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107th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     107-764
_______________________________________________________________________

                                     

                                     

                                     

                                                 Union Calendar No. 479

   MAKING FEDERAL COMPUTERS SECURE: OVERSEEING EFFECTIVE INFORMATION 
                          SECURITY MANAGEMENT

                               __________

                              THIRD REPORT

                                 by the

                     COMMITTEE ON GOVERNMENT REFORM


                                     


                                     

  Available via the World Wide Web: http://www.gpo.gov/congress/house
                      http://www.house.gov/reform

October 24, 2002.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed


                     COMMITTEE ON GOVERNMENT REFORM

                     DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York         HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland       TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut       MAJOR R. OWENS, New York
ILEANA ROS-LEHTINEN, Florida         EDOLPHUS TOWNS, New York
JOHN M. McHUGH, New York             PAUL E. KANJORSKI, Pennsylvania
STEPHEN HORN, California             PATSY T. MINK, Hawaii
JOHN L. MICA, Florida                CAROLYN B. MALONEY, New York
THOMAS M. DAVIS, Virginia            ELEANOR HOLMES NORTON, Washington, 
MARK E. SOUDER, Indiana                  DC
STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
BOB BARR, Georgia                    DENNIS J. KUCINICH, Ohio
DAN MILLER, Florida                  ROD R. BLAGOJEVICH, Illinois
DOUG OSE, California                 DANNY K. DAVIS, Illinois
RON LEWIS, Kentucky                  JOHN F. TIERNEY, Massachusetts
JO ANN DAVIS, Virginia               JIM TURNER, Texas
TODD RUSSELL PLATTS, Pennsylvania    THOMAS H. ALLEN, Maine
DAVE WELDON, Florida                 JANICE D. SCHAKOWSKY, Illinois
CHRIS CANNON, Utah                   WM. LACY CLAY, Missouri
ADAM H. PUTNAM, Florida              DIANE E. WATSON, California
C.L. ``BUTCH'' OTTER, Idaho          STEPHEN F. LYNCH, Massachusetts
EDWARD L. SCHROCK, Virginia                      ------
JOHN J. DUNCAN, Jr., Tennessee       BERNARD SANDERS, Vermont 
JOHN SULLIVAN, Oklahoma                  (Independent)


                      Kevin Binger, Staff Director
                 Daniel R. Moll, Deputy Staff Director
                     James C. Wilson, Chief Counsel
                     Robert A. Briggs, Chief Clerk
                 Phil Schiliro, Minority Staff Director

    Subcommittee on Government Efficiency, Financial Management and 
                      Intergovernmental Relations

                   STEPHEN HORN, California, Chairman
RON LEWIS, Kentucky                  JANICE D. SCHAKOWSKY, Illinois
DOUG OSE, California                 MAJOR R. OWENS, New York
ADAM H. PUTNAM, Florida              PAUL E. KANJORSKI, Pennsylvania
JOHN SULLIVAN, Oklahoma              CAROLYN B. MALONEY, New York

                               Ex Officio

DAN BURTON, Indiana                  HENRY A. WAXMAN, California
                    Bonnie L. Heald, Staff Director
                     Henry A. Wray, Senior Counsel
               Claire Buckles, Professional Staff Member
             Elizabeth Johnston, Professional Staff Member
                          Chris Barkley, Clerk
           David McMillen, Minority Professional Staff Member
  


                         LETTER OF TRANSMITTAL

                              ----------                              

                                  House of Representatives,
                                  Washington, DC, October 24, 2002.
Hon. J. Dennis Hastert,
Speaker of the House of Representatives,
Washington, DC.
    Dear Mr. Speaker: By direction of the Committee on 
Government Reform, I submit herewith the committee's third 
report to the 107th Congress. The committee's report is based 
on a study conducted by its Subcommittee on Government 
Efficiency, Financial Management and Intergovernmental 
Relations.
                                                Dan Burton,
                                                          Chairman.

                                 (iii)

                                     


                               C O N T E N T S

                                                                   Page
  I. Summary of Oversight Findings and Recommendations................1
      A. Introduction............................................     1
      B. Findings................................................     3
          1. Agencies are not conducting periodic risk                4
              assessments.
          2. Federal computer systems have significant and            4
              pervasive weaknesses in their security controls.
              a. Agencies do not have effective security              5
                  management program controls.
              b. Agencies do not have effective access controls..     5
          3. Federal information technology systems rely on           5
              commercial software that is vulnerable to attack.
          4. Agencies' Capital Planning and Investment Control        6
              processes do not include information technology 
              security.
          5. Congress does not have consistent and timely access      7
              to the information it needs to fulfill its 
              oversight responsibilities for Federal information 
              security and related budget deliberations.
      C. Recommendations.........................................     7
          1. The Government Information Security Reform Act of        7
              2000 (Security Act) should be strengthened and made 
              permanent.
          2. Sustained congressional oversight is needed.........     8
          3. Agency funding should be tied to the implementation      8
              of effective computer security plans and 
              procedures.
          4. Congress should encourage the Administration to set      9
              minimum security standards for commercial off-the-
              shelf software that is purchased by Federal 
              agencies.
 II. Conclusions......................................................9
III. Subcommittee Initiatives........................................10
      A. Oversight hearing on the extent of the potential threat     10
          posed by computer viruses and worms to the workings of 
          the Federal Government.
      B. Oversight hearing on the probability of cyber attacks       10
          against the Nation's computer-dependent infrastructure.
      C. Report card grading Federal departments and agencies on     11
          their computer security efforts.
      D. Oversight hearing on lessons learned from the Government    11
          Information Security Reform Act of 2000.
      E. Legislative hearing on the ``Federal Information            12
          Security Management Act of 2002''.

