<DOC>
[109th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:28534.wais]
LOW CLEARANCE: WHY DID DOD SUDDENLY STOP PROCESSING PRIVATE SECTOR
SECURITY CLEARANCES?
=======================================================================
HEARING
before the
COMMITTEE ON
GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
__________
MAY 17, 2006
__________
Serial No. 109-156
__________
Printed for the use of the Committee on Government Reform
Available via the World Wide Web: http://www.gpoaccess.gov/congress/
index.html
http://www.house.gov/reform
______
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COMMITTEE ON GOVERNMENT REFORM
TOM DAVIS, Virginia, Chairman
CHRISTOPHER SHAYS, Connecticut HENRY A. WAXMAN, California
DAN BURTON, Indiana TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida MAJOR R. OWENS, New York
JOHN M. McHUGH, New York EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida PAUL E. KANJORSKI, Pennsylvania
GIL GUTKNECHT, Minnesota CAROLYN B. MALONEY, New York
MARK E. SOUDER, Indiana ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio DENNIS J. KUCINICH, Ohio
TODD RUSSELL PLATTS, Pennsylvania DANNY K. DAVIS, Illinois
CHRIS CANNON, Utah WM. LACY CLAY, Missouri
JOHN J. DUNCAN, Jr., Tennessee DIANE E. WATSON, California
CANDICE S. MILLER, Michigan STEPHEN F. LYNCH, Massachusetts
MICHAEL R. TURNER, Ohio CHRIS VAN HOLLEN, Maryland
DARRELL E. ISSA, California LINDA T. SANCHEZ, California
JON C. PORTER, Nevada C.A. DUTCH RUPPERSBERGER, Maryland
KENNY MARCHANT, Texas BRIAN HIGGINS, New York
LYNN A. WESTMORELAND, Georgia ELEANOR HOLMES NORTON, District of
PATRICK T. McHENRY, North Carolina Columbia
CHARLES W. DENT, Pennsylvania ------
VIRGINIA FOXX, North Carolina BERNARD SANDERS, Vermont
JEAN SCHMIDT, Ohio (Independent)
------ ------
David Marin, Staff Director
Lawrence Halloran, Deputy Staff Director
Teresa Austin, Chief Clerk
Phil Barnett, Minority Chief of Staff/Chief Counsel
C O N T E N T S
----------
Page
Hearing held on May 17, 2006..................................... 1
Statement of:
Johnson, Clay, III, Acting Director, U.S. Office of
Management and Budget; Robert Andrews, Deputy Under
Secretary of Defense for Counterintelligence and Security,
U.S. Department of Defense; Robert W. Rogalski, Special
Assistant to the Under Secretary of Defense for
Intelligence, accompanied by Janice Haith, Acting Director,
Defense Security Services, U.S. Department of Defense;
Kathy L. Dillaman, Associate Director, Federal
Investigative Services Division, U.S. Office of Personnel
Management; and Thomas F. Gimble, Principal Deputy
Inspector General, U.S. Department of Defense.............. 11
Andrews, Robert.......................................... 18
Dillaman, Kathy L........................................ 41
Gimble, Thomas F......................................... 50
Johnson, Clay, III....................................... 11
Rogalski, Robert W....................................... 30
Wagoner, Doug, chairman, Intelligence Subcommittee,
Information Technology Association of America, on behalf of
the Security Clearance Coalition; William L. Gunst, vice
president for business operations, Anteon International
Corp.; and Nicholas Karangelen, president, Trident Systems,
Inc........................................................ 78
Gunst, William L......................................... 88
Karangelen, Nicholas..................................... 94
Wagoner, Doug............................................ 78
Letters, statements, etc., submitted for the record by:
Andrews, Robert, Deputy Under Secretary of Defense for
Counterintelligence and Security, U.S. Department of
Defense, prepared statement of............................. 19
Cummings, Hon. Elijah E., a Representative in Congress from
the State of Maryland, prepared statement of............... 103
Davis, Chairman Tom, a Representative in Congress from the
State of Virginia, prepared statement of................... 4
Dillaman, Kathy L., Associate Director, Federal Investigative
Services Division, U.S. Office of Personnel Management,
prepared statement of...................................... 43
Gimble, Thomas F., Principal Deputy Inspector General, U.S.
Department of Defense, prepared statement of............... 52
Gunst, William L., vice president for business operations,
Anteon International Corp., prepared statement of.......... 90
Johnson, Clay, III, Acting Director, U.S. Office of
Management and Budget, prepared statement of............... 13
Karangelen, Nicholas, president, Trident Systems, Inc.,
prepared statement of...................................... 96
Rogalski, Robert W., Special Assistant to the Under Secretary
of Defense for Intelligence, prepared statement of......... 32
Wagoner, Doug, chairman, Intelligence Subcommittee,
Information Technology Association of America, prepared
statement of............................................... 81
Waxman, Hon. Henry A., a Representative in Congress from the
State of California, prepared statement of................. 8
LOW CLEARANCE: WHY DID DOD SUDDENLY STOP PROCESSING PRIVATE SECTOR
SECURITY CLEARANCES?
----------
WEDNESDAY, MAY 17, 2006
House of Representatives,
Committee on Government Reform,
Washington, DC.
The committee met, pursuant to notice, at 1 p.m., in room
2154, Rayburn House Office Building, Hon. Tom Davis (chairman
of the committee) presiding.
Present: Representatives Tom Davis, Platts, Waxman,
Cummings, Kucinich, Watson, Ruppersberger, and Higgins.
Staff present: David Marin, staff director; Larry Halloran,
deputy staff director; Keith Ausbrook, chief counsel; Ellen
Brown, legislative director and senior policy counsel; Rob
White, communications director; Andrea LeBlanc, deputy director
of communications; Brien Beattie, professional staff member;
Teresa Austin, chief clerk; Sarah D'Orsie, deputy clerk; Phil
Barnett, minority staff director/chief counsel; Kristin
Amerling, minority general counsel; Karen Lightfoot, minority
senior policy advisor and communications director; David
Rapallo, minority chief investigative counsel; Michael
McCarthy, minority counsel; Earley Green, minority chief clerk;
and Cecelia Morton, minority office manager.
Chairman Tom Davis. The committee will come to order.
Good afternoon and welcome to today's hearing to
investigate the decision of the Defense Security Service to
institute a moratorium on all private sector requests for
personnel security clearance investigations.
Each year, the Federal Government hires private companies
to perform under defense and security-related contracts worth
billions of dollars. Much of that work requires employees to be
issued security clearances--to be checked and approved for
access to information classified as Confidential, Secret, or
Top Secret. If workers can't get cleared, important national
security work will not get done on time, and costs will
increase dramatically to the Government and the American
taxpayer.
Unfortunately, this is not the first disruption of a
troubled DOD system that seems to be suffering a cyclic
downward spiral. Intractable backlogs and lengthy delays in the
security clearance process have prompted other hearings, other
promises of reform. In testimony before this committee in May
2004, GAO reported that processing time for private sector
clearance requests had ballooned from an average of 56 days in
fiscal year 2001 to more than a full year. At that time,
backlogged cases numbered almost 200,000.
To address that untenable situation, I and others authored
Title III of the Intelligence Reform and Terrorism Prevention
Act of 2004, which called for better management, greater
transparency, and stronger accountability in the security
clearance process. We also mandated adherence to long-ignored
rules on reciprocity--recognition by one agency of clearances
granted by another. In short, Congress has repeatedly indicated
a strong desire to see the security clearance process function
efficiently and effectively to meet urgent security
requirements.
So it came as a nasty surprise, to say the least, when we
learned that DSS had notified thousands of contractors that it
would no longer be accepting any requests for private sector
security clearances because the agency was about to run out of
money. How could that happen? How could DSS or their partners
in this process at the Office of Personnel Management keep
blithely driving at full speed when the fiscal gas gauge on a
critical national security vehicle was hitting ``Empty?''
The impact of this decision is already being felt across
the Government and the corporate world. According to a May 8th
story in the Federal Times, contractor employees with
clearances have already begun asking their bosses for pay
raises, and one company is reportedly paying an IT-related
employee without a bachelor's degree a $100,000 premium because
he has a Top Secret security clearance. It is an insult to the
taxpayers. These anecdotes illustrate two things: an
instinctive understanding of the law of supply and demand on
the part of workers, and a penchant on the part of the Federal
Government to run afoul of that law.
Smaller companies are disproportionately hurt by a dearth
of security clearances. The largest defense contractors, which
employ tens of thousands of people, are usually able to find
someone on the payroll with a clearance to fill important
roles. And if not, they are in a much stronger position to
recruit cleared employees away from small companies by offering
salaries that small businesses are unable to afford,
transforming them from competitive enterprises to prime targets
for acquisition. In a business environment where the Government
is best served by competition among contractors, the kind of
corporate consolidation that clearance shortages may lead to
can only serve to drive up costs and hurt the taxpayer.
There will always be some kind of salary premium for those
working on national security-related contracts because there
will always be a demand for employees who are willing and able
to submit to the extensive background investigation required to
gain access to our Nation's secrets. But an inefficient system
that leads to unnecessary shortages of security clearances is a
self-imposed tax on the American people, and it is inexcusable.
I was pleased to learn yesterday that DOD has found the
money to restart the processing of Secret level clearance
requests, and I look forward to hearing that all requests have
been reactivated in the near future. However, I look forward to
hearing today about the steps that are being taken to ensure
that we will never again have to ask why, in a post-9/11 world,
Federal security clearances are not being processed in a timely
and efficient manner. We owe nothing less to the American
people and to the men and women, both in and out of Government,
who defend our National security.
I want to thank our distinguished witnesses for being here
today. I look forward to their testimony.
[The prepared statement of Chairman Tom Davis follows:]
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Chairman Tom Davis. The witnesses on our first panel are
also scheduled to testify at a Senate hearing at 2:30, so we
would like to limit opening statements to the chairman and
ranking member. It looks like we are in luck, Henry. Members'
statements will also be entered into the record, and the Chair
will be happy to recognize members for statements before the
second panel is sworn in.
I would now recognize my distinguished ranking member, Mr.
Waxman.
Mr. Waxman. Thank you, Mr. Chairman.
Two years ago, this committee held a hearing about delay
and mismanagement in the processing of security clearances. The
most serious problems included long backlogs in clearance
investigations, turf wars among Federal agencies, and a lack of
accountability for management of clearances across the entire
Federal Government.
Two years ago, we heard assurances that the Bush
administration was working to solve these problems. To improve
accountability in 2004, Congress passed a law requiring that a
single agency manage security clearance processing and get the
entire Federal Government working together. The President
designated the Office of Management and Budget.
