[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]





 CAN YOU CLEAR ME NOW? WEIGHING FOREIGN INFLUENCE FACTORS IN SECURITY 
                        CLEARANCE INVESTIGATIONS

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 13, 2006

                               __________

                           Serial No. 109-255

                               __________

       Printed for the use of the Committee on Government Reform



  



  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html
                      http://www.house.gov/reform

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                     COMMITTEE ON GOVERNMENT REFORM

                     TOM DAVIS, Virginia, Chairman
CHRISTOPHER SHAYS, Connecticut       HENRY A. WAXMAN, California
DAN BURTON, Indiana                  TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
GIL GUTKNECHT, Minnesota             CAROLYN B. MALONEY, New York
MARK E. SOUDER, Indiana              ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio           DENNIS J. KUCINICH, Ohio
TODD RUSSELL PLATTS, Pennsylvania    DANNY K. DAVIS, Illinois
CHRIS CANNON, Utah                   WM. LACY CLAY, Missouri
JOHN J. DUNCAN, Jr., Tennessee       DIANE E. WATSON, California
CANDICE S. MILLER, Michigan          STEPHEN F. LYNCH, Massachusetts
MICHAEL R. TURNER, Ohio              CHRIS VAN HOLLEN, Maryland
DARRELL E. ISSA, California          LINDA T. SANCHEZ, California
JON C. PORTER, Nevada                C.A. DUTCH RUPPERSBERGER, Maryland
KENNY MARCHANT, Texas                BRIAN HIGGINS, New York
LYNN A. WESTMORELAND, Georgia        ELEANOR HOLMES NORTON, District of 
PATRICK T. McHENRY, North Carolina       Columbia
CHARLES W. DENT, Pennsylvania                    ------
VIRGINIA FOXX, North Carolina        BERNARD SANDERS, Vermont 
JEAN SCHMIDT, Ohio                       (Independent)
BRIAN P. BILBRAY, California

                      David Marin, Staff Director
                Lawrence Halloran, Deputy Staff Director
                       Teresa Austin, Chief Clerk
          Phil Barnett, Minority Chief of Staff/Chief Counsel



































                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on July 13, 2006....................................     1
Statement of:
    Andrews, Robert, Deputy Under Secretary, Defense 
      Counterintelligence and Security, U.S. Department of 
      Defense; and J. William Leonard, Director, Information 
      Security and Oversight Office, National Archives and 
      Records Administration.....................................    12
        Andrews, Robert..........................................    12
        Leonard, J. William......................................    21
    Zaid, Mark S., esq., managing partner, Krieger & Zaid; Doug 
      Wagoner, chairman, Intelligence Subcommittee, Information 
      Technology Association of America, on behalf of the 
      Security Clearance Coalition; and Walter S. Nagurny, 
      director, Industrial Security Office, EDS U.S. Government 
      Solutions..................................................    41
        Nagurny, Walter S........................................    95
        Wagoner, Doug............................................    80
        Zaid, Mark S.............................................    41
Letters, statements, etc., submitted for the record by:
    Andrews, Robert, Deputy Under Secretary, Defense 
      Counterintelligence and Security, U.S. Department of 
      Defense, prepared statement of.............................    15
    Cummings, Hon. Elijah E., a Representative in Congress from 
      the State of Maryland, prepared statement of...............   110
    Davis, Chairman Tom, a Representative in Congress from the 
      State of Virginia, prepared statement of...................     4
    Leonard, J. William, Director, Information Security and 
      Oversight Office, National Archives and Records 
      Administration, prepared statement of......................    23
    Nagurny, Walter S., director, Industrial Security Office, EDS 
      U.S. Government Solutions, prepared statement of...........    97
    Porter, Hon. Jon C., a Representative in Congress from the 
      State of Nevada, prepared statement of.....................   114
    Wagoner, Doug, chairman, Intelligence Subcommittee, 
      Information Technology Association of America, on behalf of 
      the Security Clearance Coalition, prepared statement of....    83
    Waxman, Hon. Henry A., a Representative in Congress from the 
      State of California, prepared statement of.................     8
    Zaid, Mark S., esq., managing partner, Krieger & Zaid, 
      prepared statement of......................................    45
























 
 CAN YOU CLEAR ME NOW? WEIGHING FOREIGN INFLUENCE FACTORS IN SECURITY 
                        CLEARANCE INVESTIGATIONS

                              ----------                              


                        THURSDAY, JULY 13, 2006

                          House of Representatives,
                            Committee on Government Reform,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:40 a.m., in 
room 2154, Rayburn House Office Building, Hon. Tom Davis 
(chairman of the committee) presiding.
    Present: Representatives Davis of Virginia, Gutknecht, 
Platts, Duncan, Dent, Foxx, Waxman, Maloney, Cummings, 
Kucinich, Watson, Van Hollen, Higgins, and Norton.
    Staff present: Larry Halloran, deputy staff director/
communications director; Patrick Lyden, parliamentarian; Rob 
White, press secretary; Andrea LeBlanc, deputy director of 
communications; Brien Beattie, professional staff member; 
Teresa Austin, chief clerk; Michael Galindo, deputy clerk; 
Kristin Amerling, minority general counsel; Michael McCarthy, 
minority counsel; Andrew Su, minority professional staff 
member; Earley Green, minority chief clerk; and Jean Gosa, 
minority assistant clerk.
    Chairman Tom Davis. Committee will come to order. Before 
beginning the hearing, I want to dispense with some quick 
committee business. I thank the gentlewoman from Florida, 
Ileana Ros-Lehtinen, for graciously agreeing to step down from 
the subcommittee on energy and resources so that our newest 
committee member, Brian Bilbray, can have a seat on that 
subcommittee. And with that, I would ask unanimous consent that 
Mrs. Ros-Lehtinen be removed from the subcommittee on energy 
and resources and Mr. Bilbray be assigned to the subcommittee 
on energy and resources and federalism and the Census. Is there 
objection? Without objection, so ordered.
    Now, on with the hearing.
    Today we continue the committee's oversight of efforts to 
modernize and streamline the security clearance process, a slow 
cumbersome and fragmented system out of sync with current 
national security needs. Today we focus on one key aspect of 
that process, implementation of new standards to weigh the 
significance of foreign preferences or foreign influences on 
the trustworthiness of security clearance applicants.
    Consistent assessment of those factors across all clearance 
granting agencies is one important aspect of the broader effort 
to upgrade and standardize the security clearance process. An 
increasingly globalized economic and political environment, our 
Nation depends on immigrants for a wide range of functions, 
including some of the most high tech and sensitive factors in 
government work.
    Naturalized citizens from every continent have come here 
and been successful in businesses that support U.S. troops in 
every theater around the globe. Others provide language 
expertise that is absolutely critical in our efforts to thwart 
the next terrorist plot against the American people.
    This is the kind of work that requires a security 
clearance, and the ability to distinguish loyal naturalized 
citizens from those who might pose a security risk is an 
essential part of getting that work done quickly and 
effectively. Cold war standards and practices that broadly at 
times automatically denied clearances to those with extensive 
foreign contacts have to be refined to meet the new realities. 
Toward that end, the President's national security advisor on 
September 29, 2005 issued a revised set of parameters designed 
to guide decisionmaking by security clearance adjudicators from 
across government. The revised guidelines give needed 
flexibility to clearance grantors in evaluating risks posed by 
foreign contacts and considering factors that minimize or 
mitigate the risks.
    Standard uniforms apply to adjudicative guidelines are one 
element of the larger effort to centralize and unify the 
process so clearances granted by one agency will be honored by 
others.
    Achieving that clearance reciprocity is mandated by the 
provisions of the 2004 Intelligence Reform Act authored by this 
committee. It appears some departments, including the 
Department of Defense, have been slow to embrace the new 
standards.
    I look forward to hearing from or distinguished first panel 
today about efforts to implement the revised guidelines. At a 
time when we need unique technological and cultural language 
expertise of the foreign born, increased security concerns have 
made it harder than ever for some with family and business 
interests abroad to qualify for a clearance. That paradox is 
compounded by a still broken investigative and adjudicative 
system plagued by delays and backlogs.
    So we asked our second panel of witnesses to discuss 
foreign influence factors in the context of the end to end 
clearance process. In May, we heard testimony about a complete 
meltdown at the defense security service, which briefly stopped 
processing contractor clearance applications all together. As 
that incident illustrated, previous efforts to fix security 
clearance process have produced what can only be charitably 
characterized as mixed results. Delays persist, and agencies 
still don't trust clearances granted by others.
    A numbers of agencies, including some in the intelligence 
community have chosen to avoid the lengthy delays and 
inefficiencies of an OPM DSS system still addicted to paper and 
shoe leather. Instead, they deal directly with the same 
contractors hired by OPM, but allow them to use more modern 
Web-based investigative tools. That approach appears to achieve 
significant savings of time and money.
    I look forward to hearing today's recommendations for 
process improvement in the handling of foreign influence 
factors in the overall security clearance system. Again, I want 
to welcome all our witnesses today at this hearing on a 
critically important national security issue.
    I ask unanimous consent that recent correspondence between 
the committee and the Department of Defense regarding 
implementation of the adjudicative guidelines be inserted into 
the hearing record. And hearing no objection, so ordered.
    And I ask further unanimous consent that the hearing record 
include a statement and exhibit submitted by Sheldon I. Cohen, 
an attorney who represents clearance applicants and who has 
analyzed the clearance appeals process. Without objection so 
ordered.
    [The prepared statement of Chairman Tom Davis follows:]

  

    
    Chairman Tom Davis. I would now recognize our distinguished 
ranking member, Mr. Waxman, for his opening statement.
    Mr. Waxman. Mr. Chairman, I am glad we are holding another 
hearing on problems with the security clearance process. 
Earlier this year, we heard from national security 
whistleblowers whose clearances had been revoked in retaliation 
for reporting illegal activities occurring in their agencies. 
Six weeks ago, we heard about the problems caused when the 
Defense Department stopped processing clearance applications 
because they ran out of money.
    And today's hearing highlights yet another serious problem, 
the arbitrary and inconsistent weighing of ties to foreign 
nations when determining whether to grant or deny clearances.
    In making security clearance decisions, the first priority 
must be maintaining our national security. Yet some of our most 
talented citizens who are willing to place their knowledge of 
foreign cultures and languages at the service of the United 
States often have family and other connections to foreign 
nations.
    Disqualifying such individuals and losing the valuable 
analysis and information they could provide may pose more of a 
risk to our national security than the theoretical security 
risk posed by their connection to foreign relatives.
    Protecting national security requires us to strike the 
right balance and calls for a consistent transparent process.
    The process in place now is anything but consistent. 
According to attorneys who handle security clearance cases, 
cases where applicants have similar ties to the same countries 
of origin reach different results without apparent rhyme or 
reason.
    The administrative judges who hear appeals nearly always 
rule in favor of the government, and their decisions are not 
reviewable by the independent judiciary.
    And ties to some countries are subject to heightened 
scrutiny without any rational process for assessing the true 
risks.
    I am especially concerned about how ties to Israel are 
considered. In several cases that have been brought to my 
attention, government investigators have moved to revoke 
clearances of persons who have held high level clearances for 
years, even decade, because they have family or religious ties 
to Israel. Why these long standing connections which were fully 
disclosed to the government years ago suddenly cause the 
government to revoke clearances is unclear. It's similarly 
unclear why ties to some U.S. allies like Israel are 
disqualifying while ties to other allies like Great Britain or 
Canada are not.
    And the problem is not just limited to Israel. Ties to 
other U.S. allies like South Korea also face heightened 
security.
    What is most disturbing is that there seems to be no more 
formal process to consider input from the State Department or 
the intelligence community in weighing the risks posed by ties 
to particular nations.
    Rather, the decision appears to be left to the whim of each 
administrative judge to decide whether a foreign country is a 
friend or foe without regard to official U.S. foreign policy.
    I hope that today's hearing will guide us in what action 
Congress can take to inject some consistency and reason into 
the security clearance process.
    Chairman Davis and I have been working together on these 
issues. After our previous hearing that revealed retaliation 
against national security whistleblowers, we introduced a bill 
that would restrict the arbitrary revocation of clearances, and 
it passed out of this committee on unanimous bipartisan vote, 
though it has not yet been allowed to go on the full House for 
a vote. I hope we can also work together to fix the problems 
identified in today's hearing.
    I would like to thank the witnesses testifying today. I 
look forward to hearing about the progress that has been made 
in addressing the issues raised at our prior hearings and a 
full discussion of the problem that remain. Thank you.
    [The prepared statement of Hon. Henry A. Waxman follows:]

