DOD Personnel Clearances: Additional Steps Can Be Taken to Reduce Backlogs and Delays in Determining Security Clearance Eligibility for Industry Personnel
Published: 2004-05-26T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: As more and more federal jobs are privatized, individuals working for private industry are taking on a greater role in national security work for the Department of Defense (DOD) and other federal agencies. Because many of these jobs require access to classified information, industry personnel must hold a security clearance. As of September 30, 2003, industry workers held more than one-third of all clearances issued by DOD. Long-standing security clearance backlogs and delays in determining clearance eligibility affect industry personnel, military members, and federal employees. As requested, we reviewed the clearance eligibility process for industry personnel and (1) describe the size of the backlog and changes in the time needed to issue eligibility determinations, (2) identify reasons for the backlog and delays, and (3) evaluate initiatives that DOD could take to eliminate the backlog and decrease the delays.
section_title: What GAO Found
paragraphs: As of March 31, 2004, DOD's security clearance backlog for industry personnel was roughly 188,000 cases, and the time needed to conduct an investigation and determine eligibility for a clearance during the last 3 fiscal years had increased by 56 days to a total of 375 days. DOD identified three separate backlog estimates; (1) more than 61,000 reinvestigations (required for renewing clearances) that were overdue but had not been submitted, (2) over 101,000 new investigations or reinvestigations that had not been completed within DOD's established time frames, and (3) over 25,000 adjudications (a determination of clearance eligibility) that had not been completed within DOD's established time frames. From fiscal year 2001 through fiscal year 2003, the average time that it took DOD to conduct an investigation and determine clearance eligibility for industry personnel increased from 319 days to 375 days. Delays in conducting investigations and determining clearance eligibility can increase national security risks, prevent industry personnel from beginning or continuing work on classified programs and activities, hinder industrial contractors from hiring the most experienced and best qualified personnel, increase the time needed to complete national-security-related contracts, and increase costs to the federal government. Several impediments hinder DOD's ability to eliminate the backlogs and reduce the amount of time needed to conduct an investigation and determine security clearance eligibility for industry personnel. Impediments include a large number of new clearance requests; an increase in the proportion of requests for top secret clearances, which require more time to process; inaccurate workload projections for both the number and type of clearances needed for industry personnel; and insufficient investigative and adjudicative workforces to handle the large workloads. Industrial contractors cited the lack of full reciprocity (the acceptance of a clearance and access granted by another department, agency, or military service) as an obstacle that can cause industry delays in filling positions and starting work on government contracts. Also, the effects of past conditions, such as the backlog itself, have been identified as impediments to timely eligibility determinations. Furthermore, DOD does not have an integrated, comprehensive management plan for addressing the backlog and delays. DOD is considering several initiatives that might reduce security clearance backlogs and processing times for determining clearance eligibility for industry personnel. Among those initiatives that DOD is exploring are (1) conducting a phased, periodic reinvestigation; (2) establishing a single adjudicative facility for industry; (3) reevaluating investigative standards and adjudicative guidelines; and (4) implementing an automated verification process for identifying and validating industrial security clearance requirements. These initiates could, however, face implementation obstacles, such as the need to change governmentwide regulations.

section_title: Letter
paragraphs: As a result of an 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,  individuals working for private industry are playing an increasingly larger  role in national security work conducted by the Department of Defense  (DOD) and other federal agencies. Some industry personnel hold jobs  requiring access to classified information that were formerly held by  military members and federal employees. These jobs allow them to work  on classified programs and activities. To handle classified information,  industry personnel must hold a security clearance. As of September 30,  2003, industry personnel held about 682,000 (or about 34 percent) of the  approximately 2 million DOD-issued security clearances.
To protect national security, the federal government must provide  high-quality and timely security clearances. As part of the process, DOD  determines whether industry personnel are eligible for a security  clearance by conducting a background investigation and adjudication  (determining eligibility for access to classified information). However,  some government and industry officials have expressed concerns about  the security clearance backlog—overdue security clearance  reinvestigations that have not been requested and new investigations and  adjudications that have not been completed within established time  frames—and the amount of time it takes DOD to conduct an investigation  and determine eligibility for a security clearance for industry personnel.
As our previous work has shown, backlogs and delays in obtaining a  security clearance historically have been problems for DOD, and they  affect industry personnel as well as military members and federal  employees. In our February 2004 report, for example, we identified  several impediments that hinder DOD’s ability to eliminate its security  clearance backlog and made recommendations for decreasing the backlog  and improving timeliness. The impediments and recommendations apply  to industry personnel as well as military members and federal employees.  Likewise, the House Committee on Government Reform recently  documented problems with DOD’s personnel security clearance program  and recommended changes to, among other things, reduce the backlog.
Recent legislation could affect DOD’s security clearance process. The  National Defense Authorization Act for Fiscal Year 2004 authorized the  transfer of DOD’s personnel security investigative functions and more than  1,800 investigative employees to the Office of Personnel Management  (OPM). However, as of May 6, 2004, this transfer had not taken place. The  transfer can occur only after the Secretary of Defense certifies to Congress  that certain conditions can be met and the Director of OPM concurs with  the transfer.
In response to your request, we reviewed the process that DOD uses to  determine security clearance eligibility for industry personnel. As agreed  with your offices, our objectives in this report concerning industry  personnel clearances are to (1) describe the size of the security clearance  backlog and changes during the last 3 fiscal years in the amount of time it  takes to conduct an investigation and determine eligibility for a clearance,  (2) identify reasons for the backlog and for delays in conducting  investigations and determining eligibility, and (3) evaluate initiatives that  DOD could take to eliminate the backlog and decrease the delays.
In conducting this review, we examined DOD’s policy guidance,  regulations, instructions, and statistical evidence on the security clearance  process for industry personnel. In addition, we reviewed reports by GAO,  DOD, congressional staff, and other government entities. We also  interviewed DOD and industry officials; observed the procedures used to  process clearance information; and analyzed data from the Case Control  Management System’s database, which manages the collection and  dissemination of personnel security data from receipt of personnel  security history to the monitoring, closing, transmitting, and maintaining  of personnel security records. We assessed the reliability of the Case  Control Management System’s data used to determine the extent of the  backlog and the time needed to conduct an investigation and determine  eligibility for a clearance and determined that the data for fiscal years 2001  and thereafter were sufficiently reliable for the purpose of this report. In  addition, we reviewed the methodology, sampling, and modeling  techniques used in the Defense Personnel Security Research Center’s  reports on various DOD initiatives relating to the clearance process. We  conducted our review from July 2003 through May 2004 in accordance  with generally accepted government auditing standards. Additional  information on our scope and methodology can be found in appendix I.
subsections: section_title: Background
paragraphs: Within DOD, the Office of the Under Secretary of Defense for Intelligence  (OUSD ) is responsible for coordinating and implementing DOD-wide  policies related to access to classified information. Within OUSD (I), the  Defense Security Service (DSS) is responsible for conducting background  investigations and administering the personnel security investigations  program for DOD and 22 other federal agencies that allows industry  personnel access to classified information. Two offices are responsible  for adjudicating cases involving industry personnel. DSS’s Defense  Industrial Security Clearance Office (DISCO) adjudicates cases that  contain only favorable information or minor issues regarding security  concerns (e.g., some overseas travel by the individual), and the Defense  Office of Hearings and Appeals (DOHA) within the Defense Legal Services  Agency adjudicates cases that contain major security issues (e.g., an  individual’s unexplained affluence or criminal history).
As with military members 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 defense or foreign relations.  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.” Individuals who need access  to classified information over a long period are required to periodically  renew their clearance (a reinvestigation). The time frames for  reinvestigations are 5 years for top secret clearances, 10 years for secret  clearances, and 15 years for confidential clearances.
To ensure the trustworthiness, judgment, and reliability of industry  personnel in positions with access to classified information, DOD relies  on a three-stage personnel security clearance process. (See fig. 1.) This  process, which is essentially the same for industry personnel as it is for  military members and federal employees, entails (1) determining that  the position requires a clearance and, if so, submitting a request for  a clearance to DSS; (2) conducting an initial investigation or a  reinvestigation; and (3) using the investigative report to determine  eligibility for access to classified information—a procedure known as  “adjudication.”
In the preinvestigation stage, if a position requires a clearance, then the  industrial contractor must request an investigation of the individual. The  request could be the result of needing to fill a new position for a recent  contract, replacing an employee in an existing position, renewing the  clearance of an individual who is due for reinvestigation, or processing a  request for a future employee (up to 180 days) in advance of the hiring  date. Once the requirement for a security clearance is established, the  industry employee completes a personnel security questionnaire, and the  industrial contractor submits it to DSS. All industry requests for a  DOD-issued clearance are submitted to DSS, while requests for military  members and federal employees are submitted to either DSS or OPM.
