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

Letter

Background

DOD obtains nearly all of its clearance investigations through OPM, which is currently responsible for 90 percent of the personnel security clearance investigations for the federal government. DOD retained responsibility for adjudicating clearances of servicemembers, DOD civilians, and industry personnel. Two DOD offices are responsible for adjudicating cases involving industry personnel. The Defense Industrial Security Clearance Office (DISCO) within DSS adjudicates cases that contain only favorable information or minor issues regarding security concerns (e.g., some overseas travel by the individual). The Defense Office of Hearings and Appeals (DOHA) within the Defense Legal Agency adjudicates cases that contain major security issues (e.g., an individual’s unexplained affluence or criminal history) which could result in the denial of clearance eligibility and possibly lead to an appeal.

Like servicemembers and federal workers, industry personnel must obtain a security clearance to gain access to classified information, which is categorized into three levels: top secret, secret, and confidential. The level of classification denotes the degree of protection required for information and the amount of damage that unauthorized disclosure could reasonably be expected to cause to national security. For top secret information, the expected damage that unauthorized disclosure could reasonably be expected to cause is “exceptionally grave damage;” for secret information, it is “serious damage;” and for confidential information, it is “damage.”

DOD’s Report Responded to the Mandated Issues but Did Not Include Certain Important Data on Some Issues

DOD provided information on each issue specified by the mandate, but certain important information on funding, processing times, and quality was limited or absent. DOD divided its nine-page report into five sections, corresponding to the five sections of the law. DOD began with a discussion of the personnel security clearance investigation funding requirements—$178 million for fiscal year 2007 and approximately $300 million for fiscal year 2008—and indicated that funds exist to cover the fiscal year 2007 projected costs. In section two, DOD reported the size of the investigative backlog by showing that 21,817 (48 percent) of the applications for clearance investigations for industry personnel which were still pending as of July 14, 2007, were more than 90 days old. In section three, DOD reported OPM statistics that showed the average number of days required to complete investigations as of May 2007. An initial top secret clearance took an average of 211 days; top secret renewals, an average of 334 days; and all secret/confidential initials and renewals, an average of 127 days. The fourth section of DOD’s report highlighted seven areas that DOD characterized as progress toward implementing planned changes in the process. These areas included timeliness-improvement actions that were DOD-specific (e.g., adding a capability to electronically submit the applicant’s form authorizing the release of medical information) and governmentwide (e.g., submitting all requests for clearances using OPM’s Electronic Questionnaires for Investigations Processing). In the fifth section, the Under Secretary of Defense for Intelligence certified that the department had taken actions to improve the industry personnel clearance program during the 12 months preceding the report date. DOD supported this finding by including a table showing that the monthly average number of completed industry investigations increased from 13,227 in July 2006 to 16,495 in July 2007.

Certain important information on three of the mandated issues—the program funding requirements, the average processing time, and quality in the clearance process—was limited or absent. First, DOD reported program-funding requirements covering less than 2 years. DOD reported an annualized projected cost of $178.2 million for fiscal year 2007, a projected funding requirement of approximately $300 million for fiscal year 2008, and a department statement indicating that it was able to fund the industry personnel security clearance program for the remainder of 2007. The mandate directed DOD to report its funding requirements for the program and the Secretary of Defense’s ability to fulfill them. While the report described DOD’s immediate needs and ability to fund those needs, it did not include information on (1) the funding requirements for fiscal year 2009 and beyond, even though the survey used to develop the funding requirements asked contractors about their clearance needs through 2010; and (2) the tens of millions of dollars that the DSS Director testified to Congress in May 2007 were necessary to maintain the infrastructure supporting the industry security clearance program. The OUSD(I) Director of Security and the DSS Director told us that the department did not include funding requirements beyond fiscal year 2008 because of concerns about the accuracy of the data used to identify the requirements. They told us that the funding requirements of the program depend on the estimates of the future number of investigations that DSS will obtain from OPM, which DSS determines using its annual survey. They, as well as the report, indicated that because projections made farther into the future are more likely to be inaccurate, DOD decided not to include funding projections beyond 1 future year in the report. The report also stated that the data used to construct the projected funding requirements are available through fiscal year 2010, but the report did not include that information. DOD regularly submits longer-term financial planning documents to Congress. Specifically, the future years defense program (FYDP), which is submitted annually to Congress, contains detailed data projections for the budget year in which funds are being requested and at least the 4 succeeding years. The FYDP is a long-term capital plan and as such provides DOD and Congress with a tool for looking at future funding needs beyond immediate budget priorities.

