[Senate Hearing 110-338]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 110-338
 
                EVALUATING THE PROGRESS AND IDENTIFYING
                   OBSTACLES IN IMPROVING THE FEDERAL
                GOVERNMENT'S 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 TENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 17, 2007

                               __________

        Available via http://www.access.gpo.gov/congress/senate

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


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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TED STEVENS, Alaska
THOMAS R. CARPER, Delaware           GEORGE V. VOINOVICH, Ohio
MARK L. PRYOR, Arkansas              NORM COLEMAN, Minnesota
MARY L. LANDRIEU, Louisiana          TOM COBURN, Oklahoma
BARACK OBAMA, Illinois               PETE V. DOMENICI, New Mexico
CLAIRE McCASKILL, Missouri           JOHN WARNER, Virginia
JON TESTER, Montana                  JOHN E. SUNUNU, New Hampshire

                  Michael L. Alexander, Staff Director
     Brandon L. Milhorn, Minority Staff Director and Chief Counsel
                  Trina Driessnack Tyrer, Chief Clerk


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

                   DANIEL K. AKAKA, Hawaii, Chairman
CARL LEVIN, Michigan                 GEORGE V. VOINOVICH, Ohio
THOMAS R. CARPER, Delaware           TED STEVENS, Alaska
MARK L. PRYOR, Arkansas              TOM COBURN, Oklahoma
MARY L. LANDRIEU, Louisiana          JOHN WARNER, Virginia

                   Richard J. Kessler, Staff Director
                  Evan Cash, Professional Staff Member
             Jennifer A. Hemingway, Minority Staff Director
             David Cole, Minority Professional Staff Member
                      Emily Marthaler, Chief Clerk


                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Voinovich............................................     1

                               WITNESSES
                         Thursday, May 17, 2007

Hon. Clay Johnson, III, Deputy Director for Management, U.S. 
  Office of Management and Budget................................     4
Robert Andrews, Deputy Under Secretary of Defense for 
  Counterintelligence and Security, accompanied by Kathleen M. 
  Watson, Director, Defense Security Service, U.S. Department of 
  Defense........................................................     5
Kathy L. Dillaman, Associate Director, Federal Investigative 
  Service Division, U.S. Office of Personal Management...........     7
Derek B. Stewart, Director, Defense Capabilities and Management, 
  U.S. Government Accountability Office..........................     9
Timothy R. Sample, President, Intelligence and National Security 
  Alliance.......................................................    24
Doug Wagoner, Chief Operating Officer, Sentrillion, on behalf of 
  the Information Technology Association of America..............    27

                     Alphabetical List of Witnesses

Andrews, Robert:
    Testimony....................................................     5
    Prepared statement...........................................    47
Dillaman, Kathy L.:
    Testimony....................................................     7
    Prepared statement with an attachment........................    55
Johnson, Hon. Clay, III:
    Testimony....................................................     4
    Prepared statement...........................................    37
Sample, Timothy R.:
    Testimony....................................................    24
    Prepared statement...........................................    85
Stewart, Derek B.:
    Testimony....................................................     9
    Prepared statement...........................................    63
Wagoner, Doug:
    Testimony....................................................    27
    Prepared statement...........................................    93
Watson, Kathleen M.:
    Testimony....................................................     5

                                APPENDIX

Background.......................................................   109


                      EVALUATING THE PROGRESS AND
                   IDENTIFYING OBSTACLES IN IMPROVING
                   THE FEDERAL GOVERNMENT'S SECURITY
                           CLEARANCE PROCESS

                              ----------                              


                         THURSDAY, MAY 17, 2007

                                 U.S. Senate,      
              Subcommittee on Oversight of Government      
                     Management, the Federal Workforce,    
                            and the District of Columbia,  
                      of the Committee on Homeland Security
                                        and Governmental Affairs,  
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 9:42 a.m., in 
Room 342, Dirksen Senate Office Building, Hon. Daniel K. Akaka, 
Chairman of the Subcommittee, presiding.
    Present: Senators Akaka and Voinovich.

             OPENING STATEMENT OF SENATOR VOINOVICH

    Senator Voinovich [presiding]. The meeting will please come 
to order. Senator Akaka is on his way. He had a speech this 
morning, and I know how those go.
    I want to first of all thank Senator Akaka for holding this 
Subcommittee's fourth hearing on the Federal Government's 
security clearance process. Although I am no longer the 
Chairman of this Subcommittee and am now Ranking Member, 
Senator Akaka and I collaborated during the 109th Congress that 
this issue is very important to the future of our country. I am 
very grateful to him that we are continuing our oversight on 
the security clearance process.
    Our oversight work on the security clearance process began 
during the 109th Congress because of our concern with the 
longstanding backlog with security clearances and the 
cumbersome process that hampered the Federal Government's 
ability to clear highly-skilled employees in a timely manner. 
Our clearance processing system remains broken! It remains 
broken, limiting the ability of our national security agencies 
to meet their heightened mission requirements.
    The impact of a flawed clearance system is not limited to 
Washington. For example, during a recent visit to Wright-
Patterson Air Force Base in Ohio, I was alarmed to learn of the 
considerable delays that continue to plague the Air Force's 
ability to fill critical workforce needs.
    One year has passed since our last hearing. The first 
timeliness milestone set forth in the Intelligence Reform and 
Terrorism Prevention Act are behind us. In thinking about 
today's hearing, a number of questions come immediately to 
mind.
    Does the current security clearance process, a Cold War 
relic, have the capacity to meet the security needs of our 
Nation? Will OPM, which is responsible for about 90 percent of 
all background investigations for the Federal Government, be 
able to meet its investigative timeliness goals in the long 
term? Why isn't the Department of Defense devoting the 
resources necessary to reform its process?
    Are we taking full advantage of technology and our partners 
in industry to make needed improvements? I have talked to 
industry and they are livid about this. They can't understand 
why we in the Federal Government can't incorporate available 
technology to improve this process.
    Honest responses to these questions will help us gain a 
better understanding of whether the current path will lead to 
success or failure.
    My concern is not meant as a critique of the efforts of 
those individuals who appear before the Subcommittee today, 
though I have some strong words. In particular, I want to 
applaud Mr. Johnson for his untiring commitment to this issue. 
Mr. Johnson, your leadership will become even more vital to 
this effort as we approach the end of the Administration. A 
question for the Administration is, are you going to wind down 
or are you going to wind up?
    Under the guidance of Ms. Dillaman, OPM has made noticeable 
improvements in the timeliness of security clearances. However, 
despite the progress that has been made, I still have some very 
serious concerns.
    First, although DOD's senior leadership continues to state 
that they are committed to resolving the systemic problems at 
the Defense Security Service (DSS), actions do speak louder 
than words. Since her selection as permanent Director in 
February, DSS Director Kathy Watson has taken several important 
steps to reform the process, including hiring a committed, 
competent leadership team. This program has been on the 
Government Accountability Office's high-risk list for years and 
has led to the development of a corrective action plan.
    It is my understanding that DSS is currently under-funded 
by $55 million for fiscal year 2007. I question how we can 
expect DSS to reform itself in the absence of adequate 
resources to get the job done, let alone build the 
infrastructure necessary to sustain itself in the long term.
    Mr. Johnson, I expect to hear from you how this problem 
will be fixed, particularly since OMB has been a partner in 
developing the corrective action. It seems to me that if you 
are a partner in the corrective action, that if providing the 
resources is extremely important to making it happen, that the 
resources would be provided. It is frustrating to me that we 
are asking agencies to reform themselves yet we fail to provide 
the resources or funding to get the job done.
    I had a hearing on the backlog in Social Security for folks 
that are making appeals on Social Security Disability and I was 
raising a lot of thunder. But the bottom line is, we are as 
guilty as they are because we haven't given them the resources 
to do the job. If you don't give people the funding they need, 
then you basically tell them that you don't think very much of 
the job that you are asking them to do.
    Second, the February 2007 report by OMB and the Security 
Clearance Oversight Group identifies several obstacles which 
impede the security clearance process. The report admits that 
the Federal Government has yet to deal with the issue of 
reinvestigations. The OMB report also mentions the use of the 
e-QIP system for electronic submission of agency investigative 
requests. While I am pleased that the e-QIP has led to dramatic 
improvements in timeliness and accuracy of submissions, I 
remain perplexed as to why we have yet to reach 100 percent 
participation by agencies, including OPM. The deadline for 
compliance was April 2006, not April 2007. Mr. Johnson, I would 
like to know when you expect agencies to achieve compliance?
    Third, I remain very concerned that the Federal Government 
under OPM's leadership is not taking advantage of innovative 
technology available in the marketplace. Subcommittee staff 
recently toured the mines in Boyers, Pennsylvania, where OPM's 
clearance operations center is housed. After meeting with my 
staff to discuss their visit, I find it hard to believe that in 
the year 2007, we continue to rely on a paper-intensive 
clearance process. Ms. Dillaman, I would like to hear from you 
when you expect OPM to be able to complete a fully automated 
investigation from start to finish?
    Finally, in blatant disregard of the statute, agencies 
continue to disregard the reciprocity requirement. Our efforts 
to resolve the backlog will be diminished if agencies continue 
to reinvestigate and readjudicate individuals with valid 
clearances.
    All of us here today share a common goal of fixing this 
process. Based on our efforts to date, we have made progress in 
reducing the timeliness of issuing initial security clearances, 
but our work is far from over. The timely hire of a highly-
skilled workforce to meet our national security mission 
requires solutions to all the problems associated with the 
security clearance process. I remain committed to working on 
this issue until it is resolved. I remain committed to working 
on this issue until it is resolved.
    I would like to thank our witnesses for their participation 
and I look forward to your testimony.
    Senator Akaka has not arrived. We are going to go ahead to 
testimony. It is the custom of this Subcommittee that witnesses 
be sworn in. Will you stand and I will administer the oath to 
you.
    Do you solemnly swear that the testimony you are about to 
give this Subcommittee is the truth, the whole truth, and 
nothing but the truth, so help you, God?
    Mr. Johnson. I do.
    Mr. Andrews. I do.
    Ms. Dillaman. I do.
    Mr. Stewart. I do.
    Senator Voinovich. Let the record show that our witnesses 
answered in the affirmative.
    Again, I want to thank you all for being here. Mr. Johnson, 
we will start with your testimony.

