we have a quite liberal democratic resident who has not only been in elected, but reelected, putting into place some ideas and programs and projects that i think are very wrongheaded. the public had a chance to think about that, and they did reelect him. it is a challenging time. it is also an exciting time if what you are trying to do -- what i and many others are trying to do is modernize conservatism, bring it into line with challenges the country faces now, to help conservatives and the country think about the challenges of the 21st century. neither party is doing a good job. there is a lot of opportunity for thinking about what america in the 20th -- 21st century needs to change to get back to economic growth, to get back to prosperity, to get back to the kind of cultural revival we need. it is challenging, but it is

exciting. >> more tonight at 8:00, on " q&a." >> a senate subcommittee held a hearing on access to classified information. it included patrick mcfarland of the office of personnel management. this is an hour and a half. >> i called to order this joint hearing of the subcommittee on the efficiency and effectiveness of the federal workforce, and the subcommittee on financial and contracting oversight all stop i want to say thank you to janitor johnson -- senator johnson for being here. this afternoon's hearing is

entitled "safeguarding our nation secrets, examining the security clearance process." i want to thank my colleagues and their staffs, and i want t thank our witnesses for being here today. thank you for your time. recent events have forced us to look out national security. it is critical to examine the scope of these programs and find out where to balance our security and essential liberties. it is also incumbent on us to raise questions about how we are vetting federal employees or contractors who have access to sensitive data. lastly, i asked general keith alexander alexander, director of the national security agency, a pretty straight up question. tens if notng

hundreds of billions of taxpayer dollars to keep outsiders from accessing our nation secrets, how in the world as a contractor who has been on the job for less than three months get his hands on information detailing a highly classified government program that he subsequently shared with foreign media outlets? the long answer is one that will ultimately require a great deal of review. we do not just have an external program. we have an internal one. there are nearly 5 million individuals inside and outside of our government who have been granted security clearances and access to our nation's most sensitive data. million individuals have access to that information, with a real problem in our hands

if we cannot get this right. because of the national security implications involved. workbuilds on the previous of this subcommittee, as well as the senate armed services committee, and the senate select committee on intelligence. we will examine the parents process, and discuss the management oversight of the federal employees and contractors tasked with carrying out investigations for the granting of clearances. i hope and expect an open and frank discussion with witnesses today about the particular roles they play in the security clearance process. we need to know what we are doing right, and we need to know what we can do better. a lot of progress has been made in recent years, we certainly still still have a ways to go. i would like to turn it over to the head of the contracting oversight committee, senator claire mccaskill, for her statement. >> thank you, senator. i hope this is the first

hearing we have. i think all four of us have demonstrated a desire to get after various problems that are sometimes embedded in our government without adequate oversight, and i am very happy to work with all three of you on this effort today. earlier this month, a contractor working for the nsa, edward snowden, released classified information. he had access because he had received a security clearance. but security clearance was issued following an investigation of his background. over 90% of the background investigations for government employees and contractors are conducted by the office of personnel management, including all background investigations for members of the military, defense department, civilian and contractors.

this investigation portrays a government agency where there is fraud, limited accountability, and no respect for taxpayer dollars. conducting and managing background investigation costs the federal government over a billion dollars per year. the federal investigative services division uses a revolving fund structure, in which federal agencies pay opm backgroundferent checks. i was shocked to learn that this fund has never been audited. the inspector general would is allowed toe do on audit. at least 18 investigations have been convicted for falsifying,

calling into question hundreds of lower-level clearances. there are more than 40 other active and pending investigations into fabricated investigations, and it is possible that there are far more. we also learned that approximately 75% of all government investigations are conducted by contractors. of contractor conducts 65% those investigations. they also have a contract to provide support to the office of personnel management in managing and overseeing investigation. themwhich appears to put in the position of being a contractor to do the investigation, and then to be the contractor overseeing their own employees doing the investigation. for its work, the office of hasonnel management

received more than $2.4 million last year. we have received information that are currently under criminal investigation by the office of personnel management inspector general. we have also received information that this is related to systematic veil your to adequately conduct investigations under contract. we also learned about the time under review. clearly, this is an ongoing investigation, and we cannot comment. like thegencies defense department rely on these background investigations to make assessments of whether people should be trusted with our nations most sensitive investigation. are we handling background investigations in our government effectively and in a way that is

deserving of our trust? >> i will turn it over to the ranking member for his opening statement. >> thank you, mr. chairman. and i think my chair from the last congress, and ranking .ember from wisconsin this is timely. it is an important topic, timely given the snowden disclosures, and the inadequacy of the .ystem the security clearance process is critical, because it ensures our most valuable nation -- information is protected, a while ensuring we have what we need to protect our country. done poorly, it can be damaging.

we run the risk of hamstringing ability to build alliances around the world. this committee has a long history of looking into this issue. we have managed almost 5 million personnel authorized to have some kind of security clearance, 5 million people. given the many challenges in the past, it is only appropriate that we follow up today to see how these agencies are progressing, and in light of what just happened, to see why it is not working as well as it should be. six years, the government accountability office had the dod program on the high risk list. it got up in 2011, that there agenciesg list of

involved in the security clearance process, and we are still working through those. these include case management systems, metrics, reciprocity, and most troubling, the pressure to meet timeliness metrics, impacting the quality of investigations. inspectors general have identified issues of concern, from the financial oversight of a $2 million annual revolving fund, fraudulent investigations, and inadequate steps taken by negligent investigators. we must have an adequate, effective, efficient, timely completion of such investigations. there are many questions as to effectiveness and efficiency of this process. i look forward to hearing a progress report, mr. chairman,

