Federal Real Property: DHS and GSA Have Not Implemented Recommendations to Strengthen the Management of DHS Headquarters Consolidation

DHS and GSA have been managing efforts to consolidate DHS executive leadership, operational management, and other personnel at one secure headquarters location rather than at multiple locations throughout the Washington, D.C., metropolitan area. The consolidation is to include the development of multi-billion dollar headquarters facilities at the St. Elizabeths campus in Washington, D.C.

In September 2014, GAO issued a report entitled: Federal Real Property: DHS and GSA Need to Strengthen the Management of DHS Headquarters Consolidation (GAO-14-648). This statement summarizes the key findings and recommendations from this report, and provides a status update as of April 2018 on DHS and GSA implementation of GAO's recommendations.

To complete the September 2014 report, GAO compared DHS and GSA capital planning efforts against applicable leading practices, interviewed officials, and reviewed cost and schedule estimates for the St. Elizabeths project. To assess subsequent DHS and GSA actions to implement GAO's September 2014 recommendations, GAO conducted periodic follow-up with agency officials.

In its September 2014 report, GAO found that Department of Homeland Security (DHS) and General Services Administration (GSA) planning for the DHS headquarters consolidation at the St. Elizabeths campus in Washington, D.C. did not fully conform with leading capital decision-making practices intended to help agencies effectively plan and procure assets. Specifically, GAO found that DHS and GSA had not conducted a comprehensive assessment of current needs, identified capability gaps, or evaluated and prioritized alternatives that would help officials adapt consolidation plans to changing conditions and address funding issues as reflected in leading practices. GAO recommended that DHS and GSA conduct various assessments and analyses and use the results to inform updated DHS headquarters consolidation plans. The agencies concurred with this recommendation.

In its September 2014 report, GAO also found that DHS and GSA cost and schedule estimates for the headquarters consolidation project at St. Elizabeths did not conform or, only minimally or partially conformed, with leading estimating practices, and were therefore unreliable. Thus, GAO recommended that DHS and GSA develop revised cost and schedule estimates for the remaining portions of the consolidation project in accordance with leading practices, and the agencies concurred with this recommendation.

The DHS Headquarters Consolidation Accountability Act of 2015, enacted in April 2016 would, according to the accompanying Senate committee report, ensure that DHS and GSA fully address the recommendations from GAO's September 2014 report and provide Congress the information needed to make sound decisions regarding the project. Among other things, the Act required DHS, in coordination with GSA, to submit information to Congress, including various assessments and updated cost and schedule estimates related to the DHS headquarters consolidation. As of April 2018, however, DHS and GSA had not submitted the information to Congress that would either meet the requirements of the Act or address GAO's recommendations. DHS and GSA officials cited funding instability as one challenge to updating consolidation plans and cost and schedule estimates.

Among other things, GAO recommended in its September 2014 report that DHS and GSA develop revised DHS headquarters plans that reflect leading practices for capital decision making and also reliable cost and schedule estimates. DHS and GSA concurred with our recommendations.

I am pleased to be here today to discuss the Department of Homeland  Security (DHS) headquarters consolidation project at St. Elizabeths  campus in Washington, D.C., including a status update on the  recommendations that we made in a 2014 report on this issue. The  multi-billion dollar construction project, managed by DHS and the General  Services Administration (GSA), is the centerpiece of DHS’s larger effort  to manage and consolidate its workforce of over 20,000 in the National  Capital Region. As conceived in 2006, the federally owned St. Elizabeths  site was designed to consolidate DHS’s executive leadership, operational  management, and other personnel at one secure location rather than at  multiple locations throughout the Washington, D.C., metropolitan area.  The St. Elizabeths project is intended to allow for more efficient DHS  operations and provide long-term cost savings by reducing reliance on  leased space. From fiscal year 2006 through fiscal year 2014, the St.  Elizabeths consolidation project had received approximately $495 million  through DHS appropriations and approximately $1.1 billion through GSA  appropriations, for a total of over $1.5 billion. However, since  construction began in fiscal year 2009, the project has generally received  less funding than requested, which DHS and GSA officials have stated  has led to cost escalations and schedule delays. The President’s fiscal  year 2019 budget requests a total of about $400 million for continued  consolidation and new development funds for the project.

In September 2014, we made three recommendations to improve the  management of DHS headquarters consolidation, and DHS and GSA  concurred with the recommendations.

In 2014, we recommended that:  1.  DHS and GSA conduct the following assessments and use the results  to inform updated DHS headquarters consolidation plans: a comprehensive needs assessment and gap analysis of current  and needed capabilities that take into consideration changing  conditions; and an alternatives analysis that identifies the costs and benefits of  leasing and construction alternatives for the remainder of the  project and prioritizes options to account for funding instability.  2.  DHS and GSA develop revised cost and schedule estimates for the  remaining portions of the consolidation project that conform to GSA  guidance and leading practices for cost and schedule estimation,  including an independent evaluation of the estimates.  3.  DHS designate the headquarters consolidation program a major  acquisition, consistent with DHS acquisition policy, and apply DHS  acquisition policy requirements.

