<DOC> [109 Senate Hearings] [From the U.S. Government Printing Office via GPO Access] [DOCID: f:22198.wais] S. Hrg. 109-160 ACCESS DELAYED: FIXING THE SECURITY CLEARANCE PROCESS ======================================================================= HEARING before the OVERSIGHT OF GOVERNMENT MANAGEMENT, THE FEDERAL WORKFORCE AND THE DISTRICT OF COLUMBIA SUBCOMMITTEE of the COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS UNITED STATES SENATE ONE HUNDRED NINTH CONGRESS FIRST SESSION __________ JUNE 28, 2005 __________ Printed for the use of the Committee on Homeland Security and Governmental Affairs U.S. GOVERNMENT PRINTING OFFICE 22-198 WASHINGTON : 2005 _____________________________________________________________________________ For Sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512ÿ091800 Fax: (202) 512ÿ092250 Mail: Stop SSOP, Washington, DC 20402ÿ090001 COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS SUSAN M. COLLINS, Maine, Chairman TED STEVENS, Alaska JOSEPH I. LIEBERMAN, Connecticut GEORGE V. VOINOVICH, Ohio CARL LEVIN, Michigan NORM COLEMAN, Minnesota DANIEL K. AKAKA, Hawaii TOM COBURN, Oklahoma THOMAS R. CARPER, Delaware LINCOLN D. CHAFEE, Rhode Island MARK DAYTON, Minnesota ROBERT F. BENNETT, Utah FRANK LAUTENBERG, New Jersey PETE V. DOMENICI, New Mexico MARK PRYOR, Arkansas JOHN W. WARNER, Virginia Michael D. Bopp, Staff Director and Chief Counsel Joyce A. Rechtschaffen, Minority Staff Director and Counsel Trina D. Tyrer, Chief Clerk OVERSIGHT OF GOVERNMENT MANAGEMENT, THE FEDERAL WORKFORCE AND THE DISTRICT OF COLUMBIA SUBCOMMITTEE GEORGE V. VOINOVICH, Ohio, Chairman TED STEVENS, Alaska DANIEL K. AKAKA, Hawaii NORM COLEMAN, Minnesota CARL LEVIN, Michigan TOM COBURN, Oklahoma THOMAS R. CARPER, Delaware LINCOLN D. CHAFEE, Rhode Island MARK DAYTON, Minnesota ROBERT F. BENNETT, Utah FRANK LAUTENBERG, New Jersey PETE V. DOMENICI, New Mexico MARK PRYOR, Arkansas JOHN W. WARNER, Virginia Andrew Richardson, Staff Director Richard J. Kessler, Minority Staff Director Nanci E. Langley, Minority Deputy Staff Director Tara E. Baird, Chief Clerk C O N T E N T S ------ Opening statements: Page Senator Voinovich............................................ 1 Senator Akaka................................................ 9 Senator Carper............................................... 22 Prepared statement: Senator Lautenberg........................................... 27 WITNESSES Tuesday, June 28, 2005 Derek B. Stewart, Director, Defense Capabilities and Management, U.S. Government Accountability Office.......................... 4 Kathy L. Dillaman, Deputy Associate Director for Human Resource Products and Services, Center for Federal Investigative Services, U.S. Office of Personnel Management.................. 5 Heather Anderson, Director, Strategic Integration, Office of the Deputy Under Secretary of Defense, Counterintelligence and Security, and Acting Director, Defense Security Service, U.S. Department of Defense.......................................... 7 Alphabetical List of Witnesses Anderson, Heather: Testimony.................................................... 7 Prepared statement........................................... 55 Dillaman, Kathy L.: Testimony.................................................... 5 Prepared statement........................................... 49 Stewart, Derek B.: Testimony.................................................... 4 Prepared statement........................................... 28 Appendix Questions and Responses from: Mr. Stewart.................................................. 64 Ms. Dillaman................................................. 67 Ms. Anderson................................................. 69 ACCESS DELAYED: FIXING THE SECURITY CLEARANCE PROCESS ---------- TUESDAY, JUNE 28, 2005 U.S. Senate, Oversight of Government Management, the Federal Workforce and the District of Columbia Subcommittee, of the Committee on Homeland Security and Governmental Affairs, Washington, DC. The Subcommittee met, pursuant to notice, at 10:10 a.m., in room 562, Dirksen Senate Office Building, Hon. George V. Voinovich, Chairman of the Subcommittee, presiding. Present: Senators Voinovich, Akaka, and Carper. OPENING STATEMENT OF CHAIRMAN VOINOVICH Senator Voinovich. Good morning. I want to thank you all for coming, and I suspect that the Ranking Member of this Subcommittee will be coming in just a short while. We started a vote at 10 o'clock, so people are tied up with that. Today, the Subcommittee on Oversight of Government Management, the Federal Workforce and the District of Columbia continues its investigation into the Government Accountability Office's high-risk list of Federal programs that are susceptible to waste and mismanagement. Today's hearing is entitled, ``Access Delayed: Fixing the Security Clearance Process.'' We are going to explore the security clearance backlog and discuss what actions need to be taken to reduce it. We will also examine the transfer of investigative responsibilities from the Department of Defense (DOD) to the Office of Personnel Management (OPM), including the impact that the shift will have on the ability to investigate and adjudicate security clearances in a thorough and expeditious manner. In order to improve the workflow of any process, we must first understand the root causes of the problem. In the case of the security clearance backlog, there appear to be several barriers to a streamlined process, including (1) the sheer size of the backlog, which in this case we don't know; (2) an influx of new requests since September 11, 2001; (3) an inadequate number of investigator and adjudicator employees; and (4) the overall lack of a strategic plan for managing the process. In fact, according to GAO, the clearance process is so disjointed that DOD has not calculated the size of the backlog since 2000, meaning that we do not have an exact number of investigations pending. However, in a February 2004 report, GAO estimated that the DOD clearance backlog is roughly 270,000 investigations and 90,000 adjudications. Unfortunately, the implications of a broken security clearance process send shockwaves throughout the Federal Government's national security workforce. The bottom line is that the security clearance process is a major national security and human capital challenge that needs to be resolved immediately. The cumbersome and lengthy process can stall the hiring of both Federal employees and contractors for classified positions, such as terrorism and intelligence analysts, which can adversely impact our national security. During the lengthy security clearance process, prospective government employees are often in a state of limbo because they are unable to start their new job until they receive proper clearances. I can think of nothing more frustrating for a bright, ambitious, and qualified individual who wants to serve our Nation, but is told by agencies, such as the FBI and CIA, they must sit idly for months on end because their security clearance is being slowly processed. This scenario is all too real for the private sector, as well, as GAO found that obtaining a clearance can take over one year. For example, in fiscal year 2003, GAO reported it was taking DOD an average of 375 days to process clearances for private sector contracting positions. Whether they are computer technology consultants, network engineers, or intelligence analysts, contractors play a vital role in securing our Nation. Therefore, it is imperative that we improve this process, because in today's job market, it is unrealistic to assume that the best and brightest applicants are going to wait over one year to receive a government clearance so they can begin their jobs. With all these factors, it is no surprise that the security clearance process has been designated as high risk by GAO. However, this is one area where I believe that we can make significant progress in the near future. A number of simultaneous actions are occurring to streamline the security clearance process. First, as outlined in the 2004 Defense authorization bill, DOD transferred its security clearance investigation workforce to OPM. With this event occurring on February 22, 2005, I am interested in the assessment from our witnesses regarding the transition, including the short- and long-term impact this will have on the entire security clearance investigation and adjudication process. I would also like to know if we have enough employees trained to process the growing security clearance demands of our post-September 11 Federal Government. Second, last year, I offered an amendment to the intelligence reform legislation in Committee to enhance and consolidate the Federal Government's security clearance process. My amendment, which was included in the final bill, directs the President to select a single Executive Branch department to develop and implement policies and procedures for security clearance investigations and adjudications. The law also requires the President to select a single Executive Branch agency to conduct security clearance investigations. Additionally, it requires reciprocity of security clearances in order to streamline the process of transferring employees from one agency to another, and that has always been a problem. Too often employees receive a security clearance from one agency only to find that another agency won't recognize it, so they have to start the entire process over again. I think that we need to understand that once you get a clearance for a certain level, like ``top secret,'' that the clearance should be transferrable from one agency to another without starting the process all over again. I understand that President Bush issued an Executive Order late yesterday that provides the necessary framework for implementing the Intelligence Reform Act. I cannot help but wonder if it is a coincidence that the Executive Order was issued on the eve of this hearing today. Under the Executive Order, OPM is the primary Federal agency responsible for investigating security clearance applications--congratulations, OPM--while the Office of Management and Budget is accountable for setting and implementing the government's security clearance policies. Although the Executive Order is not the focus of today's discussion, the timing is important, as I plan to hold another hearing to examine its implementation later this year. Senator Akaka and I share a passion for improving the performance of the high-risk areas. I look forward to working with the Administration and GAO to make sure that the security clearance process is removed from the list as expeditiously as possible. And I would like to make clear to everyone here today that I am going to be on this like a junkyard dog. Since this issue is on the high-risk list, I am going to make sure, as a Member of the U.S. Senate and the Chairman of this Subcommittee, that measurable performance improvements are