oversight

DOD Personnel: Inadequate Personnel Security Investigations Pose National Security Risks

Published by the Government Accountability Office on 1999-10-27.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                  United States General Accounting Office

GAO               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




GAO/NSIAD-00-12
Contents



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


Tables       Table 1: Comparison of DSS Investigations Sent for Adjudication
               Before and After CCMS Implementation                                 29
             Table 2: Status of Joint Security Commission Recommendations           39
             Table 3: Status of Joint Security Commission II Recommendations        40
             Table 4: Status of Secrecy Commission Recommendations                  41
             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 Facilities                                              43
             Table 7: Personnel Security Investigation Budget                       46
             Table 8: Personnel Security Investigation Staff                        46
             Table 9: Personnel Security Investigation Workload                     47
             Table 10: Number of Deficient DSS Investigations at Four DOD
               Adjudication Facilities                                              48
             Table 11: Investigators’ Responses to Survey Questions on Recent
               Training Received on Federal Standards                               49




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          Contents




Figures   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 Investigations                17
          Figure 5: Percent of Investigators Without Recent Training on
            Investigative Requirements                                             26
          Figure 6: Investigators Views on Workload                                28




          Abbreviations

          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



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United States General Accounting Office                                                       National Security and
Washington, D.C. 20548                                                                 International Affairs Division



                                    B-283901                                                                               Leter




                                    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.1 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


                                    1
                                     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.




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                   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

                   • 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



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

• 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;
• eliminated quality control mechanisms such as quality assurance and
  supervisory review of completed investigations;
• ineffectively managed implementation of a new automated investigative
  case processing system that caused delays in processing cases; and
• 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.




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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 1982.2 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.



2
See 31 U.S.C. 3512.




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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      The personnel security investigation is a critical step toward ensuring that
Investigations in DOD   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



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                                          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 1: Personnel Security Investigation and Adjudication Process




                                          Source: Defense Security Service.




DSS Resources and                         Over the past 7 years, financial and personnel resources at DSS and
Workload                                  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



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                        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   In 1994, the President established the Security Policy Board as a new
Personnel Security      interagency body to develop directives for U.S. security policies,
                        procedures, and practices; in addition, the National Security Act was
Investigations and
                        amended to require the President to establish uniform executive branch
Adjudication            procedures to govern access to classified information.3 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.




                        3
                         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).




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The purpose of initial investigations for top secret clearances is to provide
information in the following nine areas:4

• 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;
• corroboration of education;
• 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;
• interviews with character references with social knowledge of the
  subject and any former spouse divorced within the last 10 years;
• interviews with neighbors to confirm all residences for last 3 years;
• 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);
• a financial review, including a credit bureau check;
• a local agency check of criminal history records and other public
  records to verify any civil or criminal court actions involving the subject;
  and
• 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



4
 Secret and confidential clearances require proof of the subject’s date and place of birth,
national and local agency checks, and a financial review.




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                      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:

                      •   allegiance to the United States;
                      •   foreign influence;
                      •   sexual behavior;
                      •   personal conduct;
                      •   financial considerations;
                      •   alcohol consumption;
                      •   drug involvement;
                      •   emotional, mental, and personality disorders;
                      •   criminal conduct;
                      •   security violations;
                      •   outside activities; and
                      •   misuse of information technology systems.



Investigations Have   The DOD personnel security investigation program has resulted in
                      investigations that
Been Incomplete and
Untimely              • 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;
                      • 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
                      • 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



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                          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.5 Also, the longer a
                          reinvestigation is delayed, the greater the risk that changes in an
                          individual’s behavior will go undetected.


DSS Investigations Have   In our review of 530 randomly sampled top secret security clearance
Been Incomplete           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,

                          • 92 percent of all 530 investigations90 percent of the 226 initial
                            investigations and 94 percent of the 304 reinvestigations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;
                          • 77 percent of the investigations were deficient in meeting the federal
                            standards in two or more areas; and
                          • 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.




                          5
                           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.




