Government Contracts Requiring Security Clearance

Security Clearances in Government Contracting

Many of the most valuable government contracts require contractors to handle classified national security information. These contracts span defense, intelligence, cybersecurity, space, and other sensitive domains. Because security clearance requirements limit the pool of eligible contractors, cleared work typically faces less competition and commands higher rates than unclassified contracts.

The security clearance system exists to protect information whose unauthorized disclosure could cause damage to national security. As a contractor, participating in this system requires both your company (facility clearance) and your employees (personnel clearances) to be vetted and approved by the government.

If you target DoD, the Intelligence Community (IC), the Department of Energy (DOE), or any agency handling classified information, you need to understand how clearances work. Even if you currently perform only unclassified work, having a cleared facility dramatically expands the opportunities available to you. Browse contracts requiring Secret clearance on Drexault to see the scope of classified opportunities.

Clearance Levels

The U.S. government uses a tiered clearance system, with each level corresponding to the sensitivity of the information to be accessed:

• Confidential. The lowest clearance level. Grants access to information whose unauthorized disclosure could reasonably be expected to cause "damage" to national security. Confidential clearances are relatively rare in contracting; most contracts requiring clearance start at Secret.
• Secret. The most common clearance level for government contractors. Grants access to information whose disclosure could cause "serious damage" to national security. The investigation for a Secret clearance (Tier 3/T3) includes a National Agency Check with Law and Credit (NACLC), covering criminal history, credit records, and database checks going back 5 to 7 years.
• Top Secret (TS). Grants access to information whose disclosure could cause "exceptionally grave damage" to national security. The investigation (Tier 5/T5) is significantly more thorough: a Single Scope Background Investigation (SSBI) that includes extensive interviews with references, neighbors, employers, and associates going back 10 years. Processing time is typically 6 to 12 months.
• Top Secret/Sensitive Compartmented Information (TS/SCI). Not technically a separate clearance level but rather an access designation. SCI refers to intelligence information that requires special handling and is compartmented by source or method. Access requires a Top Secret clearance plus an additional adjudication by the Director of National Intelligence (DNI). TS/SCI contractors typically work in Sensitive Compartmented Information Facilities (SCIFs).

Special Access Programs (SAPs) impose even more restrictive access controls beyond standard collateral classifications. SAPs are common in advanced weapons development, stealth technology, and intelligence collection programs. Access is strictly need-to-know and requires specific program indoctrination.

FCL vs. PCL

There are two distinct types of clearances in the contractor world, and both are required before your company can perform classified work.

Facility Clearance (FCL) is your company's clearance. It certifies that your business entity meets the security requirements to access, handle, and store classified information at a specific level. An FCL involves the Defense Counterintelligence and Security Agency (DCSA, formerly DSS) inspecting your facility, security procedures, IT systems, and corporate structure. Your company must appoint a Facility Security Officer (FSO) who manages the day-to-day security program.

An FCL can be held at the Confidential, Secret, or Top Secret level. Your FCL level determines the maximum classification level of information your facility can handle. To store classified material on-site, you need an FCL with safeguarding capability, which requires approved storage containers (GSA security containers for Secret, vaults for TS), alarm systems, and access controls.

Personnel Clearance (PCL) is an individual employee's clearance. Each person who needs access to classified information must undergo a background investigation and receive adjudication. Importantly, you cannot sponsor an employee for a clearance without having an FCL first, and you typically cannot get an FCL without a contract requiring it. This is the classic chicken-and-egg problem in cleared contracting.

The FCL process evaluates your company across several factors: ownership and control (foreign ownership, control, or influence, known as FOCI, is a disqualifier unless mitigated), key management personnel clearance eligibility, physical security of the facility, and the security program your FSO establishes.

How to Get Cleared

The process for obtaining a facility clearance and personnel clearances follows these steps:

Step 1: Win or be offered a classified contract. The government does not grant facility clearances speculatively. You must have a legitimate need, typically a contract, subcontract, or pre-contract negotiation that requires access to classified information. The contracting agency initiates the sponsorship.

Step 2: Receive sponsorship. The sponsoring agency sends a DD Form 254 (Contract Security Classification Specification) to DCSA, identifying your company and the classification requirements of the contract. This kicks off the FCL process.

Step 3: Complete the FCL package. Your company submits documentation to DCSA including corporate structure information, officer and director details, a Standard Practice Procedures Plan (SPP) or National Industrial Security Program Operating Manual (NISPOM) compliance documentation, and identification of your Facility Security Officer.

Step 4: Key Management Personnel (KMP) clearances. Officers, directors, partners, and the FSO must be cleared at the FCL level. Each submits an SF-86 (Questionnaire for National Security Positions) through the e-QIP system. DCSA conducts the background investigation.

Step 5: DCSA security vulnerability assessment. DCSA inspects your facility and security procedures. For a Secret FCL, this may be a document review. For Top Secret, expect an on-site inspection.