on meeting these recommendations, and the actions taken. subcommittee chairs for bringing this issue before us. like thank you, senator portman. i will turn it over to senator johnson. >> i would like to thank the witnesses for appearing. and is all about process how it works. coming from business, there are all kinds of processes we have standardized. iso certification -- certification, surveillance audits. i was reviewing information prior to this hearing. that cap jumping in my mind. if we could apply standardization processes the government, that

would be in place. there was an article written in february 20, 2013, by a former deputy secretary of defense. i would like to enter that into the record. it describes how this gentleman this process.ugh it was somewhere on a government computer. he could not get access. the review process was basically a government employee or contract employee coming in and going through, question by question, where he was in the private sector business in a similar process, and the process of just asking five questions, they had a 99% reveal rate in terms of that person committing fraud. in the private sector, we can get to a process that works. why can't we get that in the

government? hopefully, this hearing is coming up with a standardized process that works. i agree with all three of you -- this is critical, if we are going to maintain this process. >> what was the name of the document? without objection, so done. for witnesses, i would like to welcome all of you here today. we extended an invite to the office of the director of national intelligence. there were not able to provide us with a witness. i know they are under huge demands right now, and i acknowledge the notice was short. hopefully, it can happen next time, because i am sure there will be a next time. we are fortunate to have assembled a great panel. we will start with patrick mcfarland, who was the inspector general of the united states office of snow management. he has served in this capacity since 1990, picking him the longest tenured federal inspector general. he heads up the audit and

investigative program to seek to identify fraud, waste, and mismanagement programs administered by opm. i understand you were a police officer in st. louis at one time. hopefully, your path did not cross senator mccaskill have. >> only if we were put in a criminal in jail. >> he is also accompanied by michelle smith, the opm inspector general. welcome. merton miller is an associate director of investigation for opm's investigative services. mr. miller is responsible for policy development and contractor oversight. before joining opm, esther miller served along and asked -- distinguished career in the united states air force. we will be looking for pilots and montana. then we have stephen lewis,

deputy director for personal, industrial, and physical security policy in the office of the undersecretary of defense for intelligence. welcome. that office exercises policy and planning and strategic oversight over intelligence, counterintelligence, and security matters including the security clearance process. the director of the defense security service at the defense department also joins him. welcome to the hearing today. thank you for your service. then we have the director of defense capabilities and management of the government accountability office. in that capacity, she is responsible for overseeing military and dod personnel issues including governmentwide security clearance issues. she has worked on a number of national security issues since she began her career at the gao in 1981. welcome, brenda. -- thankeing here today.

you all for being here today. it is a custom to swear in witnesses before us. i would ask you all to stand, including mr. sims and ms. schmitz. raise your right hand. do you swear that the testimony will give before the subcommittee will be the truth, the the whole truth, nothing but the truth? but the record reflect that they all answered in the affirmative. each one if you are going to have five minutes for your statements, and i would tell you that your entire written testimony will be a part of the record. you can add more to that, complete written testimony cup up until july 8. we will start with mr. mcfarlane. if you can keep it to five minutes, i would appreciate it. >> chairman tester and mccaskill, ranking members portman and johnson, and other members of the subcommittee,

good afternoon. my name is patrick mcfarlane, and i am the inspector general at the u.s. office of personnel management. thank you for inviting me here today to speak about our oversight work related to opm's federal investigative services for a gram office.-- oh gram office. -- program office. in 1978, the u.s. congress took a bold step in creating the inspector general act, old and that it was an experiment born out of the multitude of governmentwide list -- mistakes, serious problems, and wrongdoing. in the face of much opposition from the entrenched government bureaucracy, it was congress's pledge to the american citizen that their expectations of good government and their techs -- their tax money would be protected. the inspector general concept is transparency at its core functionality. it must be transparency without any shades of gray. indeed it is with this understanding that each inspector general's organization honors the independence required of them free of any political influence, which congress mandated.

today you have asked me are today because of concerns the lack of transparency in an organization that plays an integral part in protecting our national security and integrity of the government's workforce. opm federal investigative service conducts approximately 90% of these background investigations for the federal government. these are used by agencies to determine whether to grant a federal employee or contractor a security clearance. due to recent events, a key discussion point in recent public debates has become, who should we trust with access to sensitive information related to national security? the very first up the government takes in answering this question is to conduct these background investigations. i am here to inform you that there is an alarmingly insufficient level of oversight of the federal investigative services program. the lack of independent verification of the organization that conducts these important background investigations is a clear threat to national security.

if a background investigation is not conducted properly, all other steps taken when issuing a security clearance are called into question. everyday i have the privilege of leading an organization of people dedicated to a work ethic that embodies our pledge to know our business and responsibilities better than anyone else. at the close of the day, to be able to say that we did what was right for the american taxpayer. this having been said, what is most noteworthy for your understanding is that our oversight of opm's investigative program has been thwarted by virtue of an agency funding decision. under current law, the federal investigative services program must price its products and services and amanda allows it to recover its costs. opm uses a revolving fund as a financing vehicle for these activities. for several years, opm has taken

a position that oversight is not considered to be an administrative cost, and thus our office has been denied access to the revolving fund. i do not think that anyone here would argue that oversight, financial audits, performance audits, and investigative activity are not a crucial part of the administration of any government program. to compensate, we have used $3 million we have for non-trust fund work to maintain a modicum of oversight viability in the revolving fund programs. with special emphasis on the federal investigative services program because of the national

