1 March 1996, 10:00 a.m. to 12:36 p.m.
Mitre Corporation/Hayes Conference Center
The Security Policy Forum (SPF/Forum) was convened at 10:00 a.m. on 1 March 1996 by the Cochairs, Mr. Richard Stakem, Acting Executive Director for Intelligence Community Affairs, and Ms. Joan Dempsey, Deputy Assistant Secretary of Defense (Intelligence and Security).
All SPF member departments and agencies were represented with the exception of the Office of Management and Budget, the National Archives and Records Administration, and the US Coast Guard. Observers included Defense Investigative Service (DIS) and the industry Forum focal point.
Mr. Stakem and Ms. Dempsey greeted all the attendees. Mr. Peter Saderholm, Director of the SPB Staff, extended a special welcome to Mr. James Long, representing the Department of Agriculture, the newest member agency of the Forum. Mr. Saderholm noted one change to the 26 January l996 minutes submitted by CIA. With no other recommended changes or corrections, he called for acceptance of the minutes. The Forum members approved the minutes without further correction.
Mr. Peter Nelson, Chairman of both the Personnel Security Committee and its Financial Disclosure Working Group, provided an overview of the requirement for financial disclosure as set forth in Public Law 103-359 and Executive Order 12968. He voiced the Personnel Security Committee's concern that financial. disclosure would not meaningfully enhance personnel security, and outlined additional concerns raised by industry, such as cost, use of the data collected and its privacy, and possible adverse impacts on recruiting and retaining highly skilled people who have the option to work in either classified or unclassified areas. All those concerns notwithstanding, the requirement for financial disclosure remains; accordingly, the working group and the committee have sought options that have potential value and minimize possible adverse aspects. They note that the process is far from complete: questions of target population size, cost, training, possible automation, security, and implementation still must be addressed.
Mr. Nelson explained two approaches to financial disclosure: the investigative, which puts a tool in the hands of investigators to help them pursue questions of unexplained affluence identified during investigation; and the analytical, which matches data provided by individuals against data elsewhere available to the government in order to identify possible areas of concern. The working group developed four candidate forms (Attachments A through D), three of which received substantial support in the committee. Of those three, the two-page form (Attachment C) that is a modified version of the form now in use by CIA, is best suited to the investigative approach, while the full one-page form (Attachment D) is best suited to the analytical approach. An abbreviated one-page form (Attachment B) with only four data elements would have limited utility as either an investigative or analytical tool. A more extensive form (Attachment A) would support both approaches, but, in the view of the Committee and the working group, is too intrusive to be acceptable for broad use . Mr . Nelson suggested that a pilot program for testing and validating financial disclosure [would be appropriate].
Mr. Saderholm thanked the committee and its working group for its thorough and professional approach to a contentious issue.
Mr. Stakem framed the discussion by asking two questions:
- Do we need a form at all?
- If there must be a form, should it be primarily an investigative tool or an analytical tool?
The Forum quickly reached consensus that a form of some kind was necessary. Although the law mandating financial disclosure does not mention a form, use of some instrument for financial reporting is implicit; the executive order, on the other hand, explicitly tasks the Security Policy Board with developing a financial disclosure form. Therefore, any recommendation not to develop a form would have to be supported by arguments strong enough to change both the executive order and the statute. Such arguments were not forthcoming.
The Forum then turned its attention to what kind of form to have. Mr. White asked whether something already existing, the SF 450 conflict-of-interest form for example, would not meet all requirements. Although the SF 450 asks several questions appropriate for our purposes, by design it deals with a different issue than the form the Board is required to produce: it asks questions irrelevant to our purpose and leaves unasked others that we need to ask. Ms. Munson asked whether a simple release form would be adequate. A release form would not address the spirit and intent of either the statute or executive order, since it would neither contain the "relevant information concerning their financial condition" the statute requires people to provide, nor could it be construed as meeting the executive order's requirement to file a "financial disclosure report." Mr. Rubino suggested the two-page form, which would give primacy to the investigative aspect of financial disclosure, as the best alternative. The Forum now focused its discussion on this form, concentrating on the question whether it should or should not require filers to record the values of the assets and liabilities listed on it.
