[Senate Hearing 109-160]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 109-160
 
         ACCESS DELAYED: FIXING THE SECURITY CLEARANCE PROCESS

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

                                HEARING

                               before the

                  OVERSIGHT OF GOVERNMENT MANAGEMENT,
                 THE FEDERAL WORKFORCE AND THE DISTRICT
                        OF COLUMBIA SUBCOMMITTEE

                                 of the

                              COMMITTEE ON
               HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 28, 2005

                               __________

                       Printed for the use of the
        Committee on Homeland Security and Governmental Affairs


                    U.S. GOVERNMENT PRINTING OFFICE
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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                   SUSAN M. COLLINS, Maine, Chairman
TED STEVENS, Alaska                  JOSEPH I. LIEBERMAN, Connecticut
GEORGE V. VOINOVICH, Ohio            CARL LEVIN, Michigan
NORM COLEMAN, Minnesota              DANIEL K. AKAKA, Hawaii
TOM COBURN, Oklahoma                 THOMAS R. CARPER, Delaware
LINCOLN D. CHAFEE, Rhode Island      MARK DAYTON, Minnesota
ROBERT F. BENNETT, Utah              FRANK LAUTENBERG, New Jersey
PETE V. DOMENICI, New Mexico         MARK PRYOR, Arkansas
JOHN W. WARNER, Virginia

           Michael D. Bopp, Staff Director and Chief Counsel
      Joyce A. Rechtschaffen, Minority Staff Director and Counsel
                      Trina D. Tyrer, Chief Clerk


   OVERSIGHT OF GOVERNMENT MANAGEMENT, THE FEDERAL WORKFORCE AND THE 
                   DISTRICT OF COLUMBIA SUBCOMMITTEE

                  GEORGE V. VOINOVICH, Ohio, Chairman
TED STEVENS, Alaska                  DANIEL K. AKAKA, Hawaii
NORM COLEMAN, Minnesota              CARL LEVIN, Michigan
TOM COBURN, Oklahoma                 THOMAS R. CARPER, Delaware
LINCOLN D. CHAFEE, Rhode Island      MARK DAYTON, Minnesota
ROBERT F. BENNETT, Utah              FRANK LAUTENBERG, New Jersey
PETE V. DOMENICI, New Mexico         MARK PRYOR, Arkansas
JOHN W. WARNER, Virginia

                   Andrew Richardson, Staff Director
              Richard J. Kessler, Minority Staff Director
            Nanci E. Langley, Minority Deputy Staff Director
                       Tara E. Baird, Chief Clerk


                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Voinovich............................................     1
    Senator Akaka................................................     9
    Senator Carper...............................................    22
Prepared statement:
    Senator Lautenberg...........................................    27

                               WITNESSES
                         Tuesday, June 28, 2005

Derek B. Stewart, Director, Defense Capabilities and Management, 
  U.S. Government Accountability Office..........................     4
Kathy L. Dillaman, Deputy Associate Director for Human Resource 
  Products and Services, Center for Federal Investigative 
  Services, U.S. Office of Personnel Management..................     5
Heather Anderson, Director, Strategic Integration, Office of the 
  Deputy Under Secretary of Defense, Counterintelligence and 
  Security, and Acting Director, Defense Security Service, U.S. 
  Department of Defense..........................................     7

                     Alphabetical List of Witnesses

Anderson, Heather:
    Testimony....................................................     7
    Prepared statement...........................................    55
Dillaman, Kathy L.:
    Testimony....................................................     5
    Prepared statement...........................................    49
Stewart, Derek B.:
    Testimony....................................................     4
    Prepared statement...........................................    28

                                Appendix

Questions and Responses from:
    Mr. Stewart..................................................    64
    Ms. Dillaman.................................................    67
    Ms. Anderson.................................................    69


         ACCESS DELAYED: FIXING THE SECURITY CLEARANCE PROCESS

                              ----------                              


                         TUESDAY, JUNE 28, 2005

                                       U.S. Senate,
          Oversight of Government Management, the Federal  
       Workforce and the District of Columbia Subcommittee,
                            of the Committee on Homeland Security  
                                         and Governmental Affairs, 
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10:10 a.m., in 
room 562, Dirksen Senate Office Building, Hon. George V. 
Voinovich, Chairman of the Subcommittee, presiding.
    Present: Senators Voinovich, Akaka, and Carper.

            OPENING STATEMENT OF CHAIRMAN VOINOVICH

    Senator Voinovich. Good morning. I want to thank you all 
for coming, and I suspect that the Ranking Member of this 
Subcommittee will be coming in just a short while. We started a 
vote at 10 o'clock, so people are tied up with that.
    Today, the Subcommittee on Oversight of Government 
Management, the Federal Workforce and the District of Columbia 
continues its investigation into the Government Accountability 
Office's high-risk list of Federal programs that are 
susceptible to waste and mismanagement. Today's hearing is 
entitled, ``Access Delayed: Fixing the Security Clearance 
Process.'' We are going to explore the security clearance 
backlog and discuss what actions need to be taken to reduce it. 
We will also examine the transfer of investigative 
responsibilities from the Department of Defense (DOD) to the 
Office of Personnel Management (OPM), including the impact that 
the shift will have on the ability to investigate and 
adjudicate security clearances in a thorough and expeditious 
manner.
    In order to improve the workflow of any process, we must 
first understand the root causes of the problem. In the case of 
the security clearance backlog, there appear to be several 
barriers to a streamlined process, including (1) the sheer size 
of the backlog, which in this case we don't know; (2) an influx 
of new requests since September 11, 2001; (3) an inadequate 
number of investigator and adjudicator employees; and (4) the 
overall lack of a strategic plan for managing the process.
    In fact, according to GAO, the clearance process is so 
disjointed that DOD has not calculated the size of the backlog 
since 2000, meaning that we do not have an exact number of 
investigations pending. However, in a February 2004 report, GAO 
estimated that the DOD clearance backlog is roughly 270,000 
investigations and 90,000 adjudications.
    Unfortunately, the implications of a broken security 
clearance process send shockwaves throughout the Federal 
Government's national security workforce. The bottom line is 
that the security clearance process is a major national 
security and human capital challenge that needs to be resolved 
immediately. The cumbersome and lengthy process can stall the 
hiring of both Federal employees and contractors for classified 
positions, such as terrorism and intelligence analysts, which 
can adversely impact our national security.
    During the lengthy security clearance process, prospective 
government employees are often in a state of limbo because they 
are unable to start their new job until they receive proper 
clearances. I can think of nothing more frustrating for a 
bright, ambitious, and qualified individual who wants to serve 
our Nation, but is told by agencies, such as the FBI and CIA, 
they must sit idly for months on end because their security 
clearance is being slowly processed.
    This scenario is all too real for the private sector, as 
well, as GAO found that obtaining a clearance can take over one 
year. For example, in fiscal year 2003, GAO reported it was 
taking DOD an average of 375 days to process clearances for 
private sector contracting positions. Whether they are computer 
technology consultants, network engineers, or intelligence 
analysts, contractors play a vital role in securing our Nation. 
Therefore, it is imperative that we improve this process, 
because in today's job market, it is unrealistic to assume that 
the best and brightest applicants are going to wait over one 
year to receive a government clearance so they can begin their 
jobs.
    With all these factors, it is no surprise that the security 
clearance process has been designated as high risk by GAO. 
However, this is one area where I believe that we can make 
significant progress in the near future.
    A number of simultaneous actions are occurring to 
streamline the security clearance process. First, as outlined 
in the 2004 Defense authorization bill, DOD transferred its 
security clearance investigation workforce to OPM. With this 
event occurring on February 22, 2005, I am interested in the 
assessment from our witnesses regarding the transition, 
including the short- and long-term impact this will have on the 
entire security clearance investigation and adjudication 
process. I would also like to know if we have enough employees 
trained to process the growing security clearance demands of 
our post-September 11 Federal Government.
    Second, last year, I offered an amendment to the 
intelligence reform legislation in Committee to enhance and 
consolidate the Federal Government's security clearance 
process. My amendment, which was included in the final bill, 
directs the President to select a single Executive Branch 
department to develop and implement policies and procedures for 
security clearance investigations and adjudications.
    The law also requires the President to select a single 
Executive Branch agency to conduct security clearance 
investigations. Additionally, it requires reciprocity of 
security clearances in order to streamline the process of 
transferring employees from one agency to another, and that has 
always been a problem. Too often employees receive a security 
clearance from one agency only to find that another agency 
won't recognize it, so they have to start the entire process 
over again. I think that we need to understand that once you 
get a clearance for a certain level, like ``top secret,'' that 
the clearance should be transferrable from one agency to 
another without starting the process all over again.
    I understand that President Bush issued an Executive Order 
late yesterday that provides the necessary framework for 
implementing the Intelligence Reform Act. I cannot help but 
wonder if it is a coincidence that the Executive Order was 
issued on the eve of this hearing today.
    Under the Executive Order, OPM is the primary Federal 
agency responsible for investigating security clearance 
applications--congratulations, OPM--while the Office of 
Management and Budget is accountable for setting and 
implementing the government's security clearance policies. 
Although the Executive Order is not the focus of today's 
discussion, the timing is important, as I plan to hold another 
hearing to examine its implementation later this year.
    Senator Akaka and I share a passion for improving the 
performance of the high-risk areas. I look forward to working 
with the Administration and GAO to make sure that the security 
clearance process is removed from the list as expeditiously as 
possible.
    And I would like to make clear to everyone here today that 
I am going to be on this like a junkyard dog. Since this issue 
is on the high-risk list, I am going to make sure, as a Member 
of the U.S. Senate and the Chairman of this Subcommittee, that 
measurable performance improvements are made. We are going to 
get this off the high-risk list. Does everybody understand me?
    This Subcommittee will hold a hearing on the Executive 
Order in 3 months, but quarterly, I am going to be meeting with 
Ms. Dillaman, on this issue, and we are going to make 
improvements. If you are having any problems with personnel, 
with budget, or anything, I want to know about it, because this 
is very important. I am interested in human capital and making 
sure Federal agencies have the right people with the right 
skills and knowledge at the right place to get the job done. 
Unfortunately the security clearance process is hurting our 
government's ability to function properly, particularly at a 
time when we are at risk.
    Intelligence is very important, and it is just ridiculous 
that you have a backlog of 275,000 cases. It is just something 
that needs to be taken care of. It has gone on too long, and we 
are all going to work together and we are going to get it taken 
care of, OK?
    I would like to thank our witnesses for their participation 
this morning and I look forward to their testimony.
    Since Senator Akaka is not here, we will go forward with 
your testimony, and then when he comes or other Members come, 
we will get their opening statements. If you will rise and 
please raise your hand, it is a tradition of this Subcommittee 
to swear in witnesses.
    Do you swear the testimony you are about to give to this 
Subcommittee is the truth, the whole truth, and nothing but the 
truth, so help you, God?
    Mr. Stewart. I do.
    Ms. Dillaman. I do.
    Ms. Anderson. I do.
    Senator Voinovich. Let the record show that the witnesses 
answered in the affirmative.
    Our witnesses this morning include Derek Stewart, who is 
the Director of Military and Civilian Personnel Issues at the 
Government Accountability Office.
    Kathy Dillaman is the Deputy Associate Director of the 
Center for Investigative Services at the Office of Personnel 
Management. Ms. Dillaman, thank you for making the trip from 
Boyers, Pennsylvania, to be here today with us.
    Heather Anderson is the Director of the Strategic 
Integration at the Office of the Deputy Under Secretary of 
Defense, Counterintelligence and Security, and is also the 
Acting Director of the Defense Security Service.
    Again, I thank you for being here today, and Mr. Stewart, 
if you will begin the testimony.