Second, DOD reported the average investigation times cited earlier but did not include the times for other specific phases of the end-to-end clearance process. DOD reported the average number of days it took to complete investigations for all clearances closed between May 2006 and May 2007 and the average numbers of days to process DOD industry clearances from end to end for all cases adjudicated during the first 6 months of fiscal year 2007. The mandate directed DOD to report the length of the average delay for an individual case pending in the personnel security clearance investigation process. The Intelligence Reform and Terrorism Prevention Act of 2004 requires the processing of at least 80 percent of clearances to be completed within an average of 120 days, including no more than 90 days for the investigation. Although it did not provide times for other clearance phases and was not mandated to do so, DOD’s report stated that a joint study conducted by OPM, DSS, and industry identified average times to complete six discrete phases—including the investigation, the time needed to mail investigation reports from OPM to a DOD adjudication facility, and the adjudication. Our September 2006 report showed that longer delays are found in some phases of the process than in others (e.g., our analysis of 2,259 cases showed that the application-submission phase took an average of 111 days to complete instead of the goal of 14 days) and suggested that monitoring each of the phases would help DOD to identify where actions are needed to improve timeliness. The OUSD(I) Director of Security and the DSS Director told us that because the DOD report included both the average time to complete an investigation and the time to process the clearance from start to finish, the department did not include the times to process the additional discrete phases of the clearance process. While the information included in the report provides visibility to the processing times for the investigation and for the entire process, monitoring and reporting times for each phase would help DOD and Congress to identify where actions are most needed to improve timeliness.

Third, DOD documented improvements in the process but was largely silent regarding quality in the clearance processes. While DOD described several changes to the process it characterized as progress, it provided little information on measures of quality used to assess the clearance processes or procedures to promote quality during clearance investigations and adjudications processes. Specifically, the DOD report’s section describing improvements noted that DSS, DOD’s adjudicative community, and OPM are gathering and analyzing measures of quality for the clearance processes that could be used to provide the national security community with a better product. However, the DOD report did not include any of those measures. When we asked the OUSD(I) Director of Security why the measures of quality were not included, he said the department did not include them because stakeholders in the clearance processes have not agreed on how to measure quality. In September 2006, we identified several areas where OPM-supplied investigative reports and DOD adjudicative data were incomplete. We noted that while eliminating delays in the clearance process is an important goal, the government cannot afford to achieve that goal by providing reports of investigations and adjudications that are incomplete in key areas. We additionally noted that the lack of full reciprocity of clearances—when a security clearance granted by one government agency is not accepted by another agency—is an outgrowth of agencies’ concerns that other agencies may have granted clearances based on inadequate investigations and adjudications.

In deciding not to provide certain important information in its first annual report to Congress, DOD has limited the information available to Congress as it oversees the effectiveness of DOD’s industry personnel security clearance processes. Specifically, by not including funding requirements for 2009 and beyond, DOD left out information Congress could use in making longer-term appropriation and authorization decisions for this program. In addition, by not including the times to complete phases of the clearance process other than the investigation, DOD makes it less apparent to Congress where the most significant timeliness gains can be made relative to the costs of improving the processes. Finally, by not including measures of quality in the clearance processes, DOD has only partially supported its assertion that it has made improvements to the clearance processes.

Many of DOD’s Records of the Numbers and Costs of Security Clearance Investigations and Adjudications Were Not Available or Were Considered Unreliable

DOD reported that OPM conducted 81,495 investigations for the department in fiscal year 2005 and 138,769 in fiscal year 2006 and that DOD staff granted clearance eligibility to 113,408 industry personnel in fiscal year 2005 and 144,608 industry personnel in fiscal year 2006. However, we are unable to report the numbers and unit costs of investigations and adjudications for industry personnel for fiscal years 2000 through 2004, because DOD either was not able to provide data or supplied data that we found to be insufficiently reliable to report. Reliable information for fiscal years 2000 through 2004 was not available because of factors such as the abandonment of an electronic database for recording investigative and adjudicative information. Although some limitations are present for the numbers and costs data for industry personnel for fiscal years 2005 and 2006, our assessments show that they are sufficiently reliable for us to report them, along with explicit statements about their limitations.

