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                                                     Calendar No. 215
116th Congress      }                                  {      Report
                                 SENATE
 1st Session        }                                  {      116-112
_______________________________________________________________________

                                     


            INTERNET OF THINGS CYBERSECURITY IMPROVEMENT ACT

                               __________

                              R E P O R T

                                 of the

                   COMMITTEE ON HOMELAND SECURITY AND

                          GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE

                              to accompany

                                 S. 734

               TO LEVERAGE FEDERAL GOVERNMENT PROCUREMENT
             POWER TO ENCOURAGE INCREASED CYBERSECURITY FOR
           INTERNET OF THINGS DEVICES, AND FOR OTHER PURPOSES










              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]







               September 23, 2019.--Ordered to be printed 
                               __________

                      U.S. GOVERNMENT PUBLISHING OFFICE
                      
89-010                     WASHINGTON : 2019 
               
               
               
               
               
               
               
               
               
               
               
        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                    RON JOHNSON, Wisconsin, Chairman
ROB PORTMAN, Ohio                    GARY C. PETERS, Michigan
RAND PAUL, Kentucky                  THOMAS R. CARPER, Delaware
JAMES LANKFORD, Oklahoma             MAGGIE HASSAN, New Hampshire
MITT ROMNEY, Utah                    KAMALA D. HARRIS, California
RICK SCOTT, Florida                  KYRSTEN SINEMA, Arizona
MICHAEL B. ENZI, Wyoming             JACKY ROSEN, Nevada
JOSH HAWLEY, Missouri

                Gabrielle D'Adamo Singer, Staff Director
                   Joseph C. Folio III, Chief Counsel
                   Michael J.R. Flynn, Senior Counsel
               David M. Weinberg, Minority Staff Director
               Zachary I. Schram, Minority Chief Counsel
              Michelle M. Benecke, Minority Senior Counsel
                  Jeffrey D. Rothblum, Minority Fellow
                     Laura W. Kilbride, Chief Clerk













                                                     Calendar No. 215
116th Congress      }                                  {      Report
                                 SENATE
 1st Session        }                                  {      116-112

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

 
            INTERNET OF THINGS CYBERSECURITY IMPROVEMENT ACT

                                _______
                                

               September 23, 2019.--Ordered to be printed

                                _______
                                

 Mr. Johnson, from the Committee on Homeland Security and Governmental 
                    Affairs, submitted the following

                              R E P O R T

                         [To accompany S. 734]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Homeland Security and Governmental 
Affairs, to which was referred the bill (S. 734) to leverage 
Federal Government procurement power to encourage increased 
cybersecurity for Internet of Things devices, and for other 
purposes, having considered the same, reports favorably thereon 
with an amendment (in the nature of a substitute) and 
recommends that the bill, as amended, do pass.

                                CONTENTS

                                                                   Page
  I. Purpose and Summary..............................................1
 II. Background and Need for the Legislation..........................2
III. Legislative History..............................................4
 IV. Section-by-Section Analysis......................................5
  V. Evaluation of Regulatory Impact..................................6
 VI. Congressional Budget Office Cost Estimate........................7
VII. Changes in Existing Law Made by the Bill, as Reported............8

                         I. PURPOSE AND SUMMARY

    The purpose of S. 734, the Internet of Things Cybersecurity 
Improvement Act of 2019, is to proactively mitigate the risks 
posed by inadequately-secured Internet of Things (IoT) devices 
through the establishment of minimum security standards for IoT 
devices purchased by the Federal Government. The bill codifies 
the ongoing work of the National Institute of Standards and 
Technology (NIST) to develop standards and guidelines, 
including minimum-security requirements, for the use of IoT 
devices by Federal agencies. The bill also directs the Office 
of Management and Budget (OMB), in consultation with the 
Department of Homeland Security (DHS), to issue the necessary 
policies and principles to implement the NIST standards and 
guidelines on IoT security and management.
    Additionally, the bill requires NIST, in consultation with 
cybersecurity researchers and industry experts, to publish 
guidelines for the reporting, coordinating, publishing, and 
receiving of information about Federal agencies' security 
vulnerabilities and the coordinate resolutions of the reported 
vulnerabilities. OMB will provide the policies and principles 
and DHS will develop and issue the procedures necessary to 
implement NIST's guidelines on coordinated vulnerability 
disclosure for Federal agencies. The bill includes a provision 
allowing Federal agency heads to waive the IoT use and 
management requirements issued by OMB for national security, 
functionality, alternative means, or economic reasons.