      TESTIMONY OF DEREK B. STEWART,\1\ DIRECTOR, DEFENSE 
  CAPABILITIES AND MANAGEMENT, U.S. GOVERNMENT ACCOUNTABILITY 
                             OFFICE

    Mr. Stewart. Thank you, Mr. Chairman. We are pleased to be 
here today to discuss this program that we have spent over two 
decades reporting on various aspects of.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Stewart appears in the Apprendix 
on page 28.
---------------------------------------------------------------------------
    Senator Voinovich. Two decades?
    Mr. Stewart. Over two decades, sir. DOD has approximately 
two million active security clearances and is responsible for 
clearances to contractors in 22 other Federal departments and 
agencies. So for these and other reasons, it is imperative that 
there be an effective and efficient security clearance program. 
We view this as a matter of national security.
    Unfortunately, Mr. Chairman, after two decades of looking 
at this program, we concluded that not only was the program not 
effective and efficient, but this was a program in trouble. 
This led us to declare the program high risk in January of this 
year. Today, I would like to briefly touch on some of the major 
conditions we found that led to the high-risk designation and 
then offer our observations on steps being taken to address 
some of these conditions.
    There were four major program conditions that led to the 
high-risk designation. First, longstanding, persistent delays 
in completing clearance investigations. Second, no single 
performance standard for timeliness in completing 
investigations. Third, an undetermined backlog of overdue 
investigations. As you noted, Mr. Chairman, DOD has not 
estimated the size of its backlog since January 2000. And last, 
no effective method for estimating the program's total workload 
requirement, and this was especially so for the thousands of 
clearances needing reinvestigation.
    Shortly after we designated the program high risk in 
January of this year, DOD transferred its investigative 
function and personnel to OPM. However, the problems I just 
enumerated did not go away with the transfer to OPM.
    For example, DOD's inability to estimate the program's 
total workload is still a critical problem. However, I am 
pleased to report that DOD is taking a number of steps to 
improve the ability to forecast the number of military, 
civilian, and contractor positions requiring clearances and the 
level of clearance needed. While these are steps in the right 
direction, DOD has not set a target completion date for these 
efforts. Until DOD can accurately project its total workload, 
it will be difficult to determine with certainty the resources 
and staff needed to process investigations and adjudications in 
a timely, high-quality manner and ultimately eliminate the 
longstanding backlog.
    Another problem that did not go away with the transfer is 
the backlog of overdue investigations. Earlier this year, OPM 
reported a government-wide backlog of almost 186,000 
investigations, which included some DOD investigations. To 
address the backlog and improve timeliness in completing 
investigations, OPM reportedly has hired the full-time 
equivalent of 3,800 investigative staff. We believe that this 
is a positive step forward, but adding thousands of new staff 
could result in quality and timeliness concerns until the staff 
gains experience. This situation bears close scrutiny.
    Mr. Chairman, the one point I would like to emphasize in 
closing is that the transfer of this program's investigative 
functions to OPM was not a panacea that fixed all the problems. 
Much remains to be done to bring about lasting solutions to 
this high-risk area. Your hearing today will go far in focusing 
the kind of attention that is needed on this critical matter of 
national security.
    This concludes my prepared remarks. I will be happy to 
respond to questions. Thank you.
    Senator Voinovich. Thank you. Ms. Dillaman.

 TESTIMONY OF KATHY L. DILLAMAN,\1\ DEPUTY ASSOCIATE DIRECTOR 
 FOR HUMAN RESOURCE PRODUCTS AND SERVICES, CENTER FOR FEDERAL 
  INVESTIGATIVE SERVICES, U.S. OFFICE OF PERSONNEL MANAGEMENT

    Ms. Dillaman. Mr. Chairman, I do have a complete statement 
that I ask be made part of the record.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Dillaman appears in the Apprendix 
on page 49.
---------------------------------------------------------------------------
    Senator Voinovich. Without objection.
    Ms. Dillaman. Mr. Chairman, Senator Akaka, it is my 
privilege to testify today on behalf of the Office of Personnel 
Management concerning this critical issue and to update you on 
OPM's efforts to expedite and consolidate elements of the 
personnel security investigations program.
    There are four steps in the clearance process. First, 
agencies determine what level of clearance or access their 
employees, applicants, or contractors need. They then confirm 
if the person has an active clearance or if a background 
investigation is required. To support this, in 2003, OPM 
implemented the Clearance Verification System, which provides 
online access to current clearance and investigations 
information. This system, linked to the Department of Defense 
Joint Personnel Adjudication System, contains the clearance 
records of over 90 percent of all cleared individuals.
    Under the terms of the Intelligence Reform and Terrorism 
Prevention Act of 2004, OPM is required to establish, operate, 
and maintain an integrated, secure, consolidated database of 
security clearances with information on granting, denial, and 
revocation of clearance actions on military, civilian, or 
government contractor personnel. OPM's CVS system will serve as 
the foundation for this and has ample capacity to expand the 
content of the information maintained and provide access for 
authorized users. We are now determining what additional 
information should be recorded in this system and the most 
effective ways for keeping this information up to date while 
ensuring the privacy and security of the information 
maintained.
    When a background investigation is required, the subject 
and the agency provide the data and forms necessary to conduct 
the investigation. To support this requirement, in 2004, OPM 
implemented eQIP, a web-based data collection system used to 
obtain a subject's background information. Today, 27 agencies 
use this online system, and we are now working with the 
Department of Defense to implement its use for all military, 
civilian, and contractor personnel.
    The second step of the process is conducting the background 
investigation itself, and that is ours. This year, we expect to 
receive over 550,000 requests for initial or reinvestigations 
to support security clearance determinations. Approximately 
80,000 will be investigations for initial top secret 
clearances. We also expect to conduct almost 900,000 
investigations to determine the trustworthiness or suitability 
of individuals in public trust or nonsensitive positions or for 
regulatory purposes. Beginning next fiscal year, we are also 
planning for a new workload with the implementation of the 
Personal Identity Verification Project under Homeland Security 
Presidential Directive 12.
    OPM is working to ensure that adequate staff is available 
to deal with our high-volume workloads. Since 1999, the overall 
demand has risen sharply, reaching unprecedented levels in the 
aftermath of September 11. OPM and DOD both face the challenge 
of dramatically increasing staff levels to keep pace with the 
demand.
    In 2001, the decision to consolidate OPM's and DOD's 
investigations programs was made, and I am pleased to report 
that the DOD personnel security investigations program workload 
and staff were successfully transferred to OPM on February 20. 
At that time, 1,578 personnel and over 146,000 investigations 
transferred from DOD to OPM.
    OPM is also working to increase the size of our contractor 
base. We estimate that a total of 8,000 employees and 
contractors combined are needed to handle peak workloads. Last 
year, we awarded contracts to five new companies, and today, 
the six companies under contract have over 6,000 staff that 
supplements our Federal staff. Over the next 6 months, we will 
see significant performance improvement as the staff becomes 
fully productive and the number of contractors continues to 
grow.
    Senator Voinovich. You said 8,000 people, and then you 
mentioned 6,000 others.
    Ms. Dillaman. Eight-thousand total, sir. Today, we have 
6,000 contractors, 1,578 transferred DSS staff, and the core 
Federal staff we had to begin with. We are now over 8,000.
    Senator Voinovich. So it is 8,000 altogether, including the 
private contractors?
    Ms. Dillaman. Yes, sir.
    Senator Voinovich. Thank you.
    Ms. Dillaman. We are also focusing on delays in obtaining 
information from national, State, and local agencies. Many of 
these were unprepared for the substantial increases in demands 
for their services, resulting in substantial backlogs. We are 
working with them closely to identify the problem areas and to 
streamline or automate the processes whenever possible.
    We are also continuing to look at the use of information 
technology in other areas to improve the overall content or 
timely processing of investigations or strengthen the 
protection of the sensitive information maintained in OPM's 
record systems.
    The third step of the clearance process is the agency 
adjudication of the completed investigation. To minimize 
handling, OPM is converting completed investigations to image 
files, which will allow for electronic transfer.
    When the adjudication action is complete, the fourth and 
final step of the process is recording the clearance action in 
either OPM's or DOD's record system. This provides OPM a 
mechanism for monitoring agency adjudication timeliness.
    Through these efforts, we are beginning to see progress in 
restoring acceptable processing time. By October 1, 2005, our 
goal is to average 35 calendar days or less on approximately 10 
percent of the initial investigations that are targeted for 
priority processing. For all others, our goal is to complete 80 
percent or more within 120 days. We are confident that we will 
be able to meet these goals, barring any substantial or 
unexpected changes in our workloads.
    Mr. Chairman, that concludes my remarks and I would be 
happy to answer any questions you have.
    Senator Voinovich. Thank you very much. Ms. Anderson.