                               APPENDIXES

Appendix A.--Computer Security Report Card.......................    13
Appendix B.--Basis for Agency Computer Security Grades...........    14
Appendix C.--Analysis and Scoring Criteria.......................    16
Appendix D.--List of Witnesses...................................    19

                                  (v)

  
                                                 Union Calendar No. 479
107th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     107-764

======================================================================

 
   MAKING FEDERAL COMPUTERS SECURE: OVERSEEING EFFECTIVE INFORMATION 
                          SECURITY MANAGEMENT

                                _______
                                

October 24, 2002.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

   Mr. Burton, from the Committee on Government Reform submitted the 
                               following

                              THIRD REPORT

    On October 9, 2002, the Committee on Government Reform 
approved and adopted a report entitled ``Making Federal 
Computers Secure: Overseeing Effective Information Security 
Management.'' The chairman was directed to transmit a copy to 
the Speaker of the House.

          I. Summary of Oversight Findings and Recommendations


                            A. INTRODUCTION

    The Committee on Government Reform (the ``committee'') has 
legislative jurisdiction with respect to the ``overall economy, 
efficiency, and management of government operations and 
activities.'' \1\ The committee also has the general oversight 
responsibility:
---------------------------------------------------------------------------
    \1\ Clause 1(h)(6) rule X of the Rules of the House of 
Representatives, 107th Congress.

        [T]o determine whether laws and programs addressing 
        subjects within the jurisdiction of [the] committee are 
        being implemented and carried out in accordance with 
        the intent of Congress and whether they should be 
        continued, curtailed, or eliminated. Each standing 
        committee (other than the Committee on Appropriations) 
        shall review and study on a continuing basis the 
        application, administration, execution, and 
        effectiveness of laws and programs addressing subjects 
        within its jurisdiction. [The committee shall review 
        and study] any condition or circumstances that may 
        indicate the necessity or desirability of enacting new 
        or additional legislation addressing subjects within 
        its jurisdiction.\2\ Moreover, the committee has the 
        special oversight function to ``review and study on a 
        continuing basis the operation of Government activities 
        at all levels with a view to determining their economy 
        and efficiency.'' \3\
---------------------------------------------------------------------------
    \2\ Ibid., Clause 2(b)(1) (A) and (C).
    \3\ Ibid., Clause 3(e).

    The Subcommittee on Government Efficiency, Financial 
Management and Intergovernmental Relations (the 
``subcommittee'') has legislative jurisdiction with respect to 
all matters relating to the handling of Government information, 
including information security.
    Pursuant to this authority, the subcommittee convened five 
oversight hearings to explore:
         the extent of potential threats to 
        Government operations posed by computer viruses and 
        worms;
         the likelihood of cyber attacks against the 
        Nation's information infrastructure;
         the status of efforts at major executive 
        branch departments and agencies (``the agencies'') to 
        strengthen the security of their critical computer 
        operations and assets;
         lessons learned from the Government 
        Information Security Reform Act of 2000; and
         the need to reauthorize and strengthen the 
        Government Information Security Reform Act.
    Federal agencies rely extensively on computerized systems 
and electronic data to support operations that are essential to 
the health and well being of all Americans. Critical Government 
systems, from national defense and emergency services to tax 
collection and benefit payments, rely on electronically stored 
information and automated systems. Maintaining adequate 
security over these systems and the electronic data stored in 
them is essential to maintaining the continuity of the 
Government's critical operations. Security measures must 
prevent data tampering, fraud, sabotage and the inappropriate 
disclosure of sensitive information. Nevertheless, independent 
audits and evaluations continue to show that most Federal 
departments and agencies have pervasive weaknesses in their 
computer security programs that pose serious risks to these 
critical automated systems.
    Federal computers have been successfully attacked at the 
Executive Office of the President, the Department of Defense, 
the Department of the Treasury and the Department of the 
Interior. The number and sophistication of these attacks are 
increasing, not only in the Federal Government but in private 
industry as well. In 2001, worms and viruses \4\ such as Code 
Red, Code Red II, SirCam and Nimda affected millions of public 
and private computer users, shutting down Web sites, slowing 
Internet service and disrupting some Government operations. 
Overall, they have caused billions of dollars in damage. The 
September 11, 2001, terrorist attacks on the Nation's physical 
structure also raised the likelihood that terrorists might 
launch disruptive attacks against the Nation's information 
infrastructure.
---------------------------------------------------------------------------
    \4\ A virus is a program that self-replicates, infecting files by 
inserting or attaching a copy of itself or by rewriting files. A worm 
is a program that propagates itself through networks, without any user 
intervention or interaction, by attacking other machines and copying 
itself to them. Worms often go undetected until their uncontrolled 
replication consumes system resources, slowing or halting other tasks. 
As viruses and worms advance, the difference between the two becomes 
negligible, and it is common to find malicious software that includes 
the characteristics of both of these once relatively distinct species.
---------------------------------------------------------------------------
    The Government Information Security Reform Act of 2000 
(Security Act) \5\ was enacted during the 106th Congress to 
provide a comprehensive framework for ensuring that Federal 
departments and agencies implement effective security controls 
over information resources that support Federal operations and 
assets. The Security Act requires the agencies to implement 
agencywide information security programs that are founded on a 
continuing risk-management cycle. These programs, which are to 
be overseen by agencies' Chief Information Officers, are to be 
reviewed annually by program officials. In addition, the 
Security Act requires annual, independent evaluations of the 
agencies' computer security programs and practices, including 
control testing and compliance assessment.
---------------------------------------------------------------------------
    \5\ Floyd D. Spence, National Defense Authorization Act for Fiscal 
Year 2001, P.L. 106-398, Title X, Subtitle G, 114 Stat. 1654, 1654A-265 
(200).
---------------------------------------------------------------------------
    The Office of Management and Budget [OMB] is responsible 
for overseeing Federal information security. The OMB guidance 
implementing the Security Act requires agencies to submit the 
results of their annual program reviews in an executive summary 
consisting of two components. The first component, which is 
prepared by agency Inspectors General, characterizes the 
results of their independent evaluations. The second component, 
which is prepared by agency Chief Information Officers, 
summarizes the results of the annual program reviews by agency 
officials. These reports and summaries served as the basis for 
the OMB's February 2002 report, ``FY 2001 Report to Congress on 
Federal Government Information Security Reform.'' The OMB 
report identified six governmentwide security weaknesses that 
require correction, including the need to:
         greatly increase the degree of senior 
        management attention to security;
         establish measures of performance to ensure 
        that senior agency management can evaluate the 
        performance of officials with security 
        responsibilities;
         improve security education and awareness;
         fully integrate security into the capital 
        planning and investment control process;
         ensure that contractor services are 
        adequately secure; and
         improve agencies' ability to detect, report 
        and share information on vulnerabilities.

