DOD Personnel Clearances: Improved Annual Reporting Would Enable 
More Informed Congressional Oversight (13-FEB-08, GAO-08-350).	 
                                                                 
The Department of Defense (DOD) industry personnel security	 
clearance program has long-standing delays and backlogs in	 
completing clearance requests and difficulties in accurately	 
projecting its future needs for investigations to be conducted by
the Office of Personnel Management (OPM). In 2006, Congress	 
mandated that DOD report annually on the future requirements of  
the program and DOD's efforts to improve it, and that GAO	 
evaluate DOD's first report. Specifically, GAO was required to	 
report on (1) the extent to which the report responds to the	 
issues in the mandate, (2) the number and cost of clearance	 
investigations and adjudications in fiscal years 2000-2006, and  
(3) the extent to which DOD has developed procedures to estimate 
future needs, plans to reduce delays and backlogs, and plans to  
provide funding for the program. To accomplish these objectives, 
GAO obtained and reviewed laws, executive orders, policies,	 
reports, and other documents related to the security clearance	 
process and interviewed officials from a range of government	 
offices concerned with the clearance process.			 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-08-350 					        
    ACCNO:   A80731						        
  TITLE:     DOD Personnel Clearances: Improved Annual Reporting Would
Enable More Informed Congressional Oversight			 
     DATE:   02/13/2008 
  SUBJECT:   Background investigations				 
	     Cost analysis					 
	     Data integrity					 
	     Defense cost control				 
	     Investigations by federal agencies 		 
	     Personnel management				 
	     Personnel security clearance programs		 
	     Personnel security policies			 
	     Program evaluation 				 
	     Program management 				 
	     Records management 				 
	     Reporting requirements				 
	     Schedule slippages 				 
	     Security clearance backlogs			 
	     Security clearances				 
	     Security investigations				 
	     Cost estimates					 
	     Government delays					 
	     Policies and procedures				 
	     GAO High Risk Series				 

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GAO-08-350

   

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Report to Congressional Committees: 

United States Government Accountability Office: 

GAO: 

February 2008: 

DoD Personnel Clearances: 

Improved Annual Reporting Would Enable More Informed Congressional 
Oversight: 

DOD Personnel Clearances: 

GAO-08-350: 

GAO Highlights: 

Highlights of GAO-08-350, a report to congressional committees. 

Why GAO Did This Study: 

The Department of Defense (DOD) industry personnel security clearance 
program has long-standing delays and backlogs in completing clearance 
requests and difficulties in accurately projecting its future needs for 
investigations to be conducted by the Office of Personnel Management 
(OPM). In 2006, Congress mandated that DOD report annually on the 
future requirements of the program and DODï¿½s efforts to improve it, and 
that GAO evaluate DODï¿½s first report. Specifically, GAO was required to 
report on (1) the extent to which the report responds to the issues in 
the mandate, (2) the number and cost of clearance investigations and 
adjudications in fiscal years 2000-2006, and (3) the extent to which 
DOD has developed procedures to estimate future needs, plans to reduce 
delays and backlogs, and plans to provide funding for the program. To 
accomplish these objectives, GAO obtained and reviewed laws, executive 
orders, policies, reports, and other documents related to the security 
clearance process and interviewed officials from a range of government 
offices concerned with the clearance process. 

What GAO Found: 

Although DODï¿½s first annual report responded to the issues specified in 
the mandate, it did not include certain important information that was 
available on funding, processing times, and quality. DODï¿½s report 
limited the funding requirements information for its industry security 
clearance program to 2007 and 2008, even though the department asserted 
before Congress in May 2007 that it would need tens of millions of 
dollars in the future to maintain the infrastructure supporting the 
program and to cover operating costs. While DOD reported the average 
total time for DOD industry clearances and the average time to complete 
all clearance investigations, it did not include information on the 
time to complete any of the other phases (e.g., adjudication). GAOï¿½s 
September 2006 report suggested that longer delays are found in some 
phases of the process than in others and that quantifying those delays 
would be useful. The DOD report was largely silent on measures of 
quality in the clearance process, which is crucial if agencies are to 
accept the validity of clearances from other agencies. By not including 
these types of information, DOD limited the information available to 
Congress as it oversees the effectiveness of DODï¿½s industry personnel 
security clearance program. 

GAO was unable to report the number and unit cost of investigations and 
adjudications for fiscal years 2000 through 2004 because data were 
either unavailable or insufficiently reliable. However, DOD reported 
that OPM conducted 81,495 and 138,769 investigations of industry 
personnel in fiscal years 2005 and 2006, respectively, and DOD granted 
clearance eligibility to 113,408 and 144,608 industry personnel in 
fiscal years 2005 and 2006, respectively. In estimating unit costs, DOD 
and OPM did not account for all factors affecting the cost of a 
clearanceï¿½factors that would have made the DOD-provided estimates 
higher. These factors included (1) the cost of special interviews that 
are sometimes necessary to resolve discrepancies in information and (2) 
that top secret clearance adjudications normally take about twice as 
long as those for secret/confidential clearances. 

DODï¿½s procedures and plans are evolving, including procedures for 
projecting the number of future investigations it will need and plans 
to reduce backlogs and delays, as well as steps to fund the industry 
clearance program. In ongoing efforts to address the continued 
inaccuracy of its projections of future clearance needs, DOD has taken 
several steps. For example, DOD made its voluntary annual survey of 
contractors performing classified government work accessible through 
the Internet in 2006 and began encouraging industry staff to complete 
it. The response rate increased to 86 percent of industry personnel in 
2007. Further, while DOD does not have its own plan to address the 
funding of its clearance program and its delays in processing 
clearances, it is currently participating in a governmentwide effort to 
make clearance processes more efficient and cost-effective. 
Streamlining and improving the efficiency of its clearance process is 
also one of DODï¿½s top transformation priorities. In its 2004 report, 
GAO recommended that DOD implement a comprehensive plan and improve its 
estimates of future investigation needs. 

What GAO Recommends: 

GAO recommended that DOD augment future reports with information on 
funding needs for additional future years, timeliness data on clearance 
process phases in addition to the investigation (e.g., adjudication), 
and measures of quality in the clearance process, to be developed. DOD 
concurred with each recommendation. 

To view the full product, including the scope and methodology, click on 
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-350]. For more information, contact 
Brenda Farrell at (202) 512-3604 or [email protected]. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

DOD's Report Responded to the Mandated Issues but Did Not Include 
Certain Important Data on Some Issues: 

Many of DOD's Records of the Numbers and Costs of Security Clearance 
Investigations and Adjudications Were Not Available or Were Considered 
Unreliable: 

DOD's Procedures for Projecting Future Investigation Needs and Its 
Plans for Improving and Funding the Industry Clearance Program Are 
Evolving: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Scope and Methodology27: 

Appendix II: Comments from the Department of Defense31: 

Appendix III: Contact and Staff Acknowledgments34: 

Related GAO Products35: 

Tables: 

Table 1: Underlying Factors that Contributed to the Reliability of 
DOD's Data on the Numbers and Costs of Investigations and Adjudications 
for Industry Personnel during Fiscal Years 2000 through 2006: 

Table 2: Numbers of Clearance Investigations Completed for Industry 
Personnel in Fiscal Years 2005 and 2006: 

Table 3: Numbers of Clearance Adjudications Completed for Industry 
Personnel in Fiscal Years 2005 and 2006: 

Table 4: Estimated Costs of Investigations, Adjudications, and Total 
Costs for Industry Personnel Security Clearances in Fiscal Years 2005 
and 2006-Using OPM Standard and Priority Billing Rates: 

Table 5: Sources Providing Documentary and/or Testimonial Evidence as a 
Result of Personal or Telephonic Interviews: 

Abbreviations: 

CCMS: Case Control Management System: 

DISCO: Defense Industrial Security Clearance Office: 

DOD: Department of Defense: 

DODIG: Department of Defense, Office of Inspector General: 

DOHA: Defense Office of Hearings and Appeals: 

DSS: Defense Security Service: 

FYDP: future years defense program: 

JPAS: Joint Personnel Adjudications System: 

NACLC: national agency check with local agency check and credit check: 

NARA: National Archives and Records Administration: 

OPM: Office of Personnel Management: 

OUSD(C): Office of the Under Secretary of Defense for the comptroller: 

OUSD(I): Office of the Under Secretary of Defense for Intelligence: 

United States Government Accountability Office: 

Washington, DC 20548: 

February 13, 2008: 

The Honorable Carl Levin: 
Chairman: 
The Honorable John McCain: 
Ranking Member: 
Committee on Armed Services: 
United States Senate: 

The Honorable Ike Skelton: 
Chairman: 
The Honorable Duncan L. Hunter: 
Ranking Member: 
Committee on Armed Services: 
House of Representatives: 

The Department of Defense's (DOD) long-standing delays and backlogs 
(i.e., cases that have exceeded government timeliness requirements) in 
completing clearance requests, as well as other impediments that 
hindered DOD's ability to accurately estimate and eliminate its 
clearance backlog, led us to begin designating DOD's personnel security 
clearance program as a high-risk area in January 2005.[Footnote 1] We 
have also noted that it is crucial for officials granting security 
clearances to be scrupulous in their decision making because of the 
potential damage to national security and foreign relations that could 
result if personnel with security clearances fail to adequately 
safeguard classified information. In April 2006, DOD briefly stopped 
processing applications for clearance investigations for industry 
personnel, attributing the stoppage to a large volume of industry 
clearance requests and funding problems. In 2006, the John Warner 
National Defense Authorization Act of 2007 mandated that DOD report 
annually on the future requirements of the industry personnel security 
clearance investigations program and that we evaluate DOD's first 
report in response to this mandate. 

DOD's Office of the Under Secretary of Defense for Intelligence 
[OUSD(I)] has responsibility for determining eligibility for clearances 
for servicemembers, DOD civilian employees, and industry personnel 
performing work for DOD and 23 other federal agencies.[Footnote 2] That 
responsibility includes obtaining background investigations, primarily 
through the Office of Personnel Management (OPM). Within OUSD(I), the 
Defense Security Service (DSS) uses OPM-provided investigative reports 
to determine clearance eligibility of industry personnel. As of May 
2006, industry personnel held about one-third of the approximately 2.5 
million DOD-maintained personnel security clearances. Individuals 
working for private industry play a growing role in national security 
work conducted by DOD and other federal agencies--as a result of the 
increased awareness of threats to our national security stemming from 
the terrorist attacks on the United States on September 11, 2001, and 
increased efforts over the past decade to privatize federal jobs. 