     TESTIMONY OF HEATHER ANDERSON,\1\ DIRECTOR, STRATEGIC 
 INTEGRATION, OFFICE OF THE DEPUTY UNDER SECRETARY OF DEFENSE, 
COUNTERINTELLIGENCE AND SECURITY, AND ACTING DIRECTOR, DEFENSE 
          SECURITY SERVICE, U.S. DEPARTMENT OF DEFENSE

    Ms. Anderson. Chairman Voinovich and Senator Akaka, Members 
of the Subcommittee, I am Heather Anderson representing the 
Department of Defense. I am pleased to testify today and update 
you on the personnel security clearance process.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Anderson appears in the Apprendix 
on page 55.
---------------------------------------------------------------------------
    DOD requests personnel security investigations to ensure 
that only trustworthy and reliable individuals are granted 
access to classified information or placed in sensitive 
positions. As prescribed by Executive Order 12968, the 
investigative process includes an initial investigation that 
provides assurance a person has not demonstrated behavior that 
could be of security concern, to be followed by a 
reinvestigation that is conducted at specified time intervals 
to determine if an individual's clearance should be continued.
    There are approximately 3.2 million cleared individuals 
within the Federal Government, of which almost 2.5 million, or 
80 percent, are cleared DOD affiliates--civilians, military, or 
industry personnel, which would include industry individuals 
who are processed for clearances by DOD on behalf of 22 other 
Federal agencies and under the auspices of the National 
Industrial Security Program.
    DOD has been partnering with the Office of Personnel 
Management for the past 5 years, obtaining their assistance in 
the conduct of investigations and collaborating on initiatives 
to improve and modernize the investigations process. As Kathy 
mentioned, on February 20 of this year, DOD completed the 
transfer of the PSI function to OPM, an initiative that began 
approximately 2.5 years ago and which has effectively 
consolidated management and personnel security investigative 
resources within a single agency of the Federal Government.
    Prior to the transfer of function, Defense Security Service 
succeeded in closing nearly all of their pending investigative 
work received on their legacy database.
    Our success in completing these investigations was 
accomplished in part by redesigning the PSI organization to 
reduce infrastructure costs and realigning resources to improve 
productivity. By training the entire workforce on OPM's case 
management system prior to the transfer, DOD investigative 
personnel were able to begin using the system and obtain the 
benefit of its operating efficiencies for 7 months before the 
transfer. Furthermore, the training enabled a seamless transfer 
of function with minimum production downtime.
    For the past several years, DOD has also planned for and 
has championed a number of initiatives to improve the end-to-
end PSI process and eliminate the systemic weaknesses 
identified in past reports. Quite simply, our strategy is to 
streamline the process through automation initiatives while 
simultaneously transforming the PSI process into a risk-managed 
and proactive program with priority given to the most critical 
investigations.
    Some of these initiatives are: DOD pioneered the two-phased 
approach to the top secret reinvestigations, which maximizes 
efficiency by using field investigative resources only when 
needed. This approach is now the national standard.
    A second is the Automated Continuous Evaluation System, 
known as ACES, which will identify information of potential 
security concern about cleared personnel on a continuous basis 
using government and commercial data sources. Our beta testing 
results and lessons learned are being incorporated into an 
initial operating capability of ACES to be in place later this 
year.
    A third is that DOD, as mentioned earlier, is in the 
process of transitioning to eQIP. As an adjunct to that 
implementation, DOD will establish various locations throughout 
the United States where requestors can electronically submit 
fingerprint cards and release forms that are required as part 
of the eQIP request package.
    Fourth, DOD and OPM will soon implement the electronic 
report for adjudication that will provide for electronic 
dissemination of investigative results from OPM to the 
appropriate DOD adjudicative entity.
    And fifth, the Joint Personnel Adjudication System allows 
DOD security managers, including those in industry, to 
immediately grant access upon verification of eligibility and 
perform certain other clearance actions. This system has been 
connected to OPM's Security Suitability Investigations Index 
since December 2002. This connection enables DOD and other 
Federal Government offices to share information.
    Through these initiatives, we believe that the prolonged 
processing times and backlogs of prior years will be 
eliminated. We are confident that OPM can achieve these initial 
goals, in part from the additional investigative capacity OPM 
has brought online and through process improvements already 
underway.
    The DOD's central adjudication facilities are also well 
positioned for the timely adjudication of all incoming 
investigations expected from OPM. As noted in the GAO report, 
DOD has taken positive steps to hire and train additional 
adjudicative staff. Our goal is to complete 90 percent of 
adjudications within 30 days, not including the time needed for 
due process.
    DOD will continue to work with OPM and the rest of the 
community to identify additional process improvements and to 
ensure that processing of clearances meets or exceeds the 
requirements mandated by the intelligence Reform and Terrorism 
Prevention Act of 2004.
    Thank you for the opportunity to appear before your 
Subcommittee today. I am happy to answer your questions.
    Senator Voinovich. Thank you, Ms. Anderson.
    Senator Akaka, I understand that you have another hearing 
at 11 o'clock. I think before we start asking the questions, I 
would appreciate your opening statement, if you care to make 
one.

               OPENING STATEMENT OF SENATOR AKAKA

    Senator Akaka. Yes. Thank you very much, Mr. Chairman. I am 
pleased to join you today, Mr. Chairman, and I am hopeful that 
our hearing will bring into focus the problems facing the 
issuance of security clearances. I look forward to working with 
all of you to get security clearances off the high-risk list as 
soon as possible.
    Mr. Chairman, our national security strategy depends more 
than ever on ensuring that security clearances for military 
personnel, Federal workers, and government contractors are 
investigated and adjudicated without unnecessary delays.
    And Mr. Chairman, as you mentioned, I regret that I will 
have to leave to serve as the Ranking Member of an important 
Veterans' Affairs hearing called last Friday after the 
Department of Veterans' Affairs acknowledged $1 billion of 
shortfall for VA health care.
    Again, I want to thank our witnesses for being here today 
and to thank you, Mr. Chairman, for holding this morning's 
hearing. I ask that my full statement be included in the 
record.
    Senator Voinovich. Without objection.
    Senator Akaka. Thank you, Mr. Chairman.
    [The prepared statement of Senator Akaka follows:]