  TESTIMONY OF HON. CLAY JOHNSON, III,\1\ DEPUTY DIRECTOR FOR 
        MANAGEMENT, U.S. OFFICE OF MANAGEMENT AND BUDGET

    Mr. Johnson. Senator, thank you very much for your 
commitment to this reform effort. You help us get a lot done 
that we wouldn't be able to get done otherwise. What I would 
like to do is just briefly summarize what I think we have done 
and not done yet.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Johnson appears in the Appendix 
on page 37.
---------------------------------------------------------------------------
    In answer to your question, do we intend to wind down or 
wind up, let me put it this way. We intend and are very 
committed to stay tight, to remain tightly wound on this issue. 
This is a big priority for the government and it is a big 
priority for me personally because this thing can be fixed in 
the time that I am going to be here.
    Let me tell you what I think we have done. Presently, we 
are investigating, completing initial clearance investigations, 
80 percent of them within 90 days, as called for. It was the 
goal to be accomplished by December 2006. We are adjudicating 
80 percent of the initial clearances in less than 30 days, 
which was the goal for December 2006. We have reduced the 
backlog of old clearances. We have unprecedented agency 
commitment to fix this process. We have very clear goals for 
each of the component parts of the process. We have the 
information we need to hold ourselves accountable for 
accomplishing those goals. We have expanded our investigation 
and adjudication capacity and we have begun--we are using 
technology to transfer information and files more quickly than 
before.
    However, what have we not done yet? We still have a backlog 
of old investigations. We have not until this year begun to 
reform and improve the reinvestigation process. That is a 
commitment for 2007, a big priority for 2007. We have, as I 
said, focused on the two major component parts, the 
investigation part and the adjudication part, of the process. 
We are only this year creating the data information that allows 
us to look at the total process, from when the person submits 
the application to when they are told they have a job and they 
have a clearance. What is that total end-to-end process? There 
are a lot of handoffs within agencies and between agencies that 
don't get picked up and addressed and agencies aren't held 
accountable until we look at the total end-to-end. That will 
become a primary focus of this reform effort this year.
    We have demonstrated this ability to do this in less than 
90 days and adjudication in less than 30 days for several 
months. The proof in the pudding is can we do that over longer 
periods of time, and we have not--one of the challenges you 
raised in your opening remarks is we have not laid out what the 
security clearance process of the future looks like, but we are 
in the process of doing that and will have a very clear 
understanding of that by the end of this year, which we then 
will pick the next period of time to bring it to realization.
    This year, we have established as our goals that we want to 
and are going to hold ourselves accountable, it is not in the 
legislation but we want to hold ourselves accountable for 
completing 85 percent of all initial investigations in less 
than 90 days, complete 80 percent of all adjudications in less 
than 25 days, to complete reinvestigations in 180 days or less, 
to bring all record repositories up to the standard of 
submitting the files that are requested--90 percent of all the 
files that are requested within 30 days, to bring an end-to-end 
focus to our reform efforts so we can report not just on what 
adjudications are taking and not just what investigations are 
taking, but the total process, the process that the applicant 
for the security clearance, what they are realizing, and we 
want to explore additional--the possibility of using additional 
measures of investigative quality.
    In answer to a couple of questions you raised in your 
remarks in terms of the resources for DOD, DOD was provided all 
the funds in the President's budget by OMB and the President 
provided that they requested for DSS. There have been no 
limitation on funds. If there is a funding issue at DSS, it is 
not because DOD doesn't have enough money. It is because it is 
not in the right place within DOD.
    On the subject of e-QIP usage, yes, our commitment was--
every agency's commitment was to get to 100 percent usage of e-
QIP by April of last year and we didn't do it. It was not very 
well thought out by the agencies when they committed to do it. 
But the agencies on the government-wide were at 77 percent, I 
think, usage of it. The big agency still to get to 100 percent 
is DOD and they have very aggressive plans to get there by the 
end of this year. Our commitment is to be at 100 percent e-QIP 
usage by the end of this year.
    In terms of the use of technology, we are not making use 
now of a lot of these commercially available databases that a 
lot of the for-profit sector is using as they grant their 
employees security clearances, but our R&D effort will address 
that and we will lay out--within the next several months, we 
will have R&B milestones that we will be holding ourselves 
accountable for by the end of 2007, 2008, and on to 2009 that 
we will be glad to come up here and share with you. We don't 
need a hearing. We will just share that with you and your staff 
to give you an idea about what our vision for the security 
clearance process of the future consists of.
    That is my opening comments and I look forward to your 
questions.
    Senator Voinovich. Thank you. Mr. Andrews.

   TESTIMONY OF ROBERT ANDREWS,\1\ DEPUTY UNDER SECRETARY OF 
 DEFENSE FOR COUNTERINTELLIGENCE AND SECURITY, ACCOMPANIED BY 
 KATHLEEN M. WATSON, DIRECTOR, DEFENSE SECURITY SERVICE, U.S. 
                     DEPARTMENT OF DEFENSE

    Mr. Andrews. Good morning, sir. Thank you for the 
invitation to come up here this morning. I am the Deputy Under 
Secretary of Defense for Counterintelligence and Security and I 
have oversight responsibilities for DSS. I am joined by Ms. 
Watson, who is the Director of DSS.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Andrews appears in the Appendix 
on page 47.
---------------------------------------------------------------------------
    Sir, I appeared here last year about 3 days after I took 
over my job and DSS had stopped clearances. That was not a 
pleasant time. I think I started my testimony by saying this is 
not our best day.
    The crisis that led to the suspension of processing for 
security clearances had a cumulative effect in that it made 
certain that we knew that there were failures inside the system 
that couldn't be papered over. I can report that DSS has 
corrected many of the root causes of last year's shutdown, 
namely leadership and a lack of standard operating procedures. 
We have made progress to date, but much work needs to be done 
at DSS, throughout DOD, and across the interagency.
    And let me start with the positives, what the DSS team has 
accomplished over the past year. A year ago, my primary concern 
was a failure of leadership at DSS. The outfit had gone through 
four directors in 5 years, all of them acting directors. In the 
past 4 years, they have had nine comptrollers. We have made 
progress, most notably in the senior team.
    The Secretary of Defense named Ms. Watson as Acting 
Director in May 2006 and permanent Director in February of this 
year. Ms. Watson is the first permanent Director at the agency 
within the last 5 years. Kathy assembled a team, a core team, 
in her first few months on the job. This team is talented, 
focused, and committed to the success of DSS. To say that we 
are proud of Kathy's team would be a massive understatement, 
and I would like to outline some of her team's accomplishments.
    We have a closer working relationship with OPM. The Defense 
Security Service has reinvigorated its working relationship 
with OPM, and together we are working to create a process to 
better serve our customers. We resolved the surcharge issue 
that existed last year. As a result of OMB mediation, we worked 
out an agreement with OPM over the rates that OPM charges DOD 
for investigations. OPM has refunded DOD $7 million in 2006 and 
for 2007 OPM has eliminated the surcharge.
    We are closer, but not close enough, to technology 
compatibility. A better working relationship between DSS 
information technology team and its OPM counterparts has better 
enabled OPM's e-QIP security to mesh with the DOD IT system to 
facilitate overall clearance processes. As Mr. Johnson has 
mentioned, we are still in the process of adapting 100 percent 
to e-QIP and we hope to do that by the end of the year or even 
sooner.
    DSS completed a very brutal zero-based review of its 
infrastructure funding requirements. This is a bedrock 
prerequisite toward establishing order in any budgetary 
household. We can also report progress toward meeting the 
requirements of IRTPA. DOD, including DISCO, is meeting IRTPA's 
requirements that call for 80 percent of the adjudications to 
be completed within an average of 30 days.
    And we are strengthening our industrial security program. 
This remains a challenge to us, though. There are almost 12,000 
cleared contractor facilities across the country. There are 
more than 25,000 information systems approved to process 
classified information, and DSS has a field workforce of less 
than 300. We have to balance resources against inspection and 
accreditation requirements, and it is clear when we do so that 
DSS must adopt a risk management approach to execute its 
industrial oversight role.
    Another challenge is automation. DSS maintains IT systems 
upon which the defense community depends. New and changing 
requirements are taxing those systems. We are continuing to 
evaluate the best solution to our IT system requirements.
    DSS infrastructure is another challenge. The personnel 
security industry function was transferred from DSS to OPM--the 
inspection function was transferred to OPM in February 2005. We 
at DOD planned inadequately to support the DSS infrastructure 
that remained in DOD after that transfer. DSS retained the 
responsibility to oversee OPM funding and financial 
reconciliation. We failed to recognize the magnitude of the 
cost of that oversight. That failure caused accounts for the 
so-called shortfalls for 2007-2008, sir. DSS has continued to 
work closely with the DOD comptroller to identify these funding 
challenges and to resolve them.
    Finally, DSS's overarching challenge is to manage 
expectations. We must convey, and we have failed to do so so 
far, but we must convey to the rest of government and to the 
defense industrial contractor base a realistic sense of what 
DSS, its current budget and size, can be expected to support.
    We are assessing the personnel security program from end to 
end. We will come up with concrete changes necessary to 
overhaul and streamline the program. We are committed to 
working with OMB, the Office of the Director of National 
Intelligence, and the interagency to bring about a new 
personnel security process for the government.
    The Department's senior leadership is committed to 
correcting systemic problems. We realize necessary changes will 
take time. We will be providing progress reports on both our 
short-term and long-term efforts to fix DSS and on our efforts 
to fix the overall security clearance process.
    Mr. Chairman, I want to conclude by thanking Members and 
staff for your support. You have helped us through a tough 
year. We pledge to you our best efforts and we are now 
available to answer any questions you may have.
    Senator Akaka [presiding]. Thank you very much for your 
testimony. Ms. Dillaman.

TESTIMONY OF KATHY L. DILLAMAN,\1\ ASSOCIATE DIRECTOR, FEDERAL 
   INVESTIGATIVE SERVICES DIVISION, U.S. OFFICE OF PERSONNEL 
                           MANAGEMENT

    Ms. Dillaman. Mr. Chairman, Senator Voinovich, it is my 
privilege to testify today on behalf of the Office of Personnel 
Management and update you on our progress.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Dillaman with an attachment 
appears in the Appendix on page 55.
---------------------------------------------------------------------------
    In his June 2005 Executive Order, President Bush directed 
that ``agency functions relating to determining eligibility for 
access to classified national security information shall be 
appropriately uniform, centralized, efficient, effective, 
timely, and reciprocal.'' OPM Director Linda Springer takes 
that direction very seriously and has included in OPM's 
Strategic and Operational Plan specific goals to ensure that we 
accomplish these expectations.
    As you know, OPM provides background investigations to over 
100 Federal agencies to assist them in making security 
clearance or suitability determinations on civilian as well as 
military and contractor personnel. Our automated processing 
system and vast network of field investigators handle an 
extremely high volume of cases. This year we will conduct over 
1.7 million new requests.
    Mr. Chairman, as you may recall, when the joint OMB-OPM 
Performance Improvement Plan was provided to your Subcommittee 
in November 2005, it addressed the critical areas of the 
overall security clearance process. As an attachment to my 
prepared testimony today, I have included a chart which 
outlines that process, the responsible agencies, and the 
timeliness goals that we have established for each step.\1\
---------------------------------------------------------------------------
    \1\ The chart submitted by Ms. Dillaman appears in the Appendix on 
page 62.
---------------------------------------------------------------------------
    Since developing that plan, we have made significant 
progress in improving overall timeliness and reducing the 
inventory of delayed cases, and we are continuing to work 
aggressively to resolve any issues that are hindering timely 
completion of background investigations. Our processing system 
tracks every step--from the time the subject completes and 
provides the necessary data and forms, to the date the agency 
makes the adjudication action, providing full transparency for 
the timeliness of each subject's clearance.
    The first step addressed to improve overall timeliness is 
the timely and accurate submission of the subject's information 
for investigation. The expanded use of e-QIP has improved 
timeliness and has lowered the rate of submissions that OPM has 
to reject because they contain incomplete or inconsistent 
information. The use of the form has increased substantially to 
over 70 percent of all submissions this fiscal year to date, 
and in March 2007, submissions for initial clearances through 
e-QIP took 14 days. This is an improvement from the 35 to 55 
days reported in November 2005. The rejection rate is currently 
9 percent and we believe that that can be reduced to the 5 
percent goal through expanded use of e-QIP.
    We continue to make good progress in reducing the amount of 
time it takes to complete the investigations for initial 
clearances. Eighty percent of the over 137,000 initial 
clearance investigations that were requested in the first 
quarter of fiscal year 2007 are complete and they averaged 78 
days in process, well below the 90-day standard set in the 
Intelligence Reform Act. In fact, almost 28,000 of these 
investigations were completed in less than 45 calendar days.
    In addition, we significantly reduced the inventory of both 
initial and reinvestigations that were previously delayed in 
process. This fiscal year, on average, we are closing 13,000 
more investigations each month--national security 
investigations--than we are opening, which means we are 
effectively reducing and eliminating that overage portion of 
our inventory. Continued performance at this level meets the 
statutory goals for applications for initial security 
clearances and will result in the timely completions of 
reinvestigations, as well, by October 1, 2007, as planned.
    The improvement in timeliness can be attributed in part to 
our increased staffing and productivity of our field agents. 
Currently, we have over 9,200 employees and contractors devoted 
to the background investigations program. In addition, we 
continue to work aggressively with national, State, and local 
record providers to improve their timeliness in providing 
information critical to the process. And while improving the 
timeliness of investigations, we continue to be vigilant about 
maintaining or improving the quality of the investigations we 
complete.
    For adjudication, during the second quarter of fiscal year 
2006, agencies averaged 78 days to adjudicate their 
investigations, with only 9 percent of those reported done 
within the 30-day standard of the Act. During the first quarter 
of fiscal year 2007, 80 percent of the over 128,000 
adjudications reported to OPM were completed in an average of 
33 days, which includes mail and handling time between OPM and 
the adjudicating agency.
    We continue to work with agencies to improve the time it 
takes to deliver completed investigations, which includes the 
development of an imaging system that will allow us to 
electronically transmit completed investigations to those 
adjudication facilities. We are currently piloting that 
electronic transmission with nine agencies and we expect to be 
in a full production mode by October of this year. Next year, 
in 2008, the imaging system will be used to migrate from our 
current hard-copy file system, pending file system, to a 
virtual file system which will, in effect, make this process 
from beginning to end electronic and paperless.
    We are pleased with the improvements that have been made, 
but we recognize that there is still much work to be done. We 
will continue to work with OMB and the clearance-granting 
agencies in order to meet the requirements Congress and the 
President have set on this critical issue.
    This concludes my remarks and I would be happy to answer 
any questions you have.
    Senator Akaka. Thank you very much for your testimony, Ms. 
Dillaman. Now we will hear from Mr. Stewart.