Step 6: FCL granted. Once KMP clearances and facility requirements are satisfied, DCSA grants the FCL. The entire process typically takes 3 to 12 months depending on the clearance level and complexity of the investigation.

For personnel clearances, each employee who needs access submits an SF-86 and undergoes the appropriate tier investigation. Current processing times vary, but a Secret clearance typically takes 2 to 4 months and a Top Secret clearance takes 4 to 8 months. Interim clearances may be granted for employees whose investigations are in process but not yet complete.

NISPOM: The Security Rules

The National Industrial Security Program Operating Manual (NISPOM), codified as 32 CFR Part 117, establishes the requirements for safeguarding classified information disclosed to or developed by contractors. It is the rulebook for your facility security program.

The NISPOM covers:

• Security clearance procedures: How personnel clearances are requested, granted, and maintained.
• Safeguarding classified information: Storage requirements, transmission rules, reproduction controls, and destruction procedures.
• Security education and training: Initial and refresher briefings, security awareness programs, and derivative classification training.
• Visits and meetings: Procedures for classified visits to other facilities and hosting visitors with clearances.
• Subcontracting: Security requirements for subcontractors performing classified work.
• Information system security: Requirements for processing classified information on IT systems, including system authorization and cybersecurity controls.
• Foreign Ownership, Control, or Influence (FOCI): Mitigation measures when a cleared contractor has foreign ownership interests.
• Insider threat programs: Requirements to establish programs detecting and mitigating insider threats.

Your Facility Security Officer is responsible for implementing NISPOM requirements. DCSA conducts periodic security reviews (typically every 12 to 18 months) to verify compliance. Findings of noncompliance can result in your FCL being suspended or revoked.

DD Form 254

The DD Form 254, Contract Security Classification Specification, is the foundational document for any classified contract. It specifies the classification levels, security requirements, and access parameters for the contract.

Key information on the DD-254 includes:

• The classification level of the contract (Confidential, Secret, Top Secret)
• Whether access to SCI, SAP, or Restricted Data is required
• Whether the contractor will receive, generate, or store classified material
• Specific security caveats (NOFORN, RELEASABLE TO, etc.)
• The Cognizant Security Agency and their contact information
• Classification guidance for the work being performed
• Subcontractor security requirements

Review the DD-254 carefully before contract execution. If security requirements change during performance, the contracting officer should issue a revised DD-254. As a contractor, understand that the DD-254 defines the boundaries of what classified information you can access; exceeding those boundaries, even with good intentions, is a security violation.

Finding Classified Contracts

Finding classified opportunities takes extra effort. Because the work itself may be classified, solicitation details are often sparse on public platforms. That said, many classified contracts are still publicly solicited -- the Statement of Work may be classified, but the existence of the opportunity is not.

Sources for finding classified opportunities include:

• SAM.gov and Drexault. Many solicitations requiring clearance are posted publicly with notes indicating that a facility clearance is required. Filter for contracts requiring Secret or Top Secret clearance on Drexault.
• Agency forecast lists. DoD components, intelligence agencies, and other cleared agencies publish procurement forecasts listing upcoming opportunities.
• Industry days and classified briefings. Some solicitations are only briefed at industry events held in classified settings. You need an existing FCL to attend.
• Subcontracting. Large defense primes (Lockheed Martin, Raytheon, Northrop Grumman, General Dynamics, Booz Allen Hamilton) regularly seek cleared subcontractors. This is often the fastest path to classified work for small businesses.
• SBIR/STTR. Many SBIR topics from DoD and IC sponsors involve classified work. Phase I may be unclassified with classified Phase II options, giving you time to obtain your FCL.

Agency Sponsors and Special Access

Different agencies have their own security processes and can serve as sponsors for your facility clearance:

• DCSA (Defense Counterintelligence and Security Agency): The primary cognizant security agency for most industrial security matters. Manages the majority of contractor FCLs under the NISP.
• Department of Energy (DOE): Manages its own clearance process (Q and L clearances) for contractors working with Restricted Data and Formerly Restricted Data related to nuclear weapons and energy programs.
• Intelligence Community (IC): The CIA, NSA, NGA, DIA, and other IC elements manage SCI access through their own security offices. TS/SCI access requires IC sponsorship and typically includes a polygraph examination (counterintelligence scope or full scope depending on the agency).
• Department of State: Has its own security process for diplomatic security-related contracts.

For small businesses, the most practical way into classified contracting is subcontracting under a cleared prime. The prime provides the contract vehicle needed to sponsor your FCL. You build classified past performance and your team learns security procedures firsthand. Once you have an FCL and a cleared workforce, you can pursue prime classified contracts with far greater credibility.

Getting your initial FCL and building a cleared workforce takes time and money. But the payoff is access to a market segment where your competition is a fraction of what you face on unclassified work. Start exploring classified opportunities on Drexault to identify the agencies, domains, and clearance levels that align with your company's strategic direction.