                  PREPARED STATEMENT OF SENATOR AKAKA

    Thank you, Chairman Voinovich, I am pleased to join you today for 
our third hearing in the 109th Congress concerning programs on the 
GAO's high-risk list. This morning we will review personnel security 
clearances which was added to the list 6 months ago. We agree that we 
cannot allow it to stay on the list long, and I am pleased to work with 
you, Chairman Voinovich, to get security clearances off the list as 
soon as possible.
    As Ranking Member of this Subcommittee, as well as the Armed 
Services Readiness Subcommittee, I understand the many challenges 
facing the Department of Defense (DOD). Between these two 
subcommittees, we are providing much needed additional oversight of 
DOD.
    In November 2003, Congress authorized the Secretary of Defense to 
transfer the DOD personnel security investigative function from DOD's 
Defense Security Service (DSS) to the Office of Personnel Management 
(OPM).
    This decision was prompted by long-standing problems at DSS in 
conducting and adjudicating clearances, coupled with a dramatic 
increase of employees needing clearances after September 11.
    After some delay, approximately 1,600 DSS employees, including 
field investigators, support staff, and first-line supervisors were 
transferred to OPM's Center for Federal Investigative Services (CFIS) 
in February 2005. OPM field investigators, along with OPM's contract 
investigative workforce, are now responsible for nearly all personnel 
security investigations for DOD military, civilian, and industry 
personnel.
    Today, we will examine the impact this transfer has had on DOD's 
long-standing backlog and whether the transfer to OPM has had the 
expected result.
    This hearing is important because of its impact on national 
security. We understand that our national security strategy depends on 
making sure skilled job applicants do not wait months or even years for 
security clearances. However, it is not only Federal applicants who 
face this problem; it impacts the defense industry as well. For 
contractors, it becomes a difficult business decision because well-
qualified job applicants are quickly lost to a competitor.
    Once hired, the employee becomes just an overhead expense until the 
clearance is granted. Small businesses, which are vital to the U.S. 
economy, are especially hard hit by inefficiencies in this program.
    There are more immediate national security concerns relating to 
personnel security clearances. To allow needed employees to carry out 
their jobs, temporary or interim clearances maybe granted pending the 
outcome of the investigation and adjudication. Failure to properly 
manage the interim clearance process, however, can put classified 
information at risk. Also, security clearances must be periodically 
updated through reinvestigations. In 2000, GAO found that DOD had over 
500,000 overdue reinvestigations. That was one in five of all security 
clearances at DOD, putting classified information at serious risk.
    As we examine the transfer of functions from DSS to OPM, I am also 
interested in hearing about improvements in the transparency of the 
clearance process. We have heard complaints from industry 
representatives that they are still required to work through DSS, even 
though DSS is no longer in a position to provide assistance.
    I look forward to the testimony of our witnesses, and Mr. Chairman, 
I look forward to continuing our work. Thank you.

