DOD Personnel Clearances: DOD Faces Multiple Challenges in Its Efforts to Improve Clearance Processes for Industry Personnel
Published: 2008-02-13T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Department of Defense (DOD) maintains approximately 2.5 million security clearances on servicemembers, federal DOD civilian employees, industry personnel for DOD and 23 other federal agencies, and employees in the legislative branch. Delays in determining eligibility for a clearance can heighten the risk that classified information will be disclosed to unauthorized sources, increase contract costs, and pose problems in attracting and retaining qualified personnel. In this statement, GAO addresses: (1) the status of DOD's efforts to improve its projections of the numbers of clearances needed for industry personnel, and (2) other long-standing challenges that have a negative effect on the efficiency and effectiveness of DOD's personnel security clearance program for industry personnel. This statement is based on a report GAO is issuing today (GAO-08-350) and other prior work, which included reviews of clearance-related documents and interviews of senior officials at DOD and the Office of Personnel Management (OPM).
section_title: What GAO Found
paragraphs: DOD has had a long-standing challenge in accurately projecting the number of clearance investigations that will be required in the future for industry personnel. The Office of Management and Budget (OMB) developed criteria for these projections in November 2005. It established a governmentwide goal for agencies to refine their projections of the number of clearance investigations that will be required in any given year to be within 5 percent of the number of actual requests for investigation. At a May 2006 congressional hearing, an OPM Assistant Director stated that DOD had exceeded its departmentwide projection by 59 percent for the first half of fiscal year 2006. The negative effects of such inaccurate projections include impediments to workload planning and funding. GAO noted the problem with the accuracy of DOD's projections in its February 2004 report and recommended that DOD improve its projections for industry personnel. In the report it is issuing today, GAO noted that DOD has initiated changes to improve its estimates of future investigation needs and is conducting research that may change these methods further. For example, in 2006, DOD took steps to increase the response rate of its annual survey used as a basis for determining its projections. In 2007, it changed its methods for analyzing data that informs its projections. However, DOD has not yet demonstrated the effectiveness of these changes. DOD must address additional long-standing challenges or issues in order to improve the efficiency and accuracy of its personnel security clearance program for industry personnel. First, continuing delays in determining clearance eligibility can result in increased costs and risk to national security. For example, when new employees' clearances are delayed, it affects their abilities to perform their duties fully since they do not have access to classified material. Second, DOD and the rest of the federal government provide limited information to one another on how they individually ensure the quality of clearance products and procedures, which affects reciprocity of clearances. Reciprocity occurs when one government agency fully accepts a security clearance granted by another government agency. GAO's September 2006 report noted that agencies may not reciprocally recognize clearances granted by other agencies because of concerns that other agencies may have granted clearances based on inadequate investigations and adjudications. Third, in DOD's August 2007 report to Congress, it provided less than 2 years of funding-requirements information, which limits congressional awareness of future year requirements for this program. Fourth, DOD does not have a comprehensive DOD-specific plan to address delays in its clearance program. While there is a governmentwide effort to reform the clearance process, it is projected not to be operational until beyond December 2008.

section_title: Letter
paragraphs: I am pleased to be here today to discuss several of the long-standing  challenges that affect the efficiency and effectiveness of the Department of  Defense’s (DOD) personnel security clearance program for industry  personnel. DOD’s clearance program maintains approximately 2.5 million  clearances on servicemembers, federal DOD civilian employees, industry  personnel for DOD and 23 other federal agencies, and employees in the  federal legislative branch. For more than two decades, we have  documented challenges to DOD’s clearance program.
Long-standing delays in determining clearance eligibility and other  clearance challenges led us to designate DOD’s personnel security  clearance program as a high-risk area in January 2005 and to continue that  designation in the updated list of high-risk areas that we published in  2007. We identified this as a high-risk area because 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 unauthorized  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. At the same time, our work has  acknowledged recent improvements to the department’s clearance  processes that were DOD-specific or part of governmentwide efforts.
