Index

DOD Personnel: Inadequate Personnel Security Investigations Pose National
Security Risks (Letter Report, 10/27/1999, GAO/NSIAD-00-12).

Pursuant to a congressional request, GAO reviewed the Department of
Defense's (DOD) personnel security investigative functions, focusing on;
(1) the completeness and timeliness of DOD personnel security
investigations; (2) what factors, if any, might be hindering the
completeness and timeliness of the investigations; and (3) what actions
DOD has taken to address any program weaknesses.

GAO noted that: (1) DOD personnel security investigations are incomplete
and not conducted in a timely manner; (2) as a result, they pose a risk
to national security by making DOD vulnerable to espionage; (3) in the
530 cases GAO reviewed, DOD granted clearances notwithstanding that: (a)
92 percent of the 530 investigations were deficient in that they did not
contain the information in at least one of the nine investigative areas
required by the federal standards for granting clearances; (b) 77
percent of the investigations were deficient in meeting federal
standards in two or more areas; and (c) 16 percent of the investigations
identified issues that the Defense Security Service did not pursue
pertaining to individuals' prior criminal history, alcohol and drug use,
financial difficulties, and other problems that could be cause to deny a
security clearance; (4) Defense Security Service clearance
investigations are also not timely; (5) half of the 530 investigations
GAO reviewed took 204 or more days to complete even though DOD
components and contractors requesting the investigations want them
completed in 90 days; (6) completeness and timeliness problems in DOD's
personnel security program have resulted largely from a series of
Defense Security Service management actions that weakened quality
assurance and led to delays in processing cases; (7) DOD is taking steps
to address these problems; however, it will take a significant amount of
time and money to identify and implement all of the actions and steps
needed; (8) DOD recently appointed a new acting Defense Security Service
Director who has: (a) negotiated with the Office of Personnel Management
and private contractors to assist in eliminating the large backlog of
clearance reinvestigations; (b) directed a review of all investigative
policies; (c) begun reinstating quality control mechanisms and
established a new training organization; and (d) appointed a team to
assess automation problems; (9) DOD has not developed a strategic plan
for the program that includes measurable program goals and performance
measures; (10) DOD has recognized the need for a strategic plan for the
personnel security investigation program, but the plan is only in the
early stages of development; and (11) moreover, despite the serious and
widespread nature of the completeness and timeliness problems affecting
the personnel security investigation program, DOD has not planned to
report these problems as material weaknesses under the Federal Managers'
Financial Integrity Act of 1982.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-00-12
     TITLE:  DOD Personnel: Inadequate Personnel Security
	     Investigations Pose National Security Risks
      DATE:  10/27/1999
   SUBJECT:  Federal employees
	     Internal controls
	     Security clearances
	     Contractor personnel
	     Classified information
	     Strategic planning
	     Quality assurance
IDENTIFIER:  National Performance Review
	     DOD Quadrennial Defense Review
	     SSA Case Management Control System

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Report to the Ranking Minority Member, Committee on Armed Services, House
of Representatives

October 1999

DOD PERSONNEL

Inadequate Personnel Security Investigations Pose National Security
Risks
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GAO/NSIAD-00-12

Letter                                                                     3

Appendixes

Appendix I:Recent Broad-Based Studies of the Personnel Security
Investigation Process

                                                                         38

Appendix II:Scope and Methodology

                                                                         42

Appendix III:Defense Security Service Resources and Workload

                                                                         46

Appendix IV:Deficient Investigations in Our Sample

                                                                         48

Appendix V:Investigators' Recall of Recent Training Received on Federal
Investigative Standards

                                                                         49

Appendix VI:Comments From the Department of Defense

                                                                         53

Appendix VII:GAO Contacts and Staff Acknowledgments

                                                                         62

Table 1:  Comparison of DSS Investigations Sent for Adjudication
Before and After CCMS Implementation            29

Table 2:  Status of Joint Security Commission Recommendations39

Table 3:  Status of Joint Security Commission II Recommendations40

Table 4:  Status of Secrecy Commission Recommendations41

Table 5:  Number of DSS Investigations Sent to Four DOD
Adjudication Facilities and Sampled by GAO      42

Table 6:  Precision Rates for Investigations Sampled at Four DOD
Adjudication Facilities43

Table 7:  Personnel Security Investigation Budget46

Table 8:  Personnel Security Investigation Staff46

Table 9:  Personnel Security Investigation Workload47

Table 10:  Number of Deficient DSS Investigations at Four DOD Adjudication
Facilities48

Table 11:  Investigators' Responses to Survey Questions on Recent
Training Received on Federal Standards          49

Figure 1:  Personnel Security Investigation and Adjudication
Process                                          8

Figure 2:  Percent of Personnel Security Investigations With
Deficiencies                                    13

Figure 3:  Percent of Deficient Investigations in Nine Required
Investigative Areas                             14

Figure 4:  Calendar Days Needed to Complete Investigations17

Figure 5:  Percent of Investigators Without Recent Training on
Investigative Requirements                      26

Figure 6:  Investigators Views on Workload      28

CCMS    Case Control Management System

DOD     Department of Defense

DSS     Defense Security Service

GPRA    Government Performance and Results Act

NSA     National Security Agency

OCB     Operations Center Baltimore

                                                     National Security and 
                                             International Affairs Division

B-283901

October 27, 1999

The Honorable Ike Skelton
Ranking Minority Member
Committee on Armed Services
House of Representatives

Dear Mr. Skelton:

The federal government uses personnel security investigations to determine
whether an individual should be granted access to classified information.
Because these investigations are a critical first step in safeguarding
national security information, the federal government has established
standards to ensure that various aspects of an individual's background are
consistently investigated and considered when a federal agency decides if
a clearance should be granted. Although such investigations do not
guarantee that individuals will not later engage in espionage activities,
they remain a critical step in identifying those who can be trusted to
access and safeguard classified information./Footnote1/ The Department of
Defense's (DOD) Defense Security Service, with oversight by the Assistant
Secretary of Defense (Command, Control, Communications, and Intelligence),
conducts the investigations for DOD and forwards the results to one of
eight DOD adjudication facilities, which decide whether to grant or deny
the clearance. These decisions are referred to as adjudications.

At the end of fiscal year 1998, about 2.4 million DOD active duty
military, civilian, and contractor employees held personnel security
clearances: 96,000 employees held confidential clearances, 1.8 million
held secret clearances, and 524,000 held top secret clearances. From 1982
through September 1999, 80 federal employee and contractor personnel, 68
of whom were employed by DOD, were convicted of committing espionage
against the United States. These individuals had undergone personnel
security investigations and held security clearances; 19 held clearances
that allowed access to top secret information. Top secret, secret, and
confidential clearances require reinvestigations every 5, 10, and 15
years, respectively.

In view of the importance of these investigations to national security,
you asked us to review DOD's personnel security investigative functions.
Specifically, we assessed (1) the completeness and timeliness of DOD
personnel security investigations; (2) what factors, if any, might be
hindering the completeness and timeliness of the investigations; and 
(3) what actions DOD has taken to address any program weaknesses. As you
requested, we are also providing information on recent broad-based studies
that examined federal personnel security investigations and the status of
actions taken on these studies' recommendations to improve the process.
This information is presented in appendix I.

To address these objectives, we reviewed the extent to which a sample of
530 randomly selected personnel security investigations conducted by the
Defense Security Service included the information required by the federal
standards. These investigations included 226 (43 percent) investigations
conducted for the purposes of determining whether to grant or deny an
initial top secret clearance and 304 (57 percent) reinvestigations
conducted to determine whether to continue or revoke a top secret
clearance already held. We randomly selected the investigations from four
of the eight DOD adjudication facilities: the Air Force, the Army, the
Navy, and the National Security Agency. Our findings can only be
generalized to the investigations done during the January and February
1999 period at the four adjudication facilities. However, these facilities
accounted for 73 percent of the investigative work done by the Defense
Security Service in fiscal year 1998; therefore, these findings suggest
systemic program weaknesses. In addition, we surveyed all Defense Security
Service investigators and case analysts about their workload, training,
the manner in which they conduct investigations, and the adequacy of the
investigative policy guidance they received. A detailed discussion of the
scope and methodology for conducting our work is presented in appendix II.

Results in Brief

DOD personnel security investigations are incomplete and not conducted in
a timely manner. As a result, they pose a risk to national security by
making DOD vulnerable to espionage. In the 530 cases we reviewed, DOD
granted clearances notwithstanding that

o 92 percent of the 530 investigations were deficient in that they did
  not contain the information in at least 1 of the 9 investigative areas
  required by the federal standards for granting clearances, which
  include confirming the subject's residency, birth and citizenship, and
  employment records; checking records for prior criminal history,
  divorces, and financial problems; and interviewing character references;

o 77 percent of the investigations were deficient in meeting federal
  standards in two or more areas; and

o 16 percent of the investigations identified issues that the Defense
  Security Service did not pursue pertaining to individuals' prior
  criminal history, alcohol and drug use, financial difficulties, and
  other problems that could be cause to deny a security clearance.

Defense Security Service clearance investigations are also not timely.
Half of the 530 investigations we reviewed took 204 or more days to
complete even though DOD components and contractors requesting the
investigations want them completed in 90 days. Less than 1 percent of the
530 investigations met this 90-day time frame. This lack of timeliness
causes defense contractors to incur costs because their personnel cannot
begin work on DOD contracts without a security clearance. Also, about
600,000 individuals holding clearances are overdue for reinvestigations.
Delays in initiating reinvestigations create risks because DOD may be
unaware of changes in employees' personal circumstances or behaviors that
make them a greater security risk.

Completeness and timeliness problems in DOD's personnel security program
have resulted largely from a series of Defense Security Service management
actions that weakened quality assurance and led to delays in processing
cases. Specifically, the Defense Security Service 

o adopted relaxed investigative policy guidance causing confusion about
  investigative requirements and raising concerns about the sufficiency
  of information available for clearance decisions and the impact on
  uniformity in all personnel security investigations;

o eliminated quality control mechanisms such as quality assurance and
  supervisory review of completed investigations;

o ineffectively managed implementation of a new automated investigative
  case processing system that caused delays in processing cases; and

o did not adequately train its staff on the new federal investigative
  standards, causing much confusion among Defense Security Service staff
  about conducting investigations in compliance with the federal standards.

These problems arose and persisted, in part, because the Assistant
Secretary of Defense (Command, Control, Communications, and Intelligence)
did not provide proper oversight of the program.

DOD is taking steps to address these problems; however, it will take a
significant amount of time and money to identify and implement all of the
actions and additional steps needed. DOD recently appointed a new acting
Defense Security Service Director who has (1) negotiated with the Office
of Personnel Management and private contractors to assist in eliminating
the large backlog of clearance reinvestigations; (2) directed a review of
all investigative policies; (3) begun reinstating quality control
mechanisms, such as quality assurance reviews, and established a new
training organization; and (4) appointed a team to assess automation
problems. DOD has not developed a strategic plan for the program that
includes measurable program goals and performance measures. Such a plan is
needed to institute sound management practices and to assess progress in
overcoming identified problems. DOD has recognized the need for a
strategic plan for the personnel security investigation program, but the
plan is only in the early stages of development. Moreover, despite the
serious and widespread nature of the completeness and timeliness problems
affecting the personnel security investigation program, DOD has not
planned to report these problems as material weaknesses under the Federal
Managers' Financial Integrity Act of 1982./Footnote2/ This act mandates
that federal agencies conduct ongoing evaluations of their internal
control systems to protect federal programs against fraud, waste, abuse,
and mismanagement. Reporting the Defense Security Service's material
weaknesses under the act would focus needed attention on a formal
corrective action plan with specific milestones and actions to address
their underlying causes.

This report makes recommendations to the Secretary of Defense to improve
oversight and identify the personnel security program as containing
material internal control weaknesses in DOD's next report to the President
and the Congress in accordance with the Federal Managers' Financial
Integrity Act. We are also recommending that the Secretary require that
the Defense Security Service Director develop a strategic plan and
performance measures to improve the quality of the investigative work and
correct other identified weaknesses.

Background

Espionage against the United States is any overt, covert, or clandestine
activity designed to obtain information relating to national defense with
the intent to injure the United States or to provide an advantage to a
foreign nation. Acts of espionage have had serious consequences for the
United States: intelligence personnel have been killed, critical
information has been compromised, and U.S. military forces have been put
at risk. Although the number of acts of espionage appears small in
comparison to the number of security clearances in effect, according to
DOD counterintelligence officials, hundreds of other potential instances
have been detected but have not resulted in convictions because (1)
individuals defected or committed suicide or (2) the cases were settled in
other ways.

To commit espionage, a person must have access to national security
information, contacts with foreign personnel seeking it, and a willingness
to compromise the information. The primary motive for the 80 individuals
convicted of espionage was greed--the chance for financial gain--but
ideology was often another important factor. These two issues are among
the areas that are to be addressed in personnel security investigations
and considered in decisions to grant clearances.