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

    Mr. Stewart. Good morning, Mr. Chairman, Senator Voinovich. 
Thank you for the invitation to come back again to yet the 
fourth hearing on personnel security clearances. We really do 
at the GAO appreciate your commitment to this issue. As you 
know, and I have testified all three times before that this is 
a very serious issue, critical to the national security of this 
country, and we mean that sincerely. So we appreciate your 
commitment to this issue.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Stewart appears in the Appendix 
on page 63.
---------------------------------------------------------------------------
    Today, I will highlight the results of our September report 
that looked at clearances for industry personnel. Mr. Chairman, 
as you know, and Senator Voinovich, as you know, industry 
personnel have screamed the loudest about the problems with 
security clearances, because if they can't get their folks 
cleared, they can't do the work of the government and there is 
a cost involved in that for all taxpayers. So this report 
focuses on Top Secret clearances for industry personnel. We 
looked at the timeliness and the quality of DOD and OPM's 
process to grant these clearances for industry personnel.
    Mr. Chairman, I will tell you right up front that the 
results of our study are disturbing. I will address the 
timeliness issue first and then I will talk about quality.
    We reviewed over 2,000 cases of industry personnel who were 
granted Top Secret eligibility in January and February of last 
year, and I want to emphasize that these cases are a year old. 
We looked at them last year, and at that time, OMB was and OPM 
was about 3 months into the reform effort. So I just want to 
make sure we have that reference.
    Our analyses showed that the process took an average of 446 
days, or about 15 months, for first-time clearances, an average 
of 545 days, or about 18 months, to update existing clearances, 
and an average of 111 days for the application submission phase 
of the process. Now, I would note that OMB's goal at that time 
was 14 days. The average time was 111 days.
    Major factors contributing to these delays are an 
inexperienced investigative workforce, rejecting applications 
multiple times, not fully using technology, and in some cases 
requiring the manual entry of data, and multiple levels of 
application reviews. Now, those last three factors that I 
mentioned, that is the multiple rejection of applications, not 
fully using technology, and the multiple levels of reviews, 
those are critical factors and I just want to point out that 
the February report that was provided to Congress by the 
Security Clearance Oversight Group did not fully account for 
those factors, and I will come back to that point later.
    Regarding quality, we found that OPM provided incomplete 
investigative reports to DOD and DOD used these incomplete 
cases to grant Top Secret clearance eligibility. Specifically, 
we randomly sampled 50 cases out of the over 2,000 cases I 
referred to earlier to determine the completeness of 
documentation. We found that almost all, 47 out of 50 cases, 94 
percent, were missing key documentation required by Federal 
standards.
    For example, of the 13 areas required to be addressed, we 
found that 44 out of 50 cases, 88 percent, were missing 
documentation for at least two and as many as six areas of the 
13, and these cases managed to make their way from OPM to DOD 
despite OPM's quality control procedures. Now, we understand 
that the procedures have since been replaced with different 
procedures.
    Also, 27 of the 50 cases that OPM sent to DOD contained 36 
unresolved issues that were mostly related to financial 
matters, foreign influence, and personal conduct. Now, in such 
cases where there are unresolved issues, the DOD adjudicators 
should have requested OPM to provide additional information or 
at a minimum documented that additional information was needed. 
Neither of these things happened in these cases.
    Mr. Chairman, the record will show that we expressed 
concern about the quality of the process when this Subcommittee 
had its second hearing in November 2005. Today, given the 
results of our study, we remain even more concerned about the 
quality of the process. There has been a lot of talk today 
about timeliness, but what does it profit us to do it fast and 
not get it right? So we are very concerned about the quality of 
the process, as well.
    This concludes my prepared remarks. I will be happy to 
respond to questions.
    Senator Akaka. Thank you very much, Mr. Stewart. I 
appreciate all of your testimonies. We will now begin with 
questions.
    Mr. Johnson, the President's Executive Order 13381 that 
gave OMB responsibility for defining roles and requirements for 
security clearances is set to expire. What changes will take 
place upon this order expiring?
    Mr. Johnson. Well, it was set to expire. It was a 1-year 
Executive Order. It called for a time frame for OMB to be 
responsible. It was to end last June or July. We extended it 
for another year to keep us in charge. My guess is we are going 
to extend it another year. We have had thoughts about the 
responsibility for the oversight of the overall effort, 
leadership of the overall effort ought to pass to the Director 
of National Intelligence. They have some questions about that. 
Right now, it will continue to be OMB. I think we are doing a 
good job of moving it forward and will continue to be 
responsible for doing that.
    The long-term responsibility still has to be determined. 
Right now, we are just taking it a year at a time.
    Senator Akaka. Thank you. Mr. Andrews, the Defense Security 
Service has consistently underestimated the number of 
investigations it plans to submit to OPM for the year. This 
makes it difficult for OPM to get enough staff to get through 
those investigations. My question to you is why does DSS 
continue to underestimate the number of clearances?
    Mr. Andrews. That is a good question, Mr. Chairman. 
Estimating the clearance requests from over 12,000 contractors 
is based on a data call from about 400 of these contractors on 
a sampling basis each year, and so the very method of sampling 
has proven unsatisfactory. Also, too, Mr. Chairman, OPM faces a 
challenge in that the clearance request from the rest of the 
Department of Defense, not the contractors but from the 
Department of Defense, from the uniformed military services, do 
not pass through DSS and so Kathy Dillaman has to cope with 
requirements coming directly into OPM from Army, Navy, Air 
Force, and DSS has no picture of that flow, either. So it is a 
tough sampling process and we are working on it and we are 
going to need industry's help, sir. I don't know if Ms. Watson 
wants to comment more on that, but she can add details later.
    Senator Akaka. Yes, I would like further comment on what 
you are thinking about doing or what you are doing to fix this 
problem.
    Ms. Watson. Good morning. We have recognized that----
    Senator Akaka. Will you state your name?
    Ms. Watson. My name is Kathy Watson, and I am the Director 
of Defense Security Service. Good morning. The Department has 
recognized that its inability to properly predict its 
requirements for clearances is a problem not just for the 
Department, but for OPM. We recognized that a year ago, but DSS 
does not have the capability or the resources in house to 
actually help the Department predict those requirements. We 
recognized that last summer and we put forward in our budget 
request money to properly staff an office that would give us 
that capability.
    I have obtained money and funding to staff that office 
beginning in fiscal year 2008 and we are now in the process of 
hiring for that office. I have money to hire 20 people so that 
we can get our arms around the requirements process at the 
Department. Right now, each different department and agency is 
essentially acting on its own. There is no overall methodology 
at the Department. We realize we need to fix that.
    Senator Akaka. Mr. Andrews.
    Mr. Andrews. Let me add, Mr. Chairman, that we are talking 
about some gross numbers. The constituency for security 
clearances across the U.S. Government, the intelligence 
communities have about 3 percent of those clearance requests or 
requirements. The Department of Defense has 80 percent, so that 
gives you an idea of the relative magnitude of how important it 
is. And industry--this is of government clearances, so that 
will give you an idea of the challenge we face and Ms. Watson 
deals with daily.
    Senator Akaka. Ms. Dillaman, the Intelligence Reform and 
Terrorism Protection Act required that by December 2006, 80 
percent of all investigations take no more than 90 days. By 
December 2009, it should be less than 60 days. Are you going to 
meet this goal?
    Ms. Dillaman. Sir, we are certainly looking at what it is 
going to take to meet this goal. I think everyone recognizes 
that timely investigations cannot be at the cost of a good 
quality investigation. And because we rely on the voluntary 
cooperation of sources across the government and across this 
country, it is possible to overly compress the amount of time 
to the point where we are not getting the information we need 
to have a good quality investigation.
    Certainly through staffing, use of technology, research 
into alternative record systems and methods of obtaining 
information, we can continue to pare it down. But a lot will 
depend on just how much innovation we can bring to this process 
between now and the 2009 goals.
    Clearly, sir, we were capable of, in the first quarter, 
producing 28,000 investigations in less than 45 days. But that 
meant that the information for those investigations and those 
sources were readily available. That is not always the case.
    Senator Akaka. Thank you. Mr. Stewart.
    Mr. Stewart. Yes, sir, Mr. Chairman.
    Senator Akaka. GAO has said that OPM inacurately reports, 
or fudges information relating to clearance investigations, 
leaving out a significant amount of time. What aren't they 
counting and why should they be counting it?
    Mr. Stewart. Thank you for the question, Mr. Chairman. I 
hope GAO didn't use the word ``fudge.'' That is not a GAO term.
    No, it is exactly right, sir. The Security Clearance 
Oversight Group report to Congress in February points out in 
their report they are not counting all of the up-front time, 
the handoff time and the up-front time. The 111 days that I 
mentioned on average during the application submission phase, 
that is really the part that is not getting counted.
    When OPM says we are processing clearances in 75 days or 60 
days or whatever, I am not sure that those statistics include 
all of the time from the time that the security officer 
submitted the application to DOD, to DISCO, and then DOD looked 
at the application and may have sent it back to the security 
officer. Then they resubmitted. Then DOD sends it to OPM. OPM 
looks at it and it may find something wrong with it and it 
sends it back to DOD. DOD then sends it back. All of that time 
is not being counted. But the poor contractor, the industry 
person, is sitting out there waiting for his clearance and does 
not understand that all of this back-and-forth is going on and 
then the statistics show that once OPM finally scheduled it for 
an investigation, it took us X-number of days.
    So we are concerned. We would like to see the up-front time 
counted in those statistics. The law says the time that it 
takes to do the investigative phase. Well, we consider all of 
that the investigative phase. Once it leaves the contractor, 
security officer, it is with the Federal Government. It is with 
DOD and then DOD sends it to OPM. That time should be counted, 
and as far as we know, it is not.
    Senator Akaka. Thank you very much.
    Mr. Johnson. Mr. Chairman.
    Senator Akaka. Yes.
    Mr. Johnson. Could I make a comment on a couple of 
questions you asked Mr. Stewart and Ms. Dillaman?
    Senator Akaka. Yes.
    Mr. Johnson. Is that appropriate?
    Senator Akaka. Yes, since we are on the question.
    Mr. Johnson. OK. On the comment by GAO, I want to point out 
and emphasize they don't have any current knowledge of what is 
going on in the security clearance process. Their information 
is 16 months old, when we began this reform effort. So what 
they are disturbed about is what we had, what the situation was 
at the beginning of the process 16 months ago. Nobody is 
claiming that we are where we want to be, but we welcome GAO to 
come in and take another sampling of what Ms. Dillaman does and 
Mr. Andrews does, to come in and take current samples of 
clearances and let us look at current information, not 16-
month-old information.
    GAO talked about their concern about the quality. I didn't 
hear any references to any quality measures that they were 
looking at or specific data that alarmed them or gave them 
cause for concern about the quality of the investigation work 
being done by OPM. They are not trying to present to you 
anything that wasn't what it is, but I want to emphasize that 
is really old information, before 16 months of effort was 
entered into to reform that performance and to improve that 
performance.
    Senator Akaka. Thank you.
    Mr. Johnson. Thank you.
    Mr. Stewart. Mr. Chairman, may I just very quickly----
    Senator Akaka. Yes, Mr. Stewart.
    Mr. Stewart. Mr. Johnson is absolutely right. Most of our 
data is based on cases that were adjudicated in January and 
February of last year, as I mentioned in my oral statement, and 
a lot has changed in a year. However, I am holding up OMB's 
report to Congress that was submitted several months ago, in 
February, and this report says OMB has not addressed 
reinvestigations. OMB also has not included in its timeliness 
statistics the time of the handoff of applications to the 
investigative agency, handoff of investigation files to the 
adjudicative agency, return files to the investigative agency 
for further information. That is the part I am talking about. 
As these files are returned for further information, as they 
are handed off, as they go back and forth, the contractor is 
sitting there waiting for its clearance and all of this is 
going on.
    So this should be captured in OPM statistics about how long 
it takes. It is erroneous to say it is taking us--we are doing 
everything--80 percent of everything that we are doing, we are 
doing it in less than 90 days.
    Mr. Johnson. Mr. Chairman, there is nothing erroneous in 
that report, nothing. Not one utterance in that report is 
erroneous. We say what is in there. We are very specific about 
what is in there. We are very specific about what is not in 
there. And we are very specific in our discussion about our 
2007 goals, objectives, self-imposed goals, is to develop end-
to-end accountability for this process. There is not one 
erroneous piece of information or contention in that report.
    Mr. Stewart. Mr. Chairman, if you are not capturing all the 
time in the investigative phase, which includes the application 
submission part--that is all the front-end part--then these 
statistics should be viewed with some skepticism.
    Mr. Johnson. That report is very clear about what is there 
and what is not there and I personally resent the contention by 
GAO that is an erroneous report to Congress.
    Senator Akaka. Thank you.
    Ms. Dillaman. If I may, sir, included in that report in 
February, there is also another chart that clearly shows we do 
measure those segments.\1\ Obviously, we can't be responsible 
for the timeliness of the investigation until we receive a 
