[Senate Hearing 113-316]
[From the U.S. Government Printing Office]
S. Hrg. 113-316
SAFEGUARDING OUR NATION'S SECRETS: EXAMINING THE SECURITY CLEARANCE
PROCESS
=======================================================================
JOINT HEARING
before the
SUBCOMMITTEE ON THE EFFICIENCY AND
EFFECTIVENESS OF FEDERAL PROGRAMS AND THE FEDERAL WORKFORCE
and
SUBCOMMITTEE ON FINANCIAL AND
CONTRACTING OVERSIGHT
of the
COMMITTEE ON
HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
JUNE 20, 2013
__________
Available via http://www.fdsys.gov
Printed for the use of the Committee on Homeland Security
and Governmental Affairs
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
U.S. GOVERNMENT PRINTING OFFICE
82-570 PDF WASHINGTON : 2014
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800
DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC,
Washington, DC 20402-0001
COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
THOMAS R. CARPER, Delaware, Chairman
CARL LEVIN, Michigan TOM COBURN, Oklahoma
MARK L. PRYOR, Arkansas JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri ROB PORTMAN, Ohio
JON TESTER, Montana RAND PAUL, Kentucky
MARK BEGICH, Alaska MICHAEL B. ENZI, Wyoming
TAMMY BALDWIN, Wisconsin KELLY AYOTTE, New Hampshire
HEIDI HEITKAMP, North Dakota
Richard J. Kessler, Staff Director
Keith B. Ashdown, Minority Staff Director
Laura W. Kilbride, Chief Clerk
Lauren M. Corcoran, Hearing Clerk
SUBCOMMITTEE ON THE EFFICIENCY AND EFFECTIVENESS OF FEDERAL PROGRAMS
AND THE FEDERAL WORKFORCE
JON TESTER, Montana, Chairman
MARK L. PRYOR, Arkansas ROB PORTMAN, Ohio
CLAIRE McCASKILL, Missouri RON JOHNSON, Wisconsin
MARK BEGICH, Alaska RAND PAUL, Kentucky
TAMMY BALDWIN, Wisconsin MICHAEL B. ENZI, Wyoming
HEIDI HEITKAMP, North Dakota
Tony McClain, Staff Director
Brent Bombach, Minority Staff Director
Kelsey Stroud, Chief Clerk
.........................................................
SUBCOMMITTEE ON FINANCIAL AND CONTRACTING OVERSIGHT
CLAIRE McCASKILL, Missouri, Chairman
CARL LEVIN, Michigan RON JOHNSON, Wisconsin
MARK L. PRYOR, Arkansas JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana MICHAEL B. ENZI, Wyoming
MARK BEGICH, Alaska KELLY AYOTTE, New Hampshire
TAMMY BALDWIN, Wisconsin
Margaret Daum, Staff Director
Rachel Weaver, Minority Staff Director
Kelsey Stroud, Chief Clerk
C O N T E N T S
------
Opening statement:
Page
Senator Tester............................................... 1
Senator McCaskill............................................ 2
Senator Portman.............................................. 4
Senator Johnson.............................................. 5
WITNESSES
Thursday, June 20, 2013
Hon. Patrick E. McFarland, Inspector General, U.S. Office of
Personnel Management; accompanied by Michelle B. Schmitz,
Assistant Inspector General for Investigations, U.S. Office of
Personnel Management........................................... 7
Merton W. Miller, Associate Director of Investigations, Federal
Investigative Services, U.S. Office of Personnel Management.... 8
Stephen F. Lewis, Deputy Director, Security Directorate, Office
of the Under Secretary of Defense (Intelligence), U.S.
Department of Defense; accompanied by Stanley L. Sims,
Director, Defense Security Service, U.S. Department of Defense. 10
Brenda S. Farrell, Director, Defense Capabilities and Management,
U.S. Government Accountability Office.......................... 11
Alphabetical List of Witnesses
Farrell, Brenda S.:
Testimony.................................................... 11
Prepared statement........................................... 45
Lewis, Stephen F.:
Testimony.................................................... 10
Prepared statement........................................... 41
McFarland, Hon. Patrick E.:
Testimony.................................................... 7
Prepared statement........................................... 31
Miller, Merton W.:
Testimony.................................................... 8
APPENDIX
Article submitted by Senator Johnson............................. 57
OPM's White Paper submitted for the Record....................... 59
Questions and responses for the Record from:
Mr. Miller................................................... 69
Mr. Lewis.................................................... 91
Ms. Farrell.................................................. 93
SAFEGUARDING OUR NATION'S SECRETS:
EXAMINING THE SECURITY
CLEARANCE PROCESS
----------
THURSDAY, JUNE 20, 2013
U.S. Senate,
Subcommittee on the Efficiency and Effectiveness of
Federal Programs and the Federal Workforce,
and Subcommittee on Financial and
and Contracting Oversight,
of the Committee on Homeland Security
and Governmental Affairs,
Washington, DC.
The Subcommittees met, pursuant to notice, at 2:30 p.m., in
room SD-342, Dirksen Senate Office Building, Hon. Jon Tester,
Chairman of the Subcommittee, presiding.
Present: Senators Tester, McCaskill, Portman, and Johnson.
OPENING STATEMENT OF SENATOR TESTER
Senator Tester. I call to order this joint hearing of the
Subcommittee on Efficiency and Effectiveness of Federal
Programs and the Federal Workforce and the Subcommittee on
Financial and Contracting Oversight. I want to say thank you to
Senator Johnson for being here. Senator McCaskill will be here
shortly as well. I am sure Senator Portman will be, too.
This afternoon's hearing is titled, ``Safeguarding Our
Nation's Secrets: Examining the Security Clearance Process'' I
want to thank my colleagues who I mentioned previously as well
as their staffs for helping us organize this hearing, and I
want to thank our witnesses for being here today. Thank you for
your time.
Recent events have forced us all to take a closer look at
the programs carried out by this government in the name of
national security. As we move forward, it is critical for us to
examine the scope of these programs to determine whether they
properly balance our security and our essential liberties. But
it is also incumbent upon us to raise critical questions about
how our government is vetting the individuals, whether they are
Federal employees or contractors, who have access to our
Nation's most sensitive data.
Last week, I asked General Keith Alexander, the Director of
the National Security Agency (NSA), a pretty straight-up
question: After the outcry of WikiLeaks, after the Presidential
Executive Order (EO) calling for improved classified network
security, and after spending tens if not hundreds of billions
of taxpayer dollars to keep outsiders from accessing our
Nation's secrets, how in the world does a contractor, who had
been on the job for less than 3 months, get his hands on
information detailing a highly classified government program
that he subsequently shared with foreign media outlets?
The long answer is one that we will ultimately require a
great deal of soul searching by the folks in this room and
throughout our government. But the short answer is that, in
terms of securing classified information, we don't just have an
external problem; we have an internal one.
Today there are nearly 5 million individuals inside and
outside of our government who have been granted security
clearances and access to our Nation's most sensitive data; 1.4
million hold a top secret security clearance. Given the
increasing amount of classified information produced and
maintained by our government and the increasing number of folks
with access to that information, we have a real problem on our
hands if we cannot get this right. And because of the national
security implications involved, there is simply no margin for
error. None.
Today's joint hearing builds upon the previous work of this
Subcommittee as well as the work of our colleagues on the
Senate Armed Services Committee and the Senate Select Committee
on Intelligence. We will examine the efficiency and
effectiveness of the security clearance process, and we will
discuss the management and oversight of the Federal employees
and contractors tasked with carrying out investigations for the
granting of clearances.
I hope for and expect an open and frank discussion with our
witnesses today about the particular roles they play in the
security clearance process. We need to know what we are doing
right, and we need to know what we can do better. A lot of
progress has been made in recent years, but we certainly still
have a ways to go.
I would now like to turn it over to my good friend and
Chairman of the Financial and Contracting Oversight Committee,
Senator Claire McCaskill, for her opening statement. Welcome,
Claire.
OPENING STATEMENT OF SENATOR MCCASKILL
Senator McCaskill. Thank you very much. Thank you, Senator
Tester, and I hope this is the first of many joint hearings we
have with Senator Portman and Senator Johnson. I think all four
of us have demonstrated a desire to get after various problems
that are sometimes embedded in our government without adequate
oversight, and I am very happy to work with all three of you in
this regard today.
Earlier this month, a contractor working for NSA, Edward
Snowden, released classified information regarding the NSA
program. Mr. Snowden had access to this information because he
had received a security clearance. That security clearance was
issued following an investigation of Mr. Snowden's background.
Over 90 percent of the background investigations for both
government employees and contractors are conducted by the
Office of Personnel Management (OPM), including all background
investigations for members of the military and Defense
Department, civilian and contractors.
In preparation for today's hearing, we received information
regarding how the government plans, conducts, oversees, and
pays for background investigations. This information portrays a
government agency where there is fraud, limited accountability,
and no respect for taxpayer dollars. Conducting and managing
background investigations costs the Federal Government over $1
billion per year.
The Office of Personnel Management's Federal Investigative
Services Division uses a Revolving Fund structure in which
Federal agencies pay OPM for the different investigations each
agency needs, both for its employees and for its contractors.