Personnel Security Investigations in DOD
----------------------------------------

The personnel security investigation is a critical step toward ensuring
that individuals can be trusted to protect classified information. In
granting a security clearance, DOD determines that the person's loyalty to
the United States, character, trustworthiness, honesty, reliability,
discretion, and judgment are such that the person can be expected to
comply with government policy and procedures for safeguarding classified
information.

The process of obtaining a security clearance, as shown in figure 1,
begins with a request from a military commander, contractor, or other DOD
official for a security clearance for an individual because of the
sensitive nature of his or her duties. The individual then completes a
security questionnaire that asks for the personal details needed to
conduct the investigation, which is forwarded to the Defense Security
Service's (DSS) Operations Center Baltimore, in Linthicum, Maryland. The
Center's case analysts review clearance requests to ensure that all
necessary forms are complete, develop a scope for the investigation, and
assign the required work to the 12 DSS field-operating locations
throughout the United States. An investigation may be sent to one or more
operating locations depending on where the individual seeking the
clearance (referred to as the subject) has lived, worked, or attended
school. Once received in the field, an investigation is assigned to an
investigator who seeks information in that geographic location about the
subject's loyalty, character, reliability, trustworthiness, honesty, and
financial responsibility. The investigation must be expanded to clarify
and resolve any information that raises questions about the subject's
suitability to hold a position of trust. As investigative elements are
completed, the field sends reports to the DSS Operations Center, where
case analysts determine if all investigative criteria have been met and
all issues relevant for a clearance decision have been resolved. The case
analysts also request information from other federal agencies, such as the
Office of Personnel Management, Federal Bureau of Investigation, the
Central Intelligence Agency, and the Immigration and Naturalization
Service. DSS sends the completed investigation to the appropriate
adjudication facility, which decides whether to grant or deny a clearance.
Every 5 to 15 years, personnel are supposed to undergo a reinvestigation,
depending on the type of clearance.

Figure****Helvetica:x11****1:    Personnel Security Investigation and
                                 Adjudication Process

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Source: Defense Security Service.

DSS Resources and Workload
--------------------------

Over the past 7 years, financial and personnel resources at DSS and
investigative workloads have fluctuated, but have declined overall. In
fiscal year 1998, DSS had a budget of $190 million and spent approximately
75 percent of its budget on personnel security investigations. The agency
had approximately 2,500 employees, half of whom worked on personnel
security investigations. The remainder of DSS's budget and staff are used
for DSS's industrial security program and other areas related to its
responsibilities, such as administrative support. DSS received about
126,000 investigation requests and completed 142,000 investigations in
fiscal year 1998, some of which were submitted in prior years. These
workload figures do not include about 600,000 reinvestigations for
confidential, secret, and top secret clearances that are overdue but have
not been submitted for reinvestigation. On average, a top secret
investigation or reinvestigation costs about $1,600 to $2,600. DSS's
budget, staffing, and investigative workload for fiscal years 1991 through
1998 is presented in appendix III.

Federal Standards for Personnel Security Investigations and Adjudication
------------------------------------------------------------------------

In 1994, the President established the Security Policy Board as a new
interagency body to develop directives for U.S. security policies,
procedures, and practices; in addition, the National Security Act was
amended to require the President to establish uniform executive branch
procedures to govern access to classified information./Footnote3/ In
August 1995, under Executive Order 12968, the President directed the Board
to develop a common set of investigative standards and adjudicative
guidelines for determining eligibility for access to classified
information. In March 1997, the President approved federal standards
developed by the Board. These standards apply to all U.S. civilian and
military personnel, consultants, contractors, and other individuals who
require access to classified information. The objectives of the standards
are to (1) investigate and assess various aspects of an individual's
trustworthiness and reliability, taking into account both positive and
negative issues (a practice known as the whole person concept), and (2)
standardize federal processes to achieve reciprocity and avoid unnecessary
and costly reinvestigations when an individual switches agencies.

The purpose of initial investigations for top secret clearances is to
provide information in the following nine areas:/Footnote4/

o corroboration of subject's proof of date and place of birth;
  verification of citizenship for foreign-born subjects and their foreign-
  born immediate family members;

o corroboration of education;

o verification of employment for the past 7 years (including all prior
  federal and military service and type of discharge) and interviews with
  supervisors and co-workers;

o interviews with character references with social knowledge of the
  subject and any former spouse divorced within the last 10 years;

o interviews with neighbors to confirm all residences for last 3 years;

o a national agency check for the subject and spouse or cohabitant
  (searches of investigative files and other records held by federal
  agencies, including the Federal Bureau of Investigation and the Central
  Intelligence Agency);

o a financial review, including a credit bureau check;

o a local agency check of criminal history records and other public
  records to verify any civil or criminal court actions involving the
  subject; and

o a personal interview of the subject.

The standards call for investigations to be expanded to resolve issues
that arise, such as potential criminal history, alcohol or drug usage, and
financial matters, including unexplained affluence or a history of not
meeting financial obligations.

The standards for reinvestigations are essentially the same as those for
initial investigations, with two exceptions. Reinvestigations do not
require corroboration of proof of birth and citizenship for subjects and
their family members or the subjects' education. According to officials of
the Security Policy Board and in the Office of the Assistant Secretary of
Defense (Command, Control, Communications, and Intelligence), the basis
for not requiring this information in reinvestigations is that it is to be
obtained in the initial investigation. However, the officials stated that
if there were significant changes since the last investigation, such as a
new spouse or claim of significant education attained, such as a college
degree, reinvestigations are to include this information.

In deciding if a clearance should be granted or denied, the federal
adjudicative guidelines require adjudication facility staffs, using the
results of the investigation, to base their decision on the following
factors:

o allegiance to the United States;

o foreign influence;

o sexual behavior;

o personal conduct;

o financial considerations;

o alcohol consumption;

o drug involvement;

o emotional, mental, and personality disorders;

o criminal conduct;

o security violations; 

o outside activities; and

o misuse of information technology systems.

Investigations Have Been Incomplete and Untimely

The DOD personnel security investigation program has resulted in
investigations that 

o did not obtain the information required by the federal standards, such
  as residency, corroboration of birth or citizenship for foreign-born
  subjects or their immediate family members, verification of employment,
  interviews of character references, and local records checks for any
  prior criminal history, divorces, or financial problems;

o did not address issues that the investigations revealed could
  disqualify individuals from holding security clearances, such as prior
  criminal history, financial problems, and alcohol and drug use; and

o were not completed in a timely manner to meet the needs of DOD
  components and contractors.

These weaknesses pose risks to national security in that individuals have
been granted access to classified information without undergoing a
personnel security investigation that complies fully with federal
standards. In addition, the delays in completing the investigations have
hindered some contractors' ability to meet their cost and performance
schedules on DOD contracts, according to contractor officials. Further,
the large number of overdue reinvestigations has allowed hundreds of
thousands of individuals to continue to access classified information
without having a current reinvestigation as required. In 1999, the Joint
Security Commission II reported that delaying reinvestigations poses risks
to national security because the longer individuals hold clearances, the
more likely they are to be working with more critical information and
systems./Footnote5/ Also, the longer a reinvestigation is delayed, the
greater the risk that changes in an individual's behavior will go
undetected.

DSS Investigations Have Been Incomplete
---------------------------------------

In our review of 530 randomly sampled top secret security clearance
investigations and reinvestigations completed by DSS in January and
February 1999 for the 4 DOD adjudication facilities that received most of
DSS's investigations, we found that 92 percent (489) did not fully meet
federal investigative standards because they were incomplete. The
incompleteness rates for each adjudication facility were 95 percent for
the Air Force facility, 94 percent for the National Security Agency
facility,
91 percent for the Navy facility, and 88 percent for the Army facility.
(These rates are projectable to the respective populations with a
precision rate of +/- 3 to 5 percentage points. See app. II, table 6).
Overall,

o 92 percent of all 530 investigations****Symbol:xbe****90 percent of the
  226 initial investigations and 94 percent of the 304
  reinvestigations****Symbol:xbe****were deficient; that is, they did not
  contain the information in at least 1 of the 9 investigative areas
  provided in the federal standards for granting clearances;

o 77 percent of the investigations were deficient in meeting the federal
  standards in two or more areas; and 

o initial investigations had an average of 3.1 investigative deficiencies
  per investigation and reinvestigations averaged 2.7 deficiencies.

Figure 2 shows the percent of deficiencies among all four DOD adjudication
facilities included in our sample. Appendix IV includes more information
regarding these deficiencies.

Figure****Helvetica:x11****2:    Percent of Personnel Security
                                 Investigations with Deficiencies

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Note: An investigation could be deficient in up to nine areas. In our
review, the maximum number of deficiencies was eight.

Source: GAO sample of 530 DSS investigations.

As shown in figure 3, we found problems primarily in six of nine areas
required to be investigated for a security clearance by the federal
standards./Footnote6/ Frequently, DSS did not obtain one or more of the
following types of information: confirmation of residency; corroboration
of birth or citizenship for a foreign-born subject, spouse, or family
member; verification of employment; interviews of character references;
check of local agency records for any criminal history, divorce, or
financial problems; and corroboration of education. DSS frequently met the
requirement to conduct national agency checks, and almost always conducted
financial checks. Both checks are done in an automated manner. In
addition, DSS almost always conducted subject interviews.

Figure****Helvetica:x11****3:    Percent of Deficient Investigations in
                                 Nine Required Investigative Areas

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Source: GAO sample of 530 DSS investigations.

DSS also did not pursue issues needed for making clearance decisions that
arose in 84 of the 530 investigations (16 percent) that we
reviewed./Footnote7/ These issues included prior criminal history, failure
of a prior polygraph examination, potential foreign allegiance, serious
sexual issues, alcohol and drug use, and financial problems, including
large outstanding debts and bankruptcy. Officials at DSS, the Office of
the Assistant Secretary of Defense (Command, Control, Communications, and
Intelligence), and the DOD adjudication facilities said that issues such
as these should be pursued. Derogatory information on these issues could
potentially disqualify an individual from being granted a clearance.
Further, since financial gain has been the major reason individuals
committed espionage, the failure to resolve issues pertaining to large
outstanding debts and bankruptcy is of particular concern. The following
are examples of the types of issues we found that DSS investigators did
not pursue.

o In an initial investigation for an individual involved in special
  operations, DSS did not address allegations by character references
  that the subject, a former police officer, had assaulted an inmate or
  had an affair that produced a child. In addition, DSS did not contact
  creditors owed nearly $1,000 in past due accounts with an additional
  $2,800 that had been charged off.

o In an initial investigation for an individual assigned to a
  communications unit, the subject's credit report listed a bankruptcy.
  The investigative file did not show that DSS questioned the subject
  about the matter or made any further attempt to address it.

o In a reinvestigation for an electronics technician, DSS did not verify
  the subject's claim of foreign military service and citizenship. In
  addition, DSS did not resolve whether the subject might have been
  involved in shooting another individual.

o In a reinvestigation for a systems engineer, the subject stated that he
  had failed a polygraph test regarding loyalty to the United States. He
  claimed he was loyal, but he could not explain the test results. DSS
  did not perform an additional polygraph or provide documentation on the
  failed test.

o In a reinvestigation for an individual in a joint service office, the
  subject's credit report showed $10,000 past due on a mortgage and
  indicated that the lender had begun foreclosure proceedings. The
  subject denied knowledge of the matter and DSS did not contact the
  lender.

DSS Investigations Have Not Been Timely
---------------------------------------

DSS investigations have not been timely in two respects. First, once
requests for investigations are received and logged in as open cases, DSS
has not completed them in the time that its customers, such as the
military services and industrial contractors, need them to be completed.
According to DSS customers and the Joint Security Commission, when
investigations take longer than 90 days (1) the military services are
unable to assign servicemembers to jobs that require clearances and (2)
defense contractors incur financial costs because their personnel cannot
begin work on DOD contracts. Second, periodic reinvestigations are overdue
because they have not been initiated within the periods established by
federal standards. In 1994 and 1999, the Joint Security Commission
reported that delaying reinvestigations poses risks to national security
because the longer individuals hold clearances, the more likely they are
to be working with more critical information and systems.

DSS investigation time has not met customers' needs

The federal standards do not contain any specified time requirements for
agencies to complete their investigative work. However, DSS's customers
(the military services, DOD civilian agencies, and industrial contractors)
and adjudication officials stated that they need DSS to complete its
investigations within 90 days. The Office of Personnel Management, which
conducts personnel security investigations for employees of non-DOD
federal agencies, uses a standard of completing its work in 35, 75, or a
maximum of 120 days, depending on the price the customer is willing to pay
for the service./Footnote8/

From our review of 530 investigations, we found that the median time for
DSS to complete investigative work was 204 days--more than twice as long
as what its customers want./Footnote9/ Figure 4 shows that DSS completed 4
investigations, less than 1 percent, in less than 90 days; 11 percent (57
investigations) took more than 1 year.

Figure****Helvetica:x11****4:    Calendar Days Needed to Complete
                                 Investigations

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Source: GAO sample of 530 DSS investigations.