                              B. FINDINGS

    Based on oversight hearings conducted by the subcommittee, 
General Accounting Office [GAO] audits, Inspector General 
evaluations, the OMB report and the President's fiscal year 
2003 budget submission, the committee finds that, although 
agencies are making progress in reducing information technology 
risks, the Federal Government continues to face formidable 
challenges in protecting its information system assets and 
sensitive data. Specifically, the committee finds that:

1. Agencies are not conducting periodic risk assessments.

    The Security Act requires agencies to perform periodic 
threat-based risk assessments of their systems and data. 
Although many agencies are making progress in addressing 
information security controls, most agencies have neither 
systematically identified their critical systems nor assessed 
the risks to those systems. In order to complete a systematic 
risk assessment, agencies must:
         inventory all resources under their control 
        and systematically prioritize those resources based on 
        their impact to the agency's mission; and
         identify and quantify the risks to systems 
        and enterprises throughout the agency.
    Without conducting systematic risk assessments, agencies 
have, by default, accepted an unknown level of risk. Although 
agencies may have some security controls and policies in place, 
without a risk assessment, they cannot know whether those 
security controls are appropriate for the level of risk to the 
system. Nor can agencies determine whether their planned 
remedial actions adequately address crucial hidden security 
weaknesses.

2. Federal computer systems have significant and pervasive weaknesses 
        in security controls.

    The GAO and agency Inspectors General identified 
significant weaknesses in the policies, procedures and 
technical controls at all 24 major Federal departments and 
agencies included in the Chief Financial Officers Act of 1990 
(the ``CFO Act''). Security weaknesses were found in the 
following areas:
         management controls that provide the 
        framework for ensuring that security risks are 
        understood, and that effective controls are selected 
        and properly implemented;
         access controls that limit or detect 
        inappropriate access to computer resources to ensure 
        that only authorized users can read, modify or delete 
        data;
         software development and change controls to 
        ensure that only authorized software programs and 
        modifications are implemented;
         controls that ensure an appropriate 
        segregation of duties to reduce the risk that any one 
        person could perform inappropriate actions without 
        detection;
         operating system software controls to 
        protect sensitive programs that support multiple 
        applications; and
         service continuity controls to ensure that 
        computer-dependent operations experience no significant 
        disruption.
    Significant weaknesses in security controls are so 
pervasive that in fiscal year 2001, GAO auditors found that 15 
of the 24 major Federal agencies had weaknesses in all of the 
six control categories. All 24 agencies had weaknesses in their 
systems' program management and access controls. Those control 
weaknesses extended to critical Government operations, 
including e-government and e-commerce programs. For example, 
some of the General Service Administration's e-commerce and e-
government systems such as GSA Advantage, FedPay, FedBiz Ops, 
ITSS and TOPS lack program management controls, including 
current risk assessments, certification/accreditation, security 
plans and system testing.
            a. Agencies do not have effective security management 
                    program controls.
    The Security Act requires agencies to implement agencywide 
information security programs that are founded on a continuing 
risk-management cycle. Agency program officials, Inspectors 
General, the GAO and the OMB all reported that agencies had not 
complied with this requirement. Specifically, most agencies had 
not developed security plans for major systems based on 
assessed risks; had not formally documented security policies 
and procedures; had not provided adequate computer security 
training to their employees; and did not have adequate 
procedures for detecting, reporting and responding to security 
incidents. In addition, most agencies had not implemented 
programs for testing and evaluating the effectiveness of the 
controls they rely on.
    Although many agencies had remedial efforts underway to 
address the significant systems vulnerabilities identified by 
auditors, those efforts will not be fully effective or lasting 
until they are supported by the framework of a strong, 
agencywide security management program.
            b. Agencies do not have effective access controls.
    Agencies lack effective access controls' including site 
access controls, password controls, user and administrative 
permissions and network perimeter controls such as firewalls. 
The lack of these access controls allows intruders to modify, 
destroy or disclose sensitive information. In today's highly 
interconnected computing environment, weak access controls 
expose an agency's information and operations to attacks from 
remote locations by individuals with only minimal computer 
resources and skills.

