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

Letter

Background

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.

DOD’s Backlog for Industry Personnel Was Roughly 188,000 Cases, and the Time Needed for the Clearance Process Has Increased

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.

Industry Personnel Backlog Was Roughly 188,000 Cases

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.

Average Time for Clearance Process Increased to More Than 1 Year for Industry Personnel

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.

Delays Can Affect National Security and Contract Timeliness, Quality, and Cost

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.

Impediments Hinder Elimination of the Backlog and Reduction of Time Needed to Conduct an Investigation and Determine Eligibility for a Clearance

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.

Clearance Workloads Are Large and Inaccurately Projected DOD-wide

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.

Large Number of Clearance Requests DOD-wide Taxes Overburdened Process

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.

Inaccurate Projections for Clearance Workload Hamper Planning

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.

Surge in Requests May Occur When JPAS Is Fully Implemented DOD-wide

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.

Insufficient Investigative and Adjudicative Staff Cannot Handle Large Workloads

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.

Too Few Investigative Staff Are Available to Meet Government and DOD Needs

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.

Too Few Adjudicative Staff Are Available to Meet Industry Needs

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.

Reciprocity of Access Is Not Fully Utilized

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.

Effects of Past Conditions Still Being Felt

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.

Lack of Overall Management Plan Exacerbates Clearance Backlog and Delays

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.

DOD Is Considering Several Initiatives to Decrease the Backlog and Time Needed to Obtain a Security Clearance

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.

Conclusions

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.

Recommendations for Executive Action

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.

Agency Comments and Our Evaluation

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.

Appendix I: Scope and Methodology

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.

Appendix II: Excerpts from the Adjudicative Guidelines for Determining Eligibility for Access to Classified Information

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.

Appendix III: Comments from the Department of Defense

Related GAO Products

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.