As a former Missouri State auditor, I was shocked to learn that
this fund has never been audited. The Inspector General (IG)
will testify that he has tried several times, but the agency
simply does not have or keep the records that would allow him
to do an audit.
We also learned that at least 18 investigators have been
convicted of falsifying investigations since 2007. These
convictions called into question hundreds of top-secret-level
clearances as well as hundreds of lower-level clearances. There
are more than 40 other active and pending investigations into
fabricated investigations, and it is possible that there are
far more.
We also learned that approximately 75 percent of all the
government's investigations are conducted by contractors, and
just one contractor, U.S. Investigations Services (USIS),
conducts 65 percent of those investigations.
Now, USIS also has a contract to provide support to the
Office of Personnel Management in managing and overseeing
investigations, work which appears to put USIS in the position
of being a contractor to do the investigations and then to be
the contractor overseeing their own employees doing the
investigations.
For its work for the Office of Personnel Management, USIS
received more than $200 million last year. We have received
information that USIS is currently under criminal investigation
by the Office of Personnel Management Inspector General. We
have also received information that this investigation is
related to USIS' systematic failure to adequately conduct
investigations under its contract.
We have also learned that USIS conducted a background
investigation for Edward Snowden in 2011, part of the time
period that is under review.
We are limited in what we can say about this investigation
because, clearly, it is ongoing. But it is a reminder that
background investigations have real consequences for our
national security.
Federal agencies like the Department of Defense (DOD) rely
on these background investigations to make assessments of
whether people should be trusted with our Nation's most
sensitive information. This hearing will attempt to answer this
important question: Are we handling background investigations
in our government effectively and in a way that is deserving of
our trust?
I thank the witnesses for being here, and I look forward to
their testimony.
Senator Tester. Thank you, Senator McCaskill.
I will turn it over to Senator Portman, the Ranking Member
of the Federal Programs and Federal Workforce Subcommittee, for
his opening statement. Welcome.
OPENING STATEMENT OF SENATOR PORTMAN
Senator Portman. Thank you, Mr. Chairman, and I thank my
Chair from the last Congress who is here with us and the
Ranking Member, my colleague from Wisconsin.
This is timely. It is a really important topic and
obviously timely given the Snowden disclosures and the
inadequacy of the system that they demonstrated.
The security clearance process, performed well, is critical
because it protects our Nation's most valuable information
while ensuring that we have the necessary personnel to handle
and safeguard it.
Done poorly, it can be incredibly damaging. Damaging leaks
can hamstring our agencies' abilities to fulfill their
missions, as we have seen in cases over the last couple years,
harming our allies and our ability to build alliances around
the world.
This Committee has had a long history of looking into this
issue, oversight of the processes that now manage almost 5
million government and contracted personnel who are authorized
to have some form of security clearance--5 million people.
Given the many challenges in the past, it is only
appropriate that followup today to see how these agencies are
progressing and, again, in light of what just happened, to see
why it is not working as well as it should be.
For 6 years, the Government Accountability Office (GAO) had
the Department of Defense Personnel Security Program on its
high-risk list. It is now off the high-risk list. It got off in
2011. But there is a long list of concerns and recommendations
for the Department of Defense, for OPM, and for other agencies
involved in the security clearance process. These include
incomplete and poorly synchronized fielding of electronic case
management systems and other tools across government,
shortcomings in metrics for reciprocity, a sound requirements
process to determine positions that require a clearance, and
most troubling, I think, is the pressure to meet timeliness
metrics impacting the quality of investigations.
Additionally, our Inspectors General, have also identified
issues of concern from the financial oversight of OPM's $2
billion annual Revolving Fund, numerous cases of fraudulent
investigations conducted by government and contractor
investigators, and inadequate steps taken to prevent the risks
posed by these negligent investigators from continuing.
We must have adequate, effective, efficient, timely
completion of background investigations. While attention has
been paid in recent years to timeliness, there remain many
questions as to the effectiveness and efficiency of this
process.
I look forward to hearing a progress report, Mr. Chairman,
on meeting these recommendations that were provided and the
actions that have been taken to avoid further mismanagement.
Thank you to the witnesses for being here, and I thank the two
Subcommittees and the Chairs for bringing this issue before us.
Senator Tester. Thank you, Senator Portman.
Now we will turn it over to Senator Johnson, who is Ranking
Member of the Financial and Contracting Oversight Subcommittee.
Welcome, Senator Johnson.
OPENING STATEMENT OF SENATOR JOHNSON
Senator Johnson. Thank you, Mr. Chairman. I would also like
to thank the witnesses for appearing. I did not count how many
times I heard the word ``process,'' but that is exactly what
this is all about. How do you develop a process that actually
works? Coming from a manufacturing background in business,
there are all kinds of processes that we have standardized. For
example, International Organization for Standardization (ISO)
certification works amazingly well. We all adhere to it. It is
standardized. And there are things like surveillance audits on
an ongoing basis.
As I was reviewing the information prior to this hearing,
that is what kept jumping into my mind. If we could apply these
standardized type of processes across the government, I think
we would be in a far better place.
Probably the best piece of preparation material I read was
an article written on February 28, 2013 by John Hamre,\1\ a
former Deputy Secretary of Defense. The article describes how
this gentleman went through a clearance process. He had already
filed his electronic version of an SF86. But it was somewhere
on a government computer and could not be retrieved. He had to
fill it out again, a 4-hour process. His subsequent review was
a government employee or a contract employee going through
question by question. He contrasts that with his experience in
the private sector, answering five questions which had a 99-
percent reveal rate in terms of whether that person was
committing fraud.
---------------------------------------------------------------------------
\1\ Article referenced by Senator Johnson appears in the Appendix
on page 57.
---------------------------------------------------------------------------
So, again, in the private sector, we can get to this, we
can get to a process that works, and my question is: Why can't
we get that in the government? Hopefully what this hearing is
about is coming up with that standardized process that actually
works because, I agree with all three of you, this is critical
if we want to protect our national secrets.
Thank you, Mr. Chairman.
Senator Tester. Thank you, Senator Johnson.
Now for our witnesses. I would like to welcome all of you
here today. I would like to point out that we extended an
invite to the Office of the Director of National Intelligence
(ODNI). They were unable to provide us with a witness. I know
that they are under huge demands right now, and I acknowledge
that the notice was short, but hopefully it can happen next
time, because I am sure there will be a next time.
However, we are fortunate to have assembled a great panel
this afternoon. We will start with Patrick McFarland, who is
the Inspector General of the United States Office of Personnel
Management. He has served in this capacity since 1990, making
him the longest tenured Federal Inspector General. As Inspector
General of OPM, he heads up the audit and investigative
programs seeking to identify fraud, waste, abuse, and
mismanagement in programs administered by OPM.
Mr. McFarland, I understand you were a police officer in
St. Louis at one time. Hopefully your path did not cross
Senator McCaskill's.
Senator McCaskill. Only if we were combining up to put a
criminal in jail. [Laughter.]
Senator Tester. OK.
Mr. McFarland. That is correct.
Senator Tester. Very good. Mr. McFarland is also
accompanied by Michelle Schmitz, OPM's Assistant Inspector
General for Investigations. Welcome to you both.
Merton Miller is Associate Director of Investigations for
OPM's Federal Investigative Services (FIS), the Federal
Government's larger provider of background investigations and
services. Mr. Miller is responsible for FIS operations, policy
development, and contractor oversight of OPM's investigations
program. Before joining OPM, Mr. Miller served a long and
distinguished career in the United States Air Force. As a side
note, if you are looking to fly a C-130 again, please come to
Montana. We are going to be looking for pilots.
And then we have Stephen Lewis, who is Deputy Director for
Personnel, Industrial, and Physical Security Policy in the
Office of the Under Secretary of Defense for Intelligence.
Welcome. That office exercises planning policy and strategic
oversight over Defense Department intelligence,
counterintelligence, and security matters, including the
security clearance process. Today Mr. Lewis is accompanied by
Stanley Sims, Director of the Defense Security Service (DSS) at
the Defense Department. Welcome to both you, Mr. Lewis, and Mr.
Sims to the hearing today. Thank you for your service.
And then last, but certainly not least, we have Brenda
Farrell, who is the Director of Defense Capabilities and
Management at the Government Accountability Office. In that
capacity she is responsible for overseeing the military and DOD
civilian personnel issues, including governmentwide personnel
security clearance issues. She has worked extensively on a
number of national security issues since she began her career
at the GAO in 1981. Welcome, Brenda.
Thank you all for being here today.
It is the custom in this Committee to swear in the
witnesses who appear before it, so if you do not mind, I would
ask you all to stand, including Mr. Sims and Ms. Schmitz, and
repeat after me. Raise your right hand. Do you swear that the
testimony you will give before this Subcommittee will be the
truth, the whole truth, and nothing but the truth, so help you,
God?
Mr. McFarland. I do.
Ms. Schmitz. I do.
Mr. Miller. I do.
Mr. Lewis. I do.
Mr. Sims. I do.
Ms. Farrell. I do.
Senator Tester. Let the record reflect they all answered in
the affirmative.
Now, each one of you are going to have 5 minutes for your
oral statements. Your entire written testimony will be a part
of the record, and you can add more to that complete written
testimony up until July 8.