Adjudication facility officials said that because of the amount of time it
has taken to receive DSS investigative reports, they have been reluctant
to return incomplete investigations to DSS because of further delays. When
they have returned investigations to DSS for additional work, it has not
been unusual to wait an additional 6 months for DSS to complete the work.
Adjudication officials said that they frequently made decisions to grant
or deny clearances based on incomplete investigations because it would
simply take too long to have DSS obtain the missing information. They
considered this a judicious weighing of the risks entailed.

In 1994, the Joint Security Commission reported that the costs to DOD
directly attributable to delays in obtaining security clearances was as
high as several billion dollars in fiscal year 1994 for workers who were
unable to perform their jobs while awaiting a clearance./Footnote10/ In
February 1999, representatives of several contractors wrote a letter to
the DSS Director complaining about the time taken to clear personnel
scheduled to work on defense contracts and pointing out that the delays
were threatening to affect some facilities' ability to effectively perform
on contracts and meet cost schedules. They noted that 64 percent (1,426)
of the 2,236 investigations they had requested were pending for more than
90 days, with 76 investigations pending since 1997.

Periodic reinvestigations are overdue

The federal standards require a periodic reinvestigation of individuals
granted access to classified information. Clearances are outdated if a
reinvestigation has not been initiated in the past 5 years for top secret
clearances, 10 years for secret clearances, and 15 years for confidential
clearances. Historically, DOD has had a large backlog of overdue
reinvestigations. In fiscal year 1986, DOD had a backlog of 300,000
overdue reinvestigations./Footnote11/ According to the Deputy Secretary of
Defense, in June 1999, about 600,000 DOD clearances were based on outdated
investigations. However, DOD is not certain of the total number of overdue
reinvestigations, and was analyzing the backlog at the time that we
completed our work.

According to the 1999 report by the Joint Security Commission II, as many
as 700,000 reinvestigations are overdue and the backlog was continuing to
grow./Footnote12/ The Commission recommended that DOD should (1) begin to
fully enforce the standards for reinvestigations and (2) screen all
individuals whose reinvestigations are overdue to identify those whose
positions and access suggest the highest risk, and provide resources to
complete those reinvestigations promptly. At the time we completed our
work in September 1999, DOD was determining its response to this
recommendation.

Management Actions and Inadequate Oversight Have Weakened Investigations

The lack of completeness and timeliness in the DSS personnel security
investigation program can be traced, in part, to several management
actions by DSS and inadequate oversight by the Office of the Assistant
Secretary of Defense (Command, Control, Communications, and Intelligence).
Management actions that affected investigative completeness have included
DSS (1) causing confusion and raising concerns by adopting relaxed
investigative policy guidance that gives investigators greater discretion
in doing their work, (2) eliminating important investigative quality
control mechanisms, and (3) inadequately training its investigative staff
and case analysts. Many of these actions were adopted from 1996 to 1998,
under a policy of reinventing business practices. DSS based its mandate
for these changes on (1) the National Performance Review, which called for
improving government at less cost; (2) the 1994 report of the Joint
Security Commission, which called for defining the security needed in
terms of an affordable price; and (3) DOD's 1997 Quadrennial Defense
Review, which called for DSS to streamline the security investigative
process and charge its customers for investigations. Additionally,
inadequate planning by DSS management for a new automation initiative has
caused further delays in the timely completion of investigations.

DSS Relaxed Its Investigative Guidance 
---------------------------------------

The incomplete DSS personnel security investigations stemmed, in part,
from the organization's reinvention effort to streamline investigative
requirements. DSS relaxed its prior investigative policy guidance, thereby
allowing investigators greater discretion****Symbol:xbe****but also
causing much confusion****Symbol:xbe****regarding the work needed to
complete investigations. In two instances, DSS's relaxed guidance was
inconsistent with federal standards. In adopting the relaxed guidance, DSS
also ignored the concerns of DOD officials and the Security Policy Board
about the adverse effects of the policy changes on the completeness of
investigative work. The officials were concerned that these changes would
result in the adjudicators not having sufficient information to make
informed clearance decisions. The Security Policy Board was also concerned
that DSS's policy changes would hinder efforts to achieve reciprocity of
clearances between DOD and other federal agencies.

DSS investigative policies give  greater discretion to investigators 

In June 1996, the Assistant Secretary of Defense (Command, Control,
Communications, and Intelligence) formally announced that DOD would adopt
the new federal investigative standards as of July 1, 1996, while they
were being reviewed by the National Security Council. In implementing the
new standards, however, DSS began to relax its prior investigative
requirements. Between August 1996 and February 1999, DSS issued 31 policy
letters directly related to the manner in which investigations were to be
conducted. Several letters announced policy changes that gave
investigators greater discretion in how they would meet the standards or
pursue issues that might be of significance in deciding to grant
clearances. This greater discretion is illustrated below: 

o In August 1996, DSS eliminated its requirement to contact creditors
  about debts not listed on credit reports but revealed by the subject;
  and in November 1996, DSS eliminated its practice of routinely
  contacting creditors to verify the status of disputed accounts, instead
  relying on the subject's documentation. 

o In October 1996, DSS eliminated its requirement to confirm allegations
  of adultery and stated that the subject should be questioned "briefly"
  about the matter. 

o In October 1996, DSS issued policy guidance that allowed investigators
  "broad leeway" in deciding whether to obtain character references from
  the subject's neighborhood. In May 1997, DSS issued additional policy
  guidance that allowed investigators broad leeway in determining how the
  subject's residence will be confirmed. 

o In October 1996, DSS encouraged discretion in pursuing alcohol-related
  issues, stating that "only a minimal number of specific leads to
  resolve" alcohol-related issues are required and "cases will no longer
  be routinely expanded as issues based solely on one alcohol-related
  incident within the last three years."

o In December 1996, DSS eliminated its previous requirement for its
  investigators to verify federal employment using personnel records if
  there was no issue to resolve. 

o In November 1998, DSS adopted a policy providing that the time period
  to be covered in a reinvestigation is to be the period since the last
  investigation or the most recent 5-year period, whichever is shorter.
  DSS currently has about 600,000 reinvestigations that are overdue, in
  that it has been more than 5 years since the last investigation. Thus,
  DSS policy allows for gaps in developing information that could be
  relevant in making a clearance decision.

DSS's policies were also inconsistent with federal investigative standards
in two areas****Symbol:xbe****the requirement to conduct local agency
checks and to verify public records.

o Federal standards require local agency checks of criminal history
  records for the last 10 years for all locations where a subject has
  lived, been employed, and/or attended school for 6 months or more.
  However, it has been DSS policy not to conduct these checks if the
  local jurisdiction charges a fee for this service, an exception not
  provided for in the federal standards. 

o With regard to public records, the federal standards require
  verification of divorces, bankruptcies, and other court actions,
  whether civil or criminal, involving the subject. For civil actions,
  DSS policy requires that records of divorce be routinely reviewed. In
  cases of bankruptcy, DSS policy requires review only if the bankruptcy
  occurred within the last 2 years. For all other civil actions, DSS
  policy requires review only if it appears likely that suitability
  issues are involved. The federal standards, however, do not provide for
  exceptions based on date of the event, "suitability issues," or any
  other reason.

These policy changes have confused many investigators about what
investigative work is to be done. In responding to our surveys, 59 percent
(625) of the 1,061 investigator respondents and 90 percent (79) of the 88
case analyst respondents said that DSS policy guidance has resulted in
confusing investigative requirements, while only 23 percent (239) of the
investigators and 3 percent (3) of the case analysts said that it has
clarified requirements. When we completed our work in September 1999,
these policies were still in effect but being reviewed by the acting DSS
Director.

DOD officials and the Security Policy  Board raised concerns about  DSS's
revised policies

In our review of DSS policies, we discussed the DSS revised investigative
policy guidance and the DSS process for adopting policy changes with
officials in the DOD Office of the General Counsel assigned to DSS, the
Office of the Assistant Secretary of Defense (Command, Control,
Communications, and Intelligence), the eight adjudication facilities, and
the Security Policy Board. These officials expressed two overall concerns
about the impact of DSS's policy changes: (1) the DSS investigations have
increasingly provided less complete information for use by adjudicators in
determining whether to grant clearances and (2) the revised policies
undercut the Security Policy Board's efforts to achieve uniformity among
federal agencies conducting personnel security investigations. These
officials stated that, for the most part, the DSS Deputy Director for
Policy presented the policy changes to them after decisions had been made
rather than consulting with them in advance. The officials also said that
DSS had adopted certain policies that were not consistent with their
expectations about how federal agencies would meet the federal standards.

Adjudication facility officials described frequent shortfalls in many of
the investigative areas covered by the federal standards, such as failures
to corroborate citizenship of a foreign-born subject, spouse, or family
member; verify employment; or conduct local agency checks for prior
criminal histories. Adjudication officials also stated that DSS often
failed to pursue issues, such as unexplained affluence. Furthermore, the
officials from the Defense Office of Hearings and Appeals, which serves as
the appeal board for DOD and industry personnel whose clearances have been
denied or revoked, said that the investigative information provided by DSS
was frequently insufficient to make an informed determination about a
denial or revocation of a clearance being appealed.

In addition, in their policymaking actions, DSS officials have ignored the
explicit concerns of the Security Policy Board regarding the goal of
achieving investigative uniformity. The following examples illustrate this
problem:

o In October 1996, DSS's Deputy Director for Investigations briefed the
  Board's Personnel Security Committee on DSS reinvention efforts and its
  proposal to eliminate neighborhood checks. The Committee disagreed with
  this change and noted that DOD was a full partner in the cooperative
  effort to develop new, standard investigative and adjudicative policy
  and that unilateral action by DSS would undermine the process. The
  Committee also said that a failure by DSS to meet the federal standards
  would constitute a serious deterioration in the quality of its
  investigations and would unacceptably increase risk. In correspondence
  dated October 28, 1996, the Board notified all Security Policy Forum
  members and others, including the Deputy Secretary of Defense and the
  DSS Director, of its concerns about DSS initiatives that it believed
  would run counter to the investigative standards, focusing especially
  on the adverse effect on reciprocity when agreed upon standards are
  ignored. It reiterated that Presidential Decision Directive 29
  established the Security Policy Board structure as the vehicle for
  "vetting and proposing security policies" and advised DSS to bring any
  proposed changes to the standards to the Board. DSS, however, continued
  to revise and implement relaxed investigative policies after the
  Board's instruction.

o In March 1998 correspondence to the Security Policy Board's Staff
  Director, the Chairman of the Board's Personnel Security Committee
  expressed concerns about DSS's intent to unilaterally initiate changes
  to investigative policies. The Chairman believed DSS's changes
  constituted a departure from federal standards. The Chairman noted
  that, in January 1997, the Personnel Security Committee advised that
  the Board's Personnel Security Research Subcommittee (comprised of
  representatives from DSS, the Central Intelligence Agency, and other
  agencies) was the appropriate organization to coordinate and vet
  research initiatives to change national standards. Moreover, the
  Committee emphasized that all personnel security investigative
  standards should continue to be assessed and refined under the
  cognizance of the Security Policy Forum. In April 1998, the Board's
  Staff Director notified all Personnel Security Committee members and
  DOD about these concerns and advised that any research initiatives
  regarding the standards should be vetted through the Board's processes.

In February 1999, when we brought these concerns to the attention of DSS
officials, the Deputy Director for Policy acknowledged that DSS's proposed
policy changes were not sufficiently coordinated with key officials,
including the DOD General Counsel, the Office of the Assistant Secretary
of Defense (Command, Control, Communications, and Intelligence), the
adjudication facilities, and the Security Policy Board. In July 1999, the
acting DSS Director stated that he would review DSS policies and
procedures to ensure that they are consistent with the federal standards.
The Director also plans to improve the liaison with the Board, including
meeting monthly to discuss investigative standards.

Important Quality Control Mechanisms Have Been Eliminated
---------------------------------------------------------

The elimination of important quality control mechanisms has also
compromised the quality of DSS investigations. In the absence of such
mechanisms, DSS investigations have been sent for adjudication with
virtually no review to determine if they are complete and meet federal
investigative standards. DSS had two major quality control procedures to
review investigative work until 1996, when both were eliminated as a part
of reinvention efforts. First, field supervisors routinely reviewed
completed investigations before forwarding them to the DSS Operations
Center. Second, the quality assurance branch, composed of seven
investigators, conducted weekly reviews of a sample of completed
investigations. The quality assurance branch also published a quarterly
newsletter on common investigative problems. By eliminating both the
quality assurance branch and supervisory reviews, the 112 case analysts in
the DSS Operations Center became the only quality control mechanism,
responsible for reviewing about 150,000 investigations per year. The
analysts that we spoke with stated they have been so consumed with
processing investigations that they have spent little time reviewing the
quality of investigative work.

Before 1996, DSS used two other programs to ensure quality. It sent
letters to a sample of individuals interviewed by DSS investigators to
determine if the investigators were respectful and courteous, and it
periodically had supervisors accompany their subordinates to become
familiar with how the work was being done. These programs allowed DSS to
determine that investigators were actually and properly conducting their
work. Both programs were eliminated in 1996 under reinvention efforts at
DSS.

