DOD Personnel Clearances: DOD Faces Multiple Challenges in Its	 
Efforts to Improve Clearance Processes for Industry Personnel	 
(13-FEB-08, GAO-08-470T).					 
                                                                 
The Department of Defense (DOD) maintains approximately 2.5	 
million security clearances on servicemembers, federal DOD	 
civilian employees, industry personnel for DOD and 23 other	 
federal agencies, and employees in the legislative branch. Delays
in determining eligibility for a clearance can heighten the risk 
that classified information will be disclosed to unauthorized	 
sources, increase contract costs, and pose problems in attracting
and retaining qualified personnel. In this statement, GAO	 
addresses: (1) the status of DOD's efforts to improve its	 
projections of the numbers of clearances needed for industry	 
personnel, and (2) other long-standing challenges that have a	 
negative effect on the efficiency and effectiveness of DOD's	 
personnel security clearance program for industry personnel. This
statement is based on a report GAO is issuing today (GAO-08-350) 
and other prior work, which included reviews of clearance-related
documents and interviews of senior officials at DOD and the	 
Office of Personnel Management (OPM).				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-08-470T					        
    ACCNO:   A80749						        
  TITLE:     DOD Personnel Clearances: DOD Faces Multiple Challenges  
in Its Efforts to Improve Clearance Processes for Industry	 
Personnel							 
     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				 

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GAO-08-470T

   

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Testimony: 

Before the Subcommittee on Readiness, Committee on Armed Services, 
House of Representatives: 

United States Government Accountability Office: 

GAO: 

For Release on Delivery Expected at 2:00 p.m. EST: 

Wednesday, February 13, 2008: 

DOD Personnel Clearances: 

DOD Faces Multiple Challenges in Its Efforts to Improve Clearance 
Processes for Industry Personnel: 

Statement of Jack E. Edwards, Acting Director: 

Defense Capabilities and Management: 

GAO-08-470T: 

GAO Highlights: 

Highlights of GAO-08-470T, a testimony before the Subcommittee on 
Readiness, Committee on Armed Services, House of Representatives. 

Why GAO Did This Study: 

The Department of Defense (DOD) maintains approximately 2.5 million 
security clearances on servicemembers, federal DOD civilian employees, 
industry personnel for DOD and 23 other federal agencies, and employees 
in the legislative branch. Delays in determining eligibility for a 
clearance can heighten the risk that classified information will be 
disclosed to unauthorized sources, increase contract costs, and pose 
problems in attracting and retaining qualified personnel. In this 
statement, GAO addresses: (1) the status of DODï¿½s efforts to improve 
its projections of the numbers of clearances needed for industry 
personnel, and (2) other long-standing challenges that have a negative 
effect on the efficiency and effectiveness of DODï¿½s personnel security 
clearance program for industry personnel. This statement is based on a 
report GAO is issuing today (GAO-08-350) and other prior work, which 
included reviews of clearance-related documents and interviews of 
senior officials at DOD and the Office of Personnel Management (OPM). 

What GAO Found: 

DOD has had a long-standing challenge in accurately projecting the 
number of clearance investigations that will be required in the future 
for industry personnel. The Office of Management and Budget (OMB) 
developed criteria for these projections in November 2005. It 
established a governmentwide goal for agencies to refine their 
projections of the number of clearance investigations that will be 
required in any given year to be within 5 percent of the number of 
actual requests for investigation. At a May 2006 congressional hearing, 
an OPM Assistant Director stated that DOD had exceeded its 
departmentwide projection by 59 percent for the first half of fiscal 
year 2006. The negative effects of such inaccurate projections include 
impediments to workload planning and funding. GAO noted the problem 
with the accuracy of DODï¿½s projections in its February 2004 report and 
recommended that DOD improve its projections for industry personnel. In 
the report it is issuing today, GAO noted that DOD has initiated 
changes to improve its estimates of future investigation needs and is 
conducting research that may change these methods further. For example, 
in 2006, DOD took steps to increase the response rate of its annual 
survey used as a basis for determining its projections. In 2007, it 
changed its methods for analyzing data that informs its projections. 
However, DOD has not yet demonstrated the effectiveness of these 
changes. 