We will start with you, Mr. McFarland, and if you can keep
it to 5 minutes, we would sure appreciate it. Patrick.
TESTIMONY OF THE HON. PATRICK E. MCFARLAND,\1\ INSPECTOR
GENERAL, U.S. OFFICE OF PERSONNEL MANAGEMENT; ACCOMPANIED BY
MICHELLE B. SCHMITZ, ASSISTANT INSPECTOR GENERAL FOR
INVESTIGATIONS, U.S. OFFICE OF PERSONNEL MANAGEMENT
Mr. McFarland. Chairmen Tester and McCaskill, Ranking
Members Portman and Johnson, and other distinguished Members of
the Subcommittees, good afternoon. My name is Patrick
McFarland, and I am the Inspector General at the U.S. Office of
Personnel Management. Thank you for inviting me here today to
speak about our oversight work related to OPM's Federal
Investigative Services Program Office.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. McFarland appears in the Appendix
on page 31.
---------------------------------------------------------------------------
In 1978, the U.S. Congress took a bold step in passing the
Inspector General Act--bold in that it was an experiment born
out of a multitude of governmentwide mistakes, serious
problems, and just plain wrongdoing. In the face of much
opposition from entrenched government bureaucracy, it was, I
believe, a Congress' pledge to the American citizen that their
expectations of good government and their tax money would be
protected.
The Inspector General concept is transparency at its core
functionality. It must be transparency without any shades of
gray. Indeed, it is with this understanding that each Inspector
General's organization honors the independence required of them
free of any political influence, which Congress mandated.
Today you have asked me here because of concerns about the
lack of transparency in an organization that plays an integral
part in protecting our national security and the integrity of
the government's workforce.
OPM Federal Investigative Services conducts approximately
90 percent of these background investigations for the Federal
Government. These investigations are used by agencies to
determine whether to grant a Federal employee or contractor a
security clearance.
Due to recent events, a key discussion point in recent
public debates has become: Who should we trust with sensitive
information related to national security? The very first step
the government takes in answering this question is to conduct
background investigations.
I am here to inform you that there is an alarmingly
insufficient level of oversight of the Federal Investigative
Services program. The lack of independent verification of the
organization that conducts these important background
investigations is a clear threat to national security. If a
background investigation is not conducted properly, all other
steps taken when issuing a security clearance are called into
question.
Every day I have the privilege of leading an organization
of people dedicated to a work ethic that embodies our
organizational pledge to know our business and responsibilities
better than anyone else, and at the close of the day to be able
to say that we did what was right for the American taxpayer.
This having been said, what is most noteworthy for your
Subcommittee's understanding is that our oversight of OPM's
Federal Investigative Services program has been thwarted by
virtue of an agency funding decision.
Under current law, the Federal Investigative Services must
price its products and services in a manner that allows it to
recover its actual costs of administering the program. OPM uses
a Revolving Fund as the financing vehicle for these activities.
For several years, OPM has taken the position that oversight is
not considered to be an administrative cost, and, thus, our
office has been denied access to the Revolving Fund. I do not
think that anyone here would argue that oversight, financial
audits, performance audits, and investigative activity are not
a crucial part of the Administration of any government program.
To compensate, we have used the $3 million we have for non-
trust fund work to maintain a modicum of oversight viability in
the Revolving Fund programs, with special emphasis on the
Federal Investigative Services program because of the national
security implications.
Please be assured even with bare resources that, because of
recent developments discussed in my written testimony, we feel
compelled to engage our office in a joint initiative between
the Audit and Investigation Divisions to thoroughly oversee the
policies and procedures of the quality review practices of the
Federal Investigative Services program.
I am pleased to say that with the support of former
Director John Berry, the Administration has included a
legislative proposal in the President's Fiscal Year (FY) 2014
budget that would grant us access to the Revolving Fund.
I close by also requesting your Subcommittee's support for
the proposal so that our office will have the resources to
finally do the job with which we have been entrusted.
Thank you.
Senator Tester. Thank you, Patrick.
We will go with you, Merton.
TESTIMONY OF MERTON W. MILLER, ASSOCIATE DIRECTOR OF
INVESTIGATIONS, FEDERAL INVESTIGATIVE SERVICES, U.S. OFFICE OF
PERSONNEL MANAGEMENT
Mr. Miller. Thank you, Chairman.
Chairmen Tester and McCaskill, Ranking Members Portman and
Johnson, thank you very much for the opportunity to testify
today regarding OPM's role in the Federal Government's secret
clearance process.
In response to 2004 legislation authorizing the transfer of
DOD's personnel security investigations function to OPM and the
enactment of the Intelligence Reform and Terrorism Prevention
Act, OPM has continued to enhance the background investigation
process by improving timeliness, quality, and efficiency. Our
successes are due in large part to our partnership with the
Office of Management and Budget (OMB), ODNI, Department of
Defense, and other agencies that require investigations for
security clearances. We have no backlogs, are meeting
timeliness mandates, and have increased automation.
OPM's Federal Investigative Services conducts background
investigations to support Executive Branch hiring, security
clearances, credentialing determinations, among others. The
processes supporting these investigative activities are highly
integrated, automated, consistently measured against timeliness
and quality performance standards for Federal hiring and
security clearance process reforms.
Performance data for these background investigation
products are largely reported to ODNI, Executive Branch
agencies, OMB, and Congress. These products and services are
then utilized as a basis for making security clearance
suitability and fitness and credentialing determinations by
agencies.
Since absorbing DOD's background investigative program in
fiscal year 2005, DOD personnel security clearances have been
removed from the Government Accounting Office's high-risk list.
And OPM has conducted over 95 percent of the background
investigations required by the Federal Government.
OPM manages, oversees the Federal employees and contractors
responsible for conducting investigations. Now, pursuant to
Executive Order 13467, the ODNI, as a security executive agent,
is responsible for directing the oversight of investigations
and determinations and for developing uniform and consistent
policies and procedures to ensure the effective, efficient, and
timely completion of investigations and adjudications relating
to the determinations of eligibility for access to classified
information or eligibility to hold a sensitive position. And
actual clearance decisions themselves are adjudications that
are made by the sponsoring agencies. Agency heads apply uniform
adjudicative guidelines which were approved by President
Clinton and subsequently amended in 2005 by President Bush.
Conducting background investigations is one of OPM's core
missions. FIS provides background investigations for over 100
Federal agencies with approximately 10,000 separate submitting
offices worldwide. Currently we have more than 2,500 Federal
employees and 6,700 contractors that form a nationwide network
of field investigators, support staff, as well as a cadre of
Federal agents that we have working abroad.
OPM manages to balance nationwide Federal and contract
workforce to provide a flexible, responsive, and cost-effective
investigative program. Our core Federal investigators present
us the opportunity to manage highly sensitive and inherently
governmental investigation requirements while our contractor
workforce permits us to expand and contract operations as the
workload and locations dictate.
Information technology has been and will continue to be a
crucial ability to support us in balancing our timeliness,
quality, and cost goals. It plays a key role in reducing costs,
streamlining operations, improving efficiencies, eliminating
waste, and providing a better service for the agencies that
require these investigations.
In addition, we consult with the security community in
developing new policies and standards concerning the security
clearance investigations program, to ensure governmentwide
reciprocity, and address program needs, guaranteeing superior
investigative products.
Security clearance and suitability process reform has
provided program enhancements particularly in the timeliness
and quality of investigative products and has laid policy
groundwork structure to support dramatic enhancements in the
coming years. The enhancements to date have strengthened the
government's ability to recruit top talent and effectively put
Federal and contractor employees to work.
Last, FIS is working with OMB, ODNI, and DOD, and the other
Federal agencies to establish and important Executive Branch-
wide training standards, revise investigative and adjudicative
standards and processes, and develop reciprocity standards and
metrics to gauge improvements and demonstrate savings.
I thank you for the opportunity to be here today to discuss
this important issue, and I will be happy to respond to any
questions.
Senator Tester. Thank you for your testimony, Mr. Miller.
Mr. Lewis, you may proceed.
TESTIMONY OF STEPHEN F. LEWIS,\1\ DEPUTY DIRECTOR, SECURITY
DIRECTORATE, OFFICE OF THE UNDER SECRETARY OF DEFENSE
(INTELLIGENCE), U.S. DEPARTMENT OF DEFENSE; ACCOMPANIED BY
STANLEY L. SIMS, DIRECTOR, DEFENSE SECURITY SERVICE, U.S.
DEPARTMENT OF DEFENSE
Mr. Lewis. Thank you. Good afternoon. Chairmen Tester and
McCaskill, and Members of the Committee, thank you for inviting
me to testify today. My name is Steve Lewis. I am the Deputy
Director of the Security Policy and Oversight Directorate
within the Office of the Under Secretary of Defense for
Intelligence. We appreciate the Committee's continued interest
in the effectiveness of the personnel security clearance
process. Because of your commitment to this critical function
of our government and its ability to protect national security,
we have achieved major improvements over the years and look
forward to even more gains in the future.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. Lewis appears in the Appendix on
page 41.
---------------------------------------------------------------------------
I am here today on behalf of Dr. Michael Vickers, the Under
Secretary of Defense for Intelligence, and I would also like to
introduce Mr. Stan Sims, the Director of Defense Security
Service, who is accompanying us today.
