How To Manage Your Security Clearance as a 1099 Sub-Contractor

Posted by Dale Davidson

I’ve been a cleared 1099 sub-contractor since 2015. One of the concerns I had when I first started was how to keep my security clearance “active,” meaning I wanted to be able to take on projects that require a security clearance without having to start from scratch on the process.

This was important because there is a higher demand and smaller supply of folks with clearances, making me more competitive as a 1099.

Over the last five years, I’ve made a few mistakes and have been subject to the mistakes of others to the tune of $200,000 in lost revenue over that time period due to security clearance issues.

I’m not a security clearance expert by any means, but I wanted to share a few lessons I picked up that can help you if you are a cleared contractor considering going the 1099 route so that you won’t lose $200,000 like I did!

Make sure at least one prime contractor “owns” your clearance

When I first went 1099, I became a sub-contractor to my employer. Prior to leaving, I had the FSO submit my re-investigation package for a Top Secret clearance. I asked the FSO what would happen once I became a 1099.

She told me that nothing would really change except that my status in JPAS (now DISS) would change from employee to “consultant.”

I later learned when switching to a new contract with a new prime contractor that an organization could either have an “owning” or “servicing” relationship with you in JPAS/DISS. Owning implies that the organization would take a broader responsibility for your clearance and do things like submit your re-investigation paperwork.

A “servicing” relationship by contrast simply allows you to perform cleared work with that particular company or organization, but they won’t handle much beyond that in a practical sense.

When I switched to my second 1099 gig, the new company did not take an “owning” relationship with my profile in JPAS so I was worried my re-investigation would be canceled.

That second project ended and fortunately, I was able to have the prime contractor for my third project take ownership over my profile and my ongoing re-investigation before it was terminated.

If you are a W2 employee, your company will be more diligent about maintaining your clearance. As a 1099, you are a hired gun and you have to watch out for your interests. An FSO might establish a servicing relationship with your profile simply because it’s more convenient. If you aren’t going to be doing work for anyone else, you MUST confirm that your new prime will take an owning relationship. Otherwise, important administrative actions (like processing your re-investigation) might fall through the cracks.

Be proactive about validating your security clearance information

I took some time off from full-time billable work starting in January 2019 to focus on a few other things. I wanted to try to grow the business and take a few vacations.

In August 2019, I wasn’t making much progress so it made more sense to go back to my old project, which was under a new contract and prime contractor.

We got all the paperwork done and the only remaining barrier left was approval by the National Geospatial-Intelligence Agency (NGA) security office. At this point, my company had its own facility clearance (FCL), meaning my company “owned” my clearance. I knew that my most recent PR (the one that I had submitted in March 2015) had closed in April 2018.

Combined with the fact that I had left NGA only 7 months prior, I assumed there would be no problem with me getting approved.

By December 2019, I still hadn’t been approved!

I tried working through the prime FSO who kept telling me NGA hadn’t shared any information and that my case was still processing.

Well, after almost a year of not working a project, I was anxious to figure out what was going on.

My business partner/FSO looked at my JPAS profile and saw that though my investigation had closed in April 2018, I had not yet been adjudicated by DoD Central Adjudication Facility (CAF)!

Because of our lack of experience managing security clearances, we did not know that a closed investigation did not mean I was adjudicated and approved.

So, something got screwed up on the government’s side. Once an investigation closes, the adjudication process should start. My partner called the Defense Counterintelligence and Security Agency’s (DCSA) customer service line and confirmed with a representative there that indeed, my investigation was never handed off to an adjudicator.

The rep put in a request to have the process expedited and by March 2020, DoD CAF adjudicated me.

Once they did that, my partner notified a security POC at NGA that DoD CAF adjudicated me and once that occurred, NGA also adjudicated me within the next few days. [Of course, that is when COVID lockdowns began and I never ended up starting on that particular project].

I was fortunate that my company had a facility clearance at this stage and my business partner could look into my clearance status. However, as a solo 1099, you are heavily reliant on the prime FSO to make sure your clearance issues are taken care of. The quality of FSOs may vary so the more specific you can be about what you’re looking for, the better.

For example, you can validate:
  • If your investigation is open or closed
  • The date of the last closed investigation
  • If you are in the continuous evaluation program
  • If your investigation has been fully adjudicated
  • Date of your most recent adjudication
  • If your FSO has contacted DCSA in case your investigation has been closed but not adjudicated
  • If your FSO has contacted CAF if your adjudication is taking a particularly long time
  • If the customer agency has received your clearance information or has been notified of any updates about a recently completed investigation or adjudication

Don’t assume your clearance will “crossover” in a timely manner

I have been burned a few times by assuming my clearance was in tip top shape and that I would be able to start a on a new project relatively quickly.

The first time was when I was starting on a new project at NGA. I was already badged, still active on a contract there, and had a desk and access to my accounts. So…no brainer, right?


Apparently, because I still had an active re-investigation going on, the security office wanted to re-adjudicate me before approving me to start work on the new contract.

That took three months and some prodding by the program manager to the head of the personnel security office there. I could have made around $50,000 in that time frame.

The second time was when I secured a new project at the Department of Homeland Security (DHS) in June of 2020. My TS/SCI clearance was adjudicated in March of 2020 and based on the very recent adjudication, I once again thought the process should only take a few weeks. The program manager had some recent data points suggesting that would be the case.

Well, I didn’t get approved and adjudicated by DHS until November of 2020! I learned that under current reciprocity guidelines, if you have a close relationship with a foreign national (my mother in this case), agencies can conduct further investigation and not apply reciprocity off the bat.

I never did start on that DHS project because a few other projects were “faster” in terms of getting me on-boarded.

Five months of delays was around $80,000 – $100,000 in income I didn’t earn.

So even if you think your clearance is good to go, you should mitigate the risk by either staying on your current project until you get an actual indoc/start date or come up with alternative plans in case there are multi-month delays with your crossover.

As a solo 1099, you will have to be extra diligent about maintaining your clearance. But by taking the appropriate precautions and proactive measures, you can manage the risks of being stuck on the bench and out of work.

If you have any questions, please reach out to me via e-mail at [email protected].

Dale Davidson is the author of Going 1099: How to become a solo federal sub-contractor and gain control of your working life, earn more money, and unlock more free time. Feel free to reach out to him directly at [email protected] if you have any questions about the book or 1099 sub-contracting in general.

This entry was posted on Monday, October 18, 2021 6:26 pm

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