Index

DOD Personnel: More Consistency Needed in Determining Eligibility for Top Secret Security Clearances (18-APR-01, GAO-01-465).

								 
Each year, the Department of Defense (DOD) makes about 200,000	 
decisions to grant, deny, or revoke security clearances for its  
civilian, military, and contractor personnel. Through a process  
called adjudication, DOD personnel security specialists review	 
the results of employees' background investigations and determine
whether the individual is eligible for a clearance. This report  
(1) assesses whether DOD's adjudicators consistently document all
significant adverse security conditions when determining	 
individuals' eligibility for top secret security clearances and  
(2) identifies factors that hinder the effectiveness of DOD's	 
adjudicative process. GAO found that DOD adjudicators have not	 
consistently documented all significant adverse security	 
conditions present in investigative case files when determining  
individuals' eligibility for top secret security clearances. DOD 
has been unable to demonstrate that it fully considered all	 
significant adverse conditions often not documented, including	 
financial matters. Several factors have hindered the		 
effectiveness of DOD's adjudicative process. The Assistant	 
Secretary has not(1) used common explanatory guidance, such as	 
that contained in the Adjudicative Desk Reference he developed,  
or issued any other clarifying guidance to promote consistency in
applying the federal guidelines; (2) required adjudicators to	 
take DOD adjudicative training or afforded them with continuing  
education opportunities on applying the federal guidelines; and  
(3) established common equality assurance mechanisms to identify 
any problem areas needing clarifying guidance or training. Common
quality assurance procedures would facilitate DOD's oversight of 
the adjudicative process. Actions to provide stronger direction  
and oversight are needed given the challenges posed by the	 
decentralized nature of DOD's process.				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-01-465 					        
    ACCNO:   A00858						        
  TITLE:     DOD Personnel: More Consistency Needed in Determining    
             Eligibility for Top Secret Security Clearances                   
     DATE:   04/18/2001 
  SUBJECT:   Eligibility determinations 			 
	     Human resources training				 
	     Quality assurance					 
	     Security clearances				 

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GAO-01-465
     
Report to the Ranking Member, Committee on Armed Services, House of
Representatives

United States General Accounting Office

GAO

April 2001 DOD PERSONNEL More Consistency Needed in Determining Eligibility
for Top Secret Security Clearances

GAO- 01- 465

Page i GAO- 01- 465 DOD Personnel Letter 1

Executive Summary 3

Chapter 1 Introduction 9 DOD's Personnel Security Clearance Process 9
Federal Adjudicative Guidelines Aimed at Achieving Consistent

Application 11 Criteria for Determining Clearance Eligibility 12 Prior
Review by GAO 14 Objectives, Scope, and Methodology 14

Chapter 2 DOD Has Not Consistently Documented Significant Adverse Security
Conditions 16 Our Framework for Analyzing Adjudicative Case Files 16
Adjudicators Have Not Consistently Documented Significant

Adverse Security Conditions 18 Record Keeping Varies Among Adjudication
Facilities 24 Conclusions 26 Recommendation for Executive Action 26 Agency
Comments and Our Evaluation 27

Chapter 3 Several Factors Hinder the Effectiveness of DOD's Adjudicative
Process 28 Guidance to Adjudicators Has Been Inadequate 28 Adjudication
Staffs Have Not Received Common DOD Training 30 An Effective Quality
Assurance Program Is Not in Place 33 Decentralized Process Requires Stronger
Oversight 33 Conclusions 35 Recommendations for Executive Action 36 Agency
Comments and Our Evaluation 36

Appendix I Comments From the Department of Defense 37

Appendix II DOD's Adjudication Facilities 41 Contents

Page ii GAO- 01- 465 DOD Personnel Appendix III GAO's Sampling Methodology
Used in Reviewing DOD

Adjudications 43

Appendix IV Prior Reviews of DOD's Adjudicative Process 44

Appendix V Criteria for Mitigating Security Conditions 49

Appendix VI Training Taken by DOD Adjudicators Since 1995 50

Appendix VII GAO Contacts and Staff Acknowledgments 51

Tables

Table 1: Estimated Percent of Cases With Significant Adverse Conditions Not
Documented by Six Adjudication Facilities 21 Table 2: DOD Adjudicative
Budget, Staffing, and Workload for

Fiscal Year 2000 by Adjudication Facility and Reporting Organization 41
Table 3: Number of Top Secret Adjudications Made by

Adjudicators in Six DOD Facilities and Sampled by GAO 43 Table 4: Examples
of Mitigating Conditions Requiring Judgment

Regarding Broad Terms in the Federal Guidelines 49 Table 5: Adjudicative
Training Taken by DOD Adjudicators Since

1995 50

Page iii GAO- 01- 465 DOD Personnel Figures

Figure 1: Personnel Security Investigative and Adjudicative Process 10
Figure 2: Extent DOD Adjudicators Documented Significant

Adverse Security Conditions 19 Figure 3: Estimated Percent of Cases Where
GAO Found an

Unexplained Affluence Condition Not Documented by the Six Adjudication
Facilities 23

Abbreviations

C3I Command, Control, Communications, and Intelligence DOD Department of
Defense DSS Defense Security Service GAO General Accounting Office

Page 1 GAO- 01- 465 DOD Personnel

April 18, 2001 The Honorable Ike Skelton Ranking Member Committee on Armed
Services House of Representatives:

Dear Mr. Skelton: This report responds to your request that we review the
Department of Defense's (DOD) personnel security adjudicative process as a
follow- on to our review for you that highlighted material weaknesses in
DOD's personnel security investigative process. As requested, we (1)
assessed whether DOD's adjudicators consistently document all significant
adverse security conditions when determining individuals? eligibility for
top secret security clearances and (2) identified factors that hinder the
effectiveness of DOD's adjudicative process. We are making recommendations
to the Secretary of Defense aimed at strengthening the direction and
oversight of the adjudicative process.

As we agreed with your office, unless you publicly announce the contents of
this report earlier, we plan no further distribution of it until 30 days
from the date of this letter. At that time, we will send copies of this
report to the Honorable Donald H. Rumsfeld, the Secretary of Defense; the
Honorable Joseph W. Westphal, Acting Secretary of the Army; the Honorable
Lawrence J. Delaney, Acting Secretary of the Air Force; the Honorable Robert
B. Pirie, Acting Secretary of the Navy; and the heads of DOD's adjudication
facilities. We will then send copies to the congressional committees and
others who are interested and make copies available to others who request
them.

United States General Accounting Office Washington, DC 20548

Page 2 GAO- 01- 465 DOD Personnel

If there are any questions regarding this report, please contact me at (202)
512- 3958. GAO contacts and staff acknowledgements are listed in appendix
VII.

Sincerely yours, Carol R. Schuster Director Defense Capabilities and
Management

Executive Summary Page 3 GAO- 01- 465 DOD Personnel

Each year, the Department of Defense (DOD) makes about 200,000 decisions to
grant, deny, or revoke security clearances for its civilian, military, and
contractor personnel. With these clearances, employees can gain access to
highly classified information that ranges from nuclear weapon systems and
plans for the defense of Europe, to the identity of U. S. and allied
intelligence agents. The number of clearances granted by DOD- about 2.1
million in total- represents a formidable challenge to those responsible for
deciding who should be given a clearance. The critical nature of the
information that DOD maintains and the damage to national security that can
result if it is not adequately safeguarded requires scrupulous decision-
making when granting security clearances.

In October 1999, GAO reported on the first step in DOD's process for
granting top secret security clearances- the investigation phase. 1 That
report identified serious weaknesses in the management and quality of
investigations, recommended corrective actions, and prompted many changes by
DOD. On the basis of these findings, the Ranking Member, House Committee on
Armed Services asked GAO to review the second step in the process, referred
to as adjudication. Through this process, personnel security specialists
(called adjudicators) at eight DOD adjudication facilities review the
results of the investigations to identify any potentially significant
adverse conditions in an individual's background that might pose a security
risk. They then decide whether or not the individual is eligible for a
clearance. Those reviews are to be conducted according to federal
adjudicative guidelines aimed at ensuring consistency in protecting
classified information throughout the government. The President approved
these guidelines in 1997. The Assistant Secretary of Defense (Command,
Control, Communications, and Intelligence) is responsible for providing
policy and operating guidance and for monitoring DOD's decentralized
adjudicative process.

In reviewing the adjudicative process, GAO (1) assessed whether DOD's
adjudicators consistently document all significant adverse security
conditions when determining individuals? eligibility for top secret security
clearances and (2) identified factors that hinder the effectiveness of DOD's
adjudicative process. GAO reviewed 404 randomly selected, top secret cases
using the federal guidelines to determine if DOD adjudicators had recorded
all significant adverse conditions in the applicants? backgrounds.

1 DOD Personnel: Inadequate Personnel Security Investigations Pose National
Security Risks (GAO/ NSIAD- 00- 12, Oct. 27, 1999). Executive Summary

Purpose

Executive Summary Page 4 GAO- 01- 465 DOD Personnel

GAO projected these results to the population of approximately 3,800 top
secret cases that six of eight DOD adjudication facilities had reviewed in
May 2000. These six facilities accounted for 97 percent of all DOD clearance
adjudications made by the eight adjudication facilities in fiscal year 2000.

GAO's analysis showed that DOD adjudicators have not consistently documented
all significant adverse security conditions present in investigative case
files when determining individuals? eligibility for top secret security
clearances. On the basis of findings projected to the study population, GAO
estimated that DOD adjudicators did not document all significant adverse
conditions in about one- third of the population of 3,800 cases. As a
result, DOD has been unable to demonstrate that it fully considered all
significant adverse conditions that might call into question an individual's
ability to adequately safeguard classified information in granting
eligibility for top secret clearances. Conditions often not documented
included financial matters, especially unexplained affluence (i. e., wealth
that appears to exceed an individual's income), personal conduct, and
foreign influence- conditions that federal guidelines say represent security
concerns that should be carefully considered in the security clearance
decision- making process. Moreover, GAO estimated that in about one- sixth
of the study population, adjudicators decided the individuals were eligible
for top secret clearances in the absence of mitigating information that
might lessen the government's risk. The differences in documenting
significant adverse conditions among the adjudicators in the various
adjudication facilities and between the adjudicators and GAO's analysts
suggests that the adjudicators may not be consistently applying the
adjudicative guidelines. Although DOD regulations require adjudicators to
document their rationale for clearance determinations when significant
adverse information is uncovered, officials in the adjudication facilities
have differed widely in the information and records they have kept. The lack
of detailed documentation requirements prevents DOD from demonstrating that
it has considered all relevant information.

Several factors have hindered the effectiveness of DOD's adjudicative
process. Overall, the Assistant Secretary of Defense (Command, Control,
Communications, and Intelligence) has not provided adequate direction to
officials of the adjudication facilities or sufficient oversight of the
process. Specifically, the Assistant Secretary has not (1) required
adjudicators to use common explanatory guidance, such as that contained in
the Adjudicative Desk Reference he developed, or issued any other clarifying
Results in Brief

Executive Summary Page 5 GAO- 01- 465 DOD Personnel

guidance to promote consistency in applying the federal guidelines; (2)
required adjudicators to take DOD adjudicative training or afforded them
with continuing education opportunities on applying the federal guidelines;
and (3) established common quality assurance mechanisms to identify any
problem areas needing clarifying guidance or training. Use of common
guidance and common training could promote consistency in the application of
the federal guidelines. Common quality assurance procedures would facilitate
DOD's oversight of the adjudicative process. Such actions aimed at providing
stronger direction and oversight are needed given the challenges posed by
the decentralized nature of DOD's process.