The Under Secretary of Defense for Intelligence is the
Principal Staff Assistant to the Secretary and Deputy Secretary
for security matters and is responsible for setting overall DOD
policy to implement national policies for access to and the
protection of classified national security information. In
addition, he is the senior official for DOD's personnel
security program and has responsibility for policy and
procedures governing civilian, military, and industrial base
personnel security programs.
Executive Order 13467 designates the Director of National
Intelligence as the security executive agent with the
responsibility to develop uniform policies and procedures to
ensure effective completion of investigations and
determinations of eligibility for access to classified
information, as well as acceptance of those determinations on a
reciprocal basis across the government.
With regard to the oversight roles and responsibilities
within DOD, the heads of DOD components are responsible for
establishing and overseeing implementation of procedures to
ensure protection of classified information and taking prompt
and appropriate management action in cases of compromise of
classified information. Such actions are required to focus on
correcting or eliminating the conditions that caused,
contributed to, or brought about the incident. This
responsibility encompasses military service members, DOD
civilians, and embedded contractor personnel.
Under the National Industrial Security Program, the Defense
Security Service is responsible for conducting oversight of
companies cleared to perform on classified contracts for DOD
and 26 other Federal agencies which use DOD industrial security
services.
The Department has instituted various process improvements
that have resulted in greater efficiencies and effectiveness
with regard to initiating and adjudicating background
investigations, and this has helped to result in the removal of
DOD from the high-risk list for its personnel security program.
We have deployed multiple initiatives to ensure consistent,
high-quality investigative products, highly skilled and
professionally certified personnel security adjudicators, and
robust documentation of adjudicative rationale in support of
these adjudicative decisions. This helps to ensure appropriate
oversight and reciprocity.
In October 2012, DOD consolidated its adjudicative
functions and resources except for the DOD intelligence
agencies in a centralized adjudication facility to realize
efficiencies and standardize practices of this critical
inherently governmental function.
You specifically asked for the costs of obtaining security
clearances for the Department, and in fiscal year 2012, DOD
paid the Office of Personnel Management a total of $753 million
for security clearance investigations and approximately $471
million for military service members, $30 million for DOD
civilians, and $252 million for cleared industry.
Thank you for your time.
Senator Tester. Thank you for your testimony, Mr. Lewis.
Ms. Farrell, you may proceed.
TESTIMONY OF BRENDA S. FARRELL,\1\ DIRECTOR, DEFENSE
CAPABILITIES AND MANAGEMENT, U.S. GOVERNMENT ACCOUNTABILITY
OFFICE
Ms. Farrell. Chairmen Tester, McCaskill, and Members of the
Subcommittee, thank you for the opportunity to be here today to
discuss the governmentwide personnel security clearance
process. As you know, we have an extensive body of work on
issues related to the security process dating back several
decades.
---------------------------------------------------------------------------
\1\ The prepared statement of Ms. Farrell appears in the Appendix
on page 45.
---------------------------------------------------------------------------
Since 2008, we have focused on the governmentwide effort to
reform the security clearance process. My statement today is
based on GAO reports issued between 2008 and 2013 on DOD's
personnel security clearance program and personnel security
reform efforts.
Personnel security clearances allow government and
contractor personnel to gain access to classified information
that through unauthorized disclosure can in some cases cause
exceptionally grave damage to U.S. national security.
As you know, a high number of clearances continue to be
processed. The Director for National Intelligence reported this
year that more than 4.9 million government and contractor
personnel held clearances, making it a formidable challenge for
those deciding who should have a clearance. My written
statement addresses three areas for improvement to the process.
The first area addresses having a sound requirements
determination process in place. Agencies need an effective
process for determining whether positions require a security
clearance and, if so, at what level. Underdesignating positions
can lead to security risks while overdesignating can also lead
to security risks and result in significant cost implications.
Last year, we found guidance did not exist to help agencies
determine whether or not a civilian position should require a
clearance and, importantly, no requirement exists to review
existing positions with clearances. We made recommendations to
the Director of National Intelligence, to develop such
guidance.
The second part of my statement addresses quality
measurement. Since the 1990s, we have emphasized the need to
build quality and quality metrics into the clearance process.
Executive Branch efforts to reform the process have focused
more so on timeliness than quality. We have seen programs on
speeding up the processing of initial clearances, but not on
developing metrics for qualitative investigations, implementing
those metrics, or reporting on those metrics' findings.
We have reason for concern about the quality of
investigations. For example, in May 2009, GAO reported that
documentation was incomplete for most OPM investigative reports
we reviewed, about 87 percent of 3,500 total. We have made
recommendations in this area, but those recommendations have
not been implemented.
The last area of my statement addresses the guidance to
enhance efficiencies of the clearance process. Governmentwide
personnel security reform efforts have not yet focused on
potential cost savings, even though the stated mission of these
efforts includes improving cost savings. For example, OPM's
investigative process, which represents a portion of the
security clearance process and has significant costs, has not
been studied for process efficiencies or cost savings. In
February 2012, GAO reported that OPM received over $1 billion
to conduct more than 2 million background investigations in
fiscal year 2012.
We have raised concerns about transparency of costs and
investments in technology while maintaining a less efficient
and duplicative paper-based process. We have made
recommendations in this area, but actions have still not been
realized.
This concludes my opening statement. I would be pleased to
take questions. Thank you very much.
Senator Tester. Thank you all for your opening statements.
We will put 7 minutes on the clock, and we will go from
here.
I am going to start with you, Mr. McFarland. Without making
any specific statements that could compromise the ongoing
investigation, could you confirm that the Office of Personnel
Management's Office of the Inspector General (OIG) is currently
investigating USIS? They are one of the three major contractors
conducting background checks on behalf of the U.S. Government?
Mr. McFarland. Yes, Senator, we are.
Senator Tester. Can you also confirm that USIS carried out
the background investigation on Mr. Snowden?
Mr. McFarland. Well, I am not sure regarding that question.
Senator Tester. OK. It is my information that there were
two. There was an initial investigation and then a----
Mr. McFarland. Oh, I am sorry. Yes, the re-investigation,
absolutely.
Senator Tester. So USIS did do the re-investigation.
Mr. McFarland. Yes.
Senator Tester. But you are not sure who did the initial
investigation?
Mr. McFarland. That is correct.
Senator Tester. Would it be possible to get that
information?
Mr. McFarland. Yes, it is.
Senator Tester. OK, good. Are there any concerns that Mr.
Snowden's background investigation by USIS may not have been
carried out in an appropriate or thorough manner?
Mr. McFarland. Yes, we do believe that there may have been
some problems.
Senator Tester. OK. And when more information gets
available on this, I would assume it is going to be made
public. Is that correct?
Mr. McFarland. Well, it will all depend on the time and
situation, but we will do our best to keep you informed.
Senator Tester. OK, that is good. So let me ask you this:
USIS is under investigation. But yet they are given the re-
investigation of Mr. Snowden. How does that happen?
Ms. Schmitz. It is our understanding that the periodic re-
investigation was done in 2011, which would have pre-dated the
initiation of our investigation.
Senator Tester. OK. When did you initiate your
investigation of them?
Ms. Schmitz. It was later in 2011.
Senator Tester. OK. If I am correct--I believe it was in
one of your opening statements--USIS conducts about 65 of the
75 percent of investigations that is contracted out. Is that
correct?
Ms. Schmitz. That question is probably best answered by
FIS. I understand the number varies depending on whether you
are talking about all investigative products or those which
include significant field work.
Senator Tester. OK. Merton.
Mr. Miller. USIS conducts 45 percent of the overall
contract workload.
Senator Tester. OK. Very good.
I am going to go with you, Mr. Lewis, and then I will kick
it over to Senator McCaskill. I touched in my opening statement
how much classified data is being generated and maintained and
the increasing number of individuals granted access to that
data. DOD currently accounts for a vast majority of the initial
personnel security clearances. Since 9/11, heightened security
has obviously led to an increased number of background checks.
I am not challenging that at all.
What I am asking is, given our redeployment of troops in
Iraq and now the drawdown in Afghanistan, do you anticipate
that DOD security clearances are going to decrease in the
future, maintain, or increase?
Mr. Lewis. It is hard to have a crystal ball on that
subject. One would think that as the drawdown processes, there
would be less of a requirement for clearances. And we are
engaging with the military services and others to look at
scrubbing the requirements for clearances and validating need
more aggressively than we have in the past. But I cannot
predict what is going to happen with any degree of certainty.
Senator Tester. Now, understanding that the clearances are
driven by specific needs, is that scrubbing what you are using
to monitor or manage the number of overall clearances for the
DOD? Or what kind of metrics are you using? Or are there
metrics to use?
Mr. Lewis. We are looking at the number of clearances and
engaging with the military services to validate those needs. So
we do not have metrics at this point on that issue.
Senator Tester. OK. Senator McCaskill, go ahead.
Senator McCaskill. Mr. Miller, have you read Ms. Farrell's
testimony today?
Mr. Miller. I just heard it for the first time.
