Defense Dept. Resumes Processing Some Clearances The Defense Security Service says it will begin processing applications for Secret security clearances immediately, but not those for the Top Secret level. DSS made the announcement on the eve of congressional hearings to examine why the agency imposed a moratorium on processing requests for contractors April 25. The agency said it had exhausted its 2006 budget for background investigations. The Information Technology Association of America said the action was “an encouraging but insufficient step.” It suggested the turnabout was motivated by the congressional interest. Separately, the House passed an amendment that would prohibit DOD from revoking expiring clearances until the moratorium is lifted. The amendment was sponsored by House Government Reform Committee Chairman Tom Davis (R-VA) and Reps. Rob Simmons (R-CT) and Jo Ann Davis (R-VA). It was attached to the 2007 Defense Authorization bill, H.R. 5122. The bill is awaiting action in the Senate. Defense Department officials told the Government Reform Committee May 17 that $28 million has been reallocated to the Security Service, enough to last until the end of June. DOD asked Congress for permission to reprogram an additional $90 million to resume processing all industry applications through the end of the fiscal year in September. Clay Johnson, deputy director of the Office of Management and Budget, testified that DOD underestimated the number of clearances it would need this year by more than 50%. DSS has received 100,000 clearance requests from contractors since the fiscal year began Oct. 1 and estimates it will receive 100,000 more by the end of September. Johnson said the Office of Personnel Management, which conducts background investigations for DOD and most civilian agencies, is charging DOD a 25% premium above the usual cost of an investigation, and that contributed to the budget shortfall. But he said DOD’s failure to accurately forecast its needs was the bigger part of the problem. The Government Accountability Office has been warning for years that the perennial backlog of clearance applications could not be eliminated until DOD was able to accurately predict how many clearances it would need in a given year. GAO said the forecasts had missed the mark wildly in several previous years. Industry officials told the committee that the moratorium and a backlog of an estimated 300,000 applications is hurting their ability to perform their missions and costing taxpayers money. Doug Waggoner, chairman of the Intelligence Committee of the Information Technology Association, testified, “This problem is also keeping qualified people from working, is causing salary premiums as high as 25% for current clearance holders - premiums that raise the costs to industry, to government and ultimately the taxpayers; and is leaving companies unable to meet contract requirements.” Nicholas Karangelen, president of Trident Systems Inc., a small IT firm, said the moratorium had already cost him $200,000 in revenue because some employees cannot work until they receive clearances. DOD officials said they have asked OPM to waive the 25% premium it charges for investigations. But Kathy Dillaman, associate director of OPM’s investigation office in Boyers, PA, said the premium is necessary because OPM must recover its costs. Industry officials said DOD pays $5,000 for a Top-Secret investigation. Chairman Davis said all agencies involved in the process have been focused on their own narrow bureaucratic interests, while “nobody seems to be worried about the mission.” He added, “You just jack up the costs that everybody pays for these services.” OPM took over responsibility for DOD’s clearance investigations last year. President Bush ordered the Office of Management and Budget to oversee the clearance program. Johnson, the OMB deputy director, said: “We are not where we want to be. We are better than we have been.” He said all agencies involved share “a commitment to fix this.” A coalition of industry groups representing IT and government services contractors issued a white paper calling for “one application, one adjudication and one clearance.” It said, “The clearance process as a whole is irrevocably broken.” While OPM has developed an electronic form to collect an applicant’s background information, the coalition said applicants are required to submit fingerprints and signatures on paper, and those must be matched up with the electronic forms. “In far too many instances, OPM informs applicants that the agency was unable to find fingerprint cards to match an electronic application,” the paper said. OPM’s Dillaman said she has 8,600 investigators, mostly contractors, but the industry coalition said some investigators work for more than one contractor, and suggested the actual number is more like 5,000. Chairman Davis, clearly exasperated, said OPM appears to offer “two levels of service: slow and slower.” Davis, top DOD officials and OMB’s Johnson all said they were blindsided by the Defense Security Service’s decision to impose a moratorium on clearances last month. Robert Andrews, deputy undersecretary of defense for counterintelligence and security, who supervises DSS, said that was “not an organizational problem. It was a leadership problem…and we will take care of it.”