March 28, 2024

Podcast - What Is an FCL and How Do I Obtain One?

Are We All Clear? Facilitating Security Clearances

In the inaugural episode of "Are We All Clear? Facilitating Security Clearances," host Molly O'Casey sits down with Government Contracts attorney Erin Estevez. They provide a basic introduction to facility security clearances (FCLs), explaining what they are, why they matter for contractors and how the process of obtaining one works.

Ms. Estevez discusses key requirements such as establishing a need-to-know and finding a sponsor. Common pitfalls are also addressed. The episode serves as a primer on this foundational topic for understanding classified contracting. Tune in to gain valuable insights into navigating the clearance process.

Molly O'Casey: Welcome to the first episode of "Are We All Clear? Facilitating Security Clearances," where we decode the acronyms and issues on facility security clearances. I'm your host, Molly O'Casey, an international trade associate with Holland & Knight's Washington, D.C., office. Today's episode will provide basic information regarding what it means for government contractors to have facility security clearances, abbreviated as FCL, and to access classified information, as well as how a government contractor can obtain an FCL. As a starting point, this episode will discuss the need to know, meaning the key requirements for access and sponsor needed before applying for an FCL. Our speaker today is Erin Estevez, a partner in the Government Contracts Group at Holland & Knight in the Tysons, Virginia, office. Hi, Erin.

Erin Estevez: Hi, Molly. Happy to be here this morning.

Molly O'Casey: Awesome. So do you want to maybe give a brief introduction and a description of your practice and experience with FCLs?

Erin Estevez: Yes, I'd be happy to. So as Molly mentioned, I'm a government contracts attorney here at Holland & Knight. My practice focuses on counseling contractors on the full range of compliance obligations involved in doing business with the U.S. federal government. I have a particular emphasis on the regulatory implications of transactional matters like M&A financings and joint ventures. I also work frequently in small business programs. And the reason I'm here today, working with contractors that have or seeking skills to support their contracting activity. I'm the co-chair of the FCL practice here at Holland & Knight.

Molly O'Casey: Amazing. So as maybe a starting point, could you tell us what is an FCL?

Erin Estevez: Absolutely. So an FCL is essentially the U.S. government's approval of a government contractor to have access to classified information. So an FCL could be what we call possessory, meaning that a contractor can handle classified materials at its own physical location, or it could be non-possessor, meaning that contractor personnel are only accessing classified information at an approved government or third-party site. Sales are primarily issued at the organizational level for a contractor by the U.S. Department of Defense, through an agency called the Defense Counterintelligence and Security Agency, which is abbreviated DCSA. So DCSA is the FCL gatekeeper for a number of other U.S. government agencies, as well as NASA, Navy, Air Force and others. There are certain other agencies that have their own FCL process, like the Department of Energy, which has a very similar process for DOE classified contracts. And then there are also some agencies within the intel community that have their own processes where access might be granted on a contract-by-contract basis, rather than to a contractor as a whole for use across one or multiple contracts. In any of these cases, though, an FCL for a government contractor is a recognition that the company has been vetted in terms of its internal organization, its ownership or control, its security infrastructure, and the government's determined that providing access to classified information is in the government's best interest without an undue risk to U.S. national security.

Molly O'Casey: Interesting. So why do FCLs matter?

Erin Estevez: Sure. So only contractors that have an FCL are permitted to access classified information in the U.S. And actually, it's not just any classified information, but then only specifically the information described in the contract and needed for contract performance. There are serious ramifications for access to classified information without the requisite security clearance, and a contractor may not be allowed to perform a contract for a particular contract that requires access unless it's been granted an FCL. For many businesses and for all, can be a huge business development opportunity. It opens doors that otherwise restricted contracting opportunities or customers that they're trying to break into. At the same time, it does require an initial and ongoing investment into the facilities, the personnel, the infrastructure, policies and procedures that are really necessary to get the FCL in the first place and then to retain the FCL in good standing.

Molly O'Casey: That does some very useful. How does a company get one?

Erin Estevez: The starting point for any contractor you alluded to in the opening, which is that the contractor has to have a need to know. So they must establish that the contractor needs access to the information to do the job for which has been contracted or for which it's bidding in order to receive a contract. The contractor must have a sponsor, meaning another organization that has already been approved for access to classified information that supports the contractor's request to be processed for an FCL itself. That sponsor can be a U.S. government agency that's a customer of the contractors, or it could be another prime contractor that's already had an FCL, and for which the entity seeking the clearance is proposed to be a sub, a subcontractor supporting the prime performance of a government contract. So then once you have both, a need to know and a sponsor is identified, the sponsor submits an initial request for the contractor to be processed for an FCL to DCSA or the Cognizant Security Agency. If it's DOE or the intel community, the process is a little different. And everything goes through the contracting officer for the particular contracted issue. The Cognizant Security Agency responds to the contractor with a request for the information needed to begin the application, and we'll dive into the details of the application contents and process in later episodes.

Molly O'Casey: What's a common pitfall you've seen as you've helped companies process this?

Erin Estevez: Sure. So, something that we see fairly often as contractors who anticipate needing or wanting an FCL either not taking the time to really prepare themselves and their organization for the process, or trying to do too much in advance. And so the balance of this timing is a little bit more of an art than a science. Often there's a lot that can be done in advance in terms of preparing the organizational government documents, leading appropriate individuals and key roles within the company, gathering information from owners and investors, really laying the groundwork for the properties, proper security protocols within the company so that the contractor can be ready to submit its application package in a timely manner and work through the process with minimal delays and back and forth with the agency. On the other hand, certain of the steps that will ultimately lead to the granting of the FCL are really dictated by what DCSA has reviewed of the package determines and subject to the agency's discretion and approval. So trying to implement too much too early can actually result in some duplicative work, or having to undo or redo prior steps in the process. We can predict what we think DCSA will require with some degree of certainty, based on our group's sort of extensive collective experience of FCLs, but it's a really nuanced in the contractor-specific exercise. So we guide contractors along the way depending on their specific unique circumstances. So I highly recommend engaging with experienced advisers early in the process to save time and money in the long run.

Molly O'Casey: Thank you so much for your thoughts, Erin. So, the area of facilities security clearances is a bit of an alphabet soup of acronyms. So each episode, we ask our speaker to explain an acronym that featured in the episode with wrong answers only. Today's acronyms would be FCL or DCSA. Erin, do you have any ideas on some, some wrong answers that you could provide for what those acronyms mean?

Erin Estevez: Yeah. Yes, I do, and it is quite the alphabet soup when it comes to this practice area. So courtesy of my other co-chair of the FCL practice, Antonia, we're going to say FCL stands for First Class lawyer. So we know folks that always listen to podcasts of lawyers talking shop, but when you do, let it be an FCL about an FCL.

Molly O'Casey: Thank you so much for that, Erin. And thank you for taking the time to meet with us today and talk about your experience. On our next episode, we'll be discussing personnel clearances, and I hope everyone has a great week in the meantime.

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