request. However, we do have full transparency from the time 
the subject completes his or her document until it is handed 
back to the adjudicating agency. The chart shows agency-by-
agency the average number of days that the front-end process, 
that handoff, took, and yes, that has to be added to the 
investigation time.
---------------------------------------------------------------------------
    \1\ The chart submitted by Ms. Dillaman appears in the Appendix on 
page 62.
---------------------------------------------------------------------------
    In my testimony, I stated that the goal was to reduce that 
to 14 days. Anecdotally, we have evidence where it took much 
longer than the 111 days Mr. Stewart referenced. We have gotten 
agencies focused on timely submissions. E-QIP submissions are 
taking 14 days. Paper copy, 30 days, and that 30 days will 
reduce to 14 when we have full e-QIP submission. Nothing is 
being left out. We have full accountability from the time the 
person fires the starting pistol until we get it to 
investigate. That includes my piece, which is doing the 
investigation, a handoff, yes, but also timeliness then through 
adjudication.
    Senator Voinovich. Ms. Dillaman, OPM has desiganted a 
category in the clearance process ``closed pending.'' When a 
case is designated ``closed pending,'' does the clock stop or 
is the time included when calculating the average case 
completion times as required by the Intelligence Reform bill? 
If so, I would be interested in understanding why OPM believes 
this is an accurate method of calculating the time it takes to 
complete an investigation.
    Ms. Dillaman. Yes, sir. No, sir, it does not stop when we 
close it pending. Closed pending is an internal action within 
OPM to measure when the labor I need to provide has been 
provided. I may still be waiting on a third party. All of the 
data in our February report, all of our data which measures 
success under the Act is to ``closed complete,'' final, which 
includes obtaining all third-party information.
    Senator Voinovich. You don't take it off the clock if you 
put it in the closed pending file?
    Ms. Dillaman. No, sir, only internally. Nothing that we are 
publishing now stops the clock at closed pending.
    Senator Voinovich. As a result of the Subcommittee's 
oversight, a strategic plan was developed to monitor progress. 
Mr. Johnson, you indicated that you want to update that plan. 
Is that correct?
    Mr. Johnson. You mean my opening remarks?
    Senator Voinovich. Yes. One of the things that we did, and 
I felt real good about it, in fact, I bragged about it, is the 
fact that OPM, GAO, OPM and the Defense Department got together 
and developed a strategic plan, looking at the whole picture. 
Mr. Johnson, you have now had time to monitor what is wrong 
with the process and what is right. I am asking if you intend 
to update the plan?
    Mr. Johnson. We have--our strategy on reforming this was to 
take the process that exists today, very manual, the same 
handoffs, and try to do the same work that we do now but do it 
better, and we thought that taking the process as is, doing it 
better, could get us to our December 2006 timeliness goals. We 
did for adjudication and we did for investigation, which was 
specifically called out by the Intel bill. The biggest issue is 
the end-to-end, from the very beginning to the very end, which 
was not a focus of the Intel bill but it needs to be and so we 
are changing our way of thinking about this to that end-to-end 
perspective.
    We have all come to the conclusion that the only way we can 
get to the December 2009 goals of, I think it is 40 days for 
the investigation and 20 days for the adjudication, is we have 
to completely rethink the way we do this. We can't just do what 
we are doing now better. We have to do it differently. So what 
we need to do is there is a vision. DIA has a vision. The 
Director of National Intelligence has a vision. It has been 
shared in general terms with the leadership of this oversight 
group. What we need to do, and we will be able to do so within 
the next couple of months, is to come to you and say here is 
the way we envision this process working 2 years from now.
    Senator Voinovich. Let me just say this. I am really 
concerned, because I don't believe that you are going to get it 
done by the time that you leave. I really don't. Senator Akaka, 
I have spent a significant amount of time on this issue. We 
need to have a pretty doggone good plan of what it is going to 
take to get the job done----
    Mr. Johnson. Right.
    Senator Voinovich [continuing]. Because when you leave, I 
would like to be able to take the next Administration and say, 
here is where we are at. Here are the things that need to be 
done. How are you going about doing them? I don't know about 
Senator Akaka, but I would like to bring those people in that 
are going to be working on this immediately so we don't lose 
any time on the clearance reform process.
    Mr. Johnson. Right. You will have that. What you have now, 
we committed to you in December--I mean, in February, this 
recent February, what our goals are and what we are going to 
work on this year, in 2007. One of those is a plan for the 
future, the new system, the new way of end-to-end, more 
automated, more use of commercial databases, more custom 
investigations and so forth. We will have a general picture to 
present to you, share with you within the next couple of months 
and we will keep you as current on that as you want to be and 
we will have by the end of 2008 a real clear knowledge of the 
validity, the likely validity of that and where that is going 
to be, and it may not be completely installed and the way we 
are doing our business then, but it will be really clear what 
the new, improved way of granting and determining security 
clearances ought to be. And so you will have that.
    Senator Voinovich. I would like to have it. The individuals 
we are going to be hearing from on the second panel have been 
critical of OPM's dependency on imaging data, such as 
fingerprint cards, in automating the process. The second panel 
will testify that imaging does not equal automation because it 
does not allow for the image to be read for data extraction. 
They have many concerns.
    It is important that we listen to industry to get their 
ideas on how we can do this better.
    For example, I am really impressed with the improved 
rejection rate of initial applications because of e-QIP. It 
means somebody is talking and saying, hey, how can we come up 
with new technology to improve the process.
    E-QIP is making a big difference. That is wonderful. There 
is less frustration with the agencies.
    By working with industry, we are going to get this done. We 
are going to get this thing off the high-risk list, you hear 
me? Now, everybody says it can't be done, but by God, it is 
going to get done and we are all going to work together to do 
it.
    Mr. Johnson. Well, this can be done. Nobody on this side of 
the table thinks this is impossible. No, this will be done.
    Senator Akaka. I agree with Senator Voinovich. We have 2 
minutes before the vote is called on the floor. I am going to 
call a recess at this time. We will be back and we will 
continue to discuss these issues.
    The Subcommittee is in recess.
    [Recess.]
    Senator Akaka. This hearing will come to order.
    I want to welcome Kathy Watson to the table.
    I would like to say that before we recessed, there were 
some remarks that were made by Senator Voinovich and I want you 
to know he was right on target about what we are here to do. We 
are here to flesh out what we think needs to be changed and 
corrected and begin to put together a plan that we hope will 
work. That is what we are all here to do.
    So let me begin by asking a question of Ms. Dillaman. OPM's 
investigations are almost entirely paper-based. Even when you 
get an electronic application, you print it out and you file 
it. All of that paper is then shipped back and forth to 
investigators and agencies with companies like FedEx. This 
seems like a waste of time and money. Why isn't OPM storing and 
sending documents electronically?
    Ms. Dillaman. We are, sir. That is exactly the process we 
are going through now. Imaging our case papers and working in 
an entirely electronic mode is what is on the plate for this 
year. By the end of this fiscal year, all of our files will be 
imaged files. Next fiscal year, all the work in process will be 
imaged.
    We reach out, sir, to hundreds of different types of 
sources and often the information they provide is delivered to 
us in paper form because that is how it is stored in those 
repositories, Federal, State, and local. We will then convert 
all of that to imaged documents, totally eliminating the paper, 
both for the pending investigations and for the completed 
investigations.
    Senator Akaka. This is a concern. Aren't we risking the 
privacy of a lot of sensitive personnel information when we let 
it out of the hands of the Federal employees and contractors?
    Ms. Dillaman. Oh, absolutely, sir. We take every reasonable 
precaution to safeguard that sensitive information.
    Senator Akaka. Ms. Dillaman, your largest contractor, the 
U.S. Investigation Service, works for other government 
agencies, too, like Customs and Border Patrol. USIS completes a 
lot of those investigations faster by using their own computer 
software and processes. Why can't OPM do investigations as fast 
as its own contractor?
    Ms. Dillaman. Sir, I don't believe that the computer system 
alone is the reason why investigations for some agencies can be 
done quicker. A lot of that has to do with volume, 
predictability of the location of those investigations, and the 
resources that contractor chooses to apply to those 
contractors.
    Senator Akaka. Is there any reason to think that those 
investigations are inferior to an OPM investigation?
    Ms. Dillaman. I would have no basis to judge that, sir.
    Senator Akaka. Mr. Johnson, would OMB ever consider 
allowing DSS to use someone other than OPM to investigate their 
clearances?
    Mr. Johnson. I would want to know why.
    Senator Akaka. You have been working with DSS and the 
question was whether you would consider allowing someone other 
than OPM to investigate.
    Mr. Johnson. If that request came to me, I would ask, what 
is the definition of success here? What is the goal? What is 
the timeliness goal, the quality goal, the cost goal? What is 
the performance you are getting from OPM now relative to that 
goal and what do you believe you will get from an alternative 
source of investigative work? And understand what the risks of 
making a change are versus the benefits and then make a good 
decision. Our goal is to do the right thing for the Federal 
Government and for the taxpayers and if the right thing is to 
do it differently, we will seriously consider that.
    Senator Akaka. Well, let me ask a follow-up with Ms. Watson 
for any comment on what was just said. Do you think that you 
would want more options?
    Ms. Watson. DSS has been considering running a pilot 
program to see if there are alternative service providers for 
investigations so we can do a comparison on cost of 
investigation, the timeliness, and the quality, but we are 
restricted this year from doing that by reapportionment 
language we received from OMB.
    Senator Akaka. As I understand it, it could be that there 
is a problem in spending funds----
    Ms. Watson. Yes.
    Senator Akaka [continuing]. For any pilot projects that 
would use anyone other than OPM to investigate----
    Ms. Watson. Yes.
    Senator Akaka [continuing]. Clearances, and you are saying 
that that is correct?
    Ms. Watson. Yes.
    Senator Akaka. That the funding is a problem?
    Ms. Watson. Yes.
    Senator Akaka. Mr. Andrews, I understand that the computer 
program used by DSS, JPAS, has problems. Some would call it 
unreliable and on the verge of collapse. Can upgrades fix JPAS 
or does it need to be replaced?
    Mr. Andrews. I think it needs to be replaced, sir.
    Senator Akaka. How long have you had that system?
    Mr. Andrews. I don't have any idea, sir. Ms. Dillaman, do 
you know?
    Ms. Watson. DSS actually inherited that system from the Air 
Force. It was designed to do much less than we are asking it to 
do today. It has been upgraded by DSS for the last several 
years, although I don't recall the date that DSS assumed 
responsibility for the system. It has been upgraded numerous 
times to meet current requirements, and I can tell you that we 
aren't meeting current requirements with the upgrades we have, 
but we are now in a position where if we continue to upgrade 
it, we think it could kill the system.
    Mr. Andrews. On a micro-sense, Senator, my perception is 
that if we put more money into JPAS, we are throwing good money 
after bad.
    Senator Akaka. Thank you. Ms. Dillaman, why isn't OPM 
counting the time that Mr. Stewart says should be?
    Ms. Dillaman. We are, sir. All time is accounted for in our 
statistics. Again, sir, though, I can only be responsible for 
an investigation from the time I receive it until the time I 
complete it. But we can, however, track the time it takes to 
get to us and the time after the investigation is completed by 
our organization. Those statistics are provided and continue to 
be provided accurately and consistently and it is broken down 
by agency so that we can identify where those delays are.
    Senator Akaka. Thank you. Senator Voinovich.
    Senator Voinovich. Yes. Getting back to JPAS, in your 
testimony, Mr. Andrews, you recommend the system be migrated to 
Defense Information System for Security (DISS), and discussed 
the high cost of migration. In light of your current budget 
shortfalls, how are you going to pay for it?
    Mr. Andrews. We are working on it, sir. The short answer is 
that we are working with the DOD Comptroller to do just that. 
We are still in negotiation inside the Pentagon for that.
    Senator Voinovich. You say that system is collapsing and 
you are going to go and get it done. Mr. Johnson said that the 
Defense Department has the money it needs. It is a question of 
allocating those resources to DISS. Is that the case, or don't 
you have the money? Ms. Watson, do you want to comment? All I 
want to know is are you going to have the money that you need 
to get the job done?
    Mr. Andrews. As it stands right now, no, sir. Ms. Watson 
can fill in.
    Ms. Watson. No, sir, I don't have the money to do what I 
need now. I have enough money right now to sustain our current 
systems. JPAS is only one of five systems that we use to 
support the personnel security clearance process in the 
Department. DSS is responsible for the other four systems, as 
well.
    To give you an idea of the cost just to sustain JPAS, just 
to keep it running costs me $10 million a year. My IT budget 
this year is $20 million. Ten million of that is going to just 
keeping one part of the system alive. There is not enough money 
left to upgrade the other systems, to keep them running, and to 
build a new system.
    We have spent many hours working this issue with the 
Comptroller's office in the Department of Defense. We are 
continuing to scope the budgetary requirements. But I do not 
yet have funding that I need.
    Senator Voinovich. So you are saying that the Defense 
Department isn't allocating resources that they have to your 
operation, or is it because you haven't had enough money made 
available to you in the appropriation process or request from 
the Office of Management and Budget?
    Ms. Watson. I don't have enough money made available to me. 