In the investigation stage, DSS, OPM, or one of their contractors  conducts the actual investigation of the industry employee by using  standards that were established governmentwide in 1997 and  implemented by DOD in 1998. As table 1 shows, the type of information  gathered in an investigation depends on the level of clearance needed and  whether an initial investigation or a reinvestigation is being conducted.  For either an initial investigation or a reinvestigation for a confidential or  secret clearance, investigators gather much of the information  electronically. For a top secret clearance, investigators gather additional  information that requires much more time-consuming efforts, such as  traveling, obtaining police and court records, and arranging and  conducting interviews. DSS’s Personnel Investigations Center forwards the  completed investigative report to DISCO.
In the adjudicative stage, DISCO uses the information from the  investigative report to determine whether an individual is eligible for a  security clearance. If the report is determined to be a “clean” case—a case  that contains no potential security issue or minor issues—then DISCO  adjudicators determine eligibility for a clearance. However, if the case is  determined to be an “issue” case—a case containing information that  might disqualify an individual for a clearance (e.g., foreign connections  or drug- or alcohol-related problems)—then DISCO forwards the case  to DOHA adjudicators for the clearance-eligibility decision. Regardless  of which office renders the adjudication, DISCO issues the clearance- eligibility decision and forwards this determination to the industrial  contractor. All adjudications are based on 13 federal adjudicative  guidelines established governmentwide in 1997 and implemented by  DOD in 1998 (see app. II). DISCO and DOHA serve as central adjudication  facilities for industry personnel, whereas DOD uses eight other central  adjudication facilities to approve, deny, or revoke eligibility for a security  clearance for military members and federal employees.
section_title: DOD’s Backlog for Industry Personnel Was Roughly 188,000 Cases, and the Time Needed for the Clearance Process Has Increased
paragraphs: DOD’s security clearance backlog for industry personnel was roughly  188,000 cases, and the time needed to conduct an investigation and  determine eligibility for a clearance had increased by 56 days during  the last 3 fiscal years. As of March 31, 2004, DSS identified more  than 61,000 overdue but not submitted reinvestigations and about  127,000 investigations or adjudications that had been started but not  completed within set time frames. From fiscal year 2001 through fiscal  year 2003, the average time that it took to conduct an investigation and  determine clearance eligibility for industry personnel increased from  319 days to 375 days. DOD’s delays in conducting an investigation and  determining clearance eligibility can, among other things, increase  national security risks and the costs to the federal government of  contractor performance on defense contracts.
subsections: section_title: Industry Personnel Backlog Was Roughly 188,000 Cases
paragraphs: As of March 31, 2004, the industry personnel backlog was roughly  188,000 cases. DOD identified more than 61,000 reinvestigations that  were overdue but had not been submitted, over 101,000 backlogged  investigations, and over 25,000 backlogged adjudications. For the  25,000 completed investigations awaiting adjudication, DSS found that  over 19,000 of the cases were at DISCO and more than 6,300 of the cases  were at DOHA. However, as of March 31, 2004, DOHA independently  reported that it had eliminated its adjudication backlog. A complicating  factor in determining the size of the industrial personnel backlog is that  the backlog may be underestimated, since DSS had opened relatively few  cases between October 1, 2003, and March 31, 2004, in anticipation of the  authorized transfer of the investigative function from DSS to OPM. DSS  had received, but not opened, almost 69,200 new industry personnel  requests received in the first half of fiscal year 2004. Cases received in  fiscal year 2004, which have already exceeded the set time frames for  completing the investigation, are included in the 101,000 backlogged  investigations identified above.
To view the industry personnel backlog in its proper context, we  compared this backlog to the DOD-wide clearance backlog as of  September 30, 2003, the date of the most recent DOD-wide data. For the  preinvestigation stage, DOD did not know the total number of personnel  DOD-wide with overdue requests for reinvestigation that had not been  submitted—even though their clearances exceeded the governmentwide  time frames for submitting reinvestigations. (See fig. 2.) Any request for a  reinvestigation that has not been submitted within a specified time frame  is overdue and considered part of the backlog. As noted in our February  2004 report, DOD could not estimate the number of military members and  federal employees who had not requested a reinvestigation. Similarly, in a  prior report, we indicated that DOD estimated its backlog of overdue but  not submitted reinvestigations at 300,000 cases in 1986 and 500,000 cases  in 2000. Because DOD’s Case Control Management System has limited  query capability, DOD was unable to identify the number of overdue  but not submitted industrial personnel reinvestigations as of  September 30, 2003. Although this system can identify overdue  reinvestigations for industry personnel when queried at a specific point in  time, it does not allow DOD to identify the number of military members  and federal employees whose reinvestigations are overdue but not  submitted at any time.
The size of the total DSS-estimated backlog for industry personnel  doubled during the 6-month period ending on March 31, 2004. Table 2  compares the sizes of the investigative and adjudicative backlogs at the  end of fiscal year 2003 with the end of the first-half of fiscal year 2004. This  comparison does not include the backlog of overdue reinvestigations that  have not been submitted, because DSS was not able to estimate that  backlog as of September 30, 2003.
As of September 30, 2003, the estimated size of the investigative backlog  for industry personnel amounted to roughly 44,600 cases, or 17 percent of  the larger DOD-wide backlog of approximately 270,000 cases, which  included military members, federal employees, and industry personnel.  (See fig. 2.) DSS’s time frames for completing investigations range from  75 days to 180 days, depending on the investigative requirements. For  instance, an initial secret investigation is required to be completed within  75 days, while a secret or top secret reinvestigation has to be completed  within 180 days. Some requests for investigations receive priority over  other requests. For example, requests for initial clearances receive priority  over requests for reinvestigations, since individuals awaiting initial  clearances cannot work whereas individuals who already have clearances  that are due for reinvestigation can continue to work.
As of September 30, 2003, the estimated size of the adjudicative backlog  for industry personnel totaled roughly 17,300 cases. This number  represented 19 percent of the roughly 93,000 cases in the DOD-wide  adjudicative backlog on that date. Of the 17,300 industry personnel cases,  some 12,800 were awaiting adjudication at DISCO (most of which were  reinvestigations) and the remaining 4,500 cases were awaiting adjudication  at DOHA. As of March 31, 2004, DOHA independently reported that it had  totally eliminated this backlog of cases that had been awaiting initial  adjudication by its security specialists. Typically, about 14 to 20 percent of  the cases received by DISCO are eventually sent to DOHA for adjudication.  As shown in figure 2, DISCO and DOHA use different time frames for  identifying cases as backlogged. For example, DISCO uses 3 days for  initial clearances and 30 days for reinvestigations, while DOHA uses  different time frames on the basis of the number of cases on hand for  30 days that exceed a steady workload of 2,150 cases each month. If  DISCO’s time frames were applied to investigations awaiting adjudication  at DOHA, then DOHA’s backlog would have been larger than that reported  at the end of fiscal year 2003.
section_title: Average Time for Clearance Process Increased to More Than 1 Year for Industry Personnel
paragraphs: In the 3-year period from fiscal year 2001 through fiscal year 2003, the  average time that DOD took to determine clearance eligibility for industry  personnel rose from 319 days to 375 days, an increase of 18 percent. (See  tables 3 and 4.) In other words, during fiscal year 2003, industry personnel  waited an average of more than 1 year from the time DSS received a  personnel security questionnaire to the time that DISCO issued an  eligibility determination.
In fiscal year 2003, it took DOD an average of 332 days to determine  eligibility for “clean” cases, that is, those that had little or no potential  security issues. (See table 3.) By comparison, it took DOD an average of  615 days to complete “issue” cases that contained potentially more serious  security matters. This time period included DSS’s investigation, DISCO’s  identification of potential issues and its forwarding of an issue case to  DOHA, DOHA’s need to request additional investigation in some instances,  and DOHA’s adjudication of the case. The 615-day average for issue cases  is an overestimate because of problems with DSS’s Case Control  Management System. The system is unable to distinguish between the end  of the investigative and adjudicative processes to determine eligibility for a  clearance and the continuing appeals process that may follow the denial of  a clearance request or the revocation of a clearance.
Table 4 shows that from fiscal year 2001 through fiscal year 2003, the  average number of days it took to conduct an investigation and determine  eligibility for a security clearance for industry personnel increased by  56 days, or 18 percent.
section_title: Delays Can Affect National Security and Contract Timeliness, Quality, and Cost
paragraphs: Delays in renewing security clearances for industry personnel and others  who are doing classified work caused by the backlog can lead to a  heightened risk of national security breaches. Such breaches involve the  unauthorized disclosure of classified information, which can cause up to  “exceptionally grave damage” to national security. In a 1999 report, the  Joint Security Commission II pointed out that delays in initiating  reinvestigations create risks to national security because the longer the  individuals hold clearances, the more likely they are to be working with  critical information and systems.