Our prior work has shown that there have been delays in processing 
clearances for industry personnel. For example, in our September 2006 
report, we found that industry personnel contracted to work for the 
federal government waited more than 1 year on average to receive top 
secret clearances. Specifically, our analysis of about 2,300 cases 
showed the clearance process took an average of 446 days for initial 
top secret clearances and 545 days for renewals of top secret 
clearances. While the government's goal for the application-submission 
phase of the process is 14 days or less, this phase took an average of 
111 days. 

Problems in the clearance program can negatively affect national 
security. For example, delays in renewing security clearances for 
personnel who are already doing classified work can lead to a 
heightened risk of disclosure of classified information. In contrast, 
delays in providing initial security clearances for previously 
noncleared personnel can result in other negative consequences, such as 
additional costs and delays in completing national security-related 
contracts, lost-opportunity costs, and problems retaining the best- 
qualified personnel. The Intelligence Reform and Terrorism Prevention 
Act of 2004[Footnote 3] provided timeliness guidelines that currently 
require adjudicative agencies to make a determination on at least 80 
percent of all applications for a security clearance within an average 
of 120 days after the date of receipt of the application, with 90 days 
for the investigation and 30 days for the adjudication. Moreover, as we 
noted in our prior reports,[Footnote 4] when clearance investigations 
or adjudications (determination of eligibility for a clearance) were 
inadequately or inconsistently documented, DOD was unable to 
demonstrate that it had fully considered all significant adverse 
conditions that might call into question an individual's ability to 
adequately safeguard classified information. 

The John Warner National Defense Authorization Act[Footnote 5] for 
Fiscal Year 2007 required DOD to include in its annual budget 
submission to Congress a report on DOD's industry personnel clearance 
investigations program. Specifically, the law required that DOD report 
on five items: (1) the funding requirements of the investigations 
program and the ability of the Secretary of Defense to fund it, (2) the 
size of the investigation process backlog, (3) the length of the 
average delay for an individual case pending in the investigation 
process, (4) any progress made by the Secretary of Defense in 
implementing planned changes in the investigation process during the 12 
months preceding the report date, and (5) a determination, certified by 
the Secretary of Defense, of whether the investigation process had 
improved during the 12 months preceding the report date. The mandate 
specified that DOD shall include this report annually in the defense 
budget justification documents it submits to Congress. DOD submitted 
its 2007 report on August 20, 2007, about 6 months after it submitted 
its budget justification documents to Congress. 

The mandate further specified that we review the initial DOD report and 
provide additional information to Congress. This additional information 
is the number and unit cost of each type of clearance investigation and 
adjudication for industry personnel performed in fiscal years 2000 
through 2006; the amount of any surcharge DOD paid to OPM for 
conducting an investigation; a description of procedures DOD used to 
estimate the number of investigations to be conducted annually; and a 
description of DOD's plans to reduce delays and backlogs, adequately 
fund the investigative process, and establish a more effective and 
stable investigations program. Therefore, this letter answers the 
following questions: (1) To what extent does DOD's August 2007 report 
to Congress address the five issues specified in the mandate? (2) What 
were the number and cost of each type of clearance investigation and 
adjudication for industry personnel performed in fiscal years 2000 
through 2006? (3) To what extent has DOD developed procedures to 
estimate the number of investigations to be conducted; plans to reduce 
delays and backlogs in the clearance program, if any; and provide 
funding? This report contributes to a larger GAO body of work on DOD's 
personnel security clearance program. (See the list of related GAO 
products at the end of this report.) 

Our scope was limited to industry personnel whose clearance 
investigations or adjudications occurred in fiscal year 2000 or later 
and were the responsibility of OUSD(I). For all three questions, we 
reviewed laws, executive orders, and policies related to top secret, 
secret, and confidential security clearance investigations and 
adjudications. Those sources provided most of the criteria we used to 
assess the DOD report on personnel security clearances for industry and 
for the data and planning we examined to address our other two 
researchable questions. We gained additional insights about causes and 
effects to explain our findings from reports (e.g., GAO and DOD Office 
of the Inspector General) and documentary and testimonial evidence from 
interviews we conducted with personnel associated with a variety of 
government offices: OUSD(I), DSS, DOD's adjudication facilities for 
industry personnel clearances, the Office of the Under Secretary of 
Defense for the Comptroller [OUSD(C)], and DOD's Personnel Security 
Research Center. To determine the extent to which DOD's report to 
Congress addressed the five issues specified in Public Law 109-364 
(Sec. 347), we compared the findings in the DOD report to the mandated 
requirements and governmentwide and DOD-wide data quality standards. To 
determine the number and cost of each type of clearance work performed 
for industry personnel in fiscal years 2000 through 2006, we obtained 
and analyzed investigations-related data from DSS and OUSD(C), as well 
as adjudications-related data from DOD's two adjudication facilities 
for industry personnel clearances. When we assessed the reliability of 
the data pertaining to numbers and costs of investigations and 
adjudications, we found that some of the information was not available, 
could not be assessed, or contained discrepancies when compared with 
data from other sources. Since the data for fiscal years 2000 through 
2004 were not sufficiently reliable, we have reported numbers and costs 
for only fiscal years 2005 and 2006, which were sufficiently reliable 
for the purposes of this report. To determine the extent to which DOD 
has implemented plans to make its clearance program more effective and 
stable by better estimating the numbers of industry clearances needed, 
reducing delays and backlogs, and providing adequate funding, we 
reviewed planning documentation that OUSD(I) and DSS officials 
provided. Additional information on our scope and methodology is 
presented in appendix I. We conducted this performance audit from May 
2007 through February 2008 in accordance with generally accepted 
government auditing standards. Those standards require that we plan and 
perform the audit to obtain sufficient, appropriate evidence to provide 
a reasonable basis for our findings and conclusions, based on our audit 
objectives. We believe that the evidence we obtained provides a 
reasonable basis for our findings and conclusions based on our audit 
objectives. 

Results in Brief: 

While DOD responded in its first annual report to the issues specified 
in the mandate, it did not include certain important information that 
was available on funding, times to complete some phases of the 
clearance process, and quality. In its report, DOD included sections 
addressing the funding requirements of the personnel security clearance 
program for industry, and the numbers of initial and renewal 
investigations for top secret and secret/confidential clearances that 
were overdue as of July 14, 2007. It also included descriptions of 
seven actions taken that DOD characterized as progress in the industry 
clearance program, such as efforts to improve timeliness that are DOD- 
specific (e.g., adding a capability to electronically submit the 
applicant's form authorizing the release of medical information) or 
governmentwide (e.g., submitting all requests for clearance using OPM's 
Electronic Questionnaires for Investigations Processing). However, for 
three issues, DOD stated in the report that certain important 
information was available but not included. First, DOD provided 
information on funding requirements as mandated, but limited the 
information to 2007 and 2008. Additional funding information was not 
included, even though the DSS Director testified to Congress in May 
2007 that tens of millions of dollars would be needed in the future to 
maintain the infrastructure supporting the industry personnel security 
clearance program, in addition to the funding to conduct the 
investigations for the clearances themselves. DOD regularly submits 
longer-term financial planning documents, such as its future years 
defense program, to Congress. Second, although DOD reported the average 
end-to-end processing time for DOD industry clearances and the average 
time to complete investigations for all clearances, it did not include 
the average time to complete other phases of the clearance process, 
such as the adjudication. As our September 2006 report showed, longer 
delays are found in some phases of the process than in others.[Footnote 
6] Providing the times to complete other phases of the clearance 
process in the report would help to highlight where those delays are 
occurring. Finally, while DOD identified several improvements that it 
had made to the clearance process, it was largely silent on measures to 
assess quality in the clearance process. In our September 2006 report, 
we identified concerns with quality in the clearance process and noted 
that the lack of full reciprocity of clearances--when a security 
clearance granted by one government agency is not accepted by another 
agency--is an outgrowth of agencies' concerns that other agencies may 
have granted clearances based on inadequate investigations and 
adjudications. The OUSD(I) Director of Security and the DSS Director 
told us that several factors influenced their decision not to include 
these types of information in the DOD report. For example, because 
information used to project the funding requirements for this program 
has less accuracy the farther into the future projections are made, DOD 
decided not to include future funding requirements beyond 1 year. In 
deciding not to include certain available information in its report to 
Congress, DOD limited the information available to Congress as it 
oversees the effectiveness of DOD's industry personnel security 
clearance program. 

We were unable to report the number and unit cost of investigations and 
adjudications for fiscal years 2000 through 2004, because our data 
requests and analyses revealed that the information was either 
unavailable or insufficiently reliable for us to report. However, DOD 
reported that OPM provided 81,495 and 138,769 clearance investigations 
on industry personnel in fiscal years 2005 and 2006, respectively; and 
DOD staff granted clearance eligibility to 113,408 industry personnel 
in fiscal year 2005 and 144,608 industry personnel in fiscal year 
2006.[Footnote 7] No reliable information is available for fiscal years 
2000 through 2004 for reasons including the fact that an electronic 
database for investigative and adjudicative information was 
discontinued. While we were able to report DOD's estimated unit costs 
of security clearances for fiscal years 2005 and 2006, three factors 
suggest that the actual unit costs would be higher than the estimates 
we reported if OPM and DOD were to account for all costs. First, DOD's 
estimated unit cost for an investigation (e.g., $3,840 for an initial 
top secret clearance in fiscal year 2006) did not include the expense 
of special interviews that are sometimes conducted to resolve 
conflicting information that has arisen in the investigation. Second, 
DOD's estimated unit cost did not account for a partial refund of about 
$7 million--made to DOD in September 2006--of a surcharge DOD paid OPM 
for all DOD investigations conducted in fiscal years 2005 and 2006. 
Third, determining the actual unit cost of adjudications for fiscal 
years 2005 and 2006 would require accounting for several factors that 
DOD did not include in the data it provided to us. For example, while 
DSS provided an estimate for the unit cost of adjudications, officials 
acknowledged that this estimate was rough because, among other things, 
it did not account for the fact that adjudications for top secret 
clearances normally take about twice as long as those for secret/ 
confidential clearances. 

