DoD personnel who hold or have ever held security clearances were compromised when the Chinese hacked into the OPM databases a few years ago. I'm not sure how security clearances are investigated and granted, but I do know that personal information was compromised.
It does make sense for DoD to investigate, grant, and safeguard information related to security clearances. There are a few other functions of OPM that I wonder where they will go. For example, when I hire a new employee and they want a pay raise or vacation credits (because they were contractors that I hired as employees), I consult the OPM for guidance on how to handle their requests. I don't know where I will look for that regulatory guidance once the OPM is disbanded.
“I consult the OPM for guidance on how to handle their requests. I don’t know where I will look for that regulatory guidance once the OPM is disbanded”
It seems from the report, management of those functions will shift either to OMB or the GSA. No doubt within either of them will be a new, subordinate, office responsible for those functions.