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Figure 2: Percent of Personnel Security Investigations with Deficiencies
         Percent of deficient investigations
100




    80                                                   43

             62                    53           56

    60




    40                                                   35
                                   20
                                                21
             17

    20                             15
                                                 14      16
             16
                                   12
              5                                  9       6
     0

           Air Force          Army             Navy    National
                                                       Security
                                                       Agency


                  3+ deficiencies

                  2 deficiencies

                  1 deficiencies

                  0 deficiencies


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.6 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


6
 For our analysis, we grouped interviews with former spouses with other character
references.




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                                                      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 3: Percent of Deficient Investigations in Nine Required Investigative Areas
60 Percent of deficient investigations




         54
50
                           51

                                           47

40


                                                            36

30
                                                                           30



                                                                                          23
20




10
                                                                                                         10


                                                                                                                         1              1
 0

       Residency         Birth and       Employment       Reference    Local records     Education      National      Finances         Subject
                        citizenship                                       check                       agency check                    interview

                                                      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.7 These
                                                      issues included prior criminal history, failure of a prior polygraph


                                                      7
                                                       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.




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                          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.

                          • 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.
                          • 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.
                          • 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.
                          • 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.
                          • 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   DSS investigations have not been timely in two respects. First, once
Not Been Timely           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



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                                 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   The federal standards do not contain any specified time requirements for
met customers’ needs             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.8

                                 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.9 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.




                                 8
                                 OPM charges from $1,600 to about $3,000 for top secret investigations and reinvestigations.
                                 9
                                  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.




                                 Page 16                                                   GAO/NSIAD-00-12 DOD Personnel
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Figure 4: Calendar Days Needed to Complete Investigations
45 Percentage of days



40

                    209
35



25
                             161


20



15
                                        99


10

                                                  57
 5


          4
 0

       0-90        91-180   181-270     271-365   > 365
      Days to complete


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.10 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



Page 17                                            GAO/NSIAD-00-12 DOD Personnel
                                B-283901




                                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   The federal standards require a periodic reinvestigation of individuals
overdue                         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.11 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.12 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.




                                10
                                 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.
                                11
                                   National Security: DOD Clearance Reductions and Related Issues (GAO/NSIAD-87-170BR,
                                Sept. 18, 1987).
                                12
                                     A Report by the Joint Security Commission II, August 24, 1999.




                                Page 18                                                    GAO/NSIAD-00-12 DOD Personnel
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Management Actions                The lack of completeness and timeliness in the DSS personnel security
                                  investigation program can be traced, in part, to several management
and Inadequate                    actions by DSS and inadequate oversight by the Office of the Assistant
Oversight Have                    Secretary of Defense (Command, Control, Communications, and
                                  Intelligence). Management actions that affected investigative completeness
Weakened                          have included DSS (1) causing confusion and raising concerns by adopting
Investigations                    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                   The incomplete DSS personnel security investigations stemmed, in part,
Investigative Guidance            from the organization’s reinvention effort to streamline investigative
                                  requirements. DSS relaxed its prior investigative policy guidance, thereby
                                  allowing investigators greater discretionbut also causing much
                                  confusion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   In June 1996, the Assistant Secretary of Defense (Command, Control,
greater discretion to             Communications, and Intelligence) formally announced that DOD would
investigators                     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



                                  Page 19                                         GAO/NSIAD-00-12 DOD Personnel
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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:

• 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.
• In October 1996, DSS eliminated its requirement to confirm allegations
  of adultery and stated that the subject should be questioned “briefly”
  about the matter.
• 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.
• 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.”
• 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.
• 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the requirement to conduct local agency checks and to verify
public records.

• Federal standards require local agency checks of criminal history
  records for the last 10 years for all locations where a subject has lived,



Page 20                                          GAO/NSIAD-00-12 DOD Personnel
                                 B-283901




                                   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.
                                 • 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   In our review of DSS policies, we discussed the DSS revised investigative
Policy Board raised concerns     policy guidance and the DSS process for adopting policy changes with
about DSS’s revised policies     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



                                 Page 21                                           GAO/NSIAD-00-12 DOD Personnel
B-283901




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:

• 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.
• 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



Page 22                                           GAO/NSIAD-00-12 DOD Personnel
                            B-283901




                               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   The elimination of important quality control mechanisms has also
Mechanisms Have Been        compromised the quality of DSS investigations. In the absence of such
                            mechanisms, DSS investigations have been sent for adjudication with
Eliminated
                            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



                            Page 23                                         GAO/NSIAD-00-12 DOD Personnel
                              B-283901




                              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   Investigative quality has also been diminished by a lack of training on the
Inadequate                    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



                              Page 24                                         GAO/NSIAD-00-12 DOD Personnel
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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 1996.13 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.




