Security clearance pause puts agencies, contractors at risk

Federal contractors and lawmakers are hoping to quickly reverse the Defense Department’s surprise decision to halt the processing of some 3,000 civilian security clearances.

“It’s very possible we’ll hold hearings soon on this issue,” said Robert White, a spokesman for Rep. Tom Davis (R-Va.), chairman of the House Government Reform Committee. “At this point, we obviously have a lot more questions than answers.”

The Defense Security Service blamed the halt on fiscal constraints and the overwhelming number of requests for security investigations.

The Professional Services Council and six other organizations have written to Defense Secretary Donald Rumsfeld, urging him to intercede and quickly clear the growing logjam of clearance requests.

They want Rumsfeld to immediately restart the clearance process and ensure that it continues for the remainder of the current fiscal year, which ends Sept. 30.

The organizations — which include the Aerospace Industries Association (AIA), AFCEA International, the Contract Services Association of America, the National Defense Industrial Association, the Information Technology Association of America, and the Intelligence and National Security Alliance — are also seeking an immediate review of the funding request for fiscal 2007 to ensure a similar shortfall does not occur next year.

The halt affects about 20 defense-related agencies in addition to DOD, including the Homeland Security Department, but not the intelligence community.

Stan Soloway, president of the Professional Services Council, said DSS indicated in April that it would no longer accept priority clearance requests. “This latest [notice cutting off all requests] really came as a shock.”

“It looks to me like some kind of a monumental government budgeting screw-up,” said John Douglass, AIA’s president and chief executive officer. “Nobody told us they were having any financial problems.”

He said the announcement also caught Pentagon acquisition officials by surprise.

The stoppage could last until DSS finds additional funds or until the approval of the fiscal 2007 budget.

Another consequence of the halt is that employees with clearances can demand more money for their services, adding as much as 20 percent to their market value, said Richard Piske, vice president and general manager of Kelly FedSecure, which supplies cleared employees to government agencies.

Because most government business is managed through fixed-price contracts, Piske added, “if the cost of labor goes up significantly and is unanticipated, that brings challenges to the entire industry.”

The situation is “threatening to halt key national security initiatives,” ITAA officials said in a statement.

“It is unrealistic to expect this problem to solve itself,” said Olga Grkavac, an executive vice president of ITAA. “Until serious resources are devoted to this issue, our national security could be at stake.”

“Companies working on national security projects will not be able to finish the job without the ability to sustain the cleared personnel on the job and to bring in more when needed,” she said.