security implications. please be assured, even with their resources, it is of recent discussed in my written testimony, we feel compelled to engage our office in a joint initiative between the audit and investigative divisions to thoroughly oversight policies and procedures of the quality review practices of the federal investigative services program. i am pleased to say that with the support of former director john, the administration has included a legislative proposal in the president's fiscal year 2014 budget that would grant us access to the revolving fund. i close by also requesting your subcommittee support -- subcommittees support so that we can have the resources to do the job with which we have been entrusted. thank you. >> we will go to you, merton. >> chairman tester, chairwoman mccaskill, ranking members, thank you very much for the opportunity to testify today regarding opm's role in the federal government see it -- secret clearance process. in response to a 2004

legislation authorizing the transfer of dod's security transfer to opm, opm has continued to enhance the background investigation process by improving timeliness, quality, and efficiency. our successes are due in large part to our partnership with omb, odni, the department of defense, and other agencies. we have no backlogs. we are meeting timeless mandates. and we have increased automation. our investigative services conducts back rent investigations -- background investigations to support hiring, security clearances, credential determinations, among others. the processes supporting these activities are highly integrated, automated, insistently measured against timeliness and performance quality standards. performance data for these background investigations are togely reported o todni,--

odni, executive branch agencies, and to congress. these products and services are used as a basis for making security clearance and credentialing determinations by agencies. since absorbing dod's background investigative or graham in 2005, dod personal security clearances have been removed from the government's accounting office. opm has conducted over 95% of the background investigations required by the federal government. opm manages, oversees the federal employees and contractors responsible for conducting investigations. pursuant to an executive order, the odni is responsible for directing the oversight investigations and determinations and for developing uniform and consistent policies and procedures to ensure the effective, efficient, and timely completion of investigations and adjudications. actual clearance decisions themselves are adjudications

made by the sponsoring agencies. background investigation is one of opm's core missions. currently we have more than 2500 federal employees in 6700 contractors that form a network, a nationwide network of field investigators, support staff, as well as a country of fellow agents that we have working abroad.

we provide a flexible, responsive, and cons of effective -- and cost effective investigative program. the opportunity to manage highly sensitive and accurate and the and inherently governmental investigation. information technology has been and will continue to be a crucial ability to support us in balancing our timeliness quality and cost goals. it plays a key role in reducing costsit plays a key role in reducing improving efficiencies, eliminating waste, and providing a better service for agencies that require these investigations. we consult with the security community in developing new policies and standards in turning this clearly clearance investigations program to ensure governmentwide securityity and clearance reform has provided program enhancements particularly in the timeliness and quality of investigative

products. the enhancements have strengthened the government's ability to recruit top talent and effectively put federal and contracted employees to work. lastly, working with dod and other federal agencies to establish and implement executive branch wide training standards, adjudicative standards, and processes, and develop reciprocity standards and metrics to gauge improvements and demonstrate savings. i thank you for the opportunity to be here today to discuss this important issue, and i would be happy to respond to questions. >> thank you for your testimony. >> good afternoon. chairman tester, chairwoman mccaskill, members of the committee, thank you for inviting me to testify today. my name is steve lewis, i'm the deputy director of the security

policy and oversight dr. within the office of the undersecretary of defense for intelligence. we appreciate the committee's continued interest in the effectiveness of the personnel security clearance process. because of your commitment to this radical function -- critical function of our government and its ability to protect national security, the have achieved major improvements over the years and look forward to more gains in the future. i am here today on behalf of of dr. michael vickers, the undersecretary of defense for intelligence. i would like to introduce mr. stan sims. he accompanies us today. defensersecretary of for intelligence is the principal staff assistant to the secretary and deputy secretary for security matters and is responsible for setting overall dod policy to implement national policies for access to and the protection of classified national security information. in addition, he is the senior

official for dod's personal security program and has responsibility for policy and procedures governing civilian, military, and industrial based personal security programs. executive order 13467 does it makes the responsibility to develop uniform policies and procedures to assure effective completion of investigations and determinations of eligibility for access to classified information, as well as acceptance of those determinations on a reciprocal basis across the government. with regard to the oversight roles and responsibilities within dod, the heads of dod components are responsible for establishing and overseeing implementations of procedures to ensure protection of classified information. taking prompt and appropriate

management action in cases of compromised classified information. such actions are required to focus on correcting or eliminating the conditions that caused, contributed to, or brought about the incident. this responsibility encompasses military service members, dod civilians, and embedded contractor personnel. under the national industrial security program, the defense attorney services responsible for conducting oversight of companies companies cleared to perform unclassified contracts for dod and 26 other federal agencies, which use dod industrial security services. institutedent has various process improvements that have resulted in greater efficiencies and effectiveness with regard to initiating and adjudicating background investigations. this has helped to result in the removal of the dod from the

high-risk list for its personnel security program. we have deployed multiple initiatives to ensure consistent, high-quality investigative products, highly skilled and professionally certified personal security adjudicators, and robust documentation of adjudicative rationale in support of these adjudicative decisions. this helps to ensure appropriate oversight and reciprocity. in october 2012, dod consolidated its adjudicative functions and resources except for the dod intelligence agencies in a centralized adjudication facility to realize efficiencies and standardized practices of this critical, inherently governmental function. you specifically asked for the

costs of obtaining secured clearances for the department. paidscal year 2012, dod the office of personnel management a total of $753 million for security clearance investigations and approximately $471 million for military service members, $30 million for dod civilians, and $252 million for other industries. >> thank you for your testimony. mr. lewis, you may proceed. >> chairman tester, mccaskill, and members, thank you for the opportunity to be here today to discuss the governmentwide arsenal security clearance process. as you know, we have an extensive body of work on issues related to the security process dating back several decades. since 2008, we have focused on the governmentwide effort to reform the security clearance

process trade my statement today is based on gao reports between 2008-2013 about dod's security clearance program and personnel security reform efforts. her smell security clearances allow government and contracted personnel to gain access to classic of classified information -- classified information. as you know, a high number of clearances continue to be processed and the director for national intelligence reported this year that over more than 4.9 million government and contractor personnel held clearances, making it a formidable challenge for those deciding who should have a clearance. i written statement addresses three areas for improvements to the process. the first area addresses having a sound requirements determination process in place. agencies need an effective process for determining whether positions require a security clearance, and if so, at what level.