made. We are going to get this off the high-risk list. Does everybody understand me? This Subcommittee will hold a hearing on the Executive Order in 3 months, but quarterly, I am going to be meeting with Ms. Dillaman, on this issue, and we are going to make improvements. If you are having any problems with personnel, with budget, or anything, I want to know about it, because this is very important. I am interested in human capital and making sure Federal agencies have the right people with the right skills and knowledge at the right place to get the job done. Unfortunately the security clearance process is hurting our government's ability to function properly, particularly at a time when we are at risk. Intelligence is very important, and it is just ridiculous that you have a backlog of 275,000 cases. It is just something that needs to be taken care of. It has gone on too long, and we are all going to work together and we are going to get it taken care of, OK? I would like to thank our witnesses for their participation this morning and I look forward to their testimony. Since Senator Akaka is not here, we will go forward with your testimony, and then when he comes or other Members come, we will get their opening statements. If you will rise and please raise your hand, it is a tradition of this Subcommittee to swear in witnesses. Do you swear the testimony you are about to give to this Subcommittee is the truth, the whole truth, and nothing but the truth, so help you, God? Mr. Stewart. I do. Ms. Dillaman. I do. Ms. Anderson. I do. Senator Voinovich. Let the record show that the witnesses answered in the affirmative. Our witnesses this morning include Derek Stewart, who is the Director of Military and Civilian Personnel Issues at the Government Accountability Office. Kathy Dillaman is the Deputy Associate Director of the Center for Investigative Services at the Office of Personnel Management. Ms. Dillaman, thank you for making the trip from Boyers, Pennsylvania, to be here today with us. Heather Anderson is the Director of the Strategic Integration at the Office of the Deputy Under Secretary of Defense, Counterintelligence and Security, and is also the Acting Director of the Defense Security Service. Again, I thank you for being here today, and Mr. Stewart, if you will begin the testimony. TESTIMONY OF DEREK B. STEWART,\1\ DIRECTOR, DEFENSE CAPABILITIES AND MANAGEMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE Mr. Stewart. Thank you, Mr. Chairman. We are pleased to be here today to discuss this program that we have spent over two decades reporting on various aspects of. --------------------------------------------------------------------------- \1\ The prepared statement of Mr. Stewart appears in the Apprendix on page 28. --------------------------------------------------------------------------- Senator Voinovich. Two decades? Mr. Stewart. Over two decades, sir. DOD has approximately two million active security clearances and is responsible for clearances to contractors in 22 other Federal departments and agencies. So for these and other reasons, it is imperative that there be an effective and efficient security clearance program. We view this as a matter of national security. Unfortunately, Mr. Chairman, after two decades of looking at this program, we concluded that not only was the program not effective and efficient, but this was a program in trouble. This led us to declare the program high risk in January of this year. Today, I would like to briefly touch on some of the major conditions we found that led to the high-risk designation and then offer our observations on steps being taken to address some of these conditions. There were four major program conditions that led to the high-risk designation. First, longstanding, persistent delays in completing clearance investigations. Second, no single performance standard for timeliness in completing investigations. Third, an undetermined backlog of overdue investigations. As you noted, Mr. Chairman, DOD has not estimated the size of its backlog since January 2000. And last, no effective method for estimating the program's total workload requirement, and this was especially so for the thousands of clearances needing reinvestigation. Shortly after we designated the program high risk in January of this year, DOD transferred its investigative function and personnel to OPM. However, the problems I just enumerated did not go away with the transfer to OPM. For example, DOD's inability to estimate the program's total workload is still a critical problem. However, I am pleased to report that DOD is taking a number of steps to improve the ability to forecast the number of military, civilian, and contractor positions requiring clearances and the level of clearance needed. While these are steps in the right direction, DOD has not set a target completion date for these efforts. Until DOD can accurately project its total workload, it will be difficult to determine with certainty the resources and staff needed to process investigations and adjudications in a timely, high-quality manner and ultimately eliminate the longstanding backlog. Another problem that did not go away with the transfer is the backlog of overdue investigations. Earlier this year, OPM reported a government-wide backlog of almost 186,000 investigations, which included some DOD investigations. To address the backlog and improve timeliness in completing investigations, OPM reportedly has hired the full-time equivalent of 3,800 investigative staff. We believe that this is a positive step forward, but adding thousands of new staff could result in quality and timeliness concerns until the staff gains experience. This situation bears close scrutiny. Mr. Chairman, the one point I would like to emphasize in closing is that the transfer of this program's investigative functions to OPM was not a panacea that fixed all the problems. Much remains to be done to bring about lasting solutions to this high-risk area. Your hearing today will go far in focusing the kind of attention that is needed on this critical matter of national security. This concludes my prepared remarks. I will be happy to respond to questions. Thank you. Senator Voinovich. Thank you. Ms. Dillaman. TESTIMONY OF KATHY L. DILLAMAN,\1\ DEPUTY ASSOCIATE DIRECTOR FOR HUMAN RESOURCE PRODUCTS AND SERVICES, CENTER FOR FEDERAL INVESTIGATIVE SERVICES, U.S. OFFICE OF PERSONNEL MANAGEMENT Ms. Dillaman. Mr. Chairman, I do have a complete statement that I ask be made part of the record. --------------------------------------------------------------------------- \1\ The prepared statement of Ms. Dillaman appears in the Apprendix on page 49. --------------------------------------------------------------------------- Senator Voinovich. Without objection. Ms. Dillaman. Mr. Chairman, Senator Akaka, it is my privilege to testify today on behalf of the Office of Personnel Management concerning this critical issue and to update you on OPM's efforts to expedite and consolidate elements of the personnel security investigations program. There are four steps in the clearance process. First, agencies determine what level of clearance or access their employees, applicants, or contractors need. They then confirm if the person has an active clearance or if a background investigation is required. To support this, in 2003, OPM implemented the Clearance Verification System, which provides online access to current clearance and investigations information. This system, linked to the Department of Defense Joint Personnel Adjudication System, contains the clearance records of over 90 percent of all cleared individuals. Under the terms of the Intelligence Reform and Terrorism Prevention Act of 2004, OPM is required to establish, operate, and maintain an integrated, secure, consolidated database of security clearances with information on granting, denial, and revocation of clearance actions on military, civilian, or government contractor personnel. OPM's CVS system will serve as the foundation for this and has ample capacity to expand the content of the information maintained and provide access for authorized users. We are now determining what additional information should be recorded in this system and the most effective ways for keeping this information up to date while ensuring the privacy and security of the information maintained. When a background investigation is required, the subject and the agency provide the data and forms necessary to conduct the investigation. To support this requirement, in 2004, OPM implemented eQIP, a web-based data collection system used to obtain a subject's background information. Today, 27 agencies use this online system, and we are now working with the Department of Defense to implement its use for all military, civilian, and contractor personnel. The second step of the process is conducting the background investigation itself, and that is ours. This year, we expect to receive over 550,000 requests for initial or reinvestigations to support security clearance determinations. Approximately 80,000 will be investigations for initial top secret clearances. We also expect to conduct almost 900,000 investigations to determine the trustworthiness or suitability of individuals in public trust or nonsensitive positions or for regulatory purposes. Beginning next fiscal year, we are also planning for a new workload with the implementation of the Personal Identity Verification Project under Homeland Security Presidential Directive 12. OPM is working to ensure that adequate staff is available to deal with our high-volume workloads. Since 1999, the overall demand has risen sharply, reaching unprecedented levels in the aftermath of September 11. OPM and DOD both face the challenge of dramatically increasing staff levels to keep pace with the demand. In 2001, the decision to consolidate OPM's and DOD's investigations programs was made, and I am pleased to report that the DOD personnel security investigations program workload and staff were successfully transferred to OPM on February 20. At that time, 1,578 personnel and over 146,000 investigations transferred from DOD to OPM. OPM is also working to increase the size of our contractor base. We estimate that a total of 8,000 employees and contractors combined are needed to handle peak workloads. Last year, we awarded contracts to five new companies, and today, the six companies under contract have over 6,000 staff that supplements our Federal staff. Over the next 6 months, we will see significant performance improvement as the staff becomes fully productive and the number of contractors continues to grow. Senator Voinovich. You said 8,000 people, and then you mentioned 6,000 others. Ms. Dillaman. Eight-thousand total, sir. Today, we have 6,000 contractors, 1,578 transferred DSS staff, and the core Federal staff we had to begin with. We are now over 8,000. Senator Voinovich. So it is 8,000 altogether, including