In our September 2014 report, we further stated that Congress should  consider making future funding for the St. Elizabeths project contingent  upon DHS and GSA developing a revised headquarters consolidation  plan that conforms with leading practices and that (1) recognizes changes  in workplace standards, (2) identifies which components are to be  colocated at St. Elizabeths and in leased and owned space throughout  the National Capital Region, and (3) develops and provides reliable cost  and schedule estimates.

Subsequently, in 2015, we designated our three recommendations to  DHS and GSA as “Priority Recommendations” due in part to the important  fiscal and operational implications of DHS headquarters consolidation. In  addition, we have designated the broader areas of Managing Federal  Real Property and Strengthening DHS Management Functions as High  Risk areas due to mismanagement vulnerabilities or a need for  transformation.

The Department of Homeland Security (DHS) Headquarters  Consolidation Accountability Act of 2015, enacted in April 2016 would,  according to the accompanying Senate committee report, ensure that  DHS and GSA fully address the recommendations from our September  2014 report and provide Congress the additional information needed to  make sound decisions regarding the headquarters consolidation project.  Among other things, the Act requires DHS, in coordination with GSA, to  submit information to Congress about DHS headquarters consolidation  efforts not later than 120 days after enactment (enacted April 29, 2016).  Required information includes a comprehensive assessment of the  difference between the current real property and facilities needed by DHS  in the National Capital Region, an analysis that identifies the costs and  benefits of leasing and construction alternatives for the remainder of the  consolidation project, and updated cost and schedule estimates.  Furthermore, under the Act, the Comptroller General is to report on its  review and evaluation of the quality and reliability of the cost and  schedule estimates not later than 90 days after their submittal to  Congress. As of April 2018, DHS and GSA had not submitted the  required headquarters consolidation information to Congress or  implemented our related recommendations.

Although DHS and GSA have yet to provide the information to Congress,  construction is proceeding at the St. Elizabeths campus. Figures 1 and 2  show progress made to the Center Building from September 2016 to  March 2018. This structure will house the Secretary of Homeland Security  and other key leadership.

My testimony summarizes the key findings of our September 2014 report  on DHS and GSA efforts to manage the DHS headquarters consolidation  project, and provides a status update on DHS and GSA implementation of  our recommendations. To complete our September 2014 report, we  compared DHS and GSA capital planning efforts against applicable  leading practices in capital decision making and interviewed DHS and  GSA officials responsible for the planning and management of the DHS  headquarters consolidation. We also compared DHS and GSA  documents on the estimated cost and schedule for the St. Elizabeths  project with cost- and schedule-estimating leading practices we have  identified in our prior work, and relevant GSA guidance. To assess  subsequent DHS and GSA actions to implement our September 2014  recommendations, we conducted periodic follow-up with DHS and GSA  officials and obtained relevant documentation. The work upon which this  statement is based was conducted in accordance with generally accepted  government auditing standards. Those standards require that we plan  and perform the audit to obtain sufficient, appropriate evidence to provide  a reasonable basis for our findings and conclusions based on our audit  objectives. We believe that the evidence obtained provides a reasonable  basis for our findings and conclusions based on our audit objectives.

Consolidation Plans Did Not Fully Conform with Leading Capital Decision- Making Practices and GAO Recommendation Has Not Been Implemented

In our September 2014 report, we found that DHS and GSA planning for  the DHS headquarters consolidation did not fully conform with leading  capital decision-making practices intended to help agencies effectively  plan and procure assets. Specifically, we found that DHS and GSA had  not conducted a comprehensive assessment of current needs, identified  capability gaps, or evaluated and prioritized alternatives that would help  officials adapt consolidation plans to changing conditions and address  funding issues as reflected in leading practices. At that time, DHS and  GSA officials reported that they had taken some initial actions that may  facilitate consolidation planning in a manner consistent with leading  practices. For example, DHS had an overall goal of reducing the square  footage allotted per employee across the department in accordance with  workplace standards, such as standards for telework and hoteling. As  we reported in 2014, DHS and GSA officials acknowledged that new  workplace standards could create a number of new development options  to consider, as the new standards would allow for more staff to occupy  the space at St. Elizabeths than previously anticipated. DHS and GSA  officials also reported at that time that analyzing different leasing options  could affect consolidation efforts. However, we found that the  consolidation plans, which were finalized between 2006 and 2009, had  not been updated to reflect these actions.

In addition, we found in September 2014 that funding for the St.  Elizabeths project had not aligned with what DHS and GSA initially  planned. We reported that according to DHS and GSA officials, the  funding gap between what DHS and GSA requested and what was  received from fiscal years 2009 through 2014, was over $1.6 billion.  According to these officials, this gap created cost escalations of over $1  billion and schedule delays of over 10 years relative to original estimates.  We found in 2014 that these delays posed challenges for DHS in terms of  its leasing portfolio. Specifically, DHS’s long-term leasing portfolio was  developed based on the original expected completion date for St.  Elizabeths development in 2016. In 2014, DHS and GSA reported that  they had begun to work together to consider changes to the DHS  headquarters consolidation plans, but they had not announced when new  plans would be issued. Furthermore, because final documentation of  agency deliberations or analyses had not yet been developed, it was  unclear if any new plans would be informed by an updated  comprehensive needs assessment and capability gap analysis as called  for by leading capital decision-making practices. Therefore, in our  September 2014 report we recommended that DHS and GSA conduct  various assessments and analyses and use the results to inform updated  DHS headquarters consolidation plans. DHS and GSA concurred with this  recommendation and stated that their forthcoming draft St. Elizabeths  Enhanced Consolidation Plan would contain these analyses.