DOD Could Not Provide Sufficiently Reliable Information on the Numbers and Costs of Investigations and Adjudications for Fiscal Years 2000 through 2004

Our assessments of data on the numbers and costs of investigations and adjudications for industry personnel for fiscal years 2000 through 2004 showed that DOD-provided information was not sufficiently reliable for us to report. The shaded portion of table 1 summarizes underlying factors that contributed to DOD’s inability to provide us with reliable data. (In the next section, we report information provided to us by DOD on the numbers and costs of investigations and adjudications for fiscal years 2005 and 2006).

When we assessed the reliability of DOD-provided information on the numbers of investigations for industry personnel, we found discrepancies in the fiscal years 2000 through 2004 summary records kept by two DOD offices: DSS and OUSD(C). The discrepancies in the annual numbers of investigations ranged from 3 to 48 percent. Relative to the numbers found in DSS records, OUSD(C) records showed 3 percent more investigations for secret clearances had been completed in fiscal year 2001 and 48 percent fewer investigations for initial top secret investigations had been completed in fiscal year 2000. The original source of data for both offices’ records was DOD’s Case Control Management System (CCMS), which had formerly been used to electronically store data on DOD personnel security clearance investigations. DOD stopped maintaining CCMS in conjunction with the department’s transfer of DSS’s investigative functions and personnel to OPM in February 2005. DOD estimated that it could save $100 million over 5 years in costs associated with maintaining and updating CCMS by instead using OPM’s Personnel Investigations Processing System for electronically storing investigations data. Because CCMS is no longer available, we were unable to determine which—if either—office’s data were sufficiently reliable for the purposes of this report. While DOD no longer has access to the CCMS software tool needed to aggregate the associated personnel security clearance data, individual files on industry personnel have been archived and are available for access (e.g., when someone renews a clearance).

We are similarly unable to report the number of adjudications for fiscal years 2000 through 2004, because DOD could not provide information that was sufficiently reliable for the purposes of this report. Sufficiently reliable data were not available for this period because the Joint Personnel Adjudications System (JPAS) did not become the official DOD adjudication database until February 2005. In the prior years, DSS had stored adjudication-related information on industry personnel in CCMS— which is no longer operational. A DSS official indicated that JPAS provides pre-2005 adjudication information inaccurately because of problems DOD experienced when transitioning from CCMS to JPAS.

We found cost data on industry personnel clearances for fiscal years 2000 through 2004 to be insufficiently reliable, as evidenced by the inconsistency of the information that we obtained from DSS and OUSD(C). At the most extreme, the DSS records show that the cost for an investigation of a secret clearance in fiscal year 2004 was 486 percent higher than the rate reported in OUSD(C) records. DOD’s ability to provide us with more reliable information was hampered by two factors. First, when DOD transferred its investigative function and 1,800 authorized positions to OPM in February 2005, the transfer resulted in lost or misplaced records and reduced institutional knowledge in DSS’s financial management office. The DSS Director told us that DSS record keeping has not been a “strong suit” of the agency in the past. Second, DSS leadership has frequently changed over the past 5 years. For example, DSS had four acting directors in the 4 years before getting its current permanent Director, and it had nine comptrollers during the same period.

The unit cost for adjudications for fiscal years 2000 through 2004 for industry personnel clearances could not be computed, because the total cost of all adjudications and the number of adjudications—key variables in computing unit cost—were either unavailable or unreliable. For example, DSS officials told us that the budget records for this period did not differentiate the portion of DSS’s budget used to fund DISCO, which adjudicates the majority of DOD’s clearances for industry. Additionally, officials from DOHA, which adjudicates some industry cases, told us that they similarly could not accurately identify a unit cost for adjudications. DOHA officials told us that because their adjudicators conduct additional work besides security clearance work and those costs are not accounted for separately, estimates of the unit cost of the adjudicative work they perform would be speculative. Finally, as we discussed above, the data that DOD provided on the number of adjudications for 2000 through 2004 were not sufficiently reliable for the purposes of this audit.