Today, 2 years later, not only have these problems not been
solved, they have actually gotten worse. Today's hearing was
prompted by the Department of Defense's abrupt announcement of
a freeze on accepting clearance applications from contractors
because DOD mismanaged its budget and ran out of money. DOD is
now pointing fingers at the Office of Personnel Management,
which conducts background investigations on DOD's behalf. OMB,
which was supposed to be eliminating these turf wars, is
reportedly refusing to get involved.
Mismanagement and a lack of accountability have led to a
crisis that weakens our national security and drives up costs
for the taxpayer. Defense contractors are now paying exorbitant
salaries to lure employees who already have security
clearances, a cost that is ultimately passed on back to the
Government and our taxpayers. In addition, the high salaries
give an incentive to Government employees to jump ship and work
for contractors, draining talent from the civil service, and
renewal background checks on contractor employees who currently
have access to classified information are on hold.
The problems with the system for issuing security
clearances are troubling enough, but there is also growing
evidence that the system for revoking clearances is also being
mishandled. In a hearing earlier this year, national security
whistleblowers told us how the Bush administration had
improperly suspended and revoked their security clearances in
retaliation for reporting illegal activities occurring in their
agencies. Chairman Davis and I introduced a bill to provide
protections to national security whistleblowers. It passed out
of this committee in a unanimous bipartisan vote, though it has
not yet been allowed to go to the full House for a vote. I hope
we can also work together to fix the problem identified in
today's hearing.
I would like to thank the witnesses for testifying today. I
hope we can find some solution to these recurring problems so
we don't come back 2 years from now to have yet another hearing
on mismanagement of security clearances.
[The prepared statement of Hon. Henry A. Waxman follows:]
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Chairman Tom Davis. Thank you.
Members will have 7 days to submit opening statements for
the record.
Our first distinguished panel, we have the Honorable Clay
Johnson III, the Acting Director of the U.S. Office of
Management and Budget, no stranger to this committee, and thank
you for being here with us today.
We have Mr. Robert Andrews, the Deputy Under Secretary of
Defense for Counterintelligence and Security, U.S. Department
of Defense; Mr. Robert W. Rogalski, the Special Assistant to
the Under Secretary for Intelligence, accompanied by Ms. Janice
Haith, the Acting Director of Defense Security Services, U.S.
Department of Defense; and Ms. Kathy Dillaman, the Associate
Director, Federal Investigative Services Division, U.S. Office
of Personnel Management; and Mr. Thomas Gimble, the Principal
Deputy Inspector General, U.S. Department of Defense.
It is our policy we swear you in before your testimony, so
if you would just rise and raise your right hands.
[Witnesses sworn.]
Chairman Tom Davis. Mr. Johnson, we will start with you,
and thank you once again for being with us.
STATEMENTS OF CLAY JOHNSON III, ACTING DIRECTOR, U.S. OFFICE OF
MANAGEMENT AND BUDGET; ROBERT ANDREWS, DEPUTY UNDER SECRETARY
OF DEFENSE FOR COUNTERINTELLIGENCE AND SECURITY, U.S.
DEPARTMENT OF DEFENSE; ROBERT W. ROGALSKI, SPECIAL ASSISTANT TO
THE UNDER SECRETARY OF DEFENSE FOR INTELLIGENCE, ACCOMPANIED BY
JANICE HAITH, ACTING DIRECTOR, DEFENSE SECURITY SERVICES, U.S.
DEPARTMENT OF DEFENSE; KATHY L. DILLAMAN, ASSOCIATE DIRECTOR,
FEDERAL INVESTIGATIVE SERVICES DIVISION, U.S. OFFICE OF
PERSONNEL MANAGEMENT; AND THOMAS F. GIMBLE, PRINCIPAL DEPUTY
INSPECTOR GENERAL, U.S. DEPARTMENT OF DEFENSE
STATEMENT OF CLAY JOHNSON III
Mr. Johnson. Chairman Davis, Congressman Waxman, thank you
for having us here. Let me start off by saying that the
security clearance granting process has gotten better, not
worse; that the DOD is not pointing fingers at OPM for this
recent problem with their budget; and that OMB is as involved
as any oversight organization you would ever want any oversight
organization to be.
We are making progress in improving the process. In some
cases, the progress is significant. But we are not where we
wanted to be as of the month of May in our reform process.
Overall, in April, we have improved the timeliness of granting
clearances versus fiscal year 2005 by 40 days. It takes 11 days
less time to submit clearances. It takes 40 days less time to
investigate those clearances. And it takes us 10 days longer to
adjudicate.
The Department of Commerce and DOD have made significant
improvements and almost are at the desired level in terms of
the timeliness of submission. Adjudication at Commerce, Energy,
Transportation, and Homeland Security are significantly moving
forward in the percentage of satisfactorily adjudicating their
cases. DOD is more than offsetting those gains in Commerce,
Energy, Transportation, and Homeland Security.
Everybody knows what they need to do to improve, everybody
has clear goals, and everybody is committed to the reform
effort and to achieving those goals. We are still committed to
the goals that were laid out in the intel bill for where we
were to be by December 2006. It is too early to say we will not
achieve them, but we are making significant progress.
The biggest challenges, I believe, in the overall reform
process are in improving the timeliness of getting primarily
FBI records from FBI, and also in adjudicating our security
clearances in 30 days or less. The reason I say I believe those
are our biggest challenges is because the resources--we know
what we need to do, but the resources to do it are not yet in
place. The extra people needed at the FBI, the extra
adjudicators needed at DOD are not yet in place. We know how
many need to be there. We know what they need to do when they
are there, what they need to be trained to do. But it has not
yet happened.
I would be glad to answer any questions at the end of
everybody's statements.
[The prepared statement of Mr. Johnson follows:]
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Chairman Tom Davis. Thank you very much.
Mr. Andrews.
STATEMENT OF ROBERT ANDREWS
Mr. Andrews. Mr. Chairman, I am Bob Andrews. The decision
to suspend security investigations was made shortly after I
took up my post. This was not the Defense Security Services'
finest hour. We failed to estimate accurately the demand for
security investigations. We failed, moreover, to understand the
systemic problems that further contributed to suspending the
investigations.
Mr. Chairman, I am responsible for taking steps to resume
the investigations. I am also responsible for fixing the
underlying problems. I will meet those responsibilities.
We have lifted the suspension for the secret security
clearances, as you mentioned. We have also submitted to
Congress a reprogramming action to permit us to lift suspension
for top secret and periodic investigations. I believe we are on
the patH toward fixing the fundamental flaws in our process
itself. In the coming weeks, I will keep the committee abreast
of our progress and, at the committee's convenience, will
consult with you as we move forward.
I have asked Rob Rogalski, Special Assistant to the Under
Secretary for Intelligence, to lay out what happened and to
outline the near-term and longer-term solutions we have
identified.
[The prepared statement of Mr. Andrews follows:]
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Chairman Tom Davis. Mr. Rogalski, thanks for being with us.
STATEMENT OF ROBERT W. ROGALSKI
Mr. Rogalski. Good afternoon, Mr. Chairman.
Prior to the appointment of Bob Andrews, I was the Acting
Deputy Under Secretary of Defense for Counterintelligence
Security. Today I am joined by Ms. Janice Haith, Acting
Director, Defense Security Service, DSS. Ms. Haith does not
have an opening statement, so I ask your indulgence if I go
briefly over the 5 minutes allocated time.
The Under Secretary of Defense for Intelligence asked me to
lead a DOD team to diagnose what caused DSS to suspend industry
investigations due to the $90 million funding shortfall.
The work we have done has uncovered a number of systemic
problems associated with the industrial security process. We
have identified immediate changes which I believe will help
address those problems.
By way of background, the Department of Defense budgets and
pays to OPM the cost of security clearance investigations for
DOD contractors and contractors for 23 other Federal agencies
as part of the national industry security program.
On April 25th, the Acting Director, DSS, directed the
Defense Industrial Security Clearance Office [DISCO], which
processes requests from industry for investigations, to suspend
submissions to OPM for two types of investigations; initial
investigations and periodic reinvestigations.
On April 28th, DSS notified the industrial security
community to stop sending requests for investigations to DISCO
because DSS projected that it did not have sufficient funds
available to pay OPM for additional investigations. DSS took
this action to comply with the Anti-Deficiency Act. DSS cannot
knowingly request investigations without available funding.
Let me stress that DSS did not direct OPM to stop work on
any industrial investigations, initial or periodic, submitted
prior to April 25th, and DSS has paid for all work submitted to
OPM through April 25th.
During fiscal year 2006 and prior to April 25th, DSS
submitted to OPM over 100,000 requests for industry
investigations. Based on our current projections, we anticipate
submitting an additional 100,000 industry investigations for
the remainder of fiscal year 2006.
But, again, none of the more than 100,000 industrial
investigations submitted by DSS to OPM prior to April 25th have
been affected by DSS' action to suspend the submission of
investigations.
A number of factors contributed to the problem faced by
DSS.
First, DSS did not adequately budget for the cost of
industry investigations in fiscal year 2006. In October 2004,
the Department signed an agreement with OPM to transfer the
personnel security investigation function from DOD to OPM. As
part of the agreement, DOD agreed to pay to OPM up to a 25-
percent premium of the base cost of investigations to offset
potential operating losses incurred by OPM. The DOD budget
request, which was delivered to Congress in February 2005,
prior to OPM publication of its fiscal year 2006 rates, did not
include funds to pay the premium to OPM. In addition, the DSS
budget was reduced during congressional deliberation on the
fiscal year 2006 budget, and DSS did not appropriately manage
that reduction.
Second, when DOD transferred the personnel security
function to OPM, DSS had approximately 45,000 pending industry
investigation requests, which they did not transfer to OPM. DSS
directed industry to resubmit many of these investigations, and
it appears they are being submitted during this fiscal year.
DSS failed to track the status of these investigations and did
not request funding for them in its fiscal year 2006 budget
submission.
Let me now address the immediate steps the Department has
taken to address the suspension.
DOD's Comptroller provided DSS $28 million to restart
industry investigations. DSS has expended $5 million of these
funds to pay the most recent bill from OPM. Yesterday, DSS
notified industry to begin submitting requests for initial
investigations for secret clearances to ensure individuals
requiring a clearance for employment are placed in the OPM
processing queue. Based on present projections, the remaining
$23 million will allow DSS to send to OPM for processing
industry initial secret clearance requests through the end of
June 2006.
DOD, with OMB approval, submitted a reprogramming request
to Congress for $90 million yesterday to enable DSS to submit
the remaining projected industry investigations through the end
of fiscal year 2006.