Senator McCaskill. I am not going to start now, but I would
appreciate if you would read and respond to it with
specificity. It is overwhelming to me the amount of
recommendations that have been made in this area that have been
ignored by your agency. If you want to address why the
recommendations have been ignored now, you are welcome to. I
have spent a lot of time around GAO reports and looking at
recommendations and whether or not they are implemented. And,
typically, agencies that have the least amount of oversight by
Congress have the worst record of thinking that what GAO says
matters.
Is there some kind of cogent answer you can give to why all
these recommendations have been basically wholesale ignored?
Mr. Miller. We take what GAO recommends through their
audits very seriously----
Senator McCaskill. When is the last time you implemented
one of their recommendations?
Mr. Miller. We have implemented all this fiscal year a
number of recommendations regarding--I will take the last
audit--cost transparency. We have done a number of things to
support cost transparency for our customers. We submitted our
first annual stakeholder report, a 33-page report that details
not only workload and resources but also talks specifically
about where our money goes to support the program. We----
Senator McCaskill. If you would be so kind, Ms. Farrell, to
do a scorecard for us, list the recommendations that GAO has
made in this area and give us an actual score as to how many of
them have been implemented and when, by your estimation, and
then I will have a chance to share that with you, Mr. Miller,
and you can argue as to whether it is accurate or not.
Senator McCaskill. How many times has the IG asked to try
to audit the Revolving Fund that pays for all these background
investigations?
Mr. Miller. I do not have a number of times they have asked
to audit, but my understanding is we are very amendable to
moving forward with the process. The issue was determining
whether there was a legal basis to provide Revolving Fund
dollars for the audit.
Senator McCaskill. According to Mr. McFarland, the
documents do not exist to audit the fund.
Mr. Miller. Oh, there are lots of documents, financial
reports----
Senator McCaskill. OK. So I need some kind of agreement
here as to why this fund has never been audited. It is $1
billion a year. It is outrageous that it has never been
audited. And so what is your rationale as to why this fund has
never been audited?
Mr. Miller. My understanding is OPM--we support the current
request by the OIG for Revolving Fund dollars to support audits
in the future. The issue in the past was there was not a legal
basis for Revolving Fund dollars to be given to the IG for
audit purposes. We welcome the IG's oversight.
Senator McCaskill. Well, these are all public dollars.
Mr. Miller. They are public dollars. They are not
appropriated dollars. And, honestly, I cannot speak to----
Senator McCaskill. Well, they were appropriated at some
point.
Mr. Miller. Yes, ma'am, they were.
Senator McCaskill. Because you cannot get them unless they
were appropriated.
Mr. Miller. Yes, ma'am.
Senator McCaskill. So what you are saying is all somebody
has to do in government is give some of the money that has been
appropriated to another agency and, presto, whamo, no audit?
Mr. Miller. No, ma'am.
Senator McCaskill. Well, that is what you are saying. You
are saying that there was some legal question as to whether
this money was auditable by an IG just because it had been
transferred to your agency by another agency.
Mr. Miller. It was absolutely auditable. The issue was
whether Revolving Fund dollars could be given to the IG to
resource additional personnel to actually conduct the audit.
They could have used appropriated dollars at any time to audit
the Revolving Fund.
Senator McCaskill. OK. Let me see if I understand. What is
your view of this, Mr. McFarland and Ms. Schmitz, as to why the
audits have not occurred? He seems to be saying that this was
an acknowledgment by you that you did not have the resources to
do it. Is that the problem?
Mr. McFarland. We absolutely have the resources to do it.
Senator McCaskill. So what from your view is the reason why
this fund has never been audited?
Mr. McFarland. When you say ``the fund,'' you are
speaking----
Senator McCaskill. The Revolving Fund.
Mr. McFarland. Our intent, as always, is to get involved as
deeply as we can in any subject matter. The problem that we
have is that we could not identify--excuse me just a second,
please. I want to give you as correct an answer as possible.
Ms. Schmitz. My understanding--and this may be subject to
later correction because audits is not my area--is that they
were attempted in the late 1990s, and there was insufficient
documentation. Since that time the OIG has not had the
financial resources to pay to do an audit.
Senator McCaskill. OK. Well, we need to get that figured
out, because if we are actually saying to the American people
that there are not the resources available to audit a fund that
holds $1 billion worth of public money, we have a real problem.
So I am going to need you to come up with the specific answer
that you believe is holding you back from auditing this fund,
and I would need the same kind of specificity from you, Mr.
Miller, as to your willingness and your capability of being
audited. We know the Department of Defense cannot be audited.
We are working on that. It has been decades long process trying
to get them audited. This seems to me to be a discrete fund for
which an audit ought not be very expensive. It ought to be as
easy as brushing your teeth for the tens upon thousands of
government auditors we have working right now. So let us get to
the bottom of that.
I want to talk just for a minute, before my time is up,
about the number of convictions for falsifications. You have
had 18 people convicted for falsifying investigations since
2007. Of those, 11 were government employees, 7 were
contractors. Eighteen convictions seems high to me for an
office as small as this is. Do you believe you are catching
most of the fraud, Mr. McFarland? Or do you believe there is
more?
Mr. McFarland. No, I believe there may be considerably
more. I do not believe that we have caught it all by any
stretch.
Senator McCaskill. OK. My time is up. I will wait for my
second round. Thank you.
Senator Tester. Senator Portman.
Senator Portman. Thank you, Mr. Chairman.
One thing we have heard today which is disturbing is that
we cannot confirm the quality of Mr. Snowden's investigation.
This leads to a broader question about whether the pressure
that you all feel to speed up investigations and the backlog
that occurs is leading to lower quality. And I am wondering
about whether you are measuring those metrics.
You have been pressed on timeliness, I am sure, but here is
some data. In 2009, GAO assessed from a sample that 87 percent
of investigative reports that DOD adjudicators used to make
clearance decisions were missing background documentation--87
percent. GAO subsequently recommended OPM measure the frequency
with which investigative reports meet Federal investigative
standards. It seems like a pretty straightforward and
commonsense recommendation.
GAO also notes that OPM is developing a tool similar to
DOD's Rapid Assessment of Incomplete Security Evaluations. Ms.
Farrell, you talked more about that in your testimony. You
basically stated that from GAO's observation, OPM continues to
assess quality based on voluntary reporting from customer
agencies.
In light of what has just happened and in light of this
information from GAO now going back 4 years, Mr. Miller, how do
you measure quality?
Mr. Miller. Senator, we have a number of ways that we
measure quality, but if I could address just up front the 87
percent number: You probably saw OPM's response to that audit.
There are challenges associated with capturing every element of
a background investigation, and let me just explain very
quickly.
An employment check, that was one of the areas where there
was the highest number of elements missing in background
investigations. Employers can choose not to cooperate with the
government when we conduct a background investigation. I am not
saying Federal agencies. I am talking all kinds of commercial
entities where individuals may have previously worked.
One of the challenges is actually getting cooperation. If
an employer either goes away, does not exist any longer, or
chooses not to provide information to the government, that
information has to be documented in a Report of Investigation,
but you do not get that employment coverage that is required.
There are issues regarding the 87 percent subject
interviews that were not accomplished. Many of those subjects
had been deployed into a hostile environment where
investigators could not go to conduct those interviews. So
there is documentation in the Report of Investigation saying
this subject was not available due to deployment, and that case
is closed.
And, Senator, you are exactly right. Every time we initiate
an investigation, we put what we refer to as a close date, a CD
date, because that date must be met to meet the mandated 40-day
challenge that we are given for timeliness. So all
investigative leads must be accomplished in that period of
time, and the case is then closed.
Senator Portman. Let us followup on this a little bit, and,
Ms. Farrell, jump in here. Eighty-seven percent is a high
figure for incomplete reports. Given that we are trying to
protect some of our most valuable classified information and we
have seen some of the impact of this recently, do you agree
with what Mr. Miller just said, that the major problem is that
employers in the private sector do not want to respond to
questions and/or that people have been deployed into hostile
environments? Is that the reason 87 percent of these are not
properly completed?
Ms. Farrell. The documentation was not in the files. We
recognize that it may be challenging to track down people who
may be deployed, and if the documentation is there, then that
could explain it. We found the same types of incomplete
documentation with DOD's adjudication files. We recommended
they offer guidance in these situations, and that if there are
difficulties, you document it so that the adjudicator or
whoever does a review will know why that was left blank, the
person was deployed.
DOD implemented our recommendation----
Senator Portman. So if the person was deployed, for
instance, and that was the only reason that there was an
incomplete investigation, that would not be part of the 87
percent?
Ms. Farrell. If it were documented.
Senator Portman. If you simply had that documentation.
Ms. Farrell. If they had that documentation. The Federal
Investigative Guidelines, like the Federal Adjudicative
Guidelines, look at it as a baseline. So we had our staff
attend investigative training. We used GAO-certified
adjudicators to help us do these file reviews, so we made sure
that the relevant staff had the competency to see what was
missing and what should be there. So this is about
documentation, not having to look at a file and guess.
Senator Portman. And your recommendation was that they
develop tools to be able to deal with that? Mr. Miller, just
quickly, what tools have you developed to be able to close this
gap?
Mr. Miller. There are a number of initiatives ongoing
currently as well as our own quality process. We have quality
procedures for contracts and Federal employees that include
several stages and layers of review while a background
investigation is being worked and when it is finalized.