    Senator Akaka. I do have a few questions, Mr. Chairman.
    Ms. Dillaman, the Federal Government faces a critical 
shortage of foreign linguists. One of the best ways to improve 
foreign language proficiency is through immersion programs and 
spending time abroad. However, spending time abroad frequently 
results in delays in the clearance process as foreign 
activities must be verified by investigators.
    In the past, DOD's military services have conducted most of 
the overseas leads for DSS. However, DOD terminated this 
mission following the transfer of investigative function from 
DOD to OPM. My question to you is, what is OPM doing to 
facilitate the security clearance process for linguists and 
others who have spent time overseas?
    Ms. Dillaman. Senator, obtaining international coverage has 
plagued this process for decades. Until the point of transfer, 
OPM relied on both the State Department and the Department of 
Defense network of resources to obtain the required overseas 
coverage. Prior to transfer, DOD was in the process of 
converting this to have their investigative resources obtain 
the required international coverage and are now working with 
OPM to facilitate sending OPM Federal agents abroad. We expect 
to begin deployment of our own agents internationally in August 
of this year.
    Senator Akaka. Thank you. Mr. Stewart, much of the 
discussion has focused on the number of quantitative personnel 
security investigations that OPM is able to conduct. What can 
OPM do to improve the quality of these investigations?
    Mr. Stewart. We have a number of concerns about the quality 
of OPM investigations. One of the major concerns is the number 
of new investigators that have been added. According to our 
calculation, when we completed our work and issued our report 
in February of 2004, DOD and OPM combined had about 4,200 
investigators. You have heard today that OPM has 8,000 or more 
investigators. That is the addition of several thousand new 
investigators.
    We would like, and we think it is critical, that there be 
uniformity in training, that all of the investigators are 
trained on the same standards with the same instructions to 
make sure that the investigations are carried out in a high-
quality manner.
    The other issue in terms of quality is that before the 
program was transferred, OPM handled some of DOD's business. 
For example, in fiscal year 2002, OPM closed about 280,000 DOD 
cases, but over 28,000 of those cases were closed pending 
cases. That is, all of the information was not included in the 
investigation. When it was turned over to the DOD adjudicators. 
That is not a quality investigation, and 28,000 closed pending 
cases in 1 year seems to us to be a fairly large number. So 
that is a quality issue that I think DOD and OPM needs to get a 
handle on.
    Senator Akaka. Ms. Dillaman, would you care to respond to 
that?
    Ms. Dillaman. Yes, sir. First, on the training issue, we 
have developed a very robust training program for both our 
Federal and our contractor resources. We have succeeded in 
developing one standard handbook that is used by all resources, 
contractor and Federal, and our reports of investigation are 
all in one common reporting format, making it virtually 
invisible to the adjudicator who produced the investigation. So 
I think we are well on our way to meeting the training 
requirements that Mr. Stewart spelled out.
    As far as the closed pending process, it is absolutely true 
that in conducting the investigation, there are literally 
dozens of different data points or sources that you are 
contacting and collecting that make up a complete 
investigation. OPM closes an investigation pending, and that is 
a term of art for investigations, when a third-party record 
source is not available in a timely manner. That means if I 
can't lay my hands on a 30-year-old defense file quickly, but I 
have substantially completed the investigation otherwise, I 
will advance that information to the adjudicating agency and 
allow them to decide whether or not there is substantial 
information that would support a clearance action or whether 
the outstanding piece would pose a risk and should be waited 
for. It is an advance process only. The investigation is 
completed and sent in its entirety to the adjudicating office.
    Senator Akaka. Thank you. Mr. Chairman, I want to thank you 
again for holding this hearing, and focusing attention to this 
process. Of course, all of you know that the Chairman and this 
Subcommittee is really looking to resolving this seemingly 
large problem, and I want to commend the Chairman for doing 
this. We will certainly do all we can to try to help resolve 
this. I thank you for your responses. Mr. Chairman, thank you 
very much for allowing me to ask questions.
    Senator Voinovich. Thank you, Senator Akaka.
    Mr. Stewart, in the mid-1990's, OPM created an Employee 
Stock Ownership Program for its security investigation 
workforce. This action moved Federal employees to a privately-
owned company known as U.S. Investigative Services. For almost 
10 years now, OPM did not have Federal employees conducting 
security clearance investigations. With the transfer of the DOD 
employees to OPM, the agency has a hybrid of Federal 
individuals and also the private sector. Do you think this is 
an appropriate blend of employees?
    Mr. Stewart. We haven't really assessed that situation, Mr. 
Chairman. It does give us pause because the contractor 
employees, we understand, may not be working in the same 
fashion as the former DOD employees. The process may be a 
little bit different. With training, though, we think that 
everybody can be brought up to the same place. But we haven't 
really assessed that situation to determine whether there are 
any tangible problems with that.
    Senator Voinovich. Well, you have got one group working for 
the OPM, the former DOD employees, and then you have the 
private contractors, five or six of them. I really would be 
interested in knowing what GAO thinks about this mixture of 
employees.
    Ms. Dillaman, how do you decide which group gets assigned 
certain cases?
    Ms. Dillaman. Mr. Chairman, I really believe this is an 
ideal configuration, having a backbone of Federal agents 
nationwide that are supported by a broad base of contractors. I 
have four contractors to every Federal agent, approximately. 
That allows the Federal agents to facilitate access for the 
contractors to sources, because it is quite true that Federal 
agents sometimes have easier access to State and local law 
enforcement systems and other records systems and other 
sources.
    In addition, I believe there is some work that would be 
better conducted by the Federal resources, such as clearing the 
contractors themselves.
    Today, with the transfer, the Federal resources are still 
devoted to DOD's highest-priority cases. Beginning in October, 
however, we are going to reconfigure this and redivide what 
work the Federal agents do, moving the clearance of contractors 
to the Federal workforce as well as troubleshooting all the 
contract management issues for the contractors that are placed 
throughout the country to the Federal side and giving the more 
routine work to the contractors to complete.
    Senator Voinovich. Ms. Anderson, since the DOD sent 
employees over to OPM, please provide your assessment on the 
transfer.
    Ms. Anderson. I know Kathy and I both recall the town halls 
that we did a number of years ago when we first initiated this 
whole process, and in speaking with the Federal investigators, 
they recognized that the Department of Homeland Security, and 
other Federal agencies had the same PSI requirements as DOD and 
they really take it as a national security mission. So I 
understand through the grapevine that they are welcoming the 
new challenges.
    Senator Voinovich. Ms. Dillaman.
    Ms. Dillaman. I would agree. I just completed 5 weeks of 
training in the field with all of our new staff, our 
transferred staff, and I believe they are a highly motivated, 
energized workforce and that they are quite comfortable with 
the new role they are going to play.
    Senator Voinovich. Since September 11, have jobs that did 
not need a clearance been added to the clearance list?
    Ms. Dillaman. Yes, sir, they have. The number of clearance 
investigations has increased substantially since September 11.
    Senator Voinovich. Has anyone reviewed the increases in 
security clearances to determine whether they are really 
necessary? In other words, after September 11, one of the 
things that is troubling to me is that we have really changed 
the way we do things. We are almost going to the extreme to 
accomplish certain tasks. At the same time, we are adding 
enormous sums of money to cover the costs of the added 
workload.
    Sometimes I think that Osama Bin Laden has to be the 
happiest person in the world. Because of September 11, he has 
been responsible for enormous change in the United States of 
America and, frankly, a very large expenditure of funds being 
expended because of the fear of terrorist activities.
    Have you examined whether certain clearances are really 
necessary?
    Ms. Dillaman. Sir, OPM isn't in a position to challenge an 
agency's request when they ask for an investigation to support 
a clearance, but we do maintain data, specific data by agency, 
on those types of trends that can be used to monitor shifts 
such as what you just described.
    Mr. Stewart. Mr. Chairman, we looked at this issue when we 
were doing our work for the February 2004 report. In addition 
to the increase in the number of requests for clearances, we 
also noticed that there was an increase in the level of 
clearance.
    For example, in 1995 for contractor personnel, about 17 
percent of all requests were for top secret. In 2003, it was 27 
percent. So we have seen not only----
    Senator Voinovich. Repeat that again.
    Mr. Stewart. In 1995, for contractor personnel, 17 percent 
of the requests for clearances for contractor personnel was for 
the top secret level clearance. In 2003, a couple of years 
after September 11, that figure was 27 percent. It requires a 
lot more resources to investigate somebody for a top secret 
than for a ``secret'' or a ``confidential.'' So we have noticed 
that trend.
    Mr. Chairman, this is why it is so important for DOD to get 
a handle on exactly what its workload requirements are, who 
needs a clearance and at what level they need the clearance. 
DOD has undertaken this effort, but our concern is that there 
is no target completion date for this. We maintain that until 
DOD knows how many service members, how many civilian employees 
of their 700,000 Federal civilian employees, and how many 
contractor personnel actually needs a clearance, what positions 
need a clearance, at what level the clearance is needed, there 
is no way that DOD can have an efficient and an effective 
security clearance process.
    Senator Voinovich. Is the agency then the one that deter-
mines----
    Mr. Stewart. Yes, sir.
    Senator Voinovich [continuing]. Who needs a security clear-
ance----
    Mr. Stewart. Yes, sir.
    Senator Voinovich [continuing]. And at what level of 
clearance that should be given. Now, Ms. Anderson, you have 
heard what Mr. Stewart has to say. What is the Department of 
Defense doing to look at those that need a clearance and the 
level of clearance? It would be interesting for you to go back 
and look at the 17 percent number that he is talking about and 
how it is up to----
    Ms. Anderson. We have. We actually helped provide those 
numbers.
    Senator Voinovich. Well, the question is, are the 
additional clearances really needed?
    Ms. Anderson. If I might start with, we really need to make 
a distinction between the need for an investigation and the 
need for a security clearance. We do an increasing proportion 
of our investigations for access to IT systems that require a 
vetting process. We actually think we should know who the 
people who are administering our networks are. So there is a 
distinction between the need for access to classified 
information and the need for an investigation.
    We have a DOD regulation that clearly specifies who needs 
