Contractors Clearing Contractors Shows U.S. Secret Access Spike

Source: The Guardian via Getty Images

Edward Snowden, a former technical assistant for the Central Intelligence Agency, speaks during an interview in Hong Kong in this handout photo provided by The Guardian. Close

Edward Snowden, a former technical assistant for the Central Intelligence Agency,... Read More

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Source: The Guardian via Getty Images

Edward Snowden, a former technical assistant for the Central Intelligence Agency, speaks during an interview in Hong Kong in this handout photo provided by The Guardian.

The U.S. government is increasingly relying on contractors to conduct background investigations for security clearances like the top-secret access granted to Edward Snowden.

The ranks of contract workers helping to do background checks on contractors and federal employees swelled 15 percent to almost 6,800 last year from fiscal 2011, according to the Office of Personnel Management. The agency’s spending on investigative services jumped 16 percent to $474 million last year from fiscal 2009, according to data compiled by Bloomberg.

“The backlog for government and private-sector employees awaiting clearances continues to be huge,” said Stan Soloway, chief executive officer of the Professional Services Council. The group represents companies such as CACI International Inc. (CACI), which is among the contractors that have benefited from background investigation and clearance work.

The growing use of contractors has sparked scrutiny from lawmakers about the quality of the background investigations, particularly after former contractor Snowden leaked a secret surveillance program. The demand for clearances reflects the expansion of U.S. intelligence missions since Sept. 11, 2001.

About 4.92 million people held security clearances as of Oct. 1, 2012, according to a report from the Office of the Director of National Intelligence. Snowden, a former Booz Allen Hamilton Holding Corp. (BAH) employee working for the National Security Agency, was among them. It’s unclear when he obtained his clearance or when he might have had it renewed.

Lax Oversight

At least 18 investigators, including seven contractors, have been convicted of falsifying records as part of investigations since 2006, according to Patrick McFarland, inspector general for the personnel office.

McFarland is “actively” looking at 11 investigators accused of fabricating information, according to prepared testimony obtained by Bloomberg in advance of a hearing today before two Senate Homeland Security and Governmental Affairs subcommittees.

“My office has been alarmed for several years about the lack of oversight,” McFarland said in his written testimony. “Our resources remain woefully inadequate, preventing us from performing the level of oversight that such an important program requires.”

During the Cold War, the “government did the background investigations itself because it took very, very seriously the great dangers of clearing people like Snowden,” said Charles Tiefer, a professor at the University of Baltimore’s law school.

‘Fig Leaf’

While government employees are supposed to have the last say over who gets a clearance and who doesn’t, it’s impossible to tell who’s really making the decisions, said Tiefer, a former member of the U.S. Commission on Wartime Contracting.

“The notion that government officials have the final decision about granting or denying clearances is a mere fig leaf, and a pretty small one at that,” he said. “By the time the background investigators have pulled together whatever they do or don’t dig up, the decision is 95 percent made. The government role is a mere formality.”

The number of contractors, including part-time and intermittent workers, assisting with background checks has risen in the past year, while federal employees doing the work have declined about 4.7 percent. The personnel office conducts more than 2 million investigations a year, according to its website. It vets applicants both for federal agency jobs and for security clearances. A background check is required for clearance.

Cost-Effective

About 2,535 federal employees did the work in fiscal 2012, compared with 2,660 in the previous year, according to the Office of Personnel Management, which is responsible for most of the government’s clearance checks.

Soloway, of the Arlington, Virginia-based Professional Services Council, said contracting out clearance work is more cost-effective. The workload, he said, constantly fluctuates and doesn’t merit a permanent infrastructure.

Some of the leading contractors for background checks include CACI, Falls Church, Virginia-based Altegrity Inc. and Loveland, Colorado-based KeyPoint Government Solutions Inc.

Jody Brown, a spokeswoman for Arlington, Virginia-based CACI, declined to comment.

The pressure to complete background checks may have diminished the quality of some clearances.

1,600 Checks

McFarland highlighted a case in which a records worker fabricated 1,600 credit checks.

“Ironically, her own background investigation had been falsified by a background investigator convicted in a different fabrication case,” he wrote in his testimony.

Even with the increase in contracted-out clearance work, investigators are probably still overloaded with cases, said Evan Lesser, managing director of Clearancejobs.com, a website that helps government agencies and companies find employees.

“Caseloads, especially for contract investigators, are extremely large,” Lesser said in a phone interview. The companies are under pressure to get a lot of cases closed in a short amount of time, he said.

Federal budget cuts may exacerbate the backlog of clearance investigations.

The Defense Department, which pays the personnel office for the cost of its background checks, won’t be able to afford some re-investigations this year because of a funding shortfall.

The agency is suspending renewals of 9,000 to 10,000 contractor clearances, excluding key management personnel, until Oct. 1, said Cindy McGovern, a spokeswoman for the Defense Security Service, an agency of the Pentagon that provides the military and other government offices with security support.

Contractors will continue to work even if their clearance renewals are late, McGovern said in a phone interview.

To contact the reporter on this story: Danielle Ivory in Washington at divory@bloomberg.net

To contact the editor responsible for this story: Stephanie Stoughton at sstoughton@bloomberg.net

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