(Editor’s Note. We have been seeing problems with some of our clients and subscribers who are seeking business requiring security clearances for employees. In spite of a significant increase in new opportunities for secure work with the Defense Department, Department of Homeland Security and other agencies, there is an apparent shortage of qualified personnel with security clearances, creating problems with proposals, contract performance and increasing compensation required to attract these individuals. The problem seems to be that new and renewal applications for confidential, secret and top secret clearances are not being processed. We have reported on some recent cessations of processing applications and thought we would provide a more detailed account of what is happening as well as a brief discussion on the impact on contractors and some suggestions on how to weather this problem. We have relied on a recent commentary in the May 24 issue of The Government Contractor written by James McCullough and Courtney Edmonds of the law firm of Fried, Frank, Harris, Shriver & Jacobson LLP.)

Partly because it is taking 160-370 days, on average, to complete standard background investigations for a security clearance, depending on type of clearance, the GAO reported there was a backlog of approximately 232,000 applications as of June 2005. New opportunities for supply and services contracts provided by secure employees has caused an increase in clearance requests where the proportionate increase in top secret clearances (requiring more time and effort to process) have contributed to the long delays and heavy backlog. Other contributing factors that have created a kind of "perfect storm" for the backlog are lack of full reciprocity (acceptance of security clearances granted by another agency), a shortage of personnel to handle the required investigations and adjudications processes and dramatic increases of information covered by the security classification system that increases the number of government and contractor personnel who must obtain clearances. These circumstances prompted the GAO to designate DOD’s security clearance programs as a "high-risk" area as of Jaunuary 2005.

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