As of April 2018, however, the agencies had not submitted updated plan  information to Congress that would either meet the requirements of the  DHS Headquarters Consolidation Accountability Act or address our  recommendation. According to DHS officials, the agencies prepared a  comprehensive response to the Act, including updated analyses, but the  information is no longer current and now needs to be revised and  revalidated before it is submitted to Congress. Officials told us that the  updated consolidation plans and analyses assumed that the project would  receive more funding in fiscal years 2017 and 2018 than was  appropriated. Further, officials told us that the current Administration is  expected to provide input on the planned DHS component occupancies at  the St. Elizabeths campus. We continue to believe that DHS and GSA  attention to following leading capital decision-making practices—including  having a consolidation plan that justifies future actions—is critical given  the project’s multi-billion dollar cost and impact on departmental  operations.

Cost and Schedule Estimates for the St. Elizabeths Project Did Not Reflect Leading Practices and GAO Recommendation Has Not Been Implemented

In our September 2014 report, we found that DHS and GSA cost and  schedule estimates for the headquarters consolidation project at St.  Elizabeths did not conform or only minimally or partially conformed with  leading estimating practices, and were therefore unreliable.  Furthermore, we found that in some areas, the cost and schedule  estimates did not fully conform with GSA guidance relevant to developing  estimates.

In 2014, we found that DHS and GSA cost estimates for the headquarters  consolidation project at St. Elizabeths did not reflect leading practices,  which rendered the estimates unreliable. For example, we found that the  2013 cost estimate—the most recent available at the time of our 2014  report—did not include (1) a life-cycle cost analysis of the project,  including the cost of repair, operations, and maintenance; (2) was not  regularly updated to reflect significant changes to the program including  actual costs; and (3) did not include an independent estimate to  determine whether other estimating methods produce similar results. In  addition, a sensitivity and a risk and uncertainty analysis had not been  performed to assess the reasonableness of the cost estimate. We have  previously reported that a reliable cost estimate is critical to the success  of any program. Specifically, we have found that such an estimate  provides the basis for informed investment decision making, realistic  budget formulation and program resourcing, meaningful progress  measurement, proactive course correction when warranted, and  accountability for results. Accordingly, in 2014, we concluded that DHS  and GSA would benefit from maintaining current and well-documented  estimates of project costs at St. Elizabeths—even if project funding is not  fully secured.

In 2014, we also found that the 2008 and 2013 schedule estimates (the  estimates available at the time of our review) did not include all activities  for both the government and its contractors necessary to accomplish the  project’s objectives and did not include schedule baseline documents to  help measure performance as reflected in leading practices and GSA  guidance. For the 2008 schedule estimate, we found that resources (such  as labor, materials, and equipment) were not accounted for and a risk  assessment had not been conducted to predict a level of confidence in  the project’s completion date. In addition, we found the 2013 schedule  estimate was unreliable because, among other things, it was incomplete  in that it did not provide details needed to understand the sequence of  events, including work to be performed in fiscal years 2014 and 2015.

In 2014, we concluded that developing cost and schedule estimates  consistent with leading practices could promote greater transparency and  provide decision makers needed information about the St. Elizabeths  project and the larger DHS headquarters consolidation effort. However, in  commenting on our analysis of St. Elizabeths cost and schedule  estimates, DHS and GSA officials said that it would be difficult or  impossible to create reliable estimates that encompass the scope of the  entire St. Elizabeths project. In response to our findings, officials said that  given the complex, multiphase nature of the overall development effort,  specific estimates are created for smaller individual projects, but not for  the campus project as a whole. Therefore, in their view, leading  estimating practices and GSA guidance cannot reasonably be applied to  the high-level projections developed for the total cost and completion date  of the entire St. Elizabeths project. GSA stated that the higher-level,  milestone schedule currently being used to manage the program was  more flexible than the detailed schedule we proposed, and had proven  effective even with the highly variable funding provided for the project.

However, our September 2014 review found this high-level schedule was  not sufficiently defined to effectively manage the program. For example,  our review showed that the schedule did not contain detailed schedule  activities that included all government, contractor, and applicable  subcontractor efforts. In our 2014 report, we recognized the challenges of  developing reliable cost and schedule estimates for a large-scale,  multiphase project like St. Elizabeths, particularly given its unstable  funding history and agreed that incorporating cost- and schedule- estimating leading practices could involve additional costs. However, we  also concluded that unless DHS and GSA invest in these practices,  Congress risked making funding decisions and DHS and GSA  management risked making resource allocation decisions without the  benefit that a robust analysis of levels of risk, uncertainty, and confidence  provides. Therefore, in our September 2014 report we recommended that  DHS and GSA develop revised cost and schedule estimates for the  remaining portions of the consolidation project in accordance with leading  practices. DHS and GSA concurred with the recommendation.