  

    
    Chairman Tom Davis. Mr. Waxman, thank you very much.
    Members will have 7 days to submit opening statements for 
the record. We now recognize our first panel.
    You know we like to swear you in, if you would just raise 
your right hand, our first panel is Mr. Robert Andrews the 
Deputy Under Secretary for Defense Counterintelligence and 
Security, U.S. Department of Defense and Mr. J. William 
Leonard, the Director of Information Security and Oversight 
Office, National Archives and Records Administration. Raise 
your right hands.
    [Witnesses sworn.]
    Chairman Tom Davis. Thank you, please be seated. Your 
entire statement is part of the record. You will have a light 
in front of you. It turns green when you start, it will go 
orange in 4 minutes, it is red at 5. If you can try to keep 
your comments so we can get on the questions. We can put men on 
the moon. There are so many things this country can do but the 
security backlog continues to grow and it's hurting us. Our 
ability to get things done as from Mr. Waxman noted, and it's 
costing taxpayers a lot more money. I know people now with 
security clearances who don't have the skills, but they have 
the clearance so they are hired for the clearance and then they 
are trained and it's so inefficient and the taxpayers end up 
footing the bill. So I think you understand the problem.
    Mr. Andrews, we will start with you, thank you for being 
with us,

 STATEMENTS OF ROBERT ANDREWS, DEPUTY UNDER SECRETARY, DEFENSE 
 COUNTERINTELLIGENCE AND SECURITY, U.S. DEPARTMENT OF DEFENSE; 
  AND J. WILLIAM LEONARD, DIRECTOR, INFORMATION SECURITY AND 
 OVERSIGHT OFFICE, NATIONAL ARCHIVES AND RECORDS ADMINISTRATION

                  STATEMENT OF ROBERT ANDREWS

    Mr. Andrews. Good morning, sir. I am Bob Andrews, the 
Deputy Under Secretary of Defense for Counterintelligence and 
Security.
    My office is responsible for implementing personnel 
security policy.
    I know that this hearing focuses on the impact of foreign 
influence in security clearance investigations, but I do want 
to point out that there are other factors that go into the 
decision about a person's suitability to handle classified 
information.
    But before I address that issue, I would like to share a 
few highlights on the status of the defense security service 
since my last appearance before this committee.
    First, Congress approved our reprogramming request for $80 
million. DSS has developed a spend plan for these funds to 
ensure we can continue to process clearances, and this plan 
ensures industry clearances through the end of the year.
    Second, we have asked the DOD inspector general in 
conjunction with the OPM inspector general to conduct an audit 
of the investigation billing process. That audit is ongoing.
    Third, we are conducting a baseline review of our 
automation systems to ensure they are meeting our needs and the 
needs of industry now and in the future.
    Fourth, we have teamed with the information technology 
association of America on a pilot project to process clearances 
with greater efficiency.
    And fifth, I am very confident in our new DSS leaders and 
their ability to strengthen the organization.
    Now, back to the topic of the hearing, and let me give you 
some background.
    There are approximately 3.2 million cleared personnel in 
government. Of that total, nearly 2.5 million are in DOD.
    On an annual basis, DOD may handle over 600,000 clearance 
actions.
    Security clearance process begins when a senior official 
determines that an individual requires access to classified 
information. The individual completes a questionnaire and it's 
submitted for investigation.
    When the investigation is completed, results are sent to an 
adjudication facility. The Department of Defense has 9 
facilities, adjudication facilities or CAFs. These are staffed 
by over 400 trained adjudicators. To ensure we have as much 
consistency as possible among the 9 facilities, my office 
chairs an oversight and policy review board made up of 
representatives from each CAF.
    The adjudicator reviews the completed investigation and 
makes a determination whether or not to grant, deny or revoke 
access to classified information.
    The adjudicative process examines a person's background to 
determine whether or not the that person's access to classified 
information poses a risk to national security.
    I want to emphasize two points. First, that we make each 
decision on a case-by-case basis; and second, that we consider 
mitigating issues and circumstances as an integral part of the 
clearance process.
    If the adjudicator decides to deny or revoke a process 
based on information review, the individual is afforded due 
process through the right of appeal.
    The President, in 1997, issued the first guidelines used by 
adjudicators. This last December, as you pointed out, Mr. 
Chairman, the President issued a revised set of guidelines.
    There are 13 of these guidelines which the adjudicator 
considers, the results of security investigation.
    Two of these guidelines deal with foreign influence.
    Now an investigation that turns up dual citizenship or 
close associations in foreign countries will trigger a closer 
examination to determine whether that individual has a foreign 
preference or allegiance.
    I cannot, too strongly, emphasize that access to national 
security information is decided on a case-by-case basis based 
on a reasonable assessment of the risks to national security.
    There are no automatic denials based on country.
    An individual's religious affiliation plays no part in 
security clearance process.
    We simply do not do that.
    In the matter of foreign passports, I would further note 
that in August 2000, DOD issued a clarifying guidance 
concerning cases involving individuals' possession or use of a 
foreign passport.
    Revised guidelines we are now implementing state that the 
possession of a current passport, current foreign passport 
may--I want to emphasize ``may''--be a disqualifying position. 
The guidelines provide, however, that an individual can 
sufficiently mitigate the risk of national security by doing 
one of two things, voluntarily choose to surrender the passport 
or obtain official approval for its use from the appropriate 
agency of the U.S. Government.
    The Department has taken several steps toward implementing 
the revised adjudicative guidelines, including the development 
of training coordination of new guidelines with the 
adjudication facilities to ensure a common and consistent 
understanding.
    In the interest of time, I will elaborate on these steps 
during our question-and-answer period.
    Mr. Chairman, we are making every effort to ensure the 
determinations of access to classified information are 
adjudicated fairly and balance the interest of the individual 
with the need to protect our national security interest.
    Mr. Chairman, this concludes my statement.
    Chairman Tom Davis. Thank you very much.
    [The prepared statement of Mr. Andrews follows:]

  

    
    Chairman Tom Davis. Mr. Leonard.

                STATEMENT OF J. WILLIAM LEONARD

    Mr. Leonard. Thank you, Mr. Chairman, Mr. Waxman, I want to 
thank you for holding this hearing on efforts to improve 
personnel security process. The classification system and its 
ability to restrict the dissemination of information, the 
unauthorized disclosure of which could result in harm to our 
Nation and its citizens represents a fundamental national 
security tool at the disposal of the government and its leaders 
to provide for the common defense.
    The protocols governing access to classified information 
are established by Executive Order 12968. Pursuant to this 
order, such access shall be granted only to, ``individuals who 
are United States citizens for whom an appropriate 
investigation has been completed and whose personal and 
professional history affirmatively indicate loyalty to the 
United States, strength of character, trustworthiness, honesty, 
reliability, discretion, and sound judgment, as well as freedom 
from conflicting allegiances and potential for coercion and 
willingness and ability to abide by regulations governing the 
use, handling and protection of classified information.''
    In order to ensure consistent eligibility determinations 
from agency to agency, this Executive order required the 
issuance of investigative standards and adjudicative 
guidelines. Revisions to the adjudicative guidelines were 
approved by the President in December 2005 for immediate 
implementation. These revisions represented the result of an 
interagency process which recommended that all of the basic 
considerations for approving access to classified information 
be retained.
    However, based upon the changing national security 
environment, it was recommended that the criteria be elaborated 
both in terms of the actions that could raise security concerns 
and the factors that could mitigate such concerns. It should be 
noted that a number of the revisions included in the 
adjudicative guidelines were intended to address a concern 
expressed by this committee and others with regard to personnel 
security applicants with certain foreign connections.
    Specifically, a number of per se criteria such as the use 
of a foreign passport or voting in a foreign election that 
previously rendered an applicant ineligible for a security 
clearance have been modified to take into account additional 
factors that could mitigate such issues under certain 
circumstances. These and other changes were implemented, in 
part, in recognition of the increasing globalized environment 
in which our national security concerns must be addressed.
    The revised adjudicative guidelines are intended to provide 
sufficient flexibility to accommodate this reality without 
compromising national security.
    In addition to the above, Executive Order 12968 contains 
two fundamental principles, reciprocity of access eligibility 
determinations and the authority of agency heads or designated 
senior agency officials to grant exceptions to eligibility 
criteria in order to further substantial national security 
interests, two imperatives that contain inherent tension but 
are not necessarily incompatible.
    While reciprocity of access eligibility determinations 
require strict adherence to investigative standards and 
adjudicative criteria, classification and personnel security 
policy clearly recognizes that it may be in the national 
interest to grant access to classified information to limited 
individuals who are otherwise not authorized or eligible for 
access.
    Executive Order 12968, in particular, recognizes the 
authority of an agency head to waive requirements for granting 
access to classified information to further substantial 
national interests.
    An example of this is the frequent challenge many agencies 
confront today in developing and maintaining cadres of cleared 
linguists in many specialty languages. The key is that each 
time a waiver of exception is granted, it should be an informed 
judgment which takes into account the advantage to the national 
interest that may accrue, as well as the potential increase in 
risk to national security information.
    Such latitude, of course, could come at a price and 
included in that price could be reciprocal recognition of 
security clearances. As such, what is required is proactive 
management and oversight by individual agencies in order to 
achieve reciprocity by ensuring strict adherence to the 
standards in the vast majority of cases, while at the same 
time, allowing sufficient latitude to meet unique national 
security demands in other areas.
    In order to enforce the imperative reciprocity while 
recognizing the need to allow latitude in addressing other 
national security demands, a number of initiatives have been 
started under the direction of the Security Clearance Oversight 
Group, led by the Office of Management and Budget.
    I have detailed some of these initiatives in my written 
testimony.
    In closing, I want to emphasize the ongoing interagency 
efforts that are currently underway in order to strengthen the 
processes relating to determining eligibility for access to 
classified information. Included in these is a need to focus on 
leveraging technology to the point that through greater 
reliance on automated data bases, we can diminish dependence on 
the current half century-old process of conducting field 
investigative work.
    Research and pilot efforts to this end are currently 
underway in a number of such agencies. These efforts will 
ensure continuing process and improvements even after the 
current statutory case completion goals are achieved.
    Again, I thank you for inviting me here today, Mr. 
Chairman. I would be happy to answer any questions that you or 
Mr. Waxman may have.
    [The prepared statement of Mr. Leonard follows:]

  

