The federal government’s made huge progress in reducing security clearance processing times over the last several years. But there are some early signs of backsliding. As Federal News Network reported last week, the latest data shows top secret investigations took an average of 115 days in the fourth quarter of fiscal 2023 – up from 84 days during the same period last year. For more on this, the  Federal Drive with Tom Temin Deputy Editor Jared Serbu spoke with Stephanie Kostro, Executive Vice President for Policy at the Professional Services Council.

Interview Transcript: 

Jared Serbu Stephanie, on that, the trusted workforce security clearance issues. I guess the good news is here, if there is any, that security clearances for secret level clearances are not taken that big of a hit yet. But it is really noticeable on the timeliness of those top secret clearances. I wonder if you and your member companies are starting to see any of those effects in real time as these timelines go up and up as I mean, is that starting to affect people’s ability to onboard new talent, things like that?

Stephanie Kostro Well, it is an area where our member companies are looking very closely at the timelines. And so when they make offers, for example, to potential candidates that they have that in mind, do they hold a security clearance? Obviously, there’s a premium being paid for those candidates. But what’s realistic in terms of when they can put somebody, a new recruit onto a contract and these lengthening timelines is really a deterrent for recruitment.

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Jared Serbu As far as the explanations that we’re getting from the administration on the reasons for the time, do those make sense to you? They seem to be indicating that they think this is a temporary problem.

Stephanie Kostro I do wonder about the temporary nature of this, because I highlight where we are and the trusted workforce to point out process, and that is to say e-qip is a thing of the past. They’re moving to this eApp situation where some of the agencies have a lot of waivers that they don’t have to go to eApp right away. That said, I think some of the increased number of applications they got or initiations for clearances came because people wanted to file under e-qip, not have to go in through a new way of initiating clearances. That said, I am not sure I quite understand the Government’s rationale that the length of time for clearances is because closing older and complex cases or some IT outages, those are somewhat unpredictable and I’m not sure I understand where they’re coming from on that front.

Jared Serbu Yeah, I guess a large part of it depends on whether they’ve fixed the IT outages so that those don’t recur in the future.

Stephanie Kostro Exactly. And you can never. The very nature of an IT outage is that you try to to avoid them at all costs, and I’m not sure how they might avoid them in the future. That said, if you go back five years there was such a high number of clearances in the backlog. I think in FY18 it was 725,000, just clearances in the process. And they’re trying to keep a steady state of 200,000. So an uptick, 225 is not unreasonable. We are tracking very closely and contractors in particular what the trends are, so that when they do on board individuals, they have a realistic expectation of when they can put that person on a contract.

Jared Serbu Let’s talk a bit about AI. A lot going on in that space. A new executive order from President Biden. [Office of Mangement and Budget (OMB)] also has a request for comments out on a forthcoming memo that they’re going to be releasing here. And I know you’ve been doing some work to survey your members about their concerns and what they think the government should do. Talk with us a bit about what you’re hearing back from those members.

Stephanie Kostro Jared you’re exactly right. Our members are noticing that AI is sort of the word of the day, the weeks and months, the year. Everyone is talking about AI, whether it’s our legislative colleagues up on the Hill or executive branch folks. And so when the executive order came out, it had some, hundreds of tasks assigned to 50 different agencies, etc.. We’re looking very closely at out. These agencies are each taking to heart and planning on implementing elements of the executive order for which they have responsibility. The National Institute of Standards and Technology in particular with their AI framework. That said there is a lot of room for dialog in this space and our members in particular are looking for ways to engage, like the OMB requests for comments on this memo. Broad brush, are they heading in the right direction? What are the ethical and legal implications of use of AI? And Jared, at this point, I’d like to highlight the difference between AI, which a lot of us have been talking about for years, and generative AI, which is when you think of Isaac Asimov and iRobot and things like that, you look at what is the implication of application of generative AI? And I think that’s an area where our members are really wondering what’s the future here.

Jared Serbu And I think you came away with some specific recommendations for the White House as they think through these issues. You want to talk about those a bit.

