Within OUSD (I), the Defense Security Service  (DSS) is responsible for conducting background investigations and  administering the personnel security investigations program for DOD and  24 other federal agencies that allow industry personnel access to classified  information. To ensure the trustworthiness, judgment, and reliability of contractor  personnel in positions requiring access to classified information, DOD  relies on a three-stage personnel security clearance process that includes  (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  reinvestigation, and (3) using the investigative report to determine  eligibility for access to classified information—a procedure known as  “adjudication.” Figure 1 depicts this three-stage process and the federal  government offices that have the lead responsibility for each stage. Long-standing Backlogs and Delays in Determining Security Clearance Eligibility for Industry Personnel Continue to Exist and Can Have Adverse Effects

DOD’s security clearance backlog for industry personnel is sizeable,  and the average time needed to determine eligibility for a clearance  increased during the last 3 fiscal years to over 1 year. Sizeable backlog continues to exist—As of March 31, 2004, the  security clearance backlog for industry personnel was roughly  188,000 cases. This estimate is the sum of four separate DSS-supplied  estimates: over 61,000 reinvestigations that were overdue but had not been  submitted, over 101,000 ongoing DSS investigations, over 19,000 cases  awaiting adjudication at DISCO, and more than 6,300 cases awaiting  adjudication at DOHA that had exceeded the case-completion time frames  established for conducting them. 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. Furthermore, the size of the industrial personnel backlog may be  underestimated. Average time to determine clearance eligibility has increased—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 increased from 319 days to 375 days, an increase of 18 percent. Backlogs and delays can have adverse effects—Delays in renewing  security clearances for industry personnel and others who are doing  classified work can lead to a heightened risk of national security breaches. In addition, delays in  determining security clearance eligibility for industry personnel can affect  the timeliness, quality, and cost of contractor performance on defense  contracts. The report also stated that delays in the  clearance process hampered industrial contractors’ ability to perform  duties required by their contracts and increased the amount of time  needed to complete national-security-related contracts. Impediments Hinder Elimination of the Backlog and Reduction of Time Needed to 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 determine  eligibility for a clearance. Impediments 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 the  imbalance between workforces and workloads. Furthermore, DOD does not  have a management plan that could help it address many of these  impediments in a comprehensive and integrative manner. 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 to size its investigative  and adjudicative workforce to handle the workload and fund its security  clearance program. DOD Is Considering Several Initiatives to Decrease the Backlog and Time Period Needed to Obtain Eligibility for a Clearance

DOD and industry association officials have suggested several initiatives  to reduce the backlog and delays in issuing eligibility for a security  clearance. Our  final report to you will provide a more complete evaluation of these and  other initiatives. As  part of a larger review of DOD’s security clearance processes, DOD’s  Senior Executive Council is considering this consolidation. Privatization of OPM’s Investigations Service.
Why GAO Did This Study

Because of increased awareness of threats to national security and efforts to privatize federal jobs, the demand for security clearances for government and industry personnel has increased. Industry personnel are taking on a greater role in national security work for the Department of Defense (DOD) and other federal agencies. Because many of these jobs require access to classified information, industry personnel need security clearances. As of September 30, 2003, industry workers held about one-third of the approximately 2 million DOD-issued security clearances. Terrorist attacks have heightened national security concerns and underscored the need for a timely, high-quality personnel security clearance process. However, GAO's past work found that DOD had a clearance backlog and other problems with its process. GAO was asked to review the clearance eligibility determination process and backlog for industry personnel. This testimony presents our preliminary observations on the security clearance process for industry personnel and describes (1) the size of the backlog and changes in the time needed to issue eligibility determinations, (2) the impediments to reducing the backlog and delays, and (3) some of the initiatives that DOD is considering to eliminate the backlog and decrease the delays. Later this month, we plan to issue our final report.

What GAO Found

On the basis of our preliminary observations, long-standing backlogs and delays in determining security clearance eligibility for industry personnel continue to exist and can have adverse effects. DOD's security clearance backlog for industry personnel was roughly 188,000 cases as of March 31, 2004. The backlog included estimates by the Defense Security Service (DSS)--the agency responsible for administering DOD's personnel security investigations program--that consisted of more than 61,000 reinvestigations (required for renewing clearances) that were overdue but had not been submitted to DSS; over 101,000 new DSS investigations or reinvestigations that had not been completed within DOD's established time frames; and over 25,000 cases awaiting adjudication (a determination of clearance eligibility) that had not been completed within DOD's established time frames. From fiscal year 2001 through fiscal year 2003, the average time that it took DOD to determine clearance eligibility for industry personnel increased by 56 days to over 1 year. Delays in completing reinvestigations of industry personnel and others doing classified work can increase national security risks. In addition, delays in determining clearance eligibility can affect the timeliness, quality, and cost of contractor performance on defense contracts. Several impediments hinder DOD's ability to eliminate the backlog and decrease the amount of time needed to determine clearance eligibility for industry personnel. Impediments include a large number of new clearance requests; an increase in the proportion of requests for top secret clearances, which require more time to process; inaccurate workload projections for both the number and type of clearances needed for industry personnel; and the imbalance between workforces and workloads. Industrial contractors cited the lack of full reciprocity (the acceptance of a clearance and access granted by another department, agency, or military service) as an obstacle that can cause industry delays in filling positions and starting work on government contracts. Furthermore, DOD does not have an integrated, comprehensive management plan for addressing the backlog and delays. DOD is considering a number of initiatives to supplement actions that it has implemented in recent years to reduce the backlogs and the time needed to determine eligibility for a security clearance. Additional initiatives include (1) conducting a phased, periodic reinvestigation; (2) establishing a single adjudicative facility for industry; and (3) reevaluating investigative standards and adjudicative guidelines. GAO's forthcoming report will provide a more complete discussion of these and other initiatives.