    
    Chairman Tom Davis. Thank you. I am going to start 
questioning on our side with Mr. Duncan.
    Mr. Duncan. Well, thank you very much, Mr. Chairman, and I 
have just a couple questions. No. 1, I am told by staff that 
this 190,000 backlog while that sounds very high 2 or 3 years 
ago it was much higher, is that correct? That it reached 
300,000 at one point?
    Mr. Andrews. It was yes, sir, it was very high.
    Mr. Duncan. And what is the, lowest it's been in, say, the 
last 5 years?
    Mr. Andrews. Mr. Duncan, I can't give you that answer right 
now. I could provide it for you for the record. I think it 
would be of great interest to have that.
    Mr. Duncan. Let me ask you this: The title of this hearing 
is, ``Can You Clear Me Now?'' weighing foreign influence 
factors in security clearance investigations.
    Do either one of you feel there is undue foreign influence 
in these investigations at this time?
    Mr. Andrews. I don't, sir.
    Mr. Leonard. Mr. Duncan, I mentioned in my prepared, my 
oral remarks that, the President recently approved revisions to 
the adjudicative guidelines since December of last year. A 
significant part of those revisions to the guidelines was 
actually to provide greater flexibility with regard to clearing 
individuals who may have foreign connections. And again, this 
is in recognition of the increasing globalized environment that 
we operate in, not only as a government, but as a Nation, but 
as our industry as well, too. So there is greater flexibility 
today than there was just 6 months ago with respect to the 
adjudicative criteria.
    Mr. Duncan. Well, I also understand that there is some 
concern about whether those revised guidelines are being 
applied, and specifically, there was at least one report that 
said that the Department of Defense Office of General Counsel 
has possibly instructed, given instructions not to apply those 
revised guidelines. Is that correct in any way?
    Mr. Andrews. No, sir that is not correct.
    Mr. Duncan. So that is not happening?
    Mr. Andrews. No. We are pushing as fast as we can to 
implement those guidelines, sir.
    Mr. Duncan. When you say pushing as fast as you can, does 
that mean some of they have implemented or all of them or none 
of them?
    Mr. Andrews. We are in the process of implementing them 
now, sir.
    We have been--there are 4 factors that we are working on 
right now, first is training our adjudicators. As I mentioned, 
we have over 400 adjudicators, and a training program for them 
we have the Department of Defense is implementing or 
accommodating the Smith amendment into the guidelines which we 
have to do which no other department has to do.
    And, we are making certain that our automated desk 
reference, the on-line system that adjudicators use is up and 
running. We have a target date of full implementation by first 
of September, sir.
    Mr. Duncan. Well, I am also old told that part of the 
impetus for this hearing is the Legal Times, a major legal 
publication, highlighted a case in which a Korean American 
defense contractor had what are described as tremendous 
difficulties obtaining his security clearance. And he went 
through, went through the whole system, the whole process and 
an administrative law judge ruled in his favor.
    Are you familiar with that case and is that just an unusual 
case, or what is the ordinary situation? How long does it take 
in an average type case to get these clearances? Or is there 
such a thing?
    Mr. Andrews. I am not familiar with that case, sir. I will 
have to research it.
    Mr. Duncan. Well, what, is there an average length of time 
that this process is taking or does it just vary widely from 
case to case?
    Mr. Andrews. It's going to vary, Mr. Duncan. Generally, the 
secret and top secret clearances, top secret clearances may 
take over as long as a year. And they shouldn't.
    Mr. Leonard. If I could add to that, Mr. Duncan, one of the 
things that this committee was responsible for was some 
statutory timeframes, one of which is the adjudication process, 
and if I recall correctly, 80 percent of all clearances are 
required to be adjudicated within 30 days by a certain date.
    That recognizes that, you know, 20 percent of the cases 
will be the complex cases. So the simple cases should be able 
to be adjudicated in 30 days, those with issues they will take 
longer periods of time.
    Mr. Duncan. Is that requirement fairly accurate? As far as 
those percentages?
    Mr. Leonard. Agencies are not at those goals yet but they 
are making process toward getting there.
    Chairman Tom Davis. Let me just, before I recognize Mr. 
Waxman, pursue, Mr. Andrews, you are not familiar with a case 
of the Korean American defense contractor who went through the 
adjudication system at DOHA, the administrative law judge ruled 
in his favor, and then the Department of Defense appealed the 
decision, which then went to a three-judge appeals panel, which 
also ruled in the contractor's favor, and again, DOD threatened 
to appeal the case.
    Finally the contractor received the clearance, but it seems 
in this case, the bar was set extraordinarily high for someone 
whose only offense seemed to be that he had relatives in South 
Korea, which I might add, is a very strong ally of this country 
and North Korea to the north is a huge problem in the world.
    If you are not familiar with the case, there is an article 
in The Legal Times. I would like you to come back and just find 
out where why the Department is so concerned in a case like 
this, why it so doggedly pursues appeals when the expert judges 
rule that no significant threat was posed by granting the 
clearance. There may be something we don't know about.
    Mr. Andrews. We will come back to you, sir.
    Chairman Tom Davis. We will do that. We will hold you to 
that. Mr. Waxman.
    Mr. Waxman. I mentioned in my opening statement that I was 
concerned about how a sudden change to family ties to Israel 
are being considered in the clearance process. And I would like 
to describe a few cases and ask about the policies that govern 
these types of cases. One engineer received a security 
clearance more than 7 years ago to work on a fighter jet 
project. He has lived in the United States for 25 years, but 
was born in Israel and has dual citizenship. All of this was 
fully disclosed when he first applied for a security clearance 
7 years ago.
    Earlier this year, the government moved to revoke his 
clearance citing his dual citizenship and the fact that his 
mother and siblings lived in Israel.
    In two other separate but similar cases, long-time State 
Department employees had clearances revoked with officials 
citing concerns about travel to Israel in past years.
    But it had been fully disclosed. And there have been more 
cases with similar circumstances, people have always had ties 
to Israel that were fully disclosed a year ago, who have 
maintained security clearances without any incident for years 
are suddenly having clearances revoked.
    And according to several lawyers, government attorneys have 
cited the indictment of two employees from the American Israel 
Public Affairs Committee as a grounds for revoking clearances 
for people with family and religious ties to Israel.
    Mr. Andrews what has prompted this sudden scrutiny of 
connections to Israel and are these reports about the AIPAC 
issue accurate?
    Mr. Andrews. Mr. Waxman, I would like to ask that the 
individual cases that obviously concern you and other members 
of the committee, be sent to us for you know; for analysis. I 
can't sit here and tell you about each individual cases. I 
don't know the details.
    Mr. Waxman. This is the first time that it's been brought 
to your attention that there have been increases in security 
clearance withdrawals on the grounds that there were ties to 
Israel by people who had security clearances?
    Mr. Andrews. The first time it was brought to my attention, 
sir, was to--my attention was a letter from Mr. Dent of this 
committee, who sent to us an article out of Insight Magazine, 
in which claimed that the Department of Defense imposed loyalty 
tests on American Jews, and that is really the first.
    Mr. Waxman. And did you respond to his letter?
    Mr. Andrews. Yes, sir.
    Mr. Waxman. Could we have a copy of that response, 
certainly, for the record, if you don't have it with you right 
now.
    Mr. Andrews. I don't have it with me, and I know that Mr. 
Dent, probably, has a copy.
    Chairman Tom Davis. Could you make a copy of that available 
to the committee? That would be great. Specifically this one.
    Mr. Waxman. What was he told? Was he told it wasn't true? 
It looks like I do have a copy of the letter. It says this is a 
followup to our recent conversation concerning the accuracy of 
media reports, the allegation is untrue, as I promised, 
enclosing a copy of the standardized Federal adjudication 
guidelines, guidelines are not country specific, and then 
people get due process.
    I am not reading it precisely, but that is generally the 
answer that I see, that it's not true, the allegations aren't 
true, and they have a right to appeal and that it appears from 
this answer from you, that it's not a problem.
    But did you check into it to see whether there was, in 
fact, a problem that brought about the concerns expressed by 
Congressman Dent?
    Mr. Andrews. Yes, sir, I have.
    Mr. Waxman. And you found it not to be true?
    Mr. Andrews. I found it not to be true.
    Mr. Waxman. I am going to give you the information that we 
have received.
    Mr. Andrews. Please.
    Mr. Waxman. Because I think it's more important that if we 
raise the issue, we get an investigation by you, not just a 
letter saying it's not true.
    The AIPAC case, do you know of any reason why that should 
be invoked to deny people security clearances?
    Mr. Andrews. I am not certain that it was invoked to deny 
security clearance.
    Mr. Waxman. Was it invoked not to grant a security 
clearance?
    Mr. Andrews. I am not certain that it was, sir.
    Mr. Waxman. Do you know whether it has been involved at all 
in security clearance questions?
    Mr. Andrews. I am certain it probably has.
    Mr. Waxman. And why would it be?
    Mr. Andrews. I think it would be involved, sir, as a 
indication that you have to look at ties and the relationships 
of each individual case, not on the basis of religion or 
country, but what was substantively happening in that case.
    Mr. Waxman. You are talking about the case of the 
applicant? You are talking about the case of the applicant 
himself or you are talking about the AIPAC case?
    Mr. Andrews. No, I am talking about the case of the 
applicant himself.
    Mr. Waxman. Why would the AIPAC case that involves an 
indictment and trial that hasn't even yet been held on 
allegations that they did something improper affect another 
person who happens to have ties to Israel or was Jewish?
    Mr. Andrews. I don't think it did.
    Mr. Waxman. I thought you just said that you thought that 
it would be relevant.
    Mr. Andrews. No. The issue of whether anybody's foreign 
relations and contacts have relevance in security clearance 
investigation, these are relevant things to talk about and 
important to think about.
    Mr. Waxman. Well, if the ties to Israel which is one of our 
allies, why would it be relevant.
    Mr. Andrews. The ties to any foreign country are relevant. 
We do not, Mr. Waxman, as I said before, have a list of good 
countries and bad countries.
    Each case of a foreign relationship, whether it's with 
Israel or with Ireland, is looked at in a way to determine that 
the applicant is not going to be put in a position of getting 
pressure put on him or irresponsibly giving away national 
security information.
    Mr. Waxman. So would that mean that anybody who has a 
foreign relative, close foreign relative, might be--should be 
denied a security clearance?
    Mr. Andrews. No, it doesn't. It means that relationship 
will be examined and looked at to see if it poses a risk.
    Mr. Waxman. Give me an example of a relationship that you 
think would raise a red flag.
    Besides the two I's, Ireland and Israel, tell me examples 
you can think of that would raise a concern about a security 
clearance.
    Mr. Andrews. I think I would be concerned if I were an 
adjudicator, and I don't like to play hypothetical questions, 
but I would have to be concerned if I were an adjudicator and 
opened the file and found out that Sheehan McFagus had 
relatives in the IRA.
    Mr. Waxman. And how about in Israel? I don't know of 
examples of--I know someone in Israel. Give me an example of 
something that would raise a red flag.
    Mr. Andrews. I think perhaps financial ties to an Israeli 
company that is competing for a U.S. Government contract. I 
mean, there are all kinds of things. All this does is 
illustrate my contention that it's a case-by-case basis, sir.
    Mr. Waxman. But is there a consistent standard? I know my 
time has expired. Is there a case-by-case feeling?
    Mr. Andrews. I know what you are reaching for, but you get 
into, this we get caught in this thing of consistency is the 
hobgoblin of small minds. We can't have a checklist for these 
adjudicators and say if this guy has X amount of dollars 
involved in a defense contract in Cairo, I mean, you just can't 
do that in the name of consistency.
    In the name of consistency, though, sir, I think you are 
entitled to see some guidelines of these are the general 
baskets in which we put things and look at them when we make an 
individual decision.
    But one size doesn't fit all, is what I am saying.
    Mr. Leonard. Can I contribute something just from an 
overall policy point of view, Mr. Waxman? The recent revisions 
to the adjudicative guidelines that the President approved in 
this particular area were intended, as I said, to increase 
flexibility and, in essence, what they want to focus on is 
there a situation where we can expect that an individual will 
have to choose between the interests of the United States and 
the interests of a foreign interest.
    That is the focus. And even still, even if there is a 
possibility of that, the guidelines were further modified to 
provide a mitigation--and this goes to maybe some of the 
examples you cited--where there is every indication that the 
sense of loyalty to the foreign interests is minimal or that 
there are deep and long-standing relationships and loyalties to 
the United States that is expected to resolve any potential 
conflicts in the interests of the U.S. interest.
    Those are two examples of how the policy, the guidelines 
have been specifically revised back in December, to try to 
address these issues and to provide greater flexibility and 
greater guidance and do away with the per ses.
    Mr. Waxman. May we just get the guidelines for the record?
