DOD and Congress with a tool for looking at future funding  needs beyond immediate budget priorities.
Second, DOD reported the average investigation times cited earlier but did  not include the times for other specific phases of the end-to-end clearance  process. DOD reported the average number of days it took to complete  investigations for all clearances closed between May 2006 and May 2007  and the average numbers of days to process DOD industry clearances from  end to end for all cases adjudicated during the first 6 months of fiscal year  2007. The mandate directed DOD to report the length of the average delay  for an individual case pending in the personnel security clearance  investigation process. The Intelligence Reform and Terrorism Prevention  Act of 2004 requires the processing of at least 80 percent of clearances to  be completed within an average of 120 days, including no more than 90  days for the investigation. Although it did not provide times for other  clearance phases and was not mandated to do so, DOD’s report stated that  a joint study conducted by OPM, DSS, and industry identified average  times to complete six discrete phases—including the investigation, the  time needed to mail investigation reports from OPM to a DOD adjudication  facility, and the adjudication. Our September 2006 report showed that  longer delays are found in some phases of the process than in others (e.g.,  our analysis of 2,259 cases showed that the application-submission phase  took an average of 111 days to complete instead of the goal of 14 days) and  suggested that monitoring each of the phases would help DOD to identify  where actions are needed to improve timeliness. The OUSD(I) Director of  Security and the DSS Director told us that because the DOD report  included both the average time to complete an investigation and the time  to process the clearance from start to finish, the department did not  include the times to process the additional discrete phases of the  clearance process. While the information included in the report provides  visibility to the processing times for the investigation and for the entire  process, monitoring and reporting times for each phase would help DOD  and Congress to identify where actions are most needed to improve  timeliness.
Third, DOD documented improvements in the process but was largely  silent regarding quality in the clearance processes. While DOD described  several changes to the process it characterized as progress, it provided  little information on measures of quality used to assess the clearance  processes or procedures to promote quality during clearance  investigations and adjudications processes. Specifically, the DOD report’s  section describing improvements noted that DSS, DOD’s adjudicative  community, and OPM are gathering and analyzing measures of quality for  the clearance processes that could be used to provide the national security  community with a better product. However, the DOD report did not  include any of those measures. When we asked the OUSD(I) Director of  Security why the measures of quality were not included, he said the  department did not include them because stakeholders in the clearance  processes have not agreed on how to measure quality. In September 2006,  we identified several areas where OPM-supplied investigative reports and  DOD adjudicative data were incomplete. We noted that while eliminating  delays in the clearance process is an important goal, the government  cannot afford to achieve that goal by providing reports of investigations  and adjudications that are incomplete in key areas. We additionally noted  that the lack of full reciprocity of clearances—when a security clearance  granted by one government agency is not accepted by another agency—is  an outgrowth of agencies’ concerns that other agencies may have granted  clearances based on inadequate investigations and adjudications.
In deciding not to provide certain important information in its first annual  report to Congress, DOD has limited the information available to Congress  as it oversees the effectiveness of DOD’s industry personnel security  clearance processes. Specifically, by not including funding requirements  for 2009 and beyond, DOD left out information Congress could use in  making longer-term appropriation and authorization decisions for this  program. In addition, by not including the times to complete phases of the  clearance process other than the investigation, DOD makes it less  apparent to Congress where the most significant timeliness gains can be  made relative to the costs of improving the processes. Finally, by not  including measures of quality in the clearance processes, DOD has only  partially supported its assertion that it has made improvements to the  clearance processes.
section_title: Many of DOD’s Records of the Numbers and Costs of Security Clearance Investigations and Adjudications Were Not Available or Were Considered Unreliable
paragraphs: DOD reported that OPM conducted 81,495 investigations for the  department in fiscal year 2005 and 138,769 in fiscal year 2006 and that  DOD staff granted clearance eligibility to 113,408 industry personnel in  fiscal year 2005 and 144,608 industry personnel in fiscal year 2006.  However, we are unable to report the numbers and unit costs of  investigations and adjudications for industry personnel for fiscal years  2000 through 2004, because DOD either was not able to provide data or  supplied data that we found to be insufficiently reliable to report. Reliable  information for fiscal years 2000 through 2004 was not available because  of factors such as the abandonment of an electronic database for  recording investigative and adjudicative information. Although some  limitations are present for the numbers and costs data for industry  personnel for fiscal years 2005 and 2006, our assessments show that they  are sufficiently reliable for us to report them, along with explicit  statements about their limitations.