My statement today will focus on two issues: (1) the status of DOD’s  efforts to improve its projections of the number of clearances needed for  industry personnel, and (2) an overview of other long-standing challenges  that have a negative effect on the efficiency and effectiveness of DOD’s  personnel security clearance program for industry personnel. My  statement draws on a report which we are issuing today and on our prior  work on clearance processes which included reviews of clearance related  documents and interviews of senior officials at DOD and the Office of  Personnel Management (OPM) which has the primary responsibility for  providing investigation services to DOD. Our work was performed 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. A list of our related GAO products can be  found at the end of this statement.
subsections: section_title: Background
paragraphs: As with servicemembers and federal workers, industry personnel must  obtain security clearances to gain access to classified information.  Clearances are 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 cause to national security. The degree of  expected damage that unauthorized disclosure could reasonably be  expected to cause is “exceptionally grave damage” for top secret  information, “serious damage” for secret information, and “damage” for  confidential information.
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, and employees in  the federal legislative branch. That responsibility includes obtaining  background investigations, primarily through OPM. Within OUSD(I), DSS  uses OPM-provided investigative reports to determine clearance eligibility  of industry personnel. DOD has responsibility for adjudicating the  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 within DSS  and the Defense Office of Hearings and Appeals within the Defense Legal  Agency. Accordingly, the Defense Industrial Security Clearance Office  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 adjudicates cases containing  major security issues (e.g., an individual’s unexplained affluence or  criminal history) that could result in the denial of clearance eligibility and  possibly lead to an appeal.
Recent significant events affecting DOD’s clearance program include the  passage of the Intelligence Reform and Terrorism Prevention Act of 2004  and the issuance of the June 2005 Executive Order 13381, “Strengthening  Processes Relating to Determining Eligibility for Access to Classified  National Security Information.” The act included milestones for reducing  the time to complete clearances, general specifications for a database on  security clearances, and requirements for reciprocity of clearances.  Among other things, the executive order stated that OMB was to ensure  the effective implementation of policy related to appropriately uniform,  centralized, efficient, effective, timely, and reciprocal agency functions  relating to determining eligibility for access to classified national security  information.
Another recent event affecting DOD’s clearance program was the passage  of the John Warner National Defense Authorization Act for Fiscal Year  2007 which required DOD to include in its annual budget submission to  Congress a report on DOD’s industry personnel clearance investigations  program. In response to that mandate, DOD’s August 2007 Annual Report  to Congress on Personnel Security Investigations for Industry described  DOD-specific and governmentwide efforts to improve security clearance  processes. For example, one DOD-specific action described in the report  is the addition of a capability to electronically submit a clearance  applicant’s form authorizing the release of medical information. In  addition, one governmentwide effort described in the report is that all  requests for clearances are now being submitting using OPM’s Electronic  Questionnaires for Investigations Processing.
section_title: DOD’s Procedures for Projecting Future Industry Investigation Needs Are Evolving, but the Effectiveness of These Efforts Is Unclear
paragraphs: DOD has had a long-standing challenge in accurately projecting future  industry investigation needs and is developing and implementing new  methods to improve its procedures. However, DOD has not yet  demonstrated the effectiveness of these changes. 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, but those estimates have not accurately reflected  actual clearance needs. In November 2005, OMB reported a  governmentwide goal whereby agencies have been asked to work toward  refining their projections of required investigations to be within 5 percent  of the numbers of actual requests for investigation. However, according  to an OPM Associate Director’s May 2006 congressional testimony, DOD  exceeded its departmentwide projection by 59 percent in the first half of  fiscal year 2006.
Our work has shown that DOD’s long-standing inability to accurately  project its security clearance workload has had negative effects on its  clearance-related budgets and staffing requirements. For example, as we  reported in 2004, the services and defense agencies had to limit the  number of overdue reinvestigations that they submitted for investigation  in fiscal year 2000 because they did not budget sufficient funds to cover  the costs of the workload. Furthermore, in April 2006, DOD temporarily  stopped processing applications for clearance investigations for industry  personnel, attributing the stoppage to a large volume of industry clearance  requests and funding problems.
In May 2004, we addressed DOD’s problems with inaccurately projecting  the future number of clearances needed for industry personnel and the  negative effect of inaccurate projections on workload planning. In that  report, we recommended that OUSD(I) improve its 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 use of some industry personnel on more  than one contract and often for different agencies, (2) the movement of  employees from one company to another, and (3) unanticipated world  events such as the September 11, 2001, terrorist attacks. Because DOD  continues to experience an inability to accurately project its security  clearance workload, we believe that our 2004 recommendation for  improving projections still has merit.