DOD Provided Sufficiently Reliable Data on the Numbers and Costs of Investigations and Adjudications for Fiscal Years 2005 and 2006

DOD reported that OPM conducted 81,495 investigations of industry personnel for the department in fiscal year 2005 and 138,769 such investigations in 2006 (see table 2). The difference in the numbers of investigations for the 2 years is due largely to the fact that DOD could not provide reliable information on the number of investigations that DSS completed before the February transfer of investigative staff and functions to OPM. In both years, OPM provided DOD with more investigations for secret or confidential clearances than for top secret clearances. More secret/confidential clearances are historically required and performed as compared to top secret clearances, and data presented in table 2 are consistent with this trend.

Using OPM-provided data, DSS determined that it had granted clearance eligibility to 113,408 industry personnel in fiscal year 2005 and 144,608 industry personnel in fiscal year 2006 (see table 3). The number of clearances granted in a year may not match the number of investigations conducted in that year because of the time that elapses between completion of the investigation and completion of the adjudication.

For the 2 most recent of the 7 fiscal years specified in the mandate, the total estimated unit cost for the entire clearance process varied from $290 for an initial or a renewal of a secret/confidential clearance to $3,850 for the initial top secret clearance that is determined with a standard investigation (see table 4). The lower half of table 4 shows that investigations that are given higher priorities cost more.

Regardless of whether the clearance was based on a standard or priority investigation, the primary reason for the difference in costs is due to the effort required to complete the different types of investigations. For example, our September 2006 report noted that OPM estimated that approximately 60 total staff hours are needed for each investigation for an initial top secret clearance and 6 total staff hours are needed for each investigation to support a secret or confidential clearance. Another factor that causes variability in the cost of the clearance determination is whether investigators can use a phased reinvestigation. Starting in fiscal year 2006, the President authorized the use of phased reinvestigations, which do not require some types of information to be gathered during the renewal of a top secret clearance unless there are potentially derogatory issues found in earlier portions of the reinvestigation.

While the information in table 4 provides the estimated unit costs of investigations and adjudications and estimated total costs, several considerations suggest that the actual unit costs would be somewhat different from those shown in the table if OPM and DOD were to account for all of the costs. For example, the fixed costs for the investigations do not include any additional costs that DOD might incur should adverse information be revealed that requires an additional subject interview to address this information. In these instances, OPM charges DOD for an additional interview to resolve the issue before the case is adjudicated. In addition, if DOD sends an investigation report back to OPM with a request for additional interviews in order to reconcile conflicting information, there may be additional fees. DOD officials stated that cases requiring subsequent resolution of multiple issues could result in additional charges to address each issue. These special interviews cost $515 in 2005 and $430 in 2006. DOD was unable to provide data identifying the number of investigations that included these special interviews. Conversely, the 2006 investigation costs do not address a $7 million refund that OPM made to DOD in September 2006; the refund pertained to a surcharge covering all DOD investigations that DOD had paid to OPM.

In fiscal years 2005 and 2006, DOD paid OPM a surcharge in addition to the base rate OPM charged DOD to conduct investigations. The surcharge amounts were 25 percent in fiscal year 2005 and 19 percent in fiscal year 2006. DOD and OPM agreed to this surcharge in a memorandum of understanding that defined the terms of the transfer of the investigative functions and personnel from DSS to OPM. This surcharge was intended to offset any potential operating losses that OPM incurred in taking over the investigative function from DSS. However, disagreements between DOD and OPM about the amount of the surcharge led to mediation between the agencies in September 2006 and resulted in a retroactive reduction of the surcharge to 14 percent for the third quarter of fiscal year 2006 and an elimination of the surcharge for fiscal year 2007 and beyond.

The unit costs of the adjudications—$100 in fiscal year 2005 and $90 in fiscal year 2006—are approximations that must be viewed with some caution. DOD officials acknowledged that while they provided a single value for the unit cost of both top secret and secret/confidential adjudications, the actual time to adjudicate top secret clearance-eligibility determinations is roughly twice that required to adjudicate secret/confidential clearance-eligibility determinations. Furthermore, the DOD-supplied unit cost estimate for adjudications does not account for the cost associated with the additional work required to adjudicate derogatory information in some of the cases that are sent to DOHA. Prior to 2005, DSS had not differentiated the adjudication portion of its budget from other functions in its budget.