the private contractors? Ms. Dillaman. Yes, sir. Senator Voinovich. Thank you. Ms. Dillaman. We are also focusing on delays in obtaining information from national, State, and local agencies. Many of these were unprepared for the substantial increases in demands for their services, resulting in substantial backlogs. We are working with them closely to identify the problem areas and to streamline or automate the processes whenever possible. We are also continuing to look at the use of information technology in other areas to improve the overall content or timely processing of investigations or strengthen the protection of the sensitive information maintained in OPM's record systems. The third step of the clearance process is the agency adjudication of the completed investigation. To minimize handling, OPM is converting completed investigations to image files, which will allow for electronic transfer. When the adjudication action is complete, the fourth and final step of the process is recording the clearance action in either OPM's or DOD's record system. This provides OPM a mechanism for monitoring agency adjudication timeliness. Through these efforts, we are beginning to see progress in restoring acceptable processing time. By October 1, 2005, our goal is to average 35 calendar days or less on approximately 10 percent of the initial investigations that are targeted for priority processing. For all others, our goal is to complete 80 percent or more within 120 days. We are confident that we will be able to meet these goals, barring any substantial or unexpected changes in our workloads. Mr. Chairman, that concludes my remarks and I would be happy to answer any questions you have. Senator Voinovich. Thank you very much. Ms. Anderson. TESTIMONY OF HEATHER ANDERSON,\1\ DIRECTOR, STRATEGIC INTEGRATION, OFFICE OF THE DEPUTY UNDER SECRETARY OF DEFENSE, COUNTERINTELLIGENCE AND SECURITY, AND ACTING DIRECTOR, DEFENSE SECURITY SERVICE, U.S. DEPARTMENT OF DEFENSE Ms. Anderson. Chairman Voinovich and Senator Akaka, Members of the Subcommittee, I am Heather Anderson representing the Department of Defense. I am pleased to testify today and update you on the personnel security clearance process. --------------------------------------------------------------------------- \1\ The prepared statement of Ms. Anderson appears in the Apprendix on page 55. --------------------------------------------------------------------------- DOD requests personnel security investigations to ensure that only trustworthy and reliable individuals are granted access to classified information or placed in sensitive positions. As prescribed by Executive Order 12968, the investigative process includes an initial investigation that provides assurance a person has not demonstrated behavior that could be of security concern, to be followed by a reinvestigation that is conducted at specified time intervals to determine if an individual's clearance should be continued. There are approximately 3.2 million cleared individuals within the Federal Government, of which almost 2.5 million, or 80 percent, are cleared DOD affiliates--civilians, military, or industry personnel, which would include industry individuals who are processed for clearances by DOD on behalf of 22 other Federal agencies and under the auspices of the National Industrial Security Program. DOD has been partnering with the Office of Personnel Management for the past 5 years, obtaining their assistance in the conduct of investigations and collaborating on initiatives to improve and modernize the investigations process. As Kathy mentioned, on February 20 of this year, DOD completed the transfer of the PSI function to OPM, an initiative that began approximately 2.5 years ago and which has effectively consolidated management and personnel security investigative resources within a single agency of the Federal Government. Prior to the transfer of function, Defense Security Service succeeded in closing nearly all of their pending investigative work received on their legacy database. Our success in completing these investigations was accomplished in part by redesigning the PSI organization to reduce infrastructure costs and realigning resources to improve productivity. By training the entire workforce on OPM's case management system prior to the transfer, DOD investigative personnel were able to begin using the system and obtain the benefit of its operating efficiencies for 7 months before the transfer. Furthermore, the training enabled a seamless transfer of function with minimum production downtime. For the past several years, DOD has also planned for and has championed a number of initiatives to improve the end-to- end PSI process and eliminate the systemic weaknesses identified in past reports. Quite simply, our strategy is to streamline the process through automation initiatives while simultaneously transforming the PSI process into a risk-managed and proactive program with priority given to the most critical investigations. Some of these initiatives are: DOD pioneered the two-phased approach to the top secret reinvestigations, which maximizes efficiency by using field investigative resources only when needed. This approach is now the national standard. A second is the Automated Continuous Evaluation System, known as ACES, which will identify information of potential security concern about cleared personnel on a continuous basis using government and commercial data sources. Our beta testing results and lessons learned are being incorporated into an initial operating capability of ACES to be in place later this year. A third is that DOD, as mentioned earlier, is in the process of transitioning to eQIP. As an adjunct to that implementation, DOD will establish various locations throughout the United States where requestors can electronically submit fingerprint cards and release forms that are required as part of the eQIP request package. Fourth, DOD and OPM will soon implement the electronic report for adjudication that will provide for electronic dissemination of investigative results from OPM to the appropriate DOD adjudicative entity. And fifth, the Joint Personnel Adjudication System allows DOD security managers, including those in industry, to immediately grant access upon verification of eligibility and perform certain other clearance actions. This system has been connected to OPM's Security Suitability Investigations Index since December 2002. This connection enables DOD and other Federal Government offices to share information. Through these initiatives, we believe that the prolonged processing times and backlogs of prior years will be eliminated. We are confident that OPM can achieve these initial goals, in part from the additional investigative capacity OPM has brought online and through process improvements already underway. The DOD's central adjudication facilities are also well positioned for the timely adjudication of all incoming investigations expected from OPM. As noted in the GAO report, DOD has taken positive steps to hire and train additional adjudicative staff. Our goal is to complete 90 percent of adjudications within 30 days, not including the time needed for due process. DOD will continue to work with OPM and the rest of the community to identify additional process improvements and to ensure that processing of clearances meets or exceeds the requirements mandated by the intelligence Reform and Terrorism Prevention Act of 2004. Thank you for the opportunity to appear before your Subcommittee today. I am happy to answer your questions. Senator Voinovich. Thank you, Ms. Anderson. Senator Akaka, I understand that you have another hearing at 11 o'clock. I think before we start asking the questions, I would appreciate your opening statement, if you care to make one. OPENING STATEMENT OF SENATOR AKAKA Senator Akaka. Yes. Thank you very much, Mr. Chairman. I am pleased to join you today, Mr. Chairman, and I am hopeful that our hearing will bring into focus the problems facing the issuance of security clearances. I look forward to working with all of you to get security clearances off the high-risk list as soon as possible. Mr. Chairman, our national security strategy depends more than ever on ensuring that security clearances for military personnel, Federal workers, and government contractors are investigated and adjudicated without unnecessary delays. And Mr. Chairman, as you mentioned, I regret that I will have to leave to serve as the Ranking Member of an important Veterans' Affairs hearing called last Friday after the Department of Veterans' Affairs acknowledged $1 billion of shortfall for VA health care. Again, I want to thank our witnesses for being here today and to thank you, Mr. Chairman, for holding this morning's hearing. I ask that my full statement be included in the record. Senator Voinovich. Without objection. Senator Akaka. Thank you, Mr. Chairman. [The prepared statement of Senator Akaka follows:] PREPARED STATEMENT OF SENATOR AKAKA Thank you, Chairman Voinovich, I am pleased to join you today for our third hearing in the 109th Congress concerning programs on the GAO's high-risk list. This morning we will review personnel security clearances which was added to the list 6 months ago. We agree that we cannot allow it to stay on the list long, and I am pleased to work with you, Chairman Voinovich, to get security clearances off the list as soon as possible. As Ranking Member of this Subcommittee, as well as the Armed Services Readiness Subcommittee, I understand the many challenges facing the Department of Defense (DOD). Between these two subcommittees, we are providing much needed additional oversight of DOD. In November 2003, Congress authorized the Secretary of Defense to transfer the DOD personnel security investigative function from DOD's Defense Security Service (DSS) to the Office of Personnel Management (OPM). This decision was prompted by long-standing problems at DSS in conducting and adjudicating clearances, coupled with a dramatic increase of employees needing clearances after September 11. After some delay, approximately 1,600 DSS employees, including field investigators, support staff, and first-line supervisors were transferred to OPM's Center for Federal Investigative Services (CFIS) in February 2005. OPM field investigators, along with OPM's contract investigative workforce, are now responsible for nearly all personnel security investigations for DOD military, civilian, and industry personnel. Today, we will examine the impact this transfer has had on DOD's long-standing backlog and whether the transfer to OPM has had the expected result. This hearing is important because of its impact on national security. We understand that our national security strategy depends on making sure skilled job applicants do not wait months or even years for security clearances. However, it is not only Federal applicants who face this problem; it impacts