DOD's procedures for projecting the number of investigations it will 
need OPM to conduct in the future and its plans to reduce backlogs and 
delays as well as steps for funding the industry clearance program are 
evolving. DOD has had problems projecting its departmentwide clearance 
needs accurately in the past. For example, OPM reported that DOD 
exceeded its departmentwide projection by 59 percent for the first half 
of fiscal year 2006. To address these problems, DOD has recently made 
changes to the methods it uses to estimate the number of future 
security clearance investigations it needs, and it continues efforts to 
improve these methods. First, starting in 2006, DSS made its annual 
survey accessible through the Internet to make it easier for 
contractors to report estimates of how many initial and renewal 
clearances they would need in the future. Second, DSS field staff made 
a more concerted effort to actively encourage industry representatives 
to complete the voluntary survey. These changes increased the survey 
response rate from historically low rates of between 10 and 15 percent 
of the surveyed facilities providing information to 70 percent of 
facilities in 2007, which represented 86 percent of industry personnel 
with a clearance. Third, DSS began performing weekly updates to the 
investigation projection analysis rather than relying on a onetime 
annual projection of investigation needs. Fourth, DSS made additional 
changes to the methodology it uses to analyze the survey data it 
collects--including accounting for additional variables, such as the 
size of the responding company. DOD's Personnel Security Research 
Center is also researching the feasibility of replacing or 
supplementing the survey method DSS currently uses with a statistical 
model for estimating future investigation needs. Although DOD currently 
has no comprehensive plan to address delays and funding in its 
clearance program, DSS had been developing such a plan when its effort 
was supplanted by a new governmentwide effort led by an interagency 
security clearance process reform. At the same time, OMB, DOD, and 
other agencies have been focusing attention on making the clearance 
process more efficient and cost-effective across the federal 
government. Streamlining the security clearance process is also one of 
DOD's top transformation priorities, with the goal of facilitating the 
granting of personnel security clearances in the shortest time possible 
and at the lowest possible cost. However, we reported in 2004 that DOD 
was operating in a reactive mode to improve its clearance program, 
working piecemeal in response to impediments in the absence of a 
comprehensive plan to reduce delays. Because DOD has not developed a 
comprehensive plan to address delays in the industry security clearance 
program, we continue to believe that our 2004[Footnote 8] 
recommendations that DOD develop such a plan and improve its 
projections of clearance requirements have merit. 

In order to provide Congress with more information for its oversight of 
security clearances for industry personnel, we are recommending that in 
DOD's future annual reports, OUSD(I) (1) add projected funding 
information for additional out years consistent with the future years 
defense program, (2) provide information on the average time taken to 
complete each of the phases of the clearance process, and (3) develop 
and include measures of clearance quality. In its agency comments, 
OUSD(I) concurred with all three of our recommendations. OUSD(I) noted 
that DOD agrees the recommended additional information will aid 
Congress in its oversight role and its future annual reports--starting 
in 2009--will include the suggested information. DOD's comments are 
reprinted in appendix II. 

Background: 

DOD obtains nearly all of its clearance investigations through 
OPM,[Footnote 9] which is currently responsible for 90 percent of the 
personnel security clearance investigations for the federal government. 
DOD retained responsibility for adjudicating clearances of 
servicemembers, DOD civilians, and industry personnel. Two DOD offices 
are responsible for adjudicating cases involving industry personnel. 
The Defense Industrial Security Clearance Office (DISCO) within DSS 
adjudicates cases that contain only favorable information or minor 
issues regarding security concerns (e.g., some overseas travel by the 
individual). The Defense Office of Hearings and Appeals (DOHA) within 
the Defense Legal Agency adjudicates cases that contain major security 
issues (e.g., an individual's unexplained affluence or criminal 
history) which could result in the denial of clearance eligibility and 
possibly lead to an appeal. 

Like servicemembers and federal workers, industry personnel must obtain 
a security clearance to gain access to classified information, which is 
categorized into three levels: top secret, secret, and confidential. 
The level of classification denotes the degree of protection required 
for information and the amount of damage that unauthorized disclosure 
could reasonably be expected to cause to national security. For top 
secret information, the expected damage that unauthorized disclosure 
could reasonably be expected to cause is "exceptionally grave damage;" 
for secret information, it is "serious damage;" and for confidential 
information, it is "damage."[Footnote 10] 

DOD's Report Responded to the Mandated Issues but Did Not Include 
Certain Important Data on Some Issues: 

DOD provided information on each issue specified by the mandate, but 
certain important information on funding, processing times, and quality 
was limited or absent. DOD divided its nine-page report into five 
sections, corresponding to the five sections of the law. DOD began with 
a discussion of the personnel security clearance investigation funding 
requirements--$178 million for fiscal year 2007 and approximately $300 
million for fiscal year 2008--and indicated that funds exist to cover 
the fiscal year 2007 projected costs.[Footnote 11] In section two, DOD 
reported the size of the investigative backlog by showing that 21,817 
(48 percent) of the applications for clearance investigations for 
industry personnel which were still pending as of July 14, 2007, were 
more than 90 days old. In section three, DOD reported OPM statistics 
that showed the average number of days required to complete 
investigations as of May 2007.[Footnote 12] An initial top secret 
clearance took an average of 211 days; top secret renewals, an average 
of 334 days; and all secret/confidential initials and renewals, an 
average of 127 days.[Footnote 13] The fourth section of DOD's report 
highlighted seven areas that DOD characterized as progress toward 
implementing planned changes in the process. These areas included 
timeliness-improvement actions that were DOD-specific (e.g., adding a 
capability to electronically submit the applicant's form authorizing 
the release of medical information) and governmentwide (e.g., 
submitting all requests for clearances using OPM's Electronic 
Questionnaires for Investigations Processing). In the fifth section, 
the Under Secretary of Defense for Intelligence certified that the 
department had taken actions to improve the industry personnel 
clearance program during the 12 months preceding the report 
date.[Footnote 14] DOD supported this finding by including a table 
showing that the monthly average number of completed industry 
investigations increased from 13,227 in July 2006 to 16,495 in July 
2007. 

Certain important information on three of the mandated issues--the 
program funding requirements, the average processing time, and quality 
in the clearance process--was limited or absent. First, DOD reported 
program-funding requirements covering less than 2 years. DOD reported 
an annualized projected cost of $178.2 million for fiscal year 
2007,[Footnote 15] a projected funding requirement of approximately 
$300 million for fiscal year 2008, and a department statement 
indicating that it was able to fund the industry personnel security 
clearance program for the remainder of 2007. The mandate directed DOD 
to report its funding requirements for the program and the Secretary of 
Defense's ability to fulfill them. While the report described DOD's 
immediate needs and ability to fund those needs, it did not include 
information on (1) the funding requirements for fiscal year 2009 and 
beyond, even though the survey used to develop the funding requirements 
asked contractors about their clearance needs through 2010; and (2) the 
tens of millions of dollars that the DSS Director testified to Congress 
in May 2007 were necessary to maintain the infrastructure supporting 
the industry security clearance program. The OUSD(I) Director of 
Security and the DSS Director told us that the department did not 
include funding requirements beyond fiscal year 2008 because of 
concerns about the accuracy of the data used to identify the 
requirements. They told us that the funding requirements of the program 
depend on the estimates of the future number of investigations that DSS 
will obtain from OPM, which DSS determines using its annual survey. 
They, as well as the report, indicated that because projections made 
farther into the future are more likely to be inaccurate, DOD decided 
not to include funding projections beyond 1 future year in the report. 
The report also stated that the data used to construct the projected 
funding requirements are available through fiscal year 2010, but the 
report did not include that information. DOD regularly submits longer- 
term financial planning documents to Congress. Specifically, the future 
years defense program (FYDP), which is submitted annually to Congress, 
contains detailed data projections for the budget year in which funds 
are being requested and at least the 4 succeeding years. The FYDP is a 
long-term capital plan and as such provides DOD and Congress with a 
tool for looking at future funding needs beyond immediate budget 
priorities. 

Second, DOD reported the average investigation times cited earlier but 
did not include the times for other specific phases of the end-to-end 
clearance process. DOD reported the average number of days it took to 
complete investigations for all clearances closed between May 2006 and 
May 2007 and the average numbers of days to process DOD industry 
clearances from end to end for all cases adjudicated during the first 6 
months of fiscal year 2007. The mandate directed DOD to report the 
length of the average delay for an individual case pending in the 
personnel security clearance investigation process. The Intelligence 
Reform and Terrorism Prevention Act of 2004 requires the processing of 
at least 80 percent of clearances to be completed within an average of 
120 days, including no more than 90 days for the investigation. 
Although it did not provide times for other clearance phases and was 
not mandated to do so, DOD's report stated that a joint study conducted 
by OPM, DSS, and industry identified average times to complete six 
discrete phases--including the investigation, the time needed to mail 
investigation reports from OPM to a DOD adjudication facility, and the 
adjudication. Our September 2006 report[Footnote 16] showed that longer 
delays are found in some phases of the process than in others (e.g., 
our analysis of 2,259 cases showed that the application-submission 
phase took an average of 111 days to complete instead of the goal of 14 
days) and suggested that monitoring each of the phases would help DOD 
to identify where actions are needed to improve timeliness. The OUSD(I) 
Director of Security and the DSS Director told us that because the DOD 
report included both the average time to complete an investigation and 
the time to process the clearance from start to finish, the department 
did not include the times to process the additional discrete phases of 
the clearance process. While the information included in the report 
provides visibility to the processing times for the investigation and 
for the entire process, monitoring and reporting times for each phase 
would help DOD and Congress to identify where actions are most needed 
to improve timeliness. 

Third, DOD documented improvements in the process but was largely 
silent regarding quality in the clearance processes. While DOD 
described several changes to the process it characterized as progress, 
it provided little information on measures of quality used to assess 
the clearance processes or procedures to promote quality during 
clearance investigations and adjudications processes. Specifically, the 
DOD report's section describing improvements noted that DSS, DOD's 
adjudicative community, and OPM are gathering and analyzing measures of 
quality for the clearance processes that could be used to provide the 
national security community with a better product. However, the DOD 
report did not include any of those measures. When we asked the OUSD(I) 
Director of Security why the measures of quality were not included, he 
said the department did not include them because stakeholders in the 
clearance processes have not agreed on how to measure quality. In 
September 2006, we identified several areas where OPM-supplied 
investigative reports and DOD adjudicative data were incomplete. We 
noted that while eliminating delays in the clearance process is an 
important goal, the government cannot afford to achieve that goal by 
providing reports of investigations and adjudications that are 
incomplete in key areas. We additionally noted that the lack of full 
reciprocity of clearances--when a security clearance granted by one 
government agency is not accepted by another agency--is an outgrowth of 
agencies' concerns that other agencies may have granted clearances 
based on inadequate investigations and adjudications. 

In deciding not to provide certain important information in its first 
annual report to Congress, DOD has limited the information available to 
Congress as it oversees the effectiveness of DOD's industry personnel 
security clearance processes. Specifically, by not including funding 
requirements for 2009 and beyond, DOD left out information Congress 
could use in making longer-term appropriation and authorization 
decisions for this program. In addition, by not including the times to 
complete phases of the clearance process other than the investigation, 
DOD makes it less apparent to Congress where the most significant 
timeliness gains can be made relative to the costs of improving the 
processes. Finally, by not including measures of quality in the 
clearance processes, DOD has only partially supported its assertion 
that it has made improvements to the clearance processes. 