an investigation for a clearance and who needs an investigation 
for a trustworthiness determination. So that mixes the numbers 
a little bit.
    Senator Voinovich. So the point is that there are some 
people that you want to investigate, but not necessarily for a 
level of security clearance, is that right? Just generally, you 
would like to have an investigation about the background----
    Ms. Anderson. A trustworthiness investigation for positions 
of trust.
    Senator Voinovich. OK. So that is one level----
    Ms. Anderson. That is one level of the distinction here.
    Senator Voinovich. How do you coordinate your requirements 
with Ms. Dillaman's team at OPM?
    Ms. Anderson. We have a tendency to harmonize the types of 
investigations into the products Ms. Dillaman's organization 
serves. So she has a number of categories of investigations of 
increasing investment and we use that scale and those defined 
investigation types for what we request. We will request a 
single-scope background investigation for somebody who needs an 
initial top secret clearance. We may also request that same 
type of investigation for a system administrator of a mission-
critical network. They don't need access to the classified 
information necessarily, but they will have the same scope of 
background investigations.
    We have tried to harmonize the system in that way. Then it 
actually is very useful for us, because if that system 
administrator actually needs access to classified later down 
the road, we can use that same investigation. So to the 
greatest extent possible, we have harmonized the two standards 
into one.
    But getting back to your original question about the change 
in mix, it is very interesting to note that the Department of 
Defense did have a significant increase over the last 10 years, 
but to some degree, we are seeing it stabilize in the last 3 to 
5 years. So we don't think that there is an ever-increasing 
number of investigations that will be required. We are working 
very hard with the services and agencies to absolutely scrub 
their requirements and make sure that we are consistent across 
the Department.
    We have also provided fairly decent projections to Ms. 
Dillaman that allows her to do adequate planning. I think that 
there was a structural shift post-September 11 that everyone 
has talked about in terms of how we use people and who needs to 
be vetted, and I think that we are seeing that structural shift 
and we are somewhat hopeful that we will see it stabilize.
    Senator Voinovich. So the Department of Defense is 
cognizant of the problem. Has there been any recent review of 
who should get these investigations and at what level?
    Ms. Anderson. Yes. We work with the services and agencies 
to actually have them review their programs. The Army did a 
very extensive and very well done scrub most recently. The 
services have been continuously fine-tuning it.
    Now, with the change in mission requirements, we have a 
tendency when we call up Reservists and National Guard members 
that we have to make sure that their investigations are 
current, as well. And so the world environment being what it is 
today, I think that the number of clearances that have been 
requested and the number of investigations that have been 
requested is consistent with the mission requirements.
    Senator Voinovich. Now, Ms. Dillaman, I suspect that you 
conduct security clearances for the Department of Homeland 
Security? How many Federal agencies do you conduct security 
clearances for?
    Ms. Dillaman. For security clearances, sir, over 50, but in 
total, we deal with over 100 Federal agencies. There are 
several thousand offices that request investigations from OPM 
for either national security purposes, public trust, 
nonsensitive or regulatory purposes.
    Senator Voinovich. So if OMB, under the Presidential 
Executive Order, is in charge of policy, they should look at 
this from a management and budget perspective and examine to 
ascertain whether those agencies do, indeed, need the 
clearances for their employees and contractors.
    Ms. Dillaman. Yes, sir.
    Senator Voinovich. Let me start with that. That kind of 
defines the customer base----
    Ms. Dillaman. Yes, sir, and as I stated before, we have 
solid data on each and every one of those agencies, including 
trends for the past 15 years of submissions.
    Senator Voinovich. OK. Mr. Stewart, could you comment on 
this testimony? How does it relate to what you are saying, how 
can the DOD and OPM match their budget and workload 
requirements in order to get the job done. Can you comment on 
that?
    Mr. Stewart. DOD and OPM need to know the number and level 
of required clearances in order to efficiently determine the 
staffing, the resources, and the budgets. In order for OPM to 
plan properly, it has to know the workload coming from DOD.
    Senator Voinovich. And you are saying to me today that from 
your perspective, we don't know what the workload is coming 
from DOD?
    Mr. Stewart. Exactly, Mr. Chairman. I am saying that the 
DOD has an initiative underway to determine which military, 
civilian, and contractor positions need clearances and at what 
level. But I am also telling you, DOD is not done with that 
initiative. There is no target completion date set for that, 
and until that is done, DOD is not going to have an efficient 
and effective program.
    Let me just give you an example. DOD started contracting 
with OPM to handle some of their cases in 1999. In 2001, DOD 
overestimated the number of cases by 150,000 investigations. 
They were off by 150,000 investigations. In 2002, they 
underestimated the number of investigations by 135,000--not 
10,000, not 50,000, not 80,000, 135,000 underestimated. In 
2003, DOD underestimated its investigations workload by almost 
90,000 investigations.
    If you are missing your target by 100,000 investigations, 
that wreaks havoc on the budgets and numbers of staff you need 
to carry out the work. There is no way you can plan for that.
    Now, there is a second piece to this, Mr. Chairman, that we 
are also concerned about. It is reinvestigations. These are 
people who already have clearances and who come up periodically 
for reinvestigation. For top secret clearances, it is every 5 
years. For secret clearances, it is every 10 years. DOD in the 
past has not had a real good handle on what its reinvestigation 
workload is. That is, if they are notified that an individual 
needs a reinvestigation, they have that piece of information. 
The problem occurs when DOD isn't notified. It is when an 
organization doesn't submit a request on time that DOD doesn't 
know whether the individuals need a reinvestigation or not.
    DOD estimated in 2000 that there were approximately 500,000 
overdue reinvestigations that had not been submitted to DOD for 
reinvestigation. That is a huge workload. And I am here to tell 
you today that I don't think the Department has a good handle 
on that part of their workload, which OPM would investigate.
    So if I am OPM, I would be scared to death of this program, 
to be perfectly honest with you. I don't know how OPM can be 
comfortable with estimates in workload requirements coming from 
DOD given what we know about DOD's ability to estimate its 
workload requirements. They have missed by 100,000 in 2000, 
150,000 in 2001, 135,000 in 2002, 100,000 in 2003.
    But there is an initiative to try to get a better handle on 
that. I don't know what is happening on the reinvestigations 
piece. There is a system, the Joint Personnel Adjudication 
System, that should give them a better handle on the 
reinvestigation piece. I think it's close to being fully 
implemented. This is not a good picture at this point, sir.
    Senator Voinovich. The lion's share of the requests for 
these security clearances come from the Department of Defense? 
What is the percentage?
    Ms. Dillaman. Eighty percent or better.
    Senator Voinovich. Eighty percent. So the other 20 percent 
is from other agencies. So the Department of Defense creates 
the most work. I would like to have the ranking of the 
percentages. It seems to me that the OMB folks ought to know 
that, also, to begin to get into that issue.
    What is your response to this, Ms. Anderson? It sounds to 
me like things aren't going very well at DOD.
    Ms. Anderson. Sir, you will notice that GAO has not been 
out to visit us quite recently. The numbers that are quoted are 
from 2000 through 2003. As I cited in my testimony, we have 
been working very hard for the last 5 years and we have a 
number of initiative that are beginning to pay off that we 
started over 2 years ago.
    Specifically, let us start with the issue about backlog. 
There is a lot of confusion about the term backlog. Ms. 
Dillaman and I talk about work in process. Backlog seems to 
have varying definitions. There are 329,000 DOD cases in 
process today. Even when the investigations are run in 90 days, 
we will still have over 150,000 cases in process on any day.
    Going back to the conversation about how we could miss our 
estimate by 100,000, and I must say I am not familiar with 
those particular deltas, but in fiscal year 2001, the 
Department of Defense submitted 916,598 cases. We might have 
been off by 10 percent. That would be the better part of 
100,000 cases. We might have been off by 15 percent. A lot of 
the caseload management issues really focused around the 
difference between the need, the requirement, and the ability 
to fulfill that requirement.
    And speaking to Mr. Stewart's comment about why we don't 
have a close date for our improvements to validation of the 
requirements and projections, we will never have a close date. 
You can never be better enough at this to really make it 
perfect. We know that what we have today seems to be working 
for Ms. Dillaman. She has the benefit of all the information 
that gets submitted to her and we keep her up to date on policy 
changes and on trends. We talk constantly about where the 
numbers are.
    If we are going to have a significant change in policy that 
will affect her workload, we let her know and we work out 
estimates. But there are a number of things you cannot predict.
    Senator Voinovich. Over or underestimating the workload by 
100,000 is a lot of clearances.
    Ms. Anderson. Well, given it is 100,000 out of 900,000, at 
least it puts it in context. I am not saying it is perfect. But 
this year, we have actually been running relatively close to 
our projections. It is also, with regard to predicting of 
periodic reinvestigations, it is somewhat problematic to 
predict it out much more than 12 or 15 months.
    Senator Voinovich. Do you have a report on this that I can 
see? We are going to get into dotting the ``i''s and crossing 
the ``t''s on this, OK?
    Ms. Dillaman. Looking forward to it, sir.
    Senator Voinovich. I am going to look at this like guys who 
were working for me when I was governor, OK? [Laughter.]
    Ms. Dillaman. Yes, sir.
    Senator Voinovich. And we have to get OMB involved in this. 
I am going to contact Clay Johnson and Josh Bolten, because 
they have to pay attention to this issue. If they are going to 
set the policy, they ought to have a few people that really 
know this issue backwards and forwards. So I will be sending a 
letter off to OMB and find out what they are doing. I will also 
have a follow-up hearing this fall, to make sure they are 
prepared and are aware of what responsibility they really have 
in regard to this whole area.
    I think you need to have some good metrics, too. It is 
important that we are all operating under the same data points 
because the only way we can really make progress is to 
understand what these numbers mean.
    Mr. Stewart, I have one question about the Intelligence 
Reform and Terrorism Prevention Act of 2004. The law requires 
80 percent of the investigations on security clearance 
applications be completed within 90 days by December 17, 2006. 
That is the end of next year. It also requires 80 percent of 
the adjudications to be completed within 30 days. Given all 
that you know about the backlog and time frames to investigate 
and adjudicate security clearances, do you think that DOD and 