GAO makes several recommendations for executive action to provide better
direction to DOD adjudication officials, improve DOD's oversight, and
enhance the effectiveness of the adjudicative process. DOD agreed with GAO's
findings and recommendations and has begun to act on the recommendations.

GAO's analysis of a random sample of case files supporting the decisions to
grant or deny eligibility for top secret clearances showed that DOD
adjudicators did not document all significant adverse security conditions
specified in the federal guidelines. First, GAO estimated that 33 percent of
the population of 3, 800 cases contained significant adverse security
conditions that the adjudicators did not document in their records. Most
frequently, DOD adjudicators did not document significant adverse conditions
in four areas. In projecting the extent that adjudicators did not document
such factors in the 3,800- case population, GAO estimated that

 12 percent contained one or more adverse conditions related to personal
finances, including large credit card debts, bankruptcies, and unexplained
affluence;

 10 percent contained one or more conditions related to personal conduct,
such as omitting prior arrests from security questionnaires;

 10 percent contained one or more conditions related to foreign influence,
such as spouses who were not U. S. citizens, frequent travel to a foreign
country, or continuing contacts with foreign relatives; and Principal
Findings

DOD Has Not Consistently Documented Adverse Security Conditions

Executive Summary Page 6 GAO- 01- 465 DOD Personnel

 6 percent contained one or more conditions related to criminal conduct,
such as arrests, drug possession and use, and driving under the influence of
alcohol.

Second, DOD sometimes determined individuals to be eligible for top secret
clearances even though their records contained no information that might
mitigate the risks posed by significant adverse conditions in the
individuals? backgrounds as specified in the federal adjudicative
guidelines. GAO estimated that 16 percent of the cases in its study
population had adverse conditions in their case files without any mitigating
information. Unexplained affluence was the adverse condition that was most
frequently neither documented nor mitigated. This was true for an estimated
7 percent of the cases in GAO's study population. When requested,
adjudication officials could not provide supplementary information to
demonstrate that such conditions or mitigating information were considered
even though DOD regulations implementing the federal adjudicative guidelines
require that such factors be considered and documented when deciding that an
adverse condition is not serious enough to deny a clearance.

DOD regulations require that the adjudication officials record their
rationale for denying clearance eligibility or for granting it when

'significant derogatory information? is found. However, the Assistant
Secretary of Defense (Command, Control, Communications, and Intelligence)
provides no guidance beyond the regulations for determining what constitutes
this type of information, the amount of detail to record, and where it will
be recorded. Each adjudication facility documents the rationale for its
decisions differently; only two of the six facilities maintain complete
records that clearly document the adverse conditions that their adjudicators
identify and whether they applied any mitigating factors to reduce the risks
from these conditions.

The Assistant Secretary of Defense (Command, Control, Communications, and
Intelligence) has not provided sufficient direction and oversight to DOD's
adjudicative process.

 First, although the Assistant Secretary developed explanatory guidance for
the adjudicative guidelines in the Adjudicative Desk Reference to help
interpret the broad terms in the federal guidelines, he did not require
DOD's adjudicators to use it in their reviews or provide any further
explanatory guidance. Officials in the Office of the Assistant Secretary
were concerned that adjudicators might interpret the guidance in the Desk
Several Factors Hinder the

Effectiveness of DOD's Adjudication Process

Executive Summary Page 7 GAO- 01- 465 DOD Personnel

Reference as a simple checklist that could be substituted for a careful
consideration of all the facts. GAO found that the tool provides more
specificity about what constitutes a significant adverse security condition,
the rationale for the concern about the condition, and the ways the risks of
the condition could be reduced. The Assistant Secretary has not provided any
further clarifying guidance, although he is assessing whether such guidance
is needed based on continuing questions about the definition of terms in the
guidelines.

 Second, the Assistant Secretary has developed core and advanced
adjudicative training through DOD's Defense Security Service Academy that is
consistent with the federal guidelines, but he has not required adjudicators
to take this training. GAO found that almost one- half of the adjudicators
on board during fiscal year 2000 had not taken a single course from the
Academy since 1995, the time when the adjudicative guidelines were being
circulated within DOD and included in Academy courses. Further, the
Assistant Secretary has not provided continuing education opportunities,
although DOD adjudicator training staff and adjudication facility officials
believe that it is necessary to keep adjudicators current on how to apply
the federal guidelines. GAO believes that the lack of common training can
perpetuate inconsistent application of the federal guidelines.

 Third, the Assistant Secretary has not specified uniform quality assurance
procedures to be followed by the adjudication facility officials. As a
result, various procedures have been used to monitor the quality of
adjudications and, where reviews were done, the results were largely
undocumented. Without systematic and documented periodic reviews of all the
adjudicative work, neither DOD nor adjudication facility officials have the
information they need to oversee or manage the process and to ensure that
clearance decisions are made in accordance with the DOD regulations
implementing the federal guidelines.

The decentralized structure of DOD's adjudicative process has posed
management challenges. Three federal studies over the last decade identified
the decentralized structure of the process as the primary cause of cost
inefficiencies, policy inconsistencies, and monitoring weaknesses. In 1993,
following the first of these studies, DOD reduced the number of adjudication
facilities from 19 to 8. Despite the studies? recommendations to further
consolidate DOD's process, adjudication facility officials have generally
opposed such efforts for various reasons, including the fact that each
facility performs unique functions in addition to adjudication that might be
lost under a consolidated facility. If the process is to remain
decentralized, stronger guidance, direction, and oversight are needed to
enhance the consistency with which security clearance decisions are made.

Executive Summary Page 8 GAO- 01- 465 DOD Personnel

To provide better direction to DOD adjudication officials, improve DOD's
oversight, and enhance the effectiveness of the adjudicative process, GAO
recommends that the Secretary of Defense direct the Assistant Secretary of
Defense (Command, Control, Communications, and Intelligence) to

 establish detailed documentation requirements to support adjudication
decisions, including all significant adverse security conditions and the
mitigating factors relevant to each condition;

 require that all DOD adjudicators use common explanatory guidance, such as
that contained in the Adjudicative Desk Reference;

 establish common adjudicator training requirements and work with the
Defense Security Service Academy to develop appropriate continuing education
opportunities for all DOD adjudicators; and

 establish a common quality assurance program to be implemented by
officials in all DOD adjudication facilities and monitor compliance through
annual reporting.

GAO received written comments on a draft of this report from the Department
of Defense that are reprinted in appendix I. The agency acknowledged that
the data in the report shows that adjudicators have not clearly documented
disqualifying or mitigating factors in many cases. Also, the agency
acknowledged that it needs to develop more precise and relevant reference
material for its adjudicators, improve and expand on training opportunities
for its adjudicators, and provide an effective quality assurance program to
better ensure uniformity and standardization among the adjudication
facilities in support of the agency's mission objectives. The agency
concurred with our recommendations and described the actions it plans to
take to improve its documentation, guidance, training, and quality assurance
program. In addition, the agency provided technical comments to update or
clarify key information that we incorporated where appropriate.
Recommendations for

Executive Action Agency Comments and GAO's Evaluation

Chapter 1: Introduction Page 9 GAO- 01- 465 DOD Personnel

Currently, about 2.1 million Department of Defense (DOD) military, civilian,
and contractor personnel hold security clearances. More than a half million
of these have top secret clearances, which allow access to information that
could cause grave danger to national security if disclosed without
authorization. Between 1982 and 1999, 80 federal civilian, military, and
contractor personnel were convicted of espionage, 68 of whom were DOD
employees. Nineteen of these individuals held clearances that allowed access
to top secret information. These espionage cases have had serious
consequences for the United States because foreign governments, many of
which are hostile to the United States, have gained access to such highly
classified information as stealth technology; plans for the defense of
Europe; the location and use of tactical nuclear weapons; and the
identification of U. S. and allied intelligence agents who were subsequently
killed. Because compromising classified information can lead to serious
damage to U. S. national security, determining which individuals can be
expected to best safeguard such information is one of the nation's most
serious security obligations.

To ensure the trustworthiness, reliability, and loyalty of persons in
positions with access to classified information, the federal government
depends upon a process that includes (1) a personnel security investigation
and (2) a determination of eligibility for access to classified information-
a process known as adjudication. As shown in figure 1, DOD's process begins
with the individual completing a security questionnaire and a military
commander, contractor, or other DOD official submitting a request for a
security clearance. DOD's Defense Security Service (DSS), the Office of
Personnel Management, or their contractors conduct the investigations.
Chapter 1: Introduction

DOD's Personnel Security Clearance Process

Chapter 1: Introduction Page 10 GAO- 01- 465 DOD Personnel

Figure 1: Personnel Security Investigative and Adjudicative Process

Source: DOD's Defense Office of Hearings and Appeals and DSS.

Once a security investigation is completed, the results are sent to an
adjudication facility where an adjudicator, usually a personnel security
specialist, is assigned to review the investigative findings. The
adjudicator makes a determination, in accordance with DOD regulations
implementing the federal adjudicative guidelines, regarding an individual's
eligibility for access to classified information. 1 DOD maintains eight
adjudication facilities: the Air Force Central Adjudication Facility; the
Army Central Personnel Security Clearance Facility; the Defense Intelligence
Agency Central Adjudication Facility; the Directorate of Management, Joint
Chiefs of Staff Central Adjudication Facility; the Department of the Navy
Central Adjudication Facility; the National Security Agency Central
Adjudication Facility; the Washington Headquarters Services Consolidated
Adjudication Facility; and a two- part organization that makes eligibility
determinations for DOD contractor personnel (the Defense Industrial Security
Clearance Office in DSS and the Defense Office of Hearings and Appeals in
the Defense Legal Services Agency).

On the basis of the adjudicator's review, adjudication facility officials
approve, deny, or revoke an individual's eligibility for a clearance. DOD
Regulation 5200.2R requires adjudication facility staff to record the
rationale for each unfavorable security determination and each favorable
determination in which the investigation or other information highlighted
significant adverse conditions identified in the federal adjudicative
guidelines. The results of the adjudication determination are

1 In implementing the federal adjudicative guidelines, DOD Regulation 5200.
2R Department of Defense Personnel Security Program, January 1987, sets
forth the policies and procedures for granting DOD military, civilian, and
contractor personnel access to classified information. The policies and
procedures for granting industrial personnel security clearances are also
contained in DOD Directive 5220.6, Defense Industrial Personnel Security
Clearance Review Program, April 20, 1999.

Requester submits an individual's security questionnaire to DSS or the
Office of Personnel Management.

DSS, the Office of Personnel Management, or one of their

contractors conducts an investigation and forwards an

investigative report to an adjudication facility.

Based on the investigative report, adjudication facility staffs determine
eligibility for access

to classified information and forward this determination to

the requesting organization.

Chapter 1: Introduction Page 11 GAO- 01- 465 DOD Personnel

communicated to the requesting organization, usually the organization where
the individual is or will be assigned. The organization then makes the final
decision to authorize or limit access to classified information based on the
individual's eligibility and the position requirements. Overall, DOD grants
security clearance eligibility to the vast majority of applicants; in fiscal
year 2000, DOD granted eligibility for about 98 percent of the security
clearance requests.