Many of DOD's Records of the Numbers and Costs of Security Clearance 
Investigations and Adjudications Were Not Available or Were Considered 
Unreliable: 

DOD reported that OPM conducted 81,495 investigations for the 
department in fiscal year 2005 and 138,769 in fiscal year 2006 and that 
DOD staff granted clearance eligibility to 113,408 industry personnel 
in fiscal year 2005 and 144,608 industry personnel in fiscal year 2006. 
However, we are unable to report the numbers and unit costs of 
investigations and adjudications for industry personnel for fiscal 
years 2000 through 2004, because DOD either was not able to provide 
data or supplied data that we found to be insufficiently reliable to 
report. Reliable information for fiscal years 2000 through 2004 was not 
available because of factors such as the abandonment of an electronic 
database for recording investigative and adjudicative information. 
Although some limitations are present for the numbers and costs data 
for industry personnel for fiscal years 2005 and 2006, our assessments 
show that they are sufficiently reliable for us to report them, along 
with explicit statements about their limitations. 

DOD Could Not Provide Sufficiently Reliable Information on the Numbers 
and Costs of Investigations and Adjudications for Fiscal Years 2000 
through 2004: 

Our assessments of data on the numbers and costs of investigations and 
adjudications for industry personnel for fiscal years 2000 through 2004 
showed that DOD-provided information was not sufficiently reliable for 
us to report. The shaded portion of table 1 summarizes underlying 
factors that contributed to DOD's inability to provide us with reliable 
data. (In the next section, we report information provided to us by DOD 
on the numbers and costs of investigations and adjudications for fiscal 
years 2005 and 2006). 

Table 1: Underlying Factors that Contributed to the Reliability of 
DOD's Data on the Numbers and Costs of Investigations and Adjudications 
for Industry Personnel during Fiscal Years 2000 through 2006A: 

Fiscal year: 2000, 2001, 2002, 2003, 2004; 
Type of information assessed for data reliability: Number of 
investigations: The former investigations database--the Case Control 
Management System--is no longer operational; and paper summary reports 
and other records maintained by different DOD offices show 
discrepancies in the numbers of investigations completed for these 5 
fiscal years; 
Type of information assessed for data reliability: Number of 
adjudications: DOD did not designate the Joint Personnel Adjudications 
System as the official DOD-wide adjudications database until February 
2005. Previously, adjudication data for industry clearances were stored 
in the Case Control Management System, which is no longer operational; 
Type of information assessed for data reliability: Cost of 
investigations: DOD transferred its investigative function and 1,800 
authorized positions to OPM in February 2005. The transfer resulted in 
lost or misplaced records and reduced institutional knowledge in DSS's 
financial management office; 
Type of information assessed for data reliability: Cost of 
adjudications: Neither of the DOD adjudication facilities--DISCO nor 
DOHA--can separate out industry adjudication costs from other expenses 
in its budget. 

Fiscal year: 2005; 
Type of information assessed for data reliability: Number of 
investigations: DOD provided OPM data that have been generated since 
OPM began supplying the clearance investigations for industry personnel 
in fiscal year 2005; 
Type of information assessed for data reliability: Number of 
adjudications: DOD provided information from the Joint Personnel 
Adjudication System; 
Type of information assessed for data reliability: Cost of 
investigations: DOD provided rate information showing the amount OPM 
charged the department for each type of clearance investigation; 
Type of information assessed for data reliability: Cost of 
adjudications: DOD estimated the cost information for this report by 
examining DSS expenditures and the numbers of adjudications performed. 

Fiscal year: 2006. 

Source: GAO analysis of DOD data. 

[A] The shaded portions of table 1 summarize underlying factors that 
contributed to DOD's inability to provide us with reliable data. 

[End of table] 

When we assessed the reliability of DOD-provided information on the 
numbers of investigations for industry personnel, we found 
discrepancies in the fiscal years 2000 through 2004 summary records 
kept by two DOD offices: DSS and OUSD(C). The discrepancies in the 
annual numbers of investigations ranged from 3 to 48 percent. Relative 
to the numbers found in DSS records, OUSD(C) records showed 3 percent 
more investigations for secret clearances had been completed in fiscal 
year 2001 and 48 percent fewer investigations for initial top secret 
investigations had been completed in fiscal year 2000. The original 
source of data for both offices' records was DOD's Case Control 
Management System (CCMS), which had formerly been used to 
electronically store data on DOD personnel security clearance 
investigations. DOD stopped maintaining CCMS in conjunction with the 
department's transfer of DSS's investigative functions and personnel to 
OPM in February 2005. DOD estimated that it could save $100 million 
over 5 years in costs associated with maintaining and updating CCMS by 
instead using OPM's Personnel Investigations Processing System for 
electronically storing investigations data. Because CCMS is no longer 
available, we were unable to determine which--if either--office's data 
were sufficiently reliable for the purposes of this report. While DOD 
no longer has access to the CCMS software tool needed to aggregate the 
associated personnel security clearance data, individual files on 
industry personnel have been archived and are available for access 
(e.g., when someone renews a clearance). 

We are similarly unable to report the number of adjudications for 
fiscal years 2000 through 2004, because DOD could not provide 
information that was sufficiently reliable for the purposes of this 
report. Sufficiently reliable data were not available for this period 
because the Joint Personnel Adjudications System (JPAS) did not become 
the official DOD adjudication database until February 2005. In the 
prior years, DSS had stored adjudication-related information on 
industry personnel in CCMS--which is no longer operational. A DSS 
official indicated that JPAS provides pre-2005 adjudication information 
inaccurately because of problems DOD experienced when transitioning 
from CCMS to JPAS. 

We found cost data on industry personnel clearances for fiscal years 
2000 through 2004 to be insufficiently reliable, as evidenced by the 
inconsistency of the information that we obtained from DSS and OUSD(C). 
At the most extreme, the DSS records show that the cost for an 
investigation of a secret clearance in fiscal year 2004 was 486 percent 
higher than the rate reported in OUSD(C) records. DOD's ability to 
provide us with more reliable information was hampered by two factors. 
First, when DOD transferred its investigative function and 1,800 
authorized positions to OPM in February 2005, the transfer resulted in 
lost or misplaced records and reduced institutional knowledge in DSS's 
financial management office. The DSS Director told us that DSS record 
keeping has not been a "strong suit" of the agency in the past. Second, 
DSS leadership has frequently changed over the past 5 years. For 
example, DSS had four acting directors in the 4 years before getting 
its current permanent Director, and it had nine comptrollers during the 
same period. 

The unit cost for adjudications for fiscal years 2000 through 2004 for 
industry personnel clearances could not be computed, because the total 
cost of all adjudications and the number of adjudications--key 
variables in computing unit cost--were either unavailable or 
unreliable. For example, DSS officials told us that the budget records 
for this period did not differentiate the portion of DSS's budget used 
to fund DISCO, which adjudicates the majority of DOD's clearances for 
industry. Additionally, officials from DOHA, which adjudicates some 
industry cases, told us that they similarly could not accurately 
identify a unit cost for adjudications. DOHA officials told us that 
because their adjudicators conduct additional work besides security 
clearance work and those costs are not accounted for separately, 
estimates of the unit cost of the adjudicative work they perform would 
be speculative. Finally, as we discussed above, the data that DOD 
provided on the number of adjudications for 2000 through 2004 were not 
sufficiently reliable for the purposes of this audit. 

DOD Provided Sufficiently Reliable Data on the Numbers and Costs of 
Investigations and Adjudications for Fiscal Years 2005 and 2006: 

DOD reported that OPM conducted 81,495 investigations of industry 
personnel for the department in fiscal year 2005 and 138,769 such 
investigations in 2006 (see table 2). The difference in the numbers of 
investigations for the 2 years is due largely to the fact that DOD 
could not provide reliable information on the number of investigations 
that DSS completed before the February transfer of investigative staff 
and functions to OPM. In both years, OPM provided DOD with more 
investigations for secret or confidential clearances than for top 
secret clearances. More secret/confidential clearances are historically 
required and performed as compared to top secret clearances, and data 
presented in table 2 are consistent with this trend. 

Table 2: Numbers of Clearance Investigations Completed for Industry 
Personnel in Fiscal Years 2005 and 2006: 

Fiscal year: 2005; 
Top secret: initial & renewal: 16,397[B]; 
Secret/ confidential:[A] initial & renewal: 65,098[B]; 
Total: 81,495[B]. 

Fiscal year: 2006; 
Top secret: initial & renewal: 38,113; 
Secret/ confidential:[A] initial & renewal: 100,656; 
Total: 138,769. 

Source: GAO analysis of OPM data provided by DOD. 

[A] The same type of investigation is used for determining both secret 
and confidential clearances. 

[B] The numbers for fiscal year 2005 include only those investigations 
that OPM conducted. That is, information on investigations of industry 
personnel that DSS personnel completed before the February 2005 
transfer was not available. 

[End of table] 

Using OPM-provided data, DSS determined that it had granted clearance 
eligibility to 113,408 industry personnel in fiscal year 2005 and 
144,608 industry personnel in fiscal year 2006 (see table 3). The 
number of clearances granted in a year may not match the number of 
investigations conducted in that year because of the time that elapses 
between completion of the investigation and completion of the 
adjudication. 

Table 3: Numbers of Clearance Adjudications Completed for Industry 
Personnel in Fiscal Years 2005 and 2006: 

Fiscal year: 2005; 
Top secret: initial & renewal: 36,038; 
Secret/ confidential:[A[INITIAL & RENEWAL] wal: 77,370; 
Total: 113,408. 

Fiscal year: 2006; 
Top secret: initial & renewal: 40,477; 
Secret/ confidential:[A[INITIAL & RENEWAL] wal: 104,131; 
Total: 144,608. 

Source: GAO analysis of OPM data provided by DOD. 

[A] Secret and confidential clearances are included together because 
the clearance-eligibility determinations are generated from a single 
type of investigation, which generates less information than the 
investigative report required to determine eligibility for a top secret 
clearance. 

[End of table] 

For the 2 most recent of the 7 fiscal years specified in the mandate, 
the total estimated unit cost for the entire clearance process varied 
from $290 for an initial or a renewal of a secret/confidential 
clearance to $3,850 for the initial top secret clearance that is 
determined with a standard investigation (see table 4). The lower half 
of table 4 shows that investigations that are given higher priorities 
cost more. 

Table 4: Estimated Costs of Investigations, Adjudications, and Total 
Costs for Industry Personnel Security Clearances in Fiscal Years 2005 
and 2006-Using OPM Standard and Priority Billing Rates: 

Type of process used to determine clearance eligibility: OPM standard 
billing rates for DOD: Initial top secret; 
Fiscal year 2005: DOD investigation cost: OPM standard billing rates 
for DOD: $3,000; 
Fiscal year 2005: Surcharge: OPM standard billing rates for DOD: $750; 
Fiscal year 2005: Adjudication unit cost[A]: $100; 
Fiscal year 2005: Total unit cost: $3,850; 
Fiscal year 2006: DOD investigation cost: $3,150; 
Fiscal year 2006: Surcharge: $600; 
Fiscal year 2006: Adjudication unit cost[A]: $90; 
Fiscal year 2006: Total unit cost: $3,840. 