DSS Staff Training Has Been Inadequate
--------------------------------------

Investigative quality has also been diminished by a lack of training on
the federal standards for the investigative and case analyst staffs.
During the past 3 years, DSS provided almost no formal training,
especially on the standards, and DOD dismantled the major training
infrastructure that provided the training. Consequently, the investigative
and case analyst staffs may not be fully aware of what the federal
standards require.

DSS acknowledged that it has conducted little training for its staff on
the new federal investigative standards. Our analysis of DSS training data
for fiscal year 1998 showed that DSS conducted 31 training courses
attended by 2,468 DSS personnel. Only five of these courses covered
personnel security topics; 414 staff attended these courses. The remaining
26 courses covered industrial security topics, classification procedures,
technical computer training, adjudication, information security, and other
topics. DSS officials stated that since few investigators have been hired
in recent years due to a hiring freeze, DSS did not believe that training
covering the new federal standards was necessary. In June 1999, the acting
DSS Director stated that no formal training for case analysts has been
conducted since 1991. Thus, the analysts may not be fully aware of what
the federal standards require as they review investigations forwarded from
DSS's field locations.

Cutbacks in the DSS training infrastructure have contributed to a lack of
training. In 1997, DOD eliminated the main investigator training
organization at DSS, the DOD Security Institute in Richmond, Virginia.
Besides training DSS staff on investigative and other security procedures,
the Institute trained other federal agency and contractor personnel on
security procedures. In November 1997, the functions of the DOD Security
Institute were integrated into DSS, along with the DOD Personnel Security
Research Center and the DOD Polygraph Institute. The Security Institute's
functions were transferred to the DSS Office of Mission and Training in
Baltimore, Maryland. One year after the transfer, DSS studied its
investigative training program and found major deficiencies. DSS
concluded, among other things, that (1) the infrastructure was not in
place for quality training, (2) many training courses were obsolete, (3)
no means existed to evaluate staff training needs, (4) training had not
met the customers' needs, (5) refresher training and continuing education
were lacking, and (6) a new curriculum was not developed because of a lack
of resident expertise. Based on the study, DSS established a training task
force to oversee the training office. In May 1999, DSS hired a training
director, and in July 1999, the acting DSS Director established a new DSS
training organizational entity, the Defense Security Service Academy.

The respondents to our investigator survey provided information on their
training, which we defined to include both staff meetings covering
investigative standards and formal classroom training. Many of the 1,009
investigators who answered the questions on training in our survey said
that they were not trained or could not recall receiving any training on
many of the federal standards since 1996./Footnote13/ Figure 5 shows the
areas where investigators most frequently cited a lack of training in
their responses to our survey. A complete analysis of the investigators'
training responses is presented in appendix V.

Figure****Helvetica:x11****5:    Percent of Investigators Without Recent
                                 Training on Investigative Requirements

*****************
<Graphic -- Download the PDF file to
view.>
*****************

Note: We did not include information on national agency checks because
investigators do not perform this function.

Source: GAO survey of 1,009 DSS investigators who provided information on
their training.

Transition to Automated Case Management Has Led to Case Processing Delays
-------------------------------------------------------------------------

DSS did not properly plan for the implementation of its new case
management automation initiative, referred to as the Case Control
Management System (CCMS). As a result, DSS has not been able to process
its investigations, and the volume of investigations sent to DSS field
agents for investigative work and to the adjudication facilities for
clearance decisions has decreased. This has caused further delays in the
processing of investigations.

The CCMS was supposed to expedite case processing by linking all relevant
information critical to an investigation through a series of subsystems.
These subsystems include 

o the Electronic Personnel Security Questionnaire, which collects
  electronically the personnel security data to initiate and conduct an
  investigation;

o the Field Information Management System, which generates field
  investigative reports that are then fed into the system; 

o the Files Automation Scanning System, which converts paper personnel
  security questionnaires and attachments into electronic form for
  storage and retrieval;

o the Defense Clearance and Investigations Index, which integrates the
  system's applications with the central index of all DOD personnel
  security investigations and clearances; and

o the Industrial Security System, which is a separate application that
  shares information in the corporate database.

DSS officials acknowledged that CCMS (for which DOD has spent about $100
million) has not operated as intended, is not year 2000
compliant,/Footnote14/ and may cost about an additional $100 million to
stabilize. DOD officials confirmed that DSS did not complete the system
acquisition planning steps required by DOD Directive 5000.1 or adequately
test the system before implementation./Footnote15/ In addition, when the
system was implemented, DSS eliminated its existing capability before
ensuring that the new system would operate as intended and ensure it could
retrieve previously developed information. Further, even after this system
achieves a stable operational status, DOD may have to replace it in order
to meet user requirements. DSS officials estimated that they should know
in 6 months to 1 year what alternatives are available and the approximate
cost to complete this automation effort.

DSS has experienced significant system start-up problems with CCMS. For
example, CCMS has been unable to accept data from the electronic personnel
security questionnaire needed to open investigations and cannot produce
investigative reports. Instead of expediting the transmission of requests
for investigations and reports to and from DSS field offices, system
problems have caused serious delays in information processing and resulted
in a dramatic drop in the number of case openings and field investigations.

Our survey of DSS investigators reflected this drop in the number of
investigations being undertaken in DSS's field offices. We asked the
investigators about their workload before and after CCMS implementation.
As shown in figure 6, 58 percent stated that they had too much
investigative work before the new system was implemented; 23 percent said
they had too little work; and 9 percent said their workload was
appropriate. Since the new automation system was implemented the situation
has reversed:
60 percent of investigators stated that they have had too little work, only
25 percent said that they have had too much work, and 9 percent said that
their workload has been appropriate.

Figure****Helvetica:x11****6:    Investigators Views on Workload

*****************
<Graphic -- Download the PDF file to
view.>
*****************

Source: GAO survey of 1,061 DSS investigators.

Our analysis of the volume of completed investigations sent for clearance
decisions to the four DOD adjudication facilities included in our review
corroborates the investigators' views about the substantial decrease in
workload since the new case management system was implemented. For
example, in fiscal year 1998, the Air Force adjudication facility
received, on average, more than 2,200 completed investigations per month
from DSS. From October 1998 through June 1999, it received about 900
completed investigations per month. Table 1 shows the volume of
investigative receipts for four of the eight adjudication facilities
before and after CCMS implementation. Adjudication facility officials
stated that the delays in receiving completed investigations prevent DOD
from assigning individuals to high-priority units that require a security
clearance for their personnel.

Table****Helvetica:x11****1:    Comparison of DSS Investigations Sent for
                                Adjudication Before and After CCMS
                                Implementation

--------------------------------------------------------------------------
| Adjudicat :  Average monthly :   Average monthly : Differe :  Percent  |
| ion       :         receipts :          receipts :     nce :   change  |
| facility  :                  :                   :         :           |
|           :     (Oct. 1997 - :      (Oct. 1998 - :         :           |
|           :      Sept. 1998) :        June 1999) :         :           |
|------------------------------------------------------------------------|
| Air Force :            2,238 :               901 :  -1,337 :      -60  |
|------------------------------------------------------------------------|
| Army      :            2,044 :             1,292 :    -752 :      -37  |
|------------------------------------------------------------------------|
| Navy      :            1,920 :               947 :    -973 :      -51  |
|------------------------------------------------------------------------|
| NSA       :              448 :               149 :    -299 :      -67  |
--------------------------------------------------------------------------

Source: GAO analysis of data from Air Force, Army, Navy, and National
Security Agency adjudication facilities.

DSS officials stated that, for the most part, DSS has not been able to use
CCMS to process investigations as intended. As a temporary solution to the
start-up problems, DSS has recruited investigators, reserve military
personnel, and Office of Personnel Management employees to open and scope
investigations manually, and it has attempted to make emergency repairs to
the system. The acting DSS Director has placed a high priority on
correcting the problems with CCMS. He has established a project office to
provide a short-term capability that will allow DSS to process
investigations, and he is working on long-term alternatives for a
permanent solution. The acting Director expects to study the long-term
options in 2000.

Inadequate Oversight of DSS Has Allowed Quality Problems to Persist and
Increased the Number of Overdue Reinvestigations
---------------------------------------------------------------------------

DSS has operated for at least 4 years with little or no oversight from the
Office of the Assistant Secretary of Defense (Command, Control,
Communications, and Intelligence), which is responsible for assessing the
completeness of DSS investigative work. Officials in the Office of the
Assistant Secretary stated that there had been little oversight of the
management of DSS, including monitoring the investigative work and whether
DSS was properly planning its automation efforts. Sound management
practices call for such oversight. The officials stated that once DSS
became a reinvention laboratory, it was allowed to operate, for the most
part, at its own discretion.

Inadequate oversight has also resulted in a large backlog of overdue
reinvestigations. In June 1999, the Senior Civilian Official in the Office
of the Assistant Secretary of Defense (Command, Control, Communications,
and Intelligence) attributed the backlog to (1) DOD's need to implement
the federal standards that lowered the interval for secret clearances from
15 to 10 years and set a new 15-year requirement for confidential
clearances and (2) the restrictions his office imposed from fiscal year
1996 to the present on the number of reinvestigations that DOD components
could request./Footnote16/ DOD implemented these restrictions in an effort
to reduce the time for completing investigations received by DSS. However,
the Office of the Assistant Secretary did not monitor the effect that
these restrictions had on the number of overdue reinvestigations until the
situation became critical.

In 1995, the Assistant Secretary of Defense (Command, Control,
Communications, and Intelligence) directed DOD components to cease
submitting reinvestigation requests that were due to DSS because, if such
action was not taken, the average investigation completion time would
exceed 278 days. Instead, the Defense Manpower Data Center would identify
individuals for reinvestigation based on (1) the length of time since the
last investigation and (2) potentially disqualifying issues raised in the
last investigation./Footnote17/ In June 1996, the Assistant Secretary
revised the policy to allow DOD components to submit up to 40,000 secret
and 42,000 top secret reinvestigation requests per year--commonly referred
to as a quota. While these restrictions may have helped to reduce the time
to complete DSS investigations, from 278 days to 204 days, the policy has
contributed to a backlog of 600,000 overdue reinvestigations.

DSS Has Acted to Improve Investigations but Lacks Corrective Action and
Strategic Plans

In recognition of the problems confronting DSS, DOD recently appointed an
acting DSS Director who has been developing a series of corrective actions
for the problems we identified. Despite the serious and widespread nature
of the completeness, timeliness, and other problems affecting the
personnel security investigation program, DOD has not planned to report
these problems under the Federal Managers' Financial Integrity Act.
Further, DOD has not yet developed a strategic plan for the program that
includes measurable program goals and performance measures as required
under the Government Performance and Results Act (GPRA) of 1993./Footnote18/

New Acting DSS Director Taking Steps to Improve Investigative Quality and
Timeliness, but  Formal Corrective Plan Is Needed
---------------------------------------------------------------------------

DOD has begun to address several DSS management weaknesses that have
affected the quality of personnel security investigations. In June 1999,
the Deputy Secretary of Defense appointed a new acting DSS Director
charged with improving the overall management of the organization. In June
1999, we briefed the acting Director on the preliminary results of our
work. The Director stated that DSS would address the large backlog of
clearance reinvestigations, the case management automation problems, any
lack of consistency between DSS policy and investigations and the federal
standards, and the lack of training and quality control mechanisms. In
July and August 1999, the Director began to take a series of actions,
including the following:

o Working with the Defense Management Data Center, DSS will define the
  extent of the reinvestigation backlog to assist other DOD components in
  prioritizing those individuals in the most critical positions to
  support DOD missions. After preliminary discussions with the Office of
  Personnel Management and private contractors, DSS plans to seek their
  assistance to eliminate the backlog of overdue reinvestigations.

o The Director has initiated a review of all investigative policy
  guidance and procedures to ensure that DSS complies with federal
  standards. DSS subsequently plans to issue a new investigative manual.

o The Director stated that he is re-instituting a uniform quality
  assurance function in DSS and has tasked the DSS Inspector General to
  periodically review the quality of investigative work.

o The Director has created a Defense Security Service Academy that will
  be responsible for training all DSS staff on the federal standards and
  implementing the recommendations from the 1998 DSS training report.

o DSS, with the assistance of the U.S. Air Force, established a program
  office to lead the effort to stabilize the current automation system.
  As of August 1999, DSS officials could not estimate the level of effort
  or funds needed to resolve the automation problem. Preliminary
  estimates ranged from $100 million to over $300 million in additional
  funding requirements. DSS officials acknowledge it would be another 6
  months to 1 year before alternatives could be identified and a course
  of action is planned.