13
 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.




Page 25                                                 GAO/NSIAD-00-12 DOD Personnel
                                                                    B-283901




Figure 5: Percent of Investigators Without Recent Training on Investigative Requirements
90 Percentage of investigators

80           81

70                         73            71
                                                    65
60                                                                       62                62
                                                                                                             59
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                                                                    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                                             DSS did not properly plan for the implementation of its new case
Case Management Has Led                                             management automation initiative, referred to as the Case Control
                                                                    Management System (CCMS). As a result, DSS has not been able to process
to Case Processing Delays
                                                                    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




                                                                    Page 26                                                                                                 GAO/NSIAD-00-12 DOD Personnel
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• the Electronic Personnel Security Questionnaire, which collects
  electronically the personnel security data to initiate and conduct an
  investigation;
• the Field Information Management System, which generates field
  investigative reports that are then fed into the system;
• the Files Automation Scanning System, which converts paper personnel
  security questionnaires and attachments into electronic form for storage
  and retrieval;
• 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
• 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,14
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.15 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,

14
  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.
15
 DOD Directive 5000.1, titled Defense Acquisition, contains policies and principles for all
DOD acquisition programs.




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                                            B-283901




                                            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 6: Investigators Views on Workload
            Before CCMS
                                                                                    With CCMS


                       9%                   Appropriate                                      6%              No response
                                            workload                                                         Appropriate
                                                                                                  9%
                             10%            No response                                                      workload



         58%                                                                   60%                25%        Too much work
                             23%            Too little work


                                            Too much work                                                    Too little work




                                            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



                                            Page 28                                                GAO/NSIAD-00-12 DOD Personnel
                                         B-283901




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

Adjudication                Average monthly receipts                 Average monthly receipts
facility                      (Oct. 1997 − Sept. 1998)                 (Oct. 1998 − June 1999)            Difference     Percent change
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 operated for at least 4 years with little or no oversight from the
DSS Has Allowed Quality                  Office of the Assistant Secretary of Defense (Command, Control,
                                         Communications, and Intelligence), which is responsible for assessing the
Problems to Persist and
                                         completeness of DSS investigative work. Officials in the Office of the
Increased the Number of                  Assistant Secretary stated that there had been little oversight of the
Overdue Reinvestigations                 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




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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.16
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.17 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.




16
 From February 1998 until October 1999, a senior civilian official headed the Office of the
Assistant Secretary of Defense (Command, Control, Communications, and Intelligence).
17
 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.




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DSS Has Acted to            In recognition of the problems confronting DSS, DOD recently appointed
                            an acting DSS Director who has been developing a series of corrective
Improve Investigations      actions for the problems we identified. Despite the serious and widespread
but Lacks Corrective        nature of the completeness, timeliness, and other problems affecting the
                            personnel security investigation program, DOD has not planned to report
Action and Strategic        these problems under the Federal Managers’ Financial Integrity Act.
Plans                       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 1993.18


New Acting DSS Director     DOD has begun to address several DSS management weaknesses that have
Taking Steps to Improve     affected the quality of personnel security investigations. In June 1999, the
                            Deputy Secretary of Defense appointed a new acting DSS Director charged
Investigative Quality and
                            with improving the overall management of the organization. In June 1999,
Timeliness, but Formal      we briefed the acting Director on the preliminary results of our work. The
Corrective Plan Is Needed   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:

                            • 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.
                            • 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.
                            • 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.
                            • 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.


                            18
                                 See 5 U.S.C. 306 and 31 U.S.C. 1115.




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                               • 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.19
                               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          Under GPRA, federal agencies are required to set strategic goals, measure
Not Been Guided by a           performance, and report on the degree to which goals were met. GPRA
                               incorporates performance measurement as one of its most important
Strategic Plan or Methods to
                               features. Executive branch agencies are generally required to develop
Measure Performance            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.