Type of process used to determine clearance eligibility: OPM standard 
billing rates for DOD: Renewal of top secret; 
Fiscal year 2005: DOD investigation cost: OPM standard billing rates 
for DOD: $1,825; 
Fiscal year 2005: Surcharge: OPM standard billing rates for DOD: $735; 
Fiscal year 2005: Adjudication unit cost[A]: $100; 
Fiscal year 2005: Total unit cost: $2,660; 
Fiscal year 2006: DOD investigation cost: $2,050; 
Fiscal year 2006: Surcharge: $510; 
Fiscal year 2006: Adjudication unit cost[A]: $90; 
Fiscal year 2006: Total unit cost: $2,650. 

Type of process used to determine clearance eligibility: OPM standard 
billing rates for DOD: Renewal of top secret, using the phased periodic 
reinvestigation; 
Fiscal year 2005: DOD investigation cost: OPM standard billing rates 
for DOD: N/A ; 
Fiscal year 2005: Surcharge: OPM standard billing rates for DOD: N/A; 
Fiscal year 2005: Adjudication unit cost[A]: N/A ; 
Fiscal year 2005: Total unit cost: N/A ; 
Fiscal year 2006: DOD investigation cost: $1,625; 
Fiscal year 2006: Surcharge: $310; 
Fiscal year 2006: Adjudication unit cost[A]: $90; 
Fiscal year 2006: Total unit cost: $2,025. 

Type of process used to determine clearance eligibility: OPM standard 
billing rates for DOD: Renewal of top secret, using an expanded phased 
periodic reinvestigation; 
Fiscal year 2005: DOD investigation cost: OPM standard billing rates 
for DOD: N/A ; 
Fiscal year 2005: Surcharge: OPM standard billing rates for DOD: N/A; 
Fiscal year 2005: Adjudication unit cost[A]: N/A ; 
Fiscal year 2005: Total unit cost: N/A ; 
Fiscal year 2006: DOD investigation cost: $1,075; 
Fiscal year 2006: Surcharge: $205; 
Fiscal year 2006: Adjudication unit cost[A]: $90; 
Fiscal year 2006: Total unit cost: $1,370. 

Type of process used to determine clearance eligibility: OPM standard 
billing rates for DOD: Initial and renewal of secret and confidential; 
Fiscal year 2005: DOD investigation cost: OPM standard billing rates 
for DOD: $125; 
Fiscal year 2005: Surcharge: OPM standard billing rates for DOD: $75; 
Fiscal year 2005: Adjudication unit cost[A]: $100; 
Fiscal year 2005: Total unit cost: $300; 
Fiscal year 2006: DOD investigation cost: $131; 
Fiscal year 2006: Surcharge: $69; 
Fiscal year 2006: Adjudication unit cost[A]: $90; 
Fiscal year 2006: Total unit cost: $290. 

Type of process used to determine clearance eligibility: OPM priority 
billing rates for DOD: Initial top secret; 
Fiscal year 2005: DOD investigation cost: OPM standard billing rates 
for DOD: $3,480; 
Fiscal year 2005: Surcharge: OPM standard billing rates for DOD: $870; 
Fiscal year 2005: Adjudication unit cost[A]: $100; 
Fiscal year 2005: Total unit cost: $4,450; 
Fiscal year 2006: DOD investigation cost: $3,655; 
Fiscal year 2006: Surcharge: $695; 
Fiscal year 2006: Adjudication unit cost[A]: $90; 
Fiscal year 2006: Total unit cost: $4,440. 

Type of process used to determine clearance eligibility: OPM priority 
billing rates for DOD: Renewal of top secret; 
Fiscal year 2005: DOD investigation cost: OPM standard billing rates 
for DOD: $2,125; 
Fiscal year 2005: Surcharge: OPM standard billing rates for DOD: $850; 
Fiscal year 2005: Adjudication unit cost[A]: $100; 
Fiscal year 2005: Total unit cost: $3,075; 
Fiscal year 2006: DOD investigation cost: $2,375; 
Fiscal year 2006: Surcharge: $600; 
Fiscal year 2006: Adjudication unit cost[A]: $90; 
Fiscal year 2006: Total unit cost: $3,065. 

Type of process used to determine clearance eligibility: OPM priority 
billing rates for DOD: Renewal of top secret, using the phased periodic 
reinvestigation; 
Fiscal year 2005: DOD investigation cost: OPM standard billing rates 
for DOD: N/A ; 
Fiscal year 2005: Surcharge: OPM standard billing rates for DOD: N/A; 
Fiscal year 2005: Adjudication unit cost[A]: N/A ; 
Fiscal year 2005: Total unit cost: N/A ; 
Fiscal year 2006: DOD investigation cost: $1,900; 
Fiscal year 2006: Surcharge: $360; 
Fiscal year 2006: Adjudication unit cost[A]: $90; 
Fiscal year 2006: Total unit cost: $2,350. 

Type of process used to determine clearance eligibility: OPM priority 
billing rates for DOD: Renewal of top secret, using an expanded phased 
periodic reinvestigation; 
Fiscal year 2005: DOD investigation cost: OPM standard billing rates 
for DOD: N/A ; 
Fiscal year 2005: Surcharge: OPM standard billing rates for DOD: N/A; 
Fiscal year 2005: Adjudication unit cost[A]: N/A ; 
Fiscal year 2005: Total unit cost: N/A ; 
Fiscal year 2006: DOD investigation cost: $1,075; 
Fiscal year 2006: Surcharge: $425; 
Fiscal year 2006: Adjudication unit cost[A]: $90; 
Fiscal year 2006: Total unit cost: $1,590. 

Type of process used to determine clearance eligibility: OPM priority 
billing rates for DOD: Initial and renewal of secret and confidential; 
Fiscal year 2005: DOD investigation cost: OPM standard billing rates 
for DOD: $195; 
Fiscal year 2005: Surcharge: OPM standard billing rates for DOD: $50; 
Fiscal year 2005: Adjudication unit cost[A]: $100; 
Fiscal year 2005: Total unit cost: $345; 
Fiscal year 2006: DOD investigation cost: $205; 
Fiscal year 2006: Surcharge: $40; 
Fiscal year 2006: Adjudication unit cost[A]: $90; 
Fiscal year 2006: Total unit cost: $335. 

Source: OPM data provided by DOD. 

[A] Adjudication unit cost has been rounded from DOD's estimate of 
$98.20 for fiscal year 2005 and $87.51 for fiscal year 2006. 

[End of table] 

Regardless of whether the clearance was based on a standard or priority 
investigation, the primary reason for the difference in costs is due to 
the effort required to complete the different types of investigations. 
For example, our September 2006 report[Footnote 17] noted that OPM 
estimated that approximately 60 total staff hours are needed for each 
investigation for an initial top secret clearance and 6 total staff 
hours are needed for each investigation to support a secret or 
confidential clearance. Another factor that causes variability in the 
cost of the clearance determination is whether investigators can use a 
phased reinvestigation. Starting in fiscal year 2006, the President 
authorized the use of phased reinvestigations, which do not require 
some types of information to be gathered during the renewal of a top 
secret clearance unless there are potentially derogatory issues found 
in earlier portions of the reinvestigation. 

While the information in table 4 provides the estimated unit costs of 
investigations and adjudications and estimated total costs, several 
considerations suggest that the actual unit costs would be somewhat 
different from those shown in the table if OPM and DOD were to account 
for all of the costs. For example, the fixed costs for the 
investigations do not include any additional costs that DOD might incur 
should adverse information be revealed that requires an additional 
subject interview to address this information. In these instances, OPM 
charges DOD for an additional interview to resolve the issue before the 
case is adjudicated. In addition, if DOD sends an investigation report 
back to OPM with a request for additional interviews in order to 
reconcile conflicting information, there may be additional fees. DOD 
officials stated that cases requiring subsequent resolution of multiple 
issues could result in additional charges to address each issue. These 
special interviews cost $515 in 2005 and $430 in 2006. DOD was unable 
to provide data identifying the number of investigations that included 
these special interviews. Conversely, the 2006 investigation costs do 
not address a $7 million refund that OPM made to DOD in September 2006; 
the refund pertained to a surcharge covering all DOD investigations 
that DOD had paid to OPM. 

In fiscal years 2005 and 2006, DOD paid OPM a surcharge in addition to 
the base rate OPM charged DOD to conduct investigations. The surcharge 
amounts were 25 percent in fiscal year 2005 and 19 percent in fiscal 
year 2006. DOD and OPM agreed to this surcharge in a memorandum of 
understanding that defined the terms of the transfer of the 
investigative functions and personnel from DSS to OPM. This surcharge 
was intended to offset any potential operating losses that OPM incurred 
in taking over the investigative function from DSS. However, 
disagreements between DOD and OPM about the amount of the surcharge led 
to mediation between the agencies in September 2006 and resulted in a 
retroactive reduction of the surcharge to 14 percent for the third 
quarter of fiscal year 2006 and an elimination of the surcharge for 
fiscal year 2007 and beyond.[Footnote 18] 

The unit costs of the adjudications--$100 in fiscal year 2005 and $90 
in fiscal year 2006--are approximations that must be viewed with some 
caution. DOD officials acknowledged that while they provided a single 
value for the unit cost of both top secret and secret/confidential 
adjudications, the actual time to adjudicate top secret clearance- 
eligibility determinations is roughly twice that required to adjudicate 
secret/confidential clearance-eligibility determinations. Furthermore, 
the DOD-supplied unit cost estimate for adjudications does not account 
for the cost associated with the additional work required to adjudicate 
derogatory information in some of the cases that are sent to DOHA. 
Prior to 2005, DSS had not differentiated the adjudication portion of 
its budget from other functions in its budget. 

DOD's Procedures for Projecting Future Investigation Needs and Its 
Plans for Improving and Funding the Industry Clearance Program Are 
Evolving: 

Changes are occurring in the way in which DOD estimates its future 
investigations needs, as well as its plans and funding for modifying 
the personnel security clearance program for industry personnel. The 
procedures for estimating the numbers of clearance investigations 
needed annually for industry personnel are being revised in an attempt 
to improve the accuracy of those estimates. Similarly, DOD is not 
pursuing DOD-specific planning for reducing backlogs and delays as well 
as steps to adequately fund its clearance process but instead is 
participating in governmentwide planning efforts to improve clearance 
processes. 