the defense industry as well. For contractors, it becomes a difficult business decision because well- qualified job applicants are quickly lost to a competitor. Once hired, the employee becomes just an overhead expense until the clearance is granted. Small businesses, which are vital to the U.S. economy, are especially hard hit by inefficiencies in this program. There are more immediate national security concerns relating to personnel security clearances. To allow needed employees to carry out their jobs, temporary or interim clearances maybe granted pending the outcome of the investigation and adjudication. Failure to properly manage the interim clearance process, however, can put classified information at risk. Also, security clearances must be periodically updated through reinvestigations. In 2000, GAO found that DOD had over 500,000 overdue reinvestigations. That was one in five of all security clearances at DOD, putting classified information at serious risk. As we examine the transfer of functions from DSS to OPM, I am also interested in hearing about improvements in the transparency of the clearance process. We have heard complaints from industry representatives that they are still required to work through DSS, even though DSS is no longer in a position to provide assistance. I look forward to the testimony of our witnesses, and Mr. Chairman, I look forward to continuing our work. Thank you. Senator Akaka. I do have a few questions, Mr. Chairman. Ms. Dillaman, the Federal Government faces a critical shortage of foreign linguists. One of the best ways to improve foreign language proficiency is through immersion programs and spending time abroad. However, spending time abroad frequently results in delays in the clearance process as foreign activities must be verified by investigators. In the past, DOD's military services have conducted most of the overseas leads for DSS. However, DOD terminated this mission following the transfer of investigative function from DOD to OPM. My question to you is, what is OPM doing to facilitate the security clearance process for linguists and others who have spent time overseas? Ms. Dillaman. Senator, obtaining international coverage has plagued this process for decades. Until the point of transfer, OPM relied on both the State Department and the Department of Defense network of resources to obtain the required overseas coverage. Prior to transfer, DOD was in the process of converting this to have their investigative resources obtain the required international coverage and are now working with OPM to facilitate sending OPM Federal agents abroad. We expect to begin deployment of our own agents internationally in August of this year. Senator Akaka. Thank you. Mr. Stewart, much of the discussion has focused on the number of quantitative personnel security investigations that OPM is able to conduct. What can OPM do to improve the quality of these investigations? Mr. Stewart. We have a number of concerns about the quality of OPM investigations. One of the major concerns is the number of new investigators that have been added. According to our calculation, when we completed our work and issued our report in February of 2004, DOD and OPM combined had about 4,200 investigators. You have heard today that OPM has 8,000 or more investigators. That is the addition of several thousand new investigators. We would like, and we think it is critical, that there be uniformity in training, that all of the investigators are trained on the same standards with the same instructions to make sure that the investigations are carried out in a high- quality manner. The other issue in terms of quality is that before the program was transferred, OPM handled some of DOD's business. For example, in fiscal year 2002, OPM closed about 280,000 DOD cases, but over 28,000 of those cases were closed pending cases. That is, all of the information was not included in the investigation. When it was turned over to the DOD adjudicators. That is not a quality investigation, and 28,000 closed pending cases in 1 year seems to us to be a fairly large number. So that is a quality issue that I think DOD and OPM needs to get a handle on. Senator Akaka. Ms. Dillaman, would you care to respond to that? Ms. Dillaman. Yes, sir. First, on the training issue, we have developed a very robust training program for both our Federal and our contractor resources. We have succeeded in developing one standard handbook that is used by all resources, contractor and Federal, and our reports of investigation are all in one common reporting format, making it virtually invisible to the adjudicator who produced the investigation. So I think we are well on our way to meeting the training requirements that Mr. Stewart spelled out. As far as the closed pending process, it is absolutely true that in conducting the investigation, there are literally dozens of different data points or sources that you are contacting and collecting that make up a complete investigation. OPM closes an investigation pending, and that is a term of art for investigations, when a third-party record source is not available in a timely manner. That means if I can't lay my hands on a 30-year-old defense file quickly, but I have substantially completed the investigation otherwise, I will advance that information to the adjudicating agency and allow them to decide whether or not there is substantial information that would support a clearance action or whether the outstanding piece would pose a risk and should be waited for. It is an advance process only. The investigation is completed and sent in its entirety to the adjudicating office. Senator Akaka. Thank you. Mr. Chairman, I want to thank you again for holding this hearing, and focusing attention to this process. Of course, all of you know that the Chairman and this Subcommittee is really looking to resolving this seemingly large problem, and I want to commend the Chairman for doing this. We will certainly do all we can to try to help resolve this. I thank you for your responses. Mr. Chairman, thank you very much for allowing me to ask questions. Senator Voinovich. Thank you, Senator Akaka. Mr. Stewart, in the mid-1990's, OPM created an Employee Stock Ownership Program for its security investigation workforce. This action moved Federal employees to a privately- owned company known as U.S. Investigative Services. For almost 10 years now, OPM did not have Federal employees conducting security clearance investigations. With the transfer of the DOD employees to OPM, the agency has a hybrid of Federal individuals and also the private sector. Do you think this is an appropriate blend of employees? Mr. Stewart. We haven't really assessed that situation, Mr. Chairman. It does give us pause because the contractor employees, we understand, may not be working in the same fashion as the former DOD employees. The process may be a little bit different. With training, though, we think that everybody can be brought up to the same place. But we haven't really assessed that situation to determine whether there are any tangible problems with that. Senator Voinovich. Well, you have got one group working for the OPM, the former DOD employees, and then you have the private contractors, five or six of them. I really would be interested in knowing what GAO thinks about this mixture of employees. Ms. Dillaman, how do you decide which group gets assigned certain cases? Ms. Dillaman. Mr. Chairman, I really believe this is an ideal configuration, having a backbone of Federal agents nationwide that are supported by a broad base of contractors. I have four contractors to every Federal agent, approximately. That allows the Federal agents to facilitate access for the contractors to sources, because it is quite true that Federal agents sometimes have easier access to State and local law enforcement systems and other records systems and other sources. In addition, I believe there is some work that would be better conducted by the Federal resources, such as clearing the contractors themselves. Today, with the transfer, the Federal resources are still devoted to DOD's highest-priority cases. Beginning in October, however, we are going to reconfigure this and redivide what work the Federal agents do, moving the clearance of contractors to the Federal workforce as well as troubleshooting all the contract management issues for the contractors that are placed throughout the country to the Federal side and giving the more routine work to the contractors to complete. Senator Voinovich. Ms. Anderson, since the DOD sent employees over to OPM, please provide your assessment on the transfer. Ms. Anderson. I know Kathy and I both recall the town halls that we did a number of years ago when we first initiated this whole process, and in speaking with the Federal investigators, they recognized that the Department of Homeland Security, and other Federal agencies had the same PSI requirements as DOD and they really take it as a national security mission. So I understand through the grapevine that they are welcoming the new challenges. Senator Voinovich. Ms. Dillaman. Ms. Dillaman. I would agree. I just completed 5 weeks of training in the field with all of our new staff, our transferred staff, and I believe they are a highly motivated, energized workforce and that they are quite comfortable with the new role they are going to play. Senator Voinovich. Since September 11, have jobs that did not need a clearance been added to the clearance list? Ms. Dillaman. Yes, sir, they have. The number of clearance investigations has increased substantially since September 11. Senator Voinovich. Has anyone reviewed the increases in security clearances to determine whether they are really necessary? In other words, after September 11, one of the things that is troubling to me is that we have really changed the way we do things. We are almost going to the extreme to accomplish certain tasks. At the same time, we are adding enormous sums of money to cover the costs of the added workload. Sometimes I think that Osama Bin Laden has to be the happiest person in the world. Because of September 11, he has been responsible for enormous change in the United States of America and, frankly, a very large expenditure of funds being expended because of the fear of terrorist activities. Have you examined whether certain clearances are really necessary? Ms. Dillaman. Sir, OPM isn't in a position to challenge an agency's request when they ask for an investigation to support a clearance, but we do maintain data, specific data by agency, on those types of trends that can be used to monitor shifts such as what you just described. Mr. Stewart. Mr. Chairman, we looked at this issue when we were doing our work for the February 2004 report. In addition to the increase in the number of requests for clearances, we also noticed that there was an increase in the level of clearance. For example, in 1995 