While the acting DSS Director is taking positive steps to improve the
personnel security investigation program, at the time we completed our
fieldwork in September 1999, DOD had not planned to report the identified
control weaknesses in this program as material weaknesses under the
Federal Managers' Financial Integrity Act. Under the act, agency managers
are publicly accountable for correcting deficiencies; the head of each
agency reports annually to the President and the Congress on material
internal control weaknesses and on formal plans for correcting
them./Footnote19/ According to officials in the Office of the Assistant
Secretary of Defense (Command, Control, Communications, and Intelligence),
the weaknesses are due, for the most part, to the discretion given to DSS
over its management, which resulted in the issuance of relaxed
investigative policy guidance, elimination of quality control mechanisms,
and inadequate investigative work. The serious and widespread nature of
the problems and the weaknesses in DSS's internal control systems for the
personnel security investigation program would typically warrant reporting
under the Federal Managers' Financial Integrity Act.

DSS Improvements Have Not Been Guided by a Strategic Plan or Methods to
Measure Performance
---------------------------------------------------------------------------

Under GPRA, federal agencies are required to set strategic goals, measure
performance, and report on the degree to which goals were met. GPRA
incorporates performance measurement as one of its most important
features. Executive branch agencies are generally required to develop
annual performance plans that use performance measurement to reinforce the
connection between strategic goals and the day-to-day activities of their
managers and staff. The annual performance plans are to include
performance goals for an agency's program activities as listed in the
budget, a summary of the necessary resources to conduct these activities,
the performance indicators that will be used to measure performance, and a
discussion of how the performance information will be verified.

DOD does not have a strategic plan for DSS's personnel security
investigation program that includes goals and performance measures. The
acting DSS Director has recognized the need for such plans, and DSS is in
the early stages of developing them. In addition, DSS currently lacks
adequate methods to measure the quality of its investigative work. DSS has
used two primary measurement methods: (1) a customer assessment team that
met periodically with adjudicators and requesters of investigations to
determine their satisfaction with DSS investigative work and (2) the
number of completed investigations returned by the adjudication facilities
for re-work. Based on these measures, DSS determined that its customer
assessments "have not raised any systemic issues" and that the
adjudication facilities have returned only a small number of
investigations (1 percent) for re-work due to incomplete investigations.
Based on these results, former DSS officials stated that they believed DSS
customers were satisfied with its work.

Contrary to this DSS view, officials in all eight adjudication facilities
told us that they had complained about the quality and timeliness of the
investigative work on numerous occasions. As discussed earlier, DSS's
reliance on the number of cases returned for re-work is not a valid
indicator of the quality of its investigative work because the
adjudication facility staffs only return a small number of incomplete
investigations because they said that it takes too long for DSS to
complete the work and return the cases. Without independent performance
measures, DSS cannot be sure it has accurate data on work quality. In
addition, although DSS has established time goals for completing its
investigations, it has not met its customers' needs to have investigations
completed within 90 days. In fiscal year 2000, DSS goals are to complete
(1) 75 percent of top secret initial investigations for military and
civilian personnel within 120 days and
90 percent within 220 days and (2) 50 percent of top secret periodic
reinvestigations within 180 days and 90 percent within 300 days. However,
DSS has not conducted any workload analysis to determine the caseload that
its investigators and case analysts can carry and produce timely, high-
quality work. Without such information, it is difficult to determine what
level of staff is necessary.

Conclusions

DOD investigations have not fully complied with federal personnel security
investigative standards, creating risks to national security by granting
security clearances based on incomplete investigations. Although there is
no guarantee that individuals fully investigated will not engage in
espionage activities, these investigations are a critical first step in
ensuring that those granted access to classified information can be
trusted to safeguard it. At this time, DOD cannot make such assurances.
Problems at the Defense Security Service, combined with the lack of
adequate oversight by the Assistant Secretary of Defense (Command,
Control, Communications, and Intelligence), have allowed the weaknesses in
the Defense Security Service's personnel security investigations program
to persist and go unreported.

The Defense Security Service has implemented investigative policies that
relaxed its prior requirements and gave its investigators greater
discretion in doing their work. As a result, nearly 60 percent of the
Defense Security Service investigators and 90 percent of the case analysts
reported being confused about the investigative work required, and
according to the Security Policy Board, DOD has hindered efforts to
achieve uniformity among federal agencies in conducting clearance
investigations. More importantly, the completeness of Defense Security
Service investigations has been significantly compromised. DOD has stated
that many of the changes in the management of personnel security
investigations were undertaken as efforts to reinvent the Defense Security
Service using better business practices; however, Defense Security Service
actions have not achieved this result. Rather, the reinvention efforts
have eroded the completeness and timeliness of clearance investigations.
As a result, hundreds of thousands of individuals can access classified
information without assurances of their trustworthiness and reliability
because their investigations may be incomplete and the reinvestigations
for many are overdue. Moreover, the reduced volume of investigations
processed by the Defense Security Service since October 1998 has hindered
contractors' efforts to meet cost and performance schedules. Finally, the
Defense Security Service has not planned to report this program as
containing material internal control weaknesses, in accordance with the
Federal Managers' Financial Integrity Act.

There are no quick and easy solutions to the problems in the Defense
Security Service's personnel security investigations program. It may take
several years before DOD can fully implement the needed corrective policy
and infrastructure changes, and the cost of the corrective actions may be
substantial. The actions that the acting Defense Security Service Director
has taken are steps in the right direction, but few definitive plans for
improvements have been developed and many planned actions have not yet
been implemented. The Defense Security Service does not yet have a
strategic plan that establishes program goals and measures to assess its
performance against the goals. In addition, the plans for separate
activities--such as revising investigative policy guidance, re-instituting
quality control mechanisms, and providing an infrastructure for training--
have not yet been brought together into an overall corrective action plan.
Additionally, the Office of the Assistant Secretary of Defense (Command,
Control, Communications, and Intelligence) has not developed specific
plans for improving its oversight of Defense Security Service activities.

Recommendations

Because of the significant weaknesses in the DOD personnel security
investigation program and the program's importance to national security,
we recommend that the Secretary of Defense direct the Assistant Secretary
of Defense (Command, Control, Communications, and Intelligence) to

o report the personnel security investigation program as a material
  weakness under the Federal Managers' Financial Integrity Act to ensure
  that the needed oversight is provided and that actions are taken to
  correct the systemic problems in the Defense Security Service personnel
  security investigation program;

o improve its oversight of the Defense Security Service personnel
  security investigation program, including approving a Defense Security
  Service strategic plan; and

o identify and prioritize overdue reinvestigations, in coordination with
  other DOD components, and fund and implement initiatives to conduct
  these reinvestigations in a timely manner.

In addition, we recommend that the Secretary of Defense instruct the
Defense Security Service Director, with oversight by the Assistant
Secretary of Defense (Command, Control, Communications, and Intelligence),
to

o develop a corrective action plan as required under the Federal
  Managers' Financial Integrity Act that incorporates corrective actions
  and milestones for addressing material weaknesses in the Defense
  Security Service personnel security investigative program and
  performance measures for monitoring the progress of corrective actions;

o establish a strategic plan that includes agency goals, performance
  measures, and procedures for tracking progress in meeting goals in
  accordance with sound management practices and the Government
  Performance and Results Act;

o conduct analyses needed to (1) determine an appropriate workload that
  investigators and case analysts can manage while meeting federal
  standards and (2) develop an overall strategy and resource plan to
  improve the quality and timeliness of investigations and reduce the
  number of overdue reinvestigations;

o review and clarify all investigative policy guidance to ensure that
  investigations comply with federal standards;

o establish a process for identifying and forwarding to the Security
  Policy Board suggested changes to policy guidance concerning the
  implementation of the federal standards and other investigative policy
  issues;

o establish formal quality control mechanisms to ensure that Defense
  Security Service or contracted investigators perform high-quality
  investigations, including periodic reviews of samples of completed
  investigations and feedback on problems to senior managers,
  investigators, and trainers;

o establish a training infrastructure for basic and continuing
  investigator and case analyst training that includes formal feedback
  mechanisms to assess training needs and measure effectiveness, and as a
  high priority, provide training on complying with federal investigative
  standards for investigators and case analysts; and

o take steps to correct the case management automation problems to gain
  short-term capability and develop long-term, cost-effective automation
  alternatives.

Further, we recommend that the Secretary direct all DOD adjudication
facility officials to (1) grant clearances only when all essential
investigative work has been done and (2) regularly communicate with the
Defense Security Service about continuing investigative weaknesses and
needed corrective actions.

Agency Comments

In written comments on a draft of this report, DOD agreed that the
deficiencies cited in the report represent a potential risk to the DOD
personnel security program and the protection of classified information.
DOD concurred with all our recommendations to improve its personnel
security investigation program. DOD also stated that it plans to
aggressively monitor and report on progress to remedy the problems we
disclosed and to fully implement all recommendations, including complying
with the reporting requirement under the Federal Managers' Financial
Integrity Act. DOD further described many actions already planned or under
way to implement each recommendation. When fully implemented, these
actions should correct the significant weaknesses we found in our review.

DOD's comments are presented in their entirety in appendix VI. DOD also
provided technical comments, which we have incorporated as appropriate.

As agreed with your office, unless you publicly announce the contents of
this report earlier, we plan no further distribution of this report until 
15 days after its issue date. At that time, we will send copies to the
Honorable William S. Cohen, Secretary of Defense; the Honorable Arthur L.
Money, Assistant Secretary of Defense (Command, Control, Communications,
and Intelligence); the Honorable Louis Caldera, Secretary of the Army; the
Honorable Richard Danzig, Secretary of the Navy; the Honorable F. Whitten
Peters, Secretary of the Air Force; Lieutenant General Michael V. Hayden,
Director, National Security Agency; and Lieutenant General (retired)
Charles J. Cunningham, Jr., Acting Director, Defense Security Service. We
are also sending copies to the Honorable  Samuel Berger, Assistant to the
President for National Security Affairs, and General (retired) Larry
Welch, Chairman, and Mr. Dan Jacobson, Executive Director, Security Policy
Board; and other interested parties.

If you have any questions about this report, please call the contacts
listed in appendix VII.

Sincerely yours,

*****************
<Graphic -- Download the PDF file to
view.>
*****************

Carol R. Schuster
Associate Director, National Security
   Preparedness Issues

--------------------------------------
/Footnote1/-^Personnel security investigations are the cornerstone of, but
  only a part of, DOD's personnel security program to prevent and detect
  espionage. Other mechanisms include employee education and counseling
  programs, continuing evaluations of employee workplace behavior, and
  counterintelligence operations.
/Footnote2/-^See 31 U.S.C. 3512.
/Footnote3/-^The Board, created by Presidential Decision Directive 29,
  consists of senior representatives from the following 10 federal
  agencies, departments, and other organizations: the Central Intelligence
  Agency; the National Security Council; the Office of Management and
  Budget; the Joint Chiefs of Staff; the Departments of Defense, Commerce,
  Energy, Justice, and State; and a non-defense agency rotated on an
  annual basis (now served by the Department of Transportation). 
/Footnote4/-^Secret and confidential clearances require proof of the
  subject's date and place of birth, national and local agency checks, and
  a financial review.
/Footnote5/-^The Joint Security Commission was convened twice to review
  U.S. security policies and procedures. It issued reports on its work in
  1994 and 1999. See appendix I for more detailed information on the Joint
  Security Commission's work. 
/Footnote6/-^For our analysis, we grouped interviews with former spouses
  with other character references.
/Footnote7/-^Because the basic investigative work was incomplete in a high
  percentage of the cases we reviewed, we were unable to determine the
  extent to which other issues may have existed but were not identified.
/Footnote8/-^OPM charges from $1,600 to about $3,000 for top secret
  investigations and reinvestigations.
/Footnote9/-^The median is the point at which 50 percent of the
  investigations took longer than 204 days and 50 percent took less than
  204 days.
/Footnote10/-^In its 1994 report, the Joint Security Commission noted that
  DSS customers wanted clearance investigations completed within 90 days.
  At the time, it took DSS an average of 149 days to complete
  investigations. The Commission used an average cost of $250 per day
  beyond the 90-day standard for each DOD employee who was unable to
  perform their duties while awaiting a security clearance.
/Footnote11/-^National Security: DOD Clearance Reductions and Related
  Issues (GAO/NSIAD-87-170BR, Sept. 18, 1987).
/Footnote12/-^A Report by the Joint Security Commission II, August 24, 1999.
/Footnote13/-^The Security Policy Board approved the new investigative
  standards in March 1996. In June 1996, DOD decided to implement the new
  standards while the National Security Council considered them for
  approval. The President approved the standards in March 1997.
/Footnote14/-^The year 2000 problem results from the inability of a
  computer system at the year 2000 to interpret the century correctly from
  a recorded or calculated date having only two digits to indicate the
  year. As a result, the computer system could malfunction or produce
  incorrect information. To be year 2000 compliant, a computer system must
  be tested, verified, and validated to function or produce correct
  information when the year 2000 is encountered during its processing of
  automated data.
/Footnote15/-^DOD Directive 5000.1, titled Defense Acquisition, contains
  policies and principles for all DOD acquisition programs.
/Footnote16/-^From February 1998 until October 1999, a senior civilian
  official headed the Office of the Assistant Secretary of Defense
  (Command, Control, Communications, and Intelligence).
/Footnote17/-^The Defense Manpower Data Center, established in 1974,
  collects and maintains an archive of automated manpower, personnel,
  training, and financial databases for DOD. One of its databases (the
  Defense Clearance and Investigations Index) maintains data on active
  duty personnel, reservists, and DOD civilians and contractors who have
  been involved in a security clearance investigation or adjudication.
/Footnote18/-^See 5 U.S.C. 306 and 31 U.S.C. 1115.
/Footnote19/-^See 31 U.S.C. 3512 (d)(2).