subsections: section_title: DOD Could Not Provide Sufficiently Reliable Information on the Numbers and Costs of Investigations and Adjudications for Fiscal Years 2000 through 2004
paragraphs: Our assessments of data on the numbers and costs of investigations and  adjudications for industry personnel for fiscal years 2000 through 2004  showed that DOD-provided information was not sufficiently reliable for us  to report. The shaded portion of table 1 summarizes underlying factors  that contributed to DOD’s inability to provide us with reliable data. (In the  next section, we report information provided to us by DOD on the  numbers and costs of investigations and adjudications for fiscal years 2005  and 2006).
When we assessed the reliability of DOD-provided information on the  numbers of investigations for industry personnel, we found discrepancies  in the fiscal years 2000 through 2004 summary records kept by two DOD  offices: DSS and OUSD(C). The discrepancies in the annual numbers of  investigations ranged from 3 to 48 percent. Relative to the numbers found  in DSS records, OUSD(C) records showed 3 percent more investigations  for secret clearances had been completed in fiscal year 2001 and 48  percent fewer investigations for initial top secret investigations had been  completed in fiscal year 2000. The original source of data for both offices’  records was DOD’s Case Control Management System (CCMS), which had  formerly been used to electronically store data on DOD personnel security  clearance investigations. DOD stopped maintaining CCMS in conjunction  with the department’s transfer of DSS’s investigative functions and  personnel to OPM in February 2005. DOD estimated that it could save $100  million over 5 years in costs associated with maintaining and updating  CCMS by instead using OPM’s Personnel Investigations Processing System  for electronically storing investigations data. Because CCMS is no longer  available, we were unable to determine which—if either—office’s data  were sufficiently reliable for the purposes of this report. While DOD no  longer has access to the CCMS software tool needed to aggregate the  associated personnel security clearance data, individual files on industry  personnel have been archived and are available for access (e.g., when  someone renews a clearance).
We are similarly unable to report the number of adjudications for fiscal  years 2000 through 2004, because DOD could not provide information that  was sufficiently reliable for the purposes of this report. Sufficiently  reliable data were not available for this period because the Joint Personnel  Adjudications System (JPAS) did not become the official DOD  adjudication database until February 2005. In the prior years, DSS had  stored adjudication-related information on industry personnel in CCMS— which is no longer operational. A DSS official indicated that JPAS provides  pre-2005 adjudication information inaccurately because of problems DOD  experienced when transitioning from CCMS to JPAS.
We found cost data on industry personnel clearances for fiscal years 2000  through 2004 to be insufficiently reliable, as evidenced by the  inconsistency of the information that we obtained from DSS and  OUSD(C). At the most extreme, the DSS records show that the cost for an  investigation of a secret clearance in fiscal year 2004 was 486 percent  higher than the rate reported in OUSD(C) records. DOD’s ability to  provide us with more reliable information was hampered by two factors.  First, when DOD transferred its investigative function and 1,800  authorized positions to OPM in February 2005, the transfer resulted in lost  or misplaced records and reduced institutional knowledge in DSS’s  financial management office. The DSS Director told us that DSS record  keeping has not been a “strong suit” of the agency in the past. Second, DSS  leadership has frequently changed over the past 5 years. For example, DSS  had four acting directors in the 4 years before getting its current  permanent Director, and it had nine comptrollers during the same period.
The unit cost for adjudications for fiscal years 2000 through 2004 for  industry personnel clearances could not be computed, because the total  cost of all adjudications and the number of adjudications—key variables in  computing unit cost—were either unavailable or unreliable. For example,  DSS officials told us that the budget records for this period did not  differentiate the portion of DSS’s budget used to fund DISCO, which  adjudicates the majority of DOD’s clearances for industry. Additionally,  officials from DOHA, which adjudicates some industry cases, told us that  they similarly could not accurately identify a unit cost for adjudications.  DOHA officials told us that because their adjudicators conduct additional  work besides security clearance work and those costs are not accounted  for separately, estimates of the unit cost of the adjudicative work they  perform would be speculative. Finally, as we discussed above, the data  that DOD provided on the number of adjudications for 2000 through 2004  were not sufficiently reliable for the purposes of this audit.
