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Arlington, Virginia 22202

SPB 157-96
28 October 1996




1. This memorandum follows up on a conversation you had with Peter Saderholm at the 22 October briefing by Defense Investigative Service (DIS) officials on their proposed "reinvention." Your position at that meeting was that DIS would not receive additional funding to address backlogs or new requirements.

2. Peter is currently on travel, so he asked me to convey a couple of thoughts to you regarding this situation. The first is in regard to the need to conduct local agency checks (LACs) for those who require SECRET access when national records checks formerly sufficed.

3. Decades ago, the Congress established in law (section 504, Title 10, US Code) a requirement that no one with a felony arrest record could enter the armed forces. In response, procedures were established within Defense to perform national- level checks of the files of the Federal Bureau of Investigations (FBI) on all being accessioned into the armed services: National Agency Checks (NAC) for those requiring classified access, ENTNACS for the others.

4. The NAC process was quite effective for many years primarily because the Congress provided vast funding to all state and local police departments. In return, the state and local police departments provided the FBI with records of felony arrests and convictions. However, beginning some ten years ago, federal funds for police departments dried up and, apparently with it, any compunction for state and local police departments to respond to federal records requirements. Today, the situation has deteriorated to the point that some 22 states provide virtually no records at all to the FBI, and many others are very inconsistent in their submissions. Accordingly, it is quite probable that we are bringing into the armed forces on a daily basis persons with serious felony arrest records. It is also quite probable that some of these same individuals will end up with SECRET clearances.

5. In establishing the new standards for a SECRET clearance, the Personnel Security Committee (PSC) and the Security Policy Forum backed away from adopting federal-wide standards for a SECRET clearance that required NACs, LACs, credit checks, and written inquiries from various references. The PSC and the Forum recognized the impact such a full scope would have had on Defense. However, they could not in good conscience support the perpetuation of a NAC alone, knowing full well of its inadequacies. Therefore, the requirement for local agency checks was insisted upon for those requiring access to classified information up to and including SECRET. The matter of what to do with military accessions in general was adjudged to be of concern but ultimately an internal Defense matter. To those of us within Defense who must contend with the new order of what sociologist describe as "youth without conscience" and "youth without souls," it is a very serious matter, even when clearances are not required.

6. I believe that if senior officials within the DoD discovered that ammunition employed by our armed forces was defective, we would spend hundreds of millions of dollars in short order to remedy the situation. While that scenario does not exist, we have discovered serious deficiencies in the tool used to ensure murderers, drug felons, crooks, and thieves are not allowed into our military units where they have access to weapons, ammunition, and potentially, classified information. Should the Congress become aware of either scenario, it is certain they would conduct a vigorous review of the matter. Therefore, we on the SPB staff believe it most appropriate to approach the Congress with this problem, particularly since the solution involves only $4-7 million, since the Congress originated the requirement and the complications we now face result from their budget cutting actions.

7. At the attachment is a letter from key members of the House Permanent Select Committee on Intelligence (HPSCI). It primarily addresses their concerns over actions proposed in the DoD polygraph program. However, in the last paragraph, the House committee members advise Secretary Perry, "If there are matters relating to shortfalls in funding for polygraph examinations, or security reinvestigations, these issues should be taken up with the Congress." DIS backlogs on reinvestigations are substantial, particularly, if you include the estimated 80,000 plus that haven't even been opened due to quotas and moratoriums. With the gracious invitation extended by the HPSCI, we also believe it appropriate to approach the Congress for budgetary relief in this most critical area.

8. If there is anything the SPB Staff can do to assist in addressing these significant issues, please advise. Also, Peter will be back in Washington within a week if you desire to chat with him about this matter.

Dan L. Jacobson


cc: Mr. Perritt, ODASD(I&S)
Mr. Nelson, ODASD(I&S)

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