OPM can meet these timelines?
    Mr. Stewart. Based on what I----
    Senator Voinovich. Is this realistic? Sometimes Congress 
sets deadlines and has no understanding in so many instances 
that they are not realistic. For example, we said March 15 was 
when the President was supposed to sign the Executive Order on 
security clearances. Well, what is today, June 28? It was 
finished June 27, 3 months late. We have to be realistic about 
what we ask agencies, because if we are not, then they really 
say Congress doesn't really understand. What do you think?
    Mr. Stewart. Well, based on what I understand about OPM's 
current time standards, it is 120 days for initial 
investigations and 180 days for investigations. If that is 
true, then they may not meet the standards of 90 days in the 
new legislation.
    Personally, I think that the 120 days and the 180 days are 
probably more realistic given the transition of this program 
and the number of new staff that have been added. OPM can 
probably speak better to this than can I. But given the 
thousands of new staff that have been added and the training 
that is required to get those folks up and ready to process 
investigations, the 90 days specified in the legislation is 
probably not realistic.
    Currently, OPM's time limits are 120 days for initial 
investigations, whether it is top secret or secret, and 180 
days for reinvestigations, regardless of the level. So that 
does not meet the 90-day requirement. But I don't believe the 
90 days is currently doable.
    Senator Voinovich. We need to establish rules and baseline 
measures for tracking progress. I would be interested in GAO's 
opinion about what a realistic timeline would be.
    The other thing I am interested in is what process, Ms. 
Dillaman and Ms. Anderson, use, to elicit how things can be 
improved? Do you hire consultants? How do you determine how you 
can improve the respective clearances in your organizations?
    Ms. Dillaman. Mr. Chairman, we involve our stakeholders. We 
regularly convene a panel of the agencies we serve, including 
the Departments of Defense, Homeland Security, Treasury, etc., 
to talk about process, different process elements, and that has 
taken us to where we are today, in how we not only move work 
internally, but how we move work from the submitting agency and 
then back to the adjudicating facility. So there is continuous 
change and improvement in the investigative process. You 
wouldn't recognize it from 10 years ago. And I think that is 
going to be an ongoing effort for us, because you can always 
improve.
    Senator Voinovich. Ms. Anderson.
    Ms. Anderson. Thank you. We work very closely with Kathy 
and her team, because they really are our strategic supplier 
with regard to investigations. We have taken a hard look at all 
the variety of processes and personnel security within the 
Department and we have been doing this for a little over 2\1/2\ 
years, and so we are starting to put pieces in place to bring 
it all together. So we have solicited input from all levels of 
this process, to include our stakeholders, which would include 
industry and our MOU members who are part of the National 
Industrial Security Program Policy Advisory Committee 
(NISPPAC), and we have received a lot of solicited and 
unsolicited feedback along the way, not only from consultants, 
but from other interested parties, to include House and Senate 
members. So we will take input from anyone. We are looking for 
things that make the process better, more robust, and reduce 
risk.
    Senator Voinovich. Do you employ quality management 
techniques? For example, through Total Quality Management 
employees are empowered and recommend how they think they can 
do their job better and be more efficient, and ultimately 
streamline the process.
    Ms. Anderson. We have embraced that. One of the real 
benefits of our Joint Personnel Adjudication System is that it 
allows flexibility. We have a number of very different 
organizations within the Department. We have large 
organizations, like the services, and then you have smaller 
agencies. You have specialized agencies, intelligence agencies, 
and defense logistics agencies.
    So we have built a set of tools that allow us consistent 
measures, consistent quality control, but allows flexibility in 
how these sub-organizations organize their processes to best 
meet their piece of the mission. So we have empowered them and 
given them the tools that allow them some flexibility within 
their process so that they can tailor these processes to their 
specific needs without engendering any dislocation to 
reciprocity and other pieces of the process that are important 
to preserve.
    Senator Voinovich. Do you have any continuous improvement 
teams?
    Ms. Anderson. We do not have a standing set of continuous 
improvement teams. We have pockets of them in different areas, 
to include our automated continuing evaluation system. We have 
a whole process improvement team associated with that. Our 
adjudicators have a collaborative forum and we are trying to 
get a little more structure in that, as well, to actually make 
sure that they are leveraging best practices across those 
organizations.
    Senator Voinovich. I would really like to know what process 
you use to involve your employees on developing recommendations 
on how things can be improved.
    Ms. Dillaman, what about you?
    Ms. Dillaman. Yes, sir. We also have users' groups, not 
only with our own Federal staff, but we are including the 
contractor staff, as well. Each of our contractors sends 
representatives to the specific users' groups to talk about 
process and tools. Our automation system, which is the heart of 
the control of these investigations, has been constantly 
renovated through those types of users' groups activities.
    Senator Voinovich. OK. I have a little problem with that, 
because GAO determined that the private sector contractors were 
your external customers, but I think they are your internal 
customers. It takes 375 days for contractor clearances. In 
other words, private sector employees wait an average of 375 
days to receive their clearances. And the question is, have you 
sat down to ask contractors how they think improvements to the 
security process could be made?
    I am concerned that the cost to private contractors 
continues to go up the longer the process takes. First of all, 
if you want to hire somebody that is good but then they can't 
do their work until they get a clearance and you put them on 
the payroll, they sit there and can't do their work they are 
supposed to do because of the fact that they don't have a 
clearance. So the private company keeps losing money.
    I know OPM and DOD held a news conference with contractors, 
but I want to know how much time have you really spent with 
them getting their ideas on how they think you can improve the 
system? This is part of quality management, reaching out and 
asking their opinions can really make a difference.
    I know when I was governor, we had a forum for stakeholders 
to fill out. Ninety-five percent of the forms came back with 
problems because the form was just not relevant to the 
customer. So we spent 6 months with the customer and we reduced 
the size of the form and the questions. The end result reduced 
errors to close to 5 percent. It was good for our employees 
because they were having difficulty working in an efficient 
manner since there were high error rates. Customers would 
submit their forms and State employees would notify them that 
the forms were incomplete, so the customer would have to go 
through the process again. It just took a lot of time and 
money.
    I will never forget, one of the employees said he used to 
come to work in the morning, and the closer he got to the 
office, the more stressed he became. Just by getting involved 
with the customers and coming up with a new form, it just 
really relieved all of that tension and made things so much 
more efficient.
    And the question is, how much time do you spend with your 
private sector customers?
    Ms. Dillaman. Sir, personally, I spend a good deal of time 
with our customers, with the Federal agencies that are 
customers. In fact, I have a team here in Washington that is 
dedicated to that. In fact, each agency is assigned a customer 
service representative for OPM.
    When it comes to industry, industry feedback is channeled 
through the Department of Defense. I have partnered with DOD 
and presented at several conferences and meetings to industry 
issues about the process, including taking suggestions on how 
we can improve it. But I would defer to my colleague in DOD in 
terms of how industry----
    Senator Voinovich. I want to know how much--when was the 
last time you sat down with the private industry people that 
you are hiring to get their feedback on this clearance process 
and----
    Ms. Anderson. I, myself, briefed them on this issue and 
solicited feedback in May--I can probably tell you the exact 
date--at the AIA and NDIA forum in Arizona. We have a tendency 
to hit about one industry organization meeting for exactly that 
purpose a month, if not myself, then someone who directly 
reports to me. And we do actually incorporate all of industry's 
comments in our DOD position to OPM. To talk about revising the 
form, we have provided significant comments which includes the 
industry input to OPM with regard to the revision of the SF-86 
form.
    So we have a number of forums that we provide industry, and 
it is normally through the industry associations, although we 
are always open and I do very frequently take briefings and 
requests from individual industry participants. So we do 
everything we can to make sure that we are incorporating all of 
the ideas. We are entirely endorsing the need for change.
    Senator Voinovich. OK. The question is, my staff met with 
some private sector representatives. The real issue is, if OPM 
is taking over the investigations, why doesn't OPM meet with 
the private sector?
    Ms. Dillaman. And again, sir, the request for 
investigations on industry come from the Department of Defense. 
We are more than happy to meet with industry groups with DOD, 
partnering with DOD, but the industry is channeled through DOD.
    Senator Voinovich. But the fact of the matter is that in 
terms of improving the process, now that OPM is conducting the 
investigation, it seems to me that it would be very worthwhile 
for you to meet with the private sector stakholders.
    Ms. Anderson. Sir, the other piece of this that is very 
important to remember, and the reason that Ms. Dillaman and I 
team up to meet with industry is invariably when we are talking 
about this process, we are talking about the clearance process 
and it includes not only the investigation but the 
adjudication. So we have worked as kind of a tag team to make 
sure if there is a question about something, our organization 
reviews the SF-86, the self-disclosed information that is 
provided by all of our applicants, and 80 percent of the time 
for secret clearances, we can provide an interim clearance in a 
week. That will put those industry people to work at the 
interim secret level. We do not have that luxury in most cases 
at some of the higher level of clearances. That is why we make 
sure that we prioritize with OPM those investigations.
    But when we have conversations with any of our 
constituencies, we have found it beneficial for us to go 
together because it is invariably a discussion not only about 
the investigation, but what else can be done to have those 
people work effectively while it is going on. So we have a 
piece of this at the front end with regard to taking some risk 
with interim clearances, and we have a piece of this on the 
back end, which is the final piece and the decision on 
eligibility and, ultimately, access.
    Senator Voinovich. Well, we have got this shifting. It 
seems to me there is a different perspective from your point of 
view since you are the one that is going to have to do the 
investigation.
    Senator Carper is here. Thank you very much for coming 
here. He is very interested in this, because he is also a 
former governor. Senator Carper.