DOD must address additional long-standing challenges or issues in order 
to improve the efficiency and accuracy of its personnel security 
clearance program for industry personnel. First, continuing delays in 
determining clearance eligibility can result in increased costs and 
risk to national security. For example, when new employeesï¿½ clearances 
are delayed, it affects their abilities to perform their duties fully 
since they do not have access to classified material. Second, DOD and 
the rest of the federal government provide limited information to one 
another on how they individually ensure the quality of clearance 
products and procedures, which affects reciprocity of clearances. 
Reciprocity occurs when one government agency fully accepts a security 
clearance granted by another government agency. GAOï¿½s September 2006 
report noted that agencies may not reciprocally recognize clearances 
granted by other agencies because of concerns that other agencies may 
have granted clearances based on inadequate investigations and 
adjudications. Third, in DODï¿½s August 2007 report to Congress, it 
provided less than 2 years of funding-requirements information, which 
limits congressional awareness of future year requirements for this 
program. Fourth, DOD does not have a comprehensive DOD-specific plan to 
address delays in its clearance program. While there is a 
governmentwide effort to reform the clearance process, it is projected 
not to be operational until beyond December 2008. 

What GAO Recommends: 

GAO made recommendations to address DODï¿½s security clearance 
challenges. For example, in the report we are issuing today, GAO 
recommended that DOD provide Congress with information on funding and 
quality in clearance processes. DOD concurred and indicated it would 
provide that information in its 2009 report to Congress. 

To view the full product, click on [hyperlink, http://www.GAO-08-470T. 
For more information, contact Jack Edwards at (202) 512-8246 or 
[email protected], or Brenda Farrell at (202) 512-3604 or 
[email protected] 

[End of section] 

Chairman Ortiz and Members of the Subcommittee: 

I am pleased to be here today to discuss several of the long-standing 
challenges that affect the efficiency and effectiveness of the 
Department of Defense's (DOD) personnel security clearance program for 
industry personnel. DOD's clearance program maintains approximately 2.5 
million clearances on servicemembers, federal DOD civilian employees, 
industry personnel for DOD and 23 other federal agencies, and employees 
in the federal legislative branch. For more than two decades, we have 
documented challenges to DOD's clearance program. 

Long-standing delays in determining clearance eligibility and other 
clearance challenges led us to designate DOD's personnel security 
clearance program as a high-risk area in January 2005 and to continue 
that designation in the updated list of high-risk areas that we 
published in 2007.[Footnote 1] We identified this as a high-risk area 
because 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 unauthorized 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. At the same time, our 
work has acknowledged recent improvements to the department's clearance 
processes that were DOD-specific or part of governmentwide efforts. 

My statement today will focus on two issues: (1) the status of DOD's 
efforts to improve its projections of the number of clearances needed 
for industry personnel, and (2) an overview of other long-standing 
challenges that have a negative effect on the efficiency and 
effectiveness of DOD's personnel security clearance program for 
industry personnel. My statement draws on a report which we are issuing 
today[Footnote 2] and on our prior work on clearance processes which 
included reviews of clearance related documents and interviews of 
senior officials at DOD and the Office of Personnel Management (OPM) 
which has the primary responsibility for providing investigation 
services to DOD. Our work was performed 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. A list of our related GAO products can be found 
at the end of this statement. 

Summary: 

DOD has had a long-standing challenge in accurately projecting the 
number of clearance investigations that will be required in the future 
for industry personnel. In November 2005, the Office of Management and 
Budget (OMB) reported a governmentwide goal for agencies to refine 
their projections of the number of clearance investigations that will 
be required in any given year to be within 5 percent of the numbers of 
actual requests for investigation. In contrast, at a May 2006 
congressional hearing, an OPM Assistant Director stated that DOD's 
actual number of clearance investigation requests exceeded its 
departmentwide projection by 59 percent for the first half of fiscal 
year 2006. The negative effects of such inaccurate projections include 
impediments to workload planning and funding. These negative effects 
led us to recommend in our February 2004 report that DOD improve its 
projections for industry personnel. In the report we are issuing today 
on security clearances, we note that DOD initiated changes to improve 
its estimates of future investigation needs and is conducting research 
that may change these methods further. DOD's Defense Security Service 
(DSS) took steps to improve the response rate of its annual survey used 
to determine the number of clearances that industry anticipates needing 
in order to perform classified work. First, in 2006 to improve response 
rates, DSS made its annual survey accessible through the Internet, and 
DSS field staff began actively encouraging industry representatives to 
complete this voluntary survey. Second, in 2007, DSS changed the 
methods it uses to analyze the survey data. For example, DSS began 
performing weekly analyses of future investigation needs rather than 
relying on the previous method of performing a one-time annual analysis 
of its survey results. DSS also changed its analysis procedures by 
including variables (e.g., company size) not previously accounted for 
in its analyses. In addition to these recent changes to the methods DSS 
uses to develop its projections, DOD is conducting research that may 
change these methods further. However, DOD has not yet demonstrated the 
effectiveness of these changes. 