The Assistant Secretary of Defense, Command, Control, Communications, and
Intelligence (C3I), has primary responsibility for issuing policy and
operating guidance and performing oversight of the adjudicative process.
Accountability for DOD's adjudicative process is decentralized. The eight
adjudication facilities charged with making adjudication determinations
report to the head of their respective military department or defense
agency. In fiscal year 2000, the facilities made about 185,000 clearance
decisions with 183 adjudicators and a budget of about $25 million. Appendix
II describes the reporting organizations, budget, staffing, and workload for
the eight adjudication facilities.

In March 1997, the federal government established a common set of personnel
security investigative standards and adjudicative guidelines for determining
eligibility for access to classified information. These guidelines were in
response to the mandate of Executive Order 12968 that security policies must
ensure consistent, cost- effective, and efficient protection of classified
information. Such policies foster the consistent application of the federal
guidelines to facilitate reciprocity among federal agencies, and thereby
avoid unnecessary and costly clearance reevaluations when an individual
moves from one agency to another before the clearance eligibility has
expired. All federal agencies and departments are to use the federal
guidelines in making decisions on security clearances for government
civilians, military personnel, consultants, contractor employees, and others
who require access to classified information. The guidelines also apply to
all clearance types -

confidential, secret, and top secret. 2 The guidelines are based on the
collective advice and expertise of a broad cross section of senior
representatives from 10 federal agencies and the results of studies of prior

2 These classifications refer to information or material that if disclosed
without proper authorization could cause varying degrees of damage to
national security. For example, disclosure of top secret information could
cause grave damage to national security. Federal Adjudicative

Guidelines Aimed at Achieving Consistent Application

Chapter 1: Introduction Page 12 GAO- 01- 465 DOD Personnel

espionage cases. DOD instructed adjudication facility officials to begin
following the guidelines in 1996 while they were still under review. The
President approved the guidelines in March 1997; in November 1998, DOD
adopted the guidelines as its official adjudication policy.

The 1997 federal adjudicative guidelines state that each security clearance
case is to be judged on its own merits and a final decision to grant, deny,
or revoke access to classified information is the responsibility of the
specific department or agency. Any doubt about whether a clearance for
access to classified information is consistent with national security is to
be resolved in favor of national security. Executive Order 12968, which
authorized the federal guidelines, makes it clear that a determination to
grant clearance eligibility is a discretionary decision based on judgments
by appropriately trained adjudicative staff. The guidelines, therefore, are
not to be considered a simple checklist. Adjudicators are to consider
available, reliable information about the person- past and present,
favorable and unfavorable- in reaching an ?overall common sense? clearance
eligibility determination, a process known as the ?whole person? concept.

In making determinations of eligibility for security clearances, the federal
guidelines require adjudicators to consider (1) guidelines covering 13
specific areas, (2) adverse conditions or conduct that could raise a
security concern and factors that might mitigate (alleviate) the condition
for each guideline, and (3) general factors related to the whole person.
First, the guidelines state that clearance decisions require a common sense
determination of eligibility for access to classified information based upon
careful consideration of the following 13 areas:

 allegiance to the United States;

 foreign influence, such as having a family member who is a citizen of a
foreign country;

 foreign preference, such as performing military service for a foreign
country;

 sexual behavior;

 personal conduct, such as deliberately concealing or falsifying relevant
facts when completing a security questionnaire;

 financial considerations;

 alcohol consumption;

 drug involvement;

 emotional, mental, and personality disorders;

 criminal conduct; Criteria for

Determining Clearance Eligibility

Chapter 1: Introduction Page 13 GAO- 01- 465 DOD Personnel

 security violations;

 outside activities, such as providing service to or being employed by a
foreign country; and

 misuse of information technology systems. Second, for each of these 13
areas, the guidelines specify (1) numerous significant adverse conditions or
conduct that could raise a security concern that may disqualify an
individual from obtaining a security clearance and (2) mitigating factors
that could allay those security concerns, even when serious, and permit
granting a clearance. For example, the financial consideration guideline
states that individuals could be denied security clearances based on having
a history of not meeting financial obligations. However, this adverse
condition could be set aside (referred to as mitigated) if one or more of
the following factors were present: the financial condition was not recent,
resulted from factors largely beyond the person's control (e. g., loss of
employment), or was addressed through counseling.

Third, the adjudicator should evaluate the relevance of an individual's
overall conduct by considering the following general factors:

 the nature, extent, and seriousness of the conduct;

 the circumstances surrounding the conduct, to include knowledgeable
participation;

 the frequency and recency of the conduct;

 the individual's age and maturity at the time of the conduct;

 the voluntariness of participation;

 the presence or absence of rehabilitation and other pertinent behavioral
changes;

 the motivation for the conduct;

 the potential for pressure, coercion, exploitation, or duress; and

 the likelihood of continuation or recurrence. When the personnel security
investigation uncovers no adverse security conditions, the adjudicator's
task is fairly straightforward because there is no security condition to
mitigate.

Chapter 1: Introduction Page 14 GAO- 01- 465 DOD Personnel

In October 1999, we reported on the first part of the process of obtaining a
security clearance- DOD's security investigative process. 3 We found that 92
percent of investigations did not gather all of the information required by
federal investigative standards and that the investigations were not
completed in a timely manner. We concluded that these problems represented a
risk to national security by making DOD vulnerable to espionage. We
recommended that the Secretary of Defense improve oversight, identify the
personnel security investigative process as containing material internal
control weaknesses, and take steps to correct those weaknesses. 4 We also
recommended that the DSS Director develop a strategic plan and performance
measures to improve the quality of the investigative work and correct
problems in such areas as the case control management system and training.
Following our report, DOD began to institute a variety of reforms aimed at
improving security investigations. These reforms will not be completed for
several more years.

On the basis of the weaknesses we noted in DOD's personnel security
investigative process, the Ranking Member, House Committee on Armed
Services, asked us to determine if similar weaknesses might exist in the
second step in determining eligibility for security clearances- the
adjudicative process. The decentralized management of this process adds
special challenges not faced in the centralized investigative process. Our
objectives were to (1) assess whether DOD's adjudicators consistently
document all significant adverse security conditions when determining
individuals? eligibility for security clearances and (2) identify factors
that might hinder the effectiveness of DOD's adjudicative process.

To assess whether DOD's adjudicators consistently document all significant
adverse security conditions, we conducted an independent analysis of a
sample of 404 randomly selected top secret security

3 GAO/ NSIAD- 00- 12, October 27, 1999. We also reported on DOD's backlog of
overdue personnel security reinvestigations and DOD's plans to address this
problem in DOD Personnel: More Actions Needed to Address Backlog of Security
Clearance Reinvestigations (GAO/ NSIAD- 00- 215, Aug. 24, 2000) and DOD
Personnel: More Accurate Estimate of Overdue Security Clearance
Reinvestigations Is Needed

(GAO/ T- NSIAD- 00- 246, Sept. 20, 2000). 4 As we recommended, DOD reported
its investigative process weaknesses under the Federal Managers? Financial
Integrity Act of 1982. 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 control weaknesses
and on formal plans for correcting them. See 31 U. S. C. 3512 (d)( 2). Prior
Review by GAO

Objectives, Scope, and Methodology

Chapter 1: Introduction Page 15 GAO- 01- 465 DOD Personnel

clearance requests. We projected the findings from that sample to the
approximately 3, 800 cases adjudicated by six facilities in May 2000. A
detailed discussion of our framework for analyzing adjudicative case files
is contained in chapter 2; a detailed discussion of our sampling methodology
for the case files is presented in appendix III.

To identify factors that might hinder the effectiveness of DOD's
adjudicative process, we (1) evaluated the clarity of guidance to DOD
adjudicative staffs on how to apply the federal guidelines, (2) determined
the extent that adjudicators had been trained on the guidelines, (3)
identified quality assurance mechanisms to ensure that the federal
guidelines had been consistently applied and all significant adverse
conditions documented, and (4) evaluated DOD's oversight of the process,
including challenges posed by its decentralized structure. We discussed
these matters with officials in the Office of the Assistant Secretary of
Defense (C3I), the eight adjudication facilities, two joint combatant
commands, and several industries with DOD contracts requiring personnel to
have security clearances. To provide additional context for our findings, we
also summarized the key findings of past audits and evaluations of DOD's
adjudicative process, which are discussed in appendix IV.

We performed our work at the headquarters? offices of the Assistant
Secretary of Defense (C3I); DSS; and the eight adjudication facilities
located in the Washington, D. C., metropolitan area; and DOD's Defense
Personnel Security Research Center located in Monterey, California.

We conducted our review from January 2000 to March 2001 in accordance with
generally accepted government auditing standards.

Chapter 2: DOD Has Not Consistently Documented Significant Adverse Security
Conditions

Page 16 GAO- 01- 465 DOD Personnel

Federal adjudicative guidelines were developed to promote consistency in
security clearance eligibility determinations. However, our analysis of a
random sample of the case files supporting decisions for eligibility for top
secret clearances in May 2000 showed that DOD did not consistently document
all significant adverse conditions specified in the federal guidelines as
areas of concern. We found two major weaknesses. First, we estimated that
about one- third of the study population cases contained significant adverse
security conditions that the adjudicators did not document in their records.
Second, in about one- sixth of the cases, the adjudicators determined
individuals to be eligible for clearances, even though there was no
information in the case files to mitigate the adverse conditions. The
differences in documenting adverse conditions among the adjudicators in the
various adjudication facilities and between the adjudicators and our
analysts suggest that the adjudicators may not be consistently applying the
adjudicative guidelines. As a result, DOD cannot demonstrate that it had
fully considered significant adverse conditions contained in the federal
adjudicative guidelines before it granted top secret clearances to
individuals.

DOD regulations require that adjudication facility officials record their
rationale for denying a clearance or for granting one when significant
adverse information as specified in the federal adjudicative guidelines is
uncovered. However, the extent of documentation varies widely. The lack of
standard documentation requirements for adjudicative decisions hampers DOD's
ability to perform meaningful quality reviews and prevents it from
demonstrating that it considered all relevant information.

To evaluate the extent to which DOD adjudicators consistently documented
adverse security conditions, we conducted independent reviews of a random
sample of cases adjudicated by six of DOD's eight adjudication facilities in
May 2000. These six facilities accounted for 97 percent of DOD's clearance
adjudications made by DOD's eight adjudication facilities in fiscal year
2000. We selected separate random samples totaling 404 cases from the 6
facilities, which enabled us to project our results to a population of about
3,800 cases adjudicated for top secret clearances by these facilities during
that month. 1 The sample included cases being adjudicated for the first time
as well as cases that

1 DOD determined that individuals were eligible for a security clearance in
399 of the 404 cases. Chapter 2: DOD Has Not Consistently

Documented Significant Adverse Security Conditions

Our Framework for Analyzing Adjudicative Case Files

Chapter 2: DOD Has Not Consistently Documented Significant Adverse Security
Conditions

Page 17 GAO- 01- 465 DOD Personnel

were up for renewal. We included cases adjudicated by the Air Force, the
Army, the Defense Intelligence Agency, the Defense Office of Hearings and
Appeals, the Navy, and the Washington Headquarters Services because these
six adjudication facilities collectively handled all key employee groups-
military and civilian personnel and contractors. We also included cases for
intelligence agency personnel.