Part of that was because DSS probably did not request enough. 
We have in the past years. In the last year, it has not been 
funded. Whether or not the Department has that money and is not 
allocating it to me, I do not know the answer to that.
    Senator Voinovich. Well, it sounds to me like button, 
button, who has got the button?
    Ms. Watson. Yes.
    Senator Voinovich. Where are the buttons, Mr. Johnson? Is 
the money going to be there?
    Mr. Johnson. DOD, as an entity, has all the money it needs 
to address the opportunities at DSS. They are talking about 
finding $10 million, $15 million, which is not even a rounding 
error at DOD.
    DOD does not need more total money to fix security 
clearances.
    Senator Voinovich. How is OMB going to work with DOD to 
help with the funding issues?
    Mr. Johnson. We are going to help them--if they want to 
move money around within DOD, we will help them do that.
    Senator Voinovich. Next week, I am meeting with Gordon 
England. I am going to find out whether he is going to 
reallocate the money. It seems to me it is incumbent on you to 
lean on these agencies to say they need to budget enough money 
to improve the security clearance process. Can I count on you 
to do that?
    Mr. Johnson. You can count on me to deliver that message 
and communicate from Mr. England on down how important it is, 
but I can't make them reallocate that money.
    Senator Voinovich. Senator Akaka, you are on the Armed 
Services Committee. I think you have a little clout there. 
Maybe the two of us will get Mr. England and get a commitment 
out of him that the money is going to be forthcoming.
    Senator Akaka. Well, there is no question the money is 
needed, so we will have to work on that.
    Mr. Johnson. One of the questions you asked me, Senator 
Voinovich, was funding for general operations, continuous 
operations of DSS this year, was that assured, and I think your 
answer, Ms. Dillamon, is yes. The money that they are talking 
about not having is the money to change the way we do business 
and to upgrade or replace JPAS, is that correct?
    Senator Voinovich. You haven't taken--I didn't swear you 
in.
    [Laughter.]
    Go ahead, Ms. Watson.
    Ms. Watson. Sir, right now, I am $25 million short for the 
rest of this fiscal year. There is a reprogramming action and I 
believe it made it to the Hill yesterday or the day before. It 
has the support of the Comptroller in DOD, it has the support 
of OMB, and now we are just waiting for Hill action. I 
anticipate that it will be acted upon favorably, but I don't 
have the answer to that yet. But that money will simply just 
sustain what I have through the end of this fiscal year. It is 
not to upgrade anything.
    Senator Voinovich. Ms. Watson, how much money do you need?
    Ms. Watson. Twenty-five million will get me through this 
year. That is it. Yes, I need plus money for next year. We are 
working with the DOD Comptroller on what we actually need for 
next year. We do have an increase in our budget, but it is not 
enough and they understand that now. We are working through 
that issue.
    And in terms of out years, 2009 and beyond, we are working 
that through the POM process. We know that we need 
approximately $200 million at a minimum to fund the next 
system, DISS. It is not inexpensive to do this work. And, in 
fact, if we are fully funded now, we can't deploy that new 
system until probably fiscal year 2010 or 2011.
    Senator Voinovich. Well, I think that we are going to have 
to get together more often than hearings on this, Senator 
Akaka.
    Ms. Watson. And I want to get it done. I have the team 
assembled to do the work. I just need the money to do it.
    Senator Voinovich. Our staff is very impressed with the 
management team. I agree with Mr. Andrews, your observation 
where you have a good management team. They are really 
impressed with the team that you have. So we are going to work 
with you real close to see if we can't make sure you get your 
money.
    Ms. Watson. Thank you. I will take all the help I can get.
    Senator Voinovich. Yes. In all of the process of improving 
this, have any of you brought in the private sector to get 
their opinion about what they think needs to be done and how 
they can help or what their recommendations are? Mr. Johnson.
    Mr. Johnson. With an eye towards how do we do it 
differently, how do we do it more like the private sector does? 
But they have a different challenge. We have a more complicated 
security clearance challenge than Wall Street firms and so 
forth. But nevertheless, sir, there are lessons to be learned, 
and yes, there has been a lot of conversation between Eric 
Boswell and John Fitzpatrick at the Office of the Director of 
National Intelligence. DOD has had a lot of conversations with 
outside firms, as well, about alternative ways of doing this. 
And so there will be a lot of consultation with outside firms, 
not only suppliers of and that will continue.
    Senator Voinovich. You put together a strategic plan for 
security clearances. What input have you received? We are going 
to have a second panel here. What input have you or the 
Department of Defense or even Ms. Dillaman, in your operation, 
gotten from the private sector looking at the system and 
getting their thoughts on how they think that you can improve 
the system?
    Mr. Andrews. Senator Voinovich, let me sort of drop down 
one level of granularity from Mr. Johnson. ODNI, Eric Boswell, 
the ambassador who was responsible for security for Mike 
McConnell, and I are meeting tomorrow under Mr. Johnson's 
sponsorship to put together a team that will come up with the 
new plan, in other words, not just fixing DSS, the present 
thing. We are working on very short internal time lines. I 
don't want to say what the time lines are because you will 
probably drop back one day and want a report on that, but let 
me say that one of your people on the panel following, Tim 
Sample, is going to be representing industry's input into that 
tiger team to work on the new process. So, yes, sir, we are.
    Senator Voinovich. So you are going to bring him in and get 
his input?
    Mr. Andrews. We have and we will.
    Senator Voinovich. OK. Ms. Watson.
    Ms. Watson. On the IT side of the house, we knew we need to 
bring industry in to assist us in designing the new system. 
There is an acquisition management framework that we need to 
work through in the Department and that will allow us to get 
outside assistance. We talked to industry, in fact, some of our 
industry partners earlier this week, about their willingness to 
get involved in this process and assist us and our desire to 
take the assistance. To be honest with you, our team has been 
focused on the last 4 months just getting enough money to stay 
alive this year instead of doing outreach on what we can do 
with the new systems, and we know we need to change our focus 
and we will change that once we have some money.
    Senator Voinovich. I will mention again that when I was 
mayor and when I was governor, I didn't use a lot of 
consultants. I don't know what the rules are in terms of ethics 
but it seems to me that if our friends that deal with the 
Department are concerned about security clearance, they ought 
to do some pro bono work to help out.
    It is amazing what the private sector can do. It seems to 
me that the private sector could be very helpful in moving this 
along. If you can do it, you ought to take advantage of them.
    Thank you, Senator Akaka.
    Senator Akaka. Thank you, Senator Voinovich.
    Just to follow up on a response that you gave, Ms. Watson. 
You said that you were $25 million short when the question was 
asked about how much you needed. Since you are $25 million 
short now, how much do you need?
    Ms. Watson. We have done an assessment of what we need for 
next year to sustain ourselves versus what we need to improve 
ourselves. The difference is substantial. It is about $80 
million. We are working to prove our case in the Department 
that we need that additional $80 million so that we can begin 
to make improvements.
    Senator Akaka. Thank you. Mr. Johnson, under the 
Intelligence Reform bill, agencies are supposed to allow for 
reciprocal security clearances from other agencies. This isn't 
happening at all agencies. Can you tell me why that is or what 
is the problem? Also, is OMB tracking the number of security 
clearances that must be redone?
    Mr. Johnson. We are not where we need to be on the whole 
issue of reciprocity. One of the things we have come to realize 
is there is reciprocity in terms of granting a security 
clearance. There is also reciprocity with regards to 
determining suitability for employment. So if I want to hire 
somebody from DOD, there are two issues. Does their security 
clearance pass to me, do I reciprocate and accept the security 
clearance? Yes, but I still might want to do some additional 
investigation to determine the real suitability of that person 
for working at OMB, or whatever the agency is.
    So the intelligence bill talks about security clearance 
reciprocity. There is also the issue of suitability 
reciprocity. We are trying to reconcile those, get those 
brought together so that it is the same issue, the same 
additional investigation or not that would have to be done, the 
determination to be the same. We are not where we want to be on 
that. But the general feeling is that in terms of reciprocity 
with regards to security clearances, that is not perfect, but 
it is better than it used to be and it is a pretty high level.
    When we have looked at--we have the ability at OPM to look 
at when somebody requests a security clearance, background 
investigation be done, do they already have a security 
clearance? What is the incidence of that? Ms. Dillaman, do you 
know? Can you talk to that?
    Ms. Dillaman. I can't address how often it happens, but I 
do know that we have an automatic stopper in the system that 
would keep an agency from reinvestigating someone who has a 
current, valid investigation on file.
    Senator Akaka. Mr. Johnson, I was asking about the number 
of security clearances that must be redone. Can you tell me how 
many clearances have been redone?
    Mr. Johnson. I don't know, but I would bet it is next to 
none.
    Senator Akaka. Mr. Stewart, the GAO reported last September 
that more needs to be done by the OMB to fix the clearance 
process. Which part of the chain is the biggest problem, OMB, 
OPM, or DSS?
    Mr. Stewart. Thank you for that question, Mr. Chairman. As 
you know, DOD's personnel security clearance program is on the 
high-risk list, so we have focused on DOD. I am encouraged by 
much of what I have heard here today from Mr. Andrews and 
others. But part of the problem that remains, and one problem 
that will have to be fixed, and I really want to emphasize 
this, we must fix this problem of DOD not knowing what its 
workload projections are, because that is one of the reasons we 
put them on the high-risk list and they are not coming off the 
list until they have a better way of projecting their workload.
    Last year, Ms. Dillaman testified that DOD exceeded its 
workload goals by 59 percent. OMB's plan says that agencies 
will be within 5 percent of their workload projections. Today, 
I don't know where DOD is, but I would bet that they are not 
within 5 percent of the workload. So that is a big problem for 
us as we see it and that part has to be fixed.
    The other part of this deals with technology, and you and 
Senator Voinovich have touched on pieces of this. We have not 
done an investigation of JPAS and PIPS, which is OPM's system, 
and the other systems out there, but we would love to have the 
Subcommittee to ask us to do that job because we feel that part 
of the fix to this problem goes to the technology that is in 
play right now.
    You mentioned, Mr. Chairman, that USIS has systems in place 
that they use for other customers like NRO and other agencies 
that appear to be doing things faster. GAO would love to look 
at those systems. We have IT people in house, experts. We have 
the resources ready to go to do that job if you want us to do 
it.
    So those two areas, I would say, DOD's workload projections 
and then the whole technological piece of this process, are 
where we think we really need to focus.
    Senator Akaka. Well, I want to thank you so much and thank 
this panel very much for your responses to our questions.
    Mr. Stewart. Mr. Chairman, may I say one other thing?
    Senator Akaka. Mr. Stewart.
    Mr. Stewart. I thought I was going to get a question and I 
didn't, but I just want to say this to you and Senator 
Voinovich. Mr. Johnson mentioned that it is likely that OMB 
will continue as the lead on this situation for the Federal 
Government, but at some point, this may go to the ODNI, the 
intelligence community, and if that happens, that will take GAO 
out of the picture. We have significant challenges working with 
the intelligence community. Comptroller General Walker has been 
meeting with Senator Rockefeller on the Senate Intelligence 
Committee. He has met with Congressman Reyes, Chairman of the 
House Intelligence Committee, to try to make a dent in this 
issue. So I just wanted to let the Subcommittee know today that 
if at some point this issue goes to the intelligence community, 
GAO will cease to have access to many of the records we will 
need to assist Congress in doing its work.
    Mr. Andrews. Mr. Chairman, I hesitate to speak for my 
highers in the intelligence community, but I will tell you that 
neither the ODNI nor the USDI and the Department of Defense are 
casting any covetous eyes toward taking over Mr. Johnson's 
responsibility.
    [Laughter.]
    Mr. Stewart. Thank you, Mr. Chairman.
    Senator Akaka. Yes. Before concluding this panel, I want to 
mention that I have a bill, S. 82, that reaffirms this 
condition.
    Mr. Stewart. Thank you for that, Mr. Chairman. We 
appreciate that.
    Senator Akaka. Again, I want to thank you very much and 
again repeat that Senator Voinovich and I are committed to 
looking at the problems we are facing and we are looking into 
all of the government's high-risk areas to see what we can do 
together to even come to improve it and do it better. We may 
also try to save money doing it. But this is a good part of the 
process, and again, I want to thank you. We are trying to fix 
whatever needs to be fixed, and we can only do that with your 
help. We continue to look forward to working with you on this.
    I want to thank this first panel and encourage you to stay, 
if you can, to hear our second panel of witnesses. So thank you 
very much, and may I call up the second panel, please.
    As Chairman of this Subcommittee, I would like to welcome 
our second panel, Timothy Sample, President of the Intelligence 
and National Security Alliance, and Doug Wagoner, Chief 
Operating Officer of Sentrillion, representing the Information 
Technology Association of America.
    At this point in time, I am going to call for a recess of 
about 15 minutes. This Subcommittee is in recess.
    [Recess.]
    Senator Akaka. The hearing will be in order.
    It is the custom of this Subcommittee to swear in all 
witnesses, so I ask you to please stand, raise your right hand, 
and repeat after me.
    Do you solemnly swear that the testimony you are about to 
give this Subcommittee is the truth, the whole truth, and 
nothing but the truth, so help you, God?
    Mr. Sample. I do.
    Mr. Wagoner. I do.
    Senator Akaka. Thank you. Let the record note the witnesses 
responded in the affirmative.
    At this time, I welcome both of you, Mr. Sample and Mr. 
Wagoner, and ask for your testimony, Mr. Sample please proceed.