DOD's Method for Estimating the Numbers of Industry Personnel Clearance 
Investigations Needed in the Future Is Evolving: 

DOD is changing the methods it uses to estimate the numbers of security 
clearance investigations it will need for industry personnel in the 
future in an effort to improve the accuracy of those estimates. Since 
2001, DOD has conducted an annual survey of contractors performing 
classified work for the government in order to estimate future 
clearance-investigation needs for industry personnel. In November 2005, 
OMB reported a governmentwide goal whereby agencies have been asked to 
work toward refining their projections to be within 5 percent of the 
numbers of actual requests for investigation.[Footnote 19] However, DOD 
has had difficulties in projecting its departmentwide clearance needs 
accurately. For the first half of fiscal year 2006, OPM reported that 
DOD had exceeded its departmentwide projection by 59 percent. The 
negative effects of such inaccurate projections include impediments to 
workload planning and funding. 

We have addressed the impact that inaccurate projections have on 
workload planning in our prior work. In 2004, we recommended that 
OUSD(I) improve the projections of clearance requirements for industry 
personnel--for both the numbers and types of clearances--by working 
with DOD components, industry contractors, and the acquisition 
community to identify obstacles and implement steps to overcome them. 
At that time, DOD officials attributed inaccurate projections to (1) 
the fact that the voluntary annual survey was answered by only a small 
fraction of the more than 10,000 cleared contractor facilities, (2) the 
use of some industry personnel on more than one contract and often for 
different agencies, (3) the movement of employees from one company to 
another, and (4) unanticipated world events such as the September 11, 
2001, terrorist attacks. 

In its efforts to improve its estimates of future clearance 
investigation needs, DSS has made recent changes to the methods it uses 
to develop these estimates; and it is conducting research that may 
change these methods further.[Footnote 20] First, starting in 2006, DSS 
made its annual survey accessible through the Internet. Second, DSS 
field staff made a more concerted effort to actively encourage industry 
representatives to complete the voluntary survey. According to a DSS 
official, these two changes increased the response rate of the survey, 
from historical lows of between 10 and 15 percent of surveyed 
facilities in previous years, to 70 percent of facilities responding in 
2007, representing 86 percent of industry personnel with a clearance in 
fiscal year 2007. Third, during fiscal year 2007, DSS began performing 
weekly updates to the analysis of future investigation needs, rather 
than relying on the previous method of performing a onetime annual 
analysis. Fourth, DSS has changed its analysis procedures by including 
variables (e.g., company size) not previously accounted for and is 
using a statistical method that substitutes values for missing survey 
data. In addition, DOD's Personnel Security Research Center is 
assessing a statistical model for estimating future investigation needs 
in order to determine if a model can supplement or replace the current 
survey method. 

DOD Currently Has No Plan of Its Own to Improve the Clearance Process 
but Is Participating in Related Governmentwide Efforts: 

Modifications to DOD's personnel security clearance program are 
changing from a DOD-specific emphasis to one that focuses on 
governmentwide efforts. Consequently, DOD does not have a comprehensive 
plan to address department-specific clearance backlogs, delays, and 
program funding. The principles of the Government Performance and 
Results Act of 1993 provide federal agencies with a basis for a results-
oriented framework that they can use to construct comprehensive plans 
that include setting goals, measuring performance, and reporting on the 
degree to which goals are met. In addition, the Intelligence Reform and 
Terrorism Prevention Act of 2004 provides DOD with timeliness 
requirements that would need to be met in any such comprehensive plan 
addressing clearance backlogs and delays. 

In our 2004 report[Footnote 21] on personnel security clearances for 
industry personnel, we recommended that DOD develop and implement an 
integrated, comprehensive management plan to eliminate the backlog, 
reduce the delays in conducting investigations and determining 
eligibility for security clearances, and overcome the impediments that 
could allow such problems to recur. At that time, DOD had been reacting 
to the impediments in a piecemeal fashion, rather than establishing an 
integrated approach that incorporated objectives and outcome-related 
goals, set priorities, identified resources, established performance 
measures, and provided milestones for permanently eliminating the 
backlog and reducing the delays. 

The DSS Director told us that DSS had been drafting a comprehensive 
plan to improve the security clearance process for industry personnel, 
but new governmentwide efforts have supplanted the larger-scale 
initiatives that DSS was planning. However, according to OUSD(I) 
officials, DOD continues to pursue a limited number of smaller-scale 
initiatives to address backlogs and delays and to ensure that funding 
is available for its security clearance processes. For example, to 
address delays in the processes, DOD is working with OPM to introduce 
methods of obtaining applicants' fingerprints electronically and to 
implement a method that would enable OPM to transfer investigative 
records to DOD adjudicators electronically. To help ensure that funding 
is available for its security clearance program, DOD is examining the 
number of clearances it funds and undertakes for industry personnel who 
work with 23 other federal agencies and departments. The DSS Director 
indicated that DOD is considering the cost it incurs for providing 
clearance-related services and the feasibility of shifting the funding 
responsibility back to the federal agencies and departments that 
request the clearances through DOD. 

High-level attention has been focused on improving personnel security 
clearance processes governmentwide. Since June 2005, OMB's Deputy 
Director of Management has been responsible for a leadership role in 
improving the governmentwide processes. During that time, OMB has 
overseen, among other things, the issuance of reciprocity standards, 
the growth of OPM's investigative workforce, and greater use of OPM's 
automated clearance-application system. An August 9, 2007, memorandum 
from the Deputy Secretary of Defense indicates that DOD's clearance 
program is drawing attention at the highest levels of the department. 
Streamlining security clearance processes is one of the 25 DOD 
transformation priorities identified in the memorandum. 

Another indication of high-level governmentwide involvement in 
addressing problems in clearance processes is the formation of an 
interagency security clearance process reform team in June 2007. The 
team's memorandum of agreement indicates that it seeks to develop, in 
phases, a reformed DOD and intelligence community security clearance 
process that allows the granting of high-assurance security clearances 
in the least time possible and at the lowest reasonable cost. The 
team's July 25, 2007, terms of reference indicate that the team plans 
to deliver "a transformed, modernized, fair, and reciprocal security 
clearance process that is universally applicable" to DOD, the 
intelligence community, and other U.S. government agencies, no later 
than December 31, 2008. In our November 2007 discussions with DOD 
officials, the OUSD(I) Director of Security clarified that the 
government expects to have demonstrated the feasibility of components 
of the new system by December 2008, but the actual system would not be 
operational for some additional unspecified period. 

Conclusions: 

While DOD's initial report on security clearances addressed all of the 
issues specified in the mandate, the omission of certain important 
information on the same issues currently limits Congress's ability to 
carry out its oversight and appropriations functions pertaining to 
industry personnel security clearances. For example, inclusion of only 
one future year of budgeting information limits the report's usefulness 
for strategic appropriations and oversight purposes. Without more 
information on DOD's longer-term funding needs for industry personnel 
security clearances, Congress lacks the visibility it needs to fully 
assess appropriations requirements. Elsewhere, DOD provides such longer-
term funding projections as a tool for looking beyond immediate budget 
priorities. Specifically, DOD annually submits to Congress the FYDP, 
which contains budget projections for the current budget year and at 
least the 4 succeeding years. Similarly, congressional oversight is 
hampered by the absence of information specific to industry personnel 
on timeliness measures for the average number of days it takes to 
perform portions of the clearance process--such as the adjudication 
phase--for pending and completed cases. Without these additional 
statistics, there is limited transparency for monitoring the progress 
that DOD and OPM are making annually in streamlining investigative and 
adjudicative tasks. Finally, DOD's report did not include any metrics 
on quality, even though we have previously recommended--in multiple 
reports and testimonies--that DOD and other parts of the government 
develop and report such measures for their clearance processes. 
Problems with the quality of investigations and adjudications can lead 
to negative consequences--such as the reluctance of agencies to accept 
clearances issued by other agencies--and can thereby increase waste in 
the form of unnecessary additional workload for the entire clearance 
community. Inclusion of these three types of data in the future annual 
reports appears feasible, based on statements in DOD's initial report 
that acknowledged the availability or ongoing development of each type 
of data. 

Recommendations for Executive Action: 

To improve the quality of the information that DOD provides in future 
reports to Congress for monitoring the security clearance process for 
industry personnel, we recommend that the Secretary of Defense direct 
the Under Secretary of Defense for Intelligence to augment the 
information contained in the department's initial mandated report. We 
therefore recommend the following three actions: 

* Add projected funding information for additional out years so that 
Congress can use that input in making strategic appropriation and 
authorization decisions about the clearance program for industry 
personnel. 

* In addition to the mandated information on average delays for pending 
cases; provide timeliness data for the additional phases within the 
clearance process, to allow for greater transparency regarding which 
processes are working well and which need improvement. 

* Develop measures of quality in the clearance process and include them 
in future reports, to explicitly show how DOD is balancing quality and 
timeliness requirements in its personnel security clearance program. 

Agency Comments and Our Evaluation: 

In written comments on a draft of this report, OUSD(I) concurred with 
all three of our recommendations. OUSD(I) noted that DOD agrees the 
recommended additional information will aid Congress in its oversight 
role and its future annual reports--starting in 2009--will include the 
suggested information. Regarding our funding recommendation, OUSD(I) 
noted its plans for addressing out year funding in the future and 
discussed the difficulty in capturing infrastructure costs such as 
those needed to sustain the current adjudication system and build a new 
information technology system. With regard to our recommendation on 
quality, DOD noted that the Personnel Security Research Center is 
leading the effort to further define measures, develop collection 
methodology, and suggest collection methods. DOD's comments are 
included in their entirety in appendix II of this report. 

We are sending copies of this report to interested congressional 
committees; the Secretary of Defense; the Director of the Office of 
Management and Budget; and the Director of the Office of Personnel 
Management. We will also make copies available to others on request. In 
addition, the report will be available at no charge on the GAO Web site 
at [hyperlink, http://www.gao.gov]. 

If you or your staff has any questions about this report, please 
contact me at (202) 512-3604 or [email protected]. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. GAO staff who made major contributions 
to this report are listed in appendix III. 

Signed by: 

Brenda S. Farrell: 

Director Defense Capabilities and Management: 

[End of section] 

Appendix I: Scope and Methodology: 

Scope: 

The scope and methodology of this report follow from the questions it 
answers. This report answers the following questions: (1) To what 
extent does the Department of Defense's (DOD) August 2007 report to 
Congress address the five issues specified in the mandate? (2) What 
were the number and cost of each type of clearance investigation and 
adjudication for industry personnel performed in fiscal years 2000 
through 2006? (3) To what extent has DOD developed procedures to 
estimate the number of investigations to be conducted; plans to reduce 
delays and backlogs in the clearance program, if any; and provide 
funding? 