3. Federal information technology systems rely on commercial software 
        that is vulnerable to attack.

    Commercial off-the-shelf operating systems and applications 
software have become increasingly complex. A single operating 
system or applications program may contain more than a billion 
lines of code. The size and complexity of the code makes 
detection of design and coding flaws difficult--especially if 
the flaws do not affect the operational functionality of the 
software being tested. Further, commercial software is 
inherently designed to facilitate the conduct of business 
through collaboration and information sharing, which, by its 
nature, is susceptible to being accessed by unauthorized 
individuals. In addition, to retain a competitive edge in the 
marketplace, software developers have focused on increasing 
software functionality and then speeding those features to 
market. This emphasis frequently comes at the expense of 
identifying potential software security flaws during the design 
and testing of new products. Some of those design and coding 
flaws leave the system vulnerable to attack.
    According to the CERT Coordination Center, 7,181 
software vulnerabilities have been reported since 1995. The 
most common operating systems used by Federal agencies contain 
a substantial number of those vulnerabilities. In the past 5 
years, 235 security vulnerabilities have been found in the 
Microsoft Windows NT operating system, 104 vulnerabilities in 
Microsoft 95/98, and 146 vulnerabilities in Solaris.\6\ 
Correcting these vulnerabilities requires downloading software 
patches developed by the manufacturer. To be effective, these 
patches must be current, correctly installed and applied to all 
computers on a network. The number of new vulnerabilities being 
discovered daily makes remediating them an overwhelming task 
for systems administrators. This task is further complicated 
when the software patches to correct these vulnerabilities have 
other unintended consequences that must be corrected as well.
---------------------------------------------------------------------------
    \6\ Security Focus Online, http://online.securityfocus.com/vulns/
stats/shtml, Feb. 27, 2002.
---------------------------------------------------------------------------
    The complexity of commercial software is perhaps the most 
significant factor in creating vulnerabilities, but it is not 
the only factor. Commercial network configurations themselves 
are complex and unique to each user's data processing and 
storage requirements. The correct security settings depend on 
the specific network configuration and operating environment. 
For example, correct security settings depend on the type of 
routers, firewall and intrusion detection software, operating 
environment, and applications software and hardware. Until 
recently, commercial vendors shipped software with the default 
``out of the box'' security settings disabled. Although that 
practice changed in 2001, most software is still shipped with 
security settings only partially enabled because the optimal 
settings depend on the specific network configuration. Systems 
administrators must set a multitude of security parameters in 
an increasingly complex and unique network environment--
security parameters that must be re-assessed each time an 
organization's mission changes, or when software or hardware is 
modified.
    The Government's reliance on commercial software exposes 
Federal agencies to the same types of cyber attacks faced by 
the private sector. Exploit scripts,\7\ which hackers use to 
attack these vulnerabilities, are traded in an underground 
forum. Government systems make unusually attractive targets 
because of the critical information they store.
---------------------------------------------------------------------------
    \7\ Exploit scripts are software programs used by hackers to take 
advantage of system vulnerabilities in order to take control of the 
victim's computer system and execute malicious actions.
---------------------------------------------------------------------------

4. Agencies' Capital Planning and Investment Control processes do not 
        include information technology security.

    Implementation of a robust Capital Planning and Investment 
Control [CPIC] process for information technology would provide 
agencies with an institutionalized, formal process for planning 
and evaluating their information technology investments. The 
CPIC process must include security requirements and costs as 
part of planning and investment decisionmaking if agencies are 
to make informed risk/benefit investment decisions. Even those 
agencies that have implemented a robust CPIC process do not, in 
all cases, include security considerations in their formal 
processes. Only two of the agencies reviewed (the Departments 
of Agriculture and Labor) had a strong, implemented CPIC 
process that included security requirements.
    Unless computer security is fully integrated into an 
institutionalized CPIC process, the Government is at risk of 
continuing to invest billions of dollars in unsecured 
information technology systems.

