When an Indian-born engineer at a U.S. defense contractor recently sought to upgrade his security clearance to top secret, it should have been routine. After all, he had been an American citizen for 40 years and had an unmblemished record for the two decades he held a lower-level clearance. But in September, according to people familiar with the case, the Defense Office of Hearings & Appeals (DOHA) not only rejected the engineer's application but also yanked his older clearance.
Why? The engineer, who is appealing the decision, has retired siblings living in India. In such cases, the Pentagon fears a foreign government could threaten the family and pressure the American to hand over classified data. Yet the engineer had a clearance for years when members of his family worked for the Indian government and the risk of a harmful disclosure was greater.
The engineer's plight is no aberration. A BusinessWeek analysis of more than 1,600 security-clearance appeals decisions over the past four years shows that the number of clearances denied because of relatives abroad is up twelvefold, from 14 in 2000 to an annual rate of 170 in 2003. Some of those decisions are later reversed on appeal. Even so, experts say the tally of denials may grossly understate the problem, because there's no public record of rejections that aren't appealed.
America the Wary
Why the shift? Among the reasons are the war on terror, suspicion of economic espionage by otherwise friendly allies, and hyped charges of technology theft by China, which is regarded as having interests inimical to the U.S. But now, some industry and government officials and lawyers whose clients have been turned down wonder if the result is an arbitrary, almost chaotic review process. "Things have gotten way out of hand," says David C. Merkin, a lawyer for a China-born database administrator whose application for a secret clearance was denied in May because he visited his parents four times between 1994 and 1999. Adds Pamela B. Stuart, who represents workers at large defense companies: "If you didn't come over on the Mayflower, you can't get a clearance these days."
The implications for the nation's high-tech edge in defense are enormous. From 1990 to 2000, the share of science and engineering doctorates awarded by U.S. universities to foreign-born students rose from 24% to 38%, according to the National Science Board. And the American Mathematical Society says that foreigners also accounted for 47% of the math doctorates awarded in 2002-03. While foreigners can't get security clearances, many of these students eventually become U.S. citizens. Yet the cases -- which don't identify employee or employer -- show that security screeners are routinely nixing candidates with ties to countries such as China, Taiwan, and Israel. As a result, the crackdown could jeopardize crucial defense work that is increasingly dependent on a foreign-born labor pool. "It's just the profile of the workforce," notes Stan Z. Soloway, president of the Professional Services Council, a trade group. "To summarily dismiss somebody because of where they were born is a dangerous precedent."
The system isn't supposed to work that way. Having relatives abroad has long been a red flag, and wariness is appropriate. Candidates for clearances are supposed to have a chance to explain why their foreign ties pose no risk. But increasingly, the mere presence of relatives in certain countries proves decisive. The harder line is "widespread and deliberate," says Martin C. Faga, CEO of Mitre Corp., a McLean (Va.) research firm that works on defense communications and intelligence systems -- and the only one of a dozen defense contractors willing to discuss this touchy subject. DOHA also declined comment.
The new scrutiny puts contractors in a bind. Because the Pentagon has a 183,000-case backlog of background checks, there is a two-year delay in granting clearances, and an initial denial may mean another year in limbo during an appeal. Even if a clearance eventually is awarded, as happens in some cases, the system's unpredictability means employers can't know when or if a worker will get the nod. Companies aren't supposed to discriminate on the basis of national origin, but hiring workers from a country in the Pentagon's sights is looking for trouble. "As a project manager, what do you do when you have finite resources and you need to get the work done?" asks Sol Glasner, Mitre's general counsel.
The government also pays a price. Take the case of a Chinese-born artificial-intelligence engineer who was denied a clearance because of relatives in China. While she appeals, she can't use Pentagon or intelligence data to test her innovative work, which records, analyzes, and tags data from electronic eavesdropping for later retrieval. Her work is "of great interest to the intelligence community," according to a brief filed by Daniel C. Schwartz, a former National Security Agency general counsel who represents her.
The problem may get worse before it gets better. Clearances must be renewed after five years, and since reviews no longer lead to routine renewal, the backlog can only grow. Experts say the caseload encourages overburdened bureaucrats to reject applicants with a blemish and move on to the next one, despite the obligation to take a searching look at the facts. And in typical bureaucratic fashion, fear of approving a future spy may produce overly cautious rulings. "No one wants to be the one who made the mistake," says Robert R. Sparks Jr., a McLean (Va.) lawyer who has represented workers at large defense firms.
What should be done? The government clearly faces a dilemma. A policy too loose could enable spying, while one too tight might cripple programs. The Pentagon brass needs to clarify and modify the existing policy. Applicants with relatives abroad should still be subject to heightened scrutiny. But with no evidence that an applicant is a problem, screeners should err on the side of granting a clearance. And if the government wants to exclude automatically any candidates with family in certain countries, it should say so. After all, that's what many examiners are doing, policy or not. In June, for example, an administrative judge said she rejected a clearance for a mechanical engineer "regarded as a person of sound integrity and moral character" because the candidate has family in Taiwan, which has "significant intelligence operations targeting the U.S."
Congress also should give candidates recourse in the courts, which isn't now permitted. While court reviews would lengthen an already agonizing process, judges need to oversee bureaucrats who are protecting their backsides. And setting precedents that balance conflicting national-security concerns would introduce more predictability into what is now a haphazard process. Prudence is fine. Capriciousness is not. If the current trend doesn't change, a well-intentioned effort to protect national security may end up damaging it.
By Stan Crock
With Steve G. Glickman and Mario Mazzoni in New York