As of April 2018, however, the agencies had not submitted revised cost  and schedule information to Congress that would either meet the  requirements of the DHS Headquarters Consolidation Accountability Act  or address our recommendation. GSA is leading efforts to revise the  project’s cost and schedule estimates, and according to GSA officials, the  revised figures will take into account leading cost- and schedule-  estimation practices, including a risk assessment. We continue to believe  that creating up-to-date, reliable cost and schedule estimates for DHS  headquarters consolidation should be an integral part of DHS and GSA  efforts to reassess the project. Without this information, it will be more  difficult for agency officials and Members of Congress to make informed  decisions regarding resource allocations and compare competing funding  priorities.

DHS Did Not Consistently Apply Its Acquisitions Guidance When Overseeing the St. Elizabeths Project, but Has Taken Steps to Implement GAO’s Recommendation

In our September 2014 report, we also found that DHS had not  consistently applied its major acquisition guidance for reviewing and  approving the headquarters consolidation project. Specifically, we found  that DHS had guidelines in place to provide senior management the  opportunity to review and approve its major projects, but DHS had not  consistently applied these guidelines to its efforts to work with GSA to  plan and implement headquarters consolidation. Part of the inconsistency  was the result of DHS designating the headquarters consolidation project  as a major acquisition in some years but not in others. For example, we  found that in 2010 and 2011, DHS identified the headquarters  consolidation project as a major acquisition and included the project on  DHS’s Major Acquisitions Oversight List. Thus, the project was subject  to the oversight and management policies and procedures established in  DHS major acquisition guidance; however, the project did not comply with  major acquisition requirements as outlined by DHS guidelines. For  example, we found that the project had not produced any of the required  key acquisition documents requiring department-level approval, such as  life-cycle cost estimates and an acquisition program baseline, among  others.

As we reported in 2014, in 2012, the project as a whole was dropped from  the list. Subsequently, in 2013 and 2014, DHS included the information  technology (IT) acquisition portion of the project on the list, but not the  entire project. DHS officials explained that they considered the St.  Elizabeths project to be more of a GSA acquisition rather than a DHS  acquisition because GSA owns the site and the majority of the building  construction is funded through GSA appropriations. In our 2014 report,  we recognized that GSA had responsibility for managing contracts  associated with the headquarters consolidation project. However, we also  noted that a variety of factors, including the overall cost, scope, and  visibility of the project, as well as the overall importance of the project in  the context of DHS’s mission, made the consolidation project a viable  candidate for consideration as a major DHS acquisition. By not  consistently applying this review process to headquarters consolidation,  we concluded that DHS management risked losing insight into the progress of the St. Elizabeths project, as well as how the project fits in  with its overall acquisitions portfolio. Thus, in our September 2014 report  we recommended that the Secretary of Homeland Security designate the  headquarters consolidation program a major acquisition and apply DHS  acquisition policy requirements. DHS concurred with the  recommendation.

As of April 2018, DHS has made some progress implementing this  recommendation. For example, on September 16, 2014, DHS issued an  Acquisition Decision Memorandum designating the DHS-funded portions  of the headquarters consolidation program as a Major Acquisition  Program to be overseen by the departmental Acquisition Review Board  (ARB). DHS also made progress implementing this recommendation by  conducting and documenting an ARB of the program in November 2016.  The ARB process provided DHS greater oversight of headquarters  consolidation, and provided a forum for officials to consider a wide range  of issues affecting consolidation efforts, such as funding and project  scope. In addition, in January 2018, DHS officials reported that they were  working to align headquarters consolidation program documentation to  meet the spirit of DHS acquisition policy guidance. We will reassess the  status of this recommendation after the consolidation plan and cost and  schedule estimates are updated and submitted to Congress per the DHS  Headquarters Consolidation Accountability Act. At that time, we believe  there will be more certainty about the future direction of the project  overall, and DHS’s funded portion in particular, and we will be better able  to assess the level of DHS acquisitions oversight for the project.

Chairman Perry, Ranking Member Correa, and Members of the  Subcommittee, this concludes my prepared statement. I look forward to  responding to any questions that you may have.

If you or your staff members have any questions about this testimony,  please contact Chris Currie, Director, Homeland Security and Justice  Issues, at (404) 679-1875 or curriec@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this statement. GAO staff who made key contributions to  this statement are John Mortin (Assistant Director), Karen Richey  (Assistant Director), Juaná Collymore, Jennifer Leotta, Thomas Lombardi,  David Lutter, and Erin O’Brien.

This is a work of the U.S. government and is not subject to copyright protection in the  United States. The published product may be reproduced and distributed in its entirety  without further permission from GAO. However, because this work may contain  copyrighted images or other material, permission from the copyright holder may be  necessary if you wish to reproduce this material separately.

The Department of Homeland Security is planning to consolidate operations and thousands of its workers at the St. Elizabeths campus in Washington, D.C. Construction began at the site in 2009.

Over $2 billion has been appropriated for the project since fiscal year 2006, which was less than requested. DHS and General Services Administration officials told us this led to cost increases and delays.

Since our 2014 report, Congress has required DHS, in coordination with GSA, to give them cost, schedule, and other information consistent with our report’s recommendations. For this testimony, we found that the information has not yet been provided.


Personnel Security Clearances: Additional Actions Needed to Implement Key Reforms and Improve Timely Processing of Investigations

This testimony focuses on, among other things, the extent to which executive branch agencies (1) made progress reforming the security clearance process, and (2) are meeting timeliness objectives and reducing NBIB's investigative backlog.