5. Congress does not have consistent and timely access to the 
        information it needs to fulfill its oversight responsibilities 
        for Federal information security and related budget 
        deliberations.

    Under the reporting requirements of the Security Act, 
agencies are required to report the results of their 
independent evaluations to the OMB. The OMB requires agencies 
to submit plans that identify, assess, prioritize and monitor 
the progress of their efforts to correct identified security 
weaknesses. Together, these evaluations and plans provide 
essential information regarding agencies' identified 
vulnerabilities, and their progress and commitment toward 
rectifying those vulnerabilities. Although the OMB provides 
Congress with an annual summary of these evaluations, Congress 
does not have consistent and timely access to the level of 
information it requires to monitor the status of agency 
computer security efforts.
    During the 107th Congress, the subcommittee reviewed the 
President's Fiscal Year 2003 budget to assess whether agencies 
were making adequate investments to correct the security 
weaknesses identified in the OMB summary report to Congress. 
However, there was such a wide disparity in the level of 
information reported by agencies that no determination could be 
made. For example, the Departments of Energy, Justice, Labor 
and the Treasury specifically proposed budgets to correct most, 
if not all, of their identified material weaknesses. However, 
the remaining budget proposals did not include sufficient 
information to determine whether identified security weaknesses 
would be addressed or not. Specifically, neither the Department 
of the Interior nor the Department of Transportation reported 
on any projects relating to security enhancements. Last year, 
both departments received ``F's'' on the subcommittee's 
computer security report card.
    To oversee the Government's computer security efforts, 
Congress must have access to a full range of information, 
including specific agency vulnerabilities and agency efforts to 
rectify those vulnerabilities, including plans, milestones, 
resources and status.

                           C. RECOMMENDATIONS

    Based on the foregoing findings, the committee recommends 
the following:

1. The Government Information Security Reform Act of 2000 (Security 
        Act) should be strengthened and made permanent.

    The Security Act requires Federal agencies to implement 
agencywide information security programs based on the level of 
risk to their systems, to provide annual independent 
evaluations of their information security programs, and to 
report the results of those evaluations to the OMB. The 
Security Act's requirements have provided Congress and the 
administration with a more complete and accurate picture of 
security weaknesses within Federal information systems. The 
requirements of the act have also established a benchmark with 
which to measure agency progress. However, the Security Act 
expires on November 29, 2002. Allowing this act to expire would 
undermine agencies' commitment toward enhancing their 
information security programs. Moreover, it would eliminate a 
significant source of information for overseeing the 
effectiveness of agency computer security programs and 
measuring their progress. The act has been instrumental in 
attracting the attention of top agency management to the 
importance of computer security, and agencies are beginning to 
address their pervasive systems vulnerabilities. Congress needs 
to sustain this momentum and strengthen the Security Act by 
enacting H.R. 3844, the ``Federal Information Security 
Management Act of 2002.'' The provisions of this legislation 
would:
         reauthorize and expand the Security Act's 
        requirements for annual agency computer security 
        evaluations and reporting;
         require the development, promulgation and 
        compliance with minimum mandatory management controls 
        for securing information and information systems;
         improve accountability and congressional 
        oversight by clarifying the Security Act's reporting 
        requirements and ensuring that Congress and the GAO 
        have access to information security evaluation results;
         clarify the Security Act's requirements for 
        national security systems;
         strengthen agency information security 
        programs, update the responsibilities of the National 
        Institute of Standards and Technology; and
         clarify definitions and legislative 
        language.

2. Sustained congressional oversight is needed.

    Strong, sustained congressional oversight is needed to 
ensure that Federal agencies implement adequate agencywide 
security programs. Thus, Congress should continue oversight 
reviews of agency efforts to comply with the requirements of 
the Security Act and any ensuing reform legislation. As well, 
detailed information on agency computer security efforts, which 
has been mandated by the OMB, should be made available to 
relevant congressional committees and the GAO.

3. Agency funding should be tied to the implementation of effective 
        computer security plans and procedures.

    If agencies fail to dedicate the appropriate resources 
toward resolving their information security problems, Congress 
should provide additional incentives. The OMB is appropriately 
using the budget process to ensure that computer security 
becomes a priority of agency management. Furthermore, the OMB 
has directed agencies to prepare and submit plans of action and 
milestones for all programs and systems in which a security 
weakness has been found. The OMB has stated that it will stop 
funding information technology projects that do not adequately 
address security requirements or requests that neglect to 
document how security planning and funding are integrated into 
the life cycle of the projects. It is too early to evaluate the 
success of this action, however. If substantial improvements to 
agency security policies, processes and practices are not made, 
Congress should consider using its authority to redirect a 
percentage of the agency's appropriated funds toward correcting 
significant security weaknesses.

4. Congress should encourage the administration to set minimum security 
        standards for commercial off-the-shelf software that is 
        purchased by Federal agencies.

    To the extent practical, the Federal Government must become 
an informed consumer and avoid purchasing commercial software 
that contains long-standing and significant vulnerabilities. 
The current practice of releasing software without adequate 
security testing and then developing patches to fix 
vulnerabilities creates an untenable burden on Government 
systems administrators. Federal agencies need a list of 
qualified software products. The list could be based on 
specified tests conducted by the developer or an independent 
Government agency, such as the National Institute of Standards 
and Technology or the National Security Agency; adaptation of a 
software maturity model targeted specifically to security 
processes and practices; or a combination of tests and process 
certifications.