    Chairman Tom Davis. Frankly, what Ralph Waldo Emerson said 
was a foolish consistency is a hobgoblin of small minds, not a 
consistency. There is a difference there. And that is the 
difference that Mr. Waxman is trying to ask, is how is this 
carried out, Mr. Dent.
    Mr. Dent. Thank you, Mr. Chairman I came in during Mr. 
Waxman's interrogation, and we had spoken yesterday, Mr. 
Andrews, Secretary Andrews, regarding just a blog site that was 
pointed out to me by some constituents who had said that the 
DOD, for whatever reasons, was denying clearance to American 
Jews who may have had ties to Israel. You and I had spoken, and 
you said that is really not the case and that there is no 
specific bias against American Jews, for example, when it comes 
to security clearances, we have no specific prohibition against 
any particular set of people in this country, as I understand 
it.
    Mr. Andrews. Well, I think any religion, no.
    Mr. Dent. The other question deals with a general issue, if 
somebody, for example, would adopt a child from another 
country, China or Russia, fairly common, seeks a security 
clearance, you would probably investigate that issue, would you 
not?
    Mr. Andrews. I think it would be noted, Congressman, and in 
the case of the child himself or herself, obviously the 
citizenship of the child would be irrelevant in a case like 
that.
    Mr. Dent. I have been told that is an issue, at least a 
point of tension.
    Mr. Andrews. Well----
    Mr. Dent. There is nothing wrong with it, I just want to 
point that out.
    Mr. Andrews. It's a case of we want to know if we're going 
to give you access to classified information we want to know 
about your foreign contacts and your foreign trips, travels, 
relationships, in toto.
    And if part of that is, I went to China, I went and adopted 
a child, that would be in there.
    Mr. Dent. Another question, too, I guess as it related to 
the Israeli situation, and I just want to be able to get back 
to my constituents and allay them that there is not a specific 
bias or prohibition against Jewish Americans who may have ties 
or family or friends in Israel that seek security clearances, 
that they can go through the process and be treated like every 
other American. Is that a safe question?
    Mr. Andrews. Yes, when I got the invitation to come down 
here, I asked some of our people, I said is it possible to 
build a profile of how we look at people by religion, and we 
don't. We don't do that.
    So it's hard to find out who is Jewish, who is Irish, who 
has an Israeli background.
    Mr. Dent. And I guess some other questions I have in 
response to the committee's June 14th inquiry about 
implementation of new guidelines, you said that before DOD can 
apply those guidelines to adjudication of clearances for 
contractors, DOD had to take appropriate actions to comply with 
the Administration Procedures Act.
    You use that phrase twice. What are those appropriate 
actions and do they include formal rulemaking?
    Mr. Andrews. I was talking about the Smith amendment that 
applies only to the Department of Defense, which sets up 
certain adjudication considerations that don't apply to other 
departments of government. And, so that, we have had to work 
that in to our implementing those guidelines as well, so it's 
sort of a different kettle of fish for us. And as I mentioned 
before, of the 3.2 million people who have security clearances 
in America, 2.5 million of them belong to us. So it's a big job 
to do that.
    Mr. Dent. And just one other thing too, with respect to 
that rulemaking, how long does that usually take, on the 
rulemaking side? You were talking about those appropriate 
actions, I asked you about the, does that include a formal 
rulemaking and how long about will that take ordinarily?
    Mr. Andrews. About 30 days.
    Mr. Dent. 30 days?
    Mr. Andrews. Yes, sir.
    Mr. Dent. And during that time, will DOD use one set of 
standards for government employees and another for contractors?
    Mr. Andrews. No, we don't.
    I will point out, however, that in the appeals process the 
government people, both military and civilian, do not have 
the--are not--cannot bring outside counsel in; however your 
civilian contractors can bring outside counsel in.
    Mr. Dent. Thank you Mr. Andrews, and I did want to thank 
you for your letter you sent to me dated today the 12. I 
appreciate that.
    Mr. Andrews. We are also including full copies of the 
adjudication guidelines too with that. That will be coming in.
    Mr. Dent. Thank you very much, and Mr. Chairman, I yield 
back.
    Chairman Tom Davis. Thank you. Mr. Van Hollen.
    Mr. Van Hollen. Thank you, Mr. Chairman and let me also 
thank the witnesses here today.
    And I am interested in following up maybe beyond this 
hearing in terms of the criteria, I know we are going to get a 
list of the criteria, I do remember a number of years ago I had 
a constituent who was a Greek American who had a dual 
citizenship which is also permitted by Greece and ended up 
going through really a terrible process here. And I am 
interested I guess, I guess before looking at the guidelines, 
let's say you do have somebody who is a dual citizen, has dual 
citizenship. How do you determine, I mean, someone a dual 
citizenship obviously has connections to more than the United 
States. But that doesn't mean that they have any less of a 
loyalty to the United States. There are various reasons people 
would want to maintain a dual citizenship. I guess the question 
is, what factors would, in fact, disqualify you under those 
circumstances?
    Mr. Andrews. Right now, the fact of dual citizenship is a 
disqualifier.
    Mr. Van Hollen. So if you choose you have to choose 
between----
    Mr. Andrews. You have to choose your country, sir.
    Mr. Van Hollen. I understand that. But there are obviously 
advantages in terms of being able to hold another passport 
things like that, but the rule right now is you choose your 
citizen, period.
    Mr. Andrews. On the passport issue, you can hold another 
passport provided the U.S. Government agency to whom you are 
going to go work, State Department, DOD or whatever, permits 
that.
    Mr. Van Hollen. In this case, if I recall correctly, they 
decided to drop their Greek citizenship, their--that portion of 
the dual citizenship.
    Is that disqualifying if you had once held dual 
citizenship?
    Mr. Andrews. If you give up your passport or you give up 
your dual citizenship in that other country----
    Mr. Van Hollen. You then become eligible.
    Mr. Andrews. You are all right.
    Mr. Van Hollen. Just on the general issue of the backlog 
and security clearances and the recommendations that were made 
by the 9/11 Commission and others, and I'm sorry I missed your 
opening comments, but where are we on that? In other words, the 
recommendations I understood it was to try to have some kind of 
uniform standard policy, so we don't have multiple agencies 
with their own standards and none of them trusting the degree 
of competence of the others, it just seems to make sense as a 
national government to have these uniform standards. Where are 
we on that?
    Mr. Andrews. Well, you have two real questions on that one 
is the backlog, which is sort of like the elephant that is 
always in the room when everybody meets on these issues. And I 
have to defer to my colleagues at OPM, because they are the 
keepers of the backlog.
    In terms of consistency across the board, we are still 
working on that.
    I don't think the issue of reciprocity is as big a problem 
as people make it out to be.
    We do have, our NSA does have different investigative 
requirements for its people.
    But I think that is probably very wise thing, given the 
sensitivity of what, some of the things they do.
    Mr. Leonard. If I can add something, one of the things I do 
have an opportunity to do is actually chair an interagency 
working group on reciprocity to focus on that one particular 
issue. And I can say we are making process. As a matter of 
fact, just within the past week, I believe, we have been able 
to narrow down to the bare minimum the authorized exceptions to 
reciprocity with respect to special access programs which has 
been one toughest nuts to crack.
    The challenge is to get that guidance now down to the 
implementation level. The next several months will tell, in 
terms of how successful we are at that. But we have been making 
progress. I believe there is clear guidance now with respect to 
what is an authorized exception to reciprocity and what is not, 
and they have been narrowed. And we should see the, what I 
still think is an inordinate number of instances of non 
reciprocity to be reduced in the future but there is still a 
ways to go.
    Mr. Van Hollen. Mr. Andrews' response was he didn't see it 
to be that many obstacles in the way to this. Can you give us a 
timeline when you would be able to have, with the exception of 
NSA, Mr. Andrews mentioned may have a special status, can you 
give us a time line as to when you will complete that work?
    Mr. Leonard. Well, again, from a guidance point of view, 
the work is completed. What is left is the hard part, the 
implementation part. And that is then up to the agencies to get 
that down to the working level and make sure that they 
understand, they comprehend, they have access to, they have 
knowledge of and they understand the latest guidance. I would 
expect that should not take more than several months, a couple 
of months. That would be my expectation.
    But then again, I don't have an agency that I am 
responsible for.
    Mr. Van Hollen. How are things going at DOD in terms of the 
implementing that, implementing the reciprocity agreements?
    Mr. Andrews. Well, the new guidelines as I mentioned we are 
hoping to have those implemented by the first of September, the 
adjudication guidelines.
    In terms of total reciprocity, sir, I think that you will 
probably always have something to work on and gnaw on. There 
will always be some cultural and organizational things that get 
in the way.
    One of the things that impressed me coming back into 
government was when I was at CIA in the 70's, I had about five 
or six different badges for different parts of building out 
there at Langley, and I came back into government, and I have 
this one badge here that gets me into DIA, that gets me into 
CIA and, who knows where else? I certainly--they won't tell me. 
But it's one badge, one pin number, and to me that is the heart 
of success.
    Mr. Van Hollen. That is some progress. I think you would 
agree we have a ways to go.
    Mr. Andrews. We do.
    Mr. Van Hollen. I thank you, Mr. Chairman.
    Chairman Tom Davis. Thank you. That is it.
    I have a few questions. In testimonies submitted for the 
record that we put in today by Sheldon Cohen, who is an 
attorney who represents clients before DOHA, he cites a study 
that he has just completed and he analyzes 898 appeals before 
the appeals board at DOHA between 2000 and 2006.
    He found a statistically incredible slant in favor of 
government appeals.
    Of appeals submitted by applicants, whose clearances were 
denied, less than 1 percent of the decisions were reversed; 
whereas in cases where DOD appealed in granting a clearance, it 
sees 74 percent were reversed.
    He goes on to note that a foreign preference influence case 
where DOD appealed the granting of an appeal, 92 percent were 
reversed. Any thoughts on that?
    Does that seem right to you?
    Mr. Andrews. Sir, we will have to get back to you on that, 
on the analysis of that.
    Chairman Tom Davis. Industry has expressed concern that 
since GAO criticized DOD for favorably adjudicating some cases 
where a minimal amount of investigative information was 
missing, the so-called closed pending cases, DOD no longer 
adjudicates any other such cases, but rather sends them back to 
OPM where they pile up and add to the backlog. OPM testified 
before this committee on May 17th that its backlog of closed 
pending cases has been growing, and at a time, stood at 70,000.
    What is your understanding of what currently happens to 
investigative files where just a minimal amount of information 
is missing? Are they being adjudicated by DOD on a risk 
management basis, or are they just send them back pending 
approval.
    Mr. Andrews. Sir, again it--I have to come back to you with 
an answer. It depends on what is missing.
    Chairman Tom Davis. Minimal, we are talking minimal things. 
We are not talking about big major gaps. We are just talking 
about, I would like to get your impressions on the record and 
you can get back to me on this.
    Mr. Andrews. Yes, sir, I will.
    Chairman Tom Davis. I think it's important just to remind 
you I know from where you sit and other people sit. It's kind 
of a job, you want to make sure these applicants, all the I's 
are dotted and T's crossed, but for taxpayers, for industry, 
but particularly at the end of the day for taxpayers, what they 
are doing is they are paying a huge premium for people who have 
security clearances. And they are doing that because the 
backlog is so great that just the clearance itself adds a 
premium to their hiring.
    And we end up paying for that.
    And in other cases, just means the mission isn't going 
forward, and in some cases, these are vital missions and in 
some cases, that we are talking about in the contract area 
where there is some foreign country involved, it can be 
language interpreters, it can be people who, people who can 
listen in on conversations and aren't available, this can be 
very, very vital. So I want to stress how important this is 
that this backlog get cleared and that we walk into this with a 
can do attitude. When I hear reports which--you have, I think, 
alleviated our fears today, but when I hear reports that the 
DOD office of general counsel says don't apply these new 
guidelines and that is, by the way, is what DOHA chief 
administrative judge is reported to have said, that they had 
been specifically instructed not to apply the new guidelines, 
it gets disturbing because we want to do this in a can-do 
attitude, how can we get through this, if there are issues and 
you are not getting the tools you need, we need to move forward 
because at the end of the day, there is a huge frustration and 
the taxpayers end up picking up the tab.
    Mr. Leonard, we let you off the hook, so I am going to ask 
you a couple of questions. In looking at the revised 
adjudicative guidelines that were issued by the NSC, it seems 
there is additional flexibility granted to government 
adjudicators might improve the quality of the clearance 
decisions being made. For example, the new regulations allow 
adjudicators to distinguish between foreign countries rather 
than just treating them as black boxes equal in threat.