In addition, delays in determining security clearance eligibility for industry  personnel can affect the timeliness, quality, and cost of contractor  performance on defense contracts. A 2003 Information Security Oversight  Office report identified concerns about the length of time required to  process industrial security clearances. According to the report, industrial  contractor officials who were interviewed said that delays in obtaining  clearances cost industry millions of dollars per year and affect personnel  resources. Interviewees reported having difficulty in filling sensitive  positions and retaining qualified personnel. The report also stated that  delays in the clearance process hampered industrial contractors’ ability to  perform duties required by their contracts. According to industry  contractors, these delays increased the amount of time needed to  complete national-security-related contracts. In interviews we conducted  during our review, industrial contractors told us about cases in which their  company hired competent applicants who already had the necessary  security clearances, rather than individuals who were more experienced  or qualified but did not have a clearance. As a result, according to industry  association officials, industrial contractors may not be performing  government contracts with the most experienced and best-qualified  personnel, thus diminishing the quality of the work. Moreover, industry  association representatives told us that defense contractors might offer  monetary incentives to attract new employees with clearances—for  example, a $15,000 to $20,000 signing bonus for individuals with a valid  security clearance, and a $10,000 bonus to current employees who recruit  a new employee with a clearance. In turn, the recruit’s former company  may need to backfill the position, as well as settle for a lower level of  contract performance while a new employee is found, obtains a clearance,  and is trained. In addition, defense contractors may hire new employees  and begin paying them, but not be able to assign any work to them— sometimes for a year or more—until they obtain a clearance. Contractors  may also incur lost-opportunity costs if prospective employees decide to  work elsewhere rather than wait to get a clearance. We were told that  contractors might pass these operating costs on to the federal  government—and the taxpayer—in the form of higher bids for  defense contracts.
section_title: Impediments Hinder Elimination of the Backlog and Reduction of Time Needed to Conduct an Investigation and Determine Eligibility for a Clearance
paragraphs: A number of impediments hinder DOD’s efforts to eliminate the clearance  backlog for industry personnel and reduce the time needed to conduct an  investigation and determine eligibility for a clearance. Impediments— similar to those we identified DOD-wide in our February 2004 report—also  affect industry personnel and include large investigative and adjudicative  workloads resulting from a large number of clearance requests in  recent years and an increase in the proportion of requests requiring top  secret clearances, inaccurate workload projections, and insufficient  investigative and adjudicative workforces to handle the large workloads.  The underutilization of reciprocity is an impediment that industrial  contractors cited as an obstacle to timely eligibility determinations. The  effects of past conditions, such as the backlog itself, problems with DSS’s  Case Control Management System, and additional national investigative  requirements, also have been identified by DOD officials as impediments  to timely eligibility determinations. Furthermore, DOD does not have a  management plan that could help it address many of these impediments in  a comprehensive and integrative manner.
subsections: section_title: Clearance Workloads Are Large and Inaccurately Projected DOD-wide
paragraphs: A major impediment is the large—but inaccurately projected—number of  requests for security clearances for industry personnel, military members,  and federal employees. A growing number of these requests are for  top secret clearances, which require more effort to process. The large and  inaccurately projected investigative and adjudicative workloads for  industry personnel cases must be viewed in the context of increasing  DOD-wide and governmentwide clearance requirements. The large  number of requirements is found in the form of both the number of  requests and a growing portion of the requests requiring top secret  clearances. Also, DOD has been unable to accurately project the number  and type of clearances required for industry personnel. Additional  inaccuracy—a potential surge in clearance requests—could result when  the Joint Personnel Adjudication System (JPAS) is fully implemented and  DOD is able to identify overdue but not submitted reinvestigations  DOD-wide.
subsections: section_title: Large Number of Clearance Requests DOD-wide Taxes Overburdened Process
paragraphs: The large number of clearance requests that DOD receives annually taxes  a process that already is experiencing backlogs and delays. These requests  are for industry personnel, as well as for military members and federal  employees. In fiscal year 2003, DOD submitted over 775,000 requests  for investigations to DSS and OPM. This figure included almost  143,000 requests for investigations of industry personnel. According to  OPM officials, OPM has received an unprecedented number of requests for  investigations governmentwide since September 2001 and has identified  this large number as the primary reason for delays in granting clearances.
Table 5 shows an increase in the number of DOD eligibility determinations  for industry personnel made during each of the last 3 years. DOD issued  about 63,000 more eligibility determinations for industry personnel in  fiscal year 2003 than it did 2 years earlier, an increase of 174 percent.  During the same period, the average number of days required to issue an  eligibility determination for industry personnel grew by 56 days, or about  18 percent. (See table 4.) In other words, the increase in the average wait  time was small compared to the increase in the number of cases. Fiscal  year 2001 is an important baseline for examining changes in clearance  processing because (1) major problems with DSS’s Case Control  Management System had been largely corrected and (2) the end of fiscal  year 2001 occurred shortly after the September 11, 2001, terrorist attacks,  which prompted an increase in clearance requests.
Table 6 shows that from fiscal year 2001 through fiscal year 2003, the  number of clearance eligibility determinations for industry personnel  increased by more than 63,000 cases, or 174 percent.
Beginning with fiscal year 1995 through fiscal year 2003, the proportion of  all requests requiring top secret clearances for industry personnel grew  from 17 to 27 percent. As indicated earlier, top secret clearances require  more information than that needed for secret clearances. According to  OUSD (I), top secret clearances take 8 times more investigative effort to  complete and 3 times more adjudicative effort to review than do secret  clearances. In addition, a top secret clearance must be renewed twice as  often—every 5 years instead of every 10 years for a secret clearance. The  full effect of requesting a top secret, rather than a secret, clearance thus is  16 times the investigative effort and 6 times the adjudicative effort.
The increased demand for top secret clearances also has budget  implications for DOD. In fiscal year 2003, security investigations obtained  through DSS cost $2,640 for an initial investigation for a top secret  clearance, $1,591 for a reinvestigation of a top secret clearance, and $328  for an initial investigation for a secret clearance. Thus, over a 10-year  period, DOD would spend $4,231 (in current-year dollars) to investigate  and reinvestigate an industry employee for a top secret clearance, a cost  13 times higher than the $328 it would require to investigate an individual  for a secret clearance.
section_title: Inaccurate Projections for Clearance Workload Hamper Planning
paragraphs: DOD’s inability to accurately estimate the number and type of clearance  requests that it will have to process for industry personnel during the  next fiscal year is part of a bigger DOD-wide workload-estimation  problem. For fiscal year 2001, DOD estimated that it would receive about  850,000 requests for clearances DOD-wide; however, the actual number  of submissions was 18 percent lower than estimated. In contrast, DOD  estimated that it would receive about 720,000 and 690,000 new requests  DOD-wide in fiscal years 2002 and 2003, respectively, but the actual  numbers of submissions were 19 and 13 percent higher than expected.
Although DSS has made efforts to improve its projections of industry  personnel security clearance requirements, problems remain. For  example, inaccurate forecasts for both the number and type of security  clearances needed for industry personnel make it difficult for DOD to plan  ahead and to size its investigative and adjudicative workforce to handle  the workload and fund its security clearance program. For fiscal year 2003,  DSS reported that the actual cost of industry personnel investigations was  almost 25 percent higher than had been projected. DOD officials believed  that these projections were inaccurate primarily because DSS received a  larger proportion of requests for initial top secret background  investigations and top secret reinvestigations, both of which require  considerably more effort to process. Since fiscal year 2001, DSS has  conducted an annual survey of security officers at cleared contractor  facilities over which DSS has cognizance to obtain their best estimates of  the number of background investigations they would require over the next  7 years. Using those estimates and historical data, DSS then prepares its  annual security clearance projections for industry personnel. For fiscal  year 2003, DSS asked each facility for the number and types of clearances  that they would need. DSS said that about 25 percent of the approximately  11,000 cleared contractor facilities voluntarily responded to this request,  but that 80 to 90 percent of the facilities with the largest dollar contracts  responded. DSS officials attributed the inaccurate projection estimate to  the use of some industry employees on more than one contract and often  for different defense agencies; the movement of employees from one  company to another; and unanticipated world events, such as the  September 11, 2001, terrorist attacks. Currently, DSS does not receive data  from DOD’s acquisition community that issues the contracts—primarily  military service and defense agency acquisition managers—to help DSS  more accurately forecast the number and type of industrial personnel  security clearances that would be required to implement or support their  particular acquisition programs and activities.