Stephanie Kostro Of course. I appreciate the opportunity. We had PSC have a very active AI working group and we are putting out a series of white papers. One of them just was released a couple of weeks ago and we sent it to the agencies. We sent it to the Hill, and it was specifically on the use of artificial intelligence and generative artificial intelligence in federal contracting. One of the areas that contractors are closely watching is the area of use of AI in market research, in contracting officers, applying it potentially to the evaluation of proposals, etc.. So we came up with six different recommendations for how the government should think about AI in this space. Looking for opportunities to learn and experiment, obviously, because this is a new system or a new tool that contracting officers might want to use. And of course, the perennial design security into AI. How can they protect information on the contracting officer level? But first and foremost, one of our recommendations talks about standardizing AI terminology and using best practices. And we’re suggesting that, as I mentioned earlier, market research is a really great place to start using AI in federal contracting to see what’s in the realm of the possible. And it’s a relatively low risk as opposed to jumping to AI in proposal evaluation, which we think needs to be carefully thought through before that becomes a reality.

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Jared Serbu It’s hard enough for human beings to perfectly follow the FAR. I can’t imagine what happens when ChatGPT starts getting in there. It would be it would be a bit of a minefield, it seems like, at this point.

Stephanie Kostro I think so. I think you know what the phrase we use in our paper is to experiment with AI tools in market research, because that’s what it is. And if you go to my father, he often says they call it practicing law and practicing medicine for a reason. No one’s got it quite right yet. We can say that we practice AI because no one’s got it quite right yet. And as we move forward, I think the low hanging fruit or the easiest way to see if it’s going ok in federal procurement is in market research.

Jared Serbu Before you go, I wanted to talk a bit about the appropriations process. Such as it is, we continue to not see very many hopeful signs that the House and Senate are going to converge on anything. If anything, they seem to be getting further apart as we move toward these latest deadlines. What are you seeing out there? What are you watching for?

Stephanie Kostro There are a few things that we’re watching for. And thank you, Jared, for it’s always about appropriations in DC. So where are we in the process? And months ago, several people were saying, buckle up for 18 months of continuing resolution because this is a difficult situation that we’re facing with newly installed Speaker [Mike] Johnson (R-La.), he has a vision of getting individual bills across the finish line. There are a couple that are we’re watching very closely and that are tremendous sticking points in this process. And I’ll bring your attention to two of them. One is the Agriculture Bill and one is the Transportation Housing Urban Development Bill. Right now, the House is looking AG cutting about 30% from its FY23 levels and THUD, as we’ll call it, about 25%. The Senate seems to think the FY23 level is just about right. So this is an area where if those bills can’t get across the finish line, I wonder whether the White House, and we’re looking for signs about how the president feels about this, would he allow other bills to be passed, but not the ones that are hugely contentious for full year appropriations? So I had a discussion with folks who wanted to talk about could the defense bill and the DHS bills get across the finish line when AG and THUD were being held up? I’m not sure the White House would agree to that.

Jared Serbu One of the thing things I keep coming back to here is considering that the CR’s have extended so far into FY 2024, if there is a cut of any significant magnitude, what are the implications of that happening midway through the fiscal year when agencies only have a relatively short time to deal with a sudden drop off in funding? That almost feels like a 2013 sequestration situation. Not quite, but it would be a pretty sudden change.

Stephanie Kostro Yeah. For those agencies that are, as I mentioned, are tremendously contentious, that is a significant cut. I mean, they’re currently operating under levels that were significantly higher than what, a full year appropriations or the 25% or 30% cut would signify. And of course, we always know that those cuts come out of contracts. It’s not like they’re going to lay off civilians or military personnel or make them take a pay cut. I’m not advocating for that by any means. But I would say, a lot of these things really come down to contracts and will be the canaries in the coal mine when it comes to that. We’d love to avoid that situation where a sequester is in place or significant cuts for agencies are in place. But the time will tell. And I hope to get more clarity out of either the House, the Senate or the White House as we move forward to that Jan.19 deadline for these agencies.

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