Prior to beginning our case file reviews, our staff received adjudicator
training from the DSS Academy, which is the organization responsible for
training DOD adjudicators. We also studied and used the DOD regulations
implementing the federal adjudicative guidelines. As an aid in performing
our reviews, we used DOD's Adjudicative Desk Reference, which had been
recommended by DSS Academy training staff and officials in the Office of the
Assistant Secretary of Defense (C3I). 2

In our case file reviews, we recorded the significant adverse conditions and
the mitigating factors we found in the same investigative files the
adjudicators had used in their reviews. To ensure the uniformity of our
reviews, we developed a data collection instrument that listed all of the
specific security conditions and the general and specific mitigating factors
stated in the federal guidelines. To ensure that our instrument was accurate
and complete, officials in the Office of the Assistant Secretary of Defense
(C3I) and training staff from the DSS Academy reviewed it. We also pretested
the instrument using adjudicative case files from DOD's Defense Office of
Hearings and Appeals.

We used a multilevel review process to ensure the accuracy and consistency
of our case file reviews. First, two or more of our analysts reviewed each
sampled case. Second, at our request, the training staff from the DSS
Academy reviewed many of the cases with significant adverse information to
ensure that we had correctly applied the guidelines. They also assisted us
in determining the seriousness of a condition or whether a condition was
mitigated based on the facts contained in many case files. Third, because
only two of the six adjudication facilities had recorded data on the
specific adverse conditions and mitigating factors they identified in their
case files, we asked facility officials to provide any supplementary
information or adjudicative- related data to demonstrate which adverse
conditions they

2 Adjudicative Desk Reference (Version 99. 1 html), Defense Personnel
Security Research Center, DOD, January 1999.

Chapter 2: DOD Has Not Consistently Documented Significant Adverse Security
Conditions

Page 18 GAO- 01- 465 DOD Personnel

had identified during their reviews. Fourth, we provided the results of our
case reviews to DOD officials in the six adjudication facilities, the Office
of the Assistant Secretary of Defense (C3I), and the Office of the Deputy
General Counsel (Legal Counsel) for review. After considering all of the
information supplied by the adjudication facility staffs and the results of
the DOD officials? reviews of the cases, our analysts compared the extent to
which they and the adjudicators agreed on the presence or absence of
significant adverse conditions for each of the 13 federal adjudicative
guidelines. We further determined if information was present in the case
files to mitigate conditions that we found.

On the basis of our case reviews, we estimated that DOD adjudicators had not
documented all significant adverse conditions present in the case files in
33 percent of the 3,800 cases adjudicated for top secret clearances by the
six adjudication facilities in May 2000 (i. e., our study population), as
shown by figure 2. 3 For another 7 percent of the cases, adjudicators
recorded adverse conditions in their records, even though we either found no
evidence of such conditions in the case files or the conditions did not
appear to meet the criteria in DOD's regulations implementing the federal
guidelines. We agreed with the DOD adjudicators? records on the presence or
absence of adverse security conditions for the remaining cases.

3 Population values can be estimated using findings from a random sample.
Moreover, the precision of the estimates can be calculated. For example, the
33 percent estimate has a precision of  6 percentage points. That is, we
are highly confident that the population value lies between 27 and 39
percent. Unless noted otherwise, the precision level is also

 6 percentage points or less for our other findings from the combined
facilities and

 10 percentage points or less for the facility- specific findings. See app.
III. Adjudicators Have

Not Consistently Documented Significant Adverse Security Conditions

Chapter 2: DOD Has Not Consistently Documented Significant Adverse Security
Conditions

Page 19 GAO- 01- 465 DOD Personnel

Figure 2: Extent DOD Adjudicators Documented Significant Adverse Security
Conditions

Source: Population projections based on GAO's random sample from about 3,
800 clearance requests adjudicated in May 2000 by six DOD adjudication
facilities. See appendix III.

Adjudicators most frequently did not document significant adverse security
conditions related to financial problems, personal and criminal conduct, and
possible foreign influence as evidenced by their not being documented in
facility case files or other records. For the cases in our study population,
we estimated that

 12 percent contained one or more adverse financial conditions, including
large credit card debts, bankruptcies, and unexplained affluence, not
recorded by the adjudicators;

 10 percent contained one or more personal conduct conditions, including
omitting prior arrests from security questionnaires, not recorded by the
adjudicators;

 10 percent contained one or more foreign influence conditions, including
spouses who were not U. S. citizens, frequent travel to a foreign country,
or continuing contacts with foreign relatives, not recorded by the
adjudicators; and

60% * GAO agreed with adjudicators' identification of the presence or
absence of adverse conditions in case files.

33% 

Adjudicators did not identify at least one adverse condition GAO found in
case files.

 7%

Adjudicators identified at least one adverse condition not found by GAO in
case files.

Chapter 2: DOD Has Not Consistently Documented Significant Adverse Security
Conditions

Page 20 GAO- 01- 465 DOD Personnel

 6 percent contained one or more criminal conduct conditions, including
arrests, drug use and possession, and driving under the influence of
alcohol, not recorded by the adjudicators.

When requested, adjudication officials could not provide supplementary
information to demonstrate that such significant conditions were considered
even though DOD regulations require adjudicators to document how they
consider such conditions in their decisions on eligibility.

Some specific examples of these omissions follow:

 In a case involving a DOD civilian employee, adjudication facility records
did not document that the individual had a pattern of adverse financial
conditions in his background- a bad debt of $1,400 in 1989; a declared
bankruptcy in 1992; and a current credit card debt totaling $98,000.
Although this information was included in the individual's credit report,
the adjudicator did not record the financial matters as conditions to be
considered in the adjudication process. According to the federal
adjudicative guidelines, these conditions represent a security concern
because the individual has a history of not meeting financial obligations.

 In two cases involving military and civilian personnel, personnel security
investigations revealed that the individuals did not disclose arrests for
driving under the influence of alcohol and being drunk and disorderly. Yet,
these conditions were not documented in the adjudication facilities? records
as matters for consideration in the adjudication process. According to the
federal adjudicative guidelines, these conditions are security concerns
because the individuals lack candor or exhibit dishonesty and an
unwillingness to comply with established rules and regulations.

 In 17 cases involving military or civilian personnel, the adjudication
facilities? records did not show that the security investigations disclosed
that the individuals had foreign ties through continuing contact with
relatives who were citizens of foreign countries, spouses who were non- U.
S. citizens, or property owned in foreign countries but not disclosed on
security questionnaires. The federal adjudicative guidelines state that such
ties may present a security concern because the individuals may be (1)
subject to influence from citizens of a foreign country over the United
States, (2) placed in situations where the potential for foreign influence
could result in the compromise of classified information, or (3) potentially
vulnerable to coercion or pressure from a foreign government.

Chapter 2: DOD Has Not Consistently Documented Significant Adverse Security
Conditions

Page 21 GAO- 01- 465 DOD Personnel

The differences in documenting significant adverse conditions among the
adjudicators in the various adjudication facilities and between the
adjudicators and our analysts suggest that the adjudicators may not be
consistently applying the adjudicative guidelines. As shown by table 1, the
extent to which the adjudicators in the six facilities documented these four
conditions varied widely. For example, adjudicators in the Air Force and the
Washington Headquarters Services more frequently did not document conditions
related to financial matters and foreign influence.

Table 1: Estimated Percent of Cases With Significant Adverse Conditions Not
Documented by Six Adjudication Facilities

Adjudicative guideline Adjudication facility Financial

matters Personal conduct Foreign

influence Criminal

conduct

Air Force 13 14 15 8 Army 85 2 4 Navy/ Marine Corps 6 8 8 2 Defense
Intelligence Agency 135 5 2 Defense Office of Hearings and Appeals 55 4 7
Washington Headquarters Services 20 1 13 3 Percent for all six facilities 12
10 10 6

Source: Population projections based on GAO's random sample from about 3,
800 clearance requests adjudicated in May 2000. See appendix III.

The presence of mitigating information in the files might lessen the
potential risks of the adjudicators? omissions. However, on the basis of our
analysis, we estimated that 16 percent of the cases in our study population
had significant adverse conditions in their case files without any
mitigating information. In these cases, adjudication facility staff
determined that the individuals were eligible for top secret clearances in
the absence of information to mitigate adverse conditions. Some examples of
the types of cases we found with no mitigating information were individuals
who had (1) spouses, parents, children, and other relatives who were born in
foreign countries, such as the former East Germany, South Korea, and Syria
with no proof of U. S. citizenship; and (2) a history of financial problems,
such as bad debts; unpaid bills, including a failure to file and pay federal
income tax amounting to several hundreds of dollars; and large credit card
bills with no evidence in the case file that the individuals? income and
their spouses would be sufficient to meet the monthly

Chapter 2: DOD Has Not Consistently Documented Significant Adverse Security
Conditions

Page 22 GAO- 01- 465 DOD Personnel

payments. These types of conditions are listed in the federal adjudicative
guidelines as security concerns.

For example, in one case in which the adjudicator had not documented the
condition, we found no mitigating factor for the individual's pattern of
financial problems (four judgments for unpaid bills, two debts placed for
collection, and four accounts currently 30 to 120 days past due) that
occurred during the five- year period covered by the adjudication. In
another case, an individual had filed for bankruptcy, had three separate
actions to garnish wages for unpaid bills, and had one current overdue bill
during the current investigative period. For this case, the adjudicator
documented that the conditions were mitigated on the basis that (1)
bankruptcy is a legal means to satisfy creditors, (2) the three actions to
garnish wages had satisfied the unpaid debts, and (3) the current overdue
bill was only 30 days past due. We did not find the information sufficient
to mitigate this pattern of financial problems. In discussing this case with
DSS Academy officials, they stated that, in their opinion, the individual's
history showed a history of not meeting financial obligations, which the
adjudicative guidelines identify as a security concern.

Unexplained affluence was the adverse condition that was most frequently
neither documented nor mitigated. This was true for an estimated 7 percent
of the cases in our study population. As shown in figure 3, adjudicators in
the Washington Headquarters Services and the Defense Intelligence Agency did
not document or mitigate this condition most often. The Adjudicative Desk
Reference suggests that unexplained affluence should be considered a
potential concern when an individual's monthly payments exceed 20 percent of
his/ her take home pay. For the most part, the individuals in the cases
shown in figure 3 had credit card debts ranging from $20,000 to over
$200,000 according to their credit reports.

Chapter 2: DOD Has Not Consistently Documented Significant Adverse Security
Conditions

Page 23 GAO- 01- 465 DOD Personnel

Figure 3: Estimated Percent of Cases Where GAO Found an Unexplained
Affluence Condition Not Documented by the Six Adjudication Facilities

Source: Population projections based on GAO's random sample from about 3,
800 clearance requests adjudicated for top secret clearances in May 2000.
See appendix III.

The following cases are examples of the types of unexplained affluence that
we found in the files that were not documented by adjudicators.

 A DOD civilian employee who had credit card balances totaling $31,000 and
three mortgages totaling $1.2 million. Although the Adjudicative Desk
Reference excludes mortgage debt in determining unexplained affluence,
adjudication facility staff told us that the large credit card debt and
mortgages should have been identified and pursued as a potential unexplained
affluence condition. This individual's monthly credit and mortgage payments
amounted to nearly $12, 000. The Adjudicative Desk Reference suggests 20
percent of income as the level where a security concern should be noted;
this means that the individual would have had to take home about $60,000 a
month. As a federal employee, the individual's take home pay was far less
than that and the case file contained no information about income from other
members of the family or other

Air Force Army Navy DIA DOHA WHS All six

facilities

DIA Defense Intelligence Agency DOHA Defense Office of Hearings and Appeals
WHS Washington Headquarters Services

Percent of all cases 0 10

20 30

40 50

60 70

80 90

100 7 6 4

11 4

15 7

Legend

Chapter 2: DOD Has Not Consistently Documented Significant Adverse Security
Conditions

Page 24 GAO- 01- 465 DOD Personnel

sources. The individual also had a close association with a citizen of a
foreign country.