DOD is developing a plan to link the number of investigations required for  contract performance to an electronic database with personnel clearance  information, and to require that the contracting officer authorize the  number and type of investigations required. According to DOD, this will  allow DSS to better monitor requirements and tie them to the budget  process. Also, linking the electronic personnel clearance information  database with the contract database maintained by the acquisition  community would tie the security clearance process more closely to the  acquisition process.
section_title: Surge in Requests May Occur When JPAS Is Fully Implemented DOD-wide
paragraphs: DOD may experience a surge in security clearance requests DOD-wide  when JPAS is fully implemented. This system will enable DOD to identify  overdue reinvestigations that have not been submitted. However, any  surge in the number of unexpected reinvestigations may be identified too  late to have the extra workload planned and budgeted for the next  fiscal year.
DOD’s inability to fully anticipate the number of reinvestigations that will  be submitted is the result of continued delays in implementing JPAS, a  system that DOD’s Chief Information Officer has identified as a mission  critical system. In response to a recommendation in our August 2000  report, DOD said that JPAS would be implemented in fiscal year 2001 and  would provide an automated means of tracking and counting overdue but  not submitted requests for reinvestigations. At the time of our February  2004 report, which again recommended the implementation of JPAS,  OUSD (I) officials said that they expected to fully implement JPAS during  January 2004. Currently, OUSD (I) officials project that JPAS will be fully  implemented sometime in fiscal year 2004.
section_title: Insufficient Investigative and Adjudicative Staff Cannot Handle Large Workloads
paragraphs: Insufficient investigative and adjudicative workforces, given the current  and projected workloads, serve as additional barriers to eliminating the  backlog and reducing security clearance processing times for industry  personnel. DOD partially concurred with our February 2004  recommendation to identify and implement steps to match the sizes of  the investigative and adjudicative workforces to the clearance request  workload. DOD—like the rest of the federal government—is competing  for a limited number of investigative staff. In contrast, DOD has more  control over its adjudicative capacity and has taken steps to increase  those resources.
subsections: section_title: Too Few Investigative Staff Are Available to Meet Government and DOD Needs
paragraphs: The limited number of investigative staff available to process requests  from DOD and other government agencies hinders DOD’s efforts to  eliminate the backlog and issue timely clearances for industry personnel.  According to an OPM official, DOD and OPM together need roughly  8,000 full-time-equivalent investigative staff to eliminate the security  clearance backlogs and deliver timely investigations to their customers.  However, in our February 2004 report, we estimated that DOD and OPM  have around 4,200 full-time-equivalent investigative staff who are either  federal employees or contract investigators, slightly more than half as  many as needed.
In addition to having too few investigators, DOD may experience a  short-term decrease in productivity in the near future as DSS investigative  employees are pulled away from their investigations to receive training  on OPM’s case management system and investigative procedures. In  December 2003, advisors to the OPM Director expressed concerns about  financial risks associated with the transfer of DSS’s investigative  functions and 1,855 investigative staff authorized in the National  Defense Authorization Act for Fiscal Year 2004. The advisors therefore  recommended that the transfer not occur, at least during fiscal year 2004.  On February 6, 2004, DSS and OPM signed an interagency agreement that  leaves the investigative functions and DSS personnel in DOD and provides  DSS personnel with training on OPM’s case management system and  investigative procedures as well as access to that system. According to our  calculations, if all 1,855 DSS investigative employees complete the 1-week  training program as planned, the loss in productively will be equivalent to  35 person-years of investigator time. Also, other short-term decreases in  productivity will result while DSS’s investigative employees become  accustomed to using OPM’s system and procedures.
section_title: Too Few Adjudicative Staff Are Available to Meet Industry Needs
paragraphs: Similarly, an adjudicative backlog of industry personnel cases developed  because DISCO and DOHA did not have an adequate number of  adjudicative personnel on hand. DOD personnel and industry officials  identified several reasons why adjudicator staff have not been able to  process requests within their established time frames. These include an  increase in the number of investigations being sent to DISCO and DOHA as  a result of the September 11, 2001, terrorist attacks and the larger number  of completed investigations stemming from DOD’s contract with OPM and  private-sector investigation companies. The adjudicative backlog also  resulted from problems in the operations of DSS’s Case Control  Management System.
DISCO and DOHA have taken steps to decrease the backlog and delays by  augmenting their adjudicative staff. As of September 30, 2003, DISCO had  56 nonsupervisory adjudicators on board, and 6 additional nonsupervisory  adjudicator applicants are currently undergoing investigations for their  security clearances. By contrast, only 33 nonsupervisory adjudicators  were available in 2001. To achieve part of this increase in the number of  adjudicators, DISCO moved nonadjudicative customer service employees  into adjudicative positions and filled the vacated positions with contract  personnel. In addition, DISCO authorized overtime for its adjudicative  staff. As of September 30, 2003, DOHA had 23 permanent federal  adjudicators as well as 46 temporary adjudicators hired specifically to help  reduce its adjudicative backlog. In 2001, after DOHA identified a growing  adjudicative workload of industry personnel cases that exceeded its  capacity, it received authority to hire 46 additional term-appointment  adjudicators. After establishing this plan to eliminate its backlog of cases  awaiting initial adjudication by its security specialists, DOHA requested  authority to hire additional permanent adjudicators to ensure that a  backlog would not recur.
section_title: Reciprocity of Access Is Not Fully Utilized
paragraphs: While the reciprocity of security clearances within DOD has not been a  problem for industry personnel, reciprocity of access to certain types of  information and programs within the federal government has not been  fully utilized, thereby preventing some industry personnel from working  and increasing the workload on already overburdened investigative and  adjudicative staff. According to DOD and industry officials, a 2003  Information Security Oversight Office report on the National Industrial  Security Program, and our analysis, reciprocity of clearances appears to  be working throughout most of DOD. However, the same cannot be said  for access to sensitive compartmented information and special access  programs within DOD or transferring clearances and access from DOD  to other agencies. Similarly, a recent report by the Defense Personnel  Security Research Center concluded that aspects of reciprocity for  industrial contractors appear not to work well and that the lack of  reciprocity between special access programs was a particular problem  for industry personnel, who often work for many of these programs  simultaneously.
The extent of the problems that are caused by the lack of full reciprocity  is unknown. In 2001, the Defense Personnel Security Research Center  proposed collecting quantitative data on the number and type of personnel  affected by reciprocity. However, the center determined that the  differences in how the various agencies handled tracking these personnel  situations proved so great and the databases they used so various that  center researchers could not overcome these incompatibilities in the time  and with the resources they had for the study. This situation has occurred  despite the establishment in 1997 (and implementation by DOD in 1998) of  governmentwide investigative standards and adjudicative guidelines. In  1999, the interagency Joint Security Commission II noted, “With these  standards and guidelines in place, there is no longer a legitimate reason  to investigate or readjudicate when a person moves from one agency’s  security purview to another.” More recently, the chair of the federal  interagency Personnel Security Working Group indicated that the lack of  full reciprocity is a major concern governmentwide, not just within DOD.
Industry association officials told us that reciprocity of access to certain  types of information and programs, especially the lack of full reciprocity in  the intelligence community, is one of the top concerns of their members.  One association provided us with several examples of access problems  that industry personnel with DOD-issued security clearances face when  working with intelligence agencies. For example, the association cited  different processes and standards used by intelligence agencies, such as  guidelines for (1) the type of investigations and required time frames,  (2) type of polygraph tests, and (3) refusal to accept adjudication  decisions made by other agencies. Industry association officials stated that  these access problems are becoming more common, especially for firms  with multiple contracts with different intelligence agencies.
Industry officials identified reciprocity concerns for the following  situations, among others:    Sensitive compartmented information and special access programs— The DOD directive that establishes policy, responsibilities, and procedures  for industry employee clearances explicitly provides that the directive  “oes not apply to cases for access to sensitive compartmented  information or a special access program.” The procedures used in  determining access to sensitive compartmented information and special  access programs are different from those used in the normal clearance  process. These procedures may involve applying more selective and  stringent investigative and adjudicative criteria. The reciprocity of  sensitive compartmented information eligibility determinations is left up  to each organization or agency that may have additional investigative  requirements that must be met (e.g., a polygraph test) prior to granting  access. While DOD requires that special access program eligibility  determinations for military members and federal employees be mutually  and reciprocally accepted by all DOD components, this requirement does  not apply to industry personnel.
