DOD’s  Office of the Under Secretary of Defense for Intelligence has overall  responsibility for DOD clearances, and its responsibilities also extend  beyond DOD. Long-standing delays in completing hundreds of thousands of clearance  requests for servicemembers, federal employees, and industry personnel  as well as numerous impediments that hinder DOD’s ability to accurately  estimate and eliminate its clearance backlog led us to declare the program  a high-risk area in January 2005. Among other things, the  executive order resulted in the Office of Management and Budget (OMB)  taking a lead role in preparing a strategic plan to improve personnel  security clearance processes governmentwide. First, I will provide a status update and  preliminary observations from our ongoing audit on the timeliness and  completeness of the processes used to determine whether industry  personnel are eligible to hold a top secret clearance—an audit that this  Subcommittee requested. Communication problems may be limiting governmentwide efforts to  improve the personnel security clearance process. In addition, OPM is still in the process of developing a  foreign presence to investigate leads overseas. Some DOD adjudication facilities have stopped accepting closed pending  cases—investigations forwarded to adjudicators even though some  required information is not included—from OPM. Expiration of Executive Order Could Slow Improvements in Clearance Processes

The July 1, 2006, expiration of Executive Order 13381 could slow  improvements in personnel security clearance processes governmentwide  as well as for DOD in particular. We have been  encouraged by the high level of commitment that OMB demonstrated in  the development of a plan to improve the personnel security clearance  process governmentwide. Because there has been no indication that the executive order will be  extended, we are concerned about whether such progress will continue  without OMB’s high-level management involvement. While OPM has  provided some leadership in assisting OMB with the development of the  governmentwide plan, OPM may not be in a position to assume additional  high-level commitment for a variety of reasons if OMB does not continue  in its current role. These reasons include: (1) the governmentwide plan  lists many management challenges facing OPM and the Associate Director  of its investigations unit, such as establishing a presence to conduct  overseas investigations and adjusting its investigative workforce to the  increasing demand for clearances; (2) adjudication of personnel security  clearances and determination of which organizational positions require  such clearances is not an OPM responsibility; and (3) agencies’ disputes  with OPM—such as the current billing dispute with DOD—may need a  high-level, impartial third party to mediate a resolution. Unexpected Volume of Clearance Requests and Funding Constraints Delay Security Clearances for Industry Personnel Further

DOD stopped processing applications for clearances for industry  personnel on April 28, 2006. DOD attributed its actions to an  overwhelming volume of requests for industry personnel security  investigations and funding constraints. DOD’s inability to accurately project clearance requirements makes it  difficult to determine clearance-related budgets and staffing. For example, in response to our May 2004 recommendation to  improve the projection of clearance requests for industry personnel, DOD  indicated that it is developing a plan and computer software to have the  government’s contracting officers (1) authorize the number of industry  personnel clearance investigations required to perform the classified work  on a given contract and (2) link the clearance investigations to the  contract number. The dispute stems from the February 2005 transfer of  DOD’s personnel security investigations function to OPM. Information  from DOD and OPM indicates that OMB subsequently directed the two  agencies to continue to work together to resolve the matter on their own. Questions for the Record Related to DOD’s Personnel Security Clearance  Program and the Government Plan for Improving the Clearance Process.
Why GAO Did This Study

The Department of Defense (DOD) is responsible for about 2 million active personnel security clearances. About one-third of the clearances are for industry personnel working on contracts for DOD and more than 20 other executive agencies. Delays in determining eligibility for a clearance can heighten the risk that classified information will be disclosed to unauthorized sources and increase contract costs and problems attracting and retaining qualified personnel. Long-standing delays in completing hundreds of thousands of clearance requests and numerous impediments that hinder DOD's ability to accurately estimate and eliminate its clearance backlog led GAO to declare DOD's personnel security clearance program a high-risk area in January 2005. This testimony presents GAO's (1) preliminary observations from its ongoing review of the timeliness and completeness of clearances, (2) concerns about the upcoming expiration of an executive order that has resulted in high level commitment to improving the governmentwide clearance process, and (3) views on factors underlying DOD's decision to stop accepting clearance requests for industry personnel.

What GAO Found

GAO's ongoing review of the timeliness and completeness of security clearance processes for industry personnel has provided three preliminary observations. First, communication problems between DOD and the Office of Personnel Management (OPM) may be limiting governmentwide efforts to improve the personnel security clearance process. Second, OPM faces performance problems due to the inexperience of its domestic investigative workforce, and it is still in the process of developing a foreign presence to investigate leads overseas. Third, some DOD adjudication facilities have stopped accepting closed pending cases--that is, investigations formerly forwarded to DOD adjudicators from OPM--even though some required investigative information was not included. In addition, the expiration of Executive Order 13381 could slow improvements in the security clearance processes governmentwide, as well as for DOD in particular. The executive order, which among other things delegated responsibility for improving the clearance process to the Office of Management and Budget (OMB), is set to expire on July 1, 2006. GAO has been encouraged by the high level of commitment that OMB has demonstrated in the development of a plan to address clearance-related problems. Because there has been no indication that the executive order will be extended, GAO is concerned about whether the progress that has resulted from OMB's high-level management involvement will continue. Issues such as OPM's need to establish an overseas presence are discussed as potential reasons why OPM may not be in a position to assume an additional high-level commitment if OMB does not continue in its current role. Finally, inaccurate projections of clearance requests and funding constraints are delaying the processing of security clearance requests for industry personnel. DOD stopped processing new applications for clearance investigations for industry personnel on April 28, 2006. DOD attributed its actions, in part, to an overwhelming volume of requests for industry personnel security investigations. DOD's long-standing inability to accurately project its security clearance workload makes it difficult to determine clearance-related budgets and staffing requirements. The funding constraints that also underlie the stoppage are related to the transfer of DOD's personnel security investigations functions to OPM. DOD has questioned some of the costs being charged by OPM and has asked OMB to mediate the DOD-OPM dispute. Information from the two agencies indicates that OMB has directed the agencies to continue to work together to resolve the matter. According to officials in the DOD and OPM inspector general offices, they are investigating the billing dispute and expect to report on the results of their investigations this summer.