last year, we found guidance did not exist to help agencies determine whether or not a civilian position should require a clearance, and importantly, no requirement exists to review existing positions with clearances. he made recommendations to the director of national intelligence who has responsibility for this area to develop such guidance. the second part of my statement addresses having performance measures to measure quality. since the 1990s, we have emphasized the need to build quality and quality metrics into the clearance process. executive branch efforts to reform the process have focused more so on timeliness and quality. we have seen results to speed up the processing of initial clearances, that we have not seen results to finish developing metrics for quality of investigations, implement

those metrics, or report on those findings. we have reason for concern about the quality of investigations. for example, in may 2009, gao reported that documentation was incomplete for most opm investigative reports we reviewed good about 87% of 3500 investigative reports. we have made recommendations in this area, but those recommendations have not been implemented. statementrea of my addresses the guidance to enhance efficiencies of the clearance process. everman wide personal security reform efforts have not yet focused on potential cost savings even though the stated mission of these efforts include improving cost savings. for example, opm's investigative process which represents a portion of the security clearance process and has significant costs has not been studied for process efficiencies or cost savings. in february 2012, gao reported

that opm received over $1 billion to conduct more than 2 million back rent investigations in fiscal year 2012. we have raised concerns about transparency of cost and investments in technology while maintaining a less ash a less efficient and duplicate it paper-based process. we have made recommendations in this area, but actions have not been realized. this concludes my statement. i would be pleased to take questions. >> thank you all for your opening statements. we will put seven minutes on the clock and we will go from here. i will start with you, mr. mcfarlane. without making any specific statements that could compromise the investigation, could you confirm that the office of personnel management's office of the inspector general is currently investigating one of the three major contractors conducting background checks on behalf of the u.s. government? >> we are. >> can you confirm that they

confirmed -- they conducted the background investigation and mr. edward snowden? >> i'm sorry. >> can you confirm they carried out the back an investigation on mr. snowden? >> i am not sure regarding the question. >> it is my information that there were 2 -- an initial investigation -- >> yes, the reinvestigation, absolutely. >> they did do the reinvestigation? >> yes. >> but you're not sure who did the initial investigation? >> yes. >> are there any concerns that mr. snowden's background investigation may not have been carried out in an appropriate or thorough manner yes -- manner? >> yes, we do believe there could be some problems.

iswhen more information available, i assume it will be made public? >> it will depend on the time and situation, but we will do our best to keep you informed. >> they are under investigation. yet they are given the reinvestigation of mr. snowden. how does that happen? >> excuse me just one moment -- michelle?

>> it is our understanding that the periodic investigation was done in 2011, which would have predated the initiation of our investigation. >> when did you initiate your investigation? >> later in 2011. >> yet this agency, if i'm correct -- i believe it was in one of your opening statements -- they do about 6500 -- 65% of the 75% that was contracted out? you said 75 -- i can look it up, but 75% of the are contracted out? is that not correct? >> that question is probably best answered by -- i understand the number varies on whether you're talking about all investigative products or those which include significant fieldwork. >> ok.

merton? >> they conduct 45% of the overall contract workload. >> very good. i'm going to go with you, mr. lewis. in my opening statement i touched on how much classified data is being generated and maintained with an increasing number of folks with access to that data. dod currently accounts for a vast majority of that initial personnel security clearances. since 9/11,-security has driven the increased number of checks. -- increased security has driven the increased number of checks. do you anticipate that dod security clearances will decrease in the future or are they going to maintain or get more? >> it is hard to have a crystal

ball on that subject. thewould think that as drawdown occurs that there would be less of a requirement for clearances, and we are engaging with the military services and others to look at scrubbing the requirements for clearances and validating need aggressively than we have in the past. but i cannot predict what is going to happen with any degree of certainty with that drawdown. >> i understand that clearances are driven by a need, a specific need -- is that scrubbing, is that what you are using to monitor or manage the overall clearances for the dod, or what kind of metrics are you using? >> we are looking at the number of clearances and engaging with the military services to

validate those needs. we do not have metrics at this point on that issue. >> senator mccaskill? >> mr. miller, have you read ms. farrel's testimony? >> i heard it for the first time. now,m not going to start but i would appreciate that you would read it and respond to its specificity. it is overwhelming to me the amount of recommendations that have been made in this area that have been ignored by your agency. i see no good reason why these recommendations have been ignored. you want to address what they have been ignored, you are welcome too. i have some other areas of want to ask you about also, but it appears to me that -- this is not the first time it has happened, i've spent a lot of time around gao reports and looking at recommendations and whether or not they are implemented -- ethically, agencies with the least amount of oversight by congress have

the worst record. is there some kind of cogent answer you can give to why all of these recommendations that have been made have been basically wholesale ignored? >> we take what gao recommends through their audits very seriously. >> when is the last time you implemented a recommendation? >> this fiscal year, we have implemented a number of recommendations regarding cost transparency. we have done a number of things to support cost transparency to our customers. we submitted our first annual stakeholder report, the first one, a 33 page report that details not only workload and resources but also talks specifically about where our money goes to support the program. >> if you would be so kind, ms. carroll, to do a scorecard for us, list the recommendations that gao has made, and give us an actual score as to how many