DOD components and some of the agencies serviced by DISCO do not  always accept the interim clearances that DISCO issues to industry  employees. DISCO provides interim clearances when an individual’s case  does not identify any potential security issues after a review of initially  gathered information. DISCO reported that it issues interim clearances to  about 95 percent of those industry personnel applying for a secret  clearance within 3 days of receiving the clearance request. However,  according to industrial contractors, their ability to use industry personnel  with interim clearances on some contracts but not on others limits their  staffing options. In addition, DSS and contractor association officials told  us that some personnel with an interim clearance could not start work  because an interim clearance does not provide access to specific types  of national security information, such as sensitive compartmented  information, special access programs, North Atlantic Treaty Organization  data, and restricted data.
Industry associations told us that intelligence agencies do not accept  DOD’s waivers, even with a letter of consent from the employee’s former  company or a verification letter by the agency that requested the original  investigation and granted the employee the clearance. To eliminate the  need to perform another investigation, the Office of the Secretary of  Defense may use a waiver to reinstate or convert a security clearance  under certain circumstances. For example, a security clearance can be  converted if an individual leaves the federal government and subsequently  begins to work for an industrial contractor, provided that (1) no more than  24 months have elapsed since the date the clearance was terminated,  (2) there is no known adverse information, and (3) the most recent  investigation meets both the scope and completion time frame for the  clearance being reinstated. By using waivers for reinstatements and  conversions, DOD can eliminate the need to perform another  investigation.
Smith Amendment—Many DOD and industry officials view the Smith  Amendment as an impediment to reciprocity because people who once  worked for DOD or other agencies may not be eligible to work for DOD  when it is time to renew their clearance because of selected potential  security issues. The Smith Amendment, which applies only to DOD,  specifies that DOD should not grant or renew a clearance for anyone who  (1) has been sentenced to imprisonment for a term exceeding 1 year, (2) is  an unlawful user of or is addicted to a controlled substance, (3) is mentally  incompetent, or (4) has been discharged or dismissed from the military  under dishonorable conditions. Therefore, a clearance previously granted  by another federal agency or through DOD would be ineligible for a  subsequent DOD clearance if one or more of the four prohibitions were  applicable. However, the Secretary of Defense or one of the Service  secretaries may authorize an exception to the Smith Amendment  prohibitions, but only in cases where the individual seeking the clearance  has been sentenced to imprisonment for a term exceeding 1 year or has  been dishonorably discharged from the Armed Forces.
Ordinarily, the adjudicators are to consider mitigating factors and  available, reliable information about the person—past and present,  favorable and unfavorable—in reaching an “overall common sense”  clearance-eligibility determination that gives careful consideration to the  13 adjudicative guidelines. (See app. II.) According to the guidelines, any  doubt about whether a clearance for access to classified information is  consistent with national security is to be resolved in favor of national  security. However, under the Smith Amendment, such mitigating factors  should not be considered when one or more of the four elements are  present in the investigative report on a person applying for a clearance  through DOD—unless the Secretary of Defense or one of the Service  secretaries issues a waiver.
section_title: Effects of Past Conditions Still Being Felt
paragraphs: A number of past conditions also serve as impediments to issuing timely  eligibility determinations for industry personnel. The backlogs themselves  contribute to delays because most new requests for investigations remain  largely dormant until earlier requests are completed. Backlogged cases  might delay the start of an initial secret clearance, for instance, until  60 days after it is received by DSS. In such a hypothetical situation, DSS  would have only 15 days, rather than the full 75 days, to complete the  investigation before having the case labeled as “backlog.” Similarly, the  adjudicative backlog might lead to a delay in reviewing new investigative  reports, thereby increasing the likelihood that a new adjudication will be  categorized as “backlog” before an eligibility determination is provided.
In addition, problems with DSS’s Case Control Management System during  fiscal years 1999 and 2000 affected the processing of security clearances in  subsequent years. These problems included limiting the dissemination of  leads to investigative staff and, thereby, limiting the flow of completed  cases to adjudication facilities, such as DISCO and DOHA. Although DSS  officials indicate that the Case Control Management System problems  have been corrected, the February 2004 interagency agreement between  DSS and OPM allows DOD to replace that system with OPM’s case  management system. An OUSD (I) official said that DOD estimates it will  save about $100 million over 5 years by avoiding the need to update and  maintain DSS’s Case Control Management System.
According to DSS officials, additional national investigative requirements,  which were implemented by DOD in 1998, have strained nationwide  investigative resources. For instance, the current requirement for a secret  clearance calls for investigative staff to conduct national agency checks,  local area checks, and a credit check. Previously, a secret clearance  required only national agency checks. DOD has had over 5 years to  address this issue and allocate sufficient resources to handle the  additional requirements.
section_title: Lack of Overall Management Plan Exacerbates Clearance Backlog and Delays
paragraphs: Currently, DOD has numerous plans to address pieces of the backlog  problem but does not have an overall management plan to eliminate  permanently the current investigative and adjudicative backlogs, reduce  the delays in determining clearance eligibility for industry personnel, and  overcome the impediments that could allow such problems to recur. DOD  has a plan to engineer a business process for personnel security, transform  DSS as an agency, complete and closeout DSS’s old investigative work,  and decommission DSS’s Case Control Management System. DOD also  has a transition plan to transfer DSS’s investigative function to OPM. The  terms and conditions of that transfer are contained in the Memorandum of  Understanding between DOD and OPM (Jan. 24, 2003). Because the  transition has not occurred yet, DSS signed the Interagency Agreement  with OPM (Feb. 6, 2004) that leaves the investigative functions and DSS  personnel in DOD and provides DSS personnel with training on OPM’s  case management system and investigative procedures as well as access to  that system. Finally, DSS has a draft Fiscal Year 2004 Performance Plan  (Mar. 25, 2004) that is intended to serve as an interim plan pending final  implementation of DSS’s strategic plan as a transformed agency. Rather  than including specific performance measures seen in previous plans, this  plan provides an accounting of milestones that must be achieved for the  agency’s transformation. None of these plans address eliminating  permanently the investigative and adjudicative backlogs, reducing the  delays in conducting investigations and determining eligibility for  clearances, or overcoming the impediments. In addition, none of these  plans address budgets, personnel resources, costs, or potential obstacles  and options for overcoming the obstacles to eliminate the backlog and  reduce the delays.
DOD’s numerous plans do not include establishing processwide objectives  and outcome-related goals; setting priorities; identifying resources;  establishing performance measures; and providing milestones for  reducing, and eventually eliminating, the backlog and delays. The  principles of the Government Performance and Results Act of 1993  provide federal agencies with a basis for such a results-oriented  framework that includes setting goals, measuring performance, and  reporting on the degree to which goals are met.
section_title: DOD Is Considering Several Initiatives to Decrease the Backlog and Time Needed to Obtain a Security Clearance
paragraphs: DOD and industry association officials have suggested a number of  initiatives to reduce the backlog and delays in conducting an investigation  and issuing eligibility for a security clearance. They indicated that these  steps could supplement actions that DOD has implemented in recent years  or has agreed to implement as a result of our recommendations or those of  others. Even if positive effects would result from these initiatives, other  obstacles, such as the need to change investigative standards, coordinate  these policy changes with other agencies, and ensure reciprocity, could  prevent their implementation or limit their use.
Phased periodic reinvestigations could make staff available for more  productive uses. A phased approach to periodic reinvestigations involves  conducting a reinvestigation in two phases; a more extensive  reinvestigation would be conducted only if potential security issues were  identified in the initial phase. Table 7 identifies proposed sources of  information for both parts of a phased periodic reinvestigation. The more  productive sources for investigative leads are shown in phase 1.  Investigative staff would gather information from phase 2 sources only in  those cases where potential security issues were uncovered in phase 1.
Recent research has shown that periodic reinvestigations for top secret  clearances conducted in two phases can save at least 20 percent of the  normal investigative effort with almost no loss in identifying critical  issues for adjudication. This research included phasing analyses  conducted by the Defense Personnel Security Research Center with  4,721 reinvestigations for top secret clearances, a pilot test conducted by  DSS, independent research at the Central Intelligence Agency and National  Reconnaissance Office, and an evaluation of DSS’s implementation of a  phased reinvestigation in fiscal year 2003 conducted by the Defense  Personnel Security Research Center. This research has shown that the  most productive sources (phase 1 sources) can be used to identify  investigations in which the least productive sources (phase 2 sources)  are likely to yield issue information. Analyses showed a phased approach  missed very little potential security issue information and identified all of  the cases in which agencies took some form of action against individuals  (e.g., a suspension of their clearance or warnings, monitoring, or  reprimands). According to DSS, this initiative is designed to use the  limited investigative resources in the most productive manner and reduce  clearance-processing time by eliminating the routine use of low-yield  information sources on many investigations and concentrating  information-gathering efforts on high-yield sources. Research conducted  by the Defense Personnel Security Research Center suggests the phased  periodic reinvestigation represents a way of balancing the risks of a rare  missed issue and the costs associated with a normal reinvestigation. While  analyses have not been conducted to evaluate how the implementation of  phasing would affect the investigative backlog, the implementation of  phasing could be a factor in reducing the backlog by decreasing some of  the hours of fieldwork required in some reinvestigations.
