Security Clearances in Government Contracting: What They Are, Who Needs Them, and How to Get One

That single sentence eliminates the majority of contractors from competing.

Security clearances are one of the biggest barriers to entry in government contracting, and one of the biggest competitive advantages once you have them. But the system is confusing. You can't just apply for one. You can't buy one. And you can't get one without a sponsor who already has one.

This guide covers everything contractors need to know: clearance levels, how to get them, what it costs, and how to overcome the classic "catch-22" that keeps new contractors locked out.

What Is a Security Clearance?

A security clearance is a formal determination by the U.S. government that a person is trustworthy enough to access classified national security information. It's the result of a thorough background investigation covering your personal history, financial records, criminal history, foreign contacts, and more.

A clearance is not a one-time check. It's an ongoing status that requires periodic reinvestigation. If your circumstances change (financial problems, foreign contacts, legal issues), your clearance can be suspended or revoked.

Key point: A clearance grants you eligibility to access classified information. You still need a "need to know", a specific, work-related reason to see particular classified material.

The Levels of Security Clearance

There are three primary clearance levels, plus two additional designations that build on Top Secret clearance. Each level corresponds to the sensitivity of the information you can access.

Confidential

What it covers: Information whose unauthorized disclosure could cause "damage" to national security. Reinvestigation cycle: Every 15 years. Timeline: Typically 1-3 months.

Confidential clearances are relatively rare in the contractor world. Most contracts that require any clearance jump straight to Secret.

Secret

What it covers: Information whose unauthorized disclosure could cause "serious damage" to national security. Reinvestigation cycle: Every 10 years. Timeline: Typically 2-6 months.

This is the workhorse clearance level for government contractors. The majority of cleared defense contracts require Secret-level clearances. If a solicitation says "clearance required" without specifying a level, it almost always means Secret.

Top Secret

What it covers: Information whose unauthorized disclosure could cause "exceptionally grave damage" to national security. Reinvestigation cycle: Every 5 years. Timeline: 4-12 months.

Investigation involves a Single Scope Background Investigation (SSBI) with extensive interviews of the applicant, references, neighbors, coworkers, and former employers. Common in intelligence contracts, advanced weapons programs, and cybersecurity operations.

TS/SCI, Top Secret with Sensitive Compartmented Information

TS/SCI is not a separate clearance level, it's an access designation added on top of a Top Secret clearance. SCI refers to intelligence sources and methods that are compartmented (divided into separate channels) so that access to one compartment doesn't automatically grant access to others.

What it means in practice: You need Top Secret clearance plus specific SCI "read-on" approvals for each compartment you need to access. Getting TS/SCI typically requires a polygraph examination, depending on the sponsoring agency.

Common uses: Intelligence community contracts (CIA, NSA, NGA, DIA), certain DoD programs with intelligence components, cybersecurity programs that intersect with signals intelligence.

SAP, Special Access Programs

SAPs are programs with security requirements that exceed those of standard classification levels. They exist across all classification levels but are most commonly associated with Top Secret work.

What it means: Even if you hold a Top Secret or TS/SCI clearance, you cannot access a SAP without being specifically "read into" that program. SAP access requires additional vetting and is tightly controlled.

Common uses: Black programs, advanced weapons development, certain space programs, sensitive acquisition programs.

Who Grants Security Clearances?

The Defense Counterintelligence and Security Agency (DCSA), formerly known as the Defense Security Service (DSS), is the primary agency responsible for conducting background investigations and granting clearances for DoD and most federal contractors.

DCSA processes over 2 million background investigations per year. Some intelligence community agencies (CIA, NSA, FBI) conduct their own investigations for their specific programs. DCSA conducts the investigation, but the sponsoring agency makes the final adjudication decision.

How to Get a Security Clearance

Here's the part that surprises most people: you cannot apply for a security clearance on your own. There is no form you can fill out, no fee you can pay, and no office you can walk into to request one.

A security clearance must be sponsored by either:

• A government agency that needs you to have access to classified information, or
• A contractor that holds a Facility Security Clearance (FCL) and has a classified contract requiring cleared personnel.

The process works like this:

Step 1: Get Sponsored

Your employer (or a government agency) determines that your job requires access to classified information and submits a clearance request on your behalf.

