Will Speak about To Screen or Not to Screen

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2. Will Speak about To Screen or Not to Screen Ozzy Ramos DavidHolmes Don Cooper Will Speak about Due Diligence: Liability versus Responsibility Will Speak about Security Clearances and “The Dilemma of The Dash” President COO Agenda: Welcome remarks: Introduction of Speakers CEO Q & A CLOSING REMARKS

3. During this Period of Instruction we asked that you • Turn down your cell phone volume to vibrate. • We ask that you hold your comments and questions until the end of the seminar. • If you need to use the rest room please do so without permission or distraction.

4. Our Mission: Our mission is to provide our clients with superior background screenings, risk management information, and human resources solutions that fully satisfy client needs, while protecting their interests with proven vetting techniques, processes, and tradecraft.

5. Our Focus Our focused solutions are aimed to protect business owners and CEO’s from everyone else that surround them. Beginning with the most entrusted leaders within their inner circle, to all those that follow in rank and file. Consequently, our methodologies allow us to assist those entrusted leaders and human resource professionals with the ability to protect and mitigate themselves away from any unwanted negligent hiring or retention lawsuits.

6. About C U CLEAR: We are dedicated to the protection of the interests of our clients by providing them with superior risk management services consisting of superior background screenings, security management and human resources solutions. We do this by using proven risk mitigation and personnel vetting techniques, processes, and tradecraft that fully satisfy our clients due diligence needs to maximize their business potential and increase their prestige within their industry.

7. Objectives: Discuss & Raise Awareness To: • Clear up the misconceptions regarding the Security Clearances & Background Investigation Process (what it does and doesn’t do) • The Security Clearance/Background Investigations process and Background Checks (Screening). • Exercising Responsible Due Diligence. • Employer Culpability and Risk of Liability. • Considerations for Exercising Due Diligence in Personnel Decisions • Innovative Methods to Meet Challenges

8. Why Are You Here? • Concerns about Current Processes Manager/Employee Responsibilities in recognizing threats • External factors • Lifestyle events and impact • Internal factors • Career/Professional events and impact • How to recognize and mitigate Threats • Employee/Manager Responsibility when faced with above • Workforce Culture

9. Aaron Alexis & the Failure of the Federal Security Clearance Process • What was known • Navy granted Alexis a Secret Clearance in March 2008 based on a NACLC background investigation. The Navy knew from the investigation that he failed to disclose on his clearance form a May 2004 arrest for malicious mischief in Seattle, WA, for which he was never prosecuted. • Alexis claimed the arrest occurred because he deflated another person's car tires and that he didn't disclose it on his clearance form because the charge was dismissed. He also had some previous delinquent debts, but he was in the process of repaying them • While he was on active duty with the US Navy Reserves from May 2007 to January 2011, his Navy command was aware of his 2008 arrest for disorderly conduct, his 2010 arrest for unlawful discharge of a firearm, and at least, two Navy disciplinary boards related to poor performance and insubordination. In addition, he was subject twice to Non-Judicial Punishment and at least one former supervisor FELT THAT HE DISPLAYED INDICATIONS OF MENTAL ILLNESS.

10. Aaron Alexis & the Failure of the Federal Security Clearance Process • What was known • In January 2011, Alexis was released early from the Navy Reserves with an honorable discharge, and his security clearance was administratively terminated. • Alexis was hired by a defense contractor in September 2012 for a position that required a SECRET CLEARANCE. His employer would have checked JPAS (Joint Personnel Adjudication System) record and determined that his Secret clearance was eligible for reinstatement, because his last investigation was less than 10 years old, and less than 24 months had elapsed since his Navy clearance was terminated. He got his clearance. continued

11. Aaron Alexis & the Failure of the Federal Security Clearance Process • What was known • To get unescorted access to military bases so that he could do his work as a defense contractor employee, Alexis also needed a Common Access Card (CAD) which is the DoD version of HSPD-12 Personnel Identity Verification (PIV) card. There is a vetting process before issuance; however, HSPD-12 rules allow issuance to anyone with a favorably adjudicated NACI or NACLC (or better)investigation without any further investigation or adjudication provided that the break in service is less than two years. • While working at Newport Naval Air Station in August 2013, employer became aware of his instability...disturbed guests...knocking on their doors in search of voices he was hearing. Alexis' mother advised his employer that he had a history of paranoid episodes. No action taken by employer. continued

