How the Coronavirus / COVID-19 Could Affect Security Clearance Holders & Future Applicants

By John V. Berry, Esq,

In my law practice over the past 22 years, I have handled numerous security clearance cases. Many of my security clearance cases have occurred during times of recession, 9/11, and the Great Recession of 2007-2009. Many security clearance holders and applicants have been affected by these events, usually in connection with their financial situation or credit. This article discusses the potential security clearance ramifications of the Coronavirus / COVID-19 and also one’s security clearance in the context of the potential financial effects that may occur.

Financial Concerns the Most Significant

The biggest issue that individual security clearance holders, applicants or future applicants will likely face as a result of the Coronavirus or COVID-19 are potential financial issues under Guideline F, Financial Considerations which falls under Security Executive Agent Directive 4 (SEAD 4). Financial issues covered include unpaid debts, overwhelming debts, unpaid taxes, bad credit and other related issues.

It is likely, due to the existing and future disruptions in business and work that many individuals could be laid off or lose their jobs if the COVID-19 infections, quarantines and social distancing lasts for an extended period of time. Alternatively, the virus may give way to another minor or major recession which could potentially devastate many individual financial situations.

When individuals are not working, their finances are clearly going to be impacted. The vast majority of security clearance holders live in the Washington, D.C. area, with one of the highest cost of living rates in the United States. A small downturn and loss of work can have massive financial implications for many government contractors and other private-sector employees in a relatively short period of time. If individuals are laid off or let go, it is often the case that they find themselves financially underwater within a month or so. As a result, these individuals will often be unable to pay their mortgage or other major bills. As a result, some creditors may report these individuals and/or issue interest or severe accumulating financial penalties that can cause major issues for individuals holding a security clearance.

These types of issues can also affect future clearance holders as debts which result from such a recession are not easily rectified immediately even when new positions requiring clearances become available. We still have clients who lost a majority of their investment property values during the Great Recession who have to address financial issues in connection with their security clearances. In other words, a small downturn can often have a major effect on security clearance holders or applicants for a long period of time.

The Good News – Clearance Financial Concerns Can be Mitigated

The good news for security clearance holders, applicants and future applicants is that security clearance adjudicators recognize periods of time in which everyone is affected by universal circumstances outside of their control. COVID-19 related issues and any downturn would almost certainly fall under this category. The most recent examples, which still arises from time to time was the result of the “Great Recession” between 2007 and 2009. I have attached a link to a security clearance case which evaluated financial issues in light of the Great Recession, explaining how such universal adverse issues can be mitigated. Security clearance adjudicators have often recognized the financial effects of this major downturn as a reason for mitigating financial issues connected with security clearances.

Security Executive Agent Directive 4 (SEAD 4), under Guideline F, Financial Considerations, provides mitigation to those facing security concerns related to debts, credit and other financial issues. SEAD 4. Paragraph 20(a) provides as mitigation that “the behavior happened so long ago, was so infrequent, or occurred under such circumstances that it is unlikely to recur . . . “ Furthermore, Paragraph 20(b) states, as a key mitigating factor that “the conditions that resulted in the financial problem were largely beyond the person’s control (e.g., loss of employment, a business downturn, unexpected medical emergency . . . and the individual acted responsibly under the circumstances.”

This type of mitigation was used in the Great Recession to mitigate many security clearance cases, where clearance holders found themselves underwater due to the collapse of the economy. If that occurs here, there is no reason to doubt that security clearance adjudicators will also not give serious consideration to mitigating financial-related security clearance concerns related to debts, bankruptcy and taxes as they have done in the past.

Interim Thoughts for Clearance Holders, Applicants and Future Applicants

The best advice for security clearance holders right now is to keep on top of their finances, work with creditors if they are laid off or lose their jobs and keep copies of all documents and attempts to resolve debts or otherwise appear to act responsibly even if faced with circumstances that cannot be immediately rectified or unreasonable creditors. Keeping records of such information makes it easier to later explain the uniqueness of the individual’s situation in connection with the COVID-19 emergency, quarantines and loss of income.

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