Even if additional testing confirms promising earlier findings that the  procedure very rarely fails to identify critical issues, several obstacles  could prevent the implementation or limit the use of this initiative.  First, the phased reinvestigation does not comply with the Investigative  Standards for Background Investigations for Access to Classified  Information (Standard C). Currently, Standard C mandates the same  investigative scope for all reinvestigations for top secret clearances,  whereas the phased approach uses different standards for clean versus  potential issue cases. Second, any change in Standard C would necessitate  a corresponding change in the Code of Federal Regulations. Third, without  modification of Standard C, reciprocity problems could result if some  agencies use the phased reinvestigation and other agencies refuse to  accept eligibility determinations based on it. DOD is now actively working  to change Standard C so that a phased reinvestigation would be an option  under the national standards.
Single adjudicative facility for industry could reduce adjudicative time.
Under this initiative, DOD would consolidate DOHA’s adjudicative  function with that of DISCO to create a single adjudicative facility for  all industrial contractor cases. At the same time, DOHA would retain  its hearings and appeals function. According to OUSD (I) officials,  this consolidation would streamline the adjudicative process for  industry personnel and make it more coherent and uniform. A single  adjudicative facility would serve as the clearinghouse for all industrial  contractor-related issues.
DOD’s Senior Executive Council is considering this consolidation as part  of a larger review of DOD’s security clearance process. From 1991 through  1998, studies by the Defense Personnel Security Research Center, Joint  Security Commission, and DOD Office of the Inspector General concluded  that the present decentralized structure of DOD’s adjudication facilities  had drawbacks. Two of the studies recommended that DOD consolidate  its adjudication facilities (with the exception of the National Security  Agency).
An OUSD (I) official told us that the consolidation would provide greater  flexibility in using adjudicators to meet changes in the workload and could  eliminate some of the time required to transfer cases from DISCO to  DOHA. If the consolidation occurred, DISCO officials said that their  operations would not change much, except for adding adjudicators. On the  other hand, DOHA officials said that the current division between DISCO  and DOHA of adjudicating clean versus issue cases works very well and  that combining the adjudicative function for industry into one facility  could negatively affect DOHA’s ability to prepare denials and revocations  of industry personnel clearances during appeals. They told us that the  consolidation would have very little impact on the timeliness and quality  of adjudications.
Evaluation of the investigative standards and adjudicative guidelines  could reveal efficiencies. This initiative would involve an evaluation of the  investigative standards used by personnel security clearance investigators  to help identify requirements that do not provide significant information  relevant to adjudicative decisions. By eliminating the need to perform  certain tasks associated with these requirements, investigative resources  could be used more efficiently. For example, DSS officials told us that less  than one-half of 1 percent of the potential security issues identified during  an investigation are derived from neighborhood checks; however, this  information source accounts for about 14 percent of the investigative time.
The Intelligence Authorization Act for Fiscal Year 2004 required the  Secretary of Defense, Director of Central Intelligence, the Attorney  General, and Director of OPM to jointly submit to Congress by  February 15, 2004, a report on the utility and effectiveness of the current  security background investigations and security clearance procedures of  the federal government, including a comparison of the costs and benefits  of conducting background investigations for secret clearances with the  costs and benefits of conducting full field background investigations. At  the time of our report, the report mandated in the intelligence act had not  been delivered to Congress.
The modification of existing investigative standards would involve using  risk management principles based on a thorough evaluation of the  potential loss of information. Like a phased periodic reinvestigation, this  initiative would require changes in the Common Investigative Standards.  In addition, the evaluation would need to be coordinated within DOD,  intelligence agencies, and others.
Requirements-identification improvements could optimize resources  and reduce backlog and delays. This initiative would use an automated  verification process to identify and validate security clearance  requirements for industry personnel. DSS officials stated that a process to  verify requirements could help DSS allocate investigative and adjudicative  resources to projected workloads, thereby reducing the backlog and  delays. DOD is considering implementing this initiative to help project the  number and type of clearances that industry may need for a specific  acquisition program. According to DSS officials, more stability is needed  in workload projections to allow the government and industrial  contractors to size their investigative workforces with the workload. This  projection becomes more critical because the investigative function is  labor-intensive and it can take 1 year to hire and train investigators before  they are able to work independently. Implementing this initiative might  require additional data gathering and reporting by DOD’s acquisition  community that issues contracts—primarily military service and defense  agency acquisition managers, especially when contracts are being  awarded. Although industry currently provides this information  voluntarily, the acquisition community is not required to provide this  information.
Automated Continuing Evaluation System may result in additional  workloads. The last initiative involves testing and eventually implementing  the Automated Continuing Evaluation System, which is being developed  by the Defense Personnel Security Research Center. This automated  assessment tool is designed to provide automated database checks and  identify issues of security concern on cleared individuals between the  specified periodic reinvestigations. The system does not require an  individual to complete any additional paperwork before a query is  undertaken. In addition, the system automatically notifies adjudication  facilities when an individual with a security clearance engages in an act of  security concern. This notification occurs sooner than is currently  possible. The system underwent a large-scale pilot program in 2002 and  was subsequently modified. Operational field testing began in April 2004.  DOD officials acknowledge that the Automated Continuing Evaluation  System alone would not help to eliminate the backlog and, in fact, may  initially result in larger investigative and adjudicative workloads. However,  they maintain that, when combined with the phased periodic  reinvestigation, the system could help reduce workloads and the backlog,  and ultimately improve personnel security.
This initiative would face some of the same obstacles as those raised for a  phased periodic reinvestigation—the need to change governmentwide  investigative standards and concerns about reciprocity.
section_title: Conclusions
paragraphs: The backlog of clearances for industry personnel and delays in  conducting investigations and determining eligibility for a clearance  must be considered in the larger context of DOD-wide backlogs and  delays. Many of the impediments and initiatives identified in this report  apply to both industry-specific and DOD-wide situations. Taken together,  these impediments hamper DOD’s ability to eliminate the security  clearance backlog and reduce the amount of time it takes to determine  clearance eligibility for industry personnel.
DSS is unable to accurately project the number and type of security  clearances needed for industry personnel as well as military members  and civilian employees. This makes it difficult to determine budgets and  staffing for investigative and adjudicative workforces. Without close  coordination and cooperation among all interested parties—OUSD (I),  DOD components issuing the contracts, industrial contractors, and the  acquisition community—inaccurate projections of the number and type of  clearance requirements for industrial personnel could continue.
The reciprocity of security clearances within DOD has not been a problem  for industry personnel; however, reciprocity for access to certain types of  information and programs within the federal government has not been  fully utilized. As a result, some who already have clearances issued by one  agency face delays in starting to work on contracts for other agencies. In  addition, the failure to utilize reciprocity unnecessarily increases the  investigative and adjudicative workloads on the already overburdened  investigative and adjudicative staff.
In recent years, DOD has reacted to the impediments in a piecemeal  fashion rather than by establishing an integrated approach that  incorporates objectives and outcome-related goals, sets priorities,  identifies resources, establishes performance measures, and provides  milestones for permanently eliminating the backlog and reducing delays.  Without such an integrated, comprehensive plan, DOD’s efforts to improve  its process for conducting security clearance background investigations  and adjudications for industry personnel will likely continue to proceed in  a piecemeal fashion.
DOD and industry officials have suggested a number of initiatives that  could help eliminate the backlog and reduce clearance delays. However,  it remains unclear whether any single initiative—or combination of  initiatives—can have a direct and immediate impact on the backlog or  delays. Even if positive effects would result from these initiatives, other  obstacles, such as the need to change investigative standards, coordinate  these policy changes with other agencies, and ensure reciprocity, could  prevent or limit the implementation of the initiatives.