section_title: DOD Provided Sufficiently Reliable Data on the Numbers and Costs of Investigations and Adjudications for Fiscal Years 2005 and 2006
paragraphs: DOD reported that OPM conducted 81,495 investigations of industry  personnel for the department in fiscal year 2005 and 138,769 such  investigations in 2006 (see table 2). The difference in the numbers of  investigations for the 2 years is due largely to the fact that DOD could not  provide reliable information on the number of investigations that DSS  completed before the February transfer of investigative staff and functions  to OPM. In both years, OPM provided DOD with more investigations for  secret or confidential clearances than for top secret clearances. More  secret/confidential clearances are historically required and performed as  compared to top secret clearances, and data presented in table 2 are  consistent with this trend.
Using OPM-provided data, DSS determined that it had granted clearance  eligibility to 113,408 industry personnel in fiscal year 2005 and 144,608  industry personnel in fiscal year 2006 (see table 3). The number of  clearances granted in a year may not match the number of investigations  conducted in that year because of the time that elapses between  completion of the investigation and completion of the adjudication.
For the 2 most recent of the 7 fiscal years specified in the mandate, the  total estimated unit cost for the entire clearance process varied from $290  for an initial or a renewal of a secret/confidential clearance to $3,850 for  the initial top secret clearance that is determined with a standard  investigation (see table 4). The lower half of table 4 shows that  investigations that are given higher priorities cost more.
Regardless of whether the clearance was based on a standard or priority  investigation, the primary reason for the difference in costs is due to the  effort required to complete the different types of investigations. For  example, our September 2006 report noted that OPM estimated that  approximately 60 total staff hours are needed for each investigation for an  initial top secret clearance and 6 total staff hours are needed for each  investigation to support a secret or confidential clearance. Another factor  that causes variability in the cost of the clearance determination is  whether investigators can use a phased reinvestigation. Starting in fiscal  year 2006, the President authorized the use of phased reinvestigations,  which do not require some types of information to be gathered during the  renewal of a top secret clearance unless there are potentially derogatory  issues found in earlier portions of the reinvestigation.
While the information in table 4 provides the estimated unit costs of  investigations and adjudications and estimated total costs, several  considerations suggest that the actual unit costs would be somewhat  different from those shown in the table if OPM and DOD were to account  for all of the costs. For example, the fixed costs for the investigations do  not include any additional costs that DOD might incur should adverse  information be revealed that requires an additional subject interview to  address this information. In these instances, OPM charges DOD for an  additional interview to resolve the issue before the case is adjudicated. In  addition, if DOD sends an investigation report back to OPM with a request  for additional interviews in order to reconcile conflicting information,  there may be additional fees. DOD officials stated that cases requiring  subsequent resolution of multiple issues could result in additional charges  to address each issue. These special interviews cost $515 in 2005 and $430  in 2006. DOD was unable to provide data identifying the number of  investigations that included these special interviews. Conversely, the 2006  investigation costs do not address a $7 million refund that OPM made to  DOD in September 2006; the refund pertained to a surcharge covering all  DOD investigations that DOD had paid to OPM.
In fiscal years 2005 and 2006, DOD paid OPM a surcharge in addition to the  base rate OPM charged DOD to conduct investigations. The surcharge  amounts were 25 percent in fiscal year 2005 and 19 percent in fiscal year  2006. DOD and OPM agreed to this surcharge in a memorandum of  understanding that defined the terms of the transfer of the investigative  functions and personnel from DSS to OPM. This surcharge was intended  to offset any potential operating losses that OPM incurred in taking over  the investigative function from DSS. However, disagreements between  DOD and OPM about the amount of the surcharge led to mediation  between the agencies in September 2006 and resulted in a retroactive  reduction of the surcharge to 14 percent for the third quarter of fiscal year  2006 and an elimination of the surcharge for fiscal year 2007 and beyond.