12. Aaron Alexis & the Failure of the Federal Security Clearance Process • WHAT WENT WRONG? • Access....CAC HSPD 12 PIV without any additional vetting • Lack of training - Culture of "do nothing"..."Culture of "move the problem” • Right level of clearance - background investigations for Secret limited....price difference.....culture of "most cost effective"...vs. the most effective at cost” • Non-disclosure requirements and costs associated with Seattle PD to report arrest to OPM • WHAT ARE WE DOING TO FIX IT? • Presidential Mandate to conduct bottom up review • Senate Oversight Committee – proposals • C U CLEAR position

13. Discuss Various Aspects of Security Clearances Process • The Security Clearance Processes • The Investigative Process • Adjudication Process and the “13 Adjudicative Guidelines” • The Gaps in the Process “The Dilemma of the Dash”

14. TOP SECRET CONFIDENTIAL SECRET • (Serious Damage) • Required Form(s): Standard Form 86 (SF-86): NAC with Law Enforcement & Credit Checks (NACLC): Includes electronic checks of various agency databases, local LE agency checks, credit, and written inquiries to education institutions and employments covering most recent 5 years of Subject’s life. • (Grave Damage) • Required Form(s): Standard Form 86 (SF-86). • Type Investigation: Single-Scope BI (SSBI): AKA: `Full-Field. Most in depth. Covers credit & financial, employments, neighborhoods, education verification, law enforcement & court record checks, interviews of references, foreign travel/associations, medical/mental health issues, former spouses/cohabitants. Covers most recent 10 years or back to 18th birthday (which ever is the shorter period). • (Damage) • Required Form(s): Standard Form 85P (SF-85P). • Type Investigation: Usually a National Agency Check (NAC) with inquiries (NACI). Search of certain federal records, FBI finger print search, and written inquires to current and former employers covering the most recent 5-7 years of Subject’s life. Levels of Access vs Types of Investigation Required

15. Programs • Special Access Programs (SAP): - Presidential (Yankee White) - Sensitive Compartmented Information (SCI) - SAPs may require Counterintelligence (CI) or Lifestyle (LS) Polygraphs • Periodic Reinvestigations/Updates are required at established intervals. Confidential: 15year intervals Secret: 10year intervals Top Secret: 5 year intervals Expiration of Security Clearance: If previously cleared, and not currently working in a cleared position your clearance is considered inactive and will expire after a two (2) year period. Initial investigation must be accomplished.

16. Three Phase Clearance Process • Application: Completion and submission of required PSQ forms, finger print cards, information releases, and any other specified documents & forms. Includes preliminary inquiries/checks and usually NAC is conducted on spouses, and on foreign born relatives/associates, cohabitants.  • Field Investigation :(Investigative leads usually conducted in all locations Subject has lived, worked or attended school. Period & activities covered depends on type of investigation and its respective coverage requirements). • Adjudication: A judgment rendered by a government agency clearance granting authority regarding a person’s eligibility & suitability for access to classified information based on investigative results in relationship to established criteria.

17. The Investigative Process • Case Assigned to Field Investigator(s): Fed Employees/Contractors: Trained, Certified and Credentialed by the Government agencies. Contractors are usually former/retired investigators. • Personal History/Activities Verified: (PID, Citizenship, Residences, Employment, Unemployment, Education, illegal Drug Use, Alcohol, Arrests, Marital, Foreign travel/Connections, Military, Civil Court Actions, and Credit and Financial issues. • Subject Interview (Voluntary): Review of Personnel Security Documents (usually CBR, PSQ and any other documents specified by the requesting agency) to ensure completeness, accuracy, currency, (obtain new info and/or clarify omissions/discrepancies).

18. The Investigative Process continued • Interview of References: Individuals who are familiar with, and associated with the Subject through Employment/Business, Neighborhood, Education or Social activities and interaction. May also include interviews of former spouses. • Record Checks & Reviews: (Usually Work, Residential, Education, Law Enforcement, Criminal Courts, Civil Courts (Judgments, Divorces, Bankruptcies, Liens, Repos), Credit/Financial records, and any other records, deemed relevant to the investigation. • Report of Investigation (ROI): Prepared and submitted by Field Investigators. Reviewed for completeness by Case Reviewers to ensure all required info has been covered and reported per federal and agency personnel security requirements. Once finalized, the ROI and associated documentation are forwarded to the requesting agency for adjudication. Activities & period covered depends type investigation vs clearance level.