              OPENING STATEMENT OF SENATOR CARPER

    Senator Carper. But you know something else? I used to be 
an intelligence officer in the Navy.
    Senator Voinovich. I am looking forward to your questions.
    Senator Carper. I probably won't show much intelligence, 
but we'll give it our best. [Laughter.]
    Mr. Chairman, good morning, and to our witnesses, thanks 
for coming this morning.
    I guess my first question is of you, Mr. Stewart. My 
understanding is that GAO has placed a security clearance 
process on its high-risk list, and the process, as I understand 
it, has been turned over from DOD to OPM and the new Department 
of Homeland Security. I know you have already talked about 
this, but let me just start with a basic question. How is it 
going?
    Mr. Stewart. I think it depends on who you ask. If you are 
asking me----
    Senator Carper. Well, I wanted to ask you first, so----
    Mr. Stewart. We have not looked at the transfer itself and 
how things are working today. Our concerns are more basic. As I 
mentioned earlier, one of the biggest concerns is for the 
Department to be able to project its workload requirements. 
Until the Department can do that, we at GAO don't believe that 
there will be an efficient and effective security clearance 
program regardless of who is doing the investigations. So we 
have some fundamental problems with the way things are working 
overall. The actual transfer, we haven't looked at that to see 
how things are working today.
    Senator Carper. Let me ask you, Ms. Dillaman and Ms. 
Anderson, would you just comment in what Mr. Stewart has just 
said.
    Ms. Anderson. It is interesting to note, and I had 
mentioned it previously, that a lot of these problems have been 
longstanding and we have made significant improvement in the 
last 2 years. Our ability to project our requirements is very 
much improved, and I believe Ms. Dillaman will attest to that, 
and that we have not left her high and dry as far as her 
ability to project workload needs.
    Additionally, as we look forward, every program has room 
for improvement, this one more than most. We will continue to 
improve and refine those projection models to ensure that we 
have taken into account every active variable and can give Ms. 
Dillaman the most accurate projection moving forward.
    With regard to the transfer, I would say that everyone got 
paid, work continued to flow, and no one died, so I would say 
it is a success.
    Senator Carper. Mr. Stewart.
    Mr. Stewart. Senator Carper, let me just tell you one of 
the things that we are concerned about, even though we haven't 
looked at the transfer. DOD and OPM announced in February 2003 
that this transfer was going to take place, over 2 years ago. 
There is a system, the eQIP system which OPM has, that DOD 
still can't use to submit all of its requests through this 
electronic system. So there is a time lag where DOD has to 
reformat information in order to get it into the system.
    This transfer has been 2 years in the making and this is 
just an example of where it doesn't seem that everybody is 
talking to each other and there is a strategic plan--DOD needs 
an overall plan to make this thing work efficiently and 
effectively.
    Senator Voinovich, have talked about the need for a Chief 
Management Officer at DOD. This is, I think, a program that 
should fall under the CMO's jurisdiction. With all due respect 
to Ms. Anderson and folks at that level, if you don't have 
somebody at the senior-most levels of the organization looking 
at this program and making sure that things are happening and 
come together in a strategic fashion, I don't know that we will 
ever have a successful program there.
    Senator Carper. Let me follow up on what you said. I was 
struck by Ms. Anderson's comment. It sort of reminded me, I 
often say, everything I do, I can do better, and clearly, that 
is probably true with most of us who are being honest with 
themselves.
    I want to come back to the point that Mr. Stewart made. I 
think he used the word eQIP, and that is probably an acronym. I 
don't know what it stands for. But let me just ask, how are DOD 
and OPM using technology to transfer investigations to OPM and 
to work through the application process and how successful have 
those technologies been?
    Ms. Dillaman. I will take it. Senator Carper, OPM in 2004 
developed and implemented an online information submission 
process. That is eQIP. It would be Electronic Questionnaire for 
Investigations Processing. This is web-based technology that 
allows the applicant to complete his or her questionnaire 
online, store the information in an automated vault, and submit 
it electronically along with either imaged or hard-copy 
attachments, like the fingerprint chart in the release form.
    There was a conscious decision made between OPM and DOD to 
customize that, to allow the submissions through JPAS, a system 
that DOD was in the process of deploying, that in the long haul 
will minimize the amount of resources that it takes to maintain 
both systems. That was a very complicated, complex development, 
but I am thrilled that we are close to implementation. I expect 
over the next 2 to 3 months, we will have a full rollover so 
that all submissions from DOD will come in electronically.
    Senator Carper. And how long have we been working on this?
    Ms. Dillaman. The customized version, over a year, heading 
toward two.
    Senator Carper. OK. And do you think we are a couple of 
months out?
    Ms. Anderson. We have already begun using it, but as with 
an organization the size of the Department of Defense, you 
don't cut it over all in one day. So we are in the process of 
matriculating more users every day. As a matter of fact, 
earlier this month, we allowed all industry users full access 
to it. So the entire cleared industry population is now free to 
use it and we are easing their transition, and this is similar 
to the services and agencies, is we give them a grace period 
that they can use the old EPSQ, our old online questionnaire, 
for a little while longer while they are transitioning to how 
the new one works. But our expectation is by the end of this 
year, everyone in the Department will be on it exclusively.
    Senator Carper. Mr. Stewart, should we be encouraged by 
this?
    Mr. Stewart. Again, it just seems a little curious to us 
that this transfer was announced over 2 years ago, and this 
clearance-request submission process is a critical part of the 
program. It is pretty basic to be able to submit requests, and 
we still don't have a fully operational system to make that 
happen. So I am not encouraged, quite frankly.
    Senator Carper. Are you from Missouri? [Laughter.]
    Senator Carper. Show me? Well, in a couple months, I hope 
you can show us a fully operational system.
    Ms. Anderson. Sir, if I might add that when we talked about 
the transfer of the investigations function, the e-Government, 
e-Clearance initiative--there are a lot of ``e''s--and the eQIP 
software that Ms. Dillaman deployed is separate from that 
functional transfer. So while it happened in parallel, it was 
not necessarily a condition for that transfer. It was separate.
    Senator Carper. All right. Thanks for all those ``e''s. 
Governor, always a pleasure.
    Senator Voinovich. I just would get back to the same 
question I had, that DOD had the Case Control Management System 
that was used to manage the security clearance databases, is 
that right?
    Ms. Anderson. It was an investigations case management 
system, yes.
    Senator Voinovich. And OPM uses the Personnel 
Investigations Processing System. I want to make sure--the PIPS 
system.
    Ms. Dillaman. Yes, sir.
    Senator Voinovich. OK. Now, are we talking about the fact 
that you are in the process of transferring the information 
from the Case Control Management System to the PIPS system?
    Ms. Anderson. No, sir.
    Senator Voinovich. You are not?
    Ms. Dillaman. We made the decision when we started on the 
discussion about the transfer of function. We did the analysis 
and determined it made no sense from either economic or 
engineering standpoint to move cases in process from DSS's 
legacy system, the CCMS, to OPM's PIPS-based system. So as part 
of our progression, we adopted the new business process in the 
beginning of fiscal year 2004 which had all new work 
matriculating on OPM's PIPS system. We then used the balance of 
2004 and, quite frankly, a little bit of 2005 to clean up, that 
is complete, all the work on the Case Control Management 
System.
    The investigative data for investigations that were begun 
on Case Control Management System were completed on that 
system. So there are no more cases on the Case Control 
Management System. We are in the process of archiving those 
resulting investigations, so we are moving them all to an 
electronic format so that they will be available to 
organizations like OPM as prior investigations, but they remain 
with the Department and we will use an electronic archive to 
actually maintain them for the 25-year period.
    Senator Voinovich. So the relevant material that you need 
has been transferred to the PIPS system?
    Ms. Dillaman. Yes. The software with regard to the 
submission process and whether or not you use the old DOD EPSQ 
or the new eQIP form, actually has nothing to do with the Case 
Control Management System.
    Senator Voinovich. OK. Ms. Dillaman, in February 2004, GAO 
reported that a lack of investigative staff contributed to the 
delays in the security clearance investigative process, and 
since the transfer, OPM indicated they will need 8,000 full-
time investigators to manage the investigative workload, and 
you are talking about almost 8,000, from what your testimony 
was this morning.
    In 2004, GAO noted that OPM's primary contractor was hiring 
around 100 investigators a month, and at the same time was 
losing around 70 employees a month. Is your contractor still 
experiencing this high turnover rate?
    Ms. Dillaman. No, sir. Our primary contractor's attrition 
rate now is down to 18 percent.
    Senator Voinovich. OK. So that they have reduced the 
turnover rate?
    Ms. Dillaman. Yes, sir. In fact----
    Senator Voinovich. Were you concerned about the turnover 
rate that they had?
    Ms. Dillaman. Absolutely, sir. There is a large turnover in 
this business, and that is historically true, that people start 
and for a number of the street agents, that doesn't turn out to 
be a long-term. But 15 percent attrition would be about right.
    In 2004, our prime contractor sold the business and it had 
been an ESOP prior to that, and so there were some windfalls 
from that and that accounted for some of the large attrition, 
where a number of people left after the sale. But that has 
stabilized and our contractor is bringing that down every 
month.
    Senator Voinovich. The U.S. Investigative Services, which 
was an ESOP that was created to preserve the jobs initially of 
the people that worked for the OPM was sold to somebody else?
    Ms. Dillaman. Yes, sir.
    Senator Voinovich. Is it still known as the USIS?
    Ms. Dillaman. Yes, sir.
    Senator Voinovich. They kept the name, but there is new 
ownership?
    Ms. Dillaman. Yes, sir.
    Senator Voinovich. And as a result of that new ownership, 
you are saying that they are a more efficient operation than 
they were prior to the change in ownership?
    Ms. Dillaman. Absolutely, sir.
    Senator Voinovich. Mr. Stewart, are you familiar with that 
change?
    Mr. Stewart. I am familiar with the change. We haven't 
looked at it, but I am familiar with the fact that the ESOP was 
sold to another party. I think you are asking a very good 
question. Some investigations contractors depend on a large 
number of part-time individuals and our understanding is that a 
lot of these individuals are retired. They are not looking to 
work full-time. We also understand that they could work for 
more than one contractor. So they could work for one contractor 
this month and not the other contractor the next month.
    I think it is great that 3,800 full-time equivalent 
investigative staff have been added, but I think it is a 
situation that bears watching because of the high turnover rate 
that was experienced when we were doing our earlier work and 
the fact that many investigators are part-time.
    Senator Voinovich. OK. I appreciate your testimony here 
this morning. What I want to do next is to set a baseline about 
where we are today. I am going to have my staff work on it and 
we will contact the Office of Management and Budget to talk to 
them about it also. But I want to know, where are we today, and 
I want to decide on some metrics so that when we get together 3 
months from now, 6 months from now, we can determine whether or 
not we are making any progress.
    So that is what I want to do. As I said, Ms. Dillaman, you 
have got a big job. I think in the Department of Defense, this 
challenge, which has been around a long time is unfortunately 
typical Department of Defense. One of the things that this 
Subcommittee is doing is taking on the fact that the Department 
of Defense has many items on the list that need to be corrected 
and here is another example of it. You are 80 percent of the 
action here. This is high-risk and so it is, again, part of the 
Department of Defense.
    I agree with you, Mr. Stewart, that if we are going to 
really see a transformation of the Defense Department, we do 
need a Chief Management Officer that is going to stay with 
these things over a long period of time. Secretary Rumsfeld 
came in and was really going to improve the Department's 
management. In fact, one day before September 11, he said that 
if they could improve the efficiency by 5 percent of the 
Department, they could save $22 to $24 billion per year. Then 
our Nation went to war and that doesn't mean you are not 
working on process improvements. I appreciate the fact that the 
Department is trying to improve things.
    But the fact is that management improvements can get lost. 
When I was governor, I had a Chief of Staff, but I also had a 
Chief Management Officer that every day got up early in the 
morning, went to bed late at night, and when all these 
firestorms occurred, that didn't bother that individual because 
every day, they were just working on management. And that is 
the way we got things done.
    This stuff is not going to get done in a short period of 
time, and that is why I think it is really important that you 
look at these numbers on a realistic basis. If we tell you to 
do something and you say, ``Those people are nuts, it will 
never happen,'' but if you come back--maybe what we should do 
is why don't you sit down and figure out how long it will take 
you. What is a reasonable time frame? Maybe we need to change 
the law to give you more time. But I think we have got to be 
real about this, and I think if we are, I think we can 
certainly see some progress made.
    I know, Ms. Dillaman, you want to see improvements. Ms. 
Anderson, you have been working with us a long time and you 
want to see it. I just want to thank you very much. I didn't 
bring you here to give you a hard time, but I want to get to 
some of the real issues here so we can get them taken care of. 
Thank you very much.
    The hearing is adjourned.
    [Whereupon, at 11:40 a.m., the Subcommittee was adjourned.]

                            A P P E N D I X

                              ----------                              


                PREPARED STATEMENT OF SENATOR LAUTENBERG

    Mr. Chairman, thank you for calling this hearing and giving us the 
opportunity to learn more about the security clearance process. This 
process is obviously vital to our national security. Before an 
individual is given access to sensitive information, we must be 
absolutely certain that they are trustworthy. But it is also in our 
Nation's interest to see that those with a legitimate need for 
information have access to the facts that will help them make good 
decisions.
    So our security clearance process must not only be thorough . . . 
it should also be timely.
    Today there is a severe backlog of investigations for security 
clearances. It is such a problem that back in January, the Government 
Accountability Office designated the security clearance process as a 
``high risk'' area within the Department of Defense.
    I understand that some of this backlog might stem from the transfer 
of investigative responsibilities from DOD to the Office of Personnel 
Management. At the current time, DOD has approximately two million 
active security clearances issued to military personnel, civilian 
workers and defense contractors. These clearances allow individuals to 
gain access to classified information that they need to perform their 
jobs. Last year the GAO estimated that there was a backlog of roughly 
270,000 applications for security clearances that needed to be 
investigated, and 90,000 that needed adjudication.
    GAO has pointed out four barriers that slowed DOD's ability to 
eliminate this backlog, including:

        (1) the sheer size of the backlog;
        (2)  an influx of new requests since September 11, 2001, adding 
        to the existing backlog;
        (3) an inadequate number of investigators and adjudicators, 
        and;
        (4)  a lack of a strategic plan for overcoming problems in 
        gaining access to state, local, and overseas information.

    The 9/11 Commission recommended action on this issue, and raised 
concerns that the backlog could make it difficult to expedite key 
national security appointments. The Commission recommended that a 
single Federal agency be responsible for providing and maintaining 
security clearances. This has not yet happened.
    Mr. Chairman, this is more than a matter of convenience.
    The fact is, if we can't do a background check in a reasonable 
amount of time, it raises questions about our ability to do it 
thoroughly, as well.
    I look forward to hearing from our witnesses.

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