 Three DOD civilian and military personnel who had credit card balances of
$96,000, $136,000, and $225,000 listed on their respective credit reports.

 A DOD General Schedule- Grade 7 civilian employee who had credit card
balances totaling more than $40,000. In addition, this individual had also
failed to disclose travel to different foreign countries, including visits
to foreign relatives, on the security questionnaire.

DSS investigative guidance states that, in instances in which an
individual's financial history raises questions about his or her ability to
meet financial obligations, the investigator is to obtain a personal
financial statement for the record. In the cases we identified with
potential unexplained affluence issues, no such statements were present in
the files nor was there any indication that adjudicators had requested such
statements.

The six individual adjudication facilities in our case reviews differ widely
in (1) the types of records they maintain on their eligibility
determinations and (2) the manner in which they chose to apply and record
adverse security conditions. DOD Regulation 5200.2R requires that
adjudication facility staff keep records on the rationale for each
unfavorable security determination and each favorable determination in which
the investigation or other information has identified significant adverse
information. However, neither the regulation nor any other Assistant
Secretary of Defense (C3I) guidance specifies how detailed this rationale
must be, where it must be documented, or what constitutes unfavorable
information.

Only the adjudication staffs in the Defense Intelligence Agency and the
Defense Office of Hearings and Appeals routinely recorded data on the
specific conditions found in their cases and whether the conditions were
mitigated. Adjudication staffs in the Air Force and the Army recorded
adverse conditions at the broad guideline level, not the specific adverse
condition or the mitigating factor. For example, they sometimes noted that
there was a concern related to the financial guideline but not the specific
financial condition, such as whether it was a bankruptcy or unexplained
affluence, or the applicable mitigating factors. The Navy's adjudicative
documentation was similar to that of both the Air Force and the Army,
although Navy officials said that they planned to begin recording mitigating
information. The adjudication staff at the Washington Headquarters Services
recorded adverse information in a tracking system Record Keeping

Varies Among Adjudication Facilities

Chapter 2: DOD Has Not Consistently Documented Significant Adverse Security
Conditions

Page 25 GAO- 01- 465 DOD Personnel

and had a separate database, which was updated subsequent to our case file
review to include more information on mitigating factors.

In addition to the wide differences in the type of and amount of
adjudication information recorded, the adjudication facilities have differed
in the manner in which they have chosen to apply the federal guidelines and
record adverse security conditions. First, adjudication facility officials
explained that more experienced adjudicators sometimes adjudicated cases ?in
their heads? and, therefore, did not document the adverse condition in the
case files if they felt the condition was mitigated. Second, in cases
involving alcohol consumption and drug involvement, most adjudicators in
five of the six adjudication facilities also recorded criminal conduct
conditions, as appropriate, in addition to the alcohol or drug condition.
That is, adjudicators also recorded a criminal conduct condition for an
individual convicted of driving under the influence of alcohol or who
admitted to drug use or was charged with drug possession. If the individual
was a military member, adjudicators sometimes also recorded a personal
conduct condition since drug use or possession is a violation of military
personnel policies. In the sixth facility, however, most adjudicators
recorded only the primary condition, which was usually alcohol or drug use,
and not the relevant related criminal or personal conduct conditions.
Officials in the DSS Academy and the Office of the Assistant Secretary of
Defense (C3I) agreed that recording relevant additional conditions for
individuals who violated the alcohol or drug condition was appropriate for
applying the adjudicative guidelines.

Third, we found other inconsistencies in cases involving financial
conditions. Some facility adjudicators documented financial conditions for
past due bills with relatively small amounts but had not recorded more
serious conditions, such as financial judgments against an individual,
unpaid debts placed for collection, unpaid bills written off by creditors as
bad debts, past due bills between 30 to 120 days, and large credit card
bills.

Several problems stem from this lack of common documentation requirements.
First, in some cases, information documenting the rationale for decisions is
scattered between case files and other supplementary adjudication records;
and in other cases, the rationale may not be recorded at all. As a result,
adjudication staff must manually reconstruct their rationale for decisions
if questioned. Second, the scattered or absent documentation makes it
difficult for DOD or facility staff to perform meaningful oversight or
quality reviews to identify any systemic weaknesses in the adjudicative
process. Third, the differences in the

Chapter 2: DOD Has Not Consistently Documented Significant Adverse Security
Conditions

Page 26 GAO- 01- 465 DOD Personnel

manner of recording significant adverse conditions may give the impression
that certain conditions are more prevalent among certain DOD population
groups, when such differences may be due to the inconsistent manner in which
DOD adjudicators are applying and documenting their eligibility
determinations. Finally, the lack of standard documentation makes it
difficult for facilities to share information when personnel granted DOD
clearance eligibility move to positions in other DOD agencies or
departments. Consequently, time and resources might be used to readjudicate
(and possibly reinvestigate) the individual before the previous eligibility
expires. This lack of reciprocity was one of the problems that the federal
guidelines sought to address.

On the basis of our analysis of DOD adjudication case files, DOD
adjudicators have determined that many individuals are eligible for access
to top secret classified information without fully documenting potentially
significant adverse security conditions in their backgrounds, as called for
under DOD regulations implementing the federal adjudicative guidelines.
Without full documentation, it is difficult to determine if the adjudicative
determinations are based on a sound and consistent application of the
federal guidelines. Under these circumstances, DOD cannot demonstrate that
it has fully considered conditions that might call into question
individuals? ability to safeguard classified information before determining
their eligibility for access. DOD's potential risk is especially serious in
those cases in which the adjudicators do not document a security condition
for which no factors are present in the case files to mitigate the
condition. The lack of detailed documentation requirements for adjudicative
decisions hampers DOD's ability to perform meaningful quality reviews and
prevents it from demonstrating that it considered all relevant information.

To more fully document adjudication decisions, we recommend that the
Secretary of Defense direct that the Assistant Secretary of Defense
(Command, Control, Communications, and Intelligence) establish detailed
documentation requirements to support adjudication decisions, including all
significant adverse security conditions and any mitigating factors relevant
to each condition. Conclusions

Recommendation for Executive Action

Chapter 2: DOD Has Not Consistently Documented Significant Adverse Security
Conditions

Page 27 GAO- 01- 465 DOD Personnel

We received written comments on a draft of this report from the Department
of Defense that are reprinted in appendix I. The agency acknowledged that
the data in the report shows that, in many cases, adjudicators have not
clearly documented disqualifying or mitigating factors. The agency concurred
with our recommendation and described the actions it plans to take to
improve its documentation. Agency Comments

and Our Evaluation

Chapter 3: Several Factors Hinder the Effectiveness of DOD's Adjudicative
Process

Page 28 GAO- 01- 465 DOD Personnel

We identified several factors that have hindered the effectiveness of DOD's
adjudicative process. These have stemmed primarily from inadequate oversight
of the process by the Assistant Secretary of Defense (C3I). Specifically,
the Assistant Secretary has not (1) required adjudicators to use common
explanatory guidance, such as the Adjudicative Desk Reference, to promote
consistency in applying the federal guidelines or issued any other
clarifying guidance; (2) required adjudicators to take DOD adjudicative
training or afforded them continuing education opportunities to stay current
on how to apply the federal guidelines; and (3) established common quality
assurance mechanisms to identify any problem areas needing clarifying
guidance or training. Federal studies during the past decade noted drawbacks
to the decentralized structure DOD uses for its adjudicative process, such
as difficulties in performing oversight and ensuring that policy is
consistently implemented. If the process is to remain decentralized, strong
direction and oversight by the Assistant Secretary of Defense (C3I) are
required to promote consistency in applying the federal adjudicative
guidelines.

We believe that one possible reason for some of the adjudicators? failures
to document significant adverse conditions has been the absence of guidance
to assist them in applying the broad terms in the federal guidelines and
DOD's implementing regulations regarding what constitutes a condition that
should be documented. Although DOD has developed a tool to improve the
uniformity with which adjudicators apply the federal adjudicative
guidelines, DOD adjudicators have not been required to use it. As a result,
the tool has not been consistently used.

The federal adjudicative guidelines contain broad, general terms that allow
the use of judgment in their application. For example, to determine the
seriousness of certain conditions in an individual's background- such as
alcohol and drug use, criminal conduct, and foreign influence- the federal
guidelines call for adjudicators to consider, among other things, the

?frequency? and ?recency? of the conduct, whether foreign contacts were

?casual,? and whether foreign holdings were ?minimal.? The guidelines,
however, do not provide any guidance as to what represents a frequent or
recent action, a casual contact, or minimal holdings. Similarly, the
guidelines contain provisions that require an individual's financial
condition to be addressed, including unexplained affluence and a failure to
satisfy debts, but they do not provide guidance as to the amounts that can
represent thresholds for unexplained affluence or debt. As shown in appendix
V, 11 of the 13 adjudicative guidelines call for adjudicators to use these
general criteria in weighing the seriousness of a security condition.
Chapter 3: Several Factors Hinder the

Effectiveness of DOD's Adjudicative Process Guidance to Adjudicators Has
Been Inadequate

Chapter 3: Several Factors Hinder the Effectiveness of DOD's Adjudicative
Process

Page 29 GAO- 01- 465 DOD Personnel

In May 2000, the Defense Personnel Security Research Center published its
report commissioned by the Assistant Secretary of Defense (C3I) on the
impact of the new federal investigative standards and adjudicative
guidelines on DOD personnel security practices. 1 It noted that many of the
300 adjudication staff who participated in the study's surveys, workshops,
and focus groups identified a need to clarify terms used in the guidelines.
These included terms describing timing, frequency, and severity of behaviors
(e. g., current, recent, isolated, frequent, severe, and serious); and
financial interest (e. g., unexplained affluence, over- indebtedness, and
substantial financial interest). The Center concluded that such terms could
have different meanings to different individuals and therefore might
contribute to inconsistencies in the adjudicative process. The Center
recommended that DOD develop standard terminology to help clarify these
terms.

The Assistant Secretary of Defense (C3I) had earlier recognized the need for
more definitive guidance on the terms in the federal guidelines and had
tasked the Defense Personnel Security Research Center to develop a tool to
assist adjudicators in this regard. The end product of this effort was
publication of the Adjudicative Desk Reference in April 1997 and last
updated in January 1999. This reference tool provides clarifying criteria
for 7 of the 11 guidelines that require judgments considering such factors
as the frequency or recency of an individual's conduct. For example, when
considering financial matters such as delinquent payments, the Desk
Reference states that concerns may be mitigated if there has been no
recurrence in 1 year or the individual has participated in credit counseling
or a debt repayment program for at least 6 months.

However, the Assistant Secretary of Defense (C3I) has not adopted the
Adjudicative Desk Reference as official DOD adjudicative policy and has not
required adjudicators to use it in reviewing DOD case files. Nor has the
Assistant Secretary provided adjudicators with any other clarifying guidance
to use. Officials in the Office of the Assistant Secretary of Defense (C3I),
including those in the Defense Personnel Security Research Center, said
that, while the Desk Reference offers more specific guidance on the terms,
they feared that adjudicators might interpret it as a checklist that could
be substituted for a careful consideration of all the facts. According to
data obtained from the Center, 46 percent of DOD

1 Adjudicative Guidelines and Investigative Standards in the Department of
Defense,

Defense Personnel Security Research Center, DOD, Technical Report- 00- 2,
May 2000.