The Deputy Under Secretary of Defense for
Counterintelligence and Security, Mr. Andrews, has directed the
following actions to address the systemic problems. The
establishment within DSS of a Central Oversight Office to
perform a variety of functions, to include: develop a process
to link security investigation requirements and funding with
current and future DOD contracts; monitor, initially on a daily
basis, the industry investigation process and develop trip
wires to reduce the probability of any need to impose a future
suspension.
The DOD Comptroller will immediately begin work with DSS to
develop new processes for DSS to use in preparing its budget
submissions. DSS will continue to work with OPM so that the two
organizations can identify and track investigations submitted
to OPM for processing, as well as the associated funding.
Mr. Chairman, the Department's senior leadership is
committed to correcting the systemic problems that have been
identified in the personnel security process. The Department
recognizes that inadequate oversight was a major contributor to
the problem.
We are prepared to meet with the committee periodically to
provide progress reports on our efforts to correct the problems
identified.
Mr. Chairman, this concludes my statement.
[The prepared statement of Mr. Rogalski follows:]
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Chairman Tom Davis. Thank you very much.
Ms. Dillaman.
STATEMENT OF KATHY L. DILLAMAN
Ms. Dillaman. Mr. Chairman, it is my privilege to testify
today on behalf of the Office of Personnel Management to
provide you with an update of the progress that has been made
to improve the timeliness of the security clearance process and
reduce the backlog of background investigations, as well as
answer any questions you may have about OPM's role in
processing security clearance investigations for the Department
of Defense.
OPM's mission is to ensure the Federal Government has an
effective civilian work force. To accomplish this mission, OPM
provides background investigation products and services to
agencies to make security clearance or suitability decisions on
civilian, military, and contractor personnel.
At OPM, the division responsible for conducting background
investigations is our Federal Investigative Services Division,
headquartered in Boyers, PA. This division supports over 100
Federal agencies with thousands of security offices worldwide.
Our automated processing systems and vast network of field
investigators handle a high volume of cases. In fact, this year
we expect to process over 1.7 million investigations.
Since February 2005, OPM has had responsibility for about
90 percent of all personnel background investigations for the
Federal Government. Subsequently, the Office of Management and
Budget formalized this by officially designating OPM as the
lead investigative agency responsible for conducting
investigations. We have been working closely with OMB and the
major clearance granting agencies to meet the timeliness
requirements of the Intelligence Reform and Terrorism
Prevention Act of 2004. Last fall, when our performance
improvement plan was released, it addressed four critical areas
of the investigation and security clearance process: workload
projections, timeliness and quality of agency submissions,
timeliness of the investigations, and the adjudications
process.
Since that time, I am happy to report that we have made
great strides in improving overall timeliness and reducing the
inventory of backlogged investigations.
OPM provides reports each quarter to OMB and the clearance
granting agencies on the progress that has been made to meet
the goals of the performance plan I referenced earlier. As an
attachment to my testimony today, I am providing a chart which
depicts the overall performance improvement trends for all
agencies.
To staff the investigative program responsibly, we need
agencies to work toward projecting their annual need within a
margin of 5 percent. Overall, agencies' projections are within
17 percent of actual submissions this fiscal year. The
Department of Defense, which represents 80 percent of the
national security investigations, has exceeded their annual
projections by 59 percent for the first half of the year. We
have asked all agencies to re-evaluate the projections for the
remainder of the year, and based on any adjustments provided,
we may need to further increase our Federal and contractor
staff to keep pace with demand.
The first step in improving the timeliness of the
investigation and clearance process is timely and accurate
submission of the subject's background information to OPM. The
expanded use of the electronic Questionnaires for
Investigations Processing [e-QIP] by submitting agencies has
improved submission timeliness and lowered the rate of
submission rejections because they contain inadequate or
incomplete information.
OPM continues to make significant progress in reducing the
amount of time it takes to complete the investigations as well.
I have included a table in my written statement that
demonstrates this progress. The improvement in timeliness can
be attributed largely to our increased staffing and
productivity by our field agents. Currently, we are maintaining
a staff of over 8,600 employees and contractors devoted to the
background investigations program. In addition, we began
deploying field agents overseas in August 2005 and currently
have more than 40 field agents working in more than 30 military
installations around the world to handle international coverage
requirements.
Although we have been able to reduce the number of overdue
initial clearance investigations, our inventory of pending
investigations is increasing because of the difficulty we have
in obtaining information from some national, State, and local
record providers. Working with OMB, Federal agencies that
provide records have developed aggressive plans to improve
their performance.
During the second quarter of this fiscal year, agencies
reported their adjudication actions to OPM. They averaged 78
days to complete this action, with 9 percent done within the
required 30 days of completion of the investigation. OPM is
working with agencies to improve this time and to automate the
process of returning investigations and reporting updating of
their actions.
Mr. Chairman, when the Senate confirmed OPM Director Linda
Springer last summer, I know she assured Members of Congress
that our work on security clearance reforms would be one of her
highest priorities. I am proud to have been given the
opportunity to work closely with our Director and put my own 30
years of Federal experience in this area to work in order to
meet the expectations Congress and the President have set on
this critical issue.
That concludes my remarks. I would be happy to answer any
questions.
[The prepared statement of Ms. Dillaman follows:]
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Chairman Tom Davis. Thank you.
Mr. Gimble.
STATEMENT OF THOMAS F. GIMBLE
Mr. Gimble. Mr. Chairman, thank you for the opportunity to
appear before the committee today to discuss personnel security
clearance program issues.
Since 1997, the DOD IG has issued 14 reports, including the
April 2006 report on ``DOD's Security Clearance Process at
Requesting Activities.'' Cumulatively, these reports address
the five phases of the personnel security clearance process.
Although we have not focused specifically on fiscal issues,
many of the issues that we have reported have fiscal
ramifications. Also, our ongoing ``Audit of Transition
Expenditures for DOD Personnel Security Investigations for
fiscal year 2005'' will determine whether the expenditures for
the transition of personnel security investigations from DSS to
OPM were in accordance with the agreement and whether OPM's
rate structure and adjustments for DOD investigations are
reasonable. Working jointly with the OPM Inspector General, we
anticipate issuing our report by August 2006.
Our reports have identified longstanding issues and made
numerous recommendations that, if implemented, would lead to a
more efficient and effective personnel security clearance
program. GAO's findings have been consistent with ours.
Unfortunately, the implementation of key recommendations has
been slow and, as a result, longstanding issues remain
uncorrected. I will discuss several longstanding issues.
In a 2002 report on ``Security Clearance Investigative
Priorities,'' we reported that DOD lacked a meaningful process
for prioritizing security clearance requests. To date, our
recommendation on prioritization remains outstanding, and
timely completion of security clearances for mission-critical
and high-risk positions is still very much an issue.
A 2001 report on the ``Defense Clearance and Investigations
Index Data base,'' the DCII, identified data integrity problems
that included incomplete and obsolete data. The DCII has not
been updated, but was still used to populate the Joint
Personnel Adjudication System [JPAS]. The new system is the
single, central record for investigative data. As a result, the
data integrity problems are still an issue.
For nearly 10 years, we have reported the need to update
the DOD Regulation 5200.2-R and DOD management has agreed. Yet,
to this date, the action remains to be completed and needs to
be given a higher priority.
A number of our reports, as well as GAO reports, have
addressed the impact of increasing workloads on both personnel
and fiscal resources. Our most recent audit report focused on
the impediments to initiating security clearance requests at 26
DOD activities and substantiated many of the longstanding
issues that I just discussed. The report found that the Under
Secretary of Defense Intelligence Office responsible for DOD
personnel security clearance program was understaffed, thus
limiting the ability to issue DOD policy and provide assistance
and oversight to the military services and defense agencies.
Security managers' workloads have grown significantly
because of September 11th, the military deployments, the global
war on terrorism, and increased use of sensitive classified
technology. OPM has also returned about 20 to 25 percent of the
investigation reports to the DOD activities because of
inaccurate data.
DSS Liaison Office was established to assist the Under
Secretary of Defense Intelligence with the oversight,
communication, and transition to OPM. Its existence was not
well-known to security managers at the requesting activities.
For almost a decade, our audits have highlighted serious
flaws in DOD's security clearance process. DOD has taken steps
to address some of the identified problems. But until systemic
and growing problems receive DOD management attention, not much
will change.
The personnel security program needs to have strong senior
leadership focus at the OSD level to include oversight of DSS;
a current integrated long-range strategic plan supported by
resources and senior leadership involvement that will enable
OSD to have visibility and oversight of the entire program to
effect the necessary changes; a transparent process for DOD
security personnel to understand the processes and resources
and using the DSS Clearance Liaison Office and other
communications tools; a better identification of personnel
security clearance requirements that will assist both DOD and
OPM in identifying the investigative and funding needs; an
updated current version of DOD Regulation 5200.2-R.
In conclusion, regardless of whether the investigative
function remains at OPM or DOD, these longstanding issues must
be resolved to make meaningful progress in reducing backlog and
ensuring a more effective and efficient end-to-end security
clearance process which will contribute to a more fiscally
sound program.
That concludes my statement.
[The prepared statement of Mr. Gimble follows:]
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Chairman Tom Davis. Thank you very much.
Mr. Rogalski, let me start with you. In your testimony, you
state that one of the factors leading to the $90 million
shortfall at DSS in fiscal year 2006 was that at time DOD
submitted its budget request in February 2005, DOD did not
request funds to cover the 25-percent premium that DOD agreed
to pay OPM in the Memorandum of Understanding that was signed
in October 2004.
Considering that the Memorandum of Understanding clearly
established that OPM could charge DSS at the rates it had been
charging, which was a known quantity, and that it could charge
up to a 25-percent premium on top of that figure, also a known
quantity, why was DOD unable to estimate the amount of money it
would need to cover what it would owe OPM?
Mr. Rogalski. First of all, I might have to take part of
this as a question for the record because that is a DOD
Comptroller answer. But let me give you what I understand from
what the DOD Comptroller told us.
It is clear that in the MOA between DOD and OPM it does say
that OPM may charge up to a 25-percent premium for the conduct
of investigations. Our understanding from the Comptroller is it
is very difficult to forecast a budget when you have a term
such as ``may'' in there. So that is why, on the advice of the
Comptroller, we went in with our initial request, again,
looking to having make some budget adjustments once that
surcharge, once that premium was imposed on DOD, and we did not
do that.
Chairman Tom Davis. So they looked at ``may'' as a
possibility and not----
Mr. Rogalski. That is correct.