RECENT BROAD-BASED STUDIES OF THE PERSONNEL SECURITY INVESTIGATION PROCESS
==========================================================================

Since 1974, 21 studies have assessed various aspects of the personnel
security investigation process. The Department of Defense (DOD) Inspector
General, GAO, special commissions, and other groups conducted these
studies. Most recently, the Joint Security Commission and the Commission
on Protecting and Reducing Government Secrecy conducted three broad-based
studies of the policies and procedures used for security investigations.
This appendix describes the 33 recommendations made by these broad-based
studies to improve personnel security investigations. The Security Policy
Board is responsible for evaluating the recommendations and is tracking
the status of their implementation. As of August 1999, 19 recommendations
had been implemented, 2 had been rejected, and 12 were still under
consideration.

Redefining Security: A Report by the Joint Security Commission, 1994
--------------------------------------------------------------------

In May 1993, the Secretary of Defense and the Director of Central
Intelligence established the Joint Security Commission to review security
policies and procedures. It reviewed security procedures in DOD and the
intelligence community and obtained advice from policymakers at all
levels, including the Congress, military and industrial leaders, and
public interest groups.

The Joint Security Commission's 1994 report covered a wide variety of
topics relating to security, including personnel security, classifying
documents, threat assessments, physical security, and protecting
technology and information systems. However, the Commission devoted most
of its report to the personnel security investigation and adjudication
processes. The Commission found the security clearance process needlessly
complex, fragmented, and costly. It noted that (1) security clearances
were sought for personnel who did not need them, (2) too many forms were
required, (3) automation and information sharing were insufficient among
federal agencies, and (4) investigations and adjudication were practiced
differently across agencies. It made 23 recommendations related to the
personnel security investigation and adjudication processes. At the time
we completed our work in August 1999, 17 recommendations had been
implemented, 5 were in process, and 1 had been rejected. Table 2 lists the
recommendations and their status.

Table****Helvetica:x11****2:    Status of Joint Security Commission
                                Recommendations

------------------------------------------------------------------------
| Recommendation                                        : Status       |
|----------------------------------------------------------------------|
| Request clearances only for personnel requiring       : Implemented  |
| access to classified information                      :              |
|----------------------------------------------------------------------|
| Standardize personnel security questionnaire          : Implemented  |
|----------------------------------------------------------------------|
| Establish investigative standards for secret          : Implemented  |
| clearances                                            :              |
|----------------------------------------------------------------------|
| Establish reinvestigative standards for secret        : Implemented  |
| clearances                                            :              |
|----------------------------------------------------------------------|
| Establish investigative standards for top secret      : Implemented  |
| clearances                                            :              |
|----------------------------------------------------------------------|
| Establish reinvestigative standards for top secret    : Implemented  |
| clearances                                            :              |
|----------------------------------------------------------------------|
| Grant interim clearances based on favorable review    : Implemented  |
| of security questionnaire                             :              |
|----------------------------------------------------------------------|
| Adopt common adjudicative criteria                    : Implemented  |
|----------------------------------------------------------------------|
| Do not re-adjudicate individuals with existing        : Implemented  |
| clearances                                            :              |
|----------------------------------------------------------------------|
| Limit the authority of program managers when making   : Implemented  |
| access determinations                                 :              |
|----------------------------------------------------------------------|
| Do not use trial-type procedures for clearance        : Implemented  |
| appeals by DOD civilian employees                     :              |
|----------------------------------------------------------------------|
| Inform employees facing loss of clearances of right   : Implemented  |
| to counsel                                            :              |
|----------------------------------------------------------------------|
| Make available documents pertaining to loss of        : Implemented  |
| security clearances for review by employees           :              |
|----------------------------------------------------------------------|
| Give DOD civilian employees the right to personally   : Implemented  |
| appeal clearance revocations or denials to            :              |
| adjudication facility                                 :              |
|----------------------------------------------------------------------|
| Give DOD civilian employees the right to appeal any   : Implemented  |
| adverse clearance decision to an appeal board         :              |
|----------------------------------------------------------------------|
| Give DOD military personnel facing clearance denials  : Implemented  |
| same rights as civilian employees                     :              |
|----------------------------------------------------------------------|
| Appoint an executive agent for security training      : Implemented  |
|----------------------------------------------------------------------|
| Institute fee-for-service mechanisms to fund          : In process   |
| security requests                                     :              |
|----------------------------------------------------------------------|
| Increase investment in automation                     : In process   |
|----------------------------------------------------------------------|
| Begin process improvement programs in all             : In process   |
| investigative and adjudicative agencies               :              |
|----------------------------------------------------------------------|
| Develop standard measurable objectives for            : In process   |
| investigations, adjudications, and appeals            :              |
|----------------------------------------------------------------------|
| Merge all DOD adjudicative entities                   : In process   |
|----------------------------------------------------------------------|
| Establish a joint investigative service               : Rejected     |
------------------------------------------------------------------------

Source: GAO analysis of Redefining Security: A Report by the Joint
Security Commission, Joint Security Commission, February 28, 1994.

A Report by the Joint Security Commission II, 1999
--------------------------------------------------

On August 24, 1999, the Joint Security Commission issued its second report
on the security systems of the United States. The Deputy Secretary of
Defense and the Director of Central Intelligence reconvened the Commission
to (1) assess the progress toward meeting the goals recommended in the
Commission's 1994 report and (2) examine emerging security issues that may
require increased emphasis due to electronic data systems, networks, and
communications systems due to the increasingly global nature of businesses
and technologies. With regard to personnel security investigations, the
Joint Security Commission noted some progress toward achieving reciprocity
as individuals move from one agency's security purview to another due to
the adoption of the uniform investigative standards and adjudicative
guidelines. However, it recognized that there were important issues
regarding the appropriateness of some of the standards that needed to be
resolved, such as neighborhood checks and financial data reporting, and
recommended that a research effort should be conducted to determine the
efficacy and effectiveness of personnel security policies. The Commission
made six recommendations related to personnel security investigation and
adjudication processes. Since they were very recent, all six
recommendations were in process. Table 3 lists the recommendations and
their status.

Table****Helvetica:x11****3:    Status of Joint Security Commission II
                                Recommendations

-----------------------------------------------------------------------
| Recommendation                                        : Status      |
|---------------------------------------------------------------------|
| The Security Policy Board should fund research on     : In process  |
| the efficacy and effectiveness of personnel security  :             |
| policies                                              :             |
|---------------------------------------------------------------------|
| DOD should begin to fully enforce the                 : In process  |
| reinvestigative standards and within 90 days should   :             |
| screen all individuals overdue for reinvestigation    :             |
| and promptly complete reinvestigations for those      :             |
| whose positions and access suggest the highest risk   :             |
|---------------------------------------------------------------------|
| DOD and the Central Intelligence Agency should limit  : In process  |
| interim clearances to 180 days                        :             |
|---------------------------------------------------------------------|
| Efforts to create, coordinate, and implement          : In process  |
| security training for government and industry should  :             |
| continue                                              :             |
|---------------------------------------------------------------------|
| The Security Policy Board should charter a            : In process  |
| coordinated, government-wide security awareness       :             |
| program within                                        :             |
| 2 years                                               :             |
|---------------------------------------------------------------------|
| Funding should be created to initiate security        : In process  |
| training, awareness, and research projects by         :             |
| designated federal departments and agencies           :             |
-----------------------------------------------------------------------

Source: GAO analysis of A Report by the Joint Security Commission II,
Joint Security Commission, August 24, 1999.

Secrecy: Report of the Commission on Protecting and Reducing Government
Secrecy, 1997
---------------------------------------------------------------------------

Title IX of the Foreign Relations Authorization Act for fiscal years 1994
and 1995 (Pub. L. 103-236, Apr. 30, 1994) created the Commission on
Protecting and Reducing Government Secrecy. The Congress sought to (1)
make comprehensive proposals to reduce the volume of classified
information, (2) strengthen the protection of legitimately classified
information, and
(3) improve existing personnel security procedures. This Commission was
the first authorized by statute to examine these matters in over 40 years.

The Commission noted that the personnel security system was established
after World War II as a means of supporting the classification system and
implementing programs to investigate the loyalty of federal employees. It
found that a variety of directives and regulations had been issued to meet
these objectives, resulting in a buildup of rules and other
inefficiencies. It noted that although Executive Order 12968 provided for
common investigative and adjudicative standards to improve clearance
reciprocity, strengthen appeal procedures, and other things, it did not
supersede prior directives. In effect, the Commission said that the new
order simply added another regulatory layer to prior directives and
regulations regarding the personnel security system.

The Commission concluded that the solutions to these problems called for a
fundamental reevaluation of the personnel security system. It made four
recommendations to improve the process. Two recommendations were
implemented, one was in process, and one was rejected. Table 4 lists the
recommendations and their status.

Table****Helvetica:x11****4:    Status of Secrecy Commission Recommendations

-----------------------------------------------------------------------
| Recommendation                                          : Status    |
|---------------------------------------------------------------------|
| Make clearances reciprocal from one agency to another   : Implemen  |
|                                                         : ted       |
|---------------------------------------------------------------------|
| Establish guiding principles for an effective           : Implemen  |
| personnel security system                               : ted       |
|---------------------------------------------------------------------|
| Achieve a greater balance between initial clearances    : In        |
| and continuing employee evaluations                     : process   |
|---------------------------------------------------------------------|
| Eliminate neighborhood and educational interviews       : Rejected  |
-----------------------------------------------------------------------

Source: GAO analysis of Secrecy: Report of the Commission on Protecting
and Reducing Government Secrecy, March 3, 1997.

SCOPE AND METHODOLOGY
=====================

This review focused on DOD policies and procedures for conducting
personnel security investigations to determine individuals' eligibility to
access classified information. To determine whether DOD complied with
federal investigative standards, we reviewed 530 cases that the Defense
Security Service (DSS) sent to four adjudication facilities in January and
February 1999 for individuals seeking a top secret clearance. We selected
this period because DSS stated that it had instituted some special reviews
of investigations in fiscal year 1998 to improve the investigations and
that these changes should have been fully implemented by January
1999./Footnote1/ We selected separate random samples for the Air Force,
the Army, the Navy, and the National Security Agency adjudication
facilities. In fiscal year 1998, these adjudication facilities accounted
for 73 percent of the investigative work done by DSS. Table 5 shows the
number of investigations completed by DSS in January and February 1999 for
each of the four DOD adjudication facilities and the number we reviewed.

Table****Helvetica:x11****5:    Number of DSS Investigations Sent to Four
                                DOD Adjudication Facilities and Sampled by
                                GAO 

------------------------------------------------------------------------
| DOD adjudication   :   Investigations sent :         Investigations  |
| facility           :          to facility  :         sampled by GAO  |
|----------------------------------------------------------------------|
| Air Force          :                   895 :                    175  |
|----------------------------------------------------------------------|
| Army               :                   429 :                    146  |
|----------------------------------------------------------------------|
| Navy               :                   190 :                    105  |
|----------------------------------------------------------------------|
| National Security  :                   184 :                    104  |
| Agency             :                       :                         |
|----------------------------------------------------------------------|
| Total              :                 1,698 :                    530  |
------------------------------------------------------------------------

Note: All investigations were received by the adjudication facilities in
January and February 1999.

Source: GAO compilation of DSS completed investigations in January and
February 1999 for four DOD adjudication facilities. 

The sampling strategy was designed to yield a precision of +/-7 percentage
points, under the assumption that we would find that 50 percent of the
investigations were done in accordance with federal standards and
50 percent did not comply with the standards. Since the percentage of
noncompliant investigations was much greater than 50 percent, our
precision increased. Table 6 shows the precision for the investigation
deficiency rate for each of the sample DOD adjudication facilities.

Table****Helvetica:x11****6:    Precision Rates for Investigations Sampled
                                at Four DOD Adjudication Facilities

                                                                   
----------------------------------------------------------------------------
|                 :  Investigations with at  :  Investigations with two    |
|                 :   least one deficiency   :    or more deficiencies     |
|--------------------------------------------------------------------------|
| DOD             : Number : Percent: Precis : Number : Percent: Precision |
| adjudication    :        :        :    ion :        :        :           |
| facility        :        :        :        :        :        :           |
|--------------------------------------------------------------------------|
| Air Force       :    166 :     95 : +/-3 % :    138 :     79 :   +/-6 %  |
|--------------------------------------------------------------------------|
| Army            :    129 :     88 : +/-5 % :    107 :     73 :   +/-6 %  |
|--------------------------------------------------------------------------|
| Navy            :     96 :     91 : +/-4 % :     81 :     77 :   +/-6 %  |
|--------------------------------------------------------------------------|
| National        :     98 :     94 : +/-3 % :     81 :     78 :   +/-6 %  |
| Security Agency :        :        :        :        :        :           |
|--------------------------------------------------------------------------|
| Total           :    489 :        :        :    407 :        :           |
----------------------------------------------------------------------------

Source: GAO sample of 530 DSS investigations. 