Chapter 3: Several Factors Hinder the Effectiveness of DOD's Adjudicative
Process

Page 30 GAO- 01- 465 DOD Personnel

adjudicators responding to its survey for its May 2000 report said that they
used the Desk Reference to a great or very great extent. The remaining 54
percent used the Desk Reference either to a moderate or slight extent or not
at all. In conducting our independent assessments of a sample of
adjudicative cases, our analysts used the Desk Reference because its use had
been recommended by DSS Academy training staff and by an official in the
Office of the Assistant Secretary of Defense (C3I). In discussing the
results of our case file reviews with adjudication officials, we found the
Desk Reference to be a valuable tool that provided a common frame of
reference to our respective determinations. On the basis of our analysis of
adjudicative cases described in chapter 2, we do believe that DOD cannot
show that careful consideration has been given to all the significant
conditions identified when adjudicating cases, and that greater use of a
tool to clarify the broad terms in the federal guidelines could help to
promote consistent application of the guidelines.

The Assistant Secretary of Defense (C3I) has not issued any further
clarifying guidance since developing the Adjudicative Desk Reference.
However, because the May 2000 study surfaced continuing questions about the
definition of terms in the guidelines, the Assistant Secretary has asked the
Defense Personnel Security Research Center to again review the federal
guidelines and identify what additional guidance is needed. As part of this
effort, the Center is using the Adjudicative Desk Reference it developed as
a starting point to determine whether additional guidelines need
clarification and if further clarification of the guidance in the Desk
Reference is needed. DOD has not established a time frame for the Center to
complete its work.

The Assistant Secretary of Defense (C3I) has not established uniform
training requirements for DOD adjudication facility staffs, and as a result,
DOD adjudicators have not received common training and continuing education
in applying the federal guidelines. Without sufficient and common training
and continuing education for adjudicators, DOD cannot ensure that all
adjudicators have acquired the required knowledge and skills necessary to
apply the federal guidelines to consistently identify, record, and determine
whether security conditions are appropriately mitigated. Adjudication Staffs

Have Not Received Common DOD Training

Chapter 3: Several Factors Hinder the Effectiveness of DOD's Adjudicative
Process

Page 31 GAO- 01- 465 DOD Personnel

Under Executive Order 12968, eligibility for access to classified
information is to be based on judgments by appropriately trained
adjudicative staff. To implement this directive, DOD offered adjudicative
training for many years. Between 1997 and 1999, personnel security training
of all types, including that related to adjudication, was significantly
restructured and a DSS Academy was established in July 1999. The DSS Academy
took steps to ensure that its adjudicative training was consistent with the
federal adjudicative guidelines. It uses a DOD contractor specializing in
education and a stakeholder panel to perform formal curriculum reviews of
the training. The panel is composed of representatives from the Office of
the Assistant Secretary of Defense (C3I), the adjudication facilities, and
the military service commands. The core adjudicative training is contained
in a basic course for new adjudicators and an advanced course for
experienced adjudication staff. These two courses cover such topics as how
to identify adverse security conditions, apply the mitigating factors, and
resolve complex issues.

Although DOD has devoted much effort to develop adjudicative training, the
Assistant Secretary of Defense (C3I) has not defined or required a specific
training regimen for DOD adjudicators. As part of our review, we determined
the extent to which adjudication staff had received adjudication training.
We focused on training taken since 1995, the time when the adjudicative
guidelines were being circulated within DOD and the Academy began to include
them in its courses. Information submitted by all eight adjudication
facilities indicated that about half of the 183 adjudicative staff (52
percent) on board in fiscal year 2000 had taken a single course from the
Academy. Thirty- eight of the 183 adjudicative staff (21 percent) had taken
the official two Academy courses since the federal guidelines were
developed. The numbers taking the full range of DOD training varied by
adjudication facility. In the Defense Intelligence Agency, none of the 9
adjudicators had taken any Academy training since the federal guidelines
were developed; and 1 adjudicator of 9 in the National Security Agency, 3 of
48 in the Army, 3 of 7 in the Washington Headquarters Services, and 4 of 36
in the Air Force had recently taken training.

Officials in seven of the eight adjudication facilities stated that they
conducted their own internal training to supplement the DSS Academy
training. The internal training consisted of a combination of (1) on- the-
job training, (2) adjudicative seminars and independent study programs, (3)
formal classroom and computer- based training, and (4) contractor courses.
Overall, 11 percent of the adjudication staff that had taken some Training
Academy Offers

Training but Not All Adjudicators Attend

Other Adjudicator Training Exists but May Not Provide Common Approach

Chapter 3: Several Factors Hinder the Effectiveness of DOD's Adjudicative
Process

Page 32 GAO- 01- 465 DOD Personnel

adjudication training since the new guidelines were being developed had
taken training at organizations besides the DSS Academy, either at the
adjudication facility or elsewhere. Appendix VI shows the number of
adjudication staff who had taken DSS Academy training as well as training
taken from other organizations since the federal guidelines were developed.

Although adjudication facility officials believe that this supplemental
training can often compensate for the lack of centralized training, it is
not without its drawbacks. For example, neither the Office of the Assistant
Secretary of Defense (C3I) nor the DSS Academy staffs have reviewed the non-
Academy training to ensure that the content is consistent with the federal
adjudicative guidelines. Moreover, although adjudication facility officials
believe that sending experienced staff to basic or advanced DSS Academy
adjudication training would be redundant of their past training or
experience, these adjudicators may not have received current training in the
federal guidelines. While the staff may have extensive experience and may
have taken training in the past, the practices, procedures, and habits that
adjudication staff learned may be inconsistent with today's requirements.

The DSS Academy does not offer continuing education training for
adjudicators, although Academy staff acknowledged that such training is
needed. Adjudicators themselves have expressed the need for such training.
According to DOD's Defense Personnel Security Research Center, over 70
percent of the adjudicators who responded to its survey on the adequacy of
adjudication training agreed to a moderate or greater extent that they
needed additional training on applying the federal adjudicative guidelines.
2 Moreover, a 1998 DOD Inspector General review of DOD's adjudicative
process noted that adjudicators were not receiving continuing education
training, nor was there a training development plan for adjudicators that
would allow them to work toward a certificate of adjudication. 3 The
Inspector General also noted that if adjudicators trained together,
reciprocity in clearance determinations would increase within DOD and that
other government agencies might more readily accept DOD clearances,
eliminating excessive and unnecessary delays caused by

2 Adjudicative Guidelines and Investigative Standards in the Department of
Defense.

3 Department of Defense Adjudication Program, Report No. 98- 124, Office of
the Inspector General, Department of Defense, April 27, 1998. Adjudicators
Are Not

Provided Continuing Education Opportunities

Chapter 3: Several Factors Hinder the Effectiveness of DOD's Adjudicative
Process

Page 33 GAO- 01- 465 DOD Personnel

conducting another adjudication. The Inspector General recommended that DOD
address these training weaknesses by establishing continuing education
standards and a program to encourage the development and certification of
professional adjudicators, but at the time we completed our fieldwork, DOD
had not done so.

The Assistant Secretary of Defense (C3I) has relied on staffs in the
adjudication facilities to implement quality assurance programs and ensure
that their clearance actions are consistent with the federal guidelines.
However, it has not established uniform quality assurance procedures to be
followed by DOD's adjudication facility staffs. As a result, different
procedures are followed throughout DOD to determine the quality of
adjudications and consistency in the application of the federal guidelines.
Moreover, the results of such efforts are largely not documented. Without
systematic and documented periodic reviews of all the adjudicative work,
neither DOD nor adjudication facility officials have the information they
need to oversee or manage the process and to ensure that clearance decisions
are made in accordance with DOD regulations implementing the federal
guidelines.

DOD Regulation 5200.2R specifies levels of supervisory review over clearance
eligibility determinations and requires the components to ensure that the
personnel security program is included in their inspection programs covering
administrative matters. However, the regulation does not specifically
require the DOD components? adjudication facility staff to periodically
assess adjudicative actions and report on the extent to which adjudications
are consistent with federal guidelines. Officials in the Air Force, the
Navy, the Defense Office of Hearings and Appeals, and the National Security
Agency adjudication facilities said that they had conducted various types of
reviews and that their assessments had shown no significant problems in
their adjudication work. However, none could provide documentation on the
results of their reviews. None of the other four facilities had formal
quality assurance programs, although some had conducted various internal
control and management assessments.

Because of the decentralized structure of DOD's adjudicative process, strong
direction and oversight are required to ensure that the many entities
involved in the process consistently apply the federal adjudicative
guidelines. Three studies done by DOD's Defense Personnel Security Research
Center, the Joint Security Commission, and the DOD Inspector An Effective
Quality

Assurance Program Is Not in Place

Decentralized Process Requires Stronger Oversight

Chapter 3: Several Factors Hinder the Effectiveness of DOD's Adjudicative
Process

Page 34 GAO- 01- 465 DOD Personnel

General between 1991 and 1998 concluded that the decentralized structure had
definite drawbacks. For example, the studies noted that

 personnel security policy may not be implemented fairly and consistently,
leading to varying interpretations and applications of adjudicative
guidelines;

 oversight was difficult and may not have been as effective as it would
have been had the adjudication facilities been consolidated;

 developing, coordinating, and implementing new adjudicative policy was
difficult; and

 the adjudicative process was not cost efficient because of the number of
small facilities that were not large enough to operate efficiently.

The Defense Personnel Security Research Center and the Joint Security
Commission recommended that DOD consolidate its adjudication facilities
(with the exception of the National Security Agency because of the sensitive
nature of its work) into a single entity. The studies noted that this
consolidation would achieve both direct savings through reduced costs and
indirect savings through improvements in customer satisfaction, adjudicative
consistency and quality, and timeliness. In the other study, the DOD
Inspector General cited the benefits of consolidation but did not make a
recommendation. However, the Inspector General noted that without
consolidation, DOD needed to improve and streamline its adjudicative
procedures to provide consistent and timely security clearance
determinations and efficient customer service. Appendix IV summarizes the
results of these three studies.

In 1993, DOD partially consolidated its adjudication facilities by reducing
them from 19 facilities to the eight in existence today. Officials in the
Office of the Assistant Secretary of Defense (C3I) told us that further
facility consolidation would help to achieve more consistency in applying
the federal guidelines. However, all of the facility heads, with the
exception of the Navy, oppose further consolidation for various reasons,
such as the fact that each facility performs unique functions in addition to
adjudication that might be lost under a consolidated facility. The Army
adjudication facility staff, for example, also support screening boards for
general officer, colonel, drill sergeant, recruiter, and senior executive
service positions. Although resisting physical consolidation, the facilities
have agreed to implement the automated Joint Personnel Adjudication System,
which is designed to virtually consolidate DOD's adjudicative management
information in late 2001. We did not fully evaluate the merits of
consolidation, however, we believe that if the process is to remain
decentralized, the Assistant Secretary of Defense (C3I) will have to

Chapter 3: Several Factors Hinder the Effectiveness of DOD's Adjudicative
Process

Page 35 GAO- 01- 465 DOD Personnel

provide explicit direction regarding documentation, guidance, and training
and strong oversight, such as quality assurance reviews, to counter the
drawbacks noted by the above studies.