GAO's statement is based on information from public versions of its reports issued in November 2017 on continuous evaluation of clearance holders and in December 2017 on clearance reform efforts. Information that ODNI and OPM deemed sensitive was omitted. For those reports, GAO reviewed Executive Orders and PAC strategic documents; obtained data from the Office of the Director of National Intelligence (ODNI) on the timeliness of initial clearances and periodic reinvestigations; and interviewed officials from ODNI, NBIB, and other agencies.

Executive branch agencies have made progress reforming the security clearance process, but long-standing key initiatives remain incomplete. Progress includes the issuance of federal adjudicative guidelines and updated strategic documents to help sustain the reform effort. However, agencies still face challenges in implementing aspects of the 2012 Federal Investigative Standards—criteria for conducting background investigations—and in implementing a continuous evaluation program. In addition, while agencies have taken steps to establish government-wide performance measures for the quality of investigations, neither the Director of National Intelligence (DNI) nor the interagency Security, Suitability, and Credentialing Performance Accountability Council (PAC) have set a milestone for completing their establishment.

GAO's analysis of timeliness data for specific executive branch agencies showed that the number of agencies meeting investigation and adjudication timeliness objectives for initial secret and top secret security clearances and periodic reinvestigations decreased from fiscal years 2012 through 2016. For example, while 73 percent of agencies did not meet timeliness objectives for initial clearances for three of four quarters in fiscal year 2012, 98 percent of agencies did not meet these objectives in fiscal year 2016. The DNI has not developed a government-wide plan, including goals and milestones, to help agencies improve timeliness. Agencies' challenges in meeting timeliness objectives have contributed to a significant backlog of background investigations at the agency that is responsible for conducting the majority of investigations, the National Background Investigations Bureau (NBIB). NBIB documentation shows that the backlog of pending investigations increased from about 190,000 in August 2014 to more than 710,000 as of February 2018, as shown below. NBIB leadership has not developed a plan to reduce the backlog to a manageable level.

In November 2017 and December 2017, GAO made 12 recommendations to the DNI and the Director of NBIB, including setting a milestone for establishing measures for investigation quality, developing a plan to meet background investigation timeliness objectives, and developing a plan for reducing the backlog. NBIB concurred with the recommendations. The DNI concurred with some, but not all, of GAO's recommendations. GAO continues to believe they are valid.

Thank you for the opportunity to be here today to discuss personnel  security clearance reforms. The government-wide personnel security  clearance process was designated as a high-risk area in January 2018  because it represents one of the highest management risks in  government. A high-quality personnel security process is necessary to  minimize the risks of unauthorized disclosures of classified information  and to help ensure that information about individuals with criminal  histories or other questionable behavior is identified and assessed. In  2014, emphasis on security clearance reform was renewed following  high-profile events such as the September 2013 shooting at the  Washington Navy Yard by an individual who had both access to the  facility and a security clearance. In November and December 2017, we  reported, among other things, that the executive branch faces challenges  completing key reform efforts, processing security clearances, and  reducing a significant backlog in background investigations.

In January 2018, in light of the serious challenges facing the interagency  Security, Suitability, and Credentialing Performance Accountability  Council (PAC), the entity responsible for driving the implementation of  and overseeing the reform efforts, we placed the government-wide  personnel security clearance process on GAO’s High-Risk List. We made  this designation out-of-cycle because it was important to call attention to  these challenges now. My testimony today focuses on three of the key  challenges that led to the high-risk designation, including: (1) the extent to  which executive branch agencies made progress reforming the security  clearance process; (2) the extent to which executive branch agencies are  meeting timeliness objectives and reducing the National Background  Investigations Bureau’s (NBIB) investigative backlog; and (3) the potential  effects of continuous evaluation—a process to review the background of  clearance holders and individuals in sensitive positions at any time during  the eligibility period—on executive branch agencies.

My testimony is primarily based on our November and December reports  on these topics. For those reports, we reviewed relevant statutes,  Executive Orders, and PAC strategic documents; obtained data from the  Office of the Director of National Intelligence (ODNI) on the timeliness of  initial personnel security clearances and periodic reinvestigations for  fiscal years 2012 through 2016 for specific executive branch agencies;  and interviewed PAC, Office of Personnel Management (OPM), NBIB,  ODNI, and Department of Defense (DOD) officials. Our November and  December 2017 reports include a detailed explanation of our scope and  methodology. In these reports, we made 12 recommendations to the  Director of National Intelligence and the Director of NBIB, some of which I  will discuss today. NBIB concurred with the recommendations. The  Director of National Intelligence concurred with some, but not all, of our  recommendations. We continue to believe these recommendations are  valid. Information that ODNI and OPM deemed sensitive was omitted. We  conducted the work on which this statement is based in accordance with  generally accepted government auditing standards.

Executive Branch Agencies Have Made Progress Reforming the Security Clearance Process, but Long-Standing Key Initiatives Remain Incomplete

The PAC Has Made Progress Reforming the Personnel Security Clearance Process

The PAC has made progress in reforming the personnel security  clearance process and implementing various security clearance reform  initiatives. For example, the PAC has taken action on 73 percent of the  recommendations of a February 2014 review conducted in the wake of  the Washington Navy Yard shooting. Actions in response to these  recommendations included ODNI and OPM jointly issuing Quality  Assessment Standards in January 2015, which establish federal  guidelines for assessing the quality of investigations. Additionally, ODNI  developed the Quality Assessment Reporting Tool, through which  agencies will report on the completeness of investigations.