To review the completeness of investigations, we developed a data
collection instrument that incorporated the federal investigative
standards approved by the President in March 1997. Officials in the Office
of the Assistant Secretary of Defense (Command, Control, Communications,
and Intelligence) and the Army's adjudication facility reviewed the
instrument, and we pretested it using Army investigations. To ensure the
accuracy of our work, two of our staff reviewed each sampled
investigation, and we returned a random subsample of deficient
investigations to the Air Force, the Army, the Navy, and the National
Security Agency adjudication facilities for their review.

To determine the factors that might be hindering the investigative
process, we reviewed DSS (1) investigative policies and procedures,
(2) mechanisms to ensure the quality of investigative work, (3) methods to
train investigative staff, and (4) automation initiatives. We reviewed DSS
investigative policy guidance and DSS's process for implementing policy
changes, including coordination with other organizations, such as the DOD
General Counsel and the Security Policy Board. To assess quality control
procedures, we reviewed what mechanisms had been established to ensure the
completeness of the investigative work. To assess the adequacy of
investigative training, we determined the number of training courses
offered to investigative staff and the number of staff attending in fiscal
year 1998. We supplemented this work with surveys mailed to all 1,174 DSS
investigators and 112 DSS case analysts. Ninety percent (1,061) of the
investigators and 79 percent (88) of the case analysts responded. The
questionnaires asked respondents' views on (1) manageability of
investigative workload, (2) adequacy of training, (3) clarity of
investigative policy guidance, (4) manner of conducting investigations, and
(5) frequency that investigations were returned for additional work.

We also reviewed DOD's oversight of DSS and DOD's assessment of the
internal controls in the personnel security investigation program.
Further, we reviewed this program in relation to the Federal Managers'
Financial Integrity Act of 1982, which mandates that federal agencies
conduct ongoing evaluations of their internal control systems to protect
federal programs against fraud, waste, abuse, and
mismanagement./Footnote2/ That act further requires that the heads of
federal agencies report annually to the President and the Congress on the
condition of these systems and on actions to correct the weaknesses
identified.

We identified the actions DOD was taking to improve investigative work,
but we were unable to assess their effectiveness because they had not been
sufficiently developed or implemented at the time we completed our work in
September 1999. We also determined the number of federal employees
(including DOD military, civilian, and contractor personnel) convicted of
espionage from 1982 through September 1999 and reviewed studies of the
personnel security investigation process and determined the status of
recommendations for improvement.

We performed our work at the following DOD and other organizations:

o Office of the Assistant Secretary of Defense (Command, Control,
  Communications, and Intelligence), Washington, D.C.;

o Headquarters, DSS, Alexandria, Virginia;

o Gulf Coast Operating Location, DSS, Smyrna, Georgia;

o Security Policy Board, Arlington, Virginia;

o Army Central Personnel Security Clearance Facility, Fort Meade, Maryland;

o Air Force Headquarters 497th Intelligence Group, Bolling Air Force
  Base, Washington, D.C.;

o Department of the Navy Central Adjudication Facility, Washington, D.C.;
  and

o National Security Agency Central Adjudication Facility, Linthicum,
  Maryland.

We also discussed the personnel security investigation program,
automation, and other issues with officials of the following adjudication
facilities: the Defense Intelligence Agency, Joint Chiefs of Staff,
Defense Office of Hearings and Appeals, and Washington Headquarters
Service. In July 1999, we held a meeting with representatives from the
Office of the Assistant Secretary of Defense (Command, Control,
Communications, and Intelligence), DSS, and all eight adjudication
facilities to obtain their views on the personnel security investigation
program and any actions needed to improve it.

We conducted our review from October 1998 to September 1999 in accordance
with generally accepted government auditing standards.

--------------------------------------
/Footnote1/-^DSS officials stated that DSS began a series of multiple
  reviews of investigations it had completed for the Army based on
  complaints DSS received from the Army about the completeness of the
  cases. DSS officials further stated that cases found to be incomplete
  were not to be sent forward to the Army's adjudication facility until
  all required investigative work was done.
/Footnote2/-^See 31 U.S.C. 3512.

DEFENSE SECURITY SERVICE RESOURCES AND WORKLOAD
===============================================

This appendix describes the Defense Security Service's resources and
workload for fiscal years 1991 through 1998 and the percent of changes
during that period. Table 7 presents information on the personnel security
budget. 

Table****Helvetica:x11****7:    Personnel Security Investigation Budget 

------------------------------------------------------------------------------
| Fiscal year 1998  :      :      :      :      :      :      :      :       |
| dollars in        :      :      :      :      :      :      :      :       |
| millions          :      :      :      :      :      :      :      :       |
|----------------------------------------------------------------------------|
|                   :                      Fiscal Year                       |
|----------------------------------------------------------------------------|
|                   : 1991 : 1992 : 1993 : 1994 : 1995 : 1996 : 1997 : 1998  |
|----------------------------------------------------------------------------|

| Investigative     : $176 : $169 : $184 : $167 : $164 : $165 : $146 : $142  |
| budget            :      :      :      :      :      :      :      :       |
|----------------------------------------------------------------------------|
| Change from FY1991:      :  -4% :  +5% :  -5% :  -7% :  -6% : -17% : -19%  |
|----------------------------------------------------------------------------|
| Other budget      :   53 :   65 :   51 :   62 :   59 :   55 :   56 :   48  |
|----------------------------------------------------------------------------|
| Change from FY1991:      : +23% :  -4% : +17% : +11% :  +4% :  +6% :  -9%  |
|----------------------------------------------------------------------------|
| Total DSS budget  : $229 : $234 : $235 : $229 : $223 : $220 : $202 : $190  |
|----------------------------------------------------------------------------|
| Change from FY1991:      :  +2% :  +3% :   0% :  -3% :  -4% : -12% : -17%  |
------------------------------------------------------------------------------

Source: Defense Security Service and GAO analysis of DSS data.

Table 8 describes the number of investigative staff assigned as personnel
security investigators, the number assigned to other DSS functions, and
the total number of DSS staff.

Table****Helvetica:x11****8:    Personnel Security Investigation Staff

                                                                 
----------------------------------------------------------------------------
|                 :                      Fiscal Year                       |
|--------------------------------------------------------------------------|
| Staff           : 1991 : 1992 : 1993 : 1994 : 1995 : 1996 : 1997 : 1998  |
|--------------------------------------------------------------------------|
| Investigators   : 1,652: 1,562: 1,432: 1,324: 1,230: 1,120: 1,165: 1,251 |
|--------------------------------------------------------------------------|
| Change from     :      :  -5% : -13% : -20% : -26% : -32% : -29% : -24%  |
| FY1991          :      :      :      :      :      :      :      :       |
|--------------------------------------------------------------------------|
| Other staff     : 2,334: 2,198: 2,219: 1,956: 1,887: 1,739: 1,450: 1,260 |
|--------------------------------------------------------------------------|
| Change from     :      :  -6% :  -5% : -16% : -19% : -25% : -38% : -46%  |
| FY1991          :      :      :      :      :      :      :      :       |
|--------------------------------------------------------------------------|
| Total DSS staff : 3,986: 3,760: 3,651: 3,280: 3,117: 2,859: 2,615: 2,511 |
|--------------------------------------------------------------------------|
| Change from     :      :  -6% :  -8% : -18% : -22% : -28% : -34% : -37%  |
| FY1991          :      :      :      :      :      :      :      :       |
----------------------------------------------------------------------------

Source: Defense Security Service and GAO analysis of DSS data.

Table 9 describes the personnel security workload, including the number of
investigations opened, the number opened per investigator, the number of
investigations closed, and the number closed per investigator.

Table****Helvetica:x11****9:    Personnel Security Investigation Workload

                                                              
-------------------------------------------------------------------------
| Investigations in    :     :     :     :     :     :     :     :      |
| thousands            :     :     :     :     :     :     :     :      |
|-----------------------------------------------------------------------|
|                      :                  Fiscal Year                   |
|-----------------------------------------------------------------------|
|                      : 1991: 1992: 1993: 1994: 1995: 1996: 1997: 1998 |
|-----------------------------------------------------------------------|
| Investigations       : 227 : 271 : 214 : 208 : 212 : 126 : 190 : 126  |
| opened               :     :     :     :     :     :     :     :      |
|-----------------------------------------------------------------------|
| Change from FY1991   :     : +19%: -6% : -8% : -7% : -44%: -16%: -44% |
|-----------------------------------------------------------------------|
| Investigations       : 137 : 173 : 149 : 157 : 172 : 113 : 163 : 101  |
| opened per           :     :     :     :     :     :     :     :      |
| investigator         :     :     :     :     :     :     :     :      |
|-----------------------------------------------------------------------|
| Change from FY1991   :     : +27%: +9% : +15%: +26%: -18%: +19%: -26% |
|-----------------------------------------------------------------------|
| Investigations closed: 232 : 264 : 217 : 206 : 204 : 158 : 172 : 142  |
|-----------------------------------------------------------------------|
| Change from FY1991   :     : +14%: -6% : -11%: -12%: -32%: -26%: -39% |
|-----------------------------------------------------------------------|
| Investigations       : 140 : 169 : 152 : 156 : 166 : 141 : 148 : 114  |
| closed per           :     :     :     :     :     :     :     :      |
| investigator         :     :     :     :     :     :     :     :      |
|-----------------------------------------------------------------------|
| Change from FY1991   :     : +21%: +8% : +11%: +18%: +1% : +5% : -19% |
-------------------------------------------------------------------------

Source: Defense Security Service and GAO analysis of DSS data.

DEFICIENT INVESTIGATIONS IN OUR SAMPLE
======================================

This appendix describes the number of deficiencies we found in our review
of 530 DSS investigations completed in January and February 1999. A
deficiency is an instance where an investigation was incomplete in that it
did not contain all the information required by federal investigative
standards. The numbers of deficiencies are presented for (1) each of the
four DOD adjudication facilities in our sample and for the total 530
investigations and (2) initial investigations and reinvestigations. Table
10 describes the number of deficient DSS investigations at four facilities.

Table****Helvetica:x11****10:    Number of Deficient DSS Investigations at
                                 Four DOD Adjudication Facilities

---------------------------------------------------------------------------
|                 :      No :     One :     Two :   Three or :     Total  |
|                 : deficie : deficie : deficie :       more : investiga  |
|                 :     ncy :     ncy :   ncies : deficienci :     tions  |
|                 :         :         :         :         es :            |
|-------------------------------------------------------------------------|
| Air Force                                                               |
|-------------------------------------------------------------------------|
| Initial         :       1 :      10 :       8 :         53 :        72  |
| investigations  :         :         :         :            :            |
|-------------------------------------------------------------------------|
| Reinvestigations:       8 :      18 :      21 :         56 :       103  |
|-------------------------------------------------------------------------|
| Army                                                                    |
|-------------------------------------------------------------------------|
| Initial         :      13 :      12 :      12 :         37 :        74  |
| investigations  :         :         :         :            :            |
|-------------------------------------------------------------------------|
| Reinvestigations:       4 :      10 :      18 :         40 :        72  |
|-------------------------------------------------------------------------|
| Navy                                                                    |
|-------------------------------------------------------------------------|
| Initial         :       5 :       7 :      11 :         37 :        60  |
| investigations  :         :         :         :            :            |
|-------------------------------------------------------------------------|
| Reinvestigations:       4 :       8 :      11 :         22 :        45  |
|-------------------------------------------------------------------------|
| National        :         :         :         :            :            |
| Security Agency :         :         :         :            :            |
|-------------------------------------------------------------------------|
| Initial         :       3 :       7 :       6 :          4 :        20  |
| investigations  :         :         :         :            :            |
|-------------------------------------------------------------------------|
| Reinvestigations:       3 :      10 :      30 :         41 :        84  |
|-------------------------------------------------------------------------|
| All four adjudication facilities                                        |
|-------------------------------------------------------------------------|
| Initial         :      22 :      36 :      37 :        131 :       226  |
| investigations  :         :         :         :            :            |
|-------------------------------------------------------------------------|
| Reinvestigations:      19 :      46 :      80 :        159 :       304  |
|-------------------------------------------------------------------------|
| Totals          :      41 :      82 :     117 :        290 :       530  |
---------------------------------------------------------------------------

Source: GAO review of 530 DSS investigations.