The decentralized manner in which DOD adjudications are conducted makes it
imperative that the entity charged with policy direction and oversight take
a strong role in guiding and directing the adjudicative process. Thus far,
the Assistant Secretary of Defense (Command, Control, Communications, and
Intelligence) has not performed this role in an effective manner. As it is,
the officials at the multiple adjudication facilities have been permitted to
operate with a high degree of independence with little oversight, each with
its own methods for training its staff, documenting its adjudicative
decisions, and monitoring its work. Under this decentralized structure, DOD
can hope to achieve greater effectiveness in its adjudicative process only
by providing stronger direction than it has in the past.

Without clear guidance and common training, adjudicators may have difficulty
in reaching an informed judgment on whether a given security condition is
significant enough to warrant disapproving or revoking access to classified
information. As a result, determinations among adjudicators may vary widely.
The differences in the adjudicative process can be an obstacle to achieving
reciprocity with other DOD and executive branch organizations- a key problem
that the federal adjudicative guidelines were intended to address. DOD's
preparation of an Adjudicative Desk Reference was a positive step in
promoting a common understanding of general terms in the federal guidelines.
While further refinements may be needed, it would seem that requiring its
use as an adjudicative aid or providing another form of clarifying guidance
would at least be a positive step toward making DOD's adjudicative process
more effective.

Similarly, the lack of a required training regimen and opportunities for
continuing education for DOD adjudicators inhibits a common understanding of
how to apply the federal guidelines. We believe that the lack of common
training could perpetuate inconsistent adjudicative determinations. And, the
absence of a prescribed quality assurance program prevents DOD from
systematically evaluating whether the adjudications are done in accordance
with DOD's regulations implementing the federal guidelines. Such quality
assurance information is needed for effective oversight of the adjudicative
process. Conclusions

Chapter 3: Several Factors Hinder the Effectiveness of DOD's Adjudicative
Process

Page 36 GAO- 01- 465 DOD Personnel

To provide better direction to DOD's adjudication facility officials,
promote consistency in applying the federal guidelines, and provide stronger
oversight, we recommend that the Secretary of Defense direct the Assistant
Secretary of Defense (Command, Control, Communications, and Intelligence) to

 require that all DOD adjudicators use common explanatory guidance, such as
that contained in the Adjudicative Desk Reference,

 establish common adjudicator training requirements and work with the
Defense Security Service Academy to develop appropriate continuing education
opportunities for all DOD adjudicators, and

 establish a common quality assurance program to be implemented by
officials in all DOD adjudication facilities and monitor compliance through
annual reporting.

We received written comments on a draft of this report from the Department
of Defense that are reprinted in appendix I. The agency acknowledged that it
needs to develop more precise and relevant reference material for its
adjudicators, improve and expand on training opportunities for its
adjudicators, and provide an effective quality assurance program to better
ensure uniformity and standardization among the adjudication facilities in
support of the agency's mission objectives. The agency concurred with our
recommendations and described the actions it plans to take to improve its
guidance, training, and quality assurance program. Recommendations for

Executive Action Agency Comments and Our Evaluation

Appendix I: Comments From the Department of Defense

Page 37 GAO- 01- 465 DOD Personnel

Appendix I: Comments From the Department of Defense

Appendix I: Comments From the Department of Defense

Page 38 GAO- 01- 465 DOD Personnel

Appendix I: Comments From the Department of Defense

Page 39 GAO- 01- 465 DOD Personnel

Appendix I: Comments From the Department of Defense

Page 40 GAO- 01- 465 DOD Personnel

Appendix II: DOD's Adjudication Facilities

Page 41 GAO- 01- 465 DOD Personnel

The Assistant Secretary of Defense, (Command, Control, Communications and
Intelligence) is responsible for overseeing the adjudicative process in the
Department of Defense (DOD). Eight adjudication facilities are responsible
for making adjudicative determinations for clearance eligibility. Facility
officials report to the heads of their respective military departments or
defense agencies through various organizational elements within their
respective components. Table 2 shows the organizations to which each
facility reports as well as their budget, staffing, and workload for fiscal
year 2000. These decentralized adjudication facilities are located in the
Washington, D. C.- Baltimore, Maryland, metropolitan area.

Table 2: DOD Adjudicative Budget, Staffing, and Workload for Fiscal Year
2000 by Adjudication Facility and Reporting Organization

Adjudication facility Budget

(in millions a ) Number of

total facility staff

Number of adjudicative

staff Number of adjudications Reporting organization

Air Force $5.2 78 36 69,000 Administrative Assistant to the Secretary of the
Air Force Army 5.7 101 48 28,000 Adjutant General, U. S. Army

Personnel Command Defense Intelligence Agency Not available 25 9 5,000
Counterintelligence and

Security Activity, Directorate of Administration, Defense Intelligence
Agency Defense Office of Hearings and Appeals 8.1 64 12 b 10,200 c Defense
Legal Services

Agency Joint Chiefs of Staff .05 5 2 2, 000 Directorate of Management,

Joint Staff National Security Agency Not available 26 9 4, 200 Office of
Security Services,

National Security Agency Navy 4.4 72 60 51,000 Naval Criminal Investigative

Service Washington Headquarters Services 1.0 12 7 16,000 Personnel and
Security

Directorate, Washington Headquarters Services

Total $24.45 383 183 185,400 d

a Dollars were rounded. b The Defense Office of Hearings and Appeals also
has 14 administrative judges who consider appeals but also adjudicate cases
with significant adverse security conditions.

Appendix II: DOD's Adjudication Facilities

Appendix II: DOD's Adjudication Facilities

Page 42 GAO- 01- 465 DOD Personnel

c About 79,000 other industrial personnel clearance requests were handled by
the Defense Industrial Security Clearance Office in the Defense Security
Service (DSS) rather than the Defense Office of Hearings and Appeals because
the related investigations disclosed no adverse conditions. Concurrent with
our review, DOD's Office of the Inspector General reviewed the adequacy of
DSS's adjudication process for granting contractor security clearances. See
DOD Adjudication of Contractor Security Clearances Granted by the Defense
Security Service, Report No. D- 2001- 065, Office of the Inspector General,
DOD, February 28, 2001. d The number of clearance adjudications made in
fiscal year 2000 was less than prior years. For the

prior 5 fiscal years, DOD made, on average, 277,500 adjudications per year;
the lowest number of adjudications made was 241,300 in fiscal year 1999.

Source: GAO analysis of data from DOD adjudication facility officials.

Appendix III: GAO's Sampling Methodology Used in Reviewing DOD Adjudications

Page 43 GAO- 01- 465 DOD Personnel

To determine whether DOD consistently documented significant adverse
security conditions, we sampled 404 cases from the 3,806 requests for top
secret clearance eligibility that were adjudicated by six of the eight DOD
adjudication facilities in May 2000 (see table 3). We selected separate
random samples for the Air Force, the Army, the Defense Intelligence Agency,
the Defense Office of Hearings and Appeals, the Navy, and the Washington
Headquarters Services. When we began reviewing the cases, however, we found
that the adjudication facility officials had erroneously listed cases that
should not have been in the population. We, therefore, adjusted the numbers
for the populations to reflect the actual number of correctly categorized
cases in the sample.

Table 3: Number of Top Secret Adjudications Made by Adjudicators in Six DOD
Facilities and Sampled by GAO DOD adjudication facility Adjusted number of
adjudicative

actions in May 2000 Adjusted number of adjudications sampled by GAO

Air Force 2, 122 93 Army 1,148 85 Defense Intelligence Agency 82 47 Defense
Office of Hearings and Appeals 94 52 Navy 97 48 Washington Headquarters
Services 263 79

Total 3,806 404

Source: GAO compilation of DOD adjudications in May 2000 for six DOD
adjudication facilities.

The sampling strategy (i. e., the number of cases selected) was designed to
yield a precision of  10 percentage points or less for findings that
described each adjudication facility. In addition to obtaining this
precision for facility- specific findings, the finding for the combined six
facilities was

 6 percentage points or less. All precision rates were constructed using a
95- percent confidence level.

This sampling strategy permitted us to project findings to the study
population of approximately 3,800 top secret cases. The findings are
provided as percentages rather than numbers of cases because of the problems
encountered in obtaining accurate lists of the May 2000 populations from
adjudication facility officials. The percentages presented in the report are
estimates of the occurrence of our findings for the adjudicative actions in
May 2000 shown in table 3.

The details of our framework for case file reviews are presented in chapter
2. Appendix III: GAO's Sampling Methodology

Used in Reviewing DOD Adjudications

Appendix IV: Prior Reviews of DOD's Adjudicative Process

Page 44 GAO- 01- 465 DOD Personnel

Three federal studies done between 1991 and 1998 assessed DOD's adjudicative
process. The studies found problems in oversight, inconsistencies in
adjudicating clearance eligibility, and cost inefficiencies. The results of
these studies are summarized below.

The Defense Personnel Security Research Center was founded in 1986 to
conduct research to improve the effectiveness, efficiency, and fairness of
DOD security systems. In March 1991, the Deputy Under Secretary of Defense
(Security Policy) directed the Center to study DOD's adjudicative process. 1
At that time, DOD had 19 adjudicative facilities and the study's objective
was to determine if DOD could improve its efficiency and effectiveness by
consolidating these facilities. The four areas reviewed were (1) the total
cost of the system; (2) customer satisfaction; (3) the quality, consistency,
and timeliness of clearance decisions; and (4) the ability of the system to
adapt to changing conditions. The Center gathered data on the structure and
functions of the facilities and held structured interviews with facility
staff. The Center found both strengths and weaknesses in the decentralized
system. Among the strengths, it found that the facilities did ?reasonably
well? in meeting DOD goals for customer requirements and priorities and that
adjudicative staff were trained and experienced in meeting the needs and
requirements of their respective components. The study also found three
weaknesses:

 First, personnel security policy may not have been implemented fairly and
consistently, leading to varying interpretations and applications of
adjudicative guidelines.

 Second, monitoring was difficult and may not have been as effective as it
might have been in a more consolidated structure. It stated that with the 19
facilities, it was difficult, and sometimes impossible, for DOD to implement
common automation changes; develop, coordinate, and implement new
adjudicative policy; and implement procedures to ensure the timely and
coordinated flow of adjudicative information throughout the system.

 Third, the system was potentially inefficient in terms of cost. Some small
facilities, it stated, were not large enough to operate efficiently and
could be more efficient if the smaller facilities were combined.

1 Consolidation of Personnel Security Adjudication in DOD, Defense Personnel
Security Research Center, DOD, PERS- TR- 92- 001, October 1991. Appendix IV:
Prior Reviews of DOD's

Adjudicative Process Study by the Defense Personnel Security Research Center
(1991)

Appendix IV: Prior Reviews of DOD's Adjudicative Process

Page 45 GAO- 01- 465 DOD Personnel

The Center concluded that these weaknesses resulted from the large number of
facilities, and it proposed two consolidation options. The first option
assigned all DOD adjudicative operations, except the National Security
Agency, to six authorities instead of 19 facilities. 2 Three facilities
would make clearance and access determinations for the Army, the Air Force,
and the Navy; a consolidated defense agency facility would adjudicate
clearance determinations for the defense and intelligence agencies, such as
DOD Inspector General staff; an organization in the Office of the Secretary
of Defense would adjudicate Defense Intelligence Agency clearances; and two
separate organizations would be merged into one to adjudicate industry
clearances. The Center noted that this option would require one- time
consolidation costs for moving offices, building upgrades, and purchasing
furniture and automation equipment. Over 10 years, the Center estimated cost
savings of $10 million over the then current system of 19 facilities.

