SECURITY CLEARANCE NIGHTMARE: The Pentagon's elaborate system of checking people before they are given security clearances to work on top-secret projects is deeply flawed, according to a report by the GAO and internal Pentagon auditors. The Defense Security Service was designed to check such people (including government employees and people working for defense contractors), but in an effort to deal with the huge backlog, standards have been relaxed (until recently) and many people were granted secret status without having "troubling financial data" investigated. About 80% of spies do their dirty work for money, and the Defense Security Service is charged with (among other things) identifying those people with large debts or unknown sources of income. The problem stems from a 1995 decision by the Clinton Administration to reduce the number of investigators by 40% (reducing the "bloated headquarters"). In an effort to deal with more clearance requests with fewer people, the civilian leadership at the Pentagon instituted a series of "reforms" in 1996-98 that were designed to do more with fewer people. One of them was an elaborate and expensive computerized security checking system that went on line in Oct 98. The problem is that this Case Control Management System never really worked, although it was intended as the magic bullet that would get the DSS job done. The DSS had never managed such a huge procurement project, and the result was inadequate controls over the contractor, who delivered software that would not do the job and would only barely run. Trying to cope with a balky system, the DSS used both the flawed CCMS and old-fashioned paper files, and any given individual had data from both systems in his case file. This created both overlaps and gaps. Other "reforms" reduced the training that DSS investigators were given in new techniques. New DSS chief Lt. Gen. Charles Cunningham has re-imposed the original standards, and has gotten the money for some additional investigators, but the backlog remains huge and thousands of previous clearances will have to be re-investigated due to the flaws and relaxed standards. (More than 90% of the clearances issued since 1996 are incomplete, and about 16% disregarded warning flags.) Cunningham is convinced that the software can be fixed, even if it costs over $100 million to do so. The GAO is convinced that even after spending this money, the system will still not work and another expensive software package will have to be created to replace it. The backlog is indeed huge. According to GAO reports, more than half a million people are being forced to wait months for clearances. Top defense contractors have kept 3,247 new employees on the payroll without being allowed to put them to work on the secret projects for which they were hired. The Pentagon picks up the $143 million tab for this delay.--Stephen V Cole