The unit costs of the adjudications—$100 in fiscal year 2005 and $90 in  fiscal year 2006—are approximations that must be viewed with some  caution. DOD officials acknowledged that while they provided a single  value for the unit cost of both top secret and secret/confidential  adjudications, the actual time to adjudicate top secret clearance-eligibility  determinations is roughly twice that required to adjudicate  secret/confidential clearance-eligibility determinations. Furthermore, the  DOD-supplied unit cost estimate for adjudications does not account for  the cost associated with the additional work required to adjudicate  derogatory information in some of the cases that are sent to DOHA. Prior  to 2005, DSS had not differentiated the adjudication portion of its budget  from other functions in its budget.
section_title: DOD’s Procedures for Projecting Future Investigation Needs and Its Plans for Improving and Funding the Industry Clearance Program Are Evolving
paragraphs: Changes are occurring in the way in which DOD estimates its future  investigations needs, as well as its plans and funding for modifying the  personnel security clearance program for industry personnel. The  procedures for estimating the numbers of clearance investigations needed  annually for industry personnel are being revised in an attempt to improve  the accuracy of those estimates. Similarly, DOD is not pursuing DOD- specific planning for reducing backlogs and delays as well as steps to  adequately fund its clearance process but instead is participating in  governmentwide planning efforts to improve clearance processes.
subsections: section_title: DOD’s Method for Estimating the Numbers of Industry Personnel Clearance Investigations Needed in the Future Is Evolving
paragraphs: DOD is changing the methods it uses to estimate the numbers of security  clearance investigations it will need for industry personnel in the future in  an effort to improve the accuracy of those estimates. Since 2001, DOD has  conducted an annual survey of contractors performing classified work for  the government in order to estimate future clearance-investigation needs  for industry personnel. In November 2005, OMB reported a  governmentwide goal whereby agencies have been asked to work toward  refining their projections to be within 5 percent of the numbers of actual  requests for investigation. However, DOD has had difficulties in  projecting its departmentwide clearance needs accurately. For the first  half of fiscal year 2006, OPM reported that DOD had exceeded its  departmentwide projection by 59 percent. The negative effects of such  inaccurate projections include impediments to workload planning and  funding.
We have addressed the impact that inaccurate projections have on  workload planning in our prior work. In 2004, we recommended that  OUSD(I) improve the projections of clearance requirements for industry  personnel—for both the numbers and types of clearances—by working  with DOD components, industry contractors, and the acquisition  community to identify obstacles and implement steps to overcome them.  At that time, DOD officials attributed inaccurate projections to (1) the fact  that the voluntary annual survey was answered by only a small fraction of  the more than 10,000 cleared contractor facilities, (2) the use of some  industry personnel on more than one contract and often for different  agencies, (3) the movement of employees from one company to another,  and (4) unanticipated world events such as the September 11, 2001,  terrorist attacks.
In its efforts to improve its estimates of future clearance investigation  needs, DSS has made recent changes to the methods it uses to develop  these estimates; and it is conducting research that may change these  methods further. First, starting in 2006, DSS made its annual survey  accessible through the Internet. Second, DSS field staff made a more  concerted effort to actively encourage industry representatives to  complete the voluntary survey. According to a DSS official, these two  changes increased the response rate of the survey, from historical lows of  between 10 and 15 percent of surveyed facilities in previous years, to 70  percent of facilities responding in 2007, representing 86 percent of  industry personnel with a clearance in fiscal year 2007. Third, during fiscal  year 2007, DSS began performing weekly updates to the analysis of future  investigation needs, rather than relying on the previous method of  performing a onetime annual analysis. Fourth, DSS has changed its  analysis procedures by including variables (e.g., company size) not  previously accounted for and is using a statistical method that substitutes  values for missing survey data. In addition, DOD’s Personnel Security  Research Center is assessing a statistical model for estimating future  investigation needs in order to determine if a model can supplement or  replace the current survey method.
section_title: DOD Currently Has No Plan of Its Own to Improve the Clearance Process but Is Participating in Related Governmentwide Efforts
paragraphs: Modifications to DOD’s personnel security clearance program are  changing from a DOD-specific emphasis to one that focuses on  governmentwide efforts. Consequently, DOD does not have a  comprehensive plan to address department-specific clearance backlogs,  delays, and program funding. The principles of the Government  Performance and Results Act of 1993 provide federal agencies with a basis  for a results-oriented framework that they can use to construct  comprehensive plans that include setting goals, measuring performance,  and reporting on the degree to which goals are met. In addition, the  Intelligence Reform and Terrorism Prevention Act of 2004 provides DOD  with timeliness requirements that would need to be met in any such  comprehensive plan addressing clearance backlogs and delays.