for contractor personnel, about 17 percent of all requests were for top secret. In 2003, it was 27 percent. So we have seen not only---- Senator Voinovich. Repeat that again. Mr. Stewart. In 1995, for contractor personnel, 17 percent of the requests for clearances for contractor personnel was for the top secret level clearance. In 2003, a couple of years after September 11, that figure was 27 percent. It requires a lot more resources to investigate somebody for a top secret than for a ``secret'' or a ``confidential.'' So we have noticed that trend. Mr. Chairman, this is why it is so important for DOD to get a handle on exactly what its workload requirements are, who needs a clearance and at what level they need the clearance. DOD has undertaken this effort, but our concern is that there is no target completion date for this. We maintain that until DOD knows how many service members, how many civilian employees of their 700,000 Federal civilian employees, and how many contractor personnel actually needs a clearance, what positions need a clearance, at what level the clearance is needed, there is no way that DOD can have an efficient and an effective security clearance process. Senator Voinovich. Is the agency then the one that deter- mines---- Mr. Stewart. Yes, sir. Senator Voinovich [continuing]. Who needs a security clear- ance---- Mr. Stewart. Yes, sir. Senator Voinovich [continuing]. And at what level of clearance that should be given. Now, Ms. Anderson, you have heard what Mr. Stewart has to say. What is the Department of Defense doing to look at those that need a clearance and the level of clearance? It would be interesting for you to go back and look at the 17 percent number that he is talking about and how it is up to---- Ms. Anderson. We have. We actually helped provide those numbers. Senator Voinovich. Well, the question is, are the additional clearances really needed? Ms. Anderson. If I might start with, we really need to make a distinction between the need for an investigation and the need for a security clearance. We do an increasing proportion of our investigations for access to IT systems that require a vetting process. We actually think we should know who the people who are administering our networks are. So there is a distinction between the need for access to classified information and the need for an investigation. We have a DOD regulation that clearly specifies who needs an investigation for a clearance and who needs an investigation for a trustworthiness determination. So that mixes the numbers a little bit. Senator Voinovich. So the point is that there are some people that you want to investigate, but not necessarily for a level of security clearance, is that right? Just generally, you would like to have an investigation about the background---- Ms. Anderson. A trustworthiness investigation for positions of trust. Senator Voinovich. OK. So that is one level---- Ms. Anderson. That is one level of the distinction here. Senator Voinovich. How do you coordinate your requirements with Ms. Dillaman's team at OPM? Ms. Anderson. We have a tendency to harmonize the types of investigations into the products Ms. Dillaman's organization serves. So she has a number of categories of investigations of increasing investment and we use that scale and those defined investigation types for what we request. We will request a single-scope background investigation for somebody who needs an initial top secret clearance. We may also request that same type of investigation for a system administrator of a mission- critical network. They don't need access to the classified information necessarily, but they will have the same scope of background investigations. We have tried to harmonize the system in that way. Then it actually is very useful for us, because if that system administrator actually needs access to classified later down the road, we can use that same investigation. So to the greatest extent possible, we have harmonized the two standards into one. But getting back to your original question about the change in mix, it is very interesting to note that the Department of Defense did have a significant increase over the last 10 years, but to some degree, we are seeing it stabilize in the last 3 to 5 years. So we don't think that there is an ever-increasing number of investigations that will be required. We are working very hard with the services and agencies to absolutely scrub their requirements and make sure that we are consistent across the Department. We have also provided fairly decent projections to Ms. Dillaman that allows her to do adequate planning. I think that there was a structural shift post-September 11 that everyone has talked about in terms of how we use people and who needs to be vetted, and I think that we are seeing that structural shift and we are somewhat hopeful that we will see it stabilize. Senator Voinovich. So the Department of Defense is cognizant of the problem. Has there been any recent review of who should get these investigations and at what level? Ms. Anderson. Yes. We work with the services and agencies to actually have them review their programs. The Army did a very extensive and very well done scrub most recently. The services have been continuously fine-tuning it. Now, with the change in mission requirements, we have a tendency when we call up Reservists and National Guard members that we have to make sure that their investigations are current, as well. And so the world environment being what it is today, I think that the number of clearances that have been requested and the number of investigations that have been requested is consistent with the mission requirements. Senator Voinovich. Now, Ms. Dillaman, I suspect that you conduct security clearances for the Department of Homeland Security? How many Federal agencies do you conduct security clearances for? Ms. Dillaman. For security clearances, sir, over 50, but in total, we deal with over 100 Federal agencies. There are several thousand offices that request investigations from OPM for either national security purposes, public trust, nonsensitive or regulatory purposes. Senator Voinovich. So if OMB, under the Presidential Executive Order, is in charge of policy, they should look at this from a management and budget perspective and examine to ascertain whether those agencies do, indeed, need the clearances for their employees and contractors. Ms. Dillaman. Yes, sir. Senator Voinovich. Let me start with that. That kind of defines the customer base---- Ms. Dillaman. Yes, sir, and as I stated before, we have solid data on each and every one of those agencies, including trends for the past 15 years of submissions. Senator Voinovich. OK. Mr. Stewart, could you comment on this testimony? How does it relate to what you are saying, how can the DOD and OPM match their budget and workload requirements in order to get the job done. Can you comment on that? Mr. Stewart. DOD and OPM need to know the number and level of required clearances in order to efficiently determine the staffing, the resources, and the budgets. In order for OPM to plan properly, it has to know the workload coming from DOD. Senator Voinovich. And you are saying to me today that from your perspective, we don't know what the workload is coming from DOD? Mr. Stewart. Exactly, Mr. Chairman. I am saying that the DOD has an initiative underway to determine which military, civilian, and contractor positions need clearances and at what level. But I am also telling you, DOD is not done with that initiative. There is no target completion date set for that, and until that is done, DOD is not going to have an efficient and effective program. Let me just give you an example. DOD started contracting with OPM to handle some of their cases in 1999. In 2001, DOD overestimated the number of cases by 150,000 investigations. They were off by 150,000 investigations. In 2002, they underestimated the number of investigations by 135,000--not 10,000, not 50,000, not 80,000, 135,000 underestimated. In 2003, DOD underestimated its investigations workload by almost 90,000 investigations. If you are missing your target by 100,000 investigations, that wreaks havoc on the budgets and numbers of staff you need to carry out the work. There is no way you can plan for that. Now, there is a second piece to this, Mr. Chairman, that we are also concerned about. It is reinvestigations. These are people who already have clearances and who come up periodically for reinvestigation. For top secret clearances, it is every 5 years. For secret clearances, it is every 10 years. DOD in the past has not had a real good handle on what its reinvestigation workload is. That is, if they are notified that an individual needs a reinvestigation, they have that piece of information. The problem occurs when DOD isn't notified. It is when an organization doesn't submit a request on time that DOD doesn't know whether the individuals need a reinvestigation or not. DOD estimated in 2000 that there were approximately 500,000 overdue reinvestigations that had not been submitted to DOD for reinvestigation. That is a huge workload. And I am here to tell you today that I don't think the Department has a good handle on that part of their workload, which OPM would investigate. So if I am OPM, I would be scared to death of this program, to be perfectly honest with you. I don't know how OPM can be comfortable with estimates in workload requirements coming from DOD given what we know about DOD's ability to estimate its workload requirements. They have missed by 100,000 in 2000, 150,000 in 2001, 135,000 in 2002, 100,000 in 2003. But there is an initiative to try to get a better handle on that. I don't know what is happening on the reinvestigations piece. There is a system, the Joint Personnel Adjudication System, that should give them a better handle on the reinvestigation piece. I think it's close to being fully implemented. This is not a good picture at this point, sir. Senator Voinovich. The lion's share of the requests for these security clearances come from the Department of Defense? What is the percentage? Ms. Dillaman. Eighty percent or better. Senator Voinovich. Eighty percent. So the other 20 percent is from other agencies. So the Department of Defense creates the most work. I would like to have the ranking of the percentages. It seems to me that the OMB folks ought to know that, also, to begin to get into that issue. What is your response to this, Ms. Anderson? It sounds to me like things aren't going very well at DOD. Ms. Anderson. Sir, you will notice that GAO has not been out to visit us quite recently. The numbers that are quoted are from 2000 through 2003. As I cited in my testimony, we have been working very hard for the last 5 years and we have a number of initiative that are beginning to pay off that we started over 2 years ago. Specifically, let us start with the issue about backlog. There is a lot of confusion