DOD’s Procedures for Projecting Future Investigation Needs and Its Plans for Improving and Funding the Industry Clearance Program Are Evolving

Changes are occurring in the way in which DOD estimates its future investigations needs, as well as its plans and funding for modifying the personnel security clearance program for industry personnel. The procedures for estimating the numbers of clearance investigations needed annually for industry personnel are being revised in an attempt to improve the accuracy of those estimates. Similarly, DOD is not pursuing DOD- specific planning for reducing backlogs and delays as well as steps to adequately fund its clearance process but instead is participating in governmentwide planning efforts to improve clearance processes.

DOD’s Method for Estimating the Numbers of Industry Personnel Clearance Investigations Needed in the Future Is Evolving

DOD is changing the methods it uses to estimate the numbers of security clearance investigations it will need for industry personnel in the future in an effort to improve the accuracy of those estimates. Since 2001, DOD has conducted an annual survey of contractors performing classified work for the government in order to estimate future clearance-investigation needs for industry personnel. In November 2005, OMB reported a governmentwide goal whereby agencies have been asked to work toward refining their projections to be within 5 percent of the numbers of actual requests for investigation. However, DOD has had difficulties in projecting its departmentwide clearance needs accurately. For the first half of fiscal year 2006, OPM reported that DOD had exceeded its departmentwide projection by 59 percent. The negative effects of such inaccurate projections include impediments to workload planning and funding.

We have addressed the impact that inaccurate projections have on workload planning in our prior work. In 2004, we recommended that OUSD(I) improve the projections of clearance requirements for industry personnel—for both the numbers and types of clearances—by working with DOD components, industry contractors, and the acquisition community to identify obstacles and implement steps to overcome them. At that time, DOD officials attributed inaccurate projections to (1) the fact that the voluntary annual survey was answered by only a small fraction of the more than 10,000 cleared contractor facilities, (2) the use of some industry personnel on more than one contract and often for different agencies, (3) the movement of employees from one company to another, and (4) unanticipated world events such as the September 11, 2001, terrorist attacks.

In its efforts to improve its estimates of future clearance investigation needs, DSS has made recent changes to the methods it uses to develop these estimates; and it is conducting research that may change these methods further. First, starting in 2006, DSS made its annual survey accessible through the Internet. Second, DSS field staff made a more concerted effort to actively encourage industry representatives to complete the voluntary survey. According to a DSS official, these two changes increased the response rate of the survey, from historical lows of between 10 and 15 percent of surveyed facilities in previous years, to 70 percent of facilities responding in 2007, representing 86 percent of industry personnel with a clearance in fiscal year 2007. Third, during fiscal year 2007, DSS began performing weekly updates to the analysis of future investigation needs, rather than relying on the previous method of performing a onetime annual analysis. Fourth, DSS has changed its analysis procedures by including variables (e.g., company size) not previously accounted for and is using a statistical method that substitutes values for missing survey data. In addition, DOD’s Personnel Security Research Center is assessing a statistical model for estimating future investigation needs in order to determine if a model can supplement or replace the current survey method.

DOD Currently Has No Plan of Its Own to Improve the Clearance Process but Is Participating in Related Governmentwide Efforts

Modifications to DOD’s personnel security clearance program are changing from a DOD-specific emphasis to one that focuses on governmentwide efforts. Consequently, DOD does not have a comprehensive plan to address department-specific clearance backlogs, delays, and program funding. The principles of the Government Performance and Results Act of 1993 provide federal agencies with a basis for a results-oriented framework that they can use to construct comprehensive plans that include setting goals, measuring performance, and reporting on the degree to which goals are met. In addition, the Intelligence Reform and Terrorism Prevention Act of 2004 provides DOD with timeliness requirements that would need to be met in any such comprehensive plan addressing clearance backlogs and delays.

In our 2004 report on personnel security clearances for industry personnel, we recommended that DOD develop and implement an integrated, comprehensive management plan to eliminate the backlog, reduce the delays in conducting investigations and determining eligibility for security clearances, and overcome the impediments that could allow such problems to recur. At that time, DOD had been reacting to the impediments in a piecemeal fashion, rather than establishing an integrated approach that incorporated objectives and outcome-related goals, set priorities, identified resources, established performance measures, and provided milestones for permanently eliminating the backlog and reducing the delays.

