Security Clearance Costs Go Up at OPM

Office of Personnel Management (OPM) security clearance costs are going up. That doesn’t have a major effect on the average clearance holder, but it does contribute to the growing trend to reduce the number of more expensive, higher level clearance investigations, as agencies look to find ways to save money. That means fewer workers cleared at the highest levels.

Over the past two years OPM has increased the price of their standard investigations an average of about 48 percent.  In October 2014 OPM introduced Tier 1 and Tier 2 investigations to replace the National Agency Check with Inquiries (NACI) and the Moderate Risk Background Investigation (MBI), respectively.   In October 2015 they introduced Tier 3 investigations to replace both the National Agency Check with Law and Credit (NACLC) and the Access National Agency Check with Inquiries (ANACI).

Tier 1 and Tier 2 investigations are not significantly different from the investigations they replaced, and the Tier 3 investigation is very similar to the ANACI.  However, since FY 2014 the prices for these three investigations increased an average of 78 percent.  The price of the Tier 3 (ANACI) investigation increased an incredible 118 percent.

Note: Tier 2R and Tier 3R are the reinvestigations for Tier 2 and Tier 3 investigations. Descriptions of the “traditional” investigative products are listed in an October 2011 article.

Why Rising Costs Matter – Agencies Must Pay Up

From FY 2014 to FY 2015 OPM increased the prices of their standard investigations an average of 26 percent.  In July 2015 OPM announced an immediate and retroactive additional price increase of about 10 percent for these same investigations.  Initially OPM stated that these increases were needed to cover unplanned costs related to the termination of OPM’s contracts with USIS at the end of September 2014.  Later OPM also stated that other federal agencies would have to help pay for the costs of credit monitoring and related services associated with the massive breach of their security clearance data earlier this year.  Recently OPM included “information technology security and system enhancements to protect against cyber-attacks and to advance efficiencies” as additional reasons for the price increases.  In October 2015 OPM increased the prices of investigations another 8 percent on average for FY 2016.

Except for the Enhanced Subject Interview (ESI), the prices shown in this chart are for standard investigations without added coverage or priority service.  The ESI is listed here because it is an integral part of many investigations, it can be added to other investigations, and it is the single most expensive element of an investigation.  Tier 3 (ANACI) will be the most frequently requested investigation this year and in future years.  It’s the investigation needed for initial Confidential and Secret clearances for military, contractor, and federal civilian employees.

New FIS implemented in 2016

The new Federal Investigative Standards (FIS) consist of five tiers of investigations, plus separate reinvestigations for Tier 2 through Tier 5.  According to the 3^rd Quarter FY2015 “Cross Agency Priority Goals for Insider Threat and Security Clearance Reform,” the Initial Operating Capability for Tier 4 and Tier 5 investigations is expected by October 2016 and Full Operating Capability for all Tier level investigations is expected by September 2017.  FOC will probably include the change to a five-year reinvestigation interval for all Tier 3 positions and implementation of new Continuous Evaluation requirements for Tier 5.  When these additional changes are implemented, the cost of individual investigations may only change slightly, but the overall spending on investigations will increase significantly.  In FY 2014 before their prices began to increase dramatically, OPM received $855 million in revenue from background investigations.  This was about a 15 percent decline from their FY 2013 revenue of $1,003 million resulting from a 14 percent decline in the number of investigations requested.  OPM only increased it prices marginally from FY 2010 to FY 2014.

There are changes being considered that could further impact the cost of investigations.  There is a study to determine whether background investigations “should be an inherently governmental function, and if not, whether it could be performed by a non-profit, private sector corporation. . . .”  Another study seeks to determine whether the current DoD approach for obtaining personnel security investigations and reinvestigations from OPM is the most efficient and effective approach.   DoD accounts for about 80 percent of OPM’s investigative workload.  There is also reportedly a recommendation to create a new agency (the National Investigative Service Agency—NISA) and transfer the responsibility to conduct personnel security investigations for the federal government from OPM to NISA.

Except for only a fraction of one percent of all cases, none of this affects individual applicants or federal contractors.  Almost all federal agencies that purchase investigations from OPM pay for the investigations using appropriated funds and will have to adjust their budgets to absorb the price increases.  The impact for cleared contractors and employees comes in how they offset increased clearance costs. One method of doing so is by scaling back the number of positions requiring more expensive investigations. This will continue the trend of reducing the number of cleared workers, particularly at higher clearance levels, in an already tight security clearance job market.

Copyright © 2016 Federal Clearance Assistance Service.  All rights reserved.