Feds demand more vendor clearances

Agencies are increasingly demanding that the contractors they work with furnish personnel with security clearances. The trend began before Sept. 11, 2001, but accelerated dramatically after the terrorist attacks. And now with war under way in Iraq, agencies are scrutinizing the backgrounds of the people who work on government sites and systems even more closely.

Company officials say that they are being asked to provide clearances for personnel in positions that never required such tight security before. And in many cases in which clearances have been required in the past, the agencies now want higher levels.

"There are going to be major backlogs to do [security clearances]. The agencies and people that do them are just slammed," said John Ortego, a consultant based in New Orleans.

"There's an increase even in agencies that don't typically process an abundance of classified data," said Ira Kirsch, president of Unisys Corp.'s U.S. Federal Government Group.

The Office of Personnel Management handles about 2 million requests a year for some level of background investigation. Although intelligence agencies have almost always required security clearances for contract personnel, civilian agencies and even some defense contracts usually have been more open.

Now agencies such as the Commerce Department are clamping down, said Michael Sade, director of Commerce's Office of Acquisition Management.

Commerce is developing a new policy on security clearances, he said, although he declined to predict its final form. "It's one of the first priorities now," he said.

The change in security demands is causing problems for vendors. The pool of workers with the necessary technology skills and the required clearance levels is small to begin with, and recruiting has become more difficult as the demand for such workers grows. Companies are looking for innovative approaches to find the needed people.

AT&T Government Solutions hired 400 people last year and expects to grow by about the same number this year, said Gary King, recruiting manager there.

Through last fall and into this spring, AT&T hired recent or soon-to-be college graduates and applied for security clearances when they started the AT&T training process. "We'll find the skills we need and we'll wait for the clearance," King said.

IonIdea Inc., a software development firm based in Fairfax, Va., touts its ability to find cleared personnel as a selling point. In addition to its consulting work, the firm keeps lists of qualified people available for engagements and puts them together with clients, acting almost as a broker, said James Wynn, vice president of the Government Solutions Division.

"We're finding major companies that we've been supporting for years have more demands for security clearances," he said.

Immediately after the 2001 attacks, many agencies began requiring that all contract staff be U.S. citizens, said Maryann Hirsch, president of Knowledge Consulting Group, an information technology services firm based in Sterling, Va.

"That affected a lot of contractors," she said. "There are a lot of legitimate green card professionals who don't have citizenship."

Hirsch cautioned that the trend could be detrimental to agencies. If officials suddenly decide to require a higher level of clearance than they once did, the contractor faces a difficult choice. Because it takes months to upgrade a clearance, contractors may choose to replace a team with new employees who already have the higher clearance.

When that happens, "the agency loses the institutional knowledge and domain expertise that those prior people had."

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Acquisition targets

The demand for security clearances affects more than the ability of contractors to find work, said Stan Soloway, president of the Professional Services Council. It also makes companies who have personnel with clearances juicier acquisition targets.

"There's clearly a premium in the marketplace right now in cleared personnel. That premium is driving some of the valuations you see on mergers and acquisitions," he said. "No one keeps a bench of cleared personnel. You can't afford to."

Some of the increased demand is unjustified, he said, but it's there all the same.

"There's a great deal of concern about security, but you have to balance it against an agency's needs," he said. "Sometimes agencies and sometimes others think they need a higher level of security than the work really requires. That's an ongoing challenge."