                            II. Conclusions

    Poor computer security is a governmentwide problem. 
Although several agencies have recently taken noteworthy steps 
to strengthen their information security programs, subcommittee 
hearings and other reports continue to find significant 
security weaknesses in computer systems at all 24 major Federal 
departments and agencies. Such weaknesses leave the 
Government's critical operations and assets highly vulnerable 
to cyber attacks.
    In November 2001, the subcommittee gave the Government an 
overall grade of ``F'' for its efforts to protect Federal 
computer systems. This failure should serve as an urgent 
warning that agencies are not making adequate progress in 
addressing their computer security vulnerabilities. The number 
and sophistication of attacks on Government computers continue 
to escalate, thus, increasing the risk to vulnerable Federal 
computer systems and networks.
    Agencies must establish effective agencywide security-
management programs that ensure that sensitive data and 
critical operations are protected. Each program should 
incorporate a strong set of management procedures and an 
organizational framework to identify and assess risks, decide 
what policies and controls are needed, periodically evaluate 
the effectiveness of policies and controls, and take action to 
address identified weaknesses.
    The evaluation and reporting requirements of the Security 
Act provide a more complete evaluation of Federal information 
security efforts than was previously available. Accordingly, 
the reports will allow more effective oversight of agency 
efforts to identify and correct information system 
vulnerabilities.
    Following the terrorist attacks on September 11, 2001, the 
President's Special Advisor for Cyberspace Security warned that 
the enemies of this Nation fully understand the United States' 
reliance on technology and are looking for vulnerabilities to 
exploit. It is imperative that Federal agencies work diligently 
to ensure that the computer systems that support their critical 
operations and the sensitive data they store are adequately 
protected.

                     III. Subcommittee Initiatives


A. Oversight hearing on the extent of the potential threat posed by 
        computer viruses and worms to the workings of the Federal 
        Government.

    The subcommittee held an oversight hearing on computer 
security in San Jose, CA, on August 29, 2001. The hearing 
focused on the threats posed by computer viruses and worms to 
Government operations. Witnesses from both Government and 
industry highlighted the damage caused by a recent rash of 
computer virus and worm attacks. They warned that these viruses 
and worms are becoming increasingly sophisticated and virulent. 
Those attacks could foreshadow potentially more damaging and 
devastating threats to the Nation's critical infrastructures. 
Accordingly, witnesses emphasized the need for proactive 
measures to protect critical operations and assets. As in 
previous reports and testimonies, the General Accounting Office 
noted the importance of Federal agencies establishing strong 
agencywide security management programs that include robust 
security planning, training and oversight. Witnesses from the 
National Security Agency and the Federal Bureau of 
Investigation emphasized the importance of better coordination 
among key Federal organizations to improve their detection, 
prevention and mitigation capabilities. Security experts from 
both the Government and the private sector also stressed the 
importance of designing more secure software products, the need 
for Federal support of research and development in computer 
security, and the need for university programs in information 
security. A witness from Symantec, one of the leading Internet 
security technology companies, stated that agencies could 
prevent 80 percent of possible attacks by adopting the top 20 
percent of good security practices, several of which are as 
simple as using well-chosen passwords.

B. Oversight hearing on the probability of cyber attacks against the 
        Nation's computer-dependent infrastructure.

    Following the September 11, 2001, attacks on New York City 
and Washington, DC, the subcommittee held an oversight hearing 
on computer security on September 26, 2001. This hearing 
focused on the potential threat of cyber attacks by terrorists. 
In addition, the hearing examined the Nation's preparedness to 
deal with such attacks, and what actions must be taken to 
protect the Nation's vital information technology 
infrastructure. Based on recent precedents, cyber attack trends 
and the geopolitical situation, the Director of the Institute 
for Security Technology Studies at Dartmouth College stated 
that the probability of cyber attacks against the U.S. 
information infrastructure was quite high. Witnesses from the 
Government underscored that pervasive security weaknesses in 
Federal information systems make the risk of disruption to 
critical operations extremely likely. A witness from the New 
York Mercantile Exchange emphasized that the September 11 
events created new and unprecedented security demands. These 
demands, such as the need for comprehensive contingency plans 
for restoring critical operations, apply to cyber defense as 
well as to the defense of the Nation's physical infrastructure.