of them have been implemented and when by your estimation, and i will have a chance to share that with you, mr. miller, and you can argue as to whether is accurate or not. how many times has the ig asked to try to audit the revolving fund that pays for all these background investigations? >> i do not have a number of times they have asked to audit, but we are very cooperative with having the ig actually audit revolving fund and the issue was determining whether there was a legal basis to provide revolving fund dollars for the audit. >> according to mr. mcfarlane, the documents do not exist to audit the funds. >> there are lots of documents, financial reports. >> i need some kind of agreement as to why these funds have never been audited. it is $1 billion a year. it is outrageous that it is never been audited. what is your rationale as to why this fund has never been audited? >> my understanding is opm, we support the current requests by the oig for revolving fund

dollars to support audits in the future. the issue in the past was there was not a legal basis apparently for revolving fund dollars to be given to the ig for audit purposes. we welcome the ig's oversight. >> these are all public dollars. >> they are public dollars, not appropriated. i honestly cannot speak to -- >> they were appropriated at some point. what you're seeing is somebody -- all somebody has to do is give money that has been appropriated to another agency and then no audit? >> and no. >> you're saying there was some legal question as to whether this money was on the table. auditable.bsolutely

they could have used appropriated dollars at any time to audit the revolving fund. >> let me see if i understand, what is your view of this as to why the audit has not occurred? he seems to be saying this was an acknowledgment by you, that you did not have the resources to do it. is that the problem? >> we absolutely have the resources to do it. >> from your view, what is the reason this has not been audited? >> when you say the fund you are speaking -- >> the revolving fund. >> the revolving fund. you have any idea? one moment, please.

this is a bit confusing, i think, but our intent, as always, is to get involved in any subject matter as deeply as we can. the problem that we have is identify --d not excuse me, one second. i want to give you is correct an answer as possible. >> my understanding come and this may be subject to later correction, my understanding is that there were attempts in the late 9 d's and insufficient documentation and since that time -- in the late 1990's and insufficient documentation. >> we need to get that figured out.

if we are seeing to the american people that they are not free but there are not the resources available to audit fund or hold a billion dollars of public money we have a real problem. i am going to need you to come up with the specific answer that you believe told you back from auditing this fund. i would need the same kind of specificity from you, mr. miller, as to your willingness and your capability of being audited. we know the department of defense cannot be audited. a discreetto be fund that may not be very expensive. it ought to be something that is as easy as brush your teeth for the tens upon thousands of government auditors have right now. i want to talk just for a minute before my time is up about the number of convictions for falsification. 18 people convicted for falsifying investigations,

of those 11 were government employees. seven were contractors. ofseems to me the number convictions since 2007 are high for an office this small. believe you're catching most of the fraud or to believe there is more? >> i believe there is considerably more. i do not believe we have caught it all by any stretch. >> my time is up, thank you. >> double, mr. chairman. one thing we have heard today is the cannot confirm the -- this leads to another with the feel the pressure to speed up investigations in the backlog. are met during those

metrics -- measuring those read it here is some data. in 2009, from a sample that they had come 87% of investigative reports the dod added kid is used are missing. 87%. they recommended frequency for --ch reports meet standards it seems like a straightforward and common sense recommendations. is gao notes that opm developing tools for security evaluations. aboutorning to talk more that. you basically stated that from observations the opm continues investigations on voluntary reporting from customer agencies.

ofould just ask in light what has happened and in light how do youormation, measure quality? ways wea number of measure quality. if i could address the 87% number, you probably saw the response to that audit. there are challenges associated with capturing every element of a background investigation. let me explain it very quickly and employment track. the was one of the areas that was one of the highest number of elements that were missing in a background investigation. i am not saying federal agencies, i am talking all kinds of commercial entities where individuals may have previously worked.

one of the challenges is getting cooperation. if an employer either goes away or does not exist any longer, or chooses not to provide information to the government, that information has to be documented and reported. you cannot get that implement coverage that is required by the investigation. thee are issues regarding 87% involving separate interviews that were not accomplished. many of the subjects have been deployed into a hostile environment where investigators cannot go to conduct those interviews. documentation in reporting investigation saying this subject was not available due to deployment in that case was closed. you're exactly right. every time we initiate an investigation we put what refers to as a closed date. that date must be met to meet the mandated for the day challenge that we were given for

timeliness. all investigative leads must be accomplished in that period of time and the case has been closed. >> let's follow up on that a little bit. of is a high figure incomplete reports. given that we're trying to protect some of our most able classified information and we seen the impact of this recently, do you agree with what mr. miller has just said? the the major problem is simple years? and or the people have been deployed? is that the reason 87% is not completed. >> the documentation was not in the files. it may be challenging to track down people who may be deployed and if the documentation is there that could explain it. we found the same types of the incomplete documentation in the adjudication files. we recommended to them that they have guidance, that if there are difficulties you documented so

that the adjudicator can know that whoever comes by and as the reviews will know why that was left. deployed andwas that was the only reason there was an incomplete investigation that would not be part of the 87%? >> if it were documented. >> you simply have the documentation. but steve federal investigative guidelines, like the federal adjudicated guidelines are looked at as baseline. staff attend investigative training. we used gao certified educators. we make sure that stuff that was coming behind reviewing have the competency to see what was missing and what should be there. this is about documentation, not having to look. your recommendation was it develops tools. what was have you developed able

to close this gap? >> there are a number of issues. , we haveuality process quality procedures in our contracts as well as federal employees through several and when it was finalized. in terms of the contractors before it is delivered to the government. there are several stages of review that occurs when a background investigation is being worked. conduct a full quality review. are federal investigators, there is a review conducted. finalized and the final review is delivered to our customers, there is a subsequent review, the adjudicated decision made by the agency itself.

