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It’s official: The National Background Investigations Bureau, along with its personnel, resources and the security clearance program itself, are now a part of the Defense Department.

Both the Pentagon and the Office of Personnel Management held a “casing of the colors” ceremony Monday morning at the National Museum of the Marine Corps in Quantico, Virginia, to recognize the formal merger of the Defense Security Service, NBIB and the Defense Department’s Consolidated Adjudications as the Defense Counterintelligence and Security Agency.

“This is really more than symbolic, in terms of a service or ceremony,” a DoD official told reporters Tuesday afternoon. “It really noted that we are a new and frankly united workforce working against a fairly broad but well-defined mission. We’ve created what is arguably the single largest security-focused agency in the federal government.”

Over the weekend, DoD successfully transferred all 2,900-3,000 NBIB federal employees into defense payroll and personnel systems.

NBIB employees received official offers to join DoD back in July. All but a handful or two of the existing NBIB employees chose to make the transfer, the official said. Those who didn’t accept the transfer have chosen to retire.

NBIB employees moved to new personnel system

For the employees themselves, the transfer shouldn’t immediately change much, DoD officials reiterated.

The agencies used a “transfer of function” authority to officially move NBIB’s existing workforce from OPM to the Pentagon.

NBIB investigators were previously considered title 5 employees.  Now, they’re considered title 10 employees under the Defense Civilian Intelligence Personnel System, which has a two-year probationary period, as well as different performance standards and pay bands compared to title 5.

Most NBIB employees will continue to report to their same duty stations for work.

NBIB’s contracts and service providers have also moved to the Pentagon. Those contracts are now defense contracts, the DoD official said.

The DCSA will perform background investigations for 105 agencies, or 95% of government. Beyond its personnel vetting mission, the agency will also provide industrial security services for 33 federal agencies and will continue to expand its protection of critical technology.

“We’re going to focus first on where can we continue to improve our processes and improve those activities and then realign the organization more precisely to meet those evolving requirements,” the DoD official said. “Not only are we looking to work on the processes that exist today, but we have two external drivers helping us focus on what tomorrow looks like.”

One of those drivers is the Trump administration’s effort to overhaul the entire suitability, credentialing and security clearance enterprise, which hasn’t gotten a serious update in decades.

That effort, called the Trusted Workforce 2.0 initiative, is supposed to drastically change how government broadly grants trust among its employees and contractors. Defense and intelligence officials have been designing both the DCSA as a new organization — and the end-to-end IT and case management system known as the National Background Investigation Service (NBIS) — with this approach in mind.

“The end state of this is better security, better efficiency, protecting our people, our programs and our information, aligned to our national security strategies and our national defense strategies, really recognizing the environment we are in now and expect to be in the future, where security focus is elevated across the board,” a DoD official told reporters.

Clearance process modernization ‘long time coming’

The security clearance transfer has been a long time coming.

Both OPM and DoD have been preparing for the security clearance transfer for over a year, well before the President signed an executive order back in April, which made the move official.

But the Performance Accountability Council, which includes DoD and OPM, along with the Office of the Director of National Intelligence and the Office of Management and Budget, have been planning for the security clearance transfer since 2016, when Congress first instructed the Pentagon to develop a plan to perform its own security clearances.

“It’s much less painful, frankly, and organizationally more sound to keep the entire enterprise as one element and move it into the department than it would to pull about 75% out of it,” a defense official said. “It would have been less efficient.”

DoD’s Personnel Vetting Transformation Office, which the department stood up as a temporary organization designed to oversee and implement change management activities associated with the security clearance transfer, had mapped out about 80 major projects with 480 milestones and roughly 2,000 individual tasks needed to accomplish the security clearance transfer by Oct. 1.

Industry and defense organizations, along with Deloitte, KPMG and other contractors have counseled DoD on the merger and coming transition, a DoD official said.

Meanwhile, DoD’s undersecretary of defense for intelligence is searching for a permanent director to the DCSA, though it doesn’t have a timeline for anticipated personnel changes. Charlie Phalen, the now former NBIB director who was appointed to lead DCSA on an acting basis back in June, is expected to continue leading the agency on a temporary basis until a replacement has been named.

Beyond its plans to modernize the security clearance, the DCSA will also focus on modernizing supply chain security and protecting sensitive information earlier in the development process.

“A continuous review of how we do business has to happen, because we have not made changes in either of the two business areas over decades. This really is a chance to review and put in place what is a good starting point, but we have to look back and ask ourselves are we doing it right?” a DoD official said. “With critical technology protection, it’s a recognition that we need to focus on a risk-based system that looks at how a company and how a facility is protecting the information or the product that they are producing in this cleared environment.”

Monday, perhaps ironically, was also the third anniversary of the official launch of the NBIB, which has managed to cut its backlog of pending investigations roughly in half from a record high inventory of 725,000 last April.

A DoD official said the current inventory of background investigations sits at 302,000, a little more than 100,000 shy of DCSA’s goal to achieve a “steady state” of 200,000 cases by Jan. 1.

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