DOD’s Office of the Under Secretary of Defense for Intelligence   has responsibility for determining eligibility for clearances for  servicemembers, DOD civilian employees, and industry personnel  performing work for DOD and 23 other federal agencies, and employees in  the federal legislative branch. DOD’s Procedures for Projecting Future Industry Investigation Needs Are Evolving, but the Effectiveness of These Efforts Is Unclear

DOD has had a long-standing challenge in accurately projecting future  industry investigation needs and is developing and implementing new  methods to improve its procedures. However, DOD has not yet  demonstrated the effectiveness of these changes. In November 2005, OMB reported a  governmentwide goal whereby agencies have been asked to work toward  refining their projections of required investigations to be within 5 percent  of the numbers of actual requests for investigation. However, according  to an OPM Associate Director’s May 2006 congressional testimony, DOD  exceeded its departmentwide projection by 59 percent in the first half of  fiscal year 2006. In May 2004, we addressed DOD’s problems with inaccurately projecting  the future number of clearances needed for industry personnel and the  negative effect of inaccurate projections on workload planning. In that  report, we recommended that OUSD(I) improve its projections of  clearance requirements for industry personnel—for both the numbers and  types of clearances—by working with DOD components, industry  contractors, and the acquisition community to identify obstacles and  implement steps to overcome them. In the report on security clearances we are issuing today, we note that DSS  has made recent changes to the methods it uses to develop these  estimates, and it is conducting research that may change these methods  further. In addition  to improving the response rate for its annual survey, DSS also changed its  methods for computing the projections. However, it is too early to determine the effect of these  new methods on the accuracy of DOD’s projections. DOD Faces Additional Long-standing Challenges to Improving the Efficiency and Effectiveness of Its Personnel Security Clearance Program for Industry Personnel

DOD must address additional long-standing challenges or issues in order  to improve the efficiency and effectiveness of its personnel security  clearance program for industry personnel. First, delays in the clearance  process continue to increase costs and risk to national security, such as  when new industry employees are not able to begin work promptly and  employees with outdated clearances have access to classified documents. Second, DOD and the rest of the federal government provide limited  information to one another on how they individually ensure the quality of  clearance products and procedures. Third, in DOD’s August 2007 report to  Congress, it provided less than 2 years of funding-requirements  information which limits congressional awareness of future year  requirements for this program. Fourth, DOD currently has no  comprehensive DOD-specific plan to address delays in its clearance  program. We additionally reported that the lack of full  reciprocity of clearances is an outgrowth of agencies’ concerns that other  agencies may have granted clearances based on inadequate investigations  and adjudications. In particular, DOD is relying on a governmentwide  effort to reform the clearance system. Agencies involved in this  governmentwide effort include the Office of the Director of National  Intelligence, DOD, OMB, and OPM. GAO-08-350. DOD Personnel Clearances: Preliminary Observations Related to  Backlogs and Delays in Determining Security Clearance Eligibility for  Industry Personnel.
Why GAO Did This Study

The Department of Defense (DOD) maintains approximately 2.5 million security clearances on servicemembers, federal DOD civilian employees, industry personnel for DOD and 23 other federal agencies, and employees in the legislative branch. Delays in determining eligibility for a clearance can heighten the risk that classified information will be disclosed to unauthorized sources, increase contract costs, and pose problems in attracting and retaining qualified personnel. In this statement, GAO addresses: (1) the status of DOD's efforts to improve its projections of the numbers of clearances needed for industry personnel, and (2) other long-standing challenges that have a negative effect on the efficiency and effectiveness of DOD's personnel security clearance program for industry personnel. This statement is based on a report GAO is issuing today (GAO-08-350) and other prior work, which included reviews of clearance-related documents and interviews of senior officials at DOD and the Office of Personnel Management (OPM).

What GAO Found

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