DOD Personnel: Inadequate Personnel Security Investigations Pose National
Security Risks (Testimony, 02/16/2000, GAO/T-NSIAD-00-65).

Pursuant to a congressional request, GAO discussed the Defense Security
Service's (DSS) personnel security investigations, focusing on the: (1)
completeness and timeliness of the agency's investigations; and (2)
factors that contributed to the deficiencies GAO found.

GAO noted that: (1) safeguarding sensitive national security information
is one of the most important responsibilities entrusted to public
servants; (2) GAO's evaluation of DSS personnel security investigations
revealed serious lapses in the thoroughness and timeliness of the
investigations, raising questions about the risks such lapses pose to
national security; (3) 530 personnel security investigations showed the
vast majority did not comply with federal standards for conducting such
investigations; (4) all of the individuals investigated were granted top
secret security clearances even though DSS investigators had not always
verified such basic information as residency, citizenship, or
employment; (5) DSS investigations had not been completed in a timely
manner and there is a backlog of over 600,000 cases for reinvestigation;
(6) as a result, some of the Department of Defense's (DOD) 2.4 million
personnel currently holding security clearances may be handling
sensitive national security information without having been thoroughly
screened; (7) in 1994, the Joint Security Commission reported that
delays in obtaining security clearances cost DOD several billion dollars
because workers were unable to perform their jobs while awaiting a
clearance; (8) GAO identified a series of ineffective management reforms
at DSS that occurred from 1996 through early 1999; (9) GAO found that
DSS--in an effort to streamline operations and improve
efficiency--relaxed its investigative guidance, eliminated key quality
control mechanisms, inadequately trained its investigators, and
ineffectively managed automation of its case processing system; (10)
however, the underlying cause of DSS problems is insufficient oversight
by the Assistant Secretary of Defense (Command, Control, Communications,
and Intelligence); and (11) GAO believes that these factors led to
incomplete investigations and exacerbated the growing backlog of
uninvestigated cases.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-NSIAD-00-65
     TITLE:  DOD Personnel: Inadequate Personnel Security
	     Investigations Pose National Security Risks
      DATE:  02/16/2000
   SUBJECT:  Federal employees
	     Internal controls
	     Security clearances
	     Contractor personnel
	     Classified information
	     Strategic planning
	     Quality assurance
	     National defense operations
IDENTIFIER:  National Performance Review

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   * For Release on Delivery
     Expected at 10:00 a.m.
   * Wednesday
   * February 16, 2000

GAO/T-NSIAD-00-65

DOD PERSONNEL

Inadequate Personnel Security Investigations Pose National Security Risks

        Statement of Carol R. Schuster, Associate Director, National
        Security Preparedness Issues, National Security and International
Affairs Division

Testimony

Before the Subcommittee on National Security, Veterans Affairs, and
International Relations, Committee on Government Reform, House of
Representatives

United States General Accounting Office

GAO

Mr. Chairman and Members of the Subcommittee:

I am pleased to be here today to discuss our recent evaluation of Defense
Security Service personnel security investigations. This evaluation was
conducted at the request of the Ranking Minority Member of the House Armed
Services Committee, who was concerned about espionage committed by
Department of Defense (DOD) employees who held security clearances. From
1982 through September 1999, 80 individuals were convicted of committing
espionage against the United States; 68 of these were DOD employees, and all
had undergone personnel security investigations and held security
clearances.

The Defense Security Service is the key investigative agency responsible for
conducting investigations of DOD's civilian and military personnel,
consultants, and contractors.

Today, I would like to discuss the results of our analysis of a
representative sample of Defense Security Service investigations completed
in January and February 1999. Specifically, I will discuss (1) the
completeness and timeliness of the agency's investigations, (2) the factors
that contributed to the deficiencies we found, and (3) our major
recommendations. But first, let me provide a brief summary of my testimony.

Summary

Our detailed analysis of 530 personnel security investigations showed that
the vast majority did not comply with federal standards for conducting such
investigations. All of the individuals investigated were granted top secret
security clearances even though Defense Security Service investigators had
not always verified such basic information as residency, citizenship, or
employment. We also found that Defense Security Service investigations have
not been completed in a timely manner and that there is a current backlog of
over 600,000 cases for reinvestigation. As a result of these conditions,
some of DOD's 2.4 million personnel currently holding security clearances
may be handling sensitive national security information without having been
thoroughly screened. In addition, in 1994, the Joint Security Commission
reported that delays in obtaining security clearances cost DOD several
billion dollars because workers were unable to perform their jobs while
awaiting a clearance.