The DSS Director told us that DSS had been drafting a comprehensive plan to improve the security clearance process for industry personnel, but new governmentwide efforts have supplanted the larger-scale initiatives that DSS was planning. However, according to OUSD(I) officials, DOD continues to pursue a limited number of smaller-scale initiatives to address backlogs and delays and to ensure that funding is available for its security clearance processes. For example, to address delays in the processes, DOD is working with OPM to introduce methods of obtaining applicants’ fingerprints electronically and to implement a method that would enable OPM to transfer investigative records to DOD adjudicators electronically. To help ensure that funding is available for its security clearance program, DOD is examining the number of clearances it funds and undertakes for industry personnel who work with 23 other federal agencies and departments. The DSS Director indicated that DOD is considering the cost it incurs for providing clearance-related services and the feasibility of shifting the funding responsibility back to the federal agencies and departments that request the clearances through DOD.

High-level attention has been focused on improving personnel security clearance processes governmentwide. Since June 2005, OMB’s Deputy Director of Management has been responsible for a leadership role in improving the governmentwide processes. During that time, OMB has overseen, among other things, the issuance of reciprocity standards, the growth of OPM’s investigative workforce, and greater use of OPM’s automated clearance-application system. An August 9, 2007, memorandum from the Deputy Secretary of Defense indicates that DOD’s clearance program is drawing attention at the highest levels of the department.

Streamlining security clearance processes is one of the 25 DOD transformation priorities identified in the memorandum.

Another indication of high-level governmentwide involvement in addressing problems in clearance processes is the formation of an interagency security clearance process reform team in June 2007. The team’s memorandum of agreement indicates that it seeks to develop, in phases, a reformed DOD and intelligence community security clearance process that allows the granting of high-assurance security clearances in the least time possible and at the lowest reasonable cost. The team’s July 25, 2007, terms of reference indicate that the team plans to deliver “a transformed, modernized, fair, and reciprocal security clearance process that is universally applicable” to DOD, the intelligence community, and other U.S. government agencies, no later than December 31, 2008. In our November 2007 discussions with DOD officials, the OUSD(I) Director of Security clarified that the government expects to have demonstrated the feasibility of components of the new system by December 2008, but the actual system would not be operational for some additional unspecified period.

Conclusions

While DOD’s initial report on security clearances addressed all of the issues specified in the mandate, the omission of certain important information on the same issues currently limits Congress’s ability to carry out its oversight and appropriations functions pertaining to industry personnel security clearances. For example, inclusion of only one future year of budgeting information limits the report’s usefulness for strategic appropriations and oversight purposes. Without more information on DOD’s longer-term funding needs for industry personnel security clearances, Congress lacks the visibility it needs to fully assess appropriations requirements. Elsewhere, DOD provides such longer-term funding projections as a tool for looking beyond immediate budget priorities. Specifically, DOD annually submits to Congress the FYDP, which contains budget projections for the current budget year and at least the 4 succeeding years. Similarly, congressional oversight is hampered by the absence of information specific to industry personnel on timeliness measures for the average number of days it takes to perform portions of the clearance process—such as the adjudication phase—for pending and completed cases. Without these additional statistics, there is limited transparency for monitoring the progress that DOD and OPM are making annually in streamlining investigative and adjudicative tasks. Finally, DOD’s report did not include any metrics on quality, even though we have previously recommended—in multiple reports and testimonies—that DOD and other parts of the government develop and report such measures for their clearance processes. Problems with the quality of investigations and adjudications can lead to negative consequences—such as the reluctance of agencies to accept clearances issued by other agencies—and can thereby increase waste in the form of unnecessary additional workload for the entire clearance community. Inclusion of these three types of data in the future annual reports appears feasible, based on statements in DOD’s initial report that acknowledged the availability or ongoing development of each type of data.