There are a number of requirements within a contract for a
full quality review of the investigation before it is delivered
to the government. As each lead is accomplished there is a
review conducted by our reviewers. We have 400 Federal
employees whose sole role is quality assurance of our products
that do a full review of each investigation.
When that is finalized and the final review and the
delivery is to our customers, there is a subsequent review--the
most important review, quite frankly--the adjudicative decision
made by the agency itself. So they review the investigation and
make a determination whether all elements are there required to
make a determination. They can make an adjudicative decision--I
am not an adjudicator--claiming a deviation, meaning that there
are certain elements not there, but based on the whole of the
investigation, they determine to grant that person either a
clearance or the Federal employment.
Senator Portman. And are you now providing these metrics to
all of your adjudicators? And are you providing this
documentation so that when GAO looks at your process the next
time, they are going to be able to know why somebody was not
provided all the information?
Mr. Miller. We have not had any followup recently with GAO.
We would welcome a followup on that, as well as to address
quality standards. We have an interagency working group chaired
by the ODNI, at DOD and OPM that is working on establishing
clear and concise standards for evaluating background
investigations to meet the quality standard. Today quality is
in the eye of the beholder, depending on the agency, depending
on the adjudicator, whether it is complete, whether it is not.
So there is a lot of gray area that, quite frankly, I advocated
in standing up this quality working group to give us defined
roles. I can tell you, give us quality standards we understand
that are clear and we will absolutely meet them.
Senator Portman. I think one would be not to have the vast
majority of the reports be incomplete. But thank you for your
testimony. We will be back on the second round. Thank you, Ms.
Farrell.
Senator Tester. Thank you, Senator Portman.
Senator Johnson.
Senator Johnson. Thank you, Mr. Chairman.
Mr. Miller, what does it mean, case closed?
Mr. Miller. Case closed means all the elements of the
background investigation have been obtained and completed and
passed on to the customer.
Senator Johnson. Or you have not gotten all of them and you
are still closing the case when 40 days is up?
Mr. Miller. If they are not obtainable, like an employment
check, that will be documented in the Report of Investigation,
and it will be closed and----
Senator Johnson. So how many of those case-closed,
incomplete investigations then are actually adjudicated and
clearances granted?
Mr. Miller. Well----
Senator Johnson. Do you keep any metrics on that?
Mr. Miller. Yes, sir. When a customer comes back to us and
says, ``You are missing elements, there is information we do
not have here to make the decision, we are asking you to reopen
that investigation,'' that is----
Senator Johnson. What percent do you get back then?
Mr. Miller. That is less than 1 percent, sir.
Senator Johnson. So then do you know how many clearances
are granted based on your case closed with incomplete
documentation?
Mr. Miller. No, sir. The only way we would know what is
granted would be what would be updated in our----
Senator Johnson. You have 87 percent of cases that are
incompletely documented, considered case closed, and then only
1 percent get kicked back with a request for more information?
So we could potentially have 86 percent of investigations
incomplete and then security clearances granted. That is
probably what is happening, right? Yikes.
Ms. Farrell, something pretty disturbing in your testimony
is the lack of guidance in terms of what is a requirement for a
security clearance being granted.
Ms. Farrell. That responsibility falls on the Director of
National Intelligence. He is responsible for oversight of the
security area by providing guidance regarding efficiencies,
effectiveness, and timeliness of----
Senator Johnson. There is no standard for even requesting a
security clearance?
Ms. Farrell. The guidance, I must say, is under draft. We
have a recommendation, and I want to acknowledge that.
Senator Johnson. We have been granting security clearances
for how many decades?
Ms. Farrell. Decades.
Senator Johnson. And there is literally no standard, no
guidance for what circumstances require a clearance. None.
Ms. Farrell. You are correct. In the absence of any
guidance, it is left up to the agencies to determine how they
are going to classify those jobs, and what you find is
inconsistency. We also found that some of the agencies were
using an OPM tool that helps determine the sensitivity of a job
position. The sensitivity of a position does not tell you the
classification, but by knowing the sensitivity, then you can
translate that into whether or not a security clearance is
needed.
Unfortunately, this tool is geared more toward determining
suitability for the job rather than if the job requires a
security clearance. It was developed without a lot of
collaboration with ODNI.
Senator Johnson. Does anybody want to challenge this in
terms of no standards, no guidance, in terms of what is a
requirement for even seeking a security clearance? Mr. Miller,
help me out here.
Mr. Miller. Sir, OPM did create a position designation tool
that was focused on suitability and determining what type of
level of investigation is required for the position in
question.
Senator Johnson. Mr. Lewis, in the Department of Defense,
is there a guidance, is there a standard?
Mr. Lewis. The key focus is on what level of access is
required to perform the duties associated with the job, and
that is going to depend upon what those duties are. For
industry it is very carefully and closely scrutinized by
Defense Security Service when they inspect contractor
facilities. Within DOD, it is going to depend on what level of
access is determined to be required to perform the duties.
Senator Johnson. Isn't that somewhat of a guidance, Ms.
Farrell? We have classifications of different secrecy levels,
and if your job description says you need X classification,
isn't that a guidance?
Ms. Farrell. The guidance does not exist, is what I am
telling you, for governmentwide determination whether or not a
civilian position needs a clearance. You will find that
individual agencies thus have developed their own rules or
procedures. What we found from our audit last year was
inconsistency in their application. In fact, even the OPM IG
reviewed use of the OPM position tool that Mr. Miller mentioned
and found that, for the majority of the cases reviewed applying
OPM's tool came up with a different determination. Quite
alarming.
Senator Johnson. Security clearances, we have clearances
for individuals, but we also have them for contractors and for
facilities, correct? I mean, you also are basically certifying
contractors to be able to handle classified material. Is that
correct? Mr. Miller, can you just step me through an
investigation of a contractor or facility versus an individual?
Mr. Miller. Yes, sir. For an individual, there is a
determination whether that the contractor needs a clearance. It
is sponsored by the Department of Defense. They submit the
individual----
Senator Johnson. OK. I am really more interested in
facilities right now.
Mr. Miller. OK. I cannot speak to facilities, sir. We are
not involved with that.
Senator Johnson. Because I want to find out how often--if
the certification is granted, are there surveillance audits on
a regular basis? Because I think that is kind of the crux of
the problem potentially, with the most recent incident. Mr.
Lewis.
Mr. Lewis. I would like to defer to Mr. Sims on that as his
agency exercises that oversight.
Senator Johnson. OK. Thank you.
Mr. Sims. Thank you, Senator. I appreciate the opportunity.
I oversee the Defense Security Service for contractors and
facilities. As Mr. Lewis stated up front, as part of the
National Industrial Security Program, the Defense Security
Service oversees the granting of facility clearances. The
facility clearance is actually required by for the government.
If the contractor is operating on a contract that requires a
certain level of clearance, for example, secret or top secret,
then they submit those requirements to DSS, but it is sponsored
by the government.
We then look at the facility, the company, if you will, and
we look at the contract and the requirements of the contract.
If the contract requires a secret clearance we evaluate the
facility by a number of different criteria and then grant the
facility clearance first.
Once the contractor gets a facility clearance, that caps
the level of access an individual working their can acquire.
For example, if there is a level of effort, however many
contractors are required to perform on that government
contract, and then that facility clearance is at the secret
level, that is only the level that the individual can even
apply for.
We audit or do security reviews on a routine basis of all
the contract facilities out there. There are about 13,500-plus
facility clearances that we oversee, awarded to about 10,000
companies. We do routine security reviews, and when our
investigative organization or our agents go to those
facilities, we look at those contracts. We verify on a routine
basis whether they have personnel operating above the clearance
level specified by the facility clearance. For example, if we
find that they have a person that is cleared at top secret,
that is trying to work on a secret contract, then we mandate
the lowering of or removal from the----
Senator Johnson. OK. I am out of time, and I am going to
have to leave. Just a quick question. How many man-hours does
the first certification process take? How many man-hours are
involved in a surveillance audit? I am just trying to get some
sort of feeling of how rigorous these certifications are.
Mr. Sims. Senator, it depends on the size of the facility.
Those 10,000 facilities range from Mom-and-Pops all the way up
to Lockheed-Martin?
Senator Johnson. Is this a day-long process? Is it a 3-
month process?
Mr. Sims. For some of the smaller companies, it could be a
day or two. For the larger companies, facilities like a
Lockheed-Martin, a large manufacturing facility, we have done
at least 2 to 3 weeks onsite with a team of security
professionals from my agency.
Senator Johnson. OK. Thank you very much.
Thank you, Mr. Chairman.
Senator Tester. You bet. Thank you, Senator Johnson.
I am going to read the second paragraph on page 3 of Mr.
McFarland's testimony, and this will be a question for you, Mr.
Miller. The testimony goes like this:
``The problem that [Patrick McFarland's] office has
encountered is that the Office of Inspector General oversight
costs are not permitted to be charged against the Revolving
Fund.''
This is a followup on Senator McCaskill's question. This $1
billion or $2 billion fund, somebody has made a call that none
of that money can be used for things like annual financial
audits or any basic oversight. Who made that call?
Mr. Miller. I cannot answer that, sir.
Senator Tester. Mr. McFarland.
