By Doug Cameron 

Black tarpaulins used to cover parts of a $12 billion nuclear submarine General Dynamics Corp. is building in Groton, Conn., blocking the view of workers who lacked security clearance to see the top-secret components underneath.

That is one of many workarounds that General Dynamics and other defense companies have used to continue work on tens of billions of dollars in defense contracts during an unprecedented backlog in security clearances.

The number of people awaiting security clearance for defense-industry work has more than tripled over the past four years to almost half a million, according to the National Background Investigations Bureau.

That is exacerbating a workforce crunch for makers of warships, jet fighters and cybersecurity systems that are already struggling to replace a wave of retiring engineers at a time of record-low unemployment and competition from tech companies.

"These folks are like gold," Harris Corp. chief executive Bill Brown said, referring to workers with security clearance. Harris said this week that it plans to merge with L3 Technologies Inc. The combined company would have 22,000 cleared staff, almost half its workforce.

The backlog began to climb in 2013, after former national security contractor Edward Snowden leaked a huge cache of documents his clearance had allowed him to access. The Pentagon tightened clearance requirements for staff and contractors, but budget cuts left unchanged at around 7,000 the number of workers that conduct the background checks. Another 1,000 have been hired over the past year, said the bureau.

The wait time to obtain "secret" clearances rose to 543 days in the second quarter from 510 days at the end of last year, according to the bureau. The wait time to renew such a clearance is almost 700 days. Including nondefense workers, the backlog is almost 700,000, the bureau said. Some 4 million U.S. citizens have active security clearances.

Some companies are starting to clear prospective employees in college to avoid being caught without the workers they need if they win a big contract. "We're now doing blue-sky hiring," said Rick Edwards, executive vice president of the international unit of Lockheed Martin Corp, who formerly ran its missiles unit.

They also are facing tougher competition from tech companies, including Facebook Inc. and Google parent Alphabet Inc. that are recruiting the same future experts in cybersecurity, artificial intelligence and autonomy.

"The competition for talent is now much broader," said Horacio Rozanski, chief executive of Booz Allen Hamilton Holding Corp, one of the largest information-technology contractors for the Pentagon and intelligence agencies.

Still, defense executives said the sector remains a draw for employees eager to work on some of the most challenging engineering problems, even if the path to work is tougher than at a tech or financial company.

Classified projects requiring the highest level of clearances are the fastest-growing part of the Pentagon budget. A quarter of annual sales at Northrop Grumman Corp., which is building a new B-21 bomber and sensitive spy satellites, involves classified work, twice the level of a decade ago.

The Pentagon is taking over the clearance process from the Office of Personnel Management over the next three years, to link defense department objectives more closely with the clearance process.

Some lawmakers have said that transition is taking too long.

"This is a system that is completely, completely broken," Sen. Mark Warner (D., Va.), vice chairman of the Senate Intelligence Committee, said during an April hearing on the clearance process.

That leaves big defense contractors for now needing to find other ways to complete Pentagon contracts like the submarine to carry intercontinental nuclear missiles that General Dynamics is building in Groton.

In addition to placing tarps on top-secret parts of the submarine, Groton shipyard security director Vince Lisi said General Dynamics has installed separate security gates around the ship for cleared and uncleared workers and conducted its own initial background checks to speed the federal process.

When General Dynamics employees cleared the screening process, Mr. Lisi said they often came in batches that don't match the skills needed at that time. The shipyard might receive clearances for 100 pipe-fitters when what it needed that month was 50 more welders, he said. That situation has improved and the shipyard is no longer experiencing delays in securing worker clearances.

Write to Doug Cameron at doug.cameron@wsj.com

 

(END) Dow Jones Newswires

October 20, 2018 07:14 ET (11:14 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
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