C. Report card grading Federal departments and agencies on their 
        computer security efforts.

    On November 9, 2001, the subcommittee held another hearing 
on computer security, during which it released its second 
annual report card measuring the Federal Government's progress 
in securing its computer systems. The grades were primarily 
based on agency summary reports to the OMB. These reports were 
based on the results of agency program reviews and independent 
evaluations by agency Inspectors General and Chief Information 
Officers, as required by the Security Act. Hearing witnesses 
from both the GAO and the OMB emphasized the importance of 
annual evaluations and reports in holding agencies accountable 
for implementing effective security. They noted that these 
mechanisms enable Congress and the administration to monitor 
agency performance and to take whatever oversight action is 
deemed advisable to remedy identified problems.
    The subcommittee's grades provided a high-level assessment 
of the agencies' overall computer security programs and 
implementation. Armed with more detailed information than in 
the previous year, the subcommittee determined that the Federal 
Government earned a failing grade of ``F'' for its computer 
security efforts. Two-thirds of the agencies evaluated, 
including such critical agencies as the Departments of Defense, 
Energy, Transportation, and Health and Human Services, as well 
as the Nuclear Regulatory Commission, failed completely in 
their computer security efforts. Five agencies received a 
barely passing grade of ``D.'' They included the Federal 
Emergency Management Agency, the General Services 
Administration and the Department of State. The National 
Aeronautics and Space Administration and the Social Security 
Administration both scored ``C's.'' The National Science 
Foundation earned the highest grade--a ``B-plus.'' \8\
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    \8\ See Appendix A.
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D. Oversight hearing on lessons learned from the Government Information 
        Security Reform Act of 2000.

    On March 6, 2002, the subcommittee held a hearing on 
computer security to assess the lessons learned from the 
Security Act. The hearing focused on implementation of the 
Security Act and, in particular, its effectiveness in improving 
the security of Federal information systems. During the 
hearing, the subcommittee examined the development and 
promulgation of security standards; the development of agency 
security programs; and the oversight roles of agency heads, the 
Director of the OMB and the GAO.
    Witnesses from the GAO, the OMB and Federal agencies all 
emphasized the value of the act's reporting requirements in 
fostering senior management accountability and attention to 
computer security issues. As well, it established a security 
baseline from which to measure future agency progress in 
improving computer security. The GAO witness testified that 
agencies had made a significant first step in implementing the 
requirements of the act; however, they had not established 
information security programs consistent with the act's 
requirements. Significant weaknesses still existed in the areas 
of providing security policy guidance, conducting risk 
assessments, developing agencywide security programs, 
implementing adequate security controls, establishing security 
incident centers and conducting security training. The OMB 
witness emphasized that its oversight role, which focuses on 
management implementation of security, will be supported by the 
incorporation of security performance measurements in the 
President's Management Scorecard. Agency witnesses identified 
specific strategies their agencies were using to improve 
implementation of the act. These strategies included reforming 
accreditation and certification processes, improving 
information technology investment review processes and focusing 
security protections on their highest priority assets.

E. Legislative hearing on the ``Federal Information Security Management 
        Act of 2002.''

    On May 2, 2002, the subcommittee held a legislative hearing 
on H.R. 3844, the ``Federal Information Security Management Act 
of 2002,'' introduced by Representative Tom Davis, R-VA. This 
bill would extend the essential provisions of the Government 
Information Security Reform Act of 2000 (Security Act), which 
will expire on November 29, 2002. H.R. 3844 would permanently 
authorize and strengthen the Government's information security 
program evaluation and reporting requirements. H.R. 3844 would 
also require the development, promulgation and agency 
compliance with minimum mandatory management controls for 
securing information and information systems. In addition, the 
bill would require annual agency reporting to the OMB, Congress 
and the Comptroller General, establish a Federal Information 
Security Incident Center, and clarify the definition of and 
evaluation responsibilities for national security systems.
    Witnesses from the GAO, the OMB, agency Chief Information 
Officers and Inspectors General all emphasized the need to 
continue the security management and reporting requirements 
established in the Security Act. Although the Security Act has 
contributed to a substantially improved security posture, 
Federal information systems are far from secure. The GAO 
witness testified that continued authorization of Federal 
information security legislation is essential in order to 
sustain agency efforts toward implementing sound security 
practices, and identifying and correcting the significant 
weaknesses that exist in their systems.
                               APPENDIXES