Chairman Tom Davis [continuing]. As a ceiling in budget.
Mr. Rogalski. Yes, sir.
Chairman Tom Davis. Live and learn, I guess.
Why did I read about this in the paper? Why didn't DOD
notify Congress that they were about to run out of money? I
mean, you know what the congressional interest in this has
been. Do you know the answer to that? Or maybe Mr. Andrews--can
somebody tell us why?
Mr. Rogalski. Very candidly, it was a mistake on our part.
We should have notified you prior to the announcement being
made in the press. We should have notified you first.
Chairman Tom Davis. It was a shock to me.
Mr. Andrews, do you have any comment on that?
Mr. Andrews. I was as shocked as my boss was, Mr. Chairman.
Chairman Tom Davis. Mr. Johnson, one of the reasons cited
by DOD is the 25 percent per investigation that they have to
pay to OPM. GAO has reported that DOD and OPM approached Office
of Management and Budget seeking arbitration of this matter,
but that OPM directed the agencies to continue to negotiate.
Why did you decline to mediate at the time? Did you think
it could----
Mr. Andrews. We have never declined. In fact, we were told
by DOD and OPM that they would come to us when it was the
appropriate time. But they were still working through the
issues and making good progress.
Chairman Tom Davis. Well, let me ask this question: Were
you as surprised as we were when they came out with this
announcement?
Mr. Andrews. Yes.
Chairman Tom Davis. So they did not check with you either.
Mr. Andrews. No. No. Let me comment also.
Chairman Tom Davis. Yes.
Mr. Andrews. Two things were going on here: their estimate
of volume was off by 50 percent, and their estimate of unit
price was off by 25 percent. The bigger of the two shortcomings
is the volume estimate, but in both cases, as I understand from
my conversation with Bob, they had the information to identify
this and forecast this problem earlier in the year. And as they
said to me and to themselves and to their bosses and we are
saying to you today, they did not do what they needed to do
when they needed to do it.
Chairman Tom Davis. Well, I would like to hear from DOD and
OPM. If you both accept the need for the premium, as well as
about the assumption underlying it and the empirical base that
they use to support it now, we have a year's worth of data now
on the costs involved in the clearance investigation process. I
would just like to get both of your views on it.
Mr. Rogalski. Let me address the premium issue. It is
correct that we did ask OMB to mediate that, but we did agree
that our respective staffs, the DOD and OPM staffs, would meet
to look at the premium issue.
On May 5th, DOD did have a meeting with OPM, and we were
again advised that the premium would remain for the rest of the
fiscal year. Again, that was a business decision the Department
made when the MOA was signed. We did agree to that. And, again,
we did not adequately budget for that premium increase from
OPM.
Chairman Tom Davis. Not only did Congress NOT get notified,
but I guess the Office of Management and Budget was a little
taken by surprise, too, by your announcement.
Mr. Rogalski. That is correct.
Chairman Tom Davis. Ms. Dillaman.
Ms. Dillaman. Yes, Mr. Chairman. First, OPM's
investigations program is totally a revolving fund program,
fee-for-service program, unlike when DOD handled the background
investigations. We must recover all costs, full cost recovery
in our process.
When we negotiated the Memorandum of Understanding, we had
concerns in three areas: The transferring staff, if they would
be able to cover their payroll; we inherited about a $10
million a month payroll. Also, we needed to double our
contracting capacity to handle the additional workloads. And
there were several infrastructure issues that had yet to be
resolved.
We have provided all of our financial statements to DOD,
and they clearly demonstrated the need for the premium. The
first quarter after transfer, we went into the red. By the end
of the year last year, we broke even, and for this first
quarter of this year, we have a slight margin. All of that
information has been provided. We fully expect, barring any
unforeseen circumstances, that we may be able to eliminate the
premium as soon as the end of this fiscal year, but there still
lurk some variables that will have to be considered.
Chairman Tom Davis. Well, let me just say this: On behalf
of everybody who is out there--the companies that are involved,
the people that are involved, the American taxpayers, who are
really getting the short end of this--when the agencies look
narrowly at your focus and your budgets and you make those
decisions based on--you know, whatever, the Anti-Difficult Act
or whatever--you just jack up the cost that everybody is paying
for these services. It ends up costing the governmental entity
money over the long term. Your budget may be covered. And we
just rely on everybody to not just look at the narrow piece of
paper and the regulations that are operating, but at the
mission as a whole, and to make sure that we are complying with
that mission. And in this case, the mission has been clear for
a couple years. We have a huge backlog that did not exist in
2001, and it is backlogged there, and now this action makes it
worse over the short term. Then we get everybody up here, and--
I mean, that is the concern, is that nobody seems to worry
about the mission. Everybody is just worried about their
bureaucratic niche and violating this act or that act or
meeting their budget, and we forget about the taxpayers and why
we are in Government.
Yes, go ahead.
Mr. Johnson. The distinguished characteristic, I believe,
of the efforts by the six large security clearance granting
agencies is their commitment to fix this. You would be very
proud of the level of commitment by all the agencies and OPM to
fix this and the time and attention that is going into this. We
are not where we want to be. We are better than we have been.
And there is a lot of looking at the big picture and not much
looking at our budgets and so forth. So I----
Chairman Tom Davis. But that is what caused the
announcement in this case.
Mr. Johnson. Well, there was oversight, as I heard it
reported, and that Bob was not then--was not notified. His boss
was not identified. We were not identified that this was
happening. And this could have been identified and forecasted
several months prior. Error.
Chairman Tom Davis. That is what I am referring to.
Mr. Johnson. But two-thirds of the problem, their budget
problem, the reason they ran out of money mid-year, two-thirds
of the reason is their volume of clearances was 50-plus-percent
higher than they thought. Only one-third of the problem is not
budgeting for the increased rate.
Chairman Tom Davis. I understand. Look, one of the outcomes
of the security language that was included in the intelligence
reform legislation of 2004 was Executive Order 13381, which
designates OMB as the oversight authority for clearance policy.
I want to congratulate you personally, Clay, for your hard work
in bringing together all the stakeholders, developing a plan to
reduce the backlogs, and enforce reciprocity agreements.
However, this Executive order expires in July of this year,
and in light of the recent situation at DSS, it seems apparent
that there continues to be a need for high-level oversight at
your level of this. Do you anticipate there being a continued
oversight role for OMB and maybe the Executive order being
extended?
Mr. Johnson. There will be continued oversight. I think
eventually the oversight for the proper activities of the
security clearance part of the Government will fall to DNI.
When they are ready to take on that oversight, it will pass to
them, and we are in conversations with the DNI to determine
whether they are ready now or they would recommend that OMB
continue in the oversight capacity. But there will continue to
be oversight on this process.
Chairman Tom Davis. But it may not come in the form of an
Executive order.
Mr. Johnson. We will issue another Executive order.
Chairman Tom Davis. OK. I have more questions, but I will
yield to Mr. Waxman.
Mr. Waxman. Thank you, Mr. Chairman.
Ms. Haith and Ms. Dillaman, you are both Directors of the
two primary Federal agencies that conduct background
investigations for security clearances. Your agencies conduct
initial investigations as well as periodic reinvestigations. I
would like to ask you about the process for reinvestigations,
if I may.
I have here the adjudicative guidelines for determining
eligibility for access to classified information, which were
approved by President Bush on December 29, 2005. These apply
explicitly to ``persons being considered for continued
eligibility for access to classified information.''
Ms. Haith, to take a hypothetical example, when you are
reinvestigating a Government employee's background, Section 34
of the President's guidelines says you are supposed to examine
incidents in which an employee has engaged in a ``deliberate or
negligent disclosure of classified or other protected
information to unauthorized persons, including, but not limited
to, the media.'' The President's guidelines say this is a
serious security concern. Would you agree?
Ms. Haith. Yes, sir, I would agree.
Mr. Waxman. And it would be especially pertinent if it
happened on several occasions. Is that right?
Ms. Haith. Yes.
Mr. Waxman. Ms. Dillaman, the President's guidelines refer
to both intentional and negligent handling of classified
information. So we are not just concerned about intentional
leaks. We are also concerned with Government officials who are
negligent in the way they handle classified information. Is
that right?
Ms. Dillaman. Yes, sir.
Mr. Waxman. So reinvestigations for security clearances are
really very different from criminal investigations. We are not
looking for intentional actions, prove beyond a reasonable
doubt. We are looking for any activity that bears on a person's
honesty and integrity. Is that correct?
Ms. Dillaman. And their continued eligibility to have a
security clearance, yes, sir.
Mr. Waxman. Finally, Ms. Haith, Section 2(e) of the
President's guidelines say that when a security concern becomes
known about someone who already has a clearance, it is
important to determine whether the person voluntarily reported
the information and was truthful and complete in responding to
questions. So, in your opinion, if an agency employee lies to
the head of the agency about improper disclosures, would that
be relevant to whether that employee should continue to have
access to classified information in the future?
Ms. Haith. Yes, sir it would be relevant. However, there is
a due process requirement, and we would have to implement the
due process according to the law.
Mr. Waxman. I thank you for that answer.
I did not get specific about a particular case, but the
information you provided raises serious questions about why
Karl Rove retains his security clearance today. Reports
indicate that he leaked classified information, the identity of
a CIA operative. Reports also indicate that he did so on more
than one occasion. It appears that he tried to cover it up by
telling the White House Press Secretary that he was not
involved. It appears he may have also lied to President Bush
himself.
Given the President's own guidelines, can either of you
tell me why Karl Rove still has a security clearance?
Ms. Haith. Sir, he is not a DOD employee. I cannot comment
on that.
Mr. Waxman. Ms. Dillaman.
Ms. Dillaman. Nor can I, sir. My agency conducts the
background investigations. The adjudications for clearances are
handled by the clearance granting agency.
Mr. Waxman. Let me ask you this: Karl Rove came into the
White House with President Bush in January 2001. If he applied
for a security clearance at that time, he would have received
an interim clearance while his background was being
investigated. He was then granted a final security clearance
most likely at some point in 2001. That means that this year,
2006, he should be scheduled for his 5-year reinvestigation. Is
either of your offices conducting this reinvestigation?
Ms. Haith. DSS is not conducting any investigation.
Mr. Waxman. Ms. Dillaman.
Ms. Dillaman. I have no idea, sir.
Mr. Waxman. OK. Can you tell us who conducts this periodic
investigation for White House staff? Who is the official we
need to talk to about this issue?
Ms. Dillaman. Sir, I need to get back to you with an answer
on that. I believe those investigations are conducted by the
FBI, but I cannot confirm that now.