In the report on security clearances we are issuing today, we note that 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. For example, DOD has modified the procedures for annually  surveying contractors performing classified work for the government in  order to more accurately estimate the number of future clearance  investigations needed for industry personnel. To improve the response  rate to this survey, in 2006, DSS made its survey accessible through the  Internet, and DSS field staff began actively encouraging industry  representatives to complete this voluntary survey. According to a DSS  official, these changes increased the survey response rate from historically  low rates of between 10 and 15 percent of the surveyed facilities providing  information in previous years to 70 percent of facilities in 2007, which  represented 86 percent of industry personnel with a clearance. In addition  to improving the response rate for its annual survey, DSS also changed its  methods for computing the projections. For example, DSS began  performing weekly analyses to refine its future investigation needs rather  than relying on the previous method of performing a onetime annual  analysis of its survey results. DSS also changed its analysis procedures by  including variables (e.g., company size) not previously accounted for in its  analyses. 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. However, it is too early to determine the effect of these  new methods on the accuracy of DOD’s projections.
section_title: DOD Faces Additional Long-standing Challenges to Improving the Efficiency and Effectiveness of Its Personnel Security Clearance Program for Industry Personnel
paragraphs: DOD must address additional long-standing challenges or issues in order  to improve the efficiency and effectiveness of its personnel security  clearance program for industry personnel. First, delays in the clearance  process continue to increase costs and risk to national security, such as  when new industry employees are not able to begin work promptly and  employees with outdated clearances have access to classified documents.  Second, DOD and the rest of the federal government provide limited  information to one another on how they individually ensure the quality of  clearance products and procedures. Third, in DOD’s August 2007 report to  Congress, it provided less than 2 years of funding-requirements  information which limits congressional awareness of future year  requirements for this program. Fourth, DOD currently has no  comprehensive DOD-specific plan to address delays in its clearance  program.
subsections: section_title: Delays in Clearance Processes Continue to Be a Challenge
paragraphs: DOD’s August 2007 report to Congress noted that delays in processing  personnel security clearances have been reduced, yet the time required to  process clearances continues to exceed time requirements established by  the Intelligence Reform and Terrorism Prevention Act of 2004. This law  currently requires 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 allotted for the investigation and 30 days allotted for the adjudication.  DOD’s August 2007 congressionally-mandated report on clearances for  industry personnel described continuing delays in the processing of  clearances. For example, during the first 6 months of fiscal year 2007, the  end-to-end processing of initial top secret clearances took an average of  276 days; renewal of top secret clearances, 335 days; and all secret  clearances, 208 days.
Delays in clearance processes can result in additional costs when new  industry employees are not able to begin work promptly and increased  risks to national security because previously cleared industry employees  are likely to continue working with classified information while the agency  determines whether they should still be eligible to hold a clearance. To  improve the timeliness of the clearance process, we recommended in  September 2006 that OMB establish an interagency working group to  identify and implement solutions for investigative and adjudicative  information-technology problems that have resulted in clearance delays.  In commenting on our recommendation, OMB’s Deputy Director for  Management stated that that National Security Council’s Security  Clearance Working Group had begun to explore ways to identify and  implement improvements to the process.
section_title: DOD and the Rest of the Government Provide Limited Information on How to Ensure the Quality of Clearance Products and Procedures
paragraphs: DOD’s August 2007 congressionally mandated report on clearances for  industry personnel documented improvements in clearance processes but  was largely silent regarding quality in clearance processes. While DOD  described several changes to the processes and characterized the changes  as progress, the department provided little information on (1) any  measures of quality used to assess clearance processes or (2) procedures  to promote quality during clearance investigation and adjudication  processes. Specifically, DOD reported 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.
