As part of the president's fiscal 2004 budget, the Defense Department plans to transfer the business of conducting background checks to the Office of Personnel Management.

The change, if approved by Congress, would give OPM responsibility for overseeing background investigations on about 80 percent of the government's civilian and military personnel, consultants and contractors.

Under an agreement signed by Deputy Defense Secretary Paul Wolfowitz and OPM Director Kay Coles James, the Defense Security Service would shift about 1,800 employees to OPM to help conduct background investigations on government personnel.

Decisions on suitability for Defense Department employment and who gets a Defense security clearance would continue to be made by Pentagon and military officials, Carol Haave, the deputy assistant defense secretary for security and information operations, said yesterday.

Haave said consolidating background investigations at OPM would improve security, eliminate duplication and save money for the Defense Department.

Clarence Crawford, OPM's associate director for management and chief financial officer, said: "We think it makes good business sense for the government to manage the background investigations from essentially one point. . . . It puts us in a good position to assign workloads and make sure true national needs are being met."

Three years ago, Defense faced a backlog of about 500,000 cases. Congressional auditors warned that background checks were taking too long to complete, jeopardizing national security. In some cases, investigators failed to pursue prior criminal histories, financial difficulties, drug and alcohol abuse and other issues that would disqualify a person from receiving a security clearance, the General Accounting Office found.

Defense brought in OPM to help work off the backlog, and the number of cases pending has dropped to about 186,000. Through that joint effort, Defense and OPM officials looked for new ways to run more efficient operations and finally decided that consolidating the work at OPM was "a logical decision," Haave said.

Under the agreement, Defense Security Service employees will transfer to OPM and continue as government workers with no change in status, location or benefits. The employees will give OPM a core group of investigators who can conduct particularly sensitive investigations of government and contractor personnel, Defense and OPM officials said.

The decision, to some extent, reflects an evolving role for OPM, which relies primarily on contract employees to perform field investigations.

In 1996, OPM set up an employee-owned company, US Investigation Services Inc., and transferred most of OPM's investigators to it. OPM privatized the investigators because the federal government was downsizing, the workload was no longer predictable, and OPM needed a more flexible system for conducting background checks.

OPM retained oversight of its background checks through its Office of Investigations Service in Boyers, Pa. The Boyers operation handled more than 2 million requests for background checks during fiscal 2002, OPM said.

The volume of background checks will likely grow in coming years as agencies tighten security to protect their computer databases and assist with homeland defense.

"We have the experience to manage large workloads," Crawford said. "This is the government coming together and doing something that makes sense."

Retirement Jack Schrader, the top career civilian in the Defense Department's civilian personnel policy shop for seven years, retired Jan. 3 after 30 years of federal service. Schrader began his career with the Air Force at Wright-Patterson Air Force Base in Ohio and progressed through the ranks in the Air Force before joining the Office of the Secretary of Defense.

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Stephen Barr's e-mail address is barrs@washpost.com.