Recommendations for Executive Action

To improve the quality of the information that DOD provides in future reports to Congress for monitoring the security clearance process for industry personnel, we recommend that the Secretary of Defense direct the Under Secretary of Defense for Intelligence to augment the information contained in the department’s initial mandated report. We therefore recommend the following three actions: Add projected funding information for additional out years so that Congress can use that input in making strategic appropriation and authorization decisions about the clearance program for industry personnel. In addition to the mandated information on average delays for pending cases; provide timeliness data for the additional phases within the clearance process, to allow for greater transparency regarding which processes are working well and which need improvement.

Develop measures of quality in the clearance process and include them in future reports, to explicitly show how DOD is balancing quality and timeliness requirements in its personnel security clearance program.

Agency Comments and Our Evaluation

In written comments on a draft of this report, OUSD(I) concurred with all three of our recommendations. OUSD(I) noted that DOD agrees the recommended additional information will aid Congress in its oversight role and its future annual reports—starting in 2009—will include the suggested information. Regarding our funding recommendation, OUSD(I) noted its plans for addressing out year funding in the future and discussed the difficulty in capturing infrastructure costs such as those needed to sustain the current adjudication system and build a new information technology system. With regard to our recommendation on quality, DOD noted that the Personnel Security Research Center is leading the effort to further define measures, develop collection methodology, and suggest collection methods. DOD’s comments are included in their entirety in appendix II of this report.

We are sending copies of this report to interested congressional committees; the Secretary of Defense; the Director of the Office of Management and Budget; and the Director of the Office of Personnel Management. We will also make copies available to others on request. In addition, the report will be available at no charge on the GAO Web site at http://www.gao.gov.

If you or your staff has any questions about this report, please contact me at (202) 512-3604 or farrellb@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix III.

Appendix I: Scope and Methodology

The scope and methodology of this report follow from the questions it answers. This report answers the following questions: (1) To what extent does the Department of Defense’s (DOD) August 2007 report to Congress address the five issues specified in the mandate? (2) What were the number and cost of each type of clearance investigation and adjudication for industry personnel performed in fiscal years 2000 through 2006? (3) To what extent has DOD developed procedures to estimate the number of investigations to be conducted; plans to reduce delays and backlogs in the clearance program, if any; and provide funding?

In 2006, the John Warner National Defense Authorization Act for Fiscal Year 2007 mandated that (1) DOD report annually on the future requirements of its industry personnel security investigations program and (2) we evaluate DOD’s first report in response to this mandate and provide additional information on eight issues. For our review of the DOD report, our scope was largely limited to information in the DOD report. The report included information on initial and renewal top secret, secret, and confidential clearances for industry personnel and information about program funding, the size of the backlog, the average time to complete investigations, and changes to the process. For the additional information on the number and cost—including information on surcharges that DOD paid to the Office of Personnel Management (OPM)—of each type of industry clearance work performed in DOD’s personnel security clearance program, we limited our scope to DSS- and OPM-conducted investigations and DOD adjudications of initial and renewal top secret, secret, and confidential clearances for industry personnel completed in fiscal years 2000 through 2006. For the additional information on planning and investigation requirements-estimation procedures, our scope included DOD and governmentwide plans and on-going efforts as well as DOD- specific procedures for estimating the numbers of future initial and renewal top secret, secret, and confidential clearances which will be needed for industry personnel.

Methodology

To determine the extent to which DOD’s report addressed each of the five issues specified in the mandate, we reviewed various documents, including laws and executive orders, DOD security clearances policies, OPM security clearances policies, and DOD and governmentwide data quality policies and regulations. These sources provided the criteria used for assessing the DOD report on personnel security clearances for industry. The sources also provided insights into possible causes and effects related to our findings about whether the DOD report addressed each of the issues specified in the mandate. We also reviewed clearance- related reports issued by organizations such as GAO, DOD’s Office of Inspector General (DODIG), and DOD’s Personnel Security Research Center. We interviewed and obtained and evaluated documentary evidence from headquarters policy and program officials from various offices (see the column for question 1 in table 5) in DOD, OPM, and the National Archives and Records Administration (NARA). We compared the findings in the DOD report to the mandated requirements and governmentwide and DOD-wide data quality standards. We also interviewed and discussed our observations of the DOD report with officials from various DOD offices.