about the term backlog. Ms. Dillaman and I talk about work in process. Backlog seems to have varying definitions. There are 329,000 DOD cases in process today. Even when the investigations are run in 90 days, we will still have over 150,000 cases in process on any day. Going back to the conversation about how we could miss our estimate by 100,000, and I must say I am not familiar with those particular deltas, but in fiscal year 2001, the Department of Defense submitted 916,598 cases. We might have been off by 10 percent. That would be the better part of 100,000 cases. We might have been off by 15 percent. A lot of the caseload management issues really focused around the difference between the need, the requirement, and the ability to fulfill that requirement. And speaking to Mr. Stewart's comment about why we don't have a close date for our improvements to validation of the requirements and projections, we will never have a close date. You can never be better enough at this to really make it perfect. We know that what we have today seems to be working for Ms. Dillaman. She has the benefit of all the information that gets submitted to her and we keep her up to date on policy changes and on trends. We talk constantly about where the numbers are. If we are going to have a significant change in policy that will affect her workload, we let her know and we work out estimates. But there are a number of things you cannot predict. Senator Voinovich. Over or underestimating the workload by 100,000 is a lot of clearances. Ms. Anderson. Well, given it is 100,000 out of 900,000, at least it puts it in context. I am not saying it is perfect. But this year, we have actually been running relatively close to our projections. It is also, with regard to predicting of periodic reinvestigations, it is somewhat problematic to predict it out much more than 12 or 15 months. Senator Voinovich. Do you have a report on this that I can see? We are going to get into dotting the ``i''s and crossing the ``t''s on this, OK? Ms. Dillaman. Looking forward to it, sir. Senator Voinovich. I am going to look at this like guys who were working for me when I was governor, OK? [Laughter.] Ms. Dillaman. Yes, sir. Senator Voinovich. And we have to get OMB involved in this. I am going to contact Clay Johnson and Josh Bolten, because they have to pay attention to this issue. If they are going to set the policy, they ought to have a few people that really know this issue backwards and forwards. So I will be sending a letter off to OMB and find out what they are doing. I will also have a follow-up hearing this fall, to make sure they are prepared and are aware of what responsibility they really have in regard to this whole area. I think you need to have some good metrics, too. It is important that we are all operating under the same data points because the only way we can really make progress is to understand what these numbers mean. Mr. Stewart, I have one question about the Intelligence Reform and Terrorism Prevention Act of 2004. The law requires 80 percent of the investigations on security clearance applications be completed within 90 days by December 17, 2006. That is the end of next year. It also requires 80 percent of the adjudications to be completed within 30 days. Given all that you know about the backlog and time frames to investigate and adjudicate security clearances, do you think that DOD and OPM can meet these timelines? Mr. Stewart. Based on what I---- Senator Voinovich. Is this realistic? Sometimes Congress sets deadlines and has no understanding in so many instances that they are not realistic. For example, we said March 15 was when the President was supposed to sign the Executive Order on security clearances. Well, what is today, June 28? It was finished June 27, 3 months late. We have to be realistic about what we ask agencies, because if we are not, then they really say Congress doesn't really understand. What do you think? Mr. Stewart. Well, based on what I understand about OPM's current time standards, it is 120 days for initial investigations and 180 days for investigations. If that is true, then they may not meet the standards of 90 days in the new legislation. Personally, I think that the 120 days and the 180 days are probably more realistic given the transition of this program and the number of new staff that have been added. OPM can probably speak better to this than can I. But given the thousands of new staff that have been added and the training that is required to get those folks up and ready to process investigations, the 90 days specified in the legislation is probably not realistic. Currently, OPM's time limits are 120 days for initial investigations, whether it is top secret or secret, and 180 days for reinvestigations, regardless of the level. So that does not meet the 90-day requirement. But I don't believe the 90 days is currently doable. Senator Voinovich. We need to establish rules and baseline measures for tracking progress. I would be interested in GAO's opinion about what a realistic timeline would be. The other thing I am interested in is what process, Ms. Dillaman and Ms. Anderson, use, to elicit how things can be improved? Do you hire consultants? How do you determine how you can improve the respective clearances in your organizations? Ms. Dillaman. Mr. Chairman, we involve our stakeholders. We regularly convene a panel of the agencies we serve, including the Departments of Defense, Homeland Security, Treasury, etc., to talk about process, different process elements, and that has taken us to where we are today, in how we not only move work internally, but how we move work from the submitting agency and then back to the adjudicating facility. So there is continuous change and improvement in the investigative process. You wouldn't recognize it from 10 years ago. And I think that is going to be an ongoing effort for us, because you can always improve. Senator Voinovich. Ms. Anderson. Ms. Anderson. Thank you. We work very closely with Kathy and her team, because they really are our strategic supplier with regard to investigations. We have taken a hard look at all the variety of processes and personnel security within the Department and we have been doing this for a little over 2\1/2\ years, and so we are starting to put pieces in place to bring it all together. So we have solicited input from all levels of this process, to include our stakeholders, which would include industry and our MOU members who are part of the National Industrial Security Program Policy Advisory Committee (NISPPAC), and we have received a lot of solicited and unsolicited feedback along the way, not only from consultants, but from other interested parties, to include House and Senate members. So we will take input from anyone. We are looking for things that make the process better, more robust, and reduce risk. Senator Voinovich. Do you employ quality management techniques? For example, through Total Quality Management employees are empowered and recommend how they think they can do their job better and be more efficient, and ultimately streamline the process. Ms. Anderson. We have embraced that. One of the real benefits of our Joint Personnel Adjudication System is that it allows flexibility. We have a number of very different organizations within the Department. We have large organizations, like the services, and then you have smaller agencies. You have specialized agencies, intelligence agencies, and defense logistics agencies. So we have built a set of tools that allow us consistent measures, consistent quality control, but allows flexibility in how these sub-organizations organize their processes to best meet their piece of the mission. So we have empowered them and given them the tools that allow them some flexibility within their process so that they can tailor these processes to their specific needs without engendering any dislocation to reciprocity and other pieces of the process that are important to preserve. Senator Voinovich. Do you have any continuous improvement teams? Ms. Anderson. We do not have a standing set of continuous improvement teams. We have pockets of them in different areas, to include our automated continuing evaluation system. We have a whole process improvement team associated with that. Our adjudicators have a collaborative forum and we are trying to get a little more structure in that, as well, to actually make sure that they are leveraging best practices across those organizations. Senator Voinovich. I would really like to know what process you use to involve your employees on developing recommendations on how things can be improved. Ms. Dillaman, what about you? Ms. Dillaman. Yes, sir. We also have users' groups, not only with our own Federal staff, but we are including the contractor staff, as well. Each of our contractors sends representatives to the specific users' groups to talk about process and tools. Our automation system, which is the heart of the control of these investigations, has been constantly renovated through those types of users' groups activities. Senator Voinovich. OK. I have a little problem with that, because GAO determined that the private sector contractors were your external customers, but I think they are your internal customers. It takes 375 days for contractor clearances. In other words, private sector employees wait an average of 375 days to receive their clearances. And the question is, have you sat down to ask contractors how they think improvements to the security process could be made? I am concerned that the cost to private contractors continues to go up the longer the process takes. First of all, if you want to hire somebody that is good but then they can't do their work until they get a clearance and you put them on the payroll, they sit there and can't do their work they are supposed to do because of the fact that they don't have a clearance. So the private company keeps losing money. I know OPM and DOD held a news conference with contractors, but I want to know how much time have you really spent with them getting their ideas on how they think you can improve the system? This is part of quality management, reaching out and asking their opinions can really make a difference. I know when I was governor, we had a forum for stakeholders to fill out. Ninety-five percent of the forms came back with problems because the form was just not relevant to the customer. So we spent 6 months with the customer and we reduced the size of the form and the questions. The end result reduced errors to close to 5 percent. It was good for our employees because they were having difficulty working in an efficient manner since there were high error rates. Customers would submit their forms and State employees would notify them that the forms were incomplete, so the customer would have to go through the process again. It just took a lot of time and money. I will never forget, one of