TESTIMONY OF TIMOTHY R. SAMPLE,\1\ PRESIDENT, INTELLIGENCE AND 
                   NATIONAL SECURITY ALLIANCE

    Mr. Sample. Thank you, Mr. Chairman. I am honored to be 
with you this morning to discuss this vitally important issue.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Sample appears in the Appendix on 
page 85.
---------------------------------------------------------------------------
    Mr. Chairman, I am the President of the Intelligence and 
National Security Alliance (INSA), which is a nonprofit, 
nonpartisan, professional association that focuses on 
intelligence and national security policy and practices. I 
wanted to mention that INSA's Counsel on Security and 
Counterintelligence is in the process of completing a white 
paper on today's subject, which I will be happy to forward to 
the Subcommittee once completed.
    With regard to evaluating the progress in security 
clearance reform, I am skeptical about the data presented in 
the first panel, in part because there is no end-to-end process 
of evaluation, thus making valid, unbiased, empirical data hard 
to derive. The key, Mr. Chairman, is to significantly transform 
the process, not to update it.
    In response to the obstacles for success, I strongly agree 
with the Security Clearance Reform Coalition, of which INSA is 
a part, and with Doug Wagoner's testimony, including, I 
imagine, his oral testimony he will give in a minute. But in 
doing so, I also note that by instituting these changes alone, 
we end up with a more efficient but still very flawed system 
that never addresses the root cause of these problems, a 
culture steeped in risk avoidance. Saying this is not a 
criticism of security officers. It is a recognition of an 
overall approach.
    Today, the personnel security process that we utilize is 
not that different from when it was implemented over 60 years 
ago. This process relies primarily on a front-end labor-
intensive investigation with a periodic reinvestigation. But by 
focusing on government efforts on initial investigations, which 
we are now emphasizing in the attempt to decrease backlog, we 
are creating significant security risks as the backlog in 
periodic reinvestigations remain at a lower priority.
    Let us remember that the most damaging spy cases of the 
past 15 years have been committed by those who have had access 
to classified information for decades, not those who just 
walked in the door. Ames, Hanssen, and Montes all worked under 
the same system we are evaluating today and worked for years 
before beginning to spy against the United States.
    A second outcome of a risk avoidance culture is our 
inability to get the right people in the right job when we need 
them. Consider for a moment that under our current system, we 
likely would not hire the first and second generation Americans 
who were so critical in breaking Japanese codes in World War II 
or building the atomic bomb.
    As Senator Voinovich stated, the impact on industry 
supporting government is also substantial. Private sector 
contractors have a difficult time filling positions the 
government requests. The government security requirements and 
the acquisition process have created a competitive marketplace 
to hire personnel based on whether he or she has a clearance, 
driving up salaries, bonuses, and costs. Ultimately, industry 
passes those costs on to you and me.
    And society has changed enough over the past 60 years in a 
way that makes field investigations less effective than they 
once were. Although some pieces of valuable information can be 
discovered during field investigation, our society has changed 
to the point that in most cases, more information can be 
derived from available databases than from asking your neighbor 
whether or not you live within your means.
    Mr. Chairman, the security community's risk avoidance 
culture is based on a threat posture, a society, and a pace of 
life that are well in our past. We attempt to avoid risk in a 
desire to achieve unachievable goals of absolute security and 
in the process we are now creating vulnerabilities in which 
others can capitalize.
    We propose moving from a risk avoidance security culture to 
one based on risk management, as many companies around the 
world have done, recognizing that risk cannot be avoided but 
must be managed by putting in place mechanisms that would 
mitigate this risk through a robust ability to detect issues on 
a day-to-day real-time basis.
    For example, a risk mitigation process could look to the 
financial sector. First, many companies that deal with the most 
sensitive insider information are cleared by an automated 
process of record checks, in some cases within 2 weeks, with a 
rigid monitored compliance structure to catch malfeasants.
    Another example comes from the credit card industry. When I 
withdraw money from an ATM, the credit card company has a 
number of continuous safeguards to ensure that the card is 
legitimate, that I am the legitimate card holder, including by 
constantly evaluating my purchase habits and notifying me if 
something out of the ordinary transpires.
    Mr. Chairman, there is no reason that the government could 
not adopt similar processes for granting and monitoring 
security clearances. In such a system, a clearance, once 
granted at a certain level for a certain job, would establish a 
security score, if you will, much like a credit score. That 
would be assigned to an individual for his lifetime and would 
be continuously monitored and adjusted based on a continuing 
assessment of the evaluation process.
    The elements of such a system would include a fully 
automated government-wide application system, including 
electronic fingerprinting; a centralized automated 
investigation that would perform significantly robust database 
checks, more than we do today; an automated adjudication system 
that would take this applicant's score and compare it with the 
acceptable level of vulnerability for the specific job for 
which the individual has applied, potentially allowing granting 
some clearances through an automated process; an end-to-end 
case management system to ensure efficiency and effectiveness; 
an automated continuous evaluation system that would run in the 
background and would adjust the individual's score on a near-
real-time basis, raising concerns when warranted; a system of 
aperiodic investigations that would be triggered randomly or 
from a continuous evaluation process; and a robust government-
wide counterintelligence process.
    Mr. Chairman, let me stress that this is not a proposal for 
a cost saving measure, although I do believe that substantial 
savings could be recognized over time. But we cannot do 
security on the cheap.
    In addition, such a new system is achievable based on 
existing commercial technology models. Indeed, technology never 
has been the issue. It has been a matter of recognition and 
resolve.
    And Mr. Chairman, if I could, let me mention from today's 
panel, I do have a little bit of concern about Mr. Johnson's 
statement that as they look to the future, they would look at a 
research and development project, and in those terms for the 
government, that usually suggests a time line that far exceeds 
what I think we can accomplish here and normally involves heavy 
reliance on manipulating legacy systems, which is something I 
think we need to get away from. Technology has far surpassed 
our legacy systems of today.
    Heretofore, government leaders have relegated security to 
an administrative function. Only recently have they begun to 
understand the significant impact of today's process and the 
bureaucracy that supports it. There is a growing realization 
that today's process does not adequately meet today's threats, 
let alone those in the future. Therefore, I implore the 
Subcommittee to consider the larger picture and support 
significant but necessary changes that have been offered. Thank 
you, Mr. Chairman.
    Senator Akaka. Thank you very much. Mr. Wagoner.