Step 2: Complete the SF-86

You fill out Standard Form 86 (SF-86), officially titled "Questionnaire for National Security Positions." This comprehensive questionnaire (120+ pages) covers your personal information, residence and employment history, education, references, foreign contacts and travel, financial records, criminal history, drug and alcohol use, and mental health history. You submit it electronically through the e-QIP system.

Pro tip: Be thorough and honest. The number one reason clearances are denied is not having issues, it's lying about them. Investigators already know the answers to most questions before they ask.

Step 3: Background Investigation

DCSA investigators verify your information through database checks (FBI, credit bureaus, court records), local law enforcement contacts, reference interviews, and, for Top Secret, personal interviews, neighborhood checks, and potentially a polygraph (especially for TS/SCI with agencies like NSA and CIA).

Step 4: Adjudication

An adjudicator reviews the findings against the 13 adjudicative guidelines covering allegiance, foreign influence, financial considerations, criminal conduct, and personal conduct. The entire process typically takes 1-3 months (Confidential), 2-6 months (Secret), or 4-12 months (Top Secret).

Facility Security Clearance: Your Company Needs One Too

Individual clearances aren't enough. If your company will perform classified work, the company itself must hold a Facility Security Clearance (FCL).

An FCL requires government or prime contractor sponsorship, secure facility space (potentially a SCIF), a designated Facility Security Officer (FSO), compliance with the NISPOM, and, if applicable, mitigation of any Foreign Ownership, Control, or Influence (FOCI).

Key point for small businesses: Getting an FCL is a significant investment. This is why many small contractors start as subcontractors to cleared primes, the prime already has the FCL and can sponsor your personnel for individual clearances.

NISPOM: The Rules of the Game

The National Industrial Security Program Operating Manual (NISPOM), codified at 32 CFR Part 117, is the rulebook every cleared contractor must follow. It covers personnel security, physical security, information security (marking, handling, and destroying classified documents), security education and training, incident reporting, and subcontracting requirements.

Your FSO must know the NISPOM inside and out. DCSA conducts periodic security reviews of cleared facilities to verify compliance, and violations can result in suspension or revocation of your FCL.

How Clearances Affect Your Contracting Strategy

Security clearances fundamentally shape which contracts you can pursue and how you price them.

The Gate Effect

Many DoD and intelligence community solicitations include clearance requirements as mandatory qualification criteria. Common language includes:

• "All key personnel must hold an active Secret clearance at time of proposal submission."
• "The Program Manager must possess a Top Secret clearance with SCI eligibility."
• "Contractor must possess a Facility Security Clearance at the Secret level or above."

These aren't preferences, they're pass/fail gates. If your team doesn't have the required clearances at the time of proposal submission, your proposal is non-responsive. You won't even be evaluated.

This means clearances directly determine your addressable market. According to USAspending.gov data, classified and clearance-required contracts represent hundreds of billions of dollars in annual DoD spending, a massive market that uncleared contractors cannot access.

The Clearance Premium

Cleared personnel command significantly higher billing rates than their uncleared counterparts. Based on GSA CALC (Contract-Awarded Labor Category) data, the premium is substantial:

On average, cleared personnel command $15, $40 per hour more than their uncleared equivalents, depending on the clearance level and specialty. For a full-time employee billed at government rates, that premium translates to $30,000, $80,000+ in additional annual revenue per person.

This premium exists because cleared labor is scarce. The process to get cleared is long, intrusive, and requires sponsorship. The supply of cleared professionals is limited, and demand consistently exceeds supply, especially for TS/SCI holders with technical skills.

The Catch-22, And How to Break It

New contractors face a frustrating paradox:

• You need a contract to sponsor employees for clearances.
• You need cleared employees to win the contract.

This circular problem keeps many capable companies locked out of the classified market. But it's not unsolvable. Here are proven strategies to break through:

1. Team with cleared companies. Form teaming agreements or joint ventures with companies that already hold FCLs and have cleared personnel. You bring the technical expertise; they bring the clearance infrastructure. Over time, your personnel get cleared through the work, and you build your own cleared workforce.

2. Hire personnel who already hold clearances. Clearances are portable. If someone holds an active clearance from a previous position, you can "transfer" it to your company (assuming you have or are obtaining an FCL). Recruiting cleared professionals from other contractors is one of the fastest ways to build a cleared team.