                               19
                                    See 31 U.S.C. 3512 (d)(2).




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              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



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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



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                  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

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

                  • 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;
                  • 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;
                  • conduct analyses needed to (1) determine an appropriate workload that
                    investigators and case analysts can manage while meeting federal



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                  B-283901




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



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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,




Carol R. Schuster
Associate Director, National Security
 Preparedness Issues




Page 37                                           GAO/NSIAD-00-12 DOD Personnel
Appendix I

Recent Broad-Based Studies of the Personnel                                                                  Appendx
                                                                                                                   ies




Security Investigation Process                                                                                Appendx
                                                                                                                    Ii




                               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         In May 1993, the Secretary of Defense and the Director of Central
Report by the Joint Security   Intelligence established the Joint Security Commission to review security
                               policies and procedures. It reviewed security procedures in DOD and the
Commission, 1994               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.




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




Table 2: Status of Joint Security Commission Recommendations

Recommendation                                                                                                              Status
Request clearances only for personnel requiring access to classified information                                            Implemented
Standardize personnel security questionnaire                                                                                Implemented
Establish investigative standards for secret clearances                                                                     Implemented
Establish reinvestigative standards for secret clearances                                                                   Implemented
Establish investigative standards for top secret clearances                                                                 Implemented
Establish reinvestigative standards for top secret clearances                                                               Implemented
Grant interim clearances based on favorable review of security questionnaire                                                Implemented
Adopt common adjudicative criteria                                                                                          Implemented
Do not re-adjudicate individuals with existing clearances                                                                   Implemented
Limit the authority of program managers when making access determinations                                                   Implemented
Do not use trial-type procedures for clearance appeals by DOD civilian employees                                            Implemented
Inform employees facing loss of clearances of right to counsel                                                              Implemented
Make available documents pertaining to loss of security clearances for review by employees                                  Implemented
Give DOD civilian employees the right to personally appeal clearance revocations or denials to adjudication                 Implemented
facility
Give DOD civilian employees the right to appeal any adverse clearance decision to an appeal board                           Implemented
Give DOD military personnel facing clearance denials same rights as civilian employees                                      Implemented
Appoint an executive agent for security training                                                                            Implemented
Institute fee-for-service mechanisms to fund security requests                                                              In process
Increase investment in automation                                                                                           In process
Begin process improvement programs in all investigative and adjudicative agencies                                           In process
Develop standard measurable objectives for investigations, adjudications, and appeals                                       In process
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                              On August 24, 1999, the Joint Security Commission issued its second report
Security Commission II,                            on the security systems of the United States. The Deputy Secretary of
                                                   Defense and the Director of Central Intelligence reconvened the
1999
                                                   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


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




                                               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 3: Status of Joint Security Commission II Recommendations

Recommendation                                                                                                           Status
The Security Policy Board should fund research on the efficacy and effectiveness of personnel security policies          In process
DOD should begin to fully enforce the reinvestigative standards and within 90 days should screen all individuals In process
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 interim clearances to 180 days                                      In process
Efforts to create, coordinate, and implement security training for government and industry should continue               In process
The Security Policy Board should charter a coordinated, government-wide security awareness program within                In process
2 years
Funding should be created to initiate security training, awareness, and research projects by designated federal          In process
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                         Title IX of the Foreign Relations Authorization Act for fiscal years 1994 and
Commission on Protecting                       1995 (Pub. L. 103-236, Apr. 30, 1994) created the Commission on Protecting
                                               and Reducing Government Secrecy. The Congress sought to (1) make
and Reducing Government
                                               comprehensive proposals to reduce the volume of classified information,
Secrecy, 1997                                  (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



                                               Page 40                                                       GAO/NSIAD-00-12 DOD Personnel
                                               Appendix I
                                               Recent Broad-Based Studies of the Personnel
                                               Security Investigation Process




                                               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 4: Status of Secrecy Commission Recommendations

Recommendation                                                                                                            Status
Make clearances reciprocal from one agency to another                                                                     Implemented
Establish guiding principles for an effective personnel security system                                                   Implemented
Achieve a greater balance between initial clearances and continuing employee evaluations                                  In 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.