Mr. Johnson. Congressman.
Mr. Waxman. Anybody on the panel? Yes?
Mr. Johnson. You need to contact the White House. Counsel's
Office is in charge of--they have a Security Office in the
White House, and they would be responsible for the 5-year
reinvestigations. And I believe it is true that the FBI does
the background checks.
Mr. Waxman. They do the background check, but the----
Mr. Johnson. Adjudication is done by the Security Office
and the White House Counsel's Office.
Mr. Waxman. OK. Well, I will just conclude by noting that
right now it looks like the White House is ignoring the
President's own guidelines while they wait for the outcome of a
criminal investigation. But as these experts here today have
testified, that is not the case that is supposed to--that is
not the way it is supposed to work. The White House is supposed
to halt access to classified information and investigate the
breach. You lose your classification status and then you see if
there is anything wrong that has been done criminally. It seems
like it has been reverse with Karl Rove. They refuse to stop
his access to classified information while there is a criminal
investigation going on.
The White House is supposed to halt the access to
classified information and investigate the breach. And, Mr.
Chairman, I think the committee should investigate how this
process works at the White House and who is in charge over
there, and I would like to ask if you would consider joining my
request for a White House briefing on these matters.
Chairman Tom Davis. Well, I think that is not a discussion
I am going to have out here with you, Mr. Waxman, but I will
certainly be happy to talk to you about this.
Mr. Waxman. Well, Mr. Chairman, as we look at this access
to classified information, I think we need to look at this
matter very, very carefully. Some of us have already reviewed
the CIA's concern about what the disclosure of Valerie Plame
meant to the CIA itself, the operatives that work for it, and
we could easily guess what the impact has been on our
classified information, whether people can trust that
classified information is going to be kept secret and not
jeopardize those about whom the classified information may be
about.
So I will close my questions with that point and will look
forward to further discussions.
Chairman Tom Davis. Thank you, Mr. Waxman.
I have a few more questions. I would like to hear from both
OPM and DOD how they go about projecting annual requests, how
accurate these estimates have been in the past, and why DOD was
so off of its estimates for this year. I know there are lot of
moving parts in this, but let's just see if you can help me on
that.
Let me start with OPM. Ms. Dillaman.
Ms. Dillaman. Yes, sir. Each year, OPM does a data call for
all agencies asking for projections for the following fiscal
year. We contrast those projections with our own records of
what has been received in the past and work with agencies if
there seems to be a significant difference between what we
actually received the prior year and what is projected for the
next year.
This year, early, before this fiscal year started, every
agency provided those projections. We are in the mid-year point
now, and we are asking agencies to revalidate those projections
to see if adjustments are needed.
Chairman Tom Davis. OK.
Mr. Rogalski. DOD has always had a challenge in making
these projections, and we certainly want to get our fidelity in
making these projections down much clearer.
There are two dynamics in the Department of Defense: one is
the projection we get from the military departments on their
projections, and then the projections for industry. Let me
address the military departments first.
What we are seeing in the Department of Defense is
increased access and expanded sharing of classified information
to the warfighter. So by getting more classified information to
the warfighter in the field, we have seen an increase across
the board to increase the number of security clearances.
Although both the Marine Corps and the Army are both looking to
try to declassify information as much as possible, but today we
are getting more information to the warfighter; hence, that has
increased the need for security clearances.
Additionally, we have extended intelligence community
networks in the field. Those further require clearances. And we
are seeing a greater percentage of clearances for our top
secret information as well. So those dynamics have increased to
the overall projections from the military departments.
Annually, we go out to industry and ask them to project
their projected workload, and industry numbers are actually
pretty accurate. For this year, we just did not adequately plan
for the increased workload for those cases being resubmitted.
We are working in the Department. Air Force has a good model.
We are looking at that as a way to be applied through DOD. We
asked for the military departments and the rest of the
Department last week--we got their input last week to develop a
strategy to better forecast data. But we realize this is an
area the Department must improve upon to get better fidelity in
our projections so we can provide OPM the data they need to
manage workload.
Chairman Tom Davis. There are a lot of moving parts in the
personnel security process. You have DOD adjudicators. You have
OPM investigators, both Federal and under contract, and private
sector requesters. What I am getting at is it would seem a
necessity that the guidelines for this process be up-to-date
and accessible to everybody. But my reading is that the DOD--
and the DOD IG has reported that the key DOD guidance, which is
Regulation 5200.2-R, hasn't been updated for almost a decade,
even though recommendations from the IG are that it be
reviewed. Similarly, the OPM investigator's manual has been in
draft for some years now.
What is DOD doing to update the necessary guidance? And
when will that be complete? And what are OPM's plans for
finalizing the investigator's manual? And has this manual been
made accessible to all those in the process, such as DOD
adjudicators who need it? I will start with DOD.
Mr. Rogalski. Mr. Chairman, the base document, that is
correct, is dated 1987. DOD has issued three changes to the
base document, with the latest being February 1996, and
additionally we have issued an interim policy guidance
memorandum since then. So even the absence of that base policy,
we meet regularly with the DOD security community. Our Acting
Director of Security chairs the DOD's Security Directors Group,
with the Security Directors from the military departments,
defense agencies, combat and commands. We put out guidance with
that forum. People can access in the community the Defense
Security Service Web site.
So we do keep the DOD security community advised of policy
changes. We are going to get out a draft coordination of the
5200.2-R, the DOD personnel security regulation in draft, by
July 2006.
Chairman Tom Davis. Do you want me to ask my question
again?
Ms. Dillaman. No. I am fine, sir.
Chairman Tom Davis. OK.
Ms. Dillaman. OPM's investigator handbook has been shared
with the adjudication community consistently. In 2004, a year
before the merger of DSS and OPM, we shared the investigator's
handbook with all of DOD because they began processing their
investigations using our handbook. We then started working
closely with DOD to come to some agreement on some common
investigative interpretations of standards and come up with one
community handbook.
In 2005, a second draft was published. It was shared with
DOD, and we have been working since then with educational text
writers to improve the format of it.
Recently, the final draft went to all of the community
stakeholders for review, and we do anticipate a final handbook
to be issued later this year.
You should keep in mind, however, that things do constantly
change and amendments need to be added. As new laws are passed
or new investigative practices are incorporated, we need to
keep amending that handbook to keep it up-to-date.
Chairman Tom Davis. So is it going to be perpetually in
draft, or are you going to----
Ms. Dillaman. No, sir. There will be a final, but
immediately after the final, we will start on improving.
Chairman Tom Davis. I got you.
Let me ask you, Mr. Gimble, what role does the Joint
Personnel Adjudication System [JPAS], play in the single data
base requirement? What is being done to eliminate the IT
stovepipes instead of a truly unified clearance data base?
Mr. Gimble. Within the Department, it is the central
repository, replacing what was known as the DCII. As I
understand it--and I do not have any current work on this, but
as I understand it, it will be the central data base within the
Department of Defense. The challenge is to make it interface
with the OPM system to where you can have a true back-and-forth
download and upload and avoid the manual----
Chairman Tom Davis. How close are we to making that happen?
Mr. Gimble. That I would have to defer and get back to you
on that. I think it is a challenge that is going to take a lot
of work to get there. I do not have a timeframe as to when you
would expect it to be there.
Chairman Tom Davis. OK. Ms. Dillaman, you testified that
OPM's inventory of so-called closed pending cases has been
increasing because of the difficulty OPM faces in obtaining
third-party information necessary to complete investigations.
Ms. Dillaman. Yes, sir.
Chairman Tom Davis. But it seems that OPM is simply
providing agencies with incomplete investigations after
charging for the full cost of a completed product.
Ms. Dillaman. First of all, sir, if I advance information
to an agency, that file is open with me until the final pieces
are completed. Today, I have 70,000 investigations pending at
OPM that are waiting for third-party information from the FBI
and the Department of Defense only. That is 70,000
investigations that could be reviewed and the decision made on
whether a clearance could be granted.
Chairman Tom Davis. So agencies could actually use
incomplete investigations to award clearances?
Ms. Dillaman. It is a judgment call on the agency's part
whether or not the final pieces pose a risk in making that
decision. Some agencies lack sufficient staff to handle the
file twice, even though the timeliness for granting clearance
or an interim clearance could be improved.
Chairman Tom Davis. OK. In a November 2003 report, GAO
reported that the Transportation Security Agency paid about
$3,195 per investigation with the understanding that they would
be expedited and completed within 75 days rather than paying
$2,700 and having the investigation completed in 120 days. So
they paid about a $500 premium.
However, when the investigations were not completed in over
a year, TSA requested a refund and they were refused.
Ms. Dillaman. Yes, sir.
Chairman Tom Davis. OK. Why shouldn't a customer receive a
refund if OPM is unable to provide the level of service that
was paid for?
Ms. Dillaman. First of all, sir, the premium relates
directly to what the contractors charge OPM to conduct the
investigations, and we advertise----
Chairman Tom Davis. But they paid more than they ordinarily
would so that they would get it back on an expedited basis.
Ms. Dillaman. And historically the processing time for
priority investigations is faster, significantly faster, than
standard service investigations. And in this case, for TSA and
for DOD, priority investigations where a premium is paid are
turned around much faster. Today, for top secret
investigations, priority service investigations are processed
in an average of 50-odd days. Standard service investigations
are averaging about 170 days. So they are getting their
investigations in about a third of the time by paying the
premium.
Chairman Tom Davis. So basically just everything has gotten
less efficient in terms of the time period?
Ms. Dillaman. No, sir. The premium on the case--the
priority cases require our contractors to invest sometimes
significant additional overhead in managing a smaller
inventory. They may send an agent to travel specifically for
one case rather than efficiently letting them queue and sending
an agent to travel for multiple cases in order to meet a
priority deadline.
Chairman Tom Davis. I am just trying to understand then.
The extra $495 that was paid, my understanding is they were
moving it from 120 days to 75 days, while you are saying, well,
the 120 was really 180 and the 75 days was really something
else. Is that----
Ms. Dillaman. Sir, we don't advertise a timeliness by days.
We advertise two levels of service: priority and standard, with
our contractors bidding a premium to do priority work faster
than standard service.
Chairman Tom Davis. It sounds like two levels of service,
slow and slower, is what it looks like.
Ms. Dillaman. Yes, sir.
Chairman Tom Davis. OK. Mr. Gimble, what has the impact of
understaffing been in the current situation? And can you
suggest a more realistic staffing level at USDI that will
ensure adequate oversight of the security clearance function at
DOD?