the review the investigation to make sure all of the elements are there. they can make a decision. based on the consistent and whole of the investigation they determined to grant that person either clarence or federal employment. providing these magic to your agitator's? to your educators? at your process the next time, time, they are going to be able to know why somebody was>> we have not provided anywe would welcome a follow-up on that. to address the quality standards. that is working on establishing a clear and concise standards

for evaluating the background. quality is in the eye of the beholder. depending on the adjudicator whether it is complete, whether it is not. there is a lot of gray area i advocated in standing up this group that may give us the fine roles. give us quality standards that are clear. we will absolutely meet those. >> thank you for your testimony. >> what does it mean case closed? >> all of the elements have been obtained and completed and passed on to the customer. >> or you have not gotten all of them. >> if they are not obtainable like the employment share, that will be documented in the report investigation.

it will be closed. >> how many of those investigations are adjudicated? >> our numbers on metrics, we look at the engagement for a request to reopen. when a customer comes back to us and says you're missing elements, there is things we do not have here, we're asking you to reopen that. >> will present you get back? >> less than one percent. >> do you know how many are granted >> no sir. >> considered case closed come only one percent get kicked back. that is probably what is happening right? something is disturbing in her testimony, there is no guidance in terms of what is required for security clearance being granted.

>> as correct. that responsibility falls in and the director of national intelligence. he is it possible for oversight of this security area by providing guidance regarding efficiencies, effectiveness, and timeliness. >> there is no standard for requesting a security clearance? >> the guidance is under draft. >> there is literally no standard for what circumstances?

>> you are correct. it is left up to the agencies to determine how they are going to classify those jobs, and what you find is a consistency. we found that some of the agencies were using an otm tool that helps determine the sensitivity of a job position. the sensitivity of the position doesn't tell you the classification, but by knowing the sensitivity, you can translate that into whether or not a security clearance is needed. unfortunately, the tool that many of the agencies were using was geared more towards determining sensitivity related to suitability for the job, rather than the job requiring security clearance. they developed the tool without a lot of collaboration with od and nine. that's how you got the till. >> does anyone want to challenge this in terms of no standard, no guidance? help me out here. >> they did create a position

that was focused on suitability and determining what type of investigation is required for the position they are asking for. >> is there a guidance and standard? >> the key focuses on what level of access is required to perform the duties associated with the job rate is going to depend on what those duties are, and for industry it is very carefully scrutinized. with in dod, it is going to depend on what level of access is determined to be required to perform duties. >> some guidance? so we have classifications of

secrecy levels. if your job disruptions as you need in a class on occasion, is that a guidance? >> a guidance is not exist is am telling you for government wide determination whether a civilian position needs a clearance. you will find the individual agencies that have developed their own rules or procedures, and what we have found from our audit last year was an inconsistency of the application. the reviewed use of the opm position that mr. miller mentioned, and found with their review that for the majority of the cases we reviewed, they came up with a different determination. quite alarming. >> security clearance for individuals, we also the contract and facilities. you also are certifying contractors to handle classified

material. is that correct? can you just step me through an investigation of the contractor facility versus an individual? >> for an individual, not for facility, i would ask if you can handle that one. for investigator, for investigations of a contractor, there is a determination that they need a clearance. it is sponsored by dod. the department of defense, they submit the individual. interestede facilities right now. i want to find out how often, if the certification is granted, are they surveillance is question mark that is the question with the most recent incident. >> i would like to defer to mr. sims on that. >> thank you. [inaudible]

>> i oversee the defense contract for facility. the facility clearancesis a requirement to read if the contractor is operating on a contract that requires a certain level of clearance, a secret or top secret, they requirements to dss. it is possibly a government. by a government we look at the facility in the look of the contract. if there are content requires there is a secret clearance, we evaluate the facility. and then we grant facility clearance first. was the contractor gets facility clearance, that covers the level access a contractor would have in working on that

contract. for example, if there is a level of effort of how many are required to perform in the government contract. that facility clearances at the secret level. that is only the level that the access of the individual can apply for. we audit or the security reviews on routine basis is -- that we oversee. we look at those and we review. when our agents go to those facilities will get those contracts and we verified them. for example, if we find that they have a person that is the top secret, trying to work on a

secret contract, we mandate the lower enough for removal. >> how many man-hours does the first certification process take? how many is involved in a surveillance audit. i'm trying to get some sort of how rigorous the certification is. thet depends on the size of facility. they are all away from mom and pops, -- >> is the daylong process? >> it could be a day or two. for larger companies, it could take up to 2-3 weeks on-site with a team of security professionals from my agency. >> thank you very much. >> this'll be a question for you mr. miller miller. the testimony goes like this. the problem is that patrick mcfarland's office has encounteredoig oversight are presented.