DOD must address additional long-standing challenges or issues in order 
to improve the efficiency and effectiveness of its personnel security 
clearance program for industry personnel. First, delays in determining 
the eligibility for a clearance continue. For example, DOD's August 
2007 congressionally mandated report on clearances for industry 
personnel noted that it took 276 days to complete the end-to-end 
processing of initial top secret clearances in the first 6 months of 
fiscal year 2007. These delays result in increased costs and risk to 
national security, such as when new industry employees are not able to 
begin work promptly and employees with outdated clearances have access 
to classified documents.[Footnote 3] Second, DOD and the rest of the 
federal government provide limited information to one another on how 
they individually ensure the quality of clearance products and 
procedures which affects reciprocity of clearances. Reciprocity occurs 
when one government agency fully accepts a security clearance granted 
by another government agency. In our September 2006 report, we noted 
that agencies may not reciprocally recognize clearances granted by 
other agencies because the other agencies may have granted clearances 
based on inadequate investigations and adjudications.[Footnote 4] 
Third, in DOD's August 2007 report to Congress it provided less than 2 
years of funding-requirements information which limits congressional 
awareness of future year requirements for this program. Fourth, DOD 
currently has no comprehensive DOD-specific plan to address delays in 
its clearance program. There is a new governmentwide effort led by an 
interagency security clearance process reform team to reduce delays in 
the security clearance process.[Footnote 5] However, the future system 
will not be operational until some time after December 2008. We have 
recommended that DOD take several actions to address each of these 
challenges in our prior work. Most recently, in the report we are 
issuing today, we are recommending that DOD augment its annual report 
on industry personnel security clearances with additional information 
on funding and quality in clearance processes. DOD concurred with those 
recommendations and indicated it would provide that information in its 
2009 report. 

Background: 

As with servicemembers and federal workers, industry personnel must 
obtain security clearances to gain access to classified information. 
Clearances are 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 cause to national security. 
The degree of expected damage that unauthorized disclosure could 
reasonably be expected to cause is "exceptionally grave damage" for top 
secret information, "serious damage" for secret information, and 
"damage" for confidential information.[Footnote 6] 

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, and employees in 
the federal legislative branch.[Footnote 7] That responsibility 
includes obtaining background investigations, primarily through OPM. 
Within OUSD(I), DSS uses OPM-provided investigative reports to 
determine clearance eligibility of industry personnel. DOD has 
responsibility for adjudicating the 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 within DSS and the Defense Office of Hearings 
and Appeals within the Defense Legal Agency. Accordingly, the Defense 
Industrial Security Clearance Office 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 adjudicates cases containing major security issues 
(e.g., an individual's unexplained affluence or criminal history) that 
could result in the denial of clearance eligibility and possibly lead 
to an appeal. 

Recent significant events affecting DOD's clearance program include the 
passage of the Intelligence Reform and Terrorism Prevention Act of 
2004[Footnote 8] and the issuance of the June 2005 Executive Order 
13381, "Strengthening Processes Relating to Determining Eligibility for 
Access to Classified National Security Information." The act included 
milestones for reducing the time to complete clearances, general 
specifications for a database on security clearances, and requirements 
for reciprocity of clearances. Among other things, the executive order 
stated that OMB was to ensure the effective implementation of policy 
related to appropriately uniform, centralized, efficient, effective, 
timely, and reciprocal agency functions relating to determining 
eligibility for access to classified national security information. 