Mr. McFarland. Yes, I can speak to that, Senator. This has
been probably the most frustrating thing that has happened
regarding the Revolving Fund for us, because it has almost
literally taken us out of the picture. We have a limited amount
of money from salaries and expenses--in our case, it is $3
million right now--to spend on non-trust fund issues, and the
Revolving Fund is a non-trust fund issue.
So what we have tried to do as best we can is stay tuned in
to what is going on, and that is kind of a sad State of affairs
for an IG to have to say, stay tuned in. We want to be in depth
in all of these things. But we have not been able to simply
because it was decided by the General Counsel's office and then
supported by the Director of OPM that we do not fit into the
category that would allow us to have funds from the Revolving
Fund.
Now, we take total disagreement with that, of course. We
feel just the opposite.
In order to try to remedy the situation, I suggested a
couple years ago the Director of OPM should suspend his
decision in agreement with the General Counsel's office, that,
we are not entitled to those funds.
Senator Tester. We have a confirmation hearing on the new
Director of OPM on July 12, and I have a notion that is going
to be a question that is going to be asked right out of the
gate: Are you going to support using some of those monies?
Let me ask you one more thing, and I want you to be very
brief, if you can.
Mr. McFarland. Sure.
Senator Tester. When you do an oversight, an audit, or
whatever it may be, is typically the cost paid for by the fund
that you are doing the audit on?
Mr. McFarland. Everything we do for health insurance,
retirement, and life insurance is done out of those trust
funds.
Senator Tester. OK. Is there any other fund out there that
you know of that has been declared off limits for reimbursement
for your duties?
Mr. McFarland. No. We are using our salary and expenses to
do what we can in the Revolving Fund. That is why it is so
limiting.
Senator Tester. I understand that. But when you do any
other audits on any other funds, I assume you are getting paid
out of those funds that you are auditing.
Mr. McFarland. That is correct.
Senator Tester. Are there any other funds that you are
auditing that you are not able to get your costs reimbursed
from those funds?
Mr. McFarland. No. In general. I think----
Senator Tester. OK. That is what I needed to know. The
hearing is July 16, not July 12.
I have a question to followup on Senator Johnson's, if I
could to you, Ms. Farrell. Short of the President of the United
States, I do not know who is responsible for these security
clearances. There are different standards, there are different
responsibilities, different metrics, different everything.
So this incident comes up with Snowden. We should not be
surprised at all. Where does the buck stop on this situation?
Does the buck stop with Congress? Are we falling back? Should
we be dictating what you should be doing? Or who should be
doing this?
Ms. Farrell. Well, we were encouraged when a governance
structure was put in place by Executive Order back in 2008. The
Executive Order established a Performance Accountability
Council (PAC) to drive reform efforts toward effectiveness,
efficiency, keep it going. And the Deputy for Management at OMB
is the Chair of the Performance Accountability Council.
The order also established the Director of National
Intelligence as the Security Executive Agent. It also
established OPM as the Suitability Executive Agent.
So that question we asked many times after the Council was
formed, when we were looking at the reform efforts and who is
in charge. It comes down to the Performance Accountability
Council, headed up by the Deputy Manager at OMB.
Senator Tester. Very quickly, Mr. Miller, should I be
concerned about this, concerned that there is no apparent
metrics or standards or----
Mr. Miller. Sir, there are standards.
Senator Tester. Yes, but they vary between each agency, so
consequently there is no reciprocity, and the standards could
go from soup to nuts.
Mr. Miller. Yes, sir. There has been a great deal of effort
under the Performance Accountability Council to align standards
and get consistency across Federal agencies.
Senator Tester. Have we been successful in that to develop
a single measurable standard?
Mr. Miller. Sir, we are better than we have been. There is
still work to do.
Senator Tester. OK. Senator McCaskill.
Senator McCaskill. Let me go back to the convictions. When
you have convictions of people who falsify investigations, what
kind of processes are in place, Mr. McFarland or Ms. Schmitz,
as to the investigations that the person was responsible for?
Ms. Schmitz. The Federal Investigative Services has an
integrity assurance process in place, which is how most of
these cases are initially detected. When they suspect that
falsification is occurring, they do what they call a recovery
effort, which is to identify the scope of the falsifications
and then they have a federally employed background investigator
go back and redo every single investigation that was assigned
to that person, both to make sure that a quality product
replaces the possibly defective product and to identify what is
falsified for further criminal investigation and potential
prosecution.
Senator McCaskill. For the people who are in the parameters
of the investigation around these criminal convictions for
falsification, I assume that their access to classified
material is cutoff while that is done? Or are they allowed to
keep their clearance while you look into it?
Ms. Schmitz. You mean the individuals who hold the security
clearance?
Senator McCaskill. Correct.
Ms. Schmitz. Mert may know more than I do, but to my
knowledge, they are not affected while the investigation is in
process.
Senator McCaskill. Is that true? They are allowed to keep
their classification even though you have discovered that
during the period of time their security clearance was given
that somebody was criminally falsifying?
Mr. Miller. Yes, ma'am, that is correct. The recovery
process that was just mentioned is the top priority. Our
integrity assurance program, as Michelle testified, is how
these falsifications are uncovered.
Senator McCaskill. And you are doing that by recontact
letters? Is that how this happens?
Mr. Miller. Yes, ma'am. That is one of the processes, the
recontact letters.
Senator McCaskill. How many people get recontact letters?
Mr. Miller. Three percent a month of all investigations
receive recontact activity, and that is for every agent we have
employed. So there is not any agent that does not receive some
recontact activity on their investigations.
Senator McCaskill. And when you say ``agent,'' you mean
government employee or contractor?
Mr. Miller. Yes, ma'am.
Senator McCaskill. So everybody who is doing background
checks, 3 percent of their work every month, the people who
they say they interviewed, you do recontact letters to confirm
they have been interviewed.
Mr. Miller. Yes, ma'am.
Senator McCaskill. What if they falsify who they contacted
and they are the ones getting the recontact letter?
Mr. Miller. Then we will uncover the fraud.
Senator McCaskill. How?
Mr. Miller. If the individual that we recontact was the
individual, the lead that was falsified, typically the response
is they were never spoken to by OPM.
Senator McCaskill. No. I mean what if the person making the
falsification falsifies the person they contacted, makes up
that it is them, and puts down a phone number that is a phone
number they have access to or an address they have access to, a
post office box, and they actually get the letter and say,
``Yes, they contacted me,'' when in reality the whole thing was
made up? How do you catch that?
Mr. Miller. That is an interesting scenario. But we know
where our agents reside. We know where our agents----
Senator McCaskill. Well, aren't some of these post office
boxes?
Mr. Miller. Some of the contacts are post office boxes,
yes, ma'am.
Senator McCaskill. I know your background, and I know that
you are through and through an investigator. It worries me that
we have this many criminal falsifications, which means that
there are people that are employed, by contractors or by you,
that are not doing the work, and you are catching them
sometimes. But if you are catching as many as you are, that
means there are a lot you are not catching. If I was going to
falsify something, I would not be stupid enough to put down the
name and the address of the person who is going to say, ``No,
they never contacted me.'' I would put down a name and address
where I would be able to control the receipt of that document
and handle it so that I would go along undetected.
Mr. Miller. One of the challenges for that scenario is that
when they fill out their SF86, they identify references, the
individual we are investigating, references and specific leads.
So we are actually contacting the people that the individual
being investigated has referred us to speak to. So that would
help keep that problem from occurring.
Senator McCaskill. OK. Have you given any thought to
shutting off the classification as you look at the
investigation?
Mr. Miller. Yes, ma'am. There has been some discussion
about that. In fact, we have gone back and reviewed--I saw the
handout that Mr. McFarland put out. It talks about the level
and extent of investigations that were involved. But what we
have determined is through the recovery process there have been
no serious issues out of all the cases involved that resulted
in a change in access. And so we expedite the recovery process
and coordinate that with the agency and update the background
investigation to make sure it is correct.
Senator McCaskill. Well, since these background checks are
potentially falsified, I think we should consider during the
pendency of your investigation into the falsification
suspending clearance temporarily for any of the people that
could be impacted by the falsification just because I think it
would be easy for us to have a disaster in that area.
I am curious about paying for these for contractors; $250
million, I think Mr. Lewis said, was paid just for security
clearance for contractors in 1 year.
Now, you have a price sheet here. Are the contractors being
asked to identify this separately in their contracts, the
defense contractors, so that those costs are being delineated
in their contracts? Or are they absorbed in their contract
price and we just cover the cost? Which is it, Mr. Sims?
Mr. Sims. Ma'am, those costs are paid for by public
dollars. We do not charge contractors for the costs of their
security clearance. Part of our budget is the cost for funding
cleared contractors in industry, and that is what that $252
million was for fiscal year 2012.
Senator McCaskill. All right. Well, then here is the
question: If we are doing this for the contractors, which I
question--it seems to me that this would be something that they
should pay for. If they want to do business with the government
in a classified setting, it seems like this should be their
dime and not ours. But assuming that we are paying for it, then
why in the world are we paying a premium for those that already
have it? It sounds like to me we are paying for it twice.
Because I know in defense contracts, they get extra money for
having employees who have the clearance. So not only are we
paying to give it to them, we are paying them again the second
time that they already have it.