In our 2004 report on personnel security clearances for industry  personnel, we recommended that DOD develop and implement an  integrated, comprehensive management plan to eliminate the backlog,  reduce the delays in conducting investigations and determining eligibility  for security clearances, and overcome the impediments that could allow  such problems to recur. At that time, DOD had been reacting to the  impediments in a piecemeal fashion, rather than establishing an integrated  approach that incorporated objectives and outcome-related goals, set  priorities, identified resources, established performance measures, and  provided milestones for permanently eliminating the backlog and reducing  the delays.
The DSS Director told us that DSS had been drafting a comprehensive plan  to improve the security clearance process for industry personnel, but new  governmentwide efforts have supplanted the larger-scale initiatives that  DSS was planning. However, according to OUSD(I) officials, DOD  continues to pursue a limited number of smaller-scale initiatives to  address backlogs and delays and to ensure that funding is available for its  security clearance processes. For example, to address delays in the  processes, DOD is working with OPM to introduce methods of obtaining  applicants’ fingerprints electronically and to implement a method that  would enable OPM to transfer investigative records to DOD adjudicators  electronically. To help ensure that funding is available for its security  clearance program, DOD is examining the number of clearances it funds  and undertakes for industry personnel who work with 23 other federal  agencies and departments. The DSS Director indicated that DOD is  considering the cost it incurs for providing clearance-related services and  the feasibility of shifting the funding responsibility back to the federal  agencies and departments that request the clearances through DOD.
High-level attention has been focused on improving personnel security  clearance processes governmentwide. Since June 2005, OMB’s Deputy  Director of Management has been responsible for a leadership role in  improving the governmentwide processes. During that time, OMB has  overseen, among other things, the issuance of reciprocity standards, the  growth of OPM’s investigative workforce, and greater use of OPM’s  automated clearance-application system. An August 9, 2007, memorandum  from the Deputy Secretary of Defense indicates that DOD’s clearance  program is drawing attention at the highest levels of the department.
Streamlining security clearance processes is one of the 25 DOD  transformation priorities identified in the memorandum.
Another indication of high-level governmentwide involvement in  addressing problems in clearance processes is the formation of an  interagency security clearance process reform team in June 2007. The  team’s memorandum of agreement indicates that it seeks to develop, in  phases, a reformed DOD and intelligence community security clearance  process that allows the granting of high-assurance security clearances in  the least time possible and at the lowest reasonable cost. The team’s July  25, 2007, terms of reference indicate that the team plans to deliver “a  transformed, modernized, fair, and reciprocal security clearance process  that is universally applicable” to DOD, the intelligence community, and  other U.S. government agencies, no later than December 31, 2008. In our  November 2007 discussions with DOD officials, the OUSD(I) Director of  Security clarified that the government expects to have demonstrated the  feasibility of components of the new system by December 2008, but the  actual system would not be operational for some additional unspecified  period.
section_title: Conclusions
paragraphs: While DOD’s initial report on security clearances addressed all of the  issues specified in the mandate, the omission of certain important  information on the same issues currently limits Congress’s ability to carry  out its oversight and appropriations functions pertaining to industry  personnel security clearances. For example, inclusion of only one future  year of budgeting information limits the report’s usefulness for strategic  appropriations and oversight purposes. Without more information on  DOD’s longer-term funding needs for industry personnel security  clearances, Congress lacks the visibility it needs to fully assess  appropriations requirements. Elsewhere, DOD provides such longer-term  funding projections as a tool for looking beyond immediate budget  priorities. Specifically, DOD annually submits to Congress the FYDP,  which contains budget projections for the current budget year and at least  the 4 succeeding years. Similarly, congressional oversight is hampered by  the absence of information specific to industry personnel on timeliness  measures for the average number of days it takes to perform portions of  the clearance process—such as the adjudication phase—for pending and  completed cases. Without these additional statistics, there is limited  transparency for monitoring the progress that DOD and OPM are making  annually in streamlining investigative and adjudicative tasks. Finally,  DOD’s report did not include any metrics on quality, even though we have  previously recommended—in multiple reports and testimonies—that DOD  and other parts of the government develop and report such measures for  their clearance processes. Problems with the quality of investigations and  adjudications can lead to negative consequences—such as the reluctance  of agencies to accept clearances issued by other agencies—and can  thereby increase waste in the form of unnecessary additional workload for  the entire clearance community. Inclusion of these three types of data in  the future annual reports appears feasible, based on statements in DOD’s  initial report that acknowledged the availability or ongoing development of  each type of data.