Another recent event affecting DOD's clearance program was the passage 
of the John Warner National Defense Authorization Act for Fiscal Year 
2007[Footnote 9] which required DOD to include in its annual budget 
submission to Congress a report on DOD's industry personnel clearance 
investigations program. In response to that mandate, DOD's August 2007 
Annual Report to Congress on Personnel Security Investigations for 
Industry described DOD-specific and governmentwide efforts to improve 
security clearance processes.[Footnote 10] For example, one DOD- 
specific action described in the report is the addition of a capability 
to electronically submit a clearance applicant's form authorizing the 
release of medical information. In addition, one governmentwide effort 
described in the report is that all requests for clearances are now 
being submitting using OPM's Electronic Questionnaires for 
Investigations Processing. 

DOD's Procedures for Projecting Future Industry Investigation Needs Are 
Evolving, but the Effectiveness of These Efforts Is Unclear: 

DOD has had a long-standing challenge in accurately projecting future 
industry investigation needs and is developing and implementing new 
methods to improve its procedures. However, DOD has not yet 
demonstrated the effectiveness of these changes. 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, but those estimates have not accurately 
reflected actual clearance needs. In November 2005, OMB reported a 
governmentwide goal whereby agencies have been asked to work toward 
refining their projections of required investigations to be within 5 
percent of the numbers of actual requests for investigation.[Footnote 
11] However, according to an OPM Associate Director's May 2006 
congressional testimony, DOD exceeded its departmentwide projection by 
59 percent in the first half of fiscal year 2006. 

Our work has shown that DOD's long-standing inability to accurately 
project its security clearance workload has had negative effects on its 
clearance-related budgets and staffing requirements. For example, as we 
reported in 2004, the services and defense agencies had to limit the 
number of overdue reinvestigations that they submitted for 
investigation in fiscal year 2000 because they did not budget 
sufficient funds to cover the costs of the workload.[Footnote 12] 
Furthermore, in April 2006, DOD temporarily stopped processing 
applications for clearance investigations for industry personnel, 
attributing the stoppage to a large volume of industry clearance 
requests and funding problems.[Footnote 13] 

In May 2004, we addressed DOD's problems with inaccurately projecting 
the future number of clearances needed for industry personnel and the 
negative effect of inaccurate projections on workload 
planning.[Footnote 14] In that report, we recommended that OUSD(I) 
improve its projections of clearance requirements for industry 
personnel--for both the numbers and types of clearances--by working 
with DOD components, industry contractors, and the acquisition 
community to identify obstacles and implement steps to overcome them. 
At that time, DOD officials attributed inaccurate projections to (1) 
the use of some industry personnel on more than one contract and often 
for different agencies, (2) the movement of employees from one company 
to another, and (3) unanticipated world events such as the September 
11, 2001, terrorist attacks. Because DOD continues to experience an 
inability to accurately project its security clearance workload, we 
believe that our 2004 recommendation for improving projections still 
has merit. 

In the report on security clearances we are issuing today, we note that 
DSS has made recent changes to the methods it uses to develop these 
estimates, and it is conducting research that may change these methods 
further. For example, DOD has modified the procedures for annually 
surveying contractors performing classified work for the government in 
order to more accurately estimate the number of future clearance 
investigations needed for industry personnel. To improve the response 
rate to this survey, in 2006, DSS made its survey accessible through 
the Internet, and DSS field staff began actively encouraging industry 
representatives to complete this voluntary survey. According to a DSS 
official, these changes increased the survey response rate from 
historically low rates of between 10 and 15 percent of the surveyed 
facilities providing information in previous years to 70 percent of 
facilities in 2007, which represented 86 percent of industry personnel 
with a clearance. In addition to improving the response rate for its 
annual survey, DSS also changed its methods for computing the 
projections. For example, DSS began performing weekly analyses to 
refine its future investigation needs rather than relying on the 
previous method of performing a onetime annual analysis of its survey 
results. DSS also changed its analysis procedures by including 
variables (e.g., company size) not previously accounted for in its 
analyses. 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. However, it is too early to determine the effect of 
these new methods on the accuracy of DOD's projections. 

DOD Faces Additional Long-standing Challenges to Improving the 
Efficiency and Effectiveness of Its Personnel Security Clearance 
Program for Industry Personnel: 

DOD must address additional long-standing challenges or issues in order 
to improve the efficiency and effectiveness of its personnel security 
clearance program for industry personnel. First, delays in the 
clearance process continue to increase costs and risk to national 
security, such as when new industry employees are not able to begin 
work promptly and employees with outdated clearances have access to 
classified documents. Second, DOD and the rest of the federal 
government provide limited information to one another on how they 
individually ensure the quality of clearance products and procedures. 
Third, in DOD's August 2007 report to Congress, it provided less than 2 
years of funding-requirements information which limits congressional 
awareness of future year requirements for this program. Fourth, DOD 
currently has no comprehensive DOD-specific plan to address delays in 
its clearance program. 