    In your reading of the revised guidelines, what has changed 
from the old version vis-a-vis foreign influence and 
preference?
    Mr. Leonard. Yes, Mr. Chairman, you are absolutely correct. 
Previously, there were some provisions in the old guidelines 
that were interpreted as a per se situation, possession of, a 
mere possession of a foreign passport could be per se a 
disqualifier, voting in a foreign election could be per se 
disqualifier. For all intents and purposes those per se 
language has been done away with, greater flexibility has been 
introduced. And as I mentioned before the key that we try to 
focus on in these guidelines with respect to foreign 
connections is, is there a basis to believe that this 
individual will be in a position where they will have to choose 
between the U.S. interests and a foreign interest? And but even 
in that case, there is a further mitigator that allows that if, 
through a recognition, that their foreign connection is so 
minimal or the ties and loyalty and connections to the United 
States run so deep that there is every expectation that the 
individual will resolve the potential conflict in the U.S. 
interests, that is a mitigator for the foreign connection would 
allow issuance of a clearance.
    Chairman Tom Davis. Now I understand the two passport 
issue, because you can't, if there is another passport you 
can't always account to where they have been to, and that 
raises other issues. They are resolvable, but it is obviously a 
red flag.
    We will be hearing from the second panel more about 
industry's proposals for reengineering the entire clearance 
process. In particular, ITAA has proposed in its written 
testimony the implementation of a pilot program utilizing 
latest IT and industry best practices.
    This program would involve feeding the same cases both into 
the pilot system and the existing OPM-DOD system in order to 
compare their effectiveness.
    What recommendations can you make regarding such a 
reengineering of the clearance process? And are there any 
potential pitfalls in moving that direction, for example, 
reciprocity?
    Mr. Leonard. Definitely, Mr. Chairman, we need to, as I 
mentioned in my statement, move away from the half century old 
process of shoe leather on the ground, especially some of the 
dubious checks we do in the field such as neighborhood checks 
and things along those lines. Increased reliance on automation 
is the key. The challenge is at what point in time are we going 
to be there. I will give you just an anecdote.
    My 23-year-old daughter just took advantage of going online 
to try to procure her first auto insurance policy, which is 
great, and the fact that you can sit at home on a weekend and 
apply for auto insurance is an advantage of technology. The 
challenge is she spent the rest of the weekend trying to 
disprove negatives that came up, and it highlights the 
unreliability of many of these data bases that are routinely 
accessed. That's the limitation.
    As those data bases become more and more reliable and we 
can be more confident in false positives and things along those 
lines, I think we will be a long way to replacing the shoe 
leather.
    Chairman Tom Davis. Which leads me to my next question. In 
the old adjudicative guidelines, applicants with family members 
living abroad were asked to prove the impossible; namely, that 
foreign family members who have never been before pressured by 
a hostile government as a means of obtaining classified 
information will never be pressured in the future.
    Do the new standards change that standard of proof in this 
respect or are we like your daughter with insurance, trying to 
prove a negative.
    Mr. Leonard. Again, the adjudicative guidelines, the way I 
read them, is that these types of potential scenarios that you 
described need to be more than just an assertion. There needs 
to be some sort of demonstration of the potential for coercion 
and it cannot be a theoretical. So it would be highly 
situational. Not to say that would never be the situation, but 
again looking at the primary focus of the adjudicative 
guidelines, it should not be a frequent occurrence.
    Chairman Tom Davis. Is it realistic to expect that the new 
guidelines will have any impact on the number of applicants 
with the foreign influence, preference issues, getting 
clearances if there is any more realistic burden of proof 
expectation?
    Mr. Leonard. Yes, I fully believe that with the new 
adjudicative guidelines individuals that may have been found 
ineligible for a security clearance under the prior guidelines 
would be found eligible today.
    Chairman Tom Davis. We just push to you and move people 
through the process and all you need to do is make one mistake 
and we will have you up here. But right now the backlog is a 
huge problem.
    Mr. Leonard. Absolutely, sir. I am hard pressed to come up 
with anything. You know, security investigations and clearances 
are the one thing that permeates almost everything this 
government does from fighting wars, from doing intelligence, to 
getting the best technology from industry. It permeates 
everything, and I am hard pressed to come up with something 
that is analogous that is so ubiquitous.
    Chairman Tom Davis. It is not as if there are not enough 
people in the pipeline that can do the job. That is the other 
thing, is that there are people to do this. It's not a scarcity 
of people. It is basically a failure of government to be able 
to put the resources in and get these out in a timely manner.
    Mr. Leonard. And it is also a failure to get a handle on 
requirements, and we add to those requirements every day not 
just in the classified national security arena, but 
investigations are now being done much more frequently for 
other purposes, for homeland security, for access to 
information systems that are purely unclassified, for hazardous 
materials truck drivers, for airport tarmac workers. The 
requirements are burgeoning and the inability to get a handle 
on these requirements and to project them and to manage them is 
making it exceedingly difficult to work that issue.
    Chairman Tom Davis. Thank you. Mr. Waxman, do you have any 
questions?
    Mr. Waxman. Yes, I do, Mr. Chairman. I want to go back to 
this discussion that we have all been touching upon. I know you 
treat each applicant on a case-by-case basis, as you should, 
but the problem seems to be that the risks posed by a 
particular nation are also handled on a case-by-case basis, 
which does not really make a lot of sense.
    For example, in his written testimony Mr. Zaid, who is 
going to testify in the next panel, cites the example of one 
judge finding Pakistan to be a U.S. ally that presents little 
security risk, while another judge finding that Pakistan has 
terrorists links and was a high risk country.
    Should administrative law judges have the authority to 
disregard the official U.S. foreign policy of the State 
Department and base decisions on their own impressions of a 
foreign country? The new guidelines for adjudication security 
clearances provide--that the President issued last December 
state that the adjudicators can and should consider the 
identity of the foreign country which the foreign contact or 
financial interest is located.
    Mr. Leonard, explain to me how this works in reality. What 
additional guidelines or training are adjudicators given to 
help them consider the identity of the foreign country and what 
steps are being taken to ensure that these considerations are 
consistent across agencies.
    Mr. Leonard. Well, one of the things that the guidelines 
were also revised to take into account or to acknowledge is the 
fact that oftentimes the basis for a decision may be based upon 
classified intelligence and things along those lines. And I 
mention that from the point of view to indicate that decisions 
along those lines, again not getting into any of the specific 
cases but decisions along the lines of which you outline, 
should be based upon official intelligence, not based upon the 
impressions of a single adjudicator.
    Mr. Waxman. Let's assume it's not based upon additional 
classified information. But look at the case of Pakistan. One 
judge says Pakistan is a terrorist country and the other says 
no, they are an ally of the United States.
    Mr. Leonard. That is my point. If those are the basis of 
decisions as opposed to individual situations with respect to 
an individual's background, you are absolutely right, they are 
required to be consistent decisions and should be based upon 
representation of issues emanating from the foreign interest, 
should be based upon official positions, again, not assumptions 
or impressions on the part of the individual adjudicator.
    Mr. Waxman. Is there a way to use the appeals process to 
introduce more consistency? Even then different judges reach 
different decisions, but is there a way to develop consistent 
precedents that judges are bound to follow so there is another 
judge looking at it and they can----
    Mr. Leonard. That is one of the things--speaking as an 
outsider, that is one of the things that I admire about the DOD 
system, especially the DOHA system, is their system is highly 
transparent, more so than the rest of the government. And just 
about anybody can research precedence, can research cases and 
look for precedence, which quite frankly no other agencies do. 
And so from that point of view, that is a part of the DOD 
process quite frankly that I admire.
    Mr. Waxman. Let me give you a factual situation just to get 
your judgment on it because we talk about a preference for 
another country. Let's assume there is an American citizen, 
Jewish, daughter moved to Israel, living in Israel permanently, 
has dual citizenship, married to an Israeli who serves in the 
Israeli Army in a high position and she works for a number of 
Israeli corporations trying to advance their interests. Would 
we assume that the father should be looked at with greater care 
or maybe even denied a security clearance because he may have 
more concern about the benefit of his children?
    Mr. Leonard. Obviously, again from other theoretical point 
of view that is an issue that would be examined. Should we 
assume anything as a result of those examinations? I would say 
not. And in fact I would point out that again the two key 
issues that should be the basis of a decision would be is there 
a basis to expect that individual would be in a position where 
they would have to choose between the U.S. interests and a 
foreign interest and even if that is the case, is there enough 
evidence in terms of long-standing ties and loyalty and 
commitment and everything else that there is every expectation 
that if the individual was given such a conflict that they 
would invariably decide in the U.S.'s interests, then that 
clearance should be granted.
    Mr. Waxman. Well, the son-in-law could be captured, held 
hostage by Lebanon or the Palestinians, Hamas group as a 
military person.
    Mr. Leonard. My son is in the U.S. military. He served in 
Iraq. He could be captured as well, too.
    Mr. Waxman. You would be annoyed if you were turned down 
for a security clearance then?
    Mr. Leonard. Interestingly enough----
    Mr. Waxman. But that is not a foreign preference. But you 
see what I am talking about. We are getting reports from people 
who say why are we being singled out because of longstanding 
ties to Israel, family ties or religious ties or whatever, 
especially when we have people who have already had security 
clearances and they haven't abused it. If you've got somebody 
who abuses a security clearance something ought to be done 
about it. I have been trying to get the chairman to pay some 
attention to the fact that Karl Rove had a security clearance 
and violated it by disclosing information about a CIA agent and 
yet he maintains a security clearance. That is a case where a 
clearance ought to be revoked. But if somebody has done 
something wrong, they should not have their security clearance 
revoked because they suddenly found out information that had 
already been disclosed.
    Mr. Leonard. With respect to people who have had long-
standing clearances, I would point out that is particularly one 
of the revisions to the guidelines where it was changed to 
indicate that the individual has such deep and long-standing 
relationships and loyalties in the United States that the 
individual can be expected to resolve any conflicts in the 
interest or favor of the United States.
    Clearly if someone has a long-standing history of a 
security clearance already, that's exactly why that provision 
in the adjudicative guidelines was modified to allow that 
flexibility.
    Chairman Tom Davis. Mr. Van Hollen.
    Mr. Van Hollen. Just a quick followup to one of the 
responses to Mr. Waxman's question on this consistency issue 
because I think it is important for the process and the 
integrity of the process for people to have some idea of what 
the guidelines are. Obviously each case is different and has to 
be weighed on its own facts.
    You mention the DOHA process as being one that actually 
provided greater transparency. In every case do you have to 
have a written decision that sets forth the basis for a 
particular finding across the board? In other words, does the 
person who is denied get a written decision?
    Mr. Leonard. As a minimum the individual needs to be 
provided a statement of reasons which outlines the reasons why 
they have been deemed ineligible and an opportunity to reply to 
that statement. The extent to which the individual can reply, 
that's what varies from agency to agency. And again I defer to 
Bob about the DOHA, but they are much more elaborate than most 
other agencies.
    Mr. Van Hollen. But across every agency there is a written 
explanation they can respond to?
    Mr. Leonard. Yes.
    Chairman Tom Davis. Thank you very much. Why don't we take 
a 2-minute recess and we will call our next panel. Mr. Andrews, 
Mr. Leonard, thank you.
    [Recess.]
    Chairman Tom Davis. We move now to our second distinguished 
panel. We have Mr. Mark Zaid, esq., managing partner at Krieger 
& Zaid law firm. We have Mr. Doug Wagoner, the chairman of the 
Intelligence Subcommittee, Information Technology Association 
of America, on behalf of the Security Clearance Coalition. We 
have Mr. Walter Nagurny, the director of the Industrial 
Security Office, EDS U.S. Government Solutions. Thank you all. 
Thank you for your patience in getting through the first panel. 
It's our policy that we swear you in before you testify. Please 
rise and raise your right hands.
    [Witnesses sworn.]
    Chairman Tom Davis. Mr. Zaid, you know the rules. We have 
gone through the first panel. Your entire statement is in the 
record. We appreciate your being here. Go ahead.