    TESTIMONY OF DOUG WAGONER,\1\ CHIEF OPERATING OFFICER, 
     SENTRILLION, ON BEHALF OF THE INFORMATION TECHNOLOGY 
                     ASSOCIATION OF AMERICA

    Mr. Wagoner. Good morning, Mr. Chairman and Senator 
Voinovich. My name is Doug Wagoner. I am the Chief Operating 
Officer of Sentrillion. I am speaking to you again today as a 
member of the Information Technology Association of America 
(ITAA) and would like to thank you for this opportunity for 
your continued commitment to reforming the clearance process.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Wagoner appears in the Appendix 
on page 93.
---------------------------------------------------------------------------
    Since 2003, ITAA has led the Security Clearance Reform 
Coalition of 10 trade associations to bring industry's 
recommendations to the clearance process. Several of our 
previous recommendations were adopted as part of the 2004 
Intelligence Reform Act, which we talked about earlier this 
morning.
    Industry continues to face significant problems with the 
clearance process that challenges our ability to meet national 
and homeland security missions. Delays in processing persist 
because of government's slow adoption of technology, agencies 
having their own requirements for clearances, and funding 
mechanisms that prevent investment in technology to save time 
and money.
    Industry's recommendations can be summed up as this: One 
application, one investigation, one adjudication to create one 
clearance. Our detailed recommendations to achieve this are 
found in the addendum to my testimony. I would like to 
highlight one recommendation from each section.
    The application: Industry believes that the single biggest 
impact to the entire clearance process would be the adoption of 
a 100 percent digital application. There are three parts to the 
application, the 30-page SF-86, a signed release form, and 
fingerprints. Industry applicants for DOD now use the 
electronic questionnaire, e-QIP, for the SF-86, but the other 
components of the application are not collected electronically.
    Fingerprints are still collected and submitted using paper 
and ink cards. This baffles industry, since the Armed Services 
recruits, DHS's certification of port workers, and much of 
local law enforcement all use digital fingerprints. Industry 
has offered to provide the technology to submit digital 
fingerprints, but this offer was declined because databases are 
incapable of accepting the digital prints. The problem is that 
the fingerprint cards must be mailed and then later connected 
with the electronic application, creating significant 
opportunity for lost, delayed, or mismatched cards, which 
delays the start of the investigation.
    The lack of a 100 percent digital application is causing a 
new serious problem, known as out-of-sync applications. Out of 
sync applications are e-QIP applications that appear to have 
been submitted successfully to the JPAS system, but in reality 
these out-of-sync applications are lost in the digital ether. 
We estimate over 2,000 industry applications are out of sync 
and potentially tens of thousand more from DOD service members. 
Out-of-sync applications are only discovered by a diligent 
security officer who follows up on a delayed application.
    Industry would like to recognize the efforts of the new 
Director of Defense Security Service Kathy Watson for 
identifying these and other problems and making suggested 
improvements to JPAS, but as we heard this morning, we are 
disappointed by the lack of funding and prioritization from the 
Department.
    An easy solution to implement would be for OPM to enforce 
their 2-year-old published requirement for government-wide use 
of e-QIP. OPM continues to accept 25 to 40 percent of all 
applications in paper, with agencies like GSA sending 100 
percent of their applications using paper. A complete digital 
application would start the investigation process in minutes, 
as opposed to days or weeks, and lead to greater automation of 
the rest of the process.
    Investigation: OPM's Federal Investigative Services 
Division (FISD), is responsible for 90 percent of the 
investigations of all clearances granted. Here, too, the 
process needs technology to eliminate the tremendous amount of 
touch labor. For example, all files, even those submitted 
electronically, are printed out and placed in doctor office-
style folders with colored tabs created for each applicant. It 
is industry's opinion that this paper shuffling between Boyers, 
Pennsylvania, and the field creates delays in clearance 
processing.
    Industry recommends that government create an end-to-end 
data management process using e-QIP. The data collected here 
could then be electronically verified via commercial and 
government databases, such as credit histories and criminal 
records. This type of data is the linchpin to make billions of 
dollars of risk-based decisions in the financial and insurance 
industries. The DNI is currently studying the use of this type 
of data for investigations and we look forward to their 
findings.
    All this data would go to adjudicators as an interoperable 
electronic file to assist in the speed and accuracy of the 
adjudication process, and this is going beyond imaging, which 
we have heard about this morning. Imaging is simply taking a 
picture of a piece of paper. What we want is to capture the 
data electronically and then move it around, manipulate it, 
analyze it, and really use the data as opposed to just taking a 
picture.
    Adjudication: Adjudication can be improved through better 
definition of derogatory information in the course of the 
investigation. Currently, some derogatory information is not 
fully developed in the investigation, imposing long and 
unnecessary risk assessments on adjudicators. We still believe 
that adjudicators are a critical part of the process of 
evaluating trustworthiness, but intentionally leaving issues 
undeveloped or labeling applications as ``closed pending'' 
exacerbates the condition and makes it harder for adjudicators 
to accurately assess an applicant. Often, this case is sent 
back for reinvestigation, only to clog the backlog.
    Reciprocity: Bill Leonard at the Information Security 
Oversight Office should be applauded for his efforts to bring 
about greater reciprocity throughout government. Frequently, 
his efforts are overcome by the intractibility of old habits. 
This is in spite of reciprocity requirements in the 2004 
Intelligence Reform Act. Limited trust in other agencies' 
investigations or adjudicative abilities is at the heart of the 
reciprocity problem. Empowering OPM as the single investigative 
source for most clearances was the correct step towards 
establishing uniformity of the process. Other steps, like the 
CIA sharing unclassified clearance information to JPAS, are 
applauded as enhancing reciprocity. However, government-wide 
sharing is still limited. As the sole system of record for 
collateral clearances, all agencies need to use JPAS.
    Budget: In conclusion, Congress must provide innovative and 
flexible budgetary authority to agencies to allow for needed 
technology and process improvements. FISD, for example, 
receives no funds but instead pays for their operations through 
agency customer fees. This pay-as-you-go system cannot budget 
for new time and cost-saving technology detailed in our 
recommendations.
    Mr. Chairman, we hope that these recommendations provide 
options to improve our clearance process. We are ready to 
discuss all the recommendations in the addendum and look 
forward to working with you and the Subcommittee to bring about 
additional improvements to national security by improving our 
clearance process.
    Senator Akaka. Thank you very much, Mr. Wagoner. Now we 
will have a round of questions.
    Mr. Wagoner, cleared workers have become a hot commodity 
for contractors. Want ads for a lot of jobs now say that you 
shouldn't even apply if you don't have a clearance already. I 
worry that contractors now may be more concerned with finding 
someone with a clearance than finding someone with the best 
skills for the job. Do you agree with this?
    Mr. Wagoner. There is no doubt that we have customers to 
serve, we have contractual requirements that we must meet, and 
there is tremendous pressure placed upon the industry for the 
cleared personnel. At the end of the day, I can't imagine any 
contractor putting an unqualified person in a job just because 
they have a clearance. At the end of the day, that is going to 
come out in your performance. It is not good business.
    But what you are seeing, as opposed to us putting 
unqualified people in the job, is us paying much more for these 
folks. As the COO of a company that does a lot of cleared work, 
I am stealing from my peers, they are stealing from me, and 
every single time the person makes a jump, they are jumping for 
5, 10, 15 percent more salary. Someone alerted me today out in 
the hallway that there is a company that says if you were hired 
in the first quarter of this year, we are going to put your 
name in a hat--if you have a clearance--and if we pull your 
name, you are going to get a new BMW, not even an American car. 
So the pressure is great, but it is greater on the financial 
side of the business than our performance.
    Senator Akaka. Mr. Sample, apparently some agencies in the 
intelligence community can do background investigations faster 
than OPM. In your experience, how long does it take to get an 
intelligence clearance versus a DOD clearance?
    Mr. Sample. Mr. Chairman, thank you for that question. 
Obviously, part of that is position-dependent and job-
dependent, but I think that there is a growing track record 
now, for example, it was mentioned this morning and I think 
mentioned earlier that the National Reconnaissance Office, for 
example, has instituted some significant technological 
advancements in their process as well as the ability to conduct 
their investigations in a much more robust fashion so that they 
have time lines that are down into, I believe, the 30 to 40-day 
requirements. That is not in all cases, clearly, but I think 
for a vast majority, that is true and I would be happy to come 
back to the Subcommittee with a much more firm time line.
    Senator Akaka. Why do you think that the intelligence 
clearance is faster? Are their standards lower or different 
than Defense's?
    Mr. Sample. I think it is because there are different 
standards for each different agency. I think that is part of 
it. But more importantly, I think an individual agency within 
the intelligence community has much better control and insight 
and the end of the overall process. They know when something is 
being held up. They know how to manage that. It is something 
that allows them to be more flexible, to be better responsive 
during the investigation, and consequently, they can move at a 
much faster pace.
    Senator Akaka. Mr. Wagoner, in your testimony, you refer to 
OPM's investigative database, PIPS, as antiquated and say that 
in the private sector, it would have been replaced as an out-
of-date hindrance to efficiency. However, in a report last 
February to Congress, OPM praised the system as a model of 
speed, reliability, and security. Can you tell me why you don't 
share OPM's assessment of PIPS?
    Mr. Wagoner. I think the best way to answer it is in my 
testimony when I noted that there are things that we all would 
like to add, be it moving data around, adding the digital 
fingerprint, adding a digital signature, and at the end of the 
day, the reason we can't implement those other technologies, 
which we use every day--you go to a supermarket, you have your 
digital signature. I mean, this is not super-advanced 
technology. The problem is that you can't bolt these kinds of 
advancements onto PIPS. It is just that antiquated.
    As an ancillary note, I am not sure if they are true--we 
have heard stories of bringing people out of retirement to 
maintain PIPS because the languages that were used to build 
that are so old, the documentation was so poor, they brought 
folks back just to maintain it. So I cannot imagine how it 
could be the model for efficiency.
    Senator Akaka. Senator Voinovich.
    Senator Voinovich. Were you here when the other witnesses 
were testifying?
    Mr. Wagoner. Yes, sir, I was.
    Senator Voinovich. OK. One of the questions I asked them is 
what input have they gotten from their customers in order to 
improve their system. I would like to know from you is what 
communication has your organizations had with OMB, OPM, and 
Defense?
    Mr. Sample. Thank you, Senator. INSA has had a continuing 
dialogue with government. A lot of our work actually has been 
through the coalition that Mr. Wagoner is here to represent 
today. Recently, however, we have had a significant amount of 
interaction with the Department of Defense, and I give them 