Delays in Clearance Processes Continue to Be a Challenge: 

DOD's August 2007 report to Congress noted that delays in processing 
personnel security clearances have been reduced, yet the time required 
to process clearances continues to exceed time requirements established 
by the Intelligence Reform and Terrorism Prevention Act of 
2004.[Footnote 15] This law currently requires 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 allotted for the investigation 
and 30 days allotted for the adjudication. DOD's August 2007 
congressionally-mandated report on clearances for industry personnel 
described continuing delays in the processing of clearances. For 
example, during the first 6 months of fiscal year 2007, the end-to-end 
processing of initial top secret clearances took an average of 276 
days; renewal of top secret clearances, 335 days; and all secret 
clearances, 208 days. 

Delays in clearance processes can result in additional costs when new 
industry employees are not able to begin work promptly and increased 
risks to national security because previously cleared industry 
employees are likely to continue working with classified information 
while the agency determines whether they should still be eligible to 
hold a clearance. To improve the timeliness of the clearance process, 
we recommended in September 2006 that OMB establish an interagency 
working group to identify and implement solutions for investigative and 
adjudicative information-technology problems that have resulted in 
clearance delays.[Footnote 16] In commenting on our recommendation, 
OMB's Deputy Director for Management stated that that National Security 
Council's Security Clearance Working Group had begun to explore ways to 
identify and implement improvements to the process. 

DOD and the Rest of the Government Provide Limited Information on How 
to Ensure the Quality of Clearance Products and Procedures: 

DOD's August 2007 congressionally mandated report on clearances for 
industry personnel documented improvements in clearance processes but 
was largely silent regarding quality in clearance processes. While DOD 
described several changes to the processes and characterized the 
changes as progress, the department provided little information on (1) 
any measures of quality used to assess clearance processes or (2) 
procedures to promote quality during clearance investigation and 
adjudication processes. Specifically, DOD reported 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. 

In September 2006, we reported that while eliminating delays in 
clearance processes is an important goal, the government cannot afford 
to achieve that goal by providing investigative and adjudicative 
reports that are incomplete in key areas. We additionally reported that 
the lack of full reciprocity of clearances is an outgrowth of agencies' 
concerns that other agencies may have granted clearances based on 
inadequate investigations and adjudications. Without fuller reciprocity 
of clearances, agencies could continue to require duplicative 
investigations and adjudications, which result in additional costs to 
the federal government. In the report we are issuing today, we are 
recommending that DOD develop measures of quality for the clearance 
process and include them in future reports to Congress.[Footnote 17] 
Statistics from such measures would help to illustrate how DOD is 
balancing quality and timeliness requirements in its personnel security 
clearance program. DOD concurred with that recommendation, indicating 
it had developed a baseline performance measure of the quality of 
investigations and adjudications and was developing methods to collect 
information using this quality measure. 

DOD's Limited Information on Future Funding Requirements Hampers 
Congressional Awareness of a Key Aspect of the Personnel Security 
Clearance Program: 

DOD's August 2007 congressionally mandated report on clearances for 
industry personnel provided less than 2 years of data on funding 
requirements. In its report, DOD identified its immediate needs by 
submitting an annualized projected cost of $178.2 million for fiscal 
year 2007[Footnote 18] and a projected funding need of approximately 
$300 million for fiscal year 2008. However, the report 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 personnel security clearance program. 

The inclusion of less than 2 future years of budgeting information 
limits Congress's ability to carry out its oversight and appropriations 
functions pertaining to industry personnel security clearances. Without 
more information on DOD's longer-term funding requirements 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 the 
future years defense program to Congress, which contains budget 
projections for the current budget year and at least the 4 succeeding 
years. In the report we are issuing today, we are recommending that DOD 
add projected funding information for additional future years so that 
Congress can use that information in making strategic appropriation and 
authorization decisions about the clearance program for industry 
personnel.[Footnote 19] DOD concurred with that recommendation and 
stated that it would implement our recommendation in its 2009 
congressional report. 