              II. BACKGROUND AND THE NEED FOR LEGISLATION

    More than eight billion IoT devices--devices that 
wirelessly connect to the internet and transmit data--are 
connected to our information systems and networks.\1\ According 
to industry reports, the number of IoT devices will be as high 
as 50 billion by 2025.\2\ This exponential increase of IoT 
devices introduces an unparalleled attack surface for hackers 
to exploit. According to industry experts, by 2020 
approximately 25 percent of cyberattacks will target these 
devices.\3\ This is because many IoT devices lack necessary 
safeguards, leaving the systems and networks they are connected 
to vulnerable to cyberattacks.\4\ Peter Winston, Chief 
Executive Officer and Founder of Integrated Computer Solutions, 
commented on the need to ensure the security of IoT devices:
---------------------------------------------------------------------------
    \1\Matt Toomey, IoT Device Security Seriously-Neglected, Aberdeen 
(Feb. 15, 2018), https://www.aberdeen.com/techpro-essentials/iot-
device-security-seriously-neglected/.
    \2\Mckinsey Global Institute, https://www.mckinsey.com/ /media/
McKinsey/Business%20 Functions/McKinsey%20Digital/Our%20Insights/
The%20Internet%20of%20Things%20The%20 
value%20o%20digitizing%20the%20physical%20world/The-Internet-of-things-
Mapping-the-value-beyond-the-hype.ashx.
    \3\Matt Toomey, supra note 1.
    \4\Id.

    Ultimately, security needs to be baked into every device at 
the operating system level. It shouldn't be up to an individual 
vendor at the application level. And the level of device 
security should match the audience. If you're selling your 
connected device to the [Central Intelligence Agency (CIA)]--if 
it has to work in a highly secure building, a place where a 
breach could be catastrophic--there's a different expectation 
than if you're selling a toy. Yes, they both require you to 
lock the doors and windows. But for the CIA, you also need to 
seal every crack and add multiple deadlocks to reinforced 
doors.\5\
---------------------------------------------------------------------------
    \5\Id.

    The Committee recognizes the challenges Federal agencies 
face in leveraging limited resources and navigating a 
cumbersome Federal procurement process to acquire and securely 
modernize information technologies.\6\ Building upon recent 
Federal reports, the work of the Government Accountability 
Office (GAO), and congressional hearings, this legislation will 
ensure federal agencies are operating under policies and 
practices for IoT devices before they become prolific on 
federal networks.
---------------------------------------------------------------------------
    \6\Mitigating America's Cybersecurity Risks: Hearing Before the S. 
Comm. on Homeland Sec. & Governmental Affairs, 115th Cong. (2018) 
(testimony of Jeanette Manfra, Assistant Secretary, Department of 
Homeland Security), available at https://www.hsgac.senate.gov/imo/
media/doc/.
---------------------------------------------------------------------------
    The traditional challenges facing Federal information 
technology are exacerbated by the lack of widely adopted 
information security standards and best practices for IoT 
technologies.\7\ In April 2018, the Committee held a hearing 
entitled, Mitigating America's Cybersecurity Risks, to discuss 
a range of Federal cybersecurity challenges, including the 
exponential growth of IoT devices in use on Federal 
networks.\8\ Co-Director of the Harvard University Belfer 
Center for Science and International Affairs, Eric Rosenbach 
testified on the importance of ``establish[ing] baseline 
security standards for the manufacturers and distributors of 
[IoT] devices.''\9\ While cautioning against a regulatory 
approach, Mr. Rosenbach supported the idea of using government 
procurement reform as a ``good place to start'' in advancing 
the secure procurement and use of IoT devices.\10\
---------------------------------------------------------------------------
    \7\Id.; see also U.S. Gov't Accountability Office, GAO-17-75, 
Technology Assessment: Internet of Things, Status and Implications of 
An Increasingly Connected World (May 2017), available at https://
www.gao.gov/assets/690/684590.pdf.
    \8\Mitigating America's Cybersecurity Risks, supra note 6.
    \9\Id. (Testimony of Eric Rosenbach).
    \10\Id.
---------------------------------------------------------------------------
    Security baselines for IoT devices are necessary as 
designers and manufactures are not producing IoT devices with 
basic cybersecurity measures baked into their products. In May 
2017, GAO published a technology assessment of IoT. The 
assessment found, among other things, ``[widespread] concerns 
have been raised about the lack of security controls in many 
IoT devices, which is in part because many vehicles, equipment, 
and other increasingly IoT-enabled devices were built without 
anticipating threats associated with Internet connectivity or 
the requisite security controls.''\11\ The implications of 
these