Mr. Gimble. I think first, Mr. Chairman, you have to kind
of put it in perspective. The staffing of the oversight at
USDI, we believe it is very significantly understaffed simply
because they do the policy updates, write the manuals, and I
think that is part of the reason that four times in the last 7
years they have said they were going to issue an updated manual
and they have not been able to do that.
The magic number I think would have to be done, there needs
to be an adequate staffing study, a delineation of exactly
what--where they want the policy procedures to be handled,
either at USDI, DSS, or down in the military departments. So I
do not have a definitive answer for you today.
Chairman Tom Davis. You testified in June 2005 that DSS
established a seven-person clearance liaison office to assist
the Office of the Under Secretary of Defense for Intelligence
with oversight, planning, communication, the transition to OPM,
and coordination for overseas interviews. But it appears that
DSS has done a poor job of advertising this office because very
few security managers the IG interviewed were aware of its
existence. Is that----
Mr. Gimble. That is correct. We went to 26 DOD locations
out in the field on the audit that we were looking at. When you
put in the initial request, did they know--were they aware of
the office and its functions to answer questions and provide
oversight? And basically it was a very low awareness at the
field level.
Chairman Tom Davis. All right. Thank you. My last question,
Clay, goes to you. And, again, I thank you for being here, and
I know you have put a lot of your effort into this thing. I am
glad to hear you were as disappointed as we were when this
announcement came out, and you are back supervising this. But
in 2004, GAO requested that the proportion of requests for
private sector top secret clearances increased from 17 percent
to 24 percent from fiscal year 1996 to fiscal year 2003, and
that the 10-year cost to the Government is 13 times higher for
a person with a top secret clearance relative to a person with
a secret clearance. That was a GAO report.
But if the bar is rising for clearance level requirements,
the cost to the Government will continue to rise with it. I am
just asking, do you have any thoughts on how to ensure that the
growth in demand for top level clearances is both necessary and
manageable?
Mr. Johnson. I don't have the answer to that. We have
talked recently about certain levels of people that OPM is
considering sending to the FBI to help with some file recovery
work, and they are required to have a top secret clearance, and
some people have asked why do they need a top secret clearance?
Some of the files require it; some don't. There is no easy
answer to that.
So I don't know how to control or how to manage or how to
make proper the demand for the different levels of clearance. I
know that longer term--not in the next year or 18 months--say 4
or 5 years out, we will be doing clearances--we all can
envision doing clearances very differently than we do them now,
and a lot more data mining and a lot less interviewing next-
door neighbors, which is the same way we have been doing it
since the 1950's. That will be almost certainly more efficient,
less expensive to do.
So I would suspect that the cost to do a certain type of
clearance will tend to come down over time, but we have not
built any of those assumptions into our attack on improving the
process here in the short term in the next 2 years.
Chairman Tom Davis. But I guess the agencies, to the extent
that someone is overclassified, are you asking--there is a cost
to that as well. We just need to understand that as we walk
through it.
I think those are the questions that I wanted to get out
today. I am just glad that we are at least back on track, but
we still have a long-term issue, and I would just say, Mr.
Johnson, we are going to need your continued efforts to try to
bring this backlog back.
Anyone else want to add anything before we go to the next
panel? Mr. Rogalski.
Mr. Rogalski. I would like to add one thing very quickly.
Thank you. We have had many discussions with Mr. Johnson about
how to improve the process, so we have the one issue of the
immediate funding shortfall, which we need to address, but I do
think--and DOD is certainly looking at what are those changes
to national policy. I do believe it is time--we are overdue--to
look at the need for the efficacy of the 5-year, 10-year, 15-
year updates. So DOD is certainly looking at these initiatives.
How can we get better investment for our dollar, again, to
really determine what is the right criteria to have to
determine that someone is suitable, trustworthy to have access
to classified information. So we are certainly looking at those
types of things in a strategic concept.
Thank you.
Chairman Tom Davis. And I would just say, we are looking at
a way to see if GAO can measure what the cost is to the
taxpayer by having this backlog, by either work not getting
done or overpaying, because there is a huge cost to that. I see
it out in my district all the time because a lot of our
companies do this kind of work and are seeing the problems. You
know what the House did in the appropriations--excuse me, in
the authorization bill last week in terms of we are not going
to allow clearances to expire at this point. There is always, I
guess, some risk in that, but given the backlog, we do not need
to create more backlog. The problem with that is when that
legislation expires, the backlog or queue will get much longer
much faster.
Yes, sir, Mr. Andrews?
Mr. Andrews. Mr. Chairman, let me close by saying that
whenever there is a crisis in Government, there is always an
initial response to let's reorganize. I think we see this
problem not as an organizational problem but as a leadership
problem at its very core, and we are going to take care of it.
Chairman Tom Davis. Well, you know, I was an Army officer,
and when you take over a post--you are former officers. You
know the story. It leaves you three envelopes if things go bad.
In the first envelope, when you open it up, if things are not
going well the first few weeks, it says, ``Blame it on your
predecessor.'' If in a couple months things still are not going
well, you get to the second envelope, and I guess that is where
we are here. It says, ``Reorganize.'' If a few months later
things are still going bad, you open up the third envelope, and
it says, ``Prepare three envelopes.''
So I think we are at the reorganize stage here. I know you
have to get over to the Senate.
Mr. Ruppersberger, do you want to ask anything?
Mr. Ruppersberger. I am sorry we have all these different
hearings, but I am on the Intelligence Committee, and we have
dealt a lot in the clearance arena, and I am not sure what you
just testified to, but my staff was here so I will find out.
I want to ask a question about--we have a program at NSA
that I believe is working pretty well from a clearance
perspective. I know when I first started working with General
Hayden on the issue, I think it was a year. I think it is down
to 3 or 4 months, and sometimes when it is a priority, it goes
a lot quicker. And from my analysis, looking at where we are,
it seems to me that things are getting clogged at OMB. And I
wonder, when we have a good program and it is working, why
don't we see why it is working.
Another issue, too, I represent the NSA Fort Meade area,
also, and I know we are having a division under the BRAC
process coming into Fort Meade. And I am concerned that what is
coming into Fort Meade on the clearance issue might interfere
with what NSA is doing now because it works.
The bottom line is where it works. And I would like you to
answer the question about, the first thing, why is it necessary
to go through OMB if that is where it seems the back-up is
there. If an NSA program--and there are other Defense areas
that are working from a clearance perspective, they seem to
have it more under control, and also as it relates to the
contractors, because the contractors that are working with our
NSA, CIA, whatever it is, you know, if they don't get their
clearances, they might not be able to do the jobs, and it slows
everything down. And we know al Qaeda is not going to wait for
us, that is for sure.
So who could answer that question about why we don't take a
program that is working, why it seems we have to go through
OMB? OMB in the beginning was kind of good because they got it
going and organized it, but now it seems to be slowing up again
and the bureaucracy seems to be coming in. And could you
identify who you are with?
Mr. Johnson. I am Clay Johnson. I am the Deputy Director
for Management at OMB and I am the person that is in charge of
this oversight process and reform process--oversight of the
reform process.
Mr. Ruppersberger. OK.
Mr. Johnson. I am not familiar with the NSA program. I know
that the security clearance process and results within the
intelligence community is considered satisfactory. They do it
on a very timely basis, high quality and so forth. So there is
not a turnaround time problem we are trying to address. So what
we are----
Mr. Ruppersberger. Wait. I don't get you there. What do you
mean there is not a turnaround problem? In the intelligence
community, in some agencies there are. I just used NSA as an
example of one that is working. Why don't we see what they are
doing and follow what they are doing? And then the second issue
is OMB. Why do we need to get involved and go with OMB? Why is
it slowing down at OMB? That is my question.
Mr. Johnson. I am not aware of what NSA is having to do
with OMB, but I would be glad to look into it and----
Mr. Ruppersberger. Did I say OMB? I meant OPM. I am sorry.
Mr. Johnson. Oh, OK.
Mr. Ruppersberger. All these acronyms are----
Mr. Johnson. Then I don't care as much. [Laughter.]
Ms. Dillaman. I care a lot because I am OPM.
Mr. Ruppersberger. OK. Let's go.
Ms. Dillaman. Sir, I am not aware of any----
Mr. Ruppersberger. You are off the hook. That is good.
Ms. Dillaman. OPM provides some of the background
investigations for NSA, and NSA has a contract to do some of
the investigations themselves. We work very closely with them,
and I know of no inordinate delays in that process.
Mr. Ruppersberger. Well, why are we here today then? I am
looking at Mr. Chairman. We are here because of the concern and
the slowdown with contractors as far as clearances. That is why
we are here today.
Chairman Tom Davis. Well, right on the eve of this
yesterday, they announced they were resuming it right before
the hearing. But we still felt it was important to get them up
here to understand what happened, and I guess once again
reiterate how important this is.
I had promised this panel they could leave. They have to be
over at the Senate at 2:30.
Mr. Ruppersberger. All right. I tell you what. Then could
you--what was your name?
Mr. Rogalski. I am Robert Rogalski from the Department of
Defense, USDI. I will take that as a question for the record. I
have met with the Director of Security at NSA. I have looked at
their process, and we will provide you a detailed explanation.
Just for clarification, NSA has been granted authority by
the Department as well as the Defense Intelligence Agency to
conduct initial background investigations. OPM conducts their
periodic reinvestigations. I will tell you that from the NSA
perspective--and I have looked at their program. They have an
excellent program. But the Department has a scalability issue
if we were to adopt the NSA program. But I will provide you a
detailed----
Mr. Ruppersberger. This is Walter Gonzalez. I am going to
have him get with you all to follow through on this.
Mr. Rogalski. Absolutely.
Mr. Ruppersberger. Fine. Thank you.
Mr. Rogalski. We would be glad to do that.
Chairman Tom Davis. All right. We are going to take a 5-
minute break--or about a 3-minute break as we move to our next
panel. I want to thank this panel for coming.
[Recess.]
Chairman Tom Davis. The hearing will come back to order.
I recognize our second panel: Mr. Doug Wagoner, the
chairman of the Intelligence Subcommittee of the Information
Technology Association of America, on behalf of the Security
Clearance Coalition; Mr. William L. Gunst, the vice president
for business operations, from Anteon International Corp.; and
Mr. Nicholas Karangelen, the president of Trident Systems, Inc.
It is good to see you all here.
You know, we swear you in before you testify. It is our
policy. If you would just rise with me and raise your right
hands.
[Witnesses sworn.]
Chairman Tom Davis. Just a second, do you want to get a
photo op here? You can let her get a photo op here while you
are there. I hope that will look good in the newsletter.
Have a seat.