the employees said he used to come to work in the morning, and the closer he got to the office, the more stressed he became. Just by getting involved with the customers and coming up with a new form, it just really relieved all of that tension and made things so much more efficient. And the question is, how much time do you spend with your private sector customers? Ms. Dillaman. Sir, personally, I spend a good deal of time with our customers, with the Federal agencies that are customers. In fact, I have a team here in Washington that is dedicated to that. In fact, each agency is assigned a customer service representative for OPM. When it comes to industry, industry feedback is channeled through the Department of Defense. I have partnered with DOD and presented at several conferences and meetings to industry issues about the process, including taking suggestions on how we can improve it. But I would defer to my colleague in DOD in terms of how industry---- Senator Voinovich. I want to know how much--when was the last time you sat down with the private industry people that you are hiring to get their feedback on this clearance process and---- Ms. Anderson. I, myself, briefed them on this issue and solicited feedback in May--I can probably tell you the exact date--at the AIA and NDIA forum in Arizona. We have a tendency to hit about one industry organization meeting for exactly that purpose a month, if not myself, then someone who directly reports to me. And we do actually incorporate all of industry's comments in our DOD position to OPM. To talk about revising the form, we have provided significant comments which includes the industry input to OPM with regard to the revision of the SF-86 form. So we have a number of forums that we provide industry, and it is normally through the industry associations, although we are always open and I do very frequently take briefings and requests from individual industry participants. So we do everything we can to make sure that we are incorporating all of the ideas. We are entirely endorsing the need for change. Senator Voinovich. OK. The question is, my staff met with some private sector representatives. The real issue is, if OPM is taking over the investigations, why doesn't OPM meet with the private sector? Ms. Dillaman. And again, sir, the request for investigations on industry come from the Department of Defense. We are more than happy to meet with industry groups with DOD, partnering with DOD, but the industry is channeled through DOD. Senator Voinovich. But the fact of the matter is that in terms of improving the process, now that OPM is conducting the investigation, it seems to me that it would be very worthwhile for you to meet with the private sector stakholders. Ms. Anderson. Sir, the other piece of this that is very important to remember, and the reason that Ms. Dillaman and I team up to meet with industry is invariably when we are talking about this process, we are talking about the clearance process and it includes not only the investigation but the adjudication. So we have worked as kind of a tag team to make sure if there is a question about something, our organization reviews the SF-86, the self-disclosed information that is provided by all of our applicants, and 80 percent of the time for secret clearances, we can provide an interim clearance in a week. That will put those industry people to work at the interim secret level. We do not have that luxury in most cases at some of the higher level of clearances. That is why we make sure that we prioritize with OPM those investigations. But when we have conversations with any of our constituencies, we have found it beneficial for us to go together because it is invariably a discussion not only about the investigation, but what else can be done to have those people work effectively while it is going on. So we have a piece of this at the front end with regard to taking some risk with interim clearances, and we have a piece of this on the back end, which is the final piece and the decision on eligibility and, ultimately, access. Senator Voinovich. Well, we have got this shifting. It seems to me there is a different perspective from your point of view since you are the one that is going to have to do the investigation. Senator Carper is here. Thank you very much for coming here. He is very interested in this, because he is also a former governor. Senator Carper. OPENING STATEMENT OF SENATOR CARPER Senator Carper. But you know something else? I used to be an intelligence officer in the Navy. Senator Voinovich. I am looking forward to your questions. Senator Carper. I probably won't show much intelligence, but we'll give it our best. [Laughter.] Mr. Chairman, good morning, and to our witnesses, thanks for coming this morning. I guess my first question is of you, Mr. Stewart. My understanding is that GAO has placed a security clearance process on its high-risk list, and the process, as I understand it, has been turned over from DOD to OPM and the new Department of Homeland Security. I know you have already talked about this, but let me just start with a basic question. How is it going? Mr. Stewart. I think it depends on who you ask. If you are asking me---- Senator Carper. Well, I wanted to ask you first, so---- Mr. Stewart. We have not looked at the transfer itself and how things are working today. Our concerns are more basic. As I mentioned earlier, one of the biggest concerns is for the Department to be able to project its workload requirements. Until the Department can do that, we at GAO don't believe that there will be an efficient and effective security clearance program regardless of who is doing the investigations. So we have some fundamental problems with the way things are working overall. The actual transfer, we haven't looked at that to see how things are working today. Senator Carper. Let me ask you, Ms. Dillaman and Ms. Anderson, would you just comment in what Mr. Stewart has just said. Ms. Anderson. It is interesting to note, and I had mentioned it previously, that a lot of these problems have been longstanding and we have made significant improvement in the last 2 years. Our ability to project our requirements is very much improved, and I believe Ms. Dillaman will attest to that, and that we have not left her high and dry as far as her ability to project workload needs. Additionally, as we look forward, every program has room for improvement, this one more than most. We will continue to improve and refine those projection models to ensure that we have taken into account every active variable and can give Ms. Dillaman the most accurate projection moving forward. With regard to the transfer, I would say that everyone got paid, work continued to flow, and no one died, so I would say it is a success. Senator Carper. Mr. Stewart. Mr. Stewart. Senator Carper, let me just tell you one of the things that we are concerned about, even though we haven't looked at the transfer. DOD and OPM announced in February 2003 that this transfer was going to take place, over 2 years ago. There is a system, the eQIP system which OPM has, that DOD still can't use to submit all of its requests through this electronic system. So there is a time lag where DOD has to reformat information in order to get it into the system. This transfer has been 2 years in the making and this is just an example of where it doesn't seem that everybody is talking to each other and there is a strategic plan--DOD needs an overall plan to make this thing work efficiently and effectively. Senator Voinovich, have talked about the need for a Chief Management Officer at DOD. This is, I think, a program that should fall under the CMO's jurisdiction. With all due respect to Ms. Anderson and folks at that level, if you don't have somebody at the senior-most levels of the organization looking at this program and making sure that things are happening and come together in a strategic fashion, I don't know that we will ever have a successful program there. Senator Carper. Let me follow up on what you said. I was struck by Ms. Anderson's comment. It sort of reminded me, I often say, everything I do, I can do better, and clearly, that is probably true with most of us who are being honest with themselves. I want to come back to the point that Mr. Stewart made. I think he used the word eQIP, and that is probably an acronym. I don't know what it stands for. But let me just ask, how are DOD and OPM using technology to transfer investigations to OPM and to work through the application process and how successful have those technologies been? Ms. Dillaman. I will take it. Senator Carper, OPM in 2004 developed and implemented an online information submission process. That is eQIP. It would be Electronic Questionnaire for Investigations Processing. This is web-based technology that allows the applicant to complete his or her questionnaire online, store the information in an automated vault, and submit it electronically along with either imaged or hard-copy attachments, like the fingerprint chart in the release form. There was a conscious decision made between OPM and DOD to customize that, to allow the submissions through JPAS, a system that DOD was in the process of deploying, that in the long haul will minimize the amount of resources that it takes to maintain both systems. That was a very complicated, complex development, but I am thrilled that we are close to implementation. I expect over the next 2 to 3 months, we will have a full rollover so that all submissions from DOD will come in electronically. Senator Carper. And how long have we been working on this? Ms. Dillaman. The customized version, over a year, heading toward two. Senator Carper. OK. And do you think we are a couple of months out? Ms. Anderson. We have already begun using it, but as with an organization the size of the Department of Defense, you don't cut it over all in one day. So we are in the process of matriculating more users every day. As a matter of fact, earlier this month, we allowed all industry users full access to it. So the entire cleared industry population is now free to use it and we are easing their transition, and this is similar to the services and agencies, is we give them a grace period that they can use the old EPSQ, our old online questionnaire, for a little while longer while they are transitioning to how the new one works. But our expectation is by the end of this year, everyone in the Department will be on it exclusively. Senator Carper. Mr. Stewart, should we be encouraged by this? Mr. Stewart. Again, it just seems a little curious to us that this transfer was announced over 2 years ago, and this clearance-request submission process is a critical part of the program. It is pretty basic to be able to submit requests, and we still don't have a fully operational system to make that happen. So I am not encouraged, quite frankly. Senator Carper. Are you from