                                               Page 41                                                     GAO/NSIAD-00-12 DOD Personnel
Appendix II

Scope and Methodology                                                                                                 Appendx
                                                                                                                            iI




              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 1999.1 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 5: Number of DSS Investigations Sent to Four DOD Adjudication Facilities and
              Sampled by GAO

              DOD adjudication                        Investigations sent to         Investigations sampled by
              facility                                               facility                             GAO
              Air Force                                                     895                                     175
              Army                                                          429                                     146
              Navy                                                          190                                     105
              National Security Agency                                      184                                     104
              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


              1
               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.




              Page 42                                                          GAO/NSIAD-00-12 DOD Personnel
                                           Appendix II
                                           Scope and Methodology




                                           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 6: Precision Rates for Investigations Sampled at Four DOD Adjudication Facilities

                                    Investigations with at least one deficiency       Investigations with two or more deficiencies
DOD adjudication facility                 Number          Percent        Precision         Number        Percent          Precision
Air Force                                      166              95             ±3 %            138             79              ±6 %
Army                                           129              88             ±5 %            107             73              ±6 %
Navy                                            96              91             ±4 %             81             77              ±6 %
National Security Agency                        98              94             ±3 %             81             78              ±6 %
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




                                           Page 43                                                   GAO/NSIAD-00-12 DOD Personnel
Appendix II
Scope and Methodology




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.2 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:

• Office of the Assistant Secretary of Defense (Command, Control,
  Communications, and Intelligence), Washington, D.C.;
• Headquarters, DSS, Alexandria, Virginia;
• Gulf Coast Operating Location, DSS, Smyrna, Georgia;
• Security Policy Board, Arlington, Virginia;
• Army Central Personnel Security Clearance Facility, Fort Meade,
  Maryland;
• Air Force Headquarters 497th Intelligence Group, Bolling Air Force
  Base, Washington, D.C.;



2
See 31 U.S.C. 3512.




Page 44                                          GAO/NSIAD-00-12 DOD Personnel
Appendix II
Scope and Methodology




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




Page 45                                           GAO/NSIAD-00-12 DOD Personnel
Appendix III

Defense Security Service Resources and
Workload                                                                                                                               Appendx
                                                                                                                                             Ii




                                           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 7: Personnel Security Investigation Budget

Fiscal year 1998 dollars in millions
                                                                                      Fiscal Year
                                                   1991      1992         1993         1994         1995       1996      1997      1998
Investigative budget                               $176      $169         $184         $167         $164       $165      $146      $142
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 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 FY1991                                         -5%         -13%          -20%         -26%        -32%       -29%      -24%
Other staff                                  2,334        2,198        2,219        1,956         1,887       1,739     1,450      1,260
Change from FY1991                                         -6%          -5%          -16%         -19%        -25%       -38%      -46%
Total DSS staff                              3,986        3,760        3,651        3,280         3,117       2,859     2,615      2,511
Change from FY1991                                         -6%          -8%          -18%         -22%        -28%       -34%      -37%


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




                                           Page 46                                                         GAO/NSIAD-00-12 DOD Personnel
                                          Appendix III
                                          Defense Security Service Resources and
                                          Workload




                                          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 9: Personnel Security Investigation Workload

Investigations in thousands
                                                                                      Fiscal Year
                                                       1991       1992       1993       1994        1995    1996     1997     1998
Investigations opened                                   227        271        214        208         212     126      190      126
Change from FY1991                                               +19%         -6%        -8%        -7%     -44%     -16%     -44%
Investigations opened per investigator                  137        173        149        157         172     113      163      101
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 closed per investigator                  140        169        152        156         166     141      148      114
Change from FY1991                                               +21%        +8%       +11%       +18%      +1%      +5%      -19%


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




                                          Page 47                                                     GAO/NSIAD-00-12 DOD Personnel
Appendix IV

Deficient Investigations in Our Sample                                                                                    Appendx
                                                                                                                                i
                                                                                                                                IV




                                          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 10: Number of Deficient DSS Investigations at Four DOD Adjudication Facilities

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


                                          Source: GAO review of 530 DSS investigations.