Well, you have heard the previous panel. I do not want to
say we are back on track, but at least one hiccup is resolved
for the immediate future. All of you are no strangers to this
issue. We just really appreciate your being here. Mr. Wagoner,
we will start with you and then go down the line.
STATEMENTS OF DOUG WAGONER, CHAIRMAN, INTELLIGENCE
SUBCOMMITTEE, INFORMATION TECHNOLOGY ASSOCIATION OF AMERICA, ON
BEHALF OF THE SECURITY CLEARANCE COALITION; WILLIAM L. GUNST,
VICE PRESIDENT FOR BUSINESS OPERATIONS, ANTEON INTERNATIONAL
CORP.; AND NICHOLAS KARANGELEN, PRESIDENT, TRIDENT SYSTEMS,
INC.
STATEMENT OF DOUG WAGONER
Mr. Wagoner. Mr. Chairman and members of the committee,
thank you for inviting ITAA and its industry partners to
testify today on the continuing challenges industry faces in
obtaining Federal security clearances. My name is Doug Wagoner
and I serve as chairman of the ITAA Intelligence Committee. I
also bring the perspective of a small business executive from
Fairfax struggling with this issue each day.
I've included more detail on our proposed solution to this
problem in a detailed white paper, and I would like to submit
that for the record.
Mr. Chairman, I was before you and this committee almost
exactly 2 years ago to discuss this problem. DSS leadership
testified that day that, as a result of changes under way at
DSS and OPM, 95 percent of Top Secret clearances by fiscal year
2005 would be completed in 120 days and no case would take over
a year. Since then, with the leadership of your committee, we
thought we had made strides to significantly change the
security clearance process. Here we are 2 years later, and DSS
is nowhere near fulfilling promises made to this committee.
In light of the past promises and attempted reforms,
industry was greatly alarmed by the April 26th action to
suspend acceptance of contractor requests for clearances. We
appreciate this committee's quick action to hold this hearing,
and look forward to Congress's support in solving this problem
both in the near and long term.
DSS may decide to suspend its activity, but our enemies are
not suspending theirs. Nor are others in the defense and
intelligence community suspending their vigilance to defeat
those enemies, and the demand and support from private industry
is greater than ever. Increasingly, defense and intelligence
agencies are turning to the private sector for products and
services they need to do their jobs. We cannot provide that
without access to classified facilities and information. In
other words, we cannot provide support without security
clearances.
There's much to tell about the impact of DSS's decision,
but none as important as the possibility that national security
missions may not be accomplished unless this issue is
addressed. This problem is also keeping qualified people from
working, is causing salary premiums as high as 25 percent,
premiums that raise the costs to industry, Government, and
ultimately the taxpayer, as you brought out earlier. And it is
leaving companies unable to meet contract requirements.
Industry has three requests that it would like to detail
today. One, immediate funding to reinstate acceptance and
processing of all contractor security clearances. Two, an audit
on how DSS and OPM could have created such a drastic shortfall
so early in the fiscal year and how that shortfall led to an
absolute moratorium. And three, a legislative overhaul of the
security clearance process, programs, and related bureaucracy,
with an immediate infusion of technology.
We must require DOD to reinstate the processing contractor
clearances immediately. If full funding cannot be found,
industry can work with DSS to prioritize cases for the rest of
this fiscal year, given full funding is made for fiscal year
2007.
It has been suggested that industry should pay for their
clearances, which cost about $3,700 for a Top Secret. Industry
rejects this suggestion for several reasons. First, it would
create haves and have-nots between large and small firms.
Additionally, the costs would be forwarded to Government, along
with any overhead charges, just as with any other allowable
cost, and this means the increased costs would come out the
expense of congressionally approved program funds. And last,
and probably the most profound reason, is that industry is not
in the business to support failed processes in Government.
It appears the decision to stop processing contractor
clearance requests was made in a vacuum and the funding
shortfall came as a complete surprise to DOD. We know of no
oversight body, including this one, that was alerted. We heard
that $145 million was budgeted and burned in 7 months, and
today they announced that they need an additional $91 billion
for the balance of fiscal year 2006. For DSS not to detect that
something was going wrong a month ago, 3 months ago, and sound
the alarm--or did OPM to deliver a surprise bill to DSS?
Industry believes there are accounting issues between OPM and
DSS on how cases are charged, and there may even be double
billing caused by how OPM rejects incomplete files.
It is for these reasons that a complete audit investigation
is needed for this monumental shortfall and how it came as a
surprise to almost everyone.
For the long term, our Nation needs a complete overhaul of
the security clearance bureaucracy. This overhaul must include
an immediate infusion of technology and data collection and
analysis. While OPM struggles to find enough investigators
armed with pen and paper to collect the data, much of this data
can be verified through commercial data bases. These sources
can verify identity, credit, and other transactional
information; in fact, our Nation's financial insurance industry
takes billions of dollars of informed risk each year based upon
the reliability of the exact same data.
In closing, Mr. Chairman, industry is very concerned by the
arbitrary decision to no longer accept our requests for
clearances. These requests are solely generated by mission
need. We stand side-by-side with our Government partners to
keep our Nation safe and are truly worried about the impact of
this decision on the many missions we support.
Mr. Chairman, you may recall that 2 years ago you held up a
1982 GAO report on security clearance problems and commented
that, since that time, you raised your son, put him through
college and law school, while little had been done to shorten
the clearance timeframes. Let's not wait for our grandchildren
to complete law school before we embark on a total overhaul of
the program's process and bureaucracies related to security
clearances.
Thank you again, and I look forward to your questions.
[The prepared statement of Mr. Wagoner follows:]
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Chairman Tom Davis. Thank you very much.
Mr. Gunst.
STATEMENT OF WILLIAM GUNST
Mr. Gunst. Chairman Davis, Ranking Member Waxman, and
members of the Committee on Government Reform, thank you for
inviting Anteon International Corp. to testify today on an
issue that is very troubling to my company and the government-
contracting community.
Anteon, headquartered in Fairfax, VA, is a leading
information technology company serving the U.S. Federal
Government. We design, integrate, maintain, and upgrade state-
of-the-art systems for national defense, intelligence, homeland
security, and other high-priority missions. Anteon was founded
in 1976 and currently has almost 10,000 employees in more than
100 locations worldwide. In short, we have been deeply involved
in this process for a long time.
We perform a significant volume of classified work under
contract with the Federal Government. Consequently, over 70
percent of our employees hold Government security clearances
today. Since 1999, the backlog for security clearance
investigations has increased significantly. As you might
expect, with this increased demand, the time to obtain a
clearance has lengthened from what it was. In the post-
September 11th period, our experience, at its worst, has shown
that the time to process a Top Secret clearance has doubled to
between 18 to 24 months.
Our need for clearances is very simple. We are subject to
the Federal Government's--our customer's--requirements. If you
cannot fill the need, you lose out on the most fundamental task
of bidding on an opportunity and then supporting the customer.
No clearances, no contracts.
At the time DSS imposed the freeze, Anteon had
approximately 1,100 actions pending, which grow at a rate of
150 to 200 actions monthly, covering new clearances, upgrades,
and reinvestigations. On a day-to-day basis we are facing three
fundamental problems, which will get worse with any
interruption to this process.
First, obtaining qualified staffing will be impacted. We
will be forced to change our hiring practices, to restrict our
hiring to only those people who already have clearances.
Second, affordability will become an issue. We will need to
closely balance being able to afford the limited and shrinking
universe of people with security clearances within the
constraints of our fixed labor-rate environments.
And third, retention could become a growing problem.
Competition for dwindling qualified staff will intensify as
those individuals with security clearances hop-scotch their way
to higher salaries. On the almost 40 percent of our contracts
that are cost reimbursable, these higher salaries will be
passed on to our Federal customers.
Let me speak to the misunderstood belief that large
contractors can deal with this current situation, since they
maintain a bench of cleared employees. Individuals sitting in a
company waiting for assignment to a contract will not be there
long. Federal contractors who strive to provide qualified staff
at a fair price cannot afford to park individuals with valuable
security clearances and indirect accounts.
We succeed in this marketplace by providing outstanding and
qualified service to our customers at a reasonable price with
lean indirect expenses. When we fail to consistently meet any
of these criteria, everyone involved in this system fails,
including our customers. It destroys our competitive position
in the marketplace for bidding, and it is a dollar-for-dollar
reduction against the reasonable expectation of our
shareholders. This condition is especially relevant for the
small business community, where limited staffs often wear
multiple hats to satisfy the customer.
This current interruption is all the more baffling after
the recent successful work to make the system more responsible
to serve those involved. Mr. Chairman, in October I joined you,
your staff, and others from the contracting community in a
meeting with the Hon. Clay Johnson in the Old Executive Office
Building to discuss the status of clearance processing at OPM.
Real progress was being made and hard targets were being
established and met. Last October, most of us left that meeting
with the firm belief that we were turning the corner and would
see continued improvement in the security clearance process.
I believe the infrastructure and outsourcing tools to
ensure continued improvements in the system are in place and
must be given a reasonable chance to succeed. However, we
cannot afford to take our eye off any piece of this very
fragile puzzle. Any interruption like this causes us to lose
progress and creates an untenable backlog.
Mr. Chairman, thank you for giving me the opportunity to
testify today, and I'm available to respond to your questions.
[The prepared statement of Mr. Gunst follows:]
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Chairman Tom Davis. Thank you very much.
Mr. Karangelen.
STATEMENT OF NICHOLAS KARANGELEN
Mr. Karangelen. Chairman Davis, thank you very much for
inviting me to testify today. It's an honor to have an
opportunity to appear before you and discuss what we believe in
small business is a timely and significant challenge.
I also am a board member of the Small Business Technology
Coalition, and I'd like to--I think we've talked a lot about
the potential impact this has on companies. My written
statement also speaks to that. But I'd like to say
retrospectively that when OPM took over this DSS in
reorganization, and I guess it sort of ended in February, we
actually saw an improvement. I haven't been as deeply involved
as the gentlemen here with me on the panel, but we did see
interim clearances go from weeks and maybe even months to a
couple of days.
And frankly, that was fabulous, because in a lot of cases
our customers will accept an interim clearance while you wait
for your final, although there are some customers that won't.
And today, just at Trident Systems, which is a small technology
company, we do a lot of work for many of the agencies of the
Government, we have 108 cleared personnel. Thirty-eight of them
have interim clearances. That's over 30 percent of my work
force.
Now, and with all due respect to the large-company problem,
small companies, especially mine, that have--sometimes our
growth is sporadic, you know, we'll grow 30 percent 1 year and
be flat for another, our companies, we have this--this problem
really exacerbates our ability to juggle. And I think we've
been doing a pretty good job of juggling the delay, which is
between 8--sometimes it's longer--months between an interim and
a final. But the notion that this could stop and we'd stop
processing clearances really puts the whole thing into a
tailspin.