We made recommendations in our February 2004 report on security  clearances for DOD personnel that also apply to industry personnel.  Among other things, we recommended that the Secretary of Defense direct  the Under Secretary of Defense for Intelligence to (1) identify and  implement steps to match the sizes of the investigative and adjudicative  workforces to the clearance request workload and (2) complete the  implementation of the Joint Personnel Adjudication System. In its written  response on a draft of that report, DOD partially concurred with the first  recommendation and concurred with the second recommendation. Since  we have already recommended these actions in the larger context of DOD  personnel, we are not repeating them in this report for industry personnel.
section_title: Recommendations for Executive Action
paragraphs: To improve the security clearance process for industry personnel as well  as for military members and federal employees, we recommend that the  Secretary of Defense direct the Under Secretary of Defense for  Intelligence to take the following four actions:  improve the projections of clearance requirements for industrial  personnel—both the number and type of clearances—by working with  DOD components, industrial contractors, and the acquisition community  to identify obstacles and implement steps to overcome them;    work with DOD components and other agencies to eliminate unnecessary  reciprocity limitations for industry personnel whose eligibility for a  clearance is granted by 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; and    analyze the feasibility of implementing initiatives designed to reduce the  backlog and delays, prioritize the initiatives, and make resources available  for testing and implementing the initiatives, which could include, but are  not limited to, those evaluated in this report.
section_title: Agency Comments and Our Evaluation
paragraphs: In written comments on a draft of this report, DOD fully concurred with  three of our four recommendations: improve projections of clearance  requirements for industrial personnel, eliminate unnecessary reciprocity  limitations, and analyze the feasibility of initiatives to reduce the backlog  and delays. DOD partially concurred with our recommendation to develop  and implement an integrated, comprehensive management plan.
In its partial concurrence, DOD noted that it had numerous plans to  improve its process and said we did not identify why a single,  comprehensive plan would improve its ability to achieve success. As our  report points out, there are several reasons for the recommendation.  Specifically, the plans that DOD provided to us often were missing details  on budgets, personnel resources, costs, milestones with specific dates for  accomplishment, identification of potential obstacles, and options for  overcoming the obstacles if they should occur. Also, the use of multiple  smaller plans does not provide DOD with a bigger picture of how it should  strategically plan and prioritize its personnel and budget resources and  actions required simultaneously in two or more plans. Continued use of  piecemeal planning could result in a failure to recognize problems not yet  addressed or planned actions that conflict with those being  implemented—or planned as part of another effort. Moreover, DOD cited  its plan to transfer DSS’s investigative functions and personnel to OPM.
While the plan would result in DOD eliminating its responsibility for  conducting the investigations, no new investigative personnel would  result, if or when the transfer occurs. Therefore, it is not apparent how the  transfer will help DOD eliminate its backlog and reduce clearance delays.  DOD’s failure to identify contingency actions if the transfer did not occur  according to its plans already has delayed the start of nearly 70,000  investigations for industry personnel in fiscal year 2004. We continue to  believe our recommendation has merit and should be implemented.
Also, in commenting on our recommendations, DOD made several points  that need to be addressed. DOD noted that we gave little  acknowledgement to the many significant initiatives under way and no  acknowledgement to policy changes implemented by DOD in past years to  expedite the process. Our report highlights several steps DOD has taken.  First, we acknowledged actions that DOD has taken in recent years to  address the backlog—and handle the 174 percent increase from fiscal year  2001 through fiscal year 2003 in the number of clearance eligibility  determinations for industry personnel, such as contracting for additional  investigative services, hiring more adjudicators, and authorizing overtime  for adjudicative staff. Second, we discuss in some detail five significant  initiatives that DOD is considering to reduce the backlog and delays. DOD  noted that its initiatives “are gradually improving the process.” This DOD  statement supports our conclusion that it remains unclear whether any of  the initiatives—individually or collectively—can have a direct and  immediate impact on the backlog or delays. Third, we acknowledged  policy changes, but many of the changes were implemented from 4 to 18  years earlier—using waivers for clearance reinstatements and conversions  to eliminate the need to perform another investigation (2000),  implementing national investigative standards and adjudicative guidelines  (1999), utilizing full reciprocity (1997), and granting of interim clearances  to put industry personnel to work (1986). These positive steps must,  however, be considered in the context of major concerns that remain.  These concerns include the sizeable and long-standing backlog; the length  of time needed to conduct an investigation and determine eligibility for a  clearance, which now takes, on average, over 1 year to complete; the  failure to implement JPAS throughout DOD with all of its intended design  features, even though DOD said it would be implemented in fiscal year  2001; and DOD’s declaration that its personnel security investigations  program has been a systemic weakness since fiscal year 2000. We believe  that our report presents a balanced representation of the improvements  and the failures that contributed to a long-standing problem that can  increase national security risks; affect the timeliness, quality, and costs of  contractor performance on national-security-related contracts; and  ultimately increase costs to the federal government.
DOD’s comments are reprinted in appendix III. DOD also provided  technical comments that we incorporated in the final report as  appropriate.
We are sending copies of this report to other interested congressional  committees. We also are sending copies to the Secretary of Defense; the  Director, Office of Personnel Management; and the Director, Office of  Management and Budget. We will make copies available to other  interested parties upon request. This report also will be available at no  charge on GAO’s Web site at http://www.gao/gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-5559 or by e-mail at stewartd@gao.gov or contact Jack E.  Edwards at (202) 512-8246 or by e-mail at edwardsj@gao.gov.
Mark A. Pross, James F. Reid, William J. Rigazio, and Nancy L. Benco  made key contributions to this report.
section_title: Appendix I: Scope and Methodology
paragraphs: In conducting our review of the security clearance process for industry  personnel, we visited key offices within the Department of Defense (DOD)  that have responsibility for oversight and program management and  implementation. We also met with selected industrial contractors and  industry associations whose employees and members are affected by the  DOD backlog and delays in conducting investigations and determining  eligibility for security clearances. We conducted our work in Washington,  D.C., at DOD, including the Office of the Under Secretary of Defense for  Intelligence (OUSD ); Defense Security Service (DSS); and the Defense  Office of Hearings and Appeals (DOHA); at the Office of Personnel  Management; the Information Security Oversight Office at the National  Archives and Records Administration; and at the Personnel Security  Working Group of the National Security Council’s Policy Coordinating  Committee on Records Access and Information Security. We also  conducted review work in Columbus, Ohio, at the Defense Industrial  Security Clearance Office (DISCO) and DOHA; at Fort Meade, Maryland, at  DSS’s Personnel Investigations Center; and in Monterey, California, at the  Defense Personnel Security Research Center.
We met with representatives of several industrial contractors, including  Northrop-Grumman Corporation, Linthicum, Maryland, and Data Systems  Analysts, Inc., and General Dynamics Advanced Information Systems in  Arlington, Virginia. In addition, we held discussions with officials  representing industry associations, including the Northern Virginia  Technology Council and the National Classification Management Society  in Washington, D.C.; via telephone with the Shipbuilders Council of  America; with officials from the Information Technology Association of  America, Arlington, Virginia; and with representatives from the Aerospace  Industries Association and National Defense Industrial Association,  Linthicum, Maryland.
To determine the size of the security clearance backlog and changes  during the last 3 fiscal years in the amount of time it takes to conduct an  investigation and issue a clearance eligibility determination, we met with  DSS and DOHA officials to obtain the relevant data from the Case Control  Management System and discussed their methods for determining what  constitutes a backlog. As part of the process for estimating the backlog,  we observed the steps used to process investigative and adjudicative  information during our visits to the DSS Personnel Investigations Center,  DISCO, and DOHA. During these site visits, we obtained information on  the number of days required to complete an investigation or adjudication,  the time frames for designating what constitutes an investigative or  adjudicative backlog, and data reliability through questionnaires and  interviews. Our Applied Research and Methods team assisted us in  reviewing the reliability of the databases used to determine the backlog.  We also examined data for fiscal years 2001 to 2003 to track changes in  how long it took industry personnel to obtain a clearance during  those years. We discuss developments during the first half of fiscal  year 2004, where appropriate, so that information is current as of  March 31, 2004.
To identify the reasons or impediments for the backlog and delays in  conducting investigations and issuing eligibility determinations, we  reviewed reports by GAO, DOD Office of the Inspector General, House  Committee on Government Reform, Defense Personnel Security Research  Center, Information Security Oversight Office, and the Joint Security  Commission II. We interviewed officials from DSS, DISCO, and DOHA and  observed and reviewed their procedures. We also discussed impediments  with officials of OUSD (I), the Defense Personnel Security Research  Center, the Information Security Oversight Office, and the Chair of the  Personnel Security Working Group of the National Security Council, as  well as industry representatives. In addition, we reviewed these agencies’  prior reports. Our Office of the General Counsel reviewed various public  laws; executive orders; federal regulations; and DOD policy  memorandums, directives, regulations, and manuals.
To identify additional steps that DOD could take to reduce the time  needed to conduct investigations and issue eligibility determinations, we  reviewed prior reports to identify previously suggested initiatives. We  supplemented this information with discussions on the status of those  previously identified steps, as well as ongoing initiatives, with both  industry representatives and government officials. Where appropriate, our  Applied Research and Methods team reviewed Defense Personnel Security  Research Center reports to help ensure that the center’s (1) approaches  were methodogically sound, (2) sampling and statistical modeling  techniques were sufficient, and (3) proposed empirically based procedural  changes to DOD’s security clearance process also were methodologically  sound. The team also reviewed industry association survey results and  evaluated the validity and reliability of the survey methodology and  results.