 STATEMENTS OF MARK S. ZAID, ESQ., MANAGING PARTNER, KRIEGER & 
   ZAID; DOUG WAGONER, CHAIRMAN, INTELLIGENCE SUBCOMMITTEE, 
INFORMATION TECHNOLOGY ASSOCIATION OF AMERICA, ON BEHALF OF THE 
SECURITY CLEARANCE COALITION; AND WALTER S. NAGURNY, DIRECTOR, 
   INDUSTRIAL SECURITY OFFICE, EDS U.S. GOVERNMENT SOLUTIONS

                STATEMENT OF MARK S. ZAID, ESQ.

    Mr. Zaid. Good morning, Mr. Chairman, members of the 
committee. It is a pleasure to testify here today on such an 
important topic. I have been handling cases involving national 
security now for more than a decade, represented nearly 100 
individuals in security clearance cases before numerous Federal 
agencies.
    This is a period in our history when our country 
desperately needs individuals with foreign language expertise 
and intimate experience with other cultures to assist in the 
war against terror. The logical population from which to 
recruit individuals are those Americans citizens with foreign 
backgrounds. Yet our agencies are losing the ability to utilize 
numerous loyal Americans simply because they brazenly admitted 
to affection from their parents residing overseas, dared to 
telephone their siblings back in the home country, or through 
no action of their own hold dual citizenship.
    The disqualifying conditions of foreign influence and 
foreign preference especially are often arbitrarily and 
inconsistently applied. Whether the country involved be ally, 
such as Israel or the United Kingdom, or an enemy and hostile, 
such as Iran or China, there is typically little rhyme or 
reason why a clearance is denied or granted.
    In recent years it has become common for the Department of 
Defense to revoke an individual's clearance after having held 
one for years or even decades. Oftentimes these individuals 
have never misled or lied about their foreign relatives or 
origins, but DOD has suddenly decided that the person poses a 
risk that never previously existed before.
    At the CIA individuals have wasted months through the 
application training process only to eventually be informed 
that their foreign background, which had neither changed nor 
been hidden from the outset, prevented the granting of the 
clearance.
    Though my testimony is more critical than positive, I do 
wish to highlight that there are many shining examples of how 
some agencies and individuals employed therein implement their 
security clearance programs. Indeed, I would rate DOHA as one 
of the better, if not best, venues for challenging a denial or 
revocation.
    Executive Order 12968, issued by President Clinton in 1995, 
created the current framework. In response, adjudicative 
guidelines were issued in March 1997 in order to establish a 
common set of standards. These were revised last December and 
in the cover memo from Mr. Hadley they were to be implemented 
immediately. As far as I know, DOD is the only agency not to 
have done so. This posture is, disappointingly, not surprising.
    It was not until April 1999 after publication in the 
Federal Register, a useless act, that DOD adopted the March 
1997 guidelines, and actual application only commenced 
beginning July 1, 1999. Thus we might not see until 2008 that 
DOD implements the 2005 guidelines notwithstanding what we 
heard earlier, and that is unacceptable.
    Only DOD likely knows how many revocation denials have been 
based on foreign influence or preference concerns, but the 
number has increased in the last few years. For decisions 
posted on DOHA's Web site this year alone approximately 25 
percent involved foreign influence.
    How significant an impact can there be between the 
application of the old and new guidelines? Let me focus on 
foreign influence, and I'll address foreign preference during 
the Q and A if desired.
    Under the 1997 guidelines one of the more common 
disqualifying conditions is whether an individual or his family 
member may be potentially vulnerable to coercion, exploitation 
or pressure by a foreign power. To mitigate this concern, one 
can seek to prove the contrary, yet it is virtually impossible 
for any individual to truly affirmatively prove a negative and 
to demonstrate that a foreign relative or contact is not in 
some way possibly subject to exploitation by a foreign power.
    Another available mitigating factor is that contact and 
correspondence with the foreign citizen are casual and 
infrequent. Unfortunately, the terms have no standardized 
definition or application.
    Consider one case in particular I had in 2004 where I 
unsuccessfully represented a defense contractor originally from 
Pakistan. This is the case Congressman Waxman referenced. My 
client provided unrefuted testimony that he had infrequent 
contact with his siblings three to four times a year. Although 
the judge ruled that there was nothing in the record to 
indicate that the family members were agents of a foreign 
power, she concluded that there is no evidence to show that he 
is not in a position to be exploited that would force him to 
choose between the two countries and be disloyal to the United 
States. Yet, at the same time the judge also concluded that can 
there was nothing in the applicant's testimony or demeanor that 
suggested he was not a loyal American and credit to his adopted 
country.
    What was behind the judge's rationale? She believed that 
``Pakistan is on the front lines in the war against 
international and regional terrorism and despite the efforts of 
its government there are individuals and groups within Pakistan 
who have acted and continue to act in a hostile manner to U.S. 
Security interests.''
    Beyond the fact that in today's world this description fits 
dozens of countries, including even the United States itself, 
it was completely inconsistent with factual findings reached in 
numerous other DOHA cases and contrary to the official position 
of this administration. For example, just 3 months after 9/11 
another DOHA judge had held Pakistan is not a country hostile 
to the security interests of the United States, but a country 
whose political institutions, while not democratic at present, 
are specifically aligned with our own traditions, which include 
the rule of law to absolve the applicant of any foreseeable 
security risk.
    Under the 2005 guidelines I have no doubt that my client 
would have had a much greater chance of attaining a security 
clearance. Even a casual comparison between the 1997 and 2005 
guidelines should leave a reader with the notion that the 
revisions are more relaxed and flexible. They fit a moralistic 
environment. They legitimately raise the bar or, more 
precisely, perhaps set a more appropriate bar for the 
government to revoke or deny a clearance based on foreign 
influence or preference.
    The most frequently cited disqualifying condition now 
requires a heightened risk of exploitation, inducement, 
manipulation, pressure or coercion. And the country is taking 
into account the nature of the relationships and the fact that 
it has to be unlikely the individual will be placed in such a 
position to choose between their native country or country 
where their relatives might live. If DOD denies a security 
clearance based on application of the 1997 guidelines when a 
favorable result could have been attained under the 2005 
guidelines, then DOD will have harmed the national security 
interests of the United States.
    I won't talk about the appeal process, Mr. Chairman. You 
referenced my colleague Sheldon Cohen's conclusions. They are 
quite damming regarding the appeal process. With respect to 
foreign connection since 2000 the Appeal Board has affirmed all 
144 of applicants' appeals of decisions that denied a clearance 
and reversed all but four of the appeals granting a clearance.
    In my testimony I submitted 15 recommendations for 
consideration. Let me just take 30 seconds to highlight a few. 
I would suggest that Congress, one, require DOD to adopt the 
new guidelines immediately; two, consider removing DOHA's 
ability to appeal favorable decisions unless a more balanced 
framework can be instituted. Other than the Department of 
Energy they are the only agency that can appeal a favorable 
decision.
    Three, task GAO to conduct a thorough assessment of the 
security clearance appeal process as it is implemented 
throughout the Federal Government. There are numerous GAO 
investigative reports, but they deal primarily with DOD.
    Three, create an administrative hearing system similar to 
that of DOHA and the Energy Department across the board at all 
Federal agencies. And the final two, either create an 
independent body outside of the involved Federal agency to 
adjudicate final appellate challenges, or grant the Federal 
judiciary statutory jurisdiction to review substantive 
clearance decisions.
    Again, I thank you for the opportunity to appear before 
you, and I will be very happy to answer any questions or work 
with you or your staff.
    [The prepared statement of Mr. Zaid follows:]

  

    
    Chairman Tom Davis. Thank you for your excellent testimony. 
Mr. Wagoner.

                   STATEMENT OF DOUG WAGONER

    Mr. Wagoner. Mr. Chairman, it is good to be here today. My 
name is Doug Wagoner. I'm the senior vice president of DSA, a 
small northern Virginia based information technology business 
that requires that all of my employees have clearance. I am 
speaking today, however, as the chairman of the ITAA'S 
Intelligence Committee and as a spokesman for the Security 
Clearance Reform Coalition.
    Thank you for this opportunity to appear before you once 
again to discuss the industry perspective on the continued 
issues facing the Federal security clearance process. Our 
coalition is comprised of the Aerospace Industries Association, 
FC International Association, Associated General Contractors of 
America and the Association of Old Crows, Contract Services 
Association, ITAA, Intelligence and National Security Alliance, 
NDIA and PSC.
    We represent thousands of companies that provide classified 
products, services and personnel to the Federal Government. The 
coalition compliments the President for extending the authority 
of Executive Order 13381 for an additional year and applauds 
the implementation of the updated December 2005 President's 
adjudicative guidelines for determining eligibility for access 
to classified information. This is a vital reform needed to 
achieve clearance reciprocity across the government. For too 
long clearances have not been reciprocally recognized between 
departments or even within agencies within the same department. 
The root of the problem is an institutional lack of trust 
between agency adjudicators, each of them thinking that only 
they can determine the person's trustworthiness for granting 
access to classified information that they control. These 
revised guidelines are the latest iteration of a long-standing 
effort to get departments and agencies to adopt uniform 
clearance adjudications.
    Unfortunately, although the President has issued the 
revised guidelines in December 2005 they have yet to be 
uniformly adopted or applied across government. We continue to 
experience problems with the equitable application of 
adjudicative criteria and reciprocal acceptance of those 
criteria, and this lies at the heart of the problem.
    If agencies could be confident that all Federal agencies 
adjudicate the same criteria and standards, they should have 
confidence in recognizing a clearance issued by another agency. 
However, there are efforts underway to bring about change and 
industry would like to recognize and thank Mr. Bill Leonard, 
the Director of Information Security Oversight Office, for his 
continued leadership on the issue of reciprocity with 
clearances.
    The application of criteria regarding the foreign influence 
on an applicant is especially important to our coalition member 
companies because of the many gifted technical personnel with 
foreign connections who can provide valuable help to national 
security missions. Other clearance applicants are singled out 
because of family or marital status, marital ties to foreign 
nationals or because they may be considered a dual citizen 
based on their birth abroad to U.S. parents. America cannot 
deny itself access to this talent.
    There is the anecdotal case of the U.S. General who, upon 
retirement, applied to have his clearance transferred to his 
new employer and was rejected because he was married to a 
Canadian national. His spouse's nationality was never a 
disqualifier during his 30-year military career, yet the same 
person working for industry apparently was no longer considered 
trustworthy.
    Unfortunately, the more frequent response is to either 
reject or forever delay applicants with such conditions without 
measurement of actual risks they may pose.
    Chairman Tom Davis. That was when they had a liberal 
government I assume, right, before the Tories came in?
    Mr. Wagoner. I am sure.
    Part of this problem can be attributed to lack of training 
for adjudicators regarding the degree of risk presented by 
certain foreign nations. This measurement of risk should 
include counterintelligence, infrastructure of a nation and its 
ability or history of applying coercion to U.S. citizens with 
relatives or friends residing in the country.
    Evaluating the extent of a person's foreign connections as 
part of the investigative process is one of the weakest links 
in the entire effort. Applicants with foreign interaction 
routinely wait months before being investigated, thereby 
creating uncertainty for the applicant and their employer. As 
part of its investigative process OPM queues up applications 
for foreign investigations, waiting for critical mass for those 
tied to a particular country to save money.
    That is not good enough and other government agencies 
appear to agree. The State Department specifically sought and 
received approval to establish their own investigative and 
clearance granting program after they found OPM's process was 
unable to meet its needs. State electronically sends out 
queries for their international clearance applications as they 
are received. The State Department's personnel security program 
may already meet or exceed the ambitious time lines mandated by 
the Intelligence Reform Act of 2004. Industry suggests OPM 
contract with the State Department to utilize their best 
practice system when foreign checks on an applicant are needed.
    Government oversight of adjudication is itself sometimes 
part of the problem. As discussed earlier, since GAO has 
previously criticized DOD for granting clearances on cases that 
do not fully comply with the national guidelines, DOD has 
directed OPM to not return any case for adjudication unless all 
leads have been completed. This development has caused many 
cases to be held at OPM that otherwise would have been 
favorably adjudicated on a risk management basis, pending 
completion of some relative minor lead in the case. While this 
approach assures complete adherence to the guidelines, it 
precludes a clearance based on otherwise favorable 
investigation where risk is minimal to non-existent.
    Our coalition has two recommendations that we believe will 
enhance the Federal security process. Both of these steps are 
within the clear direction of Congress that Congress provided 
in the 2004 Intelligence Reform Act.
    First, we recommend the creation of an agency-sponsored 
pilot program that would utilize technology with government and 
industry best practices in each stage of the clearance granting 
process, including periodic reinvestigation. This pilot program 
would provide an opportunity for government and industry to 
work together to demonstrate that technology can improve both 
the efficiency and even the security of the clearance process. 
Industry believes that the efficiencies of such a pilot would 
provide a clear contrast to current Eisenhower era, paperwork-
intensive processes. A statistically valid sample of 
investigations could be selected for a parallel test of the 
standard OPM investigation versus an investigation utilizing 
automated applications, electronic submission of fingerprints 
and signatures and verification of investigative criteria using 
commercial and government data bases. If requested, industry 
can provide the committee staff with a detailed proposal, 
including how it can reduce the backlog, lower costs, and 
ensure equitable treatment of all applicants.
    Second, we recommend each agency evaluate every stage of 
the clearance process against the 2004 Intelligence Reform Act. 
We are not aware that such metrics are being measured nor are 
there viable mechanisms to identify whether weaknesses persist. 
This should be a stoplight grading process much as the 
President's management agenda to recognize agencies with best 
practices and advice to those needing more attention.
    On behalf of the ITA Intelligence Committee and the 
Security Clearance Reform Coalition, thank you again for this 
opportunity to testify before you today and I am happy to 
answer your questions.
    [The prepared statement of Mr. Wagoner follows:]

