Federal employees and government contractors often work side by side, perform similar duties, and hold the same levels of security clearance. However, when a security clearance problem arises, the procedures and potential consequences can be very different.
For federal employees, a security clearance issue can affect not only access to classified information but also their federal careers. An employee may face an agency security investigation, suspension of access, reassignment, administrative leave, or even removal from federal service.
After many years of representing security clearance holders and applicants, I have found that federal employees are often surprised to learn that their clearance rights and appeal procedures differ substantially from those available to government contractors.
Understanding those differences is important, particularly when an employee receives notice that their clearance eligibility is under review.
Federal Employees and Contractors Do Not Always Follow the Same Clearance Process
Although federal employees and government contractors are generally evaluated under the same national security adjudicative guidelines, the administrative procedures governing their cases can differ.
For many defense contractors, the Defense Counterintelligence and Security Agency (DCSA) plays a central role in personnel security adjudications. Contractor cases may also involve the Defense Office of Hearings and Appeals (DOHA), which provides established procedures for certain adverse clearance determinations.
Federal employees, by contrast, often have their clearances adjudicated through their employing agencies or the agencies responsible for their access.
A Department of Justice employee, Department of State employee, Department of Homeland Security employee, or Intelligence Community employee may face procedures that differ from those applicable to a defense contractor.
Even within the federal government, the process is not uniform. The agency involved, the type of clearance or access, and the employee’s position can significantly affect how a case proceeds.
A Clearance Suspension Can Immediately Affect Federal Employment
One of the most significant issues for federal employees is the relationship between clearance eligibility and continued employment. Many federal positions require an employee to maintain a security clearance as a condition of employment for their position.
If an agency suspends an employee’s access to classified information, the employee may no longer be able to perform essential job duties. Depending on the circumstances, the agency may consider reassignment, alternative duties, an appropriate leave status, or other personnel action while the security issue is reviewed.
However, an agency is not necessarily required to create an alternative position or indefinitely retain an employee who cannot satisfy a position’s security requirements. In many cases, the federal employee may be proposed for leave without pay (an indefinite suspension).
This means that even a temporary clearance suspension can create significant employment uncertainty.
Federal Employees May Have Two Separate Proceedings
A particularly important distinction involves the separation between a security clearance determination and an employment action.
Suppose a federal employee receives notice that the agency intends to revoke their security clearance. The employee may have an opportunity to respond to the security allegations through the applicable clearance review process.
If the clearance is ultimately revoked, the agency may separately propose removing the employee from federal service because the position requires continued clearance eligibility.
These are two different decisions. The first concerns whether the employee should continue to be trusted with access to classified information. The second concerns whether the employee can continue occupying the federal position.
Although the proceedings are related, they involve different procedural rules, deciding officials, and appeal rights.
Does the Merit Systems Protection Board Review Clearance Revocations?
This is one of the most misunderstood issues involving federal employees.
In Department of the Navy v. Egan, 484 U.S. 518 (1988), the Supreme Court addressed the relationship between security clearance determinations and the Merit Systems Protection Board (MSPB).
The Court recognized the Executive Branch’s broad authority over national security clearance decisions and limited the MSPB’s ability to review the merits of an agency’s underlying clearance determination.
As a result, a federal employee who is removed because of a clearance revocation generally cannot file an MSPB appeal to obtain a new substantive determination that the employee should have been granted a clearance.
However, that does not mean the employee has no rights. Depending on the employee’s status and circumstances, the MSPB may review whether the agency followed applicable procedures and whether the clearance requirement and resulting personnel action were properly applied.
This distinction is important. Challenging the merits of a clearance revocation is not the same as challenging the procedures used to remove a federal employee.
What About Security Clearance Appeal Rights?
Federal employees may have administrative review rights when their clearance eligibility is denied or revoked.
Executive Order 12968 establishes minimum procedural protections for many covered federal clearance determinations, including notice of reasons, an opportunity to respond, and review procedures, subject to applicable limitations and exceptions.
However, agencies may implement these protections differently, and some national security positions or access determinations are governed by additional or specialized procedures. Unlike many defense contractor cases, federal employee clearance appeals often do not involve a DOHA administrative judge.
Some agencies use internal review boards, panels, senior officials, or other designated adjudicative authorities. The precise procedures and deadlines should be reviewed as soon as an employee receives notice of a proposed adverse clearance action.
Can a Federal Employee Be Reassigned After Losing a Clearance?
Sometimes, but reassignment is not guaranteed. An agency may have positions that do not require the same level of security eligibility. In certain circumstances, reassignment or a change in duties may be considered.
However, whether such an option is available depends on the agency’s staffing needs, applicable personnel rules, the employee’s qualifications, and the nature of the underlying security concerns. It can also depend on the employee’s relationship with their chain of command.
Federal employees should not assume that an agency must transfer them to an uncleared position simply because their clearance has been suspended or revoked. At the same time, employees should understand whether any applicable agency policy, collective bargaining agreement, or personnel procedure provides relevant protections.
Why Federal Employees Should Act Early
When a federal employee receives notice of a security concern, early action can make a substantial difference.
The employee should identify the specific allegations, determine whether the action involves access suspension or an actual eligibility determination, and carefully review the agency’s response deadlines.
Employees should also distinguish between communications from the security office and proposed personnel actions from human resources or agency management. A response that addresses the clearance allegations usually does not satisfy the separate requirements for responding to a proposed removal or other adverse employment action.
Where appropriate, employees should consider obtaining advice from counsel familiar with both federal security clearance law and federal employment procedures.
Final Thoughts
Federal employees and government contractors may be subject to the same national security adjudicative standards, but they do not always have the same procedures or appeal rights.
For federal employees, a clearance issue can become a two-part problem: maintaining eligibility to access classified information and preserving federal employment. Agency-specific procedures, internal clearance appeals, civil service rules, and the limitations established by Egan can all affect the available options.
The most important step is to understand exactly what action the agency is taking and which procedures govern that action.
This article is for informational purposes only and should not be construed as legal advice. Security clearance procedures, federal employment protections, agency policies, and appeal rights vary by agency, employee status, and type of access. Readers should consult qualified counsel regarding their specific circumstances.