3. Pursue contracts that offer sponsorship opportunities. Some solicitations don't require clearances at proposal time but state that the government will sponsor clearances for selected contractor personnel after award. Look for language like "Clearances will be sponsored post-award" or "Personnel must be clearance-eligible." These are your entry points.

4. Start with Confidential or Secret work. Don't aim for TS/SCI contracts right out of the gate. Build your cleared workforce incrementally by starting with contracts that require Secret clearances, these are faster to obtain and more widely available.

5. Work as a subcontractor to a cleared prime. Prime contractors with FCLs can sponsor clearances for subcontractor personnel working on their classified contracts. This lets you get your people cleared without needing your own FCL first.

What Can Cause a Clearance to Be Denied or Revoked?

Common red flags under the 13 adjudicative guidelines include financial problems (the most common reason for denials), criminal conduct, illegal drug use (marijuana included, even in legal states), foreign influence, and dishonesty on the SF-86. Having an issue does not automatically disqualify you, adjudicators evaluate the whole person, including how long ago the issue occurred and what you've done to address it. But failing to disclose an issue is often worse than the issue itself.

How Bidovate Helps Cleared Contractors Find the Right Opportunities

Navigating the classified contract market requires knowing which opportunities match your team's clearance profile. Searching through SAM.gov solicitations manually to find ones that align with your clearance levels is time-consuming and error-prone.

Bidovate's opportunity discovery platform helps contractors filter and track solicitations based on requirements, including clearance levels, NAICS codes, set-aside status, and agency. Instead of reading through hundreds of solicitation documents to find clearance requirements buried in Section L, you can quickly identify opportunities that match your team's capabilities.

For contractors building their cleared workforce, Bidovate also tracks contract recompetes, helping you identify upcoming opportunities early enough to get your team cleared before the solicitation drops.

Frequently Asked Questions

Can I get a security clearance on my own without a sponsor?

No. There is no way to self-sponsor a security clearance. A government agency or a contractor with a Facility Security Clearance must sponsor you in connection with a specific classified contract or program. This is by design, the government only investigates people who have a demonstrated need to access classified information.

How much does it cost a contractor to get employees cleared?

The background investigation itself is funded by the government through DCSA, contractors don't pay for the investigation directly. However, there are significant indirect costs: the time employees spend completing the SF-86 (often 20-40 hours), the productivity lost during the waiting period, the cost of maintaining an FSO and NISPOM compliance program, and potentially the cost of building or leasing secure facility space. For a mid-size company obtaining its first FCL, total costs can run $50,000, $200,000+ depending on facility requirements.

What happens to my clearance if I leave my employer?

When you leave a cleared position, your clearance goes into "inactive" status. It doesn't disappear, it can be reactivated by a new sponsor within 24 months without requiring a new investigation. After 24 months, the clearance lapses and you'd need a new investigation. If you're planning to move between cleared contractors, timing matters. Try not to have a gap longer than two years.

Do all DoD contracts require security clearances?

No. Many DoD contracts are unclassified and don't require clearances at all. Contracts for routine services like IT helpdesk support, facilities maintenance, administrative services, and many professional services can be performed without clearances. However, the higher-value, more technical, and more strategic DoD contracts, especially in areas like weapons systems, cybersecurity, intelligence analysis, and C4ISR, commonly require Secret or Top Secret clearances.

What is the difference between a security clearance and a Public Trust determination?

A Public Trust determination (also called a suitability determination) is a different process used for positions that involve access to sensitive but unclassified information, such as financial data, medical records, or law enforcement databases. It requires a background check (typically an SF-85P), but the investigation is less extensive than a security clearance, and it doesn't grant access to classified material. Many civilian agency contracts (IRS, CMS, SSA) require Public Trust rather than security clearances.

Start Building Your Cleared Contracting Strategy

Security clearances open doors to some of the most lucrative and stable contracts in the federal market. The classified work market is less crowded, contracts tend to be longer-term, and billing rates are significantly higher.

But you have to plan ahead. Clearances take months to obtain, FCLs require infrastructure and compliance programs, and the catch-22 problem means you need a deliberate strategy to break in.

Start by identifying which DoD contracts align with your capabilities, build relationships with cleared prime contractors for teaming opportunities, and begin recruiting personnel who already hold active clearances.

The sooner you start building your cleared workforce, the sooner you can compete for contracts that most of your competitors can't touch.

Book a Demo to see how Bidovate helps contractors find and track clearance-required contract opportunities across the federal market.