The US government is creating a new agency to process background checks for federal employees and contractors seeking security clearance.

The Obama administration said it will instruct the Department of Defense (DoD) to oversee the establishments of the National Background Investigations Bureau (NBIB). The new agency will take over running the Federal Investigative Service (FIS) and will perform all background checks.

The administration said that currently, the FIS handles around 95 per cent of federal background checks on an estimated 600,000 people each year. Those duties, going forward, will still be handled by FIS, but will be done as part of the new NBIB and its proposed $95m annual (FY 2017) IT budget.

Previously, the FIS had operated as part of the US Office of Personnel Management (OPM), conducting background checks for those seeking positions within US government agencies or working on contracts for the government.

The White House said that the new agency will still operate in Washington DC and share office space with OPM, but will report directly to the DoD, who will also be providing the IT, data security and other policy directions for the NBIB.

"This new government-wide service provider for background investigations will be housed within the OPM," the administration said.

"Its mission will be to provide effective, efficient, and secure background investigations for the Federal Government."

The decision comes as investigators continue to investigate the events before, during, and after the network intrusion that resulted in the loss of personal information on more than 21 million people who had applied for federal jobs or otherwise been screened.

While the source of the attacks is still under investigation, officials had pointed to a Chinese state-sponsored group as a likely culprit. ®