WALKER — The federal government’s move to protect potential breaches in its supply chain is having an adverse effect for defense manufacturers in West Michigan and beyond.
That’s according to industry insiders, who say a current backlog of federal security clearances on Department of Defense projects is causing headaches for manufacturers, most of whom are already having trouble attracting and retaining employees.
For Walker-based Plasan North America Inc., the process to secure employee security clearances for defense contracts “is taking a lot longer” than usual, said CEO Adrienne Stevens. Currently, Plasan is awaiting a clearance for one of its employees, she said.
“The government, of course, is scrutinizing much more,” Stevens told MiBiz. “One of the things we try to do is make sure that we’ve got all of the documentation and the mitigation for risk in place so we have the clearance that’s necessary for us to be successful.”
To counter this issue, Plasan — a maker of ballistic armor, composite structures and other protection systems primarily for land vehicles used by government agencies — has “solid processes in place and protocol that we’ve agreed to with the government,” Stevens said.
“For us, while there is a wait, definitely, we have good relationships with the Department of State,” Stevens said, noting the company and the agency continue to have “active communication.”
The heightened supply chain security protocols stem from a case involving leaked documents in 2013, according to reports. As a result, “clearances awaiting investigation and adjudication (have) continued to grow,” the Federation of American Scientists noted recently.
The wait for people seeking security clearance for “secret” jobs reached 543 days in the second quarter of 2018, up from 501 days at the end of 2017, according estimates from the National Background Investigations Bureau.
According to Stevens, these delays with security clearances “can affect a company from growing and to be competitive,” adding that “delays limit access to important information and sometimes even the chance to bid on a program.”
Some lawmakers admit the lengthy security clearance process could pose a problem for an industry already short on workers.
“We have to shorten the clearance days,” U.S. Sen. Gary Peters, D-Mich., told MiBiz. “No question that you have to get people (there to work), but it’s trade off because you want to make sure you are thorough as well. … We want to make sure we are protecting all the links of the supply chain.”
According to the State Department, employees who want to work on defense contracts must fill out a security questionnaire followed by a security background investigation, which is initiated by the Bureau of Human Resources. Following this, a company’s HR department sends the documents to the State Department’s Office of Personnel Security and Suitability.
Applicants then have their fingerprints scanned and records checked while a “case manager will direct the background investigation to cover key events and contacts from the individual’s past and present history.”
From there, a “critical step” in the background check occurs when employees have face-to-face interviews with a department investigator.
Given those many crucial steps, the security processes “take time,” according to Peters.
“Part of that stems from the fact that there this is a concern that a breach of the supply chain could lead to very significant negative consequences of weapons systems and any kind of military procurement,” he said. “We just realized that if you are looking at national security, if you are not focused on the supply chain, that could be a potential weakness that could be exploited by an adversary.”
According to Peters, “we are seeing it not just here with the work at Plasan, which is welding and manufacturing, but (there’s) concern when it comes to I.T. and microchips and other things that are put into our weapons systems.”
Elsewhere, defense contractors have cited finding workers with proper clearances as a major challenge to their business.
L3 Technologies Inc. (NYSE: LLL), a defense manufacturer with locations in Grand Rapids and Muskegon, said the company’s “future results of operations will be affected by our ability to retain our existing business, including our revenue arrangements with DoD customers.”
According to James Blair, vice president and treasurer of L3, the success of the business depends, in part, on its ability “to retain our employees and hire new ones, particularly those employees who have U.S. government security clearances and those with clearances of top-secret and above.”
Recently, L3 merged with Harris Corp. (NYSE:HRS), a Melbourne, Fla.-based manufacturer of defense- and commercial-related products. In a statement, L3 President and CEO Christopher Kubasik said the merger of “L3 Harris Technologies will possess a wealth of technologies and a talented and engaged workforce.”
While executives at local defense manufacturers including Precision Aerospace Corp. and GE Aviation say security clearance delays haven’t affected their operations, they’re closely watching the issue as other companies wrestle with it.
For his part, Peters thinks the security clearance process should be well thought out and not rushed, yet provide a way for the supply chain to get the talent it needs.
“This is a very complex, sophisticated supply chain, and when you have that, there are gaps of opportunity for an adversary to be able to breach that,” Peters said. “We want to make sure we are filling all of those links to the supply chain. The bad guys always look for the weakest link.”