We assessed the reliability of the data that were provided by DSS’s Case  Control Management System and used to determine the investigative and  adjudicative backlog and the time needed to conduct an investigation and  determine eligibility for a security clearance by (1) reviewing existing  information about the data and system that produced them,  (2) interviewing agency officials knowledgeable about the data, and  (3) reviewing DISCO’s and DOHA’s responses to a detailed questionnaire  about their information technology data reliability. We determined that the  data for fiscal years 2001 and thereafter were sufficiently reliable for the  purpose of this report.
The Case Control Management System also faced certain limitations,  which had an impact on our findings. Although the Case Control  Management System, which is used to obtain the backlog estimates, can  provide the total elapsed time between opening a case and issuing the final  security clearance eligibility determination, it is not capable of generating  separate time estimates for the intermediate stages of the clearance  process. Nor does it have the capability to identify how much time DOHA  needed to adjudicate issue cases. Therefore, all of the time-based findings  include the time period beginning when personnel security questionnaires  were entered into the Case Control Management System and ending when  DISCO notified the industrial contractor of the DISCO or DOHA  adjudicators’ decisions to determine eligibility for a clearance. Thus, the  total number of days to determine eligibility for a clearance includes  investigative time; DISCO and possibly DOHA review time; additional  DISCO investigative time, if required; and DOHA’s appeals process that  may follow the denial of a clearance request or the revocation of a  clearance. Finally, the Case Control Management System has the  capability to monitor overdue reinvestigations and generate accurate  estimates for that portion of the backlog for industry personnel; however,  it does not have this capability for military members and federal  employees.
We conducted our review from July 2003 through May 2004 in accordance  with generally accepted government auditing standards. We include a  comprehensive list of related GAO products at the end of this report.
section_title: Appendix II: Excerpts from the Adjudicative Guidelines for Determining Eligibility for Access to Classified Information
paragraphs: The Federal Adjudicative Guidelines for Determining Eligibility for  Access to Classified Information were approved by the President on  March 24, 1997, and implemented by the Department of Defense in 1998.  They include the following 13 guidelines and the reasons for concern.  1.  Allegiance to the United States: The willingness of an individual to  safeguard classified information is in doubt if there is any reason to  suspect the individual’s allegiance to the United States.  2.  Foreign influence: A security risk may exist when an individual is  bound by affection, influence, or obligation to persons, such as family  members, who are not citizens of the United States or may be subject  to duress.  3.  Foreign preference: When an individual acts in such a way as to  indicate preference for a foreign country, such as possession and/or  use of a foreign passport, then he or she may be prone to make  decisions harmful to the interests of the United States.  4.  Sexual behavior: Sexual behavior is a security concern if it involves a  criminal offense; indicates a personality or emotional disorder; may  subject the individual to undue influence of coercion, exploitation, or  duress; or reflects lack of judgment or discretion.  5.  Personal conduct: Conduct involving questionable judgment,  untrustworthiness, unreliability, lack of candor, or unwillingness to  comply with rules and regulations could indicate that an individual  may not properly safeguard classified information.  6.  Financial considerations: An individual who is financially  overextended is at risk of having to engage in illegal acts to generate  funds. Unexplained affluence is often linked to proceeds from  financially profitable criminal acts.  7.  Alcohol consumption: Excessive alcohol consumption often leads to  the exercise of questionable judgment, unreliability, and failure to  control impulses, and increases the risk of unauthorized disclosure of  classified information due to carelessness.  8.  Drug involvement: Improper or illegal involvement with drugs raises  questions regarding an individual’s willingness or ability to protect  classified information.  9.  Emotional, mental, or personality disorders: Emotional, mental, or  personality disorders are a security concern because they may indicate  a defect in judgment, reliability, or stability.  10.  Criminal conduct: A history or pattern of criminal activity creates  doubt about a person’s judgment, reliability, and trustworthiness.  11.  Security violations: Noncompliance with security regulations raises  doubt about an individual’s trustworthiness, willingness, and ability to  safeguard classified information.  12.  Outside activities: Involvement in certain types of outside  employment or activities is a security concern if it poses a conflict  with an individual’s security responsibilities and could create an  increased risk of unauthorized disclosure of classified information.  13.  Misuse of information technology systems: Noncompliance with  rules, procedures, guidelines, or regulations pertaining to information  technology systems may raise security concerns about an individual’s  trustworthiness, willingness, and ability to properly protect classified  systems, networks, and information.
The guidelines state that each case is to be judged on its own merits and  that a final determination to grant, deny, or revoke access to classified  information is the responsibility of the specific department or agency.  The adjudicators are to consider available, reliable information about the  person—past and present, favorable and unfavorable—in reaching an  “overall common sense” clearance-eligibility determination that gives  careful consideration to the 13 adjudicative guidelines. According to the  guidelines, any doubt about whether a clearance for access to classified  information is consistent with national security is to be resolved in favor  of national security.
section_title: Appendix III: Comments from the Department of Defense
section_title: Related GAO Products
paragraphs: 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.
DOD Personnel: More Consistency Needed in Determining Eligibility  for Top Secret Security Clearances. GAO-01-465. Washington, D.C.:  April 18, 2001.
DOD Personnel: More Accurate Estimate of Overdue Security Clearance  Reinvestigation Is Needed. GAO/T-NSIAD-00-246. Washington, D.C.:  September 20, 2000.
DOD Personnel: More Actions Needed to Address Backlog of Security  Clearance Reinvestigations. GAO/NSIAD-00-215. Washington, D.C.:  August 24, 2000.
DOD Personnel: Weaknesses in Security Investigation Program Are  Being Addressed. GAO/T-NSIAD-00-148. Washington, D.C.: April 6, 2000.
DOD Personnel: Inadequate Personnel Security Investigations  Pose National Security Risks. GAO/T-NSIAD-00-65. Washington, D.C.:  February 16, 2000.
DOD Personnel: Inadequate Personnel Security Investigations  Pose National Security Risks. GAO/NSIAD-00-12. Washington, D.C.:  October 27, 1999.
Background Investigations: Program Deficiencies May Lead DEA to  Relinquish Its Authority to OPM. GAO/GGD-99-173. Washington, D.C.:  September 7, 1999.
Military Recruiting: New Initiatives Could Improve Criminal History  Screening. GAO/NSIAD-99-53. Washington, D.C.: February 23, 1999.
Executive Office of the President: Procedures for Acquiring Access to  and Safeguarding Intelligence Information. GAO/NSIAD-98-245.  Washington, D.C.: September 30, 1998.
Privatization of OPM’s Investigations Service. GAO/GGD-96-97R.  Washington, D.C.: August 22, 1996.
Cost Analysis: Privatizing OPM Investigations. GAO/GGD-96-121R.  Washington, D.C.: July 5, 1996.
Personnel Security: Pass and Security Clearance Data for the  Executive Office of the President. GAO/NSIAD-96-20. Washington, D.C.:  October 19, 1995.
Privatizing OPM Investigations: Perspectives on OPM’s Role in  Background Investigations. GAO/T-GGD-95-185. Washington, D.C.:  June 14, 1995.
Background Investigations: Impediments to Consolidating  Investigations and Adjudicative Functions. GAO/NSIAD-95-101.  Washington, D.C.: March 24, 1995.
Security Clearances: Consideration of Sexual Orientation in the  Clearance Process. GAO/NSIAD-95-21. Washington, D.C.: March 24, 1995.
Personnel Security Investigations. GAO/NSIAD-94-135R.  Washington, D.C.: March 4, 1994.
Nuclear Security: DOE’s Progress on Reducing Its Security Clearance  Work Load. GAO/RCED-93-183. Washington, D.C.: August 12, 1993.
Personnel Security: Efforts by DOD and DOE to Eliminate Duplicative  Background Investigations. GAO/RCED-93-23. Washington, D.C.:  May 10, 1993.
Security Clearances: Due Process for Denials and Revocations by  Defense, Energy, and State. GAO/NSIAD-92-99. Washington, D.C.:  May 6, 1992.
DOD Special Access Programs: Administrative Due Process Not  Provided When Access Is Denied or Revoked. GAO/NSIAD-93-162.  Washington, D.C.: May 5, 1993.
Administrative Due Process: Denials and Revocations of Security  Clearances and Access to Special Programs. GAO/T-NSIAD-93-14.  Washington, D.C.: May 5, 1993.
Due Process: Procedures for Unfavorable Suitability and Security  Clearance Actions. GAO/NSIAD-90-97FS. Washington, D.C.: April 23, 1990.