Background Investigations:

Office of Personnel Management Needs to Improve Transparency of Its Pricing and Seek Cost Savings

GAO-12-197: Published: Feb 28, 2012. Publicly Released: Mar 28, 2012.

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What GAO Found

OPM’s reported costs to conduct background investigations increased by almost 79 percent, from about $602 million in fiscal year 2005 to almost $1.1 billion in fiscal ear 2011 (in fiscal year 2011 dollars). However, the extent to which OPM’s cost data are reliable is unknown because an audit of OPM’s revolving fund, which finances business-type operations, has not been conducted. Independent audits of OPM’s overall financial management system, where revolving fund transactions are recorded, identified material weaknesses in internal controls, which could affect the reliability of these cost data. OPM’s background investigation program has three principal cost drivers. The first cost driver is investigation fieldwork and support contracts, which represent nearly half of OPM’s fiscal year 2011 reported costs— about $532 million. These contracts allow OPM to assign an investigation to a contractor and buy clerical support for case-management. The second cost driver is personnel compensation and benefits for OPM's background investigation federal workforce, which represents about 25 percent of OPM’s fiscal year 2011 reported costs—about $265 million. The third cost driver is OPM’s information technology investments. While these investments represent less than 10 percent of fiscal year 2011 reported costs, they have increased more than 682 percent over 6 years (in fiscal year 2011 dollars), from about $12 million in fiscal year 2005 to over $91 million in fiscal year 2011. OPM attributed cost increases to more comprehensive subject interviews, increased FBI fees, and compliance with investigation timeliness requirements.

OPM develops prices for background investigations using aggregated operating costs and does not provide customer agencies with transparent information underlying its prices and price increases. Customer agency officials expressed dissatisfaction that OPM does not provide more transparent information about how it derived its prices. According to previous GAO work on the management of revolving funds and user fees, agencies should provide their program information to customer agencies, stakeholders, and Congress, to help ensure transparency of costs. Given the lack of transparency underlying the prices and price increases, some agencies believe they may be overcharged and are looking into alternative means for carrying out their investigations, which could lead to duplication that is contrary to the goals of the governmentwide suitability and personnel security clearance reform effort. OPM has information regarding its aggregated operating costs, including federal personnel costs and information technology investments, that could improve customers’ understanding of how OPM determines its prices if shared.

Governmentwide suitability and personnel security clearance reform efforts have not yet focused on cost savings. The stated mission of these efforts includes improving cost savings, timeliness, and quality, among others. While the Performance Accountability Council has focused on improving timeliness and quality, it has not provided the executive branch with guidance on cost savings. However, GAO identified opportunities for achieving cost savings or cost avoidance. Specifically, agencies have made duplicative investments in case-management and adjudication systems without considering opportunities for leveraging existing technologies. Further, OPM’s investigation process has not been studied for process efficiencies that could lead to cost savings. In addition, OPM invested in an electronic casemanagement program yet continues to convert submitted electronic files to paper. Given the pressure government agencies are under to reduce costs, the Performance Accountability Council, including OPM, is well-positioned to identify opportunities for cost savings within the process.

Why GAO Did This Study

In fiscal year 2011, the Office of Personnel Management (OPM), as the investigative service provider for most of the federal government, received over $1 billion to conduct more than 2 million background investigations (suitability determinations and personnel security clearances) for government employees. The 2004 Intelligence Reform and Terrorism Prevention Act and the resulting governmentwide reform (led by the Performance Accountability Council) helped to improve the timeliness and quality of investigations. GAO was asked to (1) identify the cost trends related to OPM’s background investigations since fiscal year 2005 and the principal factors driving OPM’s costs, (2) assess how OPM develops the background investigation prices it charges to agencies and the extent to which the basis of these prices is transparent, and (3) assess the extent to which governmentwide reform efforts have focused on reducing costs. For this review, GAO analyzed OPM’s reported background investigation cost, workload and pricing data from fiscal years 2005 to 2011; examined key background investigation reform effort documents; and conducted interviews with executive branch agencies’ officials.

What GAO Recommends

GAO recommends that OPM provide customer agencies better information on the costs of background investigations and identify and address efficiencies that could lead to cost savings. GAO also recommends that the Office of Management and Budget (OMB), through the Performance Accountability Council, expand its reform focus to identify opportunities for cost savings. OPM and OMB concurred; however, OPM raised issues with the basis of some of GAO’s findings. GAO disagrees and addresses these issues in this report.