In examining the reasons for these deficiencies, we identified a series of
ineffective management reforms at the Defense Security Service that occurred
from 1996 through early 1999. We found that the Defense Security Service_-in
an effort to streamline operations and improve efficiency_-relaxed its
investigative guidance, eliminated key quality control mechanisms,
inadequately trained its investigators, and ineffectively managed automation
of its case processing system. However, the underlying cause of the Defense
Security Service's problems is insufficient oversight of its operations by
the Assistant Secretary of Defense (Command, Control, Communications, and
Intelligence). We believe that these factors led to incomplete
investigations and exacerbated the growing backlog of uninvestigated cases.

Our report made a series of recommendations to improve the overall
management of the personnel security investigation program. These
recommendations include identifying the program as containing material
internal control weaknesses in DOD's next report to the President and the
Congress in accordance with the Federal Managers' Financial Integrity Act.
We also recommended that the Secretary of Defense require the Defense
Security Service Director to develop a strategic plan and performance
measures to improve the quality of the investigative work and correct other
identified weaknesses. DOD agreed with all of our recommendations and is in
the early stages of making the necessary changes. However, because of the
seriousness and breadth of the problems, it may take several years and many
millions of dollars before all of the necessary improvements are made.

Background

To ensure the objectivity of our analysis, we used the federal investigative
standards approved by the President in 1997, which apply to all federal
departments and agencies. All investigations must be conducted in accordance
with these standards, which are designed to help determine whether
individuals can be trusted to properly protect classified information. For
top secret clearances, these standards require investigations in the
following nine areas:

   * corroboration of a subject's date and place of birth, and verification
     of citizenship for foreign-born subjects and their foreign-born
     immediate family members;
   * corroboration of education;
   * verification of employment for the past 7 years and interviews with
     supervisors and co-workers;
   * interviews with character references and former spouses;
   * interviews with neighbors to confirm residences;
   * a national agency check on the subject and spouse or cohabitant, using
     files and records held by federal agencies (such as the Federal Bureau
     of Investigation);
   * a financial review, including a credit bureau check;
   * a local agency check of criminal history records and other public
     records to verify any civil or criminal court actions involving the
     subject; and
   * a personal interview of the subject.

We employed several methods to ensure the accuracy of our review of DSS
investigations. First, we developed a data collection instrument that
incorporated the federal investigative standards and had it reviewed by
officials from the office of the Assistant Secretary of Defense (Command,
Control, Communications, and Intelligence) and the Army's adjudication
facility. Second, two GAO staff reviewed each sampled investigation to
ensure that no important investigative information was overlooked. Third, to
ensure the accuracy of our work, we returned a random subsample of deficient
investigations to the Air Force, the Army, the Navy, and the National
Security Agency adjudication facilities for their review.

DSS Investigations Lacked Required Information

   * 92 percent of the 530 investigations were deficient in that they did
     not contain information in at least one of the nine required
     investigative areas; and
   * 77 percent of the investigations were deficient in meeting federal
     standards in two or more areas.
   * The Air Force, Army, Navy, and National Security Agency adjudication
     facilities agreed with our findings.

As shown in figure 1, we found problems primarily in six of the nine areas
that the federal standards require for a security clearance investigation.
Frequently, DSS did not obtain the following information: confirmation of
residency; corroboration of birth or citizenship for a foreign-born subject,
spouse, or family member; verification of employment; interviews of
character references; and a check of local agency records.

Figure 1: Percent of Deficient Investigations in Nine Required Investigative
Areas

Source: GAO sample of 530 DSS investigations.

In 16 percent of the investigations we examined, DSS did not pursue issues
pertaining to individuals' prior criminal history, alcohol and drug use,
financial difficulties, and other problems that its investigators uncovered.
Any of these issues, if corroborated, could disqualify an individual from
being granted a security clearance. Of particular concern is the failure to
resolve issues pertaining to large outstanding debts and bankruptcy, since
financial gain has been the major reason individuals committed espionage.
The following cases illustrated these lapses.

   * A reinvestigation for an individual working on cross-service issues
     revealed that the subject's credit report showed $10,000 past due on a
     mortgage and indicated that the lender had begun foreclosure
     proceedings. The subject denied knowledge of the matter, and there was
     no evidence that DSS pursued the matter further by contacting the
     lender.
   * An initial investigation for an individual assigned to a communications
     unit revealed a bankruptcy on the subject's credit report. There was no
     evidence that DSS questioned the subject about the matter or made any
     further attempt to address it.
   * A reinvestigation for an electronics technician contained no evidence
     that DSS attempted to verify the subject's claim to be a member of a
     foreign military service and to hold foreign citizenship. Further,
     although the investigative file indicated that the subject may have
     been involved in shooting another individual, we found no evidence that
     the matter was pursued by DSS.