19. The Adjudicative Process Performed by Certified Adjudicator • Individual specifically trained in the process of reviewing and evaluating security clearance information. • Reviews the results of the investigation and compares it to established qualifying eligibility criteria. Examines and assesses all relevant information contained in the ROI and associated documentation pertaining to the periods of Subject’s life covered by the investigation, for the purpose of making a definitive and affirmative determination that the person is an acceptable security risk. Simply put, it’s a judgment concerning a person’s eligibility and suitability for access to classified information based on the established criteria in: “The 13 Adjudicative Guidelines”.

20. The 13 Adjudicative Guidelines • Allegiance to the USA • Foreign Influence • Foreign Preference • Sexual Behavior • Personal Conduct • Financial Considerations • Drugs • Alcohol • Mental Illness • Criminal Activities • Security Violations • Outside Activities • Misuse of Information Technology

21. The Whole Person Concept “Whole Person Concept”: If there are incidents, actions, or other issues that raise questions concerning a person’s honesty, character, or integrity, the “Whole Person Concept” (WPC) is always used. Employing the WPC involves the careful weighing of a number of variables which includes; all available and reliable information about the person, past and present, (both favorable and unfavorable), when making a clearance eligibility determination.

22. Adjudication: Mitigating Factors WPC TAKES INTO CONSIDERATION The nature, extent, and seriousness of the conduct; The circumstances surrounding the conduct, to include knowledgeable participation; The frequency and recentness of the conduct; The individual's age and maturity at the time of the conduct; The voluntariness of participation; The presence or absence of rehabilitation and other permanent behavioral changes; The motivation for the conduct; The potential for pressure, coercion, exploitation, or duress; and The likelihood of continuation or recurrence.

23. Adjudication: Final Determination Each case judged on its own merits and final determination remains the responsibility of the specific department or agency. National Security interests are always the determining consideration: 1. Ultimate determination for granting eligibility for a security clearance must be clearly consistent with the interests of national security. 2. Final determination must be an overall common sense determination based upon careful consideration of all available information. 3. If there are any doubts, determination will always be made in the interests of national security.

24. Favorable & Unfavorable Determinations Denials & Revocation Favorable Determination: Result - Clearance is awarded employee starts work. Unfavorable Determinations/Denial/Revocation: Possible Results - Individual notified by agency - Right to appeal under due process - Applicant may retain legal counsel - Hearing/Court Action This Process could take months! May have to keep employee “on the books” (means pay and benefits) until resolved! Ouch!

25. The Dilemma of “The - Dash” • What the security clearance process does and doesn’t do! • Approx. 5 Million people with security clearances • Approx. 1.4 Top Secret (Approx. 480,000 contractors) • The Misconception About Periodic Re-investigations • Effectiveness of Self Reporting Process • Dealing with the Dilemma of ”The Dash”

26. NOT to Screen, and When to Screen?That is theQuestion ToScreenor

27. Aaron Alexis, “The Dash” & The 13 Adjudicative Guidelines • Allegiance to the USA • Foreign Influence (potential to be Influenced) • Foreign Preference • Sexual Behavior • Personal Conduct • Financial Considerations • Drugs ? • Alcohol ? • Mental Illness • Criminal Activities • Security Violations • Outside Activities • Misuse of Information Technology ?

28. The Difference between Background Investigations and Background Checks? • BackgroundInvestigations directed/controlled by the Federal Agencies • Only conducted for federal employees & contractors requiring access to classified info • Background Investigations are Federal Investigations • Set Investigative Coverage, Update Requirements, & Adjudicative Criteria • National Security Implications (Primarily Involves Suitability for Access to Classified Info) • Not necessarily a condition of employment for federal employees (may be for contractors) • BackgroundChecks directed/controlled by non-government entities & businesses • Conducted by commercial “Third Party” Vendors • Flexible Investigative Coverage, Updates Requirements & Adjudicative Criteria • Used to pre-qualify or pre-access candidate suitability for employment • Usually (should be) a condition of employment