To determine the number and cost of each type of clearance investigation and adjudication for industry personnel performed in fiscal years 2000 through 2006, we obtained and analyzed data from the Defense Security Service (DSS), the Office of the Under Secretary of Defense for the Comptroller , the Defense Industrial Security Clearance Office (DISCO), and the Defense Office of Hearings and Appeals (DOHA). Before determining the numbers and types of investigations and clearances, we assessed the reliability of the data by (1) interviewing knowledgeable officials about the data and the systems that produced them; (2) reviewing relevant documentation; and (3) comparing multiple sources (e.g., DSS vs.

OUSD(C) records) for consistency of information and examining patterns in the data (e.g., the percentage of all adjudications in a given fiscal year that were for top secret clearances). Our analyses showed the numbers and costs of investigations and adjudications completed in fiscal years 2000 through 2004 were not sufficiently reliable for the purposes of this report as we have previously discussed. In contrast we found the data for fiscal years 2005 and 2006 to be sufficiently reliable for our purposes but explicitly noted limitations with those data. The data for these 2 more recent years used different databases than those used to capture the earlier 5 years. Our methodology to determine the numbers and costs of investigations and adjudications for fiscal years 2005 and 2006 included the following: Numbers of investigations: We obtained and analyzed data from OPM’s Personnel Investigations Processing System that DSS provided to us.

Numbers of adjudications: We obtained and analyzed data from the Joint Personnel Adjudications System.

Costs of investigations: We obtained and analyzed investigation rate data in Financial Investigative Notices published by OPM. While we found limitations associated with these types of data for fiscal years 2005 and 2006, we found that the information was sufficiently reliable for the purposes of this report.

Surcharge for investigations: We obtained and analyzed documentary and testimonial evidence from DSS and OUSD(C) officials.

Costs of adjudications: We obtained and analyzed unit cost information that DSS officials produced for this report to show the cost of DISCO- provided adjudications and discussed the limitations of these data in the report. Although DOHA reported a unit cost for adjudications for fiscal year 2006, we did not report that statistic because our assessment revealed that it was not sufficiently reliable for the purposes of this report.

Finally, we interviewed headquarters policy and program officials from various offices (see question 2 in table 5) in DOD, OPM, and NARA to obtain their perspectives on our observations of these data.

To determine the extent to which DOD has developed procedures to estimate the number of future investigations needed for industry personnel and the extent to which DOD has plans to reduce delays and backlogs and provide funding, we took the following actions. We reviewed relevant laws, regulations, and DOD security clearances policies. These sources provided the criteria that we used in our evaluations. We also reviewed relevant clearance-related reports issued by organizations such as GAO, DODIG, and DOD’s Personnel Security Research Center. We interviewed headquarters policy and program officials from the organizations shown in table 5 (see the column for question 3). Our methodology to determine the extent to which DOD has developed procedures to estimate the number of future investigations needed for industry personnel included three steps: (1) we obtained and analyzed documents describing DOD’s procedures for estimating the number of industry investigations, (2) we reviewed DSS’s Internet-based survey of contractors who perform classified work for the government and discussed our observations of this survey with the DSS Director and DSS officials responsible for this survey, and (3) we reviewed documents obtained from DOD officials describing ongoing research on potential changes to the methods DOD uses to make these estimates. Finally, our methodology to determine the extent to which DOD has plans to reduce delays and backlogs and provide funding included reviewing documents obtained in interviews with officials at the Office of the Under Secretary of Defense for Intelligence and DSS. In particular, we reviewed and analyzed the Memorandum of Agreement between the Director of National Intelligence and the Under Secretary Of Defense (Intelligence) concerning the clearance process reengineering team. We also reviewed an August 2007 memorandum from the Deputy Secretary of Defense listing the top 25 transformation priorities for DOD, one of which is streamlining the security clearance process.

We conducted this performance audit from May 2007 through February 2008 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Appendix II: Comments from the Department of Defense

Appendix III: Contact and Staff Acknowledgments

GAO Contact

Brenda S. Farrell, (202) 512-3604 or farrellb@gao.gov.

Acknowledgments

In addition to the contact named above, Jack E. Edwards, Assistant Director; Joanne Landesman; James P. Klein; Ron La Due Lake; Thomas C. Murphy; Beverly C. Schladt; and Karen Thornton made key contributions to this report.

Related GAO Products

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.