For more information, contact Brenda S. Farrell at (202) 512-3604 or farrellb@gao.gov.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In January 2013 and June 2014, respectively, OPM issued its fiscal year 2012 and 2013 annual stakeholder reports that included information on cost drivers, operating expenses and a cost allocation model that OPM developed to formulate its background investigation prices. As a result, OPM's customers and stakeholders have access to information that may help assure they are being charged accurately and fairly for services supported through OPM's revolving fund.

    Recommendation: To improve transparency of costs and the efficiency of suitability and personnel security clearance background investigation processes that could lead to cost savings, the Director of OPM should direct the Associate Director of Federal Investigative Services to provide customer agencies with better information on the costs of background investigations, including the data related to its main cost drivers in order to clarify, to the extent possible, how its costs align with and affect investigation prices.

    Agency Affected: Office of Personnel Management

  2. Status: Closed - Implemented

    Comments: In 2012, the Federal Investigative Services Associate Director requested a manpower study to identify potential process improvements, among other things. The resulting manpower study was divided into two phases. In the first phase of the study, which was completed in 2014, OPM identified process efficiencies with potential opportunities to refocus, restructure, retrain, realign, and redesign resources. In the second phase of the study, which is ongoing, OPM plans to validate and implement the identified process efficiencies. To facilitate the second phase, OPM trained the manpower study team members in Lean Six Sigma. The team will be responsible for determining the feasibility and prioritization of implementing process improvements and whether activities identified as potential areas of duplication can be eliminated or realigned. As a result, these identified process improvements and efficiencies could lead to cost savings, potentially affecting agencies across the federal government.

    Recommendation: To improve transparency of costs and the efficiency of suitability and personnel security clearance background investigation processes that could lead to cost savings, the Director of OPM should direct the Associate Director of Federal Investigative Services to to take actions to identify process efficiencies that could lead to cost savings within its background investigation process.

    Agency Affected: Office of Personnel Management

  3. Status: Open

    Priority recommendation

    Comments: As of December 2017, OMB has taken some positive steps, but has not expanded and specified reform-related guidance to help ensure that reform stakeholders identify opportunities for cost savings, as GAO recommended in February 2012. In the absence of such guidance, in November 2016 and in December 2017, OMB cited specific actions that it has taken with the other Performance Accountability Council (PAC) agencies to align the current information technology capabilities across the security and suitability processes. For example, the PAC issued two strategic documents for fiscal years 2017-2021. In July 2016, it issued the PAC Strategic Intent, which identifies the PAC's business direction to achieve an entrusted workforce. In October 2016, it issued the PAC Enterprise Information Technology Strategy, which provides technical direction to provide mission-capable and secure security, suitability, and credentialing information technology systems. OMB stated that as of November 2016, the Security, Suitability, and Credentialing Line of Business, which OMB created in April 2015 to implement solutions for personnel security and suitability programs, among other things, was finalizing an implementation plan for these strategic documents. One objective included in the information technology strategy is to develop robust shared services to reduce duplicative investments, foster consistency, and promote best practices within the end-to-end Security, Suitability, and Credentialing Enterprise. In line with this objective, in October 2016, the PAC's Enterprise Investment Board designated six additional executive branch-wide information technology shared service capabilities, for a total of eight. While these shared service capabilities could reduce duplication, it is unclear which agencies are utilizing the shared services at this time. Additionally, OMB stated that the Security, Suitability, and Credentialing Line of Business developed an initial catalog of executive branch security, suitability, and credentialing information technology systems to support agencies' investment planning decisions, and conducted a government-wide security, suitability, and credentialing spending analysis. The steps that OMB has taken help share information related to executive branch information technology capabilities. However, issuing more formal guidance would help ensure that reform stakeholders identify opportunities for preventing duplication.

    Recommendation: To improve transparency of costs and the efficiency of suitability andpersonnel security clearance background investigation processes thatcould lead to cost savings, the Deputy Director for Management, Office of Management and Budget, in the capacity as Chair of the Performance Accountability Council, should expand and specify reform-related guidance to help ensure that reform stakeholders identify opportunities for cost savings, such as preventing duplication in the development of electronic case-management and adjudication technologies in the suitability determination and personnel security clearance processes.

    Agency Affected: Executive Office of the President: Office of Management and Budget: Performance Accountability Council

 

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