In September 2006, we reported that while eliminating delays in clearance  processes is an important goal, the government cannot afford to achieve  that goal by providing investigative and adjudicative reports that are  incomplete in key areas. We additionally reported that the lack of full  reciprocity of clearances is an outgrowth of agencies’ concerns that other  agencies may have granted clearances based on inadequate investigations  and adjudications. Without fuller reciprocity of clearances, agencies could  continue to require duplicative investigations and adjudications, which  result in additional costs to the federal government. In the report we are  issuing today, we are recommending that DOD develop measures of  quality for the clearance process and include them in future reports to  Congress. Statistics from such measures would help to illustrate how  DOD is balancing quality and timeliness requirements in its personnel  security clearance program. DOD concurred with that recommendation,  indicating it had developed a baseline performance measure of the quality  of investigations and adjudications and was developing methods to collect  information using this quality measure.
section_title: DOD’s Limited Information on Future Funding Requirements Hampers Congressional Awareness of a Key Aspect of the Personnel Security Clearance Program
paragraphs: DOD’s August 2007 congressionally mandated report on clearances for  industry personnel provided less than 2 years of data on funding  requirements. In its report, DOD identified its immediate needs by  submitting an annualized projected cost of $178.2 million for fiscal year  2007 and a projected funding need of approximately $300 million for  fiscal year 2008. However, the report 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 personnel security  clearance program.
The inclusion of less than 2 future years of budgeting information limits  Congress’s ability to carry out its oversight and appropriations functions  pertaining to industry personnel security clearances. Without more  information on DOD’s longer-term funding requirements 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 the future years  defense program to Congress, which contains budget projections for the  current budget year and at least the 4 succeeding years. In the report we  are issuing today, we are recommending that DOD add projected funding  information for additional future years so that Congress can use that  information in making strategic appropriation and authorization decisions  about the clearance program for industry personnel. DOD concurred with  that recommendation and stated that it would implement our  recommendation in its 2009 congressional report.
section_title: DOD Has No Comprehensive Department-specific Plan to Address Delays in its Clearance Program
paragraphs: DOD currently has no comprehensive department-specific plan to address  delays and other challenges in its clearance program. 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. However, DOD continues to address challenges in the  security clearance process in an incremental fashion. According to  OUSD(I) officials, DOD is pursuing a limited number of smaller-scale  initiatives to address backlogs and delays. For example, to address delays  in the process, DOD is working with OPM to introduce a new method of  obtaining an applicant’s fingerprints electronically and implement a  method that would enable OPM to transfer investigative records to DOD  adjudicators electronically.
The DSS Director said that DSS had been drafting a comprehensive plan to  improve security clearance processes for industry personnel, but new  governmentwide efforts have supplanted the larger-scale initiatives that  DSS was planning. In particular, DOD is relying on a governmentwide  effort to reform the clearance system. Agencies involved in this  governmentwide effort include the Office of the Director of National  Intelligence, DOD, OMB, and OPM. A description of those planned  improvements are included in the team’s July 25, 2007, terms of reference,  which indicate that the reform 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. In our November 2007 discussions with DOD  officials, the OUSD(I) Director of Security stated that the government  expects to have demonstrated the feasibility for components of the new  system by December 2008, but the actual system would not be operational  for some additional unspecified period.
We believe that our 2004 recommendation for a comprehensive  management plan is still warranted because (1) many of the challenges  still exist 4 years after we made our recommendation and (2) the date that  the reformed system will be in operation is unknown.
section_title: Concluding Observations
paragraphs: Mr. Chairman, we are encouraged by some department-specific and  governmentwide efforts that have improved DOD’s personnel security  clearance program, but the challenges identified in this testimony show  that much remains to be done. Should these long-standing challenges and  issues not be addressed, the vulnerability of unauthorized disclosure of  national security information and additional costs and delays in  completing national security-related contracts will likely continue. We will  continue to monitor DOD’s program as part of our series on high-risk  issues that monitors major programs and operations that need urgent  attention and transformation.
Chairman Ortiz and Members of the subcommittee, this concludes my  prepared statement. I would be happy to answer any questions that you  may have at this time.
section_title: Contact and Acknowledgments
paragraphs: For further information regarding this testimony, please contact me at  (202) 512-8246 or edwardsj@gao.gov, or Brenda S. Farrell at (202) 512-3604  or farrellb@gao.gov. In addition, contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this statement. Individuals who made key contributions to this  testimony are Grace Coleman, James P. Klein, Ron La Due Lake, Marie  Mak, and Karen D. Thornton.
section_title: Related GAO Products
paragraphs: DOD Personnel Clearances: Improved Annual Reporting Would Enable  More Informed Congressional Oversight. GAO-08-350. Washington, D.C.:  February 13, 2008.
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.
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