29. 10 Most Commonly Made Mistakes that Puts Employers “At Risk” • Hiring friends, relatives, referrals, or former industry workforce associates. (I never would’ve thought he would do something like that…….famous last words!) • The common made assumption that the individual has a security clearance, has already been investigated and therefore must be “clean”. (Remember “The Dash”!) • Hiring individuals solely based on their resume and prior employment without verifying the validity and authenticity of their claimed qualifications, education, or professional credentials & certifications. (There are plenty of criminals with high IQ’s and Degrees!) • Issuing offer letters which do not clearly state that the offer is contingent on the results of the background / drug screening results, and/or placing the individual in critical position before the results are received. (You are stuck with the problem) • Failing to exercise responsible Due Diligence by establishing, maintaining & effectively employing up-to-date, pre-employment and ongoing random background & drug screening programs. (Should’ve, Would’ve, Could’ve, But…….You Didn’t!)

30. 10 Most Commonly Made Mistakes that Puts Employers “At Risk” • Having no scheduled or periodic system in place after the hire and throughout the employees’ lifecycle with the company. (But he’s worked for me for 10 years and that’s about the same time he’s been molesting children & stealing your money!) • Having no effective or required “training and awareness” program in place that is designed to meet internal adherence and/or external third party requirements. (I would’ve told someone if I knew that’s what he meant by “going postal”!) • Not fully aware or prepared to withstand a “negligent hiring or retention” lawsuit. (Pay a little now or pay a lot to the lawyers later….win or lose the lawyers will get paid!) • Reactive vs. Proactive: Complacency breeds with Negligence to produce a disaster waiting to happen. (As long as the fire doesn’t reach the explosives we’ve got nothing to worry about!) • Ignorance of the law is NOT an effective legal defense in a liability suit. (But Your Honor, I didn’t know he kept the “AK” in his desk and shooting at people in the parking lot is not in his job description! But what do you mean by “Respondeat Superior” = Let the Master Answer !!!!

31. Employer Culpability / Liability & Due Diligence • Can An Employer Be Held Liable For The Actions And Behavior Of Its Employees? If Yes, To What Extent? • “RESPONDEAT SUPERIOR “ • It’s Latin for “Let the Master Answer!”. Respondeat Superior is a common-law doctrine taken from 17th century English law that has been adopted in the U.S as a fixture of agency law, and is recognized in both common law and civil law. It makes an employer liable for the actions of an employee when the actions take place within the scope of employment. The theory behind Respondeat Superior is that the principal (employer) controls the agent's (employee) behavior and must then assume some responsibility for the agent's actions. • Take note of the phrase “within the scope of employment! ” It does not say, “within the course of performing their assigned job duties”! The lack of a definitive meaning of “scope of employment” has been the catalyst for many a lawsuit! • NO MATTER WHO HAS THE LAST SAY, THE LAWYERS WILL GET THEIR PAY!

32. Screen Out Vice Screen In with a Recurring/Periodic Vetting Cycle

33. C U CLEAR: Whole Person Concept 360 Degree Approach Trust, but Verify 13 Adjudicative Guidelines Perpetual and Systematic Screenings Avoid Loss on HR Investments, Negligent Hiring & Retention Lawsuits Applicant Stage Detect & Deter Personnel Life Cycle Detect & Deter

34. TOScreen or NOTto Screen Proactive Approach? Reactive Approach?VS No Effective Programs in Place. Lackadaisical, Complacent, “It Will Never Happen To Us Attitude”! Gambling with Business and Livelihood Lack of Comprehensive Personnel Screenings Greater Potential for Negative Impact/Publicity Increased Risk of Negligent Hiring/Retention Lawsuits High Rate of Personnel Turnover /Personnel & Morale Problems Running in the Dark with Scissors! One Bad Hire Away from Catastrophe! Exercise Of Responsible Due Diligence By Establishing Effective Screening Programs! • Lowers Insurance Premiums – Workmen’s Compensation Claims / Health / Fleet Vehicles • Maximize Human Capital Investment/ Minimize Liability Risk • Onus of Responsibility is put on the Third Party Providers (Screeners) • Detect & Deter / Minimize Threats/ Potential Loss • Stakeholders Enjoy Sustainable Growth • Responsible Due Diligence is Strong “Selling Point” to Keep Current Clients & To Attract New Business

35. ToScreenor NOT to Screen? Can you Afford to Screen your people? or should the more appropriate question be: Can you Afford NOT to?