I was really delighted to hear today that it looks like
we're good to go through June. I think that's what I understood
from the earlier panel. But it's a very ominous notion that we
would stop processing clearances from private-sector requests.
I spoke to some of the members of the Small Business Technology
Coalition yesterday and the day before on this issue and
there's literally panic. There are companies that are not going
to be able to fulfill contractual requirements if these delays
are extended.
So I'd like to sort of wrap up just by saying that, you
know, I deeply appreciate, and we all do, what you do here on
Government Reform. The committee is really focused on the
bureaucracy and how to make it work better. We have a couple of
suggestions. Clearly, in the short term, I would agree that
we've got to give these guys some more money. There's no way we
can avoid--we can stop processing clearances. I think that's
completely untenable from a small business perspective.
From a longer-term view, though, the automation that exists
in JPAS and the potential for automation really offers what we
believe is not just a process improvement, because there's
probably lots of process improvement that could be had in
reorganization and in looking at the process, but a technology
advantage, to give investigators quicker, easier access to
information, to allow the timeframe for clearances to come down
to months.
And I want to finish by saying I'm sure there are a lot of
small businesses who would welcome the opportunity to offer an
innovative and affordable solution to fixing this problem.
So with that, I'd like to thank you again for all the work
the committee does, not just in Government Reform but in
supporting our troops as they wage the war on terror across the
globe, and for the opportunity to speak on this important
issue.
[The prepared statement of Mr. Karangelen follows:]
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Chairman Tom Davis. Thank you very much.
Let me just start the questioning. Bearing in mind that Top
Secret clearances cost the Government so much more, is the
contractor community seeing the requirement for Top Secret
clearances over lesser levels of clearances increase over the
last few years? And is it warranted if it has? Any thoughts on
that? We had this discussion how much more expensive it is to
clear someone with a Top Secret. Are we overclassifying
people--there would be an expense to that. Do you have any
reaction to that?
Mr. Wagoner. Well, I have some hard facts. ITAA is
embarking upon a new survey of our members. We have about 400
respondents in so far. We're going to wrap this up here in
about a week. So far, 88 percent of the companies that
responded have said that they have seen a dramatic increase for
the requirement of cleared personnel in the last 5 years. So
that's a hard fact based on 356 respondents.
The second part of your question, I believe, was do we
believe that these are all required. Sir, is that the question?
Chairman Tom Davis. Mm-hm. Or are we overclassifying?
Probably the Government overclassifies to begin with, but in
looking at these clearances, could someone with a Secret
clearance do stuff that we're requiring Top Secret for? Because
there is a cost for that.
Mr. Wagoner. We would sure like to say yes, but I think I
have to agree with the first panel, that stated that a lot of
the requirements upon industry is because of the greater need
to push data down to the war fighter, the new systems that have
been put in place. And then we are building those systems. We
have hands-on in those systems. I wish I could say that we
could declassify some of that, but I believe that we should
keep that as a Top Secret.
Chairman Tom Davis. Anybody else have a reaction to that?
Mr. Karangelen. I think it's interesting to note that radio
operators in the Army and the Marine Corps who are carrying
radios, SINCGARS radios with crypto that are, you know, top-
secret pieces of gear, many of them don't have any security
clearances at all.
It's very difficult for us, from where we sit, to make a
judgment about whether or not somebody needs a Top Secret
clearance or whether or not somebody should be Top Secret, but
clearly, if there was a little more--it seems to be that there
should be a little more oversight about what's top-secret and
what's not.
Chairman Tom Davis. Let me ask you this. When it comes to
pricing--and Mr. Gunst, I'll start with you--when you're
pricing something and there are security clearances, how do you
price that into your total cost at this point?
Mr. Gunst. Well, presently, given the size we are, we have
the advantage of having a little history and we have a pretty
broad range of employees with clearances. So we know when we go
into the marketplace what we're going to see there with respect
to salaries. So we have that advantage working for us. We don't
really find ourselves pricing people and then pricing
clearances. We use salaries, and the basis we use is the near-
term experience we have in the particular marketplace that we
are attempting to price an opportunity in.
Mr. Wagoner. I think also, if I could add something to
that, I think what's happened in the last 5 years is I may have
signed a contract 3 or 4 years ago with established hourly
rates for that person, and the problem is their qualifications
haven't changed, so I can't charge a higher rate for them. The
only thing that's changed is the demand for their clearance. So
we are seeing--it is impacting our margin significantly because
we're locked into a contract that we agreed to 3 or 4 years ago
not realizing that this problem was going to continue and that
we're going to have to keep paying premiums for these folks.
Chairman Tom Davis. But the little guys really get hurt in
a case like that, don't they?
Mr. Wagoner. Yes, sir.
Chairman Tom Davis. Everybody gets hurt, but----
Mr. Wagoner. I am a little guy, sir. Yes. I'm a big little
guy. [Laughter.]
Chairman Tom Davis. As the Government security clearance
customers, what is your assessment of the efforts undertaken
thus far to fulfill the requirement? Give them a grade.
Mr. Wagoner. Since the April decision? Well, let's be
clear----
Chairman Tom Davis. Well, not since the April decision.
Let's go back to after the September 11th response by Congress.
Mr. Wagoner. The respondents in the survey indicate that in
the last year and a half, 60 percent are saying it's gotten
worse or not better.
Chairman Tom Davis. OK.
Mr. Wagoner. So they're not seeing a significant
improvement in the last year, I think is how the question was
phrased. And we'll get this survey to your staff, sir, as soon
as it's done.
Mr. Gunst. My personal experience has been they get close
to an F until 2005. And frankly, I was very encouraged by what
I heard in the fall of 2005. They were meeting some very tough
thresholds. And when I first heard of this freeze in late
April, I frankly thought it was a joke. I could not believe
that an agency, without warning, would take such a step that
would affect so many different people. So I would say since
April they get an F.
Mr. Karangelen. The real issue I have is that on April
28th, I think it was, we got the first indication that there
might be a problem. And what we heard was there was a technical
problem with JPAS. It wasn't until early in May when we heard
from a third party that they'd stopped processing clearances.
And that really--that's the hardest thing to take. Because we
feel like we've been juggling the system, we've been working as
hard as we can to work within the system; 6, 8 months, if
that's what it is, that's what it is. If you're going to stop
processing clearances and not even tell me you're going to stop
processing them, that really--that seems very disingenuous. I
would have preferred to at least have had somebody say, hey,
we've got a problem. Give us a heads up, even, just like you
should have been given one.
Chairman Tom Davis. You heard the previous panel and you
heard Clay Johnson talk about how things are getting better and
maybe we haven't seen it yet. I mean, what is your confidence
level in the future at this point? Give it on assurances and
legislation.
And in addition to that, if you can think of one or two
things maybe that we are not doing that we ought to be doing
that can add to this.
And I guess I would add a third thing, is reciprocity
working? We kind of mandated it, but mandating it and getting
everybody to buy into it is a different issue.
I will start with you, Mr. Wagoner.
Mr. Wagoner. I think the most encouraging comment was from
Mr. Johnson right there toward the end, when he raised the
possibility of actually reengineering this process and taking
feet off the street and getting away from the Eisenhower-era
processes and looking at automating a lot of these functions,
looking at a lot of the data. I think that is the only way
we're going to be encouraged that anything is ever going to
change, and that is if they start changing the process. Throw
it out, start with a clean sheet of paper, and really look at
use of technology and data to get this done.
As far as reciprocity, we are starting to see some
reciprocity. I think the best that I personally have seen in
talking to other colleagues is between CIA and NSA. They seem
to have gotten the message. In our survey, about a third are
saying that they still do not see reciprocity across
Government.
Mr. Gunst. I think the primary concern I have is that I get
worried whenever I look at a process that a single person
doesn't own. It fails in industry, and I think it fails in
Government. And I know there are a lot of well-intentioned
people trying to work very hard to fix this situation. But as I
sat listening to the testimony of the first panel, I was struck
by the notion that no one has control of this process. There
are certain people that ask for the clearances, certain people
that fund them, certain people that perform them, and then the
remaining group adjudicate them.
It's difficult for me, on industry's side, to understand
why it takes 18 to 24 months for a Top Secret clearance, but
when no one owns the process, it is by definition very fragile
and no one can bring all the resources to bear to fix it,
because no single group owns it. That would be my primary
concern.
Chairman Tom Davis. What is the difference between large
and small companies? I think, Mr. Gunst, you would argue you
don't keep a bench of people, that everybody gets hurt in the
process. Is that fair to say? When security clearances aren't
out there, everybody gets hurt. Mr. Karangelen, as a smaller
company, isn't it harder on you?
Mr. Karangelen. Having a security clearance can't be a
discriminator. I mean, it's just--I mean think about it. We're
trying to buy technology, goods, and services. I want to
compete with the big guys and my peers. If it comes down to I
just can't get a security clearance, or a good competitor of
mine can't get a security clearance, that seems like a terrible
way to decide who's going to win an important technology
procurement.
So I think it hurts everyone. I think it hurts small
business more because we're just not organized to deal with it.
You know, it's like creating another bureaucracy inside your
company in order to manage what is really artificial, is a
delay, an artificial delay. And again, if you're a big company,
you add it to the bureaucratic nightmare that you have. But
when you're a small guy, it means that the president or chief
operating officer or HR person has got--you know, who's already
juggling a lot to do, has to do it.
Chairman Tom Davis. Anybody else want to add anything?
Mr. Gunst. Well, one of the obvious principal advantages
any large company has is they have some dedicated staff they
can post to a particular situation. I think the recent comment
here is that I--you know, small businesses have a person that
does HR, they do contracts, they do security, they'll open the
building in the morning, they'll take care of the light bulbs
that are out. That's one person. I have the luxury of having 15
to 20 people that handle security. So when there's an issue, I
can dedicate some resources to it and try to resolve it. I
think that is a principle difference.
Chairman Tom Davis. OK, good. Anything else anybody wants
to add?
I just appreciate your being here trying to clarify this
issue. And once again, I think were it not for this hearing, we
would not have gotten the action out of the DOD. And I think
your participation and continued vigilance on this is going to
be needed if we're going to really make a serious dent in this
problem.
Thank you all very much. The hearing is adjourned.
[Whereupon, at 2:42 p.m., the committee was adjourned.]
[The prepared statement of Hon. Elijah E. Cummings and
additional information submitted for the hearing record
follow:]
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