Mssrs. Castillo and Payne reported on CIA's experience with implementing its agency form, citing an initial cost of $1 million and 16 staff years. That form provided the model for the two-page form; however, it does not require filers to provide the values of their assets and liabilities. In Mr. Castillo's view, their experience thus far suggests that having such information would be useful.
There was no consensus regarding the appropriateness of collecting values. On the one hand, the industry observer, when queried by the chair, offered the opinion that the intrusive aspects of collecting such information raise concerns that outweigh any benefits. Furthermore, at this point, little exists that would demonstrate the usefulness (or lack of usefulness) of such information. On the other hand, as pointed out by Howard Timm of PERSEREC, if there is to be any use of the form as an analytical tool, it must include numbers: a significant portion of any analysis would consist of comparing the information provided on the form with information contained in other available records.
Because financial disclosure is a new territory for the security community, existing data that would help guide a sound decision is limited. Accordingly, Mr. Stakem argued, the most reasonable approach would appear to be a cautious one, in which some sort of testing of the various approaches would be possible. He proposed that this meant adopting the two-page form without requiring values listed, hut at the same time having some agencies collect values for testing purposes. This would permit evaluating the utility of investigative information only, analytical information only, and investigative and analytical information taken together. It would, of course, also demonstrate that financial disclosure does or does not have utility. For the duration of the test, industry would be excluded from having to provide values, even jn cases involving contracts with agencies that are collecting them.
The Forum reached consensus that a test was appropriate. However, there was no consensus on whether to use the two-page form with or without values. Thirteen members voted to include values (in which case everyone completing a form would provide them); twelve members voted to exclude then (in which case agencies wishing to collect them for testing would use a supplemental form of some kind).
Ms. Munson noted that the issue of precisely who will fill out the forms remains open. Executive Order 12968 requires them of persons with "a regular need for access" (not further defined) to information in any of five categories. However, the categories can be understood in ways that would make the number of people having to comply with financial disclosure either large or small. The Forum agreed that some more precise guidance regarding whom to select would be helpful.
ACTION: Mr. Stakem proposed reporting to the Security Policy Board the Forum's majority and minority views on which form to adopt. The membership concurred. Mr. Stakem asked the Personnel Security Committee to provide the arguments for and against the two versions of the form. Mr. Saderholm reminded the Forum of National Security Advisor Lake's commitment to a thorough review by industry of any proposed financial disclosure form.
Mr. Nelson outlined the requirement of Executive Order 12968 for a consent form, by which each person granted classified access agrees to permit an authorized investigative agency access to relevant financial records, consumer reports, and commercially maintained foreign travel records. This consent form would be used by the government in the face of credible information suggesting the employee may be disclosing classified information, has acquired excessive indebtedness or unexplained affluence, or had the capability and opportunity 1o disclose classified information known to be compromised.
The form consists or two parts: an authorization to be completed by the person, and a certification to be completed by the agency before using it. At the request of Mr. Appel, the Forum deleted language in the certification that repeated from the Executive Order language that identified the person as under suspicion of espionage. The form as modified retains the appropriate references to the Order and to statute.
ACTION: The Forum approved the proposed form, as modified, unanimously, subject to final legal review to verify all appropriate references and precise wording to ensure compliance with applicable law; for example, the CIA legal staff pointed out that the form should refer to the US Code rather than Public Law. The legal review will, as a matter of course, also examine the "Routine Uses" language contained in the form and make any necessary changes.
The next meeting is scheduled for 29 March 1996 from 1000-1130 hours at the Mitre corporation, Hayes Conference Center. Actions as stated above will be the agenda items.
The meeting was adjourned at 12:36 p.m.