In 2006, the John Warner National Defense Authorization Act for Fiscal 
Year 2007 mandated that (1) DOD report annually on the future 
requirements of its industry personnel security investigations program 
and (2) we evaluate DOD's first report in response to this mandate and 
provide additional information on eight issues. For our review of the 
DOD report, our scope was largely limited to information in the DOD 
report. The report included information on initial and renewal top 
secret, secret, and confidential clearances for industry personnel and 
information about program funding, the size of the backlog, the average 
time to complete investigations, and changes to the process. For the 
additional information on the number and cost--including information on 
surcharges that DOD paid to the Office of Personnel Management (OPM)-- 
of each type of industry clearance work performed in DOD's personnel 
security clearance program, we limited our scope to DSS-and OPM- 
conducted investigations and DOD adjudications of initial and renewal 
top secret, secret, and confidential clearances for industry personnel 
completed in fiscal years 2000 through 2006. For the additional 
information on planning and investigation requirements-estimation 
procedures, our scope included DOD and governmentwide plans and on- 
going efforts as well as DOD-specific procedures for estimating the 
numbers of future initial and renewal top secret, secret, and 
confidential clearances which will be needed for industry personnel. 

Methodology: 

To determine the extent to which DOD's report addressed each of the 
five issues specified in the mandate, we reviewed various documents, 
including laws and executive orders, DOD security clearances policies, 
OPM security clearances policies, and DOD and governmentwide data 
quality policies and regulations. These sources provided the criteria 
used for assessing the DOD report on personnel security clearances for 
industry. The sources also provided insights into possible causes and 
effects related to our findings about whether the DOD report addressed 
each of the issues specified in the mandate. We also reviewed clearance-
related reports issued by organizations such as GAO, DOD's Office of 
Inspector General (DODIG), and DOD's Personnel Security Research 
Center. We interviewed and obtained and evaluated documentary evidence 
from headquarters policy and program officials from various offices 
(see the column for question 1 in table 5) in DOD, OPM, and the 
National Archives and Records Administration (NARA). We compared the 
findings in the DOD report to the mandated requirements and 
governmentwide and DOD-wide data quality standards. We also interviewed 
and discussed our observations of the DOD report with officials from 
various DOD offices. 

Table 5: Sources Providing Documentary and/or Testimonial Evidence as a 
Result of Personal or Telephonic Interviews: 

Office: DOD; 
Office: OUSD(I), The Pentagon, Arlington, Virginia; 
Office provided information to answer: Question 1: X; 
Office provided information to answer: Question 2: X; 
Office provided information to answer: Question 3: X. 

Office: DOD; 
Office: OUSD(C), The Pentagon, Arlington, Virginia; 
Office provided information to answer: Question 1: X; 
Office provided information to answer: Question 2: X; 
Office provided information to answer: Question 3: X. 

Office: DOD; 
Office: DODIG, The Pentagon, Arlington, Virginia; 
Office provided information to answer: Question 1: X; 
Office provided information to answer: Question 2: [Empty]; 
Office provided information to answer: Question 3: X. 

Office: DOD; 
Office: DSS, Alexandria, Virginia; 
Office provided information to answer: Question 1: X; 
Office provided information to answer: Question 2: X; 
Office provided information to answer: Question 3: X. 

Office: DOD; 
Office: DISCO, Columbus, Ohio; 
Office provided information to answer: Question 1: [Empty]; 
Office provided information to answer: Question 2: X; 
Office provided information to answer: Question 3: [Empty]. 

Office: DOD; 
Office: DOHA, Columbus, Ohio; 
Office provided information to answer: Question 1: [Empty]; 
Office provided information to answer: Question 2: X; 
Office provided information to answer: Question 3: [Empty]. 

Office: DOD; 
Office: Personnel Security Research Center, Monterey, California; 
Office provided information to answer: Question 1: [Empty]; 
Office provided information to answer: Question 2: X; 
Office provided information to answer: Question 3: X. 

Office: NARA, Information Security Oversight Office, Washington, DC; 
Office provided information to answer: Question 1: X; 
Office provided information to answer: Question 2: [Empty]; 
Office provided information to answer: Question 3: X. 

Office: OPM, Washington, DC; 
Office provided information to answer: Question 1: [Empty]; 
Office provided information to answer: Question 2: X; 
Office provided information to answer: Question 3: [Empty]. 

Source: GAO. 

[End of table] 

To determine the number and cost of each type of clearance 
investigation and adjudication for industry personnel performed in 
fiscal years 2000 through 2006, we obtained and analyzed data from the 
Defense Security Service (DSS), the Office of the Under Secretary of 
Defense for the Comptroller [OUSD(C)], the Defense Industrial Security 
Clearance Office (DISCO), and the Defense Office of Hearings and 
Appeals (DOHA). Before determining the numbers and types of 
investigations and clearances, we assessed the reliability of the data 
by (1) interviewing knowledgeable officials about the data and the 
systems that produced them; (2) reviewing relevant documentation; and 
(3) comparing multiple sources (e.g., DSS vs. OUSD(C) records) for 
consistency of information and examining patterns in the data (e.g., 
the percentage of all adjudications in a given fiscal year that were 
for top secret clearances). Our analyses showed the numbers and costs 
of investigations and adjudications completed in fiscal years 2000 
through 2004 were not sufficiently reliable for the purposes of this 
report as we have previously discussed. In contrast we found the data 
for fiscal years 2005 and 2006 to be sufficiently reliable for our 
purposes but explicitly noted limitations with those data. The data for 
these 2 more recent years used different databases than those used to 
capture the earlier 5 years. Our methodology to determine the numbers 
and costs of investigations and adjudications for fiscal years 2005 and 
2006 included the following: 

* Numbers of investigations: We obtained and analyzed data from OPM's 
Personnel Investigations Processing System that DSS provided to us. 

* Numbers of adjudications: We obtained and analyzed data from the 
Joint Personnel Adjudications System. 

* Costs of investigations: We obtained and analyzed investigation rate 
data in Financial Investigative Notices published by OPM. While we 
found limitations associated with these types of data for fiscal years 
2005 and 2006, we found that the information was sufficiently reliable 
for the purposes of this report. 

* Surcharge for investigations: We obtained and analyzed documentary 
and testimonial evidence from DSS and OUSD(C) officials. 

* Costs of adjudications: We obtained and analyzed unit cost 
information that DSS officials produced for this report to show the 
cost of DISCO-provided adjudications and discussed the limitations of 
these data in the report. Although DOHA reported a unit cost for 
adjudications for fiscal year 2006, we did not report that statistic 
because our assessment revealed that it was not sufficiently reliable 
for the purposes of this report. 

Finally, we interviewed headquarters policy and program officials from 
various offices (see question 2 in table 5) in DOD, OPM, and NARA to 
obtain their perspectives on our observations of these data. 

To determine the extent to which DOD has developed procedures to 
estimate the number of future investigations needed for industry 
personnel and the extent to which DOD has plans to reduce delays and 
backlogs and provide funding, we took the following actions. We 
reviewed relevant laws, regulations, and DOD security clearances 
policies. These sources provided the criteria that we used in our 
evaluations. We also reviewed relevant clearance-related reports issued 
by organizations such as GAO, DODIG, and DOD's Personnel Security 
Research Center. We interviewed headquarters policy and program 
officials from the organizations shown in table 5 (see the column for 
question 3). Our methodology to determine the extent to which DOD has 
developed procedures to estimate the number of future investigations 
needed for industry personnel included three steps: (1) we obtained and 
analyzed documents describing DOD's procedures for estimating the 
number of industry investigations, (2) we reviewed DSS's Internet-based 
survey of contractors who perform classified work for the government 
and discussed our observations of this survey with the DSS Director and 
DSS officials responsible for this survey, and (3) we reviewed 
documents obtained from DOD officials describing ongoing research on 
potential changes to the methods DOD uses to make these estimates. 
Finally, our methodology to determine the extent to which DOD has plans 
to reduce delays and backlogs and provide funding included reviewing 
documents obtained in interviews with officials at the Office of the 
Under Secretary of Defense for Intelligence [OUSD(I)] and DSS. In 
particular, we reviewed and analyzed the Memorandum of Agreement 
between the Director of National Intelligence and the Under Secretary 
Of Defense (Intelligence) concerning the clearance process 
reengineering team. We also reviewed an August 2007 memorandum from the 
Deputy Secretary of Defense listing the top 25 transformation 
priorities for DOD, one of which is streamlining the security clearance 
process. 

We conducted this performance audit from May 2007 through February 2008 
in accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe that 
the evidence obtained provides a reasonable basis for our findings and 
conclusions based on our audit objectives. 

[End of section] 

Appendix II: Comments from the Department of Defense: 

Office Of The Under Secretary Of Defense: 
5000 Defense Pentagon: 
Washington, Dc 20301-5000: 

Intelligence: 

February 5 2008: 

Ms. Brenda S. Farrell: 
Director, Defense Capabilities and Management: 
U.S. Government Accountability Office: 
441 G Street, N.W.: 
Washington, D.C. 20548: 

Dear Ms. Farrell: 

This is the Department of Defense (DoD) response to the GAO draft 
report, GAO-08-350, `DoD Personnel Clearances: Improved Annual 
Reporting Would Enable More Informed Congressional Oversight,' dated 
January 17, 2008 (GAO Code 350986)." 

The recommendations ask the Department to provide information outside 
of the 2006 Congressional mandate to report annually on the future 
requirements of the industry personnel security program. The Department 
agrees the additional information will aid Congress in its oversight 
role and our future annual reports will include this information as 
suggested. The recommendations will be implemented in the Department's 
2009 report as they were received after submission of this year's 
report. 

I appreciate the opportunity to comment on the report and the 
professionalism and courtesy of your personnel. My point of contact is 
Rosalind Baybutt at (703) 604-1138 or [email protected]. 

Sincerely,

Signed by: 

Troy L. Sullivan

Acting Deputy Under Secretary of Defense (Counterintelligence and 
Security) 

Enclosure: 
As stated: 

GAO Draft Report - Dated January 17, 2008 GAO Code 350986/GAO-08-350:  

"DoD Personnel Clearances: Improved Annual Reporting Would Enable More 
Informed Congressional Oversight" 

Department Of Defense Comments To The Recommendations: 

Recommendation 1: The GAO recommends that the Secretary of Defense 
direct the Under Secretary of Defense for Intelligence to augment the 
information contained in the Department's initial mandated report by 
adding projected funding information for additional out years so that 
Congress can use that input in making strategic appropriation and 
authorization decisions about the clearance program for industry 
personnel. 