section_title: Recommendations for Executive Action
paragraphs: To improve the quality of the information that DOD provides in future  reports to Congress for monitoring the security clearance process for  industry personnel, we recommend that the Secretary of Defense direct  the Under Secretary of Defense for Intelligence to augment the  information contained in the department’s initial mandated report. We  therefore recommend the following three actions:    Add projected funding information for additional out years so that  Congress can use that input in making strategic appropriation and  authorization decisions about the clearance program for industry  personnel.  In addition to the mandated information on average delays for pending  cases; provide timeliness data for the additional phases within the  clearance process, to allow for greater transparency regarding which  processes are working well and which need improvement.
Develop measures of quality in the clearance process and include them in  future reports, to explicitly show how DOD is balancing quality and  timeliness requirements in its personnel security clearance program.
section_title: Agency Comments and Our Evaluation
paragraphs: In written comments on a draft of this report, OUSD(I) concurred with all  three of our recommendations. OUSD(I) noted that DOD agrees the  recommended additional information will aid Congress in its oversight  role and its future annual reports—starting in 2009—will include the  suggested information. Regarding our funding recommendation, OUSD(I)  noted its plans for addressing out year funding in the future and discussed  the difficulty in capturing infrastructure costs such as those needed to  sustain the current adjudication system and build a new information  technology system. With regard to our recommendation on quality, DOD  noted that the Personnel Security Research Center is leading the effort to  further define measures, develop collection methodology, and suggest  collection methods. DOD’s comments are included in their entirety in  appendix II of this report.
We are sending copies of this report to interested congressional  committees; the Secretary of Defense; the Director of the Office of  Management and Budget; and the Director of the Office of Personnel  Management. We will also make copies available to others on request. In  addition, the report will be available at no charge on the GAO Web site at  http://www.gao.gov.
If you or your staff has any questions about this report, please contact me  at (202) 512-3604 or farrellb@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff who made major contributions to this report are  listed in appendix III.
section_title: Appendix I: Scope and Methodology
paragraphs: The scope and methodology of this report follow from the questions it  answers. This report answers the following questions: (1) To what extent  does the Department of Defense’s (DOD) August 2007 report to Congress  address the five issues specified in the mandate? (2) What were the  number and cost of each type of clearance investigation and adjudication  for industry personnel performed in fiscal years 2000 through 2006? (3) To  what extent has DOD developed procedures to estimate the number of  investigations to be conducted; plans to reduce delays and backlogs in the  clearance program, if any; and provide funding?
In 2006, the John Warner National Defense Authorization Act for Fiscal  Year 2007 mandated that (1) DOD report annually on the future  requirements of its industry personnel security investigations program and  (2) we evaluate DOD’s first report in response to this mandate and provide  additional information on eight issues. For our review of the DOD report,  our scope was largely limited to information in the DOD report. The report  included information on initial and renewal top secret, secret, and  confidential clearances for industry personnel and information about  program funding, the size of the backlog, the average time to complete  investigations, and changes to the process. For the additional information  on the number and cost—including information on surcharges that DOD  paid to the Office of Personnel Management (OPM)—of each type of  industry clearance work performed in DOD’s personnel security clearance  program, we limited our scope to DSS- and OPM-conducted investigations  and DOD adjudications of initial and renewal top secret, secret, and  confidential clearances for industry personnel completed in fiscal years  2000 through 2006. For the additional information on planning and  investigation requirements-estimation procedures, our scope included  DOD and governmentwide plans and on-going efforts as well as DOD- specific procedures for estimating the numbers of future initial and  renewal top secret, secret, and confidential clearances which will be  needed for industry personnel.
subsections: section_title: Methodology
paragraphs: To determine the extent to which DOD’s report addressed each of the five  issues specified in the mandate, we reviewed various documents,  including laws and executive orders, DOD security clearances policies,  OPM security clearances policies, and DOD and governmentwide data  quality policies and regulations. These sources provided the criteria used  for assessing the DOD report on personnel security clearances for  industry. The sources also provided insights into possible causes and  effects related to our findings about whether the DOD report addressed  each of the issues specified in the mandate. We also reviewed clearance- related reports issued by organizations such as GAO, DOD’s Office of  Inspector General (DODIG), and DOD’s Personnel Security Research  Center. We interviewed and obtained and evaluated documentary evidence  from headquarters policy and program officials from various offices (see  the column for question 1 in table 5) in DOD, OPM, and the National  Archives and Records Administration (NARA). We compared the findings  in the DOD report to the mandated requirements and governmentwide and  DOD-wide data quality standards. We also interviewed and discussed our  observations of the DOD report with officials from various DOD offices.