Under the Center's second option, all DOD adjudication facilities, except
the National Security Agency, would be consolidated into one. This option
was intended to (1) improve DOD adjudicative operations by streamlining
command and control, (2) ensure uniform implementation of DOD policy and
procedures, and (3) maximize the potential for cost savings. Under this
option, the consolidated facility would be under the authority of the
Assistant Secretary of Defense (C3I). Some of the existing adjudication
facility heads expressed concerns that this option might not be responsive
to the special requirements and priorities of individual components and,
lacking adjudicative authority, the components could not direct the facility
to be more responsive to their requirements. To address these concerns, the
Center proposed that DOD establish two advisory boards under the Assistant
Secretary to formally review aspects of the facility's operations: a
Standards Review Board to ensure compliance with applicable standards and
procedures and a Requirements Review Board to ensure that component
personnel security programs were being supported and priorities were being
met.

Under this full consolidation option, the Center estimated cost savings over
a 10- year period of $41 million. These savings would result from:

2 Consolidating the National Security Agency adjudicative functions was not
considered because of its highly sensitive mission, and historically the
agency has maintained close control over adjudicating personnel with access
to its intelligence information.

Appendix IV: Prior Reviews of DOD's Adjudicative Process

Page 46 GAO- 01- 465 DOD Personnel

 annual reductions of work years by eliminating duplicate adjudications and
performance improvement resulting from the larger facility taking less time
to adjudicate cases than small facilities,

 economies of scale that would reduce the number of required work years for
adjudication, and

 reduced labor costs based on a more efficient grade structure and span of
control in a large facility than in smaller ones.

Despite what it cited as the compelling advantages for consolidating DOD's
adjudicative functions under a single facility, the Center recommended that
option 1 (six facilities) was a more conservative course for DOD. It stated
that despite the risks, the implementation of a single adjudication facility
was favored because it was consistent with the current consolidation trend
in DOD that resulted from shrinking resources and changing missions. The
Center concluded by noting that if DOD decided to implement option 1, this
consolidation would be compatible with any future decision to consolidate
into one organization. It stated that the most efficient manner to move from
the current system of multiple facilities to one facility was to use a
phased implementation plan and six facilities was a natural evolution from
the current system. It stated that DOD could first implement a partial
consolidation under option 1 and then assess the feasibility of moving to a
single adjudication facility (option 2) at a future date.

Instead of the options proposed by the Center, in September 1993, DOD chose
to consolidate its 19 adjudication facilities into eight- the structure
currently in place. DOD's rationale was that this structure was the best way
to ensure efficiency, customer responsiveness, and the quality of
adjudicative work. Instead of the six facilities recommended by the Center,
DOD chose to maintain two separate organizations to adjudicate clearances
for the Joint Chiefs of Staff and the National Security Agency, resulting in
the eight facilities that exist today.

In 1994, the Joint Security Commission issued a report that included its
assessment of DOD's adjudicative process. 3 The Commission, formed at the
request of the Secretary of Defense and the Director of Central
Intelligence, was to develop a more simplified, uniform, and cost- effective

3 Redefining Security: A Report to the Secretary of Defense and the Director
of Central Intelligence, Joint Security Commission, February 28, 1994. Study
by the Joint Security

Commission (1994)

Appendix IV: Prior Reviews of DOD's Adjudicative Process

Page 47 GAO- 01- 465 DOD Personnel

approach to security that would not diminish protection. It drew upon the
advice and expertise of staff from the Central Intelligence Agency, DOD, the
National Security Agency, and the Department of Energy and obtained views
from policymakers, Members of the Congress, military and industry
representatives, and public interest groups. The Commission noted that, at
the time it was conducting its work, DOD was consolidating its 19
adjudication facilities into 8. However, it noted that, staffing at the
facilities varied widely (one facility had only one person) and all of the
facilities were substantially understaffed and faced significant budget
reductions. The Commission found the adjudication structure inefficient and
the adjudication facilities were untimely in their actions and were not
meeting customer needs. It also noted that few of the facilities had
strategic plans in place for their operations or used automation to manage
their processes.

The Commission concluded that DOD would benefit substantially from
consolidating its adjudicative facilities into one organization. In its
opinion, larger facilities tended to be more efficient than smaller ones,
and in addition to direct savings resulting from maintaining a single
adjudication facility instead of eight, DOD would accrue substantial savings
through increased improved timeliness of clearance actions and better
responsiveness to customer needs. The Commission recommended that DOD merge
all of its adjudicative facilities (except the National Security Agency)
into one organization reporting to the appropriate Under Secretary or
Assistant Secretary of Defense. DOD has taken no action to respond to the
Commission's recommendation.

In April 1998, DOD's Inspector General reviewed DOD's adjudicative process
to determine the feasibility of consolidating DOD adjudication facilities. 4
In conducting its work, the Inspector General (1) analyzed data from DOD
adjudication facilities on operating costs, staffing, and adjudication
workload from fiscal year 1994 through 1997 and (2) interviewed officials
from the Office of the Assistant Secretary of Defense (C3I), the
adjudication facilities, and other DOD components. Similar to the findings
of the Defense Personnel Security Research Center and the Joint Security
Commission, the Inspector General found that DOD needed to improve and
streamline its adjudication procedures to provide

4 Department of Defense Adjudication Program, Report No. 98- 124, Office of
the Inspector General, Department of Defense, April 27, 1998. Study by the
DOD

Inspector General (1998)

Appendix IV: Prior Reviews of DOD's Adjudicative Process

Page 48 GAO- 01- 465 DOD Personnel

consistent and timely security clearances. For example, the Inspector
General found that although uniform federal adjudicative guidelines were
adopted in 1997, clearance transfers continued to entail paperwork and that
administrative action and reciprocal acceptance was not automatic. The
Inspector General noted that such administrative processing could delay the
transfer of the clearance from 1 week to several months, even though the
person was fully eligible for a security clearance and program access in his
or her prior organization. The Inspector General also noted that customers
of the adjudication facilities had expressed dissatisfaction with the time
it took to make clearance decisions. For example, the Inspector General
cited that Army clearances with adverse conditions took from 153 to 212 days
to process and Air Force cases took, on average, 360 days to process. The
Inspector General also found inefficient practices and confusion among the
DOD joint combatant commands as a result of having to deal with multiple
adjudication facilities and variances in processing clearance requests. For
example, the Inspector General noted that (1) the commands used guidance and
forms specific to each adjudication facility to process personnel security
clearances and (2) the variation in processing and forms could be confusing
for staff supporting the commands? security functions, since some of them
operated without formal training and supported the function as an additional
duty. Although the Inspector General noted that consolidation of DOD
adjudication facilities into a single entity was feasible and had merits, it
did not take a position on the matter. However, the Inspector General stated
that with or without consolidation, DOD needed to improve and streamline its
adjudication procedures to provide consistent and timely security clearances
and efficient customer service.

Appendix V: Criteria for Mitigating Security Conditions

Page 49 GAO- 01- 465 DOD Personnel

Table 4 describes the federal adjudicative guidelines and certain mitigating
criteria that call for adjudicators to use judgment in applying general
terms when making clearance eligibility determinations.

Table 4: Examples of Mitigating Conditions Requiring Judgment Regarding
Broad Terms in the Federal Guidelines

Adjudicative guideline a Examples of mitigating security conditions
containing broad terms

Allegiance to the United States Involvement in questionable activities
occurred for only a short period of time or was not recent. Foreign
influence Contact and correspondence with foreign

citizens are casual and infrequent. Foreign financial interests are minimal.
Sexual behavior The behavior was not recent. Personal conduct Omission or
falsification of relevant facts on a

security questionnaire or falsification to or concealment from an
investigator, security official, or others was not recent. Financial
considerations A history of unsatisfied financial obligations or

debts was not recent or was an isolated incident. Unexplained affluence was
from a legal source. Alcohol consumption The alcohol problem occurred a
number of

years ago and there is no indication of a recent problem. Drug involvement
Drug involvement was not recent. Emotional, mental, and personality
disorders There is no indication of a current problem.

There is a recent opinion made by a mental health professional that the
disorder is cured, under control or in remission, and has a low probability
of recurrence or exacerbation. The past emotional instability was a
temporary condition. Criminal conduct Criminal behavior was not recent or
was an

isolated incident. Security violations The violations were isolated or
infrequent.

Misuse of information technology systems The violations were isolated. a Two
guidelines (foreign preference and outside activities) were not included
because they do not

require assessments of recency, frequency, etc. Criteria listed are from the
federal adjudicative guidelines.

Source: GAO review of the Office of the Assistant Secretary of Defense (C3I)
memorandum of November 10, 1998, on Personnel Security Investigations and
Adjudications, Attachment 1: Adjudicative Guidelines for Determining
Eligibility for Access to Classified Information.

Appendix V: Criteria for Mitigating Security Conditions

Appendix VI: Training Taken by DOD Adjudicators Since 1995

Page 50 GAO- 01- 465 DOD Personnel

This appendix describes the adjudicative training taken by DOD adjudicators
since 1995, the time when the federal adjudicative guidelines were being
circulated within DOD and incorporated into Defense Security Service Academy
courses. Table 5 includes both formal training offered by the DSS Academy
and other training offered by the adjudication facilities and other
organizations.

Table 5: Adjudicative Training Taken by DOD Adjudicators Since 1995
Adjudication facility Number of

adjudicators a Number

(percent) receiving any

training b Number (percent) receiving DSS Academy training

Number (percent) receiving non- DOD

training One course taken Two courses

taken

Air Force 36 27 (89%) 27 (75%) 4 (11%) 0 Army 48 41 (35%) 30 (62%) 3 (6%) 11
(23%) Defense Intelligence Agency 9 5 (56%) 0 0 5 (55%) Defense Office of
Hearings and Appeals 12 c 9 (75%) 9 (75%) 9 (75%) 0 Joint Chiefs of Staff 2
2 (100%) 2 (100%) 2 (100%) 0 National Security Agency 9 5 (56%) 2 (22%) 1
(11%) 3 (33%) Navy 60 22 (37%) 20 (33%) 16 (27%) 2 (3%) Washington
Headquarters Services 7 5 (71%) 5 (71%) 3 (43%) 0

Total 183 116 (63%) 95 (52%) 38 (21%) 21 (11%)

a Adjudicators on board in fiscal year 2000. b Consists of DSS Academy and
other training to include formal and informal programs, such as conferences,
seminars and on- the- job training. c Defense Office of Hearings and Appeals
data includes training taken by adjudicators since they were involved in the
cases GAO reviewed and excludes information for the 14 administrative judges
who consider appeals but also adjudicate cases with significant adverse
security conditions.

Source: GAO analysis of data provided by DOD adjudication facilities.

Appendix VI: Training Taken by DOD Adjudicators Since 1995

Appendix VII: GAO Contacts and Staff Acknowledgments

Page 51 GAO- 01- 465 DOD Personnel

Christine Fossett (202) 512- 2956 Rodney Ragan (202) 512- 4158

In addition to those named above, Frank Bowen, John Brosnan, Tracy Brown,
Leo Clarke, Carole Coffey, Jack Edwards, Brian Hackett, Ernie Jackson,
Arthur Kendall, Bennett Quade, Jane Trahan, Dale Wineholt, and Susan
Woodward made significant contributions to this report. Appendix VII: GAO
Contacts and Staff

Acknowledgments GAO Contacts Acknowledgments

(702028)

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