Mr. Sims. Yes, ma'am, I see your point. I cannot address
that last part of the question, but I can address the first
part. We have done extensive research as to what is the most
cost-effective way to pay for security clearance within the
Department. The analysis shows that if we were to allow the
contractors to build the cost of clearances into the contract
then they would add overhead on the management of that. So the
most cost-effective way was to manage it from the Department,
we pay those costs, because we pay it either way.
Senator McCaskill. That makes some sense. It does not make
sense that we pay them for it since we did it in the first
place. I mean, that does not make any sense. So I guess the
contractors say, ``Well, we are not going to make you pay for
it again, so therefore you need to pay us more.'' Gee, that is
a good deal if you can get it. And it sounds like to me our
contractors are getting it.
So I would like you, Mr. Lewis, to get back to the
Committee with why you cannot cease and desist paying a premium
to contractors who have clearance since they did not pay for it
in the first place.
Mr. Sims. Ma'am, maybe I am confused. The $250 million that
we pay for contractor clearances on government contracts, those
funds go to OPM through the Revolving Fund.
Senator McCaskill. No, I understand. I understand that
public dollars are being used to provide clearances for private
contractors. So the government, the taxpayers are providing
clearances for contractors. Now, I know that in the area of
defense contracting, you get a premium on your contract if the
people who are working on your contract have clearance. That is
what is irritating me, because they are getting a premium for
something that the taxpayers provided them.
Mr. Sims. You are correct.
Senator McCaskill. It would be one thing if they were
getting a premium for something they had paid for, but they are
not. They are getting a premium for something we paid for. That
seems dumb to me. That is why I would like to figure out why we
are doing that.
Mr. Lewis. Ma'am, if I could just add in there, that is an
issue we would have to address with the acquisition community,
and we will be happy to come back to you with more information
on that.
Senator McCaskill. I would love that, and the next time I
see Ash Carter, I will mention it to him, too. It does not make
any sense to me that we would do that.
I am out of time.
Senator Tester. Mr. Lewis, what measures or safeguards are
in place to monitor the military personnel, DOD civilians,
private contractors with security clearances?
Mr. Lewis. If you are talking about their day-to-day access
to classified information, for contractors DSS does its
oversight. From the standpoint of a military servicemember or a
DOD civilian, that is the responsibility of the component head
to establish a program to monitor and conduct oversight of
their own operations.
Senator Tester. Do you know what kind of criteria is used
in these cases?
Mr. Lewis. There is a DOD Information Security Program
Manual which establishes criteria for not only how classified
material is to be protected, but also issues of security
concern that need to be reported to the central adjudication
facility about an employee.
Senator Tester. When we are talking about clearances that
are potentially revoked, can you tell me what the biggest
disqualifiers are?
Mr. Lewis. Often it is for financial issues and individuals
who have been involved in criminal activity.
Senator Tester. OK. How many clearances have been revoked
in the last year, or two, or three?
Mr. Lewis. I would have to come back to you with those.
Senator Tester. That would be good if you could.
In response to a previous question, I think Ms. Schmitz
said that USIS was under investigation since late 2011. Did I
hear that correctly?
Ms. Schmitz. Yes, sir.
Senator Tester. And they are still under investigation now?
Ms. Schmitz. Yes, sir.
Senator Tester. A year and a half later? How long do these
investigations typically take?
Ms. Schmitz. A complicated contract fraud case typically
takes several years.
Senator Tester. And during that time business goes on as
usual with these contractors even if they are under
investigation?
Ms. Schmitz. It depends on the investigation. In this case,
FIS has been aware of what we have been investigating since the
beginning, and----
Senator Tester. Can you tell me what that investigation is
about? Can you legally tell me that?
Ms. Schmitz. Since it is ongoing, sir, I really do not want
to risk jeopardizing the potential to----
Senator Tester. That is fine. I do not want you to.
Senator McCaskill, do you have any further questions?
Senator McCaskill. I do. Just a couple.
I want to get at USIS in terms of not only having the
biggest contract to do the background checks; but also having
this program support contract. And these contracts are one of
my nemeses in my job of overseeing contracts. All through our
government there has been an easy way to augment personnel by
doing these program support contracts, and at one point in
time, and probably still at Homeland Security, you could not
tell the contractors from the employees. They were doing the
same functions. They were sitting at the same desks. They were
working on the same things. One was a contractor and one was
not, and partly it was because supposedly they were easier to
get rid of.
So my question is: Why is USIS getting this $45 million a
year for program support? And what is that?
Mr. Miller. Yes, ma'am. USIS, it is one of our primary
support contracts. We provided some background to your staff
about the costs associated with it. But our front-end operation
has a number of routine activities it has to conduct, and much
of it is manual based on the way the records come to us in
paper style. We actually have 999 personnel that work the
front-end operation for us. That is everything from scoping the
investigation pre-review, inputting the data, and ensuring that
the investigation gets distributed to our investigators in the
field.
Senator McCaskill. OK. So we are paying USIS several
hundred million dollars a year to do background checks, and we
are paying them $45 million a year to do the office work.
Mr. Miller. Yes, ma'am.
Senator McCaskill. What percentage of that 999 are
contractors and what percentage of them are Federal employees?
Mr. Miller. We have 35 personnel that oversee the contract,
the support contract.
Senator McCaskill. So of the 999, 35 of them are employees
and 965 are contract people?
Mr. Miller. Yes, ma'am.
Senator McCaskill. Why are we paying contractors instead of
hiring people?
Mr. Miller. As we add automation, we are able to downsize
the staffing, and so year to year we have seen a decline in the
contract staff required for our support services. Also, based
on the low-level jobs that they are, it is more financially
beneficial for us to have contractors doing that work than
bringing on full-time----
Senator McCaskill. So you have a cost/benefit analysis that
you could give to me?
Mr. Miller. Not one I can give you, no, ma'am.
Senator McCaskill. You don't? Because there is not one?
Mr. Miller. There is not one.
Senator McCaskill. OK. Well, then how do you know they are
cheaper?
Mr. Miller. Well, we will do a cost/benefit analysis and
provide----
Senator McCaskill. Well, it sounds like to me you have not
done one, but yet you said they were cheaper.
Mr. Miller. Yes, ma'am, because we----
Senator McCaskill. Well, how do you know that?
Mr. Miller. We can contract our workforce very quickly on
the contract side, so as the automation gets added, we can go
ahead and downsize those requirement within----
Senator McCaskill. So you are telling me 999 is downsized?
Mr. Miller. Yes, ma'am.
Senator McCaskill. So it is lower than it was?
Mr. Miller. Yes, ma'am.
Senator McCaskill. What was it last year?
Mr. Miller. I would have to get that number to you. It is
over 1,000, but that is the only----
Senator McCaskill. OK. Well, I am going to dig in here,
just to warn you. I want the numbers. I want a cost/benefit
analysis. I am tired of this assumption being made that
contractors are cheaper, because I have been at this for 6
years, and I guarantee you about half the time I have looked
hard, they have not been cheaper. In fact, there have been
studies done that they are more expensive.
So I would like to take a hard look at that and make sure
that that is the case, and that was the last line of
questioning I wanted to make sure I covered today. I know all
of you want to make this as good as possible, and we do not
have these hearings to make everyone feel awkward and
uncomfortable. We have these hearings because we know oversight
is needed in this area, and I think all of you will acknowledge
oversight.
I know that my friend from GAO and my friend from the IG's
office know that oversight is needed, and I think even you all
will acknowledge that this is an area that we have neglected
oversight in. And, it takes one incident for all of us to
realize that here is a whole area of the government that most
Americans don't know about and most Members of Congress have no
idea how it actually works. The more we dig in, the more we
realize more work needs to be done.
So I appreciate all of your public service. I know we asked
some specific questions, and I know the Chairman may have
others he wants to ask now. But I would appreciate getting that
information back, and I am going to stay on this, Mr. Miller,
about the cost/benefit analysis, because you know what? I bet
we are going to figure out you can hire those people for less.
Thank you, Mr. Chairman.
Senator Tester. Thank you, Senator McCaskill. I want to
close now. If you have any closing remarks, have at it.
I just want to thank all of you for being here. I think
Senator McCaskill said it well. We have these hearings to try
to get information so we can make things run better. I
appreciate you, given the short notice especially, all being
here today because I know you are busy. Oversight is critically
important. I think that has been brought up several times
today, and making sure that we have the proper metrics, do the
proper oversight, making sure we hold both government employees
and contractors accountable is critically important.
What we are talking about here is the intelligence of the
Nation. We have a ways to go to make sure that we have the kind
of oversight in place and the kind of reciprocity in place, the
kind of metrics in place that will ensure that our intelligence
stays solid even to folks inside the Department.
We look forward to working with you, to constructively move
forward in a way that makes sense for this country. Once again
I want to thank you for your testimony. The record will remain
open until July 8 for any additional comments or any questions
by any of the Subcommittee Members.
With that, this hearing is adjourned. Thank you all.
[Whereupon, at 4:01 p.m., the Subcommittee was adjourned.]
A P P E N D I X
----------
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
[all]
|
NEWSLETTER
|
|
Join the GlobalSecurity.org mailing list
|
|
|