credit in saying that the Deputy Secretary has recognized that 
something significant needs to be changed if the Department of 
Defense is going to be able to manage their clearance process 
and their security process in the future and they had asked me 
to come in----
    Senator Voinovich. You are talking about Gordon England 
now?
    Mr. Sample. Yes, sir.
    Senator Voinovich. OK.
    Mr. Sample. And the new USDI, Jim Clapper, and also Bob 
Andrews, the witness from this morning, brought me in and asked 
me to really take a look at this and advise them as they start 
to structure what a new system might look like.
    Consequently, I think that there has been some awakening 
within DOD. I am encouraged by it. As Mr. Andrews said, they 
are continuing to reach out and INSA will come together and 
support their needs as they go forward.
    I also would add, and Mr. Andrews mentioned this, that 
there are now meetings between the DNI, DOD, and OMB to really 
look at what a future system that is much more like the one 
that I described in my opening statement might look like and 
whether or not that is achievable, and we will certainly 
support them in every aspect that they need.
    Senator Voinovich. Mr. Wagoner.
    Mr. Wagoner. While ITAA and the Security Clearance 
Coalition may differ with the progress that has been made, or 
maybe the solutions that need to be implemented, I can tell you 
that all----
    Senator Voinovich. The coalition is made up of who again?
    Mr. Wagoner. It is made up of the Aerospace Industries 
Association, Armed Forces Communication Electronics 
Association, NDIA, Professional Services Council, Mr. Sample's 
organization, INSA, Association of Old Crows, Contract Services 
Association, American Council of Engineering Companies, and 
there is one I may be missing.
    Senator Voinovich. OK. We have it here in front of us.
    Mr. Wagoner. OK.
    Senator Voinovich. Yes. Good.
    Mr. Wagoner. But I can tell you that all the witnesses this 
morning, and in addition DNI, have been very open. Any 
questions, they always take our calls. We have several meetings 
a year. They come to talk to our members to report on 
progress----
    Senator Voinovich. Have you had meetings recently with 
them? It seems like from what Mr. Sample said that there seems 
to be a renewed interest at the Department of Defense----
    Mr. Wagoner. I met with representatives from DNI's study 
group of clearances just last week, had a meeting with them 
personally. Ms. Dillaman has briefed our coalition on a regular 
basis, I would say at this point, on her progress.
    Senator Voinovich. Who did you meet with at DNI?
    Mr. Wagoner. It was Mr. Capps, representing Mr. Fitzgerald, 
who is working on the pilot project looking at data.
    Senator Voinovich. What is your observation in terms of the 
sincerity of these folks?
    Mr. Wagoner. I think it is very sincere. I think they want 
to make a difference. I think they understand the problem. I 
think they understand, to your point, sir, that there is an end 
customer that has a mission, a national security mission to 
complete. It is inter-government challenges, it is the 
budgetary challenge. We just can't seem to get to the goal 
line.
    Senator Voinovich. Now, the JPAS system, Mr. Andrews says, 
is collapsing and that he recommends that the system be 
migrated to the Defense Information System for Security, DISS, 
and discussed high costs of migration. In light of DSS's 
current budget shortfalls, is it your opinion that they don't 
have the resources to get the job done?
    Mr. Wagoner. Yes, sir. They do not have the resources to 
get the job done, nor--I am not familiar with that 
organization, DISS. I don't know how a simple transfer of an 
application is going to help. I do agree that engineering needs 
to start now on something new very close to what Mr. Sample's 
recommendations were, really looking at a new business process 
and an application to support that new business process.
    Senator Voinovich. Do you think OMB, OPM, and DOD 
understands what has to be done?
    Mr. Sample. Senator, I believe certainly within DOD they 
understand that, or certainly they are starting to. I think Mr. 
Andrews understands that and he has been pushing for looking at 
a new system. In relation to DISS specifically, it is a system 
that has been in development. It has a significant budget. I am 
not convinced yet whether at the end of the day it is the right 
system, and I only say that because it is designed to meet the 
current processes, and if you go along the line of saying you 
need to change your business processes going forward on how you 
do this, then there is a likelihood that system may end up not 
being adequate for what you need.
    Senator Voinovich. That is one of the questions that I 
would ask Gordon England. Are they really sure that transfer to 
DISS is the right technology solution.
    Mr. Sample. Yes, sir.
    Mr. Wagoner. You do not want to automate a poor process.
    Senator Voinovich. You heard a lot of the testimony this 
morning. I would be interested in your comments about it. Do 
you think there were some inaccuracies or exaggerations?
    Mr. Sample. Senator, I think my interpretation of this 
morning's panel is you had a group of people who, I believe, 
are trying to do a good job under the current system. I think 
that their goals and their guidelines thus far have been to 
make the system that they have better and respond to the 
backlog issue. I think that not all of them have gotten to the 
point of understanding that the process itself may be the 
problem, let alone the systems that are involved, and I think, 
as I said in my statement, I think there is an awakening there, 
but it is slow to come and it is the first time I know with my 
experience in the security arena, the first time I have seen 
this many high-level individuals in various agencies who are 
actually looking at this and understanding there is a problem 
and are willing to consider what, for government, are fairly 
dramatic changes.
    Senator Voinovich. Mr. Wagoner, your comments?
    Mr. Wagoner. Yes, sir. Mr. Stewart's recognition that--of 
course, it obviously was open for contention on the days--I am 
glad he brought that up, because industry has been frustrated 
by the numbers that we get out of OPM where they continue to 
say, well, we are doing better, the investigation is shorter, 
the adjudication is shorter. The problem is, we meet with our 
membership every month and we understand it is anecdotal 
evidence, but this is across many companies, across many 
associations. Generally speaking, we don't see it getting 
better for the Top Secret clearances. Maybe a few days, but we 
don't see the dramatic change that would be as evidenced in the 
February report from OPM. So I am glad Mr. Stewart raised that 
today and maybe everyone can get together on reconciliation of 
exactly when does the process start and when does it end and 
then we can get some good numbers and set some good metrics.
    Mr. Sample. Senator, if I could add, what is interesting 
is, and Mr. Wagoner just said that some of this is anecdotal, 
but ironically, from my time in the intelligence community, 
from my time in the House, and now from my time with INSA, I 
don't run into someone who has been in government and has had a 
security clearance who doesn't have some relatively dramatic 
story about their own personal interaction with the security 
clearance process and the delays involved.
    Senator Voinovich. It is amazing to me that even though 
Congress has required improvements in the security clearance 
process, many agencies are not abiding by these mandates. At 
this stage of the game it is fair to say that the process is 
broken and has not been improved.
    Mr. Sample. No, sir, I don't believe it has. And one last 
comment is that I mentioned what I consider to be the risk 
avoidance nature of this culture right now. Mr. Chairman, you 
had asked about the PIPS system and one of the comments that 
was made earlier was how secure they say it is. Well, of course 
it is secure. It connects to nothing.
    [Laughter.]
    But if your goal is absolute security at the expense of 
getting the job done to support national security, then at what 
cost is your business process?
    Senator Voinovich. I have run out of my time. Senator 
Akaka.
    Senator Akaka. Do you have further questions?
    Senator Voinovich. I would like to stay in touch with both 
of your organizations. It would be nice, maybe, on a monthly 
basis as to how you think things are moving along. Are you able 
to provided input? As I mentioned to Mr. Johnson, I think that 
we are going to push them hard for this plan. I would like to, 
as soon as possible, get your reaction to the plan so that if 
there are major concerns that you have, that we can raise them 
in the beginning rather than getting on the track and just stay 
with it.
    I really believe that, from what I can ascertain, that 
there is a real sense of--more of a sense of urgency. We have a 
golden opportunity to return this process. But if we don't stay 
on it on a very regular basis, it is not going to get finished.
    The last thing is, how do you think Ms. Watson is doing?
    Mr. Sample. My experience with Kathy Watson has been 
tremendous. I think she is the right person for that job right 
now. The fact that they have taken the step of taking the 
``acting'' away from her title will be tremendous. I think her 
management skills are shown in the leadership team she has put 
together and I think it is an issue at this point of giving her 
not only the trust, but the backing and support to allow her to 
get her job done.
    Mr. Wagoner. I think she is phenomenal. I think we all need 
to support her and give her what she needs. I think she will 
make good use of it. She knows what needs to be done. She was 
prepared today. She is phenomenal, very open with industry and 
definitely wants to make a difference.
    Mr. Sample. Senator, one last comment about Ms. Watson is 
that fixing DSS and fixing the overall process are two 
different issues, and sometimes they get intertwined. The 
importance of fixing DSS, though, is regardless of how you come 
out with the overall process, even with the best improvements 
you can make, if you can't hand it off to a healthy DSS, then 
you have undercut your whole effort.
    Senator Voinovich. Right. So DSS has to be in the position 
where they can send the information over to OPM and do it in as 
efficient a way as possible. When it comes back to DSS they 
need to be able to adjudicate it as quickly as possible. They 
are fundamental to the security clearance process.
    Mr. Wagoner. And the other role they have is as the owners 
of JPAS, which should be the system that everyone uses for 
clearances. Giving her the funding to get that where it needs 
to be once we all agree on the new process would help all of 
government, not just DOD.
    Senator Voinovich. Thank you, Mr. Chairman.
    Senator Akaka. Thank you very much. This has been a great 
discussion. Your testimonies were to the point, and again, I am 
repeating that this Subcommittee will continue to work on this 
issue. As Senator Voinovich said, we can't let it continue. You 
have been very helpful with your responses.
    The reason that we are really going after this is our 
country has been speaking so much about national security and 
this process is so vital to our national security. When 
investigating this, I couldn't believe the information I was 
finding, and because of that, I couldn't just sit there and let 
it go. So Senator Voinovich and I, I want you to know, are 
going to stick with this, and as we pointed out, we are going 
to flesh out the problems and work on them, correct them, 
improve them, and also try to plan for the future.
    As my friend, Senator Voinovich said, we can't wait for the 
next Administration. I am so glad that he also mentioned that 
we need your kind of help. As you said, Mr. Sample, we can't 
just change things, we have got to transform what is there and 
we need to do it in a manner where everybody wants to be a part 
of the process.
    So I want to say thank you to our witnesses for discussing 
with us this critically important issue. We must continue to 
work to get DOD's clearance process off GAO's high-risk list. 
We have heard very valuable testimony today and I think it will 
be very useful as we move forward. I want to thank you also for 
your patience. Usually, we don't have as many recesses as we 
had today. I also want to thank my friend, Senator Voinovich, 
for being such a huge part of this hearing.
    The hearing record will be open for a week for additional 
statements or questions from Members. With that, this hearing 
is adjourned.
    [Whereupon, at 12:42 p.m., the Subcommittee was adjourned.]


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