the follow-up on that question, this to be an dollar fund, somebody is made a call that none of that money can be used for things like annual financial audits, or any basic oversight. who made that call? >> i cannot answer that. >> i can speak to that. this has been the most frustrating and that has happened regarding the fund for us. it is literally taken it out of

the picture. for expenses. what we've tried to do is stay tuned into what is going on. we want to be in debt in all of these things. we have not been able to simply becauseit was decided in the general counsel's office, and supported by the director of opm that we do not fix into the category that would allow us to have funds from the revolving fund. i --has transpired him if

we feel just the opposite. may,has transpired, if i may, in order to try and remedy the situation, i suggested a couple of years ago that the suspension that may be the director of opm should suspend his decision in agreement with general counsel's are not entitled to those funds. then maybe go for a comptroller general's opinion if we had to. >> i got a notion that is going to be a question that is going to be asked right out of theare you going to sport using some of those monies? when you do a -- an oversight. does the cost a for that by the

fun that you are doing the audit on? >> everything we do for the health insurance and retirement life insurance is done out of those trust funds. >> -- >> we are using our salary and expenses to do what we can in the revolving fund. >> when you do any other audits on any other funds, i assume you're getting pay out of those funds in your audited. are there any other that you are not able to get your cost reimbursed? that is why i need to know. the hearing is july 16. i've a question to follow up on. sure of the president of the united states, i'm not sure who

is the sponsor will. there are different responsibilities and metrics, different everything. we shouldn't be surprised at all. where there are metrics, there -- does the buck stop in congress? should we be dictating what you should be doing, or should it be -- who should be doing this? >> we were encouraged when a government structure was put in

place by executive order back in 2008. the executive order established a performance accountability council to drive reform efforts towards effectiveness, efficiency, and keeping it going. the deputy for -- the order established the director for national intelligence as the security agents. it's established the otm as the executive agent. the question as many times it is who is in charge and it comes down to the performance accountability council, had appointed deputy manager --

headed up by the deputy manager. >> very quickly. should i be concerned about this? i'm concerned there is no apparent metrics or standards. >> there are standards. >> but they have very between each agency. there is no reciprocity. the standards go from soup to nuts. >> there's been a great deal of effort under the performance standards, and get consistency across federal agencies. >> and we been successful -- have we been successful? what we've been better. there still work to do. >> [inaudible]

what kind of processes are in place as to the investigations that that person was responsible for? >> the federal investigators had integrity service process in place, which is how most of these are detected. when they suspect that falsification is occurring, they do what they call a recovery effort, which is to identify the scope that they believe the falsifications may have occurred within, and then they have a federally employed investigator go back and redo every investigation assigned to that person. both to make sure that a quality product replaces the possibly defective product, and to identify what is falsified for the criminal investigation and potential prosecution.

>> are the accessfor the people who were in the parameters of the investigation around these criminal convictions for falsification, i assume that classified materials is done. >> the individuals who will the security clearance? to my knowledge, they are not affected. >> is that true? they are allowed to keep their classification even though you have discovered that during the course there clearance was given, someone was falsifying? >> that is correct. the recovery process that was just mentioned is top priority. our integrity assurance program is how these falsifications are

uncovered. >> by content letters? >> that is one of the processes. three percent a month of all investigations receive recontact activity. that is for every agent we have employed. there isn't any agent that doesn't receive some recontact activity on their investigation. >> teaming government employee or contractor. >> yes ma'am. >> three percent, ud recontact letters to confirm they have been interviewed. >> yes ma'am. we will uncover the fraud. >> how? >> if the individual we have contacted was the individual

that was falsified, the responses they were never spoken to by opm. >> what if the person making the falsification also fight the person they contacted? makes up the it is them, and puts down a phone number that is a phone number they have access to, or an address they have access to, and they get the letter and say they contacted me, when the whole thing was made up? >> that is an interesting scenario. we know where our agents reside. we know where -- >> are some po box? >> some are. i would just -- i know your background. i know you are true and true. it worries me that we have this criminal falsifications. there are people employed by contractors that are not doing the work, and you're catching them.

sometimes. there is a not you are lot -- there is a lot you are not catching. i would not be stupid enough to put down the name and the address who was going to be contacting me. i will put down a name and address rightly control the receipt of that document and handle it. >> one of the challenges for that scenario is that when they felt the rest, they identify references to the identify we are investigating. contactingally people that the individual being investigated has referred us to speak to. that would help keep that problem from occurring. >> have you given any thought to shutting up the classification? >> there's been some discussion about that. we have gone back and reviewed the handout that mr. mcfarland put out that talks about the level of investigation that was involved.

+ i think you should, since we expedite the recovery process and a payback and infest addition to make sure it is correct. sincehink you should, these are potentially falsify, i think we should consider enter the falsification that you would suspend clearance center early for any of the people that be impacted by the falsification. it would be easy for us to have a disaster in that area? forcurious about paying these by contractors. 250 million would pay just for contractors.

are the contractors being asked identify the separately in order to have cost delineated in their contracts, or do they absorb in their contract price? [inaudible] >> the cost for funding in the industry. that is what that was for fy 12. >> if we are doing this for the contractors, which i question, it seems to me that this would be something that they should pay for they want to do business with the government. they should be there... hours. assuming we are paying for, why are we paying the premium for

those that already have it. we are paying for it twice. they get asked her money for having employees that have a clearance. not only are we paying to give in, we are paying them a second time. >> i see your point. i can address your point. what is the most cost-effective way to pay for security clearance, and the analysis shows that if we were to allow into the contract for the cost of those clearances, then they would add overhead on their management of that. the most cost-effective way was to manage it from the department. >> that make some sense. it doesn't make sense that we pay them for it. we did in the first place. i guess the contractor -- that is a good deal you can get it.