INVESTIGATORS' RECALL OF RECENT TRAINING RECEIVED ON FEDERAL INVESTIGATIVE
STANDARDS
===========================================================================

This appendix describes the results of the investigators' responses about
their training experiences on the federal investigative standards during
the last 3 years. In our survey, we broadly defined training to include
any courses, agent continuing education seminars, and office-held meetings
that discussed personnel security investigation topics related to the
federal standards. Table 11 presents the number and percent of responses
indicating that "no****Symbol:xbe****the topic had not been covered in
training,(c) (r)yes--it had been covered,(c) or (r)could not recall.(c)
The responses are presented for three groups whose sizes varied according
to the number of people who answered each question. The groups are all
investigators (996-1,009 respondents), investigators with at least 4 years
experience (921-934 respondents), and investigators with 3 or less year's
experience (75-76 respondents)./Footnote1/ Because not all investigators
answered every question, totals for each topic vary slightly.

Table****Helvetica:x11****11:    Investigators' Responses to Survey
                                 Questions on Recent Training Received on
                                 Federal Standards

                                        Continued from Previous Page
-----------------------------------------------------------------------------
|                       :      All       :  Investigators  : Investigators  |
|                       : investigators  : with 4 or more  :   with 3 or    |
|                       :                :    years DSS    :  less years    |
|                       :                :   experience    : DSS experience |
|---------------------------------------------------------------------------|
| Topic related to      : Number : Perce :  Number : Perce : Number: Perce  |
| federal standards     :        :    nt :         :    nt :       :    nt  |
|---------------------------------------------------------------------------|
| Corroborate subject's birth                                               |
|---------------------------------------------------------------------------|
| No                    :    512 :  51.0 :     496 :  53.4 :    16 :  21.1  |
|---------------------------------------------------------------------------|
| Yes                   :    379 :  37.7 :     320 :  34.5 :    59 :  77.6  |
|---------------------------------------------------------------------------|
| Do no recall          :    113 :  11.3 :     112 :  12.1 :     1 :   1.3  |
|---------------------------------------------------------------------------|
| Corroborate subject's citizenship                                         |
|---------------------------------------------------------------------------|
| No                    :    533 :  53.2 :     514 :  55.5 :    19 :  25.0  |
|---------------------------------------------------------------------------|
| Yes                   :    350 :  34.9 :     298 :  32.2 :    52 :  68.4  |
|---------------------------------------------------------------------------|
| Do not recall         :    119 :  11.9 :     114 :  12.3 :     5 :   6.6  |
|---------------------------------------------------------------------------|
| Check family's legal status if foreign born                               |
|---------------------------------------------------------------------------|
| No                    :    566 :  56.5 :     542 :  58.6 :    24 :  31.6  |
|---------------------------------------------------------------------------|
| Yes                   :    274 :  27.4 :     232 :  25.1 :    42 :  55.3  |
|---------------------------------------------------------------------------|
| Do not recall         :    161 :  16.1 :     151 :  16.3 :    10 :  13.2  |
|---------------------------------------------------------------------------|
| Corroborate education more than 3 years ago                               |
|---------------------------------------------------------------------------|
| No                    :    465 :  46.6 :     446 :  48.3 :    19 :  25.3  |
|---------------------------------------------------------------------------|
| Yes                   :    377 :  37.8 :     332 :  36.0 :    45 :  60.6  |
|---------------------------------------------------------------------------|
| Do not recall         :    156 :  15.6 :     145 :  15.7 :    11 :  14.7  |
|---------------------------------------------------------------------------|
| Verify education within last 3 years                                      |
|---------------------------------------------------------------------------|
| No                    :    399 :  39.9 :     388 :  41.9 :    11 :  14.7  |
|---------------------------------------------------------------------------|
| Yes                   :    510 :  50.9 :     448 :  48.4 :    62 :  82.7  |
|---------------------------------------------------------------------------|
| Do not recall         :     92 :   9.2 :      90 :   9.7 :     2 :   2.7  |
|---------------------------------------------------------------------------|
| Verify all residences for last 3 years                                    |
|---------------------------------------------------------------------------|
| No                    :    316 :  31.5 :     310 :  33.5 :     6 :   7.9  |
|---------------------------------------------------------------------------|
| Yes                   :    623 :  62.2 :     555 :  59.9 :    68 :  89.5  |
|---------------------------------------------------------------------------|
| Do not recall         :     63 :   6.3 :      61 :   6.6 :     2 :   2.6  |
|---------------------------------------------------------------------------|
| Verify last 7 years of employment                                         |
|---------------------------------------------------------------------------|
| No                    :    338 :  33.7 :     332 :  35.8 :     6 :   7.9  |
|---------------------------------------------------------------------------|
| Yes                   :    598 :  59.6 :     528 :  57.0 :    70 :  92.1  |
|---------------------------------------------------------------------------|
| Do not recall         :     67 :   6.7 :      67 :   7.2 :     0 :     0  |
|---------------------------------------------------------------------------|
| Verify each employment more than 6 months                                 |
|---------------------------------------------------------------------------|
| No                    :    351 :  35.1 :     345 :  37.3 :     6 :   7.9  |
|---------------------------------------------------------------------------|
| Yes                   :    573 :  57.3 :     503 :  54.4 :    70 :  92.1  |
|---------------------------------------------------------------------------|
| Do not recall         :     76 :   7.6 :      76 :   8.2 :     0 :     0  |
|---------------------------------------------------------------------------|
| Interview each employment more than 6 months                              |
|---------------------------------------------------------------------------|
| No                    :    348 :  34.7 :     343 :  37.0 :     5 :   6.6  |
|---------------------------------------------------------------------------|
| Yes                   :    579 :  57.8 :     509 :  55.0 :    70 :  92.1  |
|---------------------------------------------------------------------------|
| Do not recall         :     75 :   7.5 :      74 :   8.0 :     1 :   1.3  |
|---------------------------------------------------------------------------|
| Corroborate any unemployment of more than 60 days                         |
|---------------------------------------------------------------------------|
| No                    :    360 :  35.9 :     353 :  38.0 :     7 :   9.2  |
|---------------------------------------------------------------------------|
| Yes                   :    556 :  55.4 :     487 :  52.5 :    69 :  90.8  |
|---------------------------------------------------------------------------|
| Do not recall         :     88 :   8.8 :      88 :   8.5 :     0 :     0  |
|---------------------------------------------------------------------------|
| Verify federal/military employment and discharge                          |
|---------------------------------------------------------------------------|
| No                    :    497 :  49.6 :     474 :  51.2 :    23 :  30.3  |
|---------------------------------------------------------------------------|
| Yes                   :    296 :  29.5 :     259 :  28.0 :    37 :  48.7  |
|---------------------------------------------------------------------------|
| Do not recall         :    209 :  20.9 :     193 :  20.8 :    16 :  21.1  |
|---------------------------------------------------------------------------|
| Corroborate military service records                                      |
|---------------------------------------------------------------------------|
| No                    :    598 :  59.8 :     565 :  61.1 :    33 :  43.4  |
|---------------------------------------------------------------------------|
| Yes                   :    189 :  18.9 :     160 :  17.3 :    29 :  38.2  |
|---------------------------------------------------------------------------|
| Do not recall         :    213 :  21.3 :     199 :  21.5 :    14 :  18.4  |
|---------------------------------------------------------------------------|
| Interview subject                                                         |
|---------------------------------------------------------------------------|
| No                    :    215 :  21.5 :     211 :  22.8 :     4 :   5.3  |
|---------------------------------------------------------------------------|
| Yes                   :    736 :  73.5 :     663 :  71.7 :    72 :  94.7  |
|---------------------------------------------------------------------------|
| Do not recall         :     51 :   5.1 :      51 :   5.5 :     0 :     0  |
|---------------------------------------------------------------------------|
| Interview four character references                                       |
|---------------------------------------------------------------------------|
| No                    :    286 :  28.5 :     280 :  30.2 :     6 :   7.9  |
|---------------------------------------------------------------------------|
| Yes                   :    648 :  64.6 :     582 :  62.8 :    66 :  86.8  |
|---------------------------------------------------------------------------|
| Do not recall         :     69 :   6.9 :      65 :   7.0 :     4 :   5.3  |
|---------------------------------------------------------------------------|
| Interview all former spouses                                              |
|---------------------------------------------------------------------------|
| No                    :    341 :  33.9 :     328 :  35.3 :    13 :  17.1  |
|---------------------------------------------------------------------------|
| Yes                   :    557 :  55.4 :     496 :  53.4 :    61 :  80.3  |
|---------------------------------------------------------------------------|
| Do not recall         :    107 :  10.6 :     105 :  11.3 :     2 :   2.6  |
|---------------------------------------------------------------------------|
| Conduct state and local government records' checks                        |
|---------------------------------------------------------------------------|
| No                    :    382 :  38.3 :     367 :  39.8 :    15 :  20.0  |
|---------------------------------------------------------------------------|
| Yes                   :    524 :  52.5 :     465 :  50.4 :    59 :  78.7  |
|---------------------------------------------------------------------------|
| Do not recall         :     92 :   9.2 :      91 :   9.9 :     1 :   1.3  |
|---------------------------------------------------------------------------|
| Conduct financial checks and resolve credit issues                        |
|---------------------------------------------------------------------------|
| No                    :     37 :   3.7 :      31 :   3.3 :     6 :   8.0  |
|---------------------------------------------------------------------------|
| Yes                   :    949 :  94.1 :     881 :  94.3 :    68 :  90.7  |
|---------------------------------------------------------------------------|
| Do not recall         :     23 :   2.3 :      22 :   2.4 :     1 :   1.3  |
|---------------------------------------------------------------------------|
| Verify bankruptcy                                                         |
|---------------------------------------------------------------------------|
| No                    :    156 :  15.5 :     151 :  16.2 :     5 :   6.7  |
|---------------------------------------------------------------------------|
| Yes                   :    799 :  79.5 :     731 :  78.6 :    68 :  90.7  |
|---------------------------------------------------------------------------|
| Do not recall         :     50 :   5.0 :      48 :   5.2 :     2 :   2.7  |
|---------------------------------------------------------------------------|
| Verify divorces                                                           |
|---------------------------------------------------------------------------|
| No                    :    426 :  42.7 :     410 :  44.4 :    16 :  21.3  |
|---------------------------------------------------------------------------|
| Yes                   :    413 :  41.4 :     363 :  39.3 :    50 :  66.7  |
|---------------------------------------------------------------------------|
| Do not recall         :    159 :  15.9 :     150 :  16.3 :     9 :  12.0  |
|---------------------------------------------------------------------------|
| Verify civil/criminal actions with court records                          |
|---------------------------------------------------------------------------|
| No                    :    342 :  34.3 :     333 :  36.2 :     9 :  12.0  |
|---------------------------------------------------------------------------|
| Yes                   :    537 :  53.9 :     476 :  51.7 :    61 :  81.3  |
|---------------------------------------------------------------------------|
| Do not recall         :    117 :  11.7 :     112 :  12.2 :     5 :   6.7  |
-----------------------------------------------------------------------------

--------------------------------------
/Footnote1/-^We separated the years of DSS investigative experience at 4
  or more because DSS had a hiring freeze for investigators in effect from
  1989 until late 1996.

COMMENTS FROM THE DEPARTMENT OF DEFENSE
=======================================

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GAO CONTACTS AND STAFF ACKNOWLEDGMENTS
======================================

GAO Contacts

Norman J. Rabkin (202) 512-5140
Carol R. Schuster (202) 512-5140
Christine A. Fossett (202) 512-2956

Acknowledgments

In addition to those named above, Mark E. Gebicke, Rodney E. Ragan, Frank
Bowen, Jay S. Willer, Carole F. Coffey, Jack E. Edwards, Thomas W.
Gosling, Ernie E. Jackson, Michael R. Kellermann, Stanley J. Kostyla,
Tracy A. McCaffery, Joseph T. McDermott, Holly R. Plank, Madelon B.
Savaides, Robert L. Williams, Jr., Susan K. Woodward, and William E.
Woodward made key contributions to this report.

(703242)

Table 1:  Comparison of DSS Investigations Sent for Adjudication
Before and After CCMS Implementation            29

Table 2:  Status of Joint Security Commission Recommendations39

Table 3:  Status of Joint Security Commission II Recommendations40

Table 4:  Status of Secrecy Commission Recommendations41

Table 5:  Number of DSS Investigations Sent to Four DOD
Adjudication Facilities and Sampled by GAO      42

Table 6:  Precision Rates for Investigations Sampled at Four DOD
Adjudication Facilities43

Table 7:  Personnel Security Investigation Budget46

Table 8:  Personnel Security Investigation Staff46

Table 9:  Personnel Security Investigation Workload47

Table 10:  Number of Deficient DSS Investigations at Four DOD Adjudication
Facilities48

Table 11:  Investigators' Responses to Survey Questions on Recent
Training Received on Federal Standards          49

Figure 1:  Personnel Security Investigation and Adjudication
Process                                          8

Figure 2:  Percent of Personnel Security Investigations With
Deficiencies                                    13

Figure 3:  Percent of Deficient Investigations in Nine Required
Investigative Areas                             14

Figure 4:  Calendar Days Needed to Complete Investigations17

Figure 5:  Percent of Investigators Without Recent Training on
Investigative Requirements                      26

Figure 6:  Investigators Views on Workload      28

*** End of document. ***