  

    
    Chairman Tom Davis. Thank you very much.
    Mr. Nagurny, thank you for being with us.

                 STATEMENT OF WALTER S. NAGURNY

    Mr. Nagurny. Chairman Davis, Ranking Minority Member Waxman 
and members of the Committee on Government Reform, first, I 
would like to commend you and your colleagues for your fast 
response and action in helping resolve the precarious situation 
created because of the daunting backlog in the security 
clearance process.
    My name is Walter Nagurny. I am the Security Director for 
the U.S. Government Solutions business unit of Electronic Data 
Systems Corp. I have served EDS in that capacity for 2 years. I 
have experience that dates back to 1987 as a government 
employee and for the past 10 years as a contractor related to 
security clearances. My responsibilities at EDS include 
oversight of all activities related to security clearances and 
support of contracts awarded to EDS by the Federal Government. 
EDS has a sizable cleared work force.
    As a major supplier of information technology to the 
Federal Government, the very significant challenge EDS faces is 
to identify and hire capable people who can provide the leading 
edge expertise government customers expect from EDS.
    One practice EDS utilizes to identify appropriate 
candidates is to conduct a voluntary prescreening with respect 
to the likelihood the clearance need for access to classified 
information will be granted. To this point candidates are not 
asked to divulge personal information to EDS, but are required 
to read an EDS internal use document that provides an overview 
of the clearance process and the Hadley guidelines. Once 
educated about the process, some candidates decide they do not 
want to face the scrutiny of a security clearance 
investigation.
    Prescreening minimizes drawn out clearance requests and 
helps the overarching U.S. Government security clearance 
infrastructure. Prescreening also provides EDS hiring managers 
with an estimated date the clearance process should be 
completed. Sometimes having a cleared employee on the job 
outweighs the technical qualifications of other candidates. 
That's unfortunate. EDS takes no action and makes no decisions 
that will impact an individual's eligibility for a security 
clearance. EDS will submit a candidate for a clearance under a 
contract that requires it as long as an EDS hiring manager made 
the decision that it is a good business. EDS's procedures 
simply provide an estimate about how long it might take to gain 
an approval for a security clearance.
    EDS has a good track record of getting employees approved 
for a security clearance. One troubling area, however, is that 
some clearance requests languish for several months without any 
feedback or end in sight. All too often highly qualified 
employees leave because a clearance decision took longer than 
18 months.
    The overall security clearance process has improved. The 
Joint Personnel Adjudication System, JPAS, for example, has 
shown a major positive impact on the way contractors interface 
with government agencies regarding security clearances.
    On the other hand, other changes have also made an impact. 
The assumption of responsibility for DOD clearance 
investigations by the Office of Personnel Management in March 
2005 is a case in point. I say that because on one hand a DOD 
interim secret clearance is now being granted to many employees 
in less than 5 business days, some in fact overnight. Final 
secret clearances are often being granted within 60 days.
    EDS has many employees who are either naturalized U.S. 
citizens, have non-citizen immediate family members or hold 
dual citizenship. Getting a security clearance for them is 
often difficult.
    EDS recognizes the indisputable need to keep classified and 
other sensitive information out of the hands of non-citizens. 
It is no doubt a huge challenge to distinguish foreign 
preference individuals who could be blackmailed from 
individuals who would never contemplate divulging information. 
The Hadley guidelines address such concerns as well as the 
factors that mitigate security concerns. As significant numbers 
of naturalized citizens accept positions in the IT industry, 
the need for government contractors to submit naturalized 
citizens for a security clearance will only increase.
    Cleared EDS employees who are naturalized citizens have an 
outstanding record of filing required security reports, 
complying with classification rules and following security 
procedures. While the Hadley guidelines speak of dual citizens 
expressing willingness to renounce their non-U.S. citizenship 
as mitigation, these cases nonetheless always end up at DOHA. A 
dual citizen who submits proof that it is his expressed intent 
to renounce non-U.S. citizenship would seem to satisfy the 
adjudicative guidelines.
    A real time example: A well-qualified EDS employee was 
recently denied an interim secret clearance. He is a veteran of 
the U.S. Marine Corps and retains a dual citizenship in 
Portugal, where he was born. Eventually DOHA will ask this 
employee to renounce his Portuguese citizenship and he will 
receive swift clearance approval. There must be a method to 
handle cases in which dual citizenship is the issue more 
swiftly.
    In closing, a few observations regarding the overarching 
status of contractors being processed for security clearances. 
Security requirements issued by user agencies that are well 
written, clear and explicit streamline the overall process. 
Many companies, including EDS, conduct a comprehensive 
background investigation and drug screening of all potential 
employees as a condition of employment. It is conceivable that 
standards could be developed to leverage on a voluntary basis 
the information obtained in preemployment investigations done 
by many national industrial security program companies, thereby 
leading to more informed security clearance decisions being 
made more swiftly.
    I thank you and I am happy to answer any questions you 
might have, Mr. Chairman.
    [The prepared statement of Mr. Nagurny follows:]

  