Similarly, the PAC reported quarterly on the status and progress of key  initiatives, as part of the Insider Threat and Security Clearance Reform  cross-agency priority goal. This reporting included the milestone due  date and status for each initiative. According to PAC Program  Management Office officials, although the data are no longer publicly  reported, they have continued to track the status of these milestones  internally, and identified almost half of the initiatives—16 of 33—as  complete as of the third quarter of fiscal year 2017.

Additionally, the PAC has issued three documents that serve as its  updated strategic framework for the next 5 years. In July 2016, it issued  its Strategic Intent for Fiscal Years 2017 through 2021, which identifies  the overall vision, goals, and 5-year business direction to achieve an  entrusted workforce. In October 2016, it issued an updated PAC  Enterprise IT Strategy, which provides the technical direction to provide  mission-capable and secure security, suitability, and credentialing IT  systems. According to PAC program management officials, the third  document—PAC Strategic Intent and Enterprise IT Strategy  Implementation Plan—was distributed to executive branch agencies in  February 2017. Further, we reported in December 2017 that PAC  members noted additional progress in reforming the personnel security  clearance process, such as the development of Security Executive Agent  Directives, the identification of executive branch—wide IT shared service  capabilities, and the standardization of adjudicative criteria.

Long-Standing Key Reform Initiatives Remain Incomplete

Although the PAC has reformed many parts of the personnel security  clearance process, the implementation of certain key initiatives, including  the full implementation of the 2012 Federal Investigative Standards and  the development of government-wide performance measures for the  quality of investigations, remain incomplete. The Federal Investigative  Standards outline criteria for conducting background investigations to  determine eligibility for a security clearance, and are intended to ensure  cost-effective, timely, and efficient protection of national interests and to  facilitate reciprocal recognition of the resulting investigations.

However, the standards also changed the frequency of periodic  reinvestigations for certain clearance holders and include continuous  evaluation as a new requirement for certain clearance holders.

Continuous evaluation is a key executive branch initiative to more  frequently identify and assess security-relevant information, such as  criminal activity, between periodic reinvestigations. Continuous evaluation  is a process to review the background of an individual who has been  determined to be eligible for access to classified information or to hold a  sensitive position at any time during the period of eligibility. Continuous  evaluation involves automated record checks conducted on a more  frequent basis, whereas periodic reinvestigations are conducted less  frequently and may include, among other things, subject and reference  interviews. The types of records checked as part of continuous evaluation  are the same as those checked for other personnel security purposes.  Security-relevant information discovered in the course of continuous  evaluation is to be investigated and adjudicated under the existing  standards.

Efforts to implement an executive branch continuous evaluation program  go back to at least 2008, with a milestone for full implementation by the  fourth quarter of fiscal year 2010. In November 2017, we reported that  while ODNI has taken an initial step to implement continuous evaluation  in a phased approach across the executive branch, it had not determined  when the future phases of implementation will occur. We recommended,  among other things, that the Director of National Intelligence develop an  implementation plan. ODNI generally concurred with that  recommendation.

Regarding government-wide measures for the quality of background  investigations, as noted earlier, ODNI and OPM issued the Quality  Assessment Standards and ODNI issued the Quality Assessment  Reporting Tool. The Quality Assessment Standards established federal  guidelines for assessing the quality of investigations. The Quality  Assessment Reporting Tool is a tool through which agencies will report  on the completeness of investigations. However, measures for quality  have not been developed, and it is unclear when this key effort will be  completed. The original milestone for completing government-wide  measures was fiscal year 2010, and no new milestone has been  established. In our December 2017 report, we recommended that the  Director of National Intelligence, in his capacity as the Security Executive  Agent, and in coordination with the other PAC Principals, establish a  milestone for the completion of government-wide performance measures  for the quality of investigations. ODNI disagreed with the  recommendation, stating that it is premature to establish such a milestone  and that it will do so once the Quality Assessment Reporting Tool metrics  have been fully analyzed. We continue to believe that setting a milestone,  which takes into consideration the amount of time needed to analyze  Quality Assessment Reporting Tool data, will help to ensure that the  analysis of the data is completed, initial performance measures are  developed, and agencies have a greater understanding of what they are  being measured against.

Agencies Meeting Timeliness Objectives for Clearances Decreased, and a Government-Wide Approach Has Not Been Developed to Improve Timeliness or Address the Backlog

Our analysis of government-wide and agency-specific data shows a  decline in the number of executive branch agencies meeting the  timeliness objectives for processing clearances. While ODNI has taken  steps to address timeliness challenges, it has not developed a  government-wide approach to help agencies improve the timeliness of  initial personnel security clearances. Additionally, the backlog of  background investigations conducted by NBIB—the primary entity  responsible for conducting background investigations—has steadily  increased since 2014 and as of February 2018 exceeds 710,000 cases.  NBIB personnel are attempting to decrease the backlog by making the  background investigation process more effective and efficient and  increasing investigator capacity. However, NBIB faces challenges in  developing a plan to reduce the size of the investigation backlog to a  manageable level.