                                ------                                


               Appendix A.--Computer Security Report Card




         Appendix B.--Basis for Agency Computer Security Grades

    The subcommittee's computer security grades for each of the 
24 major departments and agencies are based on information 
contained in agency reports to the Office of Management and 
Budget [OMB] and audit work conducted by agency Inspectors 
General and the General Accounting Office [GAO].
    In June 2001, the OMB issued reporting guidance to agencies 
on implementing the Security Act.\9\ This guidance outlined 10 
specific topic areas that needed to be included in both the 
Chief Information Officers' and Inspectors General's executive 
summaries. These topic areas refer to the key elements of an 
effective computer-security program. In grading the agencies, 
the subcommittee assigned weighted point values to each of 
these topic areas, with a perfect score totaling 100 points.
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    \9\ See Appendix C for OMB Reporting Guidelines.
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    As shown in the accompanying chart, ``Analysis and Scoring 
Criteria,'' maximum point values were assigned to questions 
according to their importance to an agency's computer security 
program. Since most questions provide a range of possible 
responses, the number of points is proportional to the extent 
to which the element has been implemented. For example, 
agencies received zero (0) points for a response of ``no,'' 
more points for ``partially,'' and the full weighted value for 
``yes.'' Based on its analysis of the Chief Information 
Officers' and Inspector Generals' responses, the subcommittee 
tallied the scores for the 24 agencies.
    Because the level of detail and/or responsiveness of 
reported data was uneven, the subcommittee also considered the 
results of computer security audits conducted by the General 
Accounting Office and agency Inspectors General from July 2000 
through September 2001 examining security weaknesses: \10\ 
Significant weaknesses have been identified for all agencies in 
some or all control categories. Those weaknesses indicate the 
extent to which agencies have actually implemented general 
controls.
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    \10\ GAO routinely tracks the results of computer security audit 
work for the 24 major departments and agencies covered by the Chief 
Financial Officers Act. Results are shown in the accompanying chart 
entitled ``Information Security Audit Results.''
---------------------------------------------------------------------------
    Points were subtracted from the agency's score for each 
control area where significant weaknesses have been found. 
Conversely, if audit work did not identify significant 
weaknesses in a control area, a corresponding number of points 
were added to the agency's score. The point values total 20 
points and are distributed as follows:
         Entity-wide security program planning and 
        management--6 points;
         Access controls--5 points;
         Application development and change 
        controls--2 points;
         System software controls--2 points;
         Segregation of duties controls--1 point; and
         Service continuity controls--4 points.
    Finally, some agencies have one or more control areas that 
have not been sufficiently audited. Because it is unknown 
whether significant weaknesses exist in these areas, a number 
of points equal to half the assigned point value was subtracted 
from the agency's score. An exception was made in the 
``separation of duties'' category, where the full value of 1 
was subtracted in order to prevent using fractions. The final 
numerical score is the result of these adjustments.
    Letter grades for the 24 agencies were assigned as follows:
        90 to 100 = A
        80 to 89 = B
        70 to 79 = C
        60 to 69 = D
        59 and lower = F
    The Government-wide grade was determined by averaging the 
final scores of all 24 agencies.
               Appendix C.--Analysis and Scoring Criteria




                    Appendix D.--Index of Witnesses

    BEMENT, Arden L., Director, National Institute of Standards 
and Technology, U.S. Department of Commerce, March 6, 2002.
    CARPENTER, Jeffrey J., manager, CERT Coordination 
Center, Carnegie Mellon University, August 29, 2001.
    CASTRO, Lawrence, Chief, Defensive Information Operations 
Group, Information Assurance Directorate, National Security 
Agency, August 29, 2001.
    CULP, Scott, manager, Microsoft Security Response Center, 
Microsoft Corp., August 29, 2001.
    DACEY, Robert F., Director, Information Security Issues, 
U.S. General Accounting Office, November 9, 2001; March 6, 
2002; and May 2, 2002.
    DAVIS, Tom M., U.S. House of Representatives, R-VA, 
chairman, Technology and Procurement Policy Subcommittee, March 
6, 2002.
    DEMPSEY, James X., deputy director, Center for Democracy 
and Technology, May 2, 2002.
    DICK, Ronald, Director, National Infrastructure Protection 
Center, Federal Bureau of Investigation, September 26, 2001.
    EVANS, Karen S., Chief Information Officer, U.S. Department 
of Energy, March 6, 2002.
    FORMAN, Mark A., Associate Director, Information Technology 
and E-Government, Office of Management and Budget, November 9, 
20001; March 6, 2002; and May 2, 2002.
    GORRIE, Robert G., Deputy Staff Director, Defensewide 
Information Assurance Program Office, Office of the Assistant 
Secretary of Defense for Command, Control, Communications and 
Intelligence, March 6, 2002.
    GROSS, Roberta L., former Inspector General, National 
Aeronautics and Space Administration, March 6, 2002.
    KUHAR, Patricia, program manager for information 
technology, California State Department of Information 
Technology, August 29, 2001.
    MAIFFRET, Marc, chief hacking officer, eEye Digital 
Security, August 29, 2001.
    MILLER, Harris N., president, Information Technology 
Association of America, August 29, 2001.
    MILLER, Ronald E., Chief Information Officer, Federal 
Emergency Management Agency, May 2, 2002.
    NEUMANN, Peter G., principal scientist, Computer Security 
Laboratory, SRI International, August 29, 2001.
    PETHIA, Richard D., director, CERT Centers, 
Software Engineering Institute, Carnegie Mellon University, 
September 26, 2001.
    RHODES, Keith A., Chief Technologist, Center for Technology 
and Engineering, U.S. General Accounting Office, August 29, 
2001.
    SEETIN, Mark, vice president, Governmental Affairs, New 
York Mercantile Exchange, September 26, 2001.
    TRILLING, Stephen, senior director of advanced concepts, 
Symantec Corp., August 29, 2001.
    VATIS, Michael, director, Institute for Security Technology 
Studies, Dartmouth College, September 26, 2001.
    WILLEMSSEN, Joel, Managing Director, Information Technology 
Issues, U.S. General Accounting Office, September 26, 2001.
    WILLIAMS, David C., Treasury Inspector General for Tax 
Administration, May 2, 2002.
    WISER, Leslie G., Jr., section chief, National 
Infrastructure Protection Center, Federal Bureau of 
Investigation, August 29, 2001.
    WOLF, Daniel G., Director, Information Assurance 
Directorate, National Security Agency, May 2, 2002.
    WU, Benjamin H., Deputy Undersecretary of Commerce for 
Technology Administration, Department of Commerce, May 2, 2002.