President George W. Bush issued Homeland Security Presidential Directive – 12 (HSPD-12) on August 27, 2004. HSPD-12 is the policy for a common identification standard for Federal employees and contractors. It's purpose is to enhance security, increase Government efficiency, reduce identity fraud, and protect personal privacy by establishing a mandatory, Government-wide standard for secure and reliable forms of identification issued by the Federal Government to its employees and contractors. The Directive specified a secure and reliable standard that:

• Is issued based on sound criteria for verifying an individual employee’s identity
• Is strongly resistant to identity fraud, tampering, counterfeiting, and terrorist exploitation
• Can be rapidly authenticated electronically
• Is issued only by providers whose reliability has been established by an official accreditation process.

The National Institute for Standards and Technology (NIST) developed and defined the standard for the Federal Government in a document "Personal Identity Verification of Federal Employees and Contractors". The Personal Identity Verification (PIV) process was divided into two parts to help all federal agencies meet the deadlines to produce a standard identification badge for all employees and contractors.

PIV-I satisfies the control objectives and meets the security requirements of HSPD-12. As of October 27, 2005, the PIV-I process required that federal employees and contractors:

• Be sponsored by a designated federal employee prior to receiving a badge;
• Have their identities verified using a defined list of acceptable documents; and
• Undergo a minimal background investigation or hold verification that a completed investigation exists.

PIV-II meets the technical interoperability requirements of HSPD-12. PIV-II specifies implementation and use of identity credentials on integrated circuit cards for use in a federal personal identity verification system. As mandated by the Office of Management and Budget (OMB) each federal agency was to have issued at least one PIV-II compliant credential by October 27, 2006. It is further mandated that all federal employees and contractors have PIV-II credentials by October 27, 2008.