Untimely Investigations Created Costly Delays and Backlog

Figure 2: Calendar Days Needed to Complete Investigations

Source: GAO sample of 530 DSS investigations.

About 600,000 DOD individuals holding clearances are overdue for
reinvestigations. This backlog resulted, in large part, from quotas imposed
by the Assistant Secretary in 1996 (and that continue today) on the number
of reinvestigations that DOD components could request in a given year. In
1994 and 1999, the Joint Security Commission reported that delays in
initiating reinvestigations create risks to national security because the
longer individuals hold clearances the more likely they are to be working
with critical information systems. Also, the longer a reinvestigation is
delayed, the greater the risk that changes in an individual's behavior will
go undetected. DOD is currently initiating several efforts to reduce this
large backlog.

Ineffective Management Reforms and Inadequate Oversight Led to Deficient
Investigations

The deficiencies in DOD's personnel security investigation program are due
to DSS's ineffective management reforms and inadequate program oversight by
the Assistant Secretary of Defense (Command, Control, Communications, and
Oversight). DSS relaxed its investigative requirements against the advice of
the Security Policy Board, eliminated critical investigative quality control
mechanisms, did not adequately train its staff on the new federal
investigative standards, and ineffectively managed the implementation of a
new $100 million automation effort. DSS's actions were undertaken as
reinvention efforts ostensibly based on the National Performance Review,
which called for improving government at less cost. However, DSS's actions
did not achieve this result.

DSS Relaxed Investigative Guidance Contrary to Security Policy Board's
Advice

In 1996 and again in 1998, the Security Policy Board advised DSS not to
adopt policies that ran counter to the federal investigative standards. The
Board noted that DOD was a full partner in developing the new standards and
that the planned actions would undermine the objectives of achieving
reciprocity in investigations among the federal government's agencies, cause
a serious deterioration in the quality of investigative work, and increase
security risk. It stated that if DSS wanted to change the standards, it
should bring such requests to the Board, which was specifically established
for that purpose. In spite of this advice, DSS adopted the relaxed
investigative guidance. The new DSS Director, appointed in June 1999, has
acknowledged the need to bring DSS standards in line with the federal
standards, and he has directed a review toward this end. He also has
expressed his intention to improve cooperation with the Security Policy
Board.

DSS Eliminated Important Quality Control Mechanisms and Did Not Provide
Adequate Training

Investigative quality has also been diminished by inadequate training on the
federal standards for both the investigative and case analysts staffs.
During the past 3 years, DSS provided almost no formal training on the
standards, and DOD dismantled the major training organization that provided
the training. As a result, from 43 percent to more than 80 percent of the
investigators we surveyed stated that they were inadequately trained on the
various federal standards. Figure 3 shows the areas where the investigators
most frequently cited training gaps.

Figure 3: Percent of Investigators Without Recent Training on Investigative
Requirements

Source: GAO survey of 1,009 DSS investigators who provided information on
their training.

Poorly Planned Automation Efforts Have Consumed Millions of Dollars and
Delayed Case Processing

Our survey of investigators shows the dramatic impact the automation
problems have had on their workload. Before the system was implemented in
October 1998, 58 percent of the investigators said they had too much work.
Since the system was implemented, the situation has reversed: Now, 60
percent of the investigators said they had too little work. A similar
decrease in workload has occurred at the adjudication facilities. The volume
of investigative cases for four facilities included in our review dropped
between 37 percent and 67 percent following the implementation of the new
automated system.

Inadequate Oversight Is Underlying Cause of DSS Problems

DOD Is Implementing GAO's Recommendations

DOD agreed that the deficiencies we found represent a potential risk to the
personnel security program and the protection of classified information. DOD
concurred with all our recommendations to improve its personnel security
investigation program and to fully implement all recommendations. In
response to our recommendations, DOD is in the process of taking a series of
actions to correct program weaknesses. To its credit, DOD did not wait for
us to issue our final report before it began taking corrective actions.
Although most of DOD's actions are in their early stages, they appear to be
responsive to our recommendations and are positive steps toward addressing
the weaknesses we found.

(702035)

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