There’s a widely held misconception that federal security clearance investigations cost several thousands of dollars or more and that federal contractors must pay for these investigations. Some reputable websites perpetuate this myth by stating:

“The average cost to process a TOP SECRET clearance is between $3,000 and about $15,000, depending upon individual factors. . . . The law requires that contractors pay most of the costs of obtaining clearances for their employees.”¹

“. . . civilian companies who do classified work for the Dept. of Defense (DoD), or a national security related contract, must bear the cost of security clearances for their employees and clearance investigations can cost several thousands of dollars.”²

It’s true that the Office of Personnel Management (OPM), which conducts over 90% of all federal security clearance investigations, conducts these investigations on a fee-for-service basis. However, almost all of these investigations are paid for by other government agencies. Less than 1% of the contractors who have their clearance investigations done by OPM pay for the investigations. There are no Department of Defense (DoD) contractors that pay for clearance investigations done by OPM. The Defense Security Service (DSS) uses appropriated funds to pay OPM for the clearance investigations of DoD contractors, as well as the contractors of 23 other federal agencies that participate in the National Industrial Security Program. In FY2010 DSS paid OPM $218 million for Personnel Security Investigations for contractor personnel.³

This does not mean that federal contractors get security clearances for free. They incur costs associated with the time required to process and maintain security clearances. The cost of these activities is largely unknown, but it can easily equal or exceed the average cost of an OPM investigation. Based on the number and type of each investigation, the weighted average cost is about $1230 per investigation. The total cost of a security clearance includes the investigation, adjudication, and front-end processing and maintenance costs. The cost of investigations is published by OPM. The cost of adjudication can be estimated based on the number and type of clearance requests and agency budgets. But no data are available on the cost of front-end clearance processing and clearance maintenance activities by federal contractors and would probably vary considerably from company to company.

Figure 1: FY2011 Prices of OPM Investigations⁴

The cost of clearance adjudication is paid for by government agencies. Adjudication times can range from 0 minutes to about 17 hours depending on the type of investigation and the complexity/seriousness of issues involved. The data shown in the chart (below) is based on all DoD clearance adjudications. Investigations for industrial clearances have a lower percentage of National Agency Checks with Law and Credit (NACLC) and a higher percentage of Single Scope Background Investigations (SSBI), SSBI Periodic Reinvestigations (SSBI-PR), and Phased Periodic Reinvestigations (PPR).

Figure 2: Adjudication Time/Cost by Investigation Type

Some explanation of these figures is necessary. About 25% to 30% of DoD NACLCs are adjudicated by computer (eAdjudication) and require minimal human involvement. SSBIs generally contain more investigative reports than NACLCs and therefore take longer to review. All SSBI-PR contain some security or suitability issues and therefore take significantly longer to review than other investigations. All PPRs are clean cases. If an issue is developed on a PPR, the investigation is converted to an SSBI-PR.

As stated earlier, the cost of front-end clearance processing and clearance maintenance activities are largely unknown, and no reliable data are available to estimate the cost of these activities. But some generalizations are possible. OPM claims that completing the March 2010 version of the SF86 “is estimated to average 150 minutes per response, including time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information.” This is probably accurate because the average is heavily weighted by military accessions, who tend to be young people with limited employment, residences, school, credit, etc. For the “average” contractor 240 to 300 minutes is probably a more reasonable estimate.

Facility Security Officers (FSO) will initially spend about 120 minutes per applicant in processing them in Joint Personnel Adjudication System (JPAS), reviewing their SF86, taking fingerprints, checking clearance status, and providing an initial security briefing. In the case of an existing employee, who requires a Top Secret clearance, additional time will be spent by the FSO, the applicant, his/her supervisor, and other employees for interviews with an investigator. These interviews will average from 15 minutes for other employees to about 60 minutes for the applicant. This also applies to employees who only require a Secret clearance, but whose personal histories contain significant security issues. Beyond this there are annual security briefings, travel briefings, visit requests, and debriefings.

Figure 3: Activities Resulting in Unknown Costs to Cleared Contractor Facilities

* Adverse actions include Incident Reports, Written Interrogatories, Statement of Reasons, clearance suspensions, and clearance denials.

In the past, non-productive (or partially productive) time while waiting on a clearance was a major cost to employers. It’s still a major cost, but it has gone down considerably in the past 4 years as the average end-to-end processing time for most initial clearances has reportedly declined from 179 days to 65 days. Many employers have been able to avoid some of the direct costs of SF86 preparation and clearance delays by using Conditional Offers of Employment and not hiring job candidates until they receive either an interim or final clearance. But when an employee encounters a major problem with an initial clearance, clearance upgrade, or clearance renewal, it can cost an employer thousands of dollars in lost productivity. These problematic cases can involve upwards of one hour a week for the FSO, supervisor, and employee until the problem is resolved.

William H. Henderson is a retired federal clearance investigator, a personnel security consultant, and the author of Security Clearance Manual and Issue Mitigation Handbook. He is a regular contributor to ClearanceJobsBlog.com and ClearanceJobs.com.

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