are like our contractors getting it. i would like you to get back to the committee with why you can not seasons and desist -- cease- and-desist paying a contract. -- paying a premium to contractors, since they did not pay it in the first place. >> maybe i'm confused. we pay opm $250 million for contractor clearances on government contracts. those funds go to opm. >> i understand pretty well i'm talking about is that public dollars are being used to provide clearances for private contractors. the government are providing contracts. i know the area defense contracting, you get a premium on your contract if the people

who are working on your contract have clearance. that is what is irritating me. they are getting a premium for something that the taxpayers provided them. it would be one thing if they were given a premium for something they had paid for, but they are not. they're getting the premium for something that we pay for. that seems dumb to me. that's why i would like to figure out why we're doing that. >> if i could add in there that that is an issue we have to address with the acquisition community, and we will be happy to come back with you with more information. >> i would love that. it is a make any sense that we would do that. >> i'm out of time. >> what measures are safeguards are in place to monitor the personality of dod pravin contractors with their security clearances? >> if you're talking about their day-to-day access to classified information, for

contractors, dss is oversight. from the standpoint of a military service member, or a dod civilian, that is the responsibility of the component to establish a program to monitor and conduct oversight. there is a dod program manual which establishes criteria for not only how class by material is to be protected, but how issues of security concern that need to be reported if there is a concern about an employee. thean you tell us with biggest qualifiers are question -- mark >> it has been for --

biggest disqualify ears are? >> it has been for financial issues, and individuals who have been involved in criminal activity. >> ok. how many clearances have been revoked in the last year or two? >> i would to come back to you with those. >> in the previous question, uses was under investigation since late 2011. did i hear that correct? >> yes sir. >> they are still under investigation now? how long do these take? >> complicated cases typical take several years. >> during that time there is no there business goes on as usual even if they are under investigation? >> it depends on the investigation. in this case, we have been of but we have been investigating

since the beginning. >> was the investigation about? >> since it is ongoing, i really don't want to risk jeopardizing. >> i do not want you to. >> i want to get out uses in terms of not only do they have the big contract to actually do the background checks, they have alls program supports. through our government, there have been an easy way to augment personnel through these contracts hearing you couldn't tell the contractors from the employees. they were doing the same

functions. they were sitting at the same desks. a mother contractor, one was another. partly was because they were easier to get rid of if you hire the contractors. easier to get rid of the contractors. >> this is one of our primary support contracts bring we provide a background to the cost associated with. our front-end operations a number of routine activities that has to conduct read much of it is manual based on the way that the records come to us a -- paper style. we have 999 personnel that work the front in operation for us.

that is everything from scope and the investigation, free, inputting the data, and ensuring the investigation gets distributed to our investigators in the field. >> we are paying uses $700 million a year to do macro checks. >> yes, ma'am. >> what percentage are federal employees? >> 35 our employees. >> yes. >> why are we paying contractors to hire people? >> year-to-year, we see a decline in the contracts required for services. we also, based on the jobs, it is more financially beneficial for us to have contractors doing that work in bringing on. >> how do you know they are cheaper?

>> we will deal with cost- benefit analysis. >> it sound like you have not done one, but he said the are cheaper. >> how do you know that? >> we can contract our workforce quickly on the contract side. we can go ahead and downsize those requirements. >> 999 is downsize? lower than it was? >> what was at last year? >> i would have to get that to you. it is over 1000. >> i what to do in here printable the numbers. i am tired of this assumption being made that contractors are cheaper. i have been at this for six years. i guarantee you that happy time, they have not and cheaper. i just think it is easier. many times, there been studies done that they are more expensive.

i would like to take a hard look at that and make sure that it is the case. that was the last line of questioning. i know all of you want to make this as good as possible. we don't have these hearings to make everyone feel awkward and comfortable. we have these hearings because we know oversight is needed in this area. i think all of you will acknowledge oversight. i know that my friends know that oversight is needed. i think even you all will acknowledge that this is an the area we have neglected it takes one incident for all of us to realize that there is a whole area of the government that most americans have no idea how this actually works. the more we dig in, the more we realize work is to be done. i appreciate all of your public service. i know we have specific questions that we have asked, and i know the chairman may have i would appreciate

getting that information back and i will stay on that, mr. miller, about the cost analysis. i bet we can figure out that you can hire those people will bless -- people for less. thank you. >> i want to close now. i want to thank all of you for being here. we have these hearings to try to get information to make things run better. i appreciate you giving us short notice. i know you are busy. oversight is critically important. that has been brought up several times today. making sure we have the proper metrics. what we're are talking about is intelligence of the nation. to make got a ways to go. sure that we have the kind of reciprocity in

place, the metrics of place that will ensure intelligence stays solid even the folks inside the apartment.-- even to folks inside the department. we look forward to working with you to constructively move forward. i want to thank you for your testimony. the record will remain open until july 8. with that, this hearing is adjourned. thank you all. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013]

>> next, senate minority leader mitch mcconnell and then federal reserve chairman bernanke. later, house speaker john boehner at the national association of manufacturers. as congress works to prevent student loan interest rates from doubling on july 1, we will bring you a a long conference tomorrow on student financial aid, a live coverage at the american enterprise institute that begins at 9 a.m. eastern on c-span three. mexicanorrow, ambassador eduardo medina mora mexico-u.s. cooperation at the brookings institute. senate minority mitch mcconnell talked about free speech and intimidating by government agencies under the obama administration. he also took questions from the

audience. from the american enterprise institute, this is 50 minutes. >> good morning, ladies and gentlemen. i am arthur brooks and i am delighted to welcome you to this address by the senate minority leader mitch mcconnell. in 1960, the president of this institution created a new model for this institution. it was very simple, but very subversive. he had a view that washington d.c. or anyplace are you are working with ideas, you are one of two types of people. either you want to win the cup titian of ideas or you want to shut dn