To determine the number and cost of each type of clearance investigation  and adjudication for industry personnel performed in fiscal years 2000  through 2006, we obtained and analyzed data from the Defense Security  Service (DSS), the Office of the Under Secretary of Defense for the  Comptroller , the Defense Industrial Security Clearance Office  (DISCO), and the Defense Office of Hearings and Appeals (DOHA). Before  determining the numbers and types of investigations and clearances, we  assessed the reliability of the data by (1) interviewing knowledgeable  officials about the data and the systems that produced them; (2) reviewing  relevant documentation; and (3) comparing multiple sources (e.g., DSS vs.
OUSD(C) records) for consistency of information and examining patterns  in the data (e.g., the percentage of all adjudications in a given fiscal year  that were for top secret clearances). Our analyses showed the numbers  and costs of investigations and adjudications completed in fiscal years  2000 through 2004 were not sufficiently reliable for the purposes of this  report as we have previously discussed. In contrast we found the data for  fiscal years 2005 and 2006 to be sufficiently reliable for our purposes but  explicitly noted limitations with those data. The data for these 2 more  recent years used different databases than those used to capture the  earlier 5 years. Our methodology to determine the numbers and costs of  investigations and adjudications for fiscal years 2005 and 2006 included  the following:    Numbers of investigations: We obtained and analyzed data from OPM’s  Personnel Investigations Processing System that DSS provided to us.
Numbers of adjudications: We obtained and analyzed data from the Joint  Personnel Adjudications System.
Costs of investigations: We obtained and analyzed investigation rate data  in Financial Investigative Notices published by OPM. While we found  limitations associated with these types of data for fiscal years 2005 and  2006, we found that the information was sufficiently reliable for the  purposes of this report.
Surcharge for investigations: We obtained and analyzed documentary and  testimonial evidence from DSS and OUSD(C) officials.
Costs of adjudications: We obtained and analyzed unit cost information  that DSS officials produced for this report to show the cost of DISCO- provided adjudications and discussed the limitations of these data in the  report. Although DOHA reported a unit cost for adjudications for fiscal  year 2006, we did not report that statistic because our assessment revealed  that it was not sufficiently reliable for the purposes of this report.
Finally, we interviewed headquarters policy and program officials from  various offices (see question 2 in table 5) in DOD, OPM, and NARA to  obtain their perspectives on our observations of these data.
To determine the extent to which DOD has developed procedures to  estimate the number of future investigations needed for industry  personnel and the extent to which DOD has plans to reduce delays and  backlogs and provide funding, we took the following actions. We reviewed  relevant laws, regulations, and DOD security clearances policies. These  sources provided the criteria that we used in our evaluations. We also  reviewed relevant clearance-related reports issued by organizations such  as GAO, DODIG, and DOD’s Personnel Security Research Center. We  interviewed headquarters policy and program officials from the  organizations shown in table 5 (see the column for question 3). Our  methodology to determine the extent to which DOD has developed  procedures to estimate the number of future investigations needed for  industry personnel included three steps: (1) we obtained and analyzed  documents describing DOD’s procedures for estimating the number of  industry investigations, (2) we reviewed DSS’s Internet-based survey of  contractors who perform classified work for the government and  discussed our observations of this survey with the DSS Director and DSS  officials responsible for this survey, and (3) we reviewed documents  obtained from DOD officials describing ongoing research on potential  changes to the methods DOD uses to make these estimates. Finally, our  methodology to determine the extent to which DOD has plans to reduce  delays and backlogs and provide funding included reviewing documents  obtained in interviews with officials at the Office of the Under Secretary of  Defense for Intelligence  and DSS. In particular, we reviewed  and analyzed the Memorandum of Agreement between the Director of  National Intelligence and the Under Secretary Of Defense (Intelligence)  concerning the clearance process reengineering team. We also reviewed  an August 2007 memorandum from the Deputy Secretary of Defense listing  the top 25 transformation priorities for DOD, one of which is streamlining  the security clearance process.
