Any idea how the DoD handles 2 failed FBI polys?
I don't know whether any action would be taken immediately, but if you currently have a top secret clearance with DoD, when your next periodic review comes up, the background investigators will see that you have an FBI file when they conduct a National Agency Check. The file will be requested, and they'll learn that your FBI application was terminated because of the polygraph results. You'll likely be questioned about that and might be asked to sit for a DoD-administered polygraph examination.
Polyfool
I happen to know from experience that a failed FBI polygraph will show up when the DOD conducts a background check for "Secret" level clearance. However, I do not think that the failed polygraph will result in not being given a "secret" clearance, assuming all else is well in your background check. I cannot speak for DOD "Top Secret" Clearances on this matter.
George and KSLawDog,
Not sure whether the clearance is S or TS yet, but I think secret. My background is clean, so hopefully I'll be okay. Thanks for the advice.