Agencies Meeting Timeliness Objectives Decreased

Our analysis showed that the percentage of executive branch agencies  meeting timeliness objectives for investigations and adjudications  decreased from fiscal years 2012 through 2016. The Intelligence Reform  and Terrorism Prevention Act of 2004 (IRTPA) established an objective  for each authorized adjudicative agency to make a determination on at  least 90 percent of all applications for a personnel security clearance  within an average of 60 days after the date of receipt of the completed  application by an authorized investigative agency. The objective includes  no longer than 40 days to complete the investigative phase and 20 days  to complete the adjudicative phase. In assessing timeliness under these  objectives, executive branch agencies exclude the slowest 10 percent  and report on the average of the remaining 90 percent (referred to as the  fastest 90 percent).

As part of the Insider Threat and Security Clearance Reform cross- agency priority goal, the PAC reported quarterly on the average number  of days to initiate, investigate, adjudicate, and complete the end-to-end  process for initial secret and initial top secret cases and periodic  reinvestigations for the executive branch as a whole from fiscal year 2014  through 2016. For fiscal year 2016, the PAC reported that the  government-wide average for executive branch agencies did not meet the 40-day investigation objective for the fastest 90  percent of initial secret clearances for any quarter; the averages  ranged from 92 days to 135 days; did not meet ODNI’s revised investigation objective for the fastest 90  percent of initial top secret clearances for any quarter; the averages  ranged from 168 days to 208 days; did not meet the goal of conducting the investigative portion of  periodic reinvestigations within 150 days for the fastest 90 percent of  cases for any quarter; the averages ranged from 175 days to 192  days; and did not meet the goal of completing periodic reinvestigations—the  end-to-end goal—within 195 days for any quarter of fiscal year 2016;  the averages ranged from 209 days to 227 days.

Our analysis of timeliness data for specific executive branch agencies  showed that the percentage of agencies meeting established  investigation and adjudication timeliness objectives for initial secret and  top secret personnel security clearances and periodic reinvestigations  decreased from fiscal year 2012 through 2016. We found that agencies  with delegated authority to conduct their own investigations and those  that use NBIB as their investigative provider experienced challenges in  meeting established investigative timeliness objectives. Specifically, in  fiscal year 2012, we found that

73 percent of the agencies, for which we obtained data, did not meet  investigation and adjudication objectives for at least three of four  quarters for initial secret clearances,

41 percent did not meet those objectives for initial top secret

16 percent did not meet the investigative goal for at least three of four  quarters for the fastest 90 percent of periodic reinvestigations.

By fiscal year 2016, the percentage of agencies that did not meet these  same objectives had increased to 98 percent, 90 percent, and 82 percent,  respectively.

Furthermore, ODNI requests individual corrective action plans from  agencies not meeting security clearance timeliness objectives. However,  the executive branch has not developed a government-wide plan, with  goals and interim milestones, to meet established timeliness objectives  for initial security clearances that takes into consideration increased  investigative requirements and other stated challenges. In our December  2017 report, we recommended that the Director of National Intelligence,  as Security Executive Agent, develop a government-wide plan, including  goals and interim milestones, to meet timeliness objectives for initial  personnel security clearance investigations and adjudications. Although  the DNI did not specifically comment on this recommendation, we  continue to believe a government-wide plan would better position ODNI to  identify and address any systemic government-wide issues.

We also recommended that the Director of National Intelligence conduct  an evidence-based review of the investigation and adjudication timeliness  objectives and take action to adjust the objectives if appropriate. He did  not agree with this recommendation and stated that it is premature to  revise the existing timeliness goals until NBIB’s backlog is resolved. We  continue to believe that our recommendation to conduct an evidence- based review, using relevant data, is valid. As we noted in our report,  even agencies with delegated authority to conduct their own  investigations are experiencing challenges meeting established timeliness  objectives. We also noted that ODNI has not comprehensively revisited  the investigation or adjudication timeliness objectives for initial security  stemming from the implementation of the 2012 Federal Investigative  Standards.

Backlog of Background Investigations Has Steadily Increased since 2014

The executive branch’s challenges in meeting investigation timeliness  objectives for initial personnel security clearances and periodic  reinvestigations have contributed to a significant backlog of background  investigations at the primary entity responsible for conducting background  investigations, NBIB. NBIB personnel are attempting to decrease the  backlog by making the background investigation process more effective  and efficient. To do so, NBIB conducted a business process  reengineering effort that was intended to identify challenges in the  process and their root causes. Specifically, NBIB officials cited efforts that  have been implemented to reduce the number of personnel hours  necessary to complete an investigation, such as centralizing interviews  and using video-teleconferencing for overseas investigations (to decrease  travel time), automated record checks, and focused writing (to make  reports more succinct and less time-consuming to prepare). However,  NBIB has not identified how the implementation of the business process  reengineering effort will affect the backlog or the need for additional  investigators in the future. In December 2017, we recommended that the  Director of NBIB develop a plan, including goals and milestones, that  includes a determination of the effect of the business process  reengineering efforts on reducing the backlog to a “healthy” inventory of  work, representing approximately 6 weeks of work. NBIB concurred with  this recommendation.

NBIB documentation shows that the backlog of pending investigations  increased from about 190,000 in August 2014 to more than 710,000 as of  February 2018, as shown in figure 1. NBIB’s Key Performance Indicators  report states that a “healthy” inventory of work is around 180,000 pending  investigations, representing approximately 6 weeks of work, and would  allow NBIB to meet timeliness objectives.

