DoD changes name of security clearance agency, appoints new leadership

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This story was updated on June 25, 2019 at 4:00 p.m. to reflect additional information from DoD senior officials. 

The Defense Department’s security clearance agency officially has a new name — and new acting leadership.

The Defense Counterintelligence and Security Agency — formerly the Defense Security Service — will be led by acting Director Charlie Phalen, currently director of the National Background Investigations Bureau, the NBIB confirmed to Federal News Network.

Charlie Phalen, director of the National Background Investigations Bureau, was named acting director of the Defense Counterintelligence and Security Agency.

The DCSA will subsume NBIB and will serve as the governmentwide security clearance provider. Phalen’s appointment begins July 1 and he will lead both NBIB and the DCSA until the two agencies merge by Oct. 1.

“Mr. Phalen has the full support and confidence of the acting Secretary of Defense, the
acting director of the Office of Personnel Management and myself,” Joseph Kernan, undersecretary of defense for intelligence, wrote Monday in a memo to Defense Security Service and NBIB employees. “His current position, background and experience in both government and industry make him well qualified to serve as the acting director of DCSA. He will provide the steady leadership, continuity, and depth of knowledge necessary to successfully transfer the background investigation mission to DoD and to integrate the workforces into a cohesive team.”

Patrick Shanahan, in one of his last acts as acting Defense secretary, made the name change official in a June 20 memo.

Kernan said the new name reflects both the DSS and NBIB’s missions.

“We are at a key moment in time and have a unique opportunity ahead of us, as we bring together the missions and workforces of NBIB and DSS,” he wrote. “Foreign threats to our personnel, technology, information and facilities are pervasive and growing. They demand that we elevate our focus on security, modernize our processes and capabilities and better integrate our efforts to allow trusted people and technology in, while keeping adversaries out. This combined team is well positioned to
bring greater focus and alignment to U.S. government-wide efforts to strengthen our trusted
workforce, mitigate supply chain threats, protect sensitive information, and bolster
counterintelligence capabilities.”

Monday’s announcement comes as the Trump administration officially recognized DoD as having primary responsibility for security clearances across much of government.

A long-awaited executive order, which President Donald Trump signed back in April, made this move official and set two major timelines. It gave both DoD and OPM until June 24 to finalize the details of the security clearance transfer and sign an agreement that codifies how NBIB and OPM authorities, resources and personnel will move to the Pentagon’s newly rebranded security clearance agency.

The transfer itself won’t be final until Oct. 1, the start of the new fiscal year.

Kernan, as the undersecretary of defense for intelligence, will oversee the DCSA and the transfer of governmentwide security clearance portfolio from OPM to DoD. In addition, the undersecretary will oversee the development of updated security vetting procedures and strengthen the DCSA’s abilities to protect technology within the defense industrial base, according to Shanahan’s June 20 memo.

Kernan’s organization will, of course, also be responsible for the backlog of pending security clearances, which sits at roughly 410,000 today.

The DCSA hopes to further whittle the security clearance inventory to 300,000 by the end of this fiscal year, a senior DoD official told reporters Monday at a briefing at the Pentagon.

Moving nearly all of the pieces needed to investigate and adjudicate a security clearance under one roof will shorten the process, the DoD official said.

“Once we execute the transfer, all of the elements of the investigative system —from submission to investigation to adjudication to record keeping — will all be under a single agency for 95% of the entire number of cases in the government,” the official said.

That goal, at least based on NBIB’s progress to date, may seem conservative. NBIB has slashed the security clearance inventory by some 300,000 cases within the past year. The agency has achieved that progress through a variety of business process improvements, new technology and more personnel, Phalen told Federal News Network last week.

DCSA is also fielding and modernizing its own IT system, which will add capabilities that are not available now.

The DoD official said there is an IT transition plan in place and DCSA will accept a certain amount of redundancy in the IT systems it uses for the first couple of years until the technology transition is complete.

DoD and OPM are also making plans to “buy back” NBIB’s current legacy case management system. The Trump administration, in a briefing document given to lawmakers in recent weeks, estimated DoD reimbursements would total $42 million.

The DCSA director will “program and budget for the emerging resource requirements necessary for the successful reorganization of the DSS to the DSCA and is authorized from fiscal year 2019 to fiscal year 2021 to increase civilian manpower, acquire facility space and enter contractual agreements within the agency’s budget authority,” the June 20 memo reads.

Dan Payne, the current director of the Defense Security Service, will retire in the coming months, Kernan said. Phalen’s appointment as acting DCSA director gives both DSS and NBIB, which will continue their efforts to merge as one entity, some consistency as they prepare for the security clearance transfer by Oct. 1.

NBIB employees themselves will be transferred to DoD by or on Sept. 29 under the transfer of authority statue.

“This also provides us the preamble to start fresh, to shape an integrated, responsive organization, and to foster a culture that reflects the best of both NBIB and DSS,” Kernan said.

Scott Maucione contributed to this report. 

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