We conducted this performance audit from May 2007 through February  2008 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
section_title: Appendix II: Comments from the Department of Defense
section_title: Appendix III: Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
paragraphs: Brenda S. Farrell, (202) 512-3604 or farrellb@gao.gov.
section_title: Acknowledgments
paragraphs: In addition to the contact named above, Jack E. Edwards, Assistant  Director; Joanne Landesman; James P. Klein; Ron La Due Lake; Thomas C.  Murphy; Beverly C. Schladt; and Karen Thornton made key contributions  to this report.
section_title: Related GAO Products
paragraphs: Defense Business Transformation: A Full-time Chief Management  Officer with a Term Appointment Is Needed at DOD to Maintain  Continuity of Effort and Achieve Sustainable Success. GAO-08-132T.  Washington, D.C.: October 16, 2007.
DOD Personnel Clearances: Delays and Inadequate Documentation  Found For Industry Personnel. GAO-07-842T. Washington, D.C.: May 17,  2007.
High-Risk Series: An Update. GAO-07-310. Washington, D.C.: January  2007.
DOD Personnel Clearances: Additional OMB Actions Are Needed To  Improve the Security Clearance Process. GAO-06-1070. Washington, D.C.:  September 28, 2006.
DOD Personnel Clearances: Questions and Answers for the Record  Following the Second in a Series of Hearings on Fixing the Security  Clearance Process. GAO-06-693R. Washington, D.C.: June 14, 2006.
DOD Personnel Clearances: New Concerns Slow Processing of Clearances  for Industry Personnel. GAO-06-748T. Washington, D.C.: May 17, 2006.
DOD Personnel Clearances: Funding Challenges and Other Impediments  Slow Clearances for Industry Personnel. GAO-06-747T. Washington, D.C.:  May 17, 2006.
Questions for the Record Related to DOD’s Personnel Security Clearance  Program and the Government Plan for Improving the Clearance Process.  GAO-06-323R. Washington, D.C.: January 17, 2006.
DOD Personnel Clearances: Government Plan Addresses Some Long- standing Problems with DOD’s Program, But Concerns Remain. GAO-06- 233T. Washington, D.C.: November 9, 2005.
Defense Management: Better Review Needed of Program Protection  Issues Associated with Manufacturing Presidential Helicopters. GAO-06- 71SU. Washington, D.C.: November 4, 2005.
Questions for the Record Related to DOD’s Personnel Security Clearance  Program. GAO-05-988R. Washington, D.C.: August 19, 2005.
Industrial Security: DOD Cannot Ensure Its Oversight of Contractors  under Foreign Influence Is Sufficient. GAO-05-681. Washington, D.C.: July  15, 2005.
DOD Personnel Clearances: Some Progress Has Been Made but Hurdles  Remain to Overcome the Challenges That Led to GAO’s High-Risk  Designation. GAO-05-842T. Washington, D.C.: June 28, 2005.
DOD’s High-Risk Areas: Successful Business Transformation Requires  Sound Strategic Planning and Sustained Leadership. GAO-05-520T.  Washington, D.C.: April 13, 2005.
High-Risk Series: An Update. GAO-05-207. Washington, D.C.: January  2005.
Intelligence Reform: Human Capital Considerations Critical to 9/11  Commission’s Proposed Reforms. GAO-04-1084T. Washington, D.C.:  September 14, 2004.
DOD Personnel Clearances: Additional Steps Can Be Taken to Reduce  Backlogs and Delays in Determining Security Clearance Eligibility for  Industry Personnel. GAO-04-632. Washington, D.C.: May 26, 2004.
DOD Personnel Clearances: Preliminary Observations Related to  Backlogs and Delays in Determining Security Clearance Eligibility for  Industry Personnel. GAO-04-202T. Washington, D.C.: May 6, 2004.
Industrial Security: DOD Cannot Provide Adequate Assurances That Its  Oversight Ensures the Protection of Classified Information. GAO-04-332.  Washington, D.C.: March 3, 2004.
DOD Personnel Clearances: DOD Needs to Overcome Impediments to  Eliminating Backlog and Determining Its Size. GAO-04-344. Washington,  D.C.: February 9, 2004.