ODNI officials stated that several significant events contributed to agency  challenges in meeting timeliness objectives over the past 5 fiscal years,  including a government shutdown, the 2015 OPM data breach, a loss of  OPM contractor support, and OPM’s review of the security of its IT  systems, which resulted in the temporary suspension of the web-based  platform used to complete and submit background investigation forms. In  addition, executive branch agencies noted the increased investigative  requirements stemming from the 2012 Federal Investigative Standards as  a further challenge to meeting established timeliness objectives in the  future.

While NBIB has taken steps to increase its capacity to conduct  background investigations by increasing its own investigator staff as well  as awarding new contracts, in our December 2017 report we noted that  NBIB officials have assessed four scenarios, from the status quo— assuming no additional contractor or federal investigator hires—to an  aggressive contractor staffing plan beyond January 2018. The two  scenarios that NBIB identified as most feasible would not result in a  “healthy” inventory level until fiscal year 2022 at the earliest. In our  December 2017 report, we recommended that the Director of NBIB  establish goals for increasing total investigator capacity—federal  employees and contractor personnel—in accordance with the plan for  reducing the backlog of investigations, as noted above. NBIB concurred  with this recommendation.

The Potential Effects of Continuous Evaluation on Executive Branch Agencies Are Unknown

We reported in November 2017 that the potential effects of continuous  evaluation on executive branch agencies are unknown because future  phases of the program and the effect on agency resources have not yet  been determined. ODNI has not yet determined key aspects of its  continuous evaluation program, which has limited the ability of executive  branch agencies to plan for implementation in accordance with ODNI’s  phased approach. For example, while ODNI has initiated the first phase  of continuous evaluation in coordination with implementing executive  branch agencies, it has not yet determined what the future phases of  implementation will entail, or when they will occur. As we reported in  November 2017, the uncertainty regarding the requirements and time  frames for the future phases of the program has affected the ability of  executive branch agencies to plan to implement continuous evaluation  and estimate the associated costs.

Although executive branch agencies have identified increased resources  as a risk associated with implementing continuous evaluation, and ODNI  has acknowledged that risk, ODNI, in coordination with the PAC, has not  assessed the potential effects of continuous evaluation on an agency’s  resources. Further, ODNI has not developed a plan, in consultation with  implementing agencies, to address such effects, including modifying the  scope or frequency of periodic reinvestigations or replacing periodic  reinvestigations for certain clearance holders.

Moreover, the potential effect of continuous evaluation on periodic  reinvestigations is unknown. Executive branch agencies have expressed  varying views about potential changes to the periodic reinvestigation  model:

DOD officials stated that with workload and funding issues, they see  no alternative but to replace periodic reinvestigations for certain  clearance holders with continuous evaluation, as the record checks  conducted are the same for both processes.

State Department officials expressed concerns that relevant  information, such as state and local law-enforcement records that are  not yet automated, would be missed if it did not conduct periodic  reinvestigations.

State Department officials, along with officials from the Departments  of Justice and Homeland Security, stated it may be possible to  change the frequency or scope of periodic reinvestigations at some  point in the future.

The Security Executive Agent Directive for continuous evaluation,  issued since our report, clarified that continuous evaluation is  intended to supplement but not replace periodic reinvestigations.

In our November 2017 report, ODNI officials stated that ODNI is not  opposed to further improving the security clearance process, and that  once continuous evaluation is operational, it plans to determine the  efficiencies and mitigation of risks associated with the approach.  Specifically, these officials stated that once continuous evaluation is  further implemented and ODNI has gathered sufficient data—which they  estimated would take about a year from May 2017—they can perform  analysis and research to determine whether any changes are needed to  the periodic reinvestigation model.

We recommended that the Director of National Intelligence assess the  potential effects of continuous evaluation on agency resources and  develop a plan, in consultation with implementing agencies, to address  those effects, such as modifying the scope of periodic reinvestigations,  changing the frequency of periodic reinvestigations, or replacing periodic  reinvestigations for certain clearance holders. ODNI generally concurred  with this recommendation.

Finally, the National Defense Authorization Act for Fiscal Year 2018,  enacted in December 2017, will have a significant impact on the  personnel security clearance process. Among other things, the act  authorized DOD to conduct its own background investigations and  requires DOD to begin carrying out a related implementation plan by  October 1, 2020. It also requires the Secretary of Defense, in  consultation with the Director of OPM, to provide for a phased transition.  These changes could potentially affect timeliness, the backlog, and other  reform initiatives but the effect is unknown at this time. DOD’s  investigations represent the majority of the background investigations  conducted by NBIB.

Chairman Burr, Vice Chairman Warner and Members of the committee,  this concludes my prepared testimony. I look forward to answering any  questions.

If you or your staff have any questions about this testimony, please  contact Brenda S. Farrell at (202) 512-3604 or at farrellb@gao.gov.  Contact points for our Offices of Congressional Relations and Public  Affairs may be found on the last page of this testimony. GAO staff who  made key contributions to this testimony are Kimberly Seay (Assistant  Director), James Krustapentus, Michael Shaughnessy, and John Van  Schaik.

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