    
    Chairman Tom Davis. Well, thank you all very much. Mr. 
Zaid, let me start with you. A recent story in the Legal Times 
reported of the plight of the Korean American I referred to in 
the previous panel. It is a client of yours, I think, the 
government dropping its second appeal, the decision that 
granted your client a security clearance. Mr. Andrews pled 
amnesia on the case even though this was a very highly 
publicized case. What reason, if any, did DOD provide for 
dropping its appeal and why the sudden change of heart in your 
opinion?
    Mr. Zaid. Thank you, Mr. Chairman. That was in fact my 
case. I am not entirely surprised that Mr. Andrews did not know 
that specific case. Quite frankly and with all due respect to 
him, he got quite a lot of facts wrong about how DOD has been 
implementing the security clearance process, especially the new 
guidelines. That case started to essentially focus----
    Chairman Tom Davis. Do you think he is just mistaken or do 
you think he's up here----
    Mr. Zaid. I got the impression frankly he just didn't know 
the answers to those questions.
    Chairman Tom Davis. We will try to followup.
    Mr. Zaid. I am sure he has quite a lot of responsibilities 
obviously and this is just one of them. And he was just 
misinformed on quite a bit; for example, like when the 
guidelines are going to be approved, the notice and comment 
period and why that would be. He kept referring back to the 
Smith amendment. Well, the Smith amendment was enacted 6 years 
ago. It has been long implemented within the DOD process and 
for the most part it's culled out most of the people in DOD who 
were subject to having a prior felony conviction in their 
record. So I am not quite sure why the Smith amendment is 
impacting current DOD policies or training, nor do I know why 
DOD feels they need to train their adjudicators any more so 
than every other Federal agency that's already adopted the new 
Hadley guidelines or President Bush guidelines.
    With respect to Mr. Moon's case, on appeal the second time 
around it was made known to me that they were a little bit 
concerned regarding a nonforeign influence question, which 
dealt with advertising on the client's Web site as to whether 
he had foreign business contacts. The Small Business 
Administration had told him it would be beneficial to him for 
business development of his minority company to promote his 
foreign business connections. He hadn't had any for about a 
decade, but he had never updated the Web site. So the 
department counsel had argued that he was lying about the 
extent of his business contacts. The administrative judge did 
not agree with that, thought it was somewhat absurd. And I made 
it analogous to as a lawyer, I often say, well, I represented X 
person; I don't any longer but I did at one point. And in fact 
it was very interesting to note in the case specifically that 
Mr. Moon was not just any individual contractor. He was the 
contractor who did the wiring, the computer wiring for the 
entire DOHA new building. The courtroom we sat in was all his 
handiwork. And I thought it quite ironic when we walked in for 
that morning his daughter testified, Korean American, born here 
in the United States, can't even speak Korean because her 
father wanted to make sure she was American more than Korean, 
and every security guard in the building, which she is a young 
attractive woman, was saying hi, how are you? We missed seeing 
you around the building.
    It is unclear and Sheldon Cohen, as you referenced, has put 
in this analysis, excellent analysis of the appeal process. It 
is unclear what motivates or the intent of department counsel 
as to why they appeal some favorable rulings and not others. 
All that is known is that it is quite clear that if you as a 
lawyer or an applicant prevail in a foreign influence case and 
that case is appealed, the odds are you might as well kiss that 
victory goodbye the way the current system is. And if you are 
denied a clearance at that initial stage you might as well 
forget trying to appeal it.
    Chairman Tom Davis. You don't tell your clients that, do 
you?
    Mr. Zaid. I have started recommending to clients don't 
waste your money paying me to have a worthless appeal.
    Chairman Tom Davis. You think Mr. Cohen's analysis is 
essentially correct?
    Mr. Zaid. It was absolutely consistent with my anecdotal 
experience. It's dead on.
    Chairman Tom Davis. You note in your testimony that DOD and 
DOE have the authority to appeal favorable clearance 
determinations and you recommend abolishing DOD's authority to 
do so. What's your understanding of the historical origins of 
that unique authority?
    Mr. Zaid. I don't know. In fact, I posed that to some 
senior government officials in the security field and they 
didn't know about it either. It's very interesting, most of the 
agencies really don't know how the other agencies conduct their 
own clearance processes. There is a basic framework, of course, 
but they have all implemented them differently. And in fact 
they not only implement them differently, but there are 
different factors that are taken more seriously at one agency 
versus the other. For example, the CIA is one of the worst 
agencies to take a clearance appeal to. If you did a 
statistical analysis, although you will probably never get the 
data because they refuse to give it to GAO, every time you ask 
them to get it you probably will find they have the lowest 
percentage of having applicants overturn a clearance decision, 
including foreign influence cases.
    I don't know why some agencies have implemented it 
differently. DOHA clearly proves as well as the Energy 
Department that, one, you can have a seemingly transparent 
process by publishing your decisions with privacy concerns 
redacted of course, and that you can have live witnesses, no 
other agency does that, and sworn statements and all sort of a 
more formal judicial process. There are nuances of the DOHA 
process. We don't have subpoena ability. We can't obtain 
additional documentation from the agencies if we think it is 
relevant. We can't utilize classified information, and I would 
say in fact that the DOHA judges I believe don't even have 
generally access to classified information.
    Chairman Tom Davis. You know, we wouldn't be here 
complaining about DOHA if there weren't such a backlog. If they 
were denying people and we still had plenty of people in the 
pipeline, I suspect that congressional interest, there may be 
some rights issues, but the fact is we have such a huge backlog 
at this point and it looks like a lot of qualified people for 
important jobs just aren't being qualified and cleared to do it 
and that's a huge burden.
    Mr. Zaid. That's a huge problem. Every agency has a 
different backlog. The CIA process will take 2 to 3 years to 
get somebody through. DOHA process now is probably within a 
year you will get a hearing. A decision will take 4 to 6 months 
depending on the judge's individual backlog, and the appeal can 
take anywhere from 6 to another 12 months. If the government 
appeals, you are stuck in a process for 2 to 3 years if not 
longer.
    Chairman Tom Davis. So you're going to be doing something 
else for your employment.
    Mr. Zaid. As we are sitting here today, I checked my trusty 
BlackBerry, I got an e-mail from a high level DOJ official 
whose daughter it took 45 months to get a clearance approved by 
DOHA in a foreign influence case.
    Chairman Tom Davis. And that is not atypical, right?
    Mr. Zaid. That's a little bit longer than I have seen but 
doesn't surprise me.
    Chairman Tom Davis. Mr. Wagoner, you have a small company, 
right?
    Mr. Wagoner. Yes, sir.
    Chairman Tom Davis. You depend on clearances?
    Mr. Wagoner. Yes, absolutely. Everyone has to have a 
clearance.
    Chairman Tom Davis. Do you have trouble keeping people 
because of the scarcity of just--the clearance is like a 
commodity itself outside of the qualifications, isn't it?
    Mr. Wagoner. Absolutely, and we do have a hard time keeping 
people, and what's ironic is a lot of the proposals these days 
they want to talk about describe your ability to retain people 
and we are all losing people because of another broken 
government process. One part of the government says, hey, you 
got to keep your turnover low but the other side is not doing 
anything to help us out there.
    Chairman Tom Davis. You are caught in a Catch-22 because of 
the government's own regulations?
    Mr. Wagoner. Absolutely.
    Chairman Tom Davis. Now, I hear from large companies 
because of the scarcity, but the smaller companies if your 
clearance expires or you need a clearance you can't afford 
sometimes to put people on another job while you're waiting for 
clearance.
    Mr. Wagoner. We can't. Obviously, that's why we are small. 
We don't have enough jobs just to move those people around 
while we're waiting, putting people on the bench, so to speak. 
We can't afford that. But even the larger companies, they have 
margin issues as well. They have a hard time keeping people on 
the bench as well.
    Chairman Tom Davis. What do you think the premium is in 
payment? I will ask Mr. Nagurny the same thing. What is the 
clearance premium that somebody is paid today because of the 
backlog and the scarcity versus if we had plenty of--if 
clearances weren't a problem?
    Mr. Wagoner. ITAA, we have just finished our third; second 
or third survey of industry. This last time we went through 
Federal Computer Week Magazine so we have many more respondents 
this time, and the premium for a top secret clearance was 
somewhere between 15 and 25 percent. I know even in my company 
we give special bonuses to those people, special incentives to 
those people, again, treating them like a whole different class 
of citizen, which I don't want to do, but I have contractual 
commitments to my customers where I have to keep these people.
    Chairman Tom Davis. Mr. Nagurny, what do you think? Do you 
have a premium you pay? If somebody loses a clearance are they 
worth as much at EDS without a clearance?
    Mr. Nagurny. Salary information is generally not something 
I have exposure to. Candidates tell us, just like Mr. Wagoner 
said, 15 to 20 percent is what they were offered in the 
marketplace.
    Chairman Tom Davis. If you had two candidates in front of 
you for the same job and one had a security clearance and one 
didn't, which one are you going to hire, all things being 
equal?
    Mr. Nagurny. The one with the clearance. And from my own 
personal experience certainly, and the salary would be higher 
for the person with the clearance.
    Chairman Tom Davis. They're more mobile with that, right? 
Again you can train them for anything. If they've got that 
clearance it ends up being a premium. So the real question, and 
nobody can answer it accurately, is how much is this costing 
American taxpayers because they're afraid to spend a few 
dollars on the front end; how much is this costing us up the 
back end because of these premiums that we are having to pay, 
let alone the inefficiencies that you have to do in shuffling 
people around and everything else, and the answer is you are 
better off paying upfront.
    Mr. Wagoner. Absolutely. And there's a cost that our 
missions are not getting done. Our missions are being delayed.
    Chairman Tom Davis. And some critical missions in some 
cases. And that's why this foreign influence, why we're talking 
about that. Some of these jobs are so specialized. This isn't 
just somebody who wants to get in line for a security clearance 
and happened to live in a foreign country or had a foreign 
relative. In many cases these have a language expertise or a 
specific expertise. Why else would you sit through 3 years 
waiting for a clearance when you can go out and do something 
else? I am saying you can put a man on the Moon but you can't 
move a security clearance through in a reasonable time and it 
just shows priorities. Somebody needs to pay full time and 
attention to get this done and all we can do, we can legislate 
until the cows come home, the Smith act 6 years ago, and they 
are using that as an excuse. We mandated in the Intelligence 
Reform Act certain things, and it's just very difficult. So we 
can hold hearings. We can hold our feet to the fire. We can 
beat them up. We can penalize them a little bit on the 
budgetary side.
    We had the State Department up here and the head of OMB 
didn't know this was a problem until they said we're not moving 
ahead with security clearances. There's just no coordination. 
It's got to be a priority. It just needs full time and 
attention and supervision.
    Mr. Wagoner, what are some of the new technologies 
available that allow the private sector to improve on the 
current investigative approach employed by OPM?
    Mr. Wagoner. Again, what's ironic is that they're not even 
necessarily new technologies, Mr. Chairman. These are 
technologies that have been out there, they're proven. The 
private industry uses them. Two key areas, one is trying to use 
digital signature and digital fingerprints. We think that would 
speed up the process. We also think that it would lead to a lot 
more accuracy. Additionally, related to that, we're going to 
have a huge tidal wave coming of additional investigations for 
HSPD-12; as Mr. Leonard said, additional investigations coming 
down for transportation workers. And I believe they are using 
digital fingerprints, digital signatures. So we would like that 
to be part of the pilot.
    Additionally, we think a lot of data collected with that 
shoe leather can be acquired and analyzed through commercial 
government data bases. And that is what I would like to do with 
the pilot, to do the math and see what is the accuracy. I mean 
the entire consumer credit, consumer insurance industry relies 
on the exact same kind of data to verify a person's identity, 
previous addresses, creditworthiness. We would like to see a 
pilot and do the math and see if we could be just as accurate 
with the security clearances.
    Chairman Tom Davis. Let me ask you both, and I don't want 
to get company specific because I don't want to put your 
company in a situation that somebody could somehow misconstrue 
that, so without naming names but in a generic basis, do you 
think companies are sometimes forced to settle for employees 
that are perhaps less qualified for a particular position than 
others who have been unable to obtain a clearance because of 
foreign preference and influence issues?
    I'm asking generically.
    Mr. Wagoner. May I answer that? In that situation the 
security clearance is the No. 1 priority.
    Chairman Tom Davis. So the end result would be that the 
person with the clearance, even if they have less 
qualifications, is the one that is going to be utilized?
    Mr. Wagoner. Certainly we would not hire a nonqualified 
person because that would be in conflict with the contractual 
requirements, but the security clearance would be the No. 1 
priority in that situation.
    Chairman Tom Davis. But if you want Alfonso Soriano in the 
outfield and he has a clearance, that's who you would rather 
have and you would put me in left field. And I only mention 
myself because I did have an RBI single in the congressional 
baseball game.
    Mr. Wagoner. What if Soriano is on second base though?
    Chairman Tom Davis. He still would be better than me. I can 
fill in the holes for a couple of innings if I got the 
clearance.
    Mr. Nagurny.
    Mr. Nagurny. I think indeed, yes, it would depend somewhat 
if we had some place for the person to work, if they could do 
productive work, billable work while the clearance was in 
process. Several of our largest sort of basic ordering 
agreement contracts, the people can go to work on that contract 
when they are cleared. Perhaps there are task orders that don't 
require a clearance, but generally yeah, the person with the 
clearance would be looked at more favorably than the person 
without.
    Chairman Tom Davis. When employees have left EDS because of 
the delays in getting a clearance, what happens to them? Where 
do they go? Are they simply heading to other companies to try 
the process all over again or do they just drop out of that 
sector of the labor market or do they just go where they can 
get a job that doesn't require but maybe suits their needs 
better?
    Mr. Nagurny. I think the largest number get out of the 
Federal sector, if you will. State and local government is 
another business area of EDS. But something no one has 
mentioned was the public trust position which also requires the 
investigations OPM conducts and also taxes the same resources 
at OPM. So few people not able to get a clearance will be 
eligible for a public trust approval for nonclassified IT work. 
So generally they are leaving the Federal sector.
    Chairman Tom Davis. In your testimony you mentioned a 
prescreening document that EDS has perspective security 
clearance applicants reviewed to prepare them for the process. 
You stated that this document is geared to the adjudicative 
standards that now are in the Hadley memorandum. Does EDS 
prepare clearance applicants using the revised adjudicative 
guidelines issued in December 2005?
    Mr. Nagurny. We're prohibited from--until we've actually 
made an offer to someone we can't review their personally 
sensitive information. What we can do with them is explain the 
process and the considerations the government looks at, the 
aggravating, the mitigating factors.
    Chairman Tom Davis. Let them know that if you give them an 
offer and they have something that could delay them it may not 
happen as quickly?
    Mr. Nagurny. And that they may be let go very quickly if 
they don't get the clearance.
    Chairman Tom Davis. OK. That's how it works.
    Mr. Zaid. Mr. Chairman, if I might add to this a little bit 
with respect to the inefficiency of the system and the cost 
effectiveness. In fact, I give recommendations or advise 
defense contractors on how to best put their employees or 
perspective employees through this system. Part of the problem 
is that with respect to foreign preference and foreign 
influence cases, from an anecdotal perspective at the very 
least, the majority of the potentially derogatory or 
disqualifying information comes not from the background 
investigation, not from the computer checks, nothing like that. 
It comes from the applicant themselves. It comes from either 
the filling out of the SF-86 where you say I am a dual citizen 
or I have a foreign passport or where you list your relatives 
or during the security interview process that may take place 
months later. So there needs to be a way in which to streamline 
some of the transfer, the initial transfer of information. The 
SF-86 is not detailed enough. There are terms that are very 
confusing that are misapplied or differently applied from 
agency to agency. And clearly many of the individuals filling 
out the SF-86 do not understand what that agency may wish.
    I had a foreign influence case with the CIA, an Iranian 
American, a lawyer whose actually family member had worked in 
intelligence services under the Shah when we had a good 
relationship obviously with that country. One would think given 
her language experience we would want her to be able to 
contribute to the U.S. national security interests. One, among 
several, issues that came up was she did not indicate that she 
had been married to an Iranian American? Why didn't she 
indicate that? Because she had had the marriage annulled. She 
was a lawyer. She was going, the marriage is annulled, there is 
no legal record that this marriage took place. It is a 
legitimate argument but the agencies don't look at it that way. 
The CIA said, no, you were married. I don't care if you had it 
legally annulled. You were. Now, that could have been an easy 
issue to resolve if the instructions were a little bit more 
clear.
    Chairman Tom Davis. I got you. Thank you all very much. It 
has been very, very helpful to us. We will continue to proceed, 
try to prod the executive branch. Mr. Zaid, we will take some 
of your recommendations and see if we might try to do something 
legislatively with them.
    Mr. Zaid. I will be happy to help in any way, sir.
    Chairman Tom Davis. Thank you very much. The hearing is 
adjourned.
    [Whereupon, at 11:35 a.m., the committee was adjourned.]
    [The prepared statements of Hon. Elijah E. Cummings and 
Hon. Jon C. Porter follow:]

  


                                 
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