Industry may wind up paying security clearance tab

(Updated) The federal government may ask contractors to help pay for processing security clearance applications for their workers, industry sources said following the Defense Department's recent decision to temporarily stop processing clearances for contractors.

The Defense Security Service announced Friday that it decided to halt the issuance of contractor clearances due to a lack of funding and the high volume of applications. The agency provides security support services to the Defense Department, federal government defense contractors and other authorized parties. In early April, it posted a notice on its Web site that it would no longer process expedited security clearance applications.

Asking industry to pay some of the costs is "certainly a possibility, but I don't know what the contractor responses would be," said Larry Allen, executive vice president of the Coalition for Government Procurement, a government contracting association. Smaller companies would rebuff the move because of the additional costs to them, while some larger businesses with financial capabilities might pay if they believed they would get a competitive edge, he added.

The government currently assumes the costs of investigating candidates and issuing clearances for them, a process that can take 12 to 18 months depending on the type of clearance requested. The Defense Security Service has been paying the Office of Personnel Management to process its security clearance requests.

The Defense Security Services' public affairs office did not immediately respond to requests for comment.

When asked if the Defense Security Service is exploring whether to have contractors pay the processing costs, Cindy McGovern, an agency spokeswoman, said the Defense Department would have to decide on the policy.

"We are working with the Defense Department to resolve the issue," McGovern said. "Any policy changes or steps that are going to be taken are going to be at the Defense Department level."

Evan Lesser, founder and director of, also said the Defense Department likely will pass the costs for processing security clearances on to contractors. His secure, online job board lists job seekers with current security clearance and restricts access to authorized government contractors.

"Unfortunately, I don't think that's going to make up for the staffing issues," he said. "[The Defense Department] just doesn't have enough people to manage this process and to do the investigations. The quantity of new requests coming in is much greater than the amount of resources they have to handle them."

The government's demand for cleared personnel skyrocketed after the terrorist attacks of Sept. 11, 2001. The war in Iraq has pushed it even higher. Besides the Defense Department, other federal agencies including the Homeland Security Department and NASA require many contractors to have security clearances.

But the government has been unable to keep up with the demand. The backlog for clearance requests totals more than 329,000. The job postings count on has increased by 85 percent in the past month, and by 43 percent since the weekend, Lesser said.

The Pentagon's recent action was the first time that the government has shut down its process for doing background checks on candidates and issuing clearances.

The move might lead to the government to transfer the cost of processing security clearances to contractors. "That could be something that's behind this as a solution," said Richard Piske, vice president and general manager of Kelly FedSecure, which provides workers with security clearances to contractors and the federal government.

Without clearances, government contractors will not be able to hire employees with clearances to complete contract work, some members of industry said. Others believe that salaries for those who already have security clearances will increase anywhere from 5 percent to 30 percent.

In the meantime, industry groups are lobbying Congress to resolve the matter quickly.

The Professional Services Council on Friday sent a letter to Stephen Cambone, the Undersecretary of Defense for Intelligence, urging him to help find a solution so the Defense Department will resume processing security clearance applications.

The Information Technology Association of America also has asked Congress to pass legislation that would require the Defense Department to resume processing security clearance applications and to devote sufficient resources to clearing the backlog. The trade group also suggested that Congress provide funding through a supplemental budget bill already under way.

(Originally published at 8:11 a.m. and updated at 4:22 p.m.)

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