Companies hoping to do business with the federal government encounter the following exasperating problem - your company can’t get critical security clearances for its personnel until it has a contract requiring clearances and your business can’t get a contract requiring clearances until your people and facility are fully cleared. As many have found, getting a security clearance is a lengthy, difficult process. A recent study revealed that acquiring a security clearance is presently taking an average of 375 days or more. The General Accounting Office ("GAO") reports that approximately 360,000 security clearance applications are "in the queue." Of the reported 360,000 applications, approximately half are for the personnel of federal contractors.

Congress, in response to the clearance processing logjam, has threatened to mandate a solution if the Executive Branch doesn’t solve the problem soon. Even if Congress is forced to act, it could be a long time before results are seen. Federal officials have indicated that it could take two years or more to reduce the processing time to a reasonable level. We are inclined to think that this estimate is overly optimistic and that improvement may not be seen for three to four years.

The national press and contracting experts have proposed the following solutions (and others) to the security clearance problem:

• Federal agencies should be required to accept security clearances granted by another agency. Although the agencies are required to grant reciprocity, many refuse to do so.
• The federal government should establish security clearance standards applicable to all federal agencies.

The Job Market

Prospective employees holding security clearances are extremely hot commodities. Those with clearances can expect to receive a 25% salary premium (or more). Contractors are stealing personnel from their competitors and the federal government because they have no choice. As a result, having a security clearance is often the deciding employment factor and may take precedence over one’s skills and experience.

Sales Implications

The federal government might not want to admit this but requiring clearances restricts competition and gives those companies holding security clearances a formidable edge in closing a sale. As you can well imagine, the large prime contractors are best positioned when it comes to having security clearances. We therefore suggest that your company get started immediately with trying to obtain security clearances. Although the process can often be somewhat frustrating and painful, obtaining clearances has become increasingly critical in the post-9/11 federal market.