                                          Page 48                                             GAO/NSIAD-00-12 DOD Personnel
Appendix V

Investigators’ Recall of Recent Training
Received on Federal Investigative Standards                                                                                              Appendx
                                                                                                                                               i
                                                                                                                                               V




                                              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the topic had not been covered in training,” “yes—it
                                              had been covered,” or “could not recall.” 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).1 Because not all investigators answered every question,
                                              totals for each topic vary slightly.



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

                                                                                    Investigators with 4 or      Investigators with 3
                                                                                       more years DSS             or less years DSS
                                                         All investigators                experience                  experience
Topic related to federal standards                          Number       Percent          Number      Percent      Number      Percent
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
                                                                                                                              Continued




                                              1
                                               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.




                                              Page 49                                                 GAO/NSIAD-00-12 DOD Personnel
                                          Appendix V
                                          Investigators’ Recall of Recent Training
                                          Received on Federal Investigative Standards




                                                                                Investigators with 4 or         Investigators with 3
                                                                                   more years DSS                or less years DSS
                                                     All investigators                experience                     experience
Topic related to federal standards                      Number       Percent            Number    Percent         Number      Percent
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
                                                                                                     Continued from Previous Page




                                          Page 50                                                 GAO/NSIAD-00-12 DOD Personnel
                                          Appendix V
                                          Investigators’ Recall of Recent Training
                                          Received on Federal Investigative Standards




                                                                                Investigators with 4 or         Investigators with 3
                                                                                   more years DSS                or less years DSS
                                                     All investigators                experience                     experience
Topic related to federal standards                      Number       Percent            Number    Percent         Number      Percent
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
                                                                                                     Continued from Previous Page




                                          Page 51                                                 GAO/NSIAD-00-12 DOD Personnel
                                             Appendix V
                                             Investigators’ Recall of Recent Training
                                             Received on Federal Investigative Standards




                                                                                   Investigators with 4 or      Investigators with 3
                                                                                      more years DSS             or less years DSS
                                                        All investigators                experience                  experience
Topic related to federal standards                         Number       Percent            Number    Percent      Number      Percent
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
                                                                                                        Continued from Previous Page




                                             Page 52                                                 GAO/NSIAD-00-12 DOD Personnel
Appendix VI

Comments From the Department of Defense                   Appendx
                                                                iI
                                                                V




              Page 53         GAO/NSIAD-00-12 DOD Personnel
                Appendix VI
                Comments From the Department of Defense




Now on p. 35.




Now on p. 35.




Now on p. 35.




                Page 54                                   GAO/NSIAD-00-12 DOD Personnel
                Appendix VI
                Comments From the Department of Defense




Now on p. 35.




Now on p. 35.




                Page 55                                   GAO/NSIAD-00-12 DOD Personnel
                    Appendix VI
                    Comments From the Department of Defense




Now on pp. 35-36.




                    Page 56                                   GAO/NSIAD-00-12 DOD Personnel
                Appendix VI
                Comments From the Department of Defense




Now on p. 36.




                Page 57                                   GAO/NSIAD-00-12 DOD Personnel
                Appendix VI
                Comments From the Department of Defense




Now on p. 36.




Now on p. 36.




                Page 58                                   GAO/NSIAD-00-12 DOD Personnel
                Appendix VI
                Comments From the Department of Defense




Now on p. 36.




                Page 59                                   GAO/NSIAD-00-12 DOD Personnel
                Appendix VI
                Comments From the Department of Defense




Now on p. 36.




                Page 60                                   GAO/NSIAD-00-12 DOD Personnel
                Appendix VI
                Comments From the Department of Defense




Now on p. 36.




                Page 61                                   GAO/NSIAD-00-12 DOD Personnel
Appendix VII

GAO Contacts and Staff Acknowledgments                                                            Appendx
                                                                                                        iI
                                                                                                        V




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)       Leter   Page 62                                        GAO/NSIAD-00-12 DOD Personnel
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