Missouri? [Laughter.] Senator Carper. Show me? Well, in a couple months, I hope you can show us a fully operational system. Ms. Anderson. Sir, if I might add that when we talked about the transfer of the investigations function, the e-Government, e-Clearance initiative--there are a lot of ``e''s--and the eQIP software that Ms. Dillaman deployed is separate from that functional transfer. So while it happened in parallel, it was not necessarily a condition for that transfer. It was separate. Senator Carper. All right. Thanks for all those ``e''s. Governor, always a pleasure. Senator Voinovich. I just would get back to the same question I had, that DOD had the Case Control Management System that was used to manage the security clearance databases, is that right? Ms. Anderson. It was an investigations case management system, yes. Senator Voinovich. And OPM uses the Personnel Investigations Processing System. I want to make sure--the PIPS system. Ms. Dillaman. Yes, sir. Senator Voinovich. OK. Now, are we talking about the fact that you are in the process of transferring the information from the Case Control Management System to the PIPS system? Ms. Anderson. No, sir. Senator Voinovich. You are not? Ms. Dillaman. We made the decision when we started on the discussion about the transfer of function. We did the analysis and determined it made no sense from either economic or engineering standpoint to move cases in process from DSS's legacy system, the CCMS, to OPM's PIPS-based system. So as part of our progression, we adopted the new business process in the beginning of fiscal year 2004 which had all new work matriculating on OPM's PIPS system. We then used the balance of 2004 and, quite frankly, a little bit of 2005 to clean up, that is complete, all the work on the Case Control Management System. The investigative data for investigations that were begun on Case Control Management System were completed on that system. So there are no more cases on the Case Control Management System. We are in the process of archiving those resulting investigations, so we are moving them all to an electronic format so that they will be available to organizations like OPM as prior investigations, but they remain with the Department and we will use an electronic archive to actually maintain them for the 25-year period. Senator Voinovich. So the relevant material that you need has been transferred to the PIPS system? Ms. Dillaman. Yes. The software with regard to the submission process and whether or not you use the old DOD EPSQ or the new eQIP form, actually has nothing to do with the Case Control Management System. Senator Voinovich. OK. Ms. Dillaman, in February 2004, GAO reported that a lack of investigative staff contributed to the delays in the security clearance investigative process, and since the transfer, OPM indicated they will need 8,000 full- time investigators to manage the investigative workload, and you are talking about almost 8,000, from what your testimony was this morning. In 2004, GAO noted that OPM's primary contractor was hiring around 100 investigators a month, and at the same time was losing around 70 employees a month. Is your contractor still experiencing this high turnover rate? Ms. Dillaman. No, sir. Our primary contractor's attrition rate now is down to 18 percent. Senator Voinovich. OK. So that they have reduced the turnover rate? Ms. Dillaman. Yes, sir. In fact---- Senator Voinovich. Were you concerned about the turnover rate that they had? Ms. Dillaman. Absolutely, sir. There is a large turnover in this business, and that is historically true, that people start and for a number of the street agents, that doesn't turn out to be a long-term. But 15 percent attrition would be about right. In 2004, our prime contractor sold the business and it had been an ESOP prior to that, and so there were some windfalls from that and that accounted for some of the large attrition, where a number of people left after the sale. But that has stabilized and our contractor is bringing that down every month. Senator Voinovich. The U.S. Investigative Services, which was an ESOP that was created to preserve the jobs initially of the people that worked for the OPM was sold to somebody else? Ms. Dillaman. Yes, sir. Senator Voinovich. Is it still known as the USIS? Ms. Dillaman. Yes, sir. Senator Voinovich. They kept the name, but there is new ownership? Ms. Dillaman. Yes, sir. Senator Voinovich. And as a result of that new ownership, you are saying that they are a more efficient operation than they were prior to the change in ownership? Ms. Dillaman. Absolutely, sir. Senator Voinovich. Mr. Stewart, are you familiar with that change? Mr. Stewart. I am familiar with the change. We haven't looked at it, but I am familiar with the fact that the ESOP was sold to another party. I think you are asking a very good question. Some investigations contractors depend on a large number of part-time individuals and our understanding is that a lot of these individuals are retired. They are not looking to work full-time. We also understand that they could work for more than one contractor. So they could work for one contractor this month and not the other contractor the next month. I think it is great that 3,800 full-time equivalent investigative staff have been added, but I think it is a situation that bears watching because of the high turnover rate that was experienced when we were doing our earlier work and the fact that many investigators are part-time. Senator Voinovich. OK. I appreciate your testimony here this morning. What I want to do next is to set a baseline about where we are today. I am going to have my staff work on it and we will contact the Office of Management and Budget to talk to them about it also. But I want to know, where are we today, and I want to decide on some metrics so that when we get together 3 months from now, 6 months from now, we can determine whether or not we are making any progress. So that is what I want to do. As I said, Ms. Dillaman, you have got a big job. I think in the Department of Defense, this challenge, which has been around a long time is unfortunately typical Department of Defense. One of the things that this Subcommittee is doing is taking on the fact that the Department of Defense has many items on the list that need to be corrected and here is another example of it. You are 80 percent of the action here. This is high-risk and so it is, again, part of the Department of Defense. I agree with you, Mr. Stewart, that if we are going to really see a transformation of the Defense Department, we do need a Chief Management Officer that is going to stay with these things over a long period of time. Secretary Rumsfeld came in and was really going to improve the Department's management. In fact, one day before September 11, he said that if they could improve the efficiency by 5 percent of the Department, they could save $22 to $24 billion per year. Then our Nation went to war and that doesn't mean you are not working on process improvements. I appreciate the fact that the Department is trying to improve things. But the fact is that management improvements can get lost. When I was governor, I had a Chief of Staff, but I also had a Chief Management Officer that every day got up early in the morning, went to bed late at night, and when all these firestorms occurred, that didn't bother that individual because every day, they were just working on management. And that is the way we got things done. This stuff is not going to get done in a short period of time, and that is why I think it is really important that you look at these numbers on a realistic basis. If we tell you to do something and you say, ``Those people are nuts, it will never happen,'' but if you come back--maybe what we should do is why don't you sit down and figure out how long it will take you. What is a reasonable time frame? Maybe we need to change the law to give you more time. But I think we have got to be real about this, and I think if we are, I think we can certainly see some progress made. I know, Ms. Dillaman, you want to see improvements. Ms. Anderson, you have been working with us a long time and you want to see it. I just want to thank you very much. I didn't bring you here to give you a hard time, but I want to get to some of the real issues here so we can get them taken care of. Thank you very much. The hearing is adjourned. [Whereupon, at 11:40 a.m., the Subcommittee was adjourned.] A P P E N D I X ---------- PREPARED STATEMENT OF SENATOR LAUTENBERG Mr. Chairman, thank you for calling this hearing and giving us the opportunity to learn more about the security clearance process. This process is obviously vital to our national security. Before an individual is given access to sensitive information, we must be absolutely certain that they are trustworthy. But it is also in our Nation's interest to see that those with a legitimate need for information have access to the facts that will help them make good decisions. So our security clearance process must not only be thorough . . . it should also be timely. Today there is a severe backlog of investigations for security clearances. It is such a problem that back in January, the Government Accountability Office designated the security clearance process as a ``high risk'' area within the Department of Defense. I understand that some of this backlog might stem from the transfer of investigative responsibilities from DOD to the Office of Personnel Management. At the current time, DOD has approximately two million active security clearances issued to military personnel, civilian workers and defense contractors. These clearances allow individuals to gain access to classified information that they need to perform their jobs. Last year the GAO estimated that there was a backlog of roughly 270,000 applications for security clearances that needed to be investigated, and 90,000 that needed adjudication. GAO has pointed out four barriers that slowed DOD's ability to eliminate this backlog, including: (1) the sheer size of the backlog; (2) an influx of new requests since September 11, 2001, adding to the existing backlog; (3) an inadequate number of investigators and adjudicators, and; (4) a lack of a strategic plan for overcoming problems in gaining access to state, local, and overseas information. The 9/11 Commission recommended action on this issue, and raised concerns that the backlog could make it difficult to expedite key national security appointments. The Commission recommended that a single Federal agency be responsible for providing and maintaining security clearances. This has not yet happened. Mr. Chairman, this is more than a matter of convenience. The fact is, if we can't do a background check in a reasonable amount of time, it raises questions about our ability to do it thoroughly, as well. I look forward to hearing from our witnesses. 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