DOD Has No Comprehensive Department-specific Plan to Address Delays in 
its Clearance Program: 

DOD currently has no comprehensive department-specific plan to address 
delays and other challenges in its clearance program. In our 2004 
report[Footnote 20] 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. However, DOD continues to address challenges in the 
security clearance process in an incremental fashion. According to 
OUSD(I) officials, DOD is pursuing a limited number of smaller-scale 
initiatives to address backlogs and delays. For example, to address 
delays in the process, DOD is working with OPM to introduce a new 
method of obtaining an applicant's fingerprints electronically and 
implement a method that would enable OPM to transfer investigative 
records to DOD adjudicators electronically. 

The DSS Director said that DSS had been drafting a comprehensive plan 
to improve security clearance processes for industry personnel, but new 
governmentwide efforts have supplanted the larger-scale initiatives 
that DSS was planning. In particular, DOD is relying on a 
governmentwide effort to reform the clearance system. Agencies involved 
in this governmentwide effort include the Office of the Director of 
National Intelligence, DOD, OMB, and OPM. A description of those 
planned improvements are included in the team's July 25, 2007, terms of 
reference, which indicate that the reform 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. In our November 2007 
discussions with DOD officials, the OUSD(I) Director of Security stated 
that the government expects to have demonstrated the feasibility for 
components of the new system by December 2008, but the actual system 
would not be operational for some additional unspecified period. 

We believe that our 2004 recommendation for a comprehensive management 
plan is still warranted because (1) many of the challenges still exist 
4 years after we made our recommendation and (2) the date that the 
reformed system will be in operation is unknown. 

Concluding Observations: 

Mr. Chairman, we are encouraged by some department-specific and 
governmentwide efforts that have improved DOD's personnel security 
clearance program, but the challenges identified in this testimony show 
that much remains to be done. Should these long-standing challenges and 
issues not be addressed, the vulnerability of unauthorized disclosure 
of national security information and additional costs and delays in 
completing national security-related contracts will likely continue. We 
will continue to monitor DOD's program as part of our series on high- 
risk issues that monitors major programs and operations that need 
urgent attention and transformation. 

Chairman Ortiz and Members of the subcommittee, this concludes my 
prepared statement. I would be happy to answer any questions that you 
may have at this time. 

Contact and Acknowledgments: 

For further information regarding this testimony, please contact me at 
(202) 512-8246 or [email protected], or Brenda S. Farrell at (202) 512- 
3604 or [email protected]. In addition, contact points for our Offices 
of Congressional Relations and Public Affairs may be found on the last 
page of this statement. Individuals who made key contributions to this 
testimony are Grace Coleman, James P. Klein, Ron La Due Lake, Marie 
Mak, and Karen D. Thornton. 

[End of section] 

Related GAO Products: 

DOD Personnel Clearances: Improved Annual Reporting Would Enable More 
Informed Congressional Oversight. GAO-08-350. Washington, D.C.: 
February 13, 2008. 

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 received 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] GAO, DOD Personnel Clearances: Improved Annual Reporting Would 
Enable More Informed Congressional Oversight, GAO-08-350 (Washington, 
D.C.: Feb. 13, 2008). 

[3] GAO-08-350. 

[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). 

[5] GAO-08-350. 

[6] 5 C.F.R. ï¿½ 1312.4 (2007). 

[7] DOD, National Industrial Security Program: Operating Manual, DOD 
5220.22-M (Feb. 28, 2006), notes that heads of agencies are required to 
enter into agreements 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. 

[8] Pub. L. No. 108-458 (2004). 

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

[10] DOD, Annual Report to Congress on Personnel Security 
Investigations for Industry and the National Industrial Security 
Program (August 2007). This first of a series of annual reports was 
mandated by the John Warner National Defense Authorization Act for 
Fiscal Year 2007, Pub. L. No. 109-364, ï¿½347 (2006). 

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

[12] GAO, DOD Personnel Clearances: DOD Needs to Overcome Impediments 
to Eliminating Backlog and Determining Its Size, GAO-04-344 
(Washington, D.C.: Feb. 9, 2004). 

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

[14] GAO, 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). 

[15] DOD, Annual Report to Congress on Personnel Security 
Investigations for Industry and the National Industrial Security 
Program (August 2007). 

[16] GAO-06-1070. 

[17] GAO-08-350. 

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

[19] GAO-08-350. 

[20] GAO-04-632. 

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