DOD Response: Concur. After an extensive review within DoD by the 
Comptroller and Program Advisory and Execution (PA&E) process, it was 
determined that the DSS funding was not sufficient. A fix was 
implemented for the FY08 and FY09 funding lines and the entire DSS 
program will be reevaluated for the FY10 Program Objective Memorandum 
(POM). Therefore, showing any numbers beyond FY09 would not have 
reflected accurate information. Once the POM process has been completed 
and the DSS funding stabilized, the Department will include projected 
funding for the out years. 

Second, the report cites Congressional testimony by the Director of DSS 
that "it would need tens of millions of dollars in the future to 
maintain the infrastructure supporting the program and to cover 
operating costs." The testimony cited referred to the cost to sustain 
the Joint Personnel Adjudication System (WAS) and to build a successor 
IT system. The budget numbers reflected in the Department's Report to 
Congress (CDA) refer to the amount budgeted by DoD for direct 
reimbursement costs to the Office of Personnel Management for Personnel 
Security Investigations for Industry. There is no accounting mechanism 
within the Department to capture infrastructure costs, such as those 
for JPAS, and apply them to this direct cost. 

Recommendation 2: The GAO recommends that the Secretary of Defense 
direct the Under Secretary of Defense for Intelligence to augment the 
information contained in the Department's initial mandated report by 
providing timeliness data for the additional phases within the 
clearance process to allow for greater transparency regarding which 
processes are working well and which need improvement. 

DOD Response: Concur. 

Recommendation 3: The GAO recommends that the Secretary of Defense 
direct the Under Secretary of Defense for Intelligence to augment the 
information contained in the Department's initial mandated report by 
developing measures of quality in the clearance process and including 
them in future reports to explicitly show how DoD is balancing quality 
and timeliness requirements in its personnel security clearance 
program. 

Dod Response: Concur. Using the Office of Management and Budget Program 
Assessment Rating Tool, the Department has developed three key baseline 
performance measures, cost of investigations and adjudications, 
timeliness of the clearance process and quality of investigations and 
adjudications. The Personnel Security Research Center (PERSEREC) has 
the lead to further define the measures, develop collection methodology 
and recommend collection tools.

[End of section] 

Appendix III: Contact and Staff Acknowledgments: 

GAO Contact: 

Brenda S. Farrell, (202) 512-3604 or [email protected]. 

Acknowledgments: 

In addition to the contact named above, Jack E. Edwards, Assistant 
Director; Joanne Landesman; James P. Klein; Ron La Due Lake; Thomas C. 
Murphy; Beverly C. Schladt; and Karen Thornton made key contributions 
to this report. 

[End of section] 

Related GAO Products: 

Defense Business Transformation: A Full-time Chief Management Officer 
with a Term Appointment Is Needed at DOD to Maintain Continuity of 
Effort and Achieve Sustainable Success. GAO-08-132T. Washington, D.C.: 
October 16, 2007. 

DOD Personnel Clearances: Delays and Inadequate Documentation Found For 
Industry Personnel. GAO-07-842T. Washington, D.C.: May 17, 2007. 

High-Risk Series: An Update. GAO-07-310. Washington, D.C.: January 
2007. 

DOD Personnel Clearances: Additional OMB Actions Are Needed To Improve 
the Security Clearance Process. GAO-06-1070. Washington, D.C.: 
September 28, 2006. 

DOD Personnel Clearances: Questions and Answers for the Record 
Following the Second in a Series of Hearings on Fixing the Security 
Clearance Process. GAO-06-693R. Washington, D.C.: June 14, 2006. 

DOD Personnel Clearances: New Concerns Slow Processing of Clearances 
for Industry Personnel. GAO-06-748T. Washington, D.C.: May 17, 2006. 

DOD Personnel Clearances: Funding Challenges and Other Impediments Slow 
Clearances for Industry Personnel. GAO-06-747T. Washington, D.C.: May 
17, 2006. 

Questions for the Record Related to DOD's Personnel Security Clearance 
Program and the Government Plan for Improving the Clearance Process. 
GAO-06-323R. Washington, D.C.: January 17, 2006. 

DOD Personnel Clearances: Government Plan Addresses Some Long-standing 
Problems with DOD's Program, But Concerns Remain. GAO-06-233T. 
Washington, D.C.: November 9, 2005. 

Defense Management: Better Review Needed of Program Protection Issues 
Associated with Manufacturing Presidential Helicopters. GAO-06-71SU. 
Washington, D.C.: November 4, 2005. 

Questions for the Record Related to DOD's Personnel Security Clearance 
Program. GAO-05-988R. Washington, D.C.: August 19, 2005. 

Industrial Security: DOD Cannot Ensure Its Oversight of Contractors 
under Foreign Influence Is Sufficient. GAO-05-681. Washington, D.C.: 
July 15, 2005. 

DOD Personnel Clearances: Some Progress Has Been Made but Hurdles 
Remain to Overcome the Challenges That Led to GAO's High-Risk 
Designation. GAO-05-842T. Washington, D.C.: June 28, 2005. 

DOD's High-Risk Areas: Successful Business Transformation Requires 
Sound Strategic Planning and Sustained Leadership. GAO-05-520T. 
Washington, D.C.: April 13, 2005. 

High-Risk Series: An Update. GAO-05-207. Washington, D.C.: January 
2005. 

Intelligence Reform: Human Capital Considerations Critical to 9/11 
Commission's Proposed Reforms. GAO-04-1084T. Washington, D.C.: 
September 14, 2004. 

DOD Personnel Clearances: Additional Steps Can Be Taken to Reduce 
Backlogs and Delays in Determining Security Clearance Eligibility for 
Industry Personnel. GAO-04-632. Washington, D.C.: May 26, 2004. 

DOD Personnel Clearances: Preliminary Observations Related to Backlogs 
and Delays in Determining Security Clearance Eligibility for Industry 
Personnel. GAO-04-202T. Washington, D.C.: May 6, 2004. 

Industrial Security: DOD Cannot Provide Adequate Assurances That Its 
Oversight Ensures the Protection of Classified Information. GAO-04-332. 
Washington, D.C.: March 3, 2004. 

DOD Personnel Clearances: DOD Needs to Overcome Impediments to 
Eliminating Backlog and Determining Its Size. GAO-04-344. Washington, 
D.C.: February 9, 2004. 

[End of section] 

Footnotes: 

[1] GAO, High-Risk Series: An Update, GAO-07-310 (Washington, D.C.: 
January 2007); and High-Risk Series: An Update, GAO-05-207 (Washington, 
D.C.: January 2005). The areas on our high-risk list receive their 
designation because they are major programs and operations that need 
urgent attention and transformation in order to ensure that our 
national government functions in the most economical, efficient, and 
effective manner possible. 

[2] DOD, National Industrial Security Program: Operating Manual, DOD 
5220.22-M (Feb. 28, 2006) notes that heads of agencies are required to 
enter into agreement with the Secretary of Defense for the purpose of 
rendering industrial security services. The following 23 departments 
and agencies have entered into such agreements: (1) National 
Aeronautics and Space Administration, (2) Department of Commerce, (3) 
General Services Administration, (4) Department of State, (5) Small 
Business Administration, (6) National Science Foundation, (7) 
Department of the Treasury, (8) Department of Transportation, (9) 
Department of the Interior, (10) Department of Agriculture, (11) 
Department of Labor, (12) Environmental Protection Agency, (13) 
Department of Justice, (14) Federal Reserve System, (15) Government 
Accountability Office, (16) U.S. Trade Representative, (17) U.S. 
International Trade Commission, (18) U.S. Agency for International 
Development, (19) Nuclear Regulatory Commission, (20) Department of 
Education, (21) Department of Health and Human Services, (22) 
Department of Homeland Security, and (23) Federal Communications 
Commission. 

[3] Pub. L. No. 108-458. 

[4] GAO, DOD Personnel Clearances: Additional OMB Actions Are Needed to 
Improve the Security Clearance Process, GAO-06-1070 (Washington, D.C.: 
Sept. 28, 2006); DOD Personnel: More Consistency Needed in Determining 
Eligibility for Top Secret Security Clearances, GAO-01-465 (Washington, 
D.C.: Apr. 18, 2001); and DOD Personnel: Inadequate Personnel Security 
Investigations Pose National Security Risks, GAO/NSIAD-00-12 
(Washington, D.C.: Oct. 27, 1999). 

[5] Pub. L. No. 109-364, ï¿½347 (2006). 

[6] GAO-06-1070. 

[7] The number of clearances granted in a year may not match the number 
of investigations conducted in that year because of the time that 
elapses between completion of the investigation and completion of the 
adjudication. 

[8] GAO-04-632. 

[9] Currently, three DOD agencies (National Security Agency, Defense 
Intelligence Agency, and the National Reconnaissance Office) have 
waivers from DOD that allow them to contract for their own personnel 
security clearance investigations. 

[10] 5 C.F.R. ï¿½ 1312.4, (2007). 

[11] DOD reported the annualized projected funding requirement for 
fiscal year 2007 of $178 million for this program based on the 41-week 
period from October 1, 2006, through July 14, 2007. In addition, the 
DOD report indicated that the department's 2006 survey, which provided 
data for fiscal years 2007 through 2010, indicated an industry 
personnel security investigations funding requirement that may exceed 
$300 million for fiscal year 2008. 

[12] The report showed average delay-related information for completed 
cases but not average delays for pending cases. The report did, 
however, provide a frequency distribution of times for pending cases. 
The mandate required that DOD report the length of the average delay 
for an individual case pending in the investigation process. 

[13] OPM performs one investigation--known as the national agency check 
with local agency check and credit check (NACLC)--for the initial and 
renewal of both the secret and confidential clearances. 

[14] The DSS Director told us that the information in Section V of the 
DOD report constituted the Secretary of Defense's certification that 
DOD had taken actions to improve its industry clearance program during 
the 12 months preceding the report date and that the Under Secretary of 
Defense for Intelligence was authorized to certify for the Secretary of 
Defense in this instance. 

[15] This annualized projection was based on the 41 weeks from October 
1, 2006, to July 14, 2007. 

[16] GAO-06-1070. 

[17] GAO-06-1070. Table 1 in our September 2006 report shows the types 
of information gathered for each type of clearance-eligibility 
determination. 

[18] DOD Office of the Inspector General, Transition Expenditures for 
DOD Personnel Security Investigations for FY 2005, D-2007-083 
(Arlington, Va.: Apr. 10, 2007). 

[19] OMB, Plan for Improving the Personnel Security Clearance Process 
(November 2005). 

[20] Although OUSD(I) officials provided us with information which may 
indicate that DOD improved the accuracy of its estimates of future 
clearance investigation needs for industry in fiscal year 2007, we were 
not able to analyze and corroborate this evidence because it was 
provided after we had concluded the analysis phase of our audit. 

[21] GAO-04-632. 

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Chuck Young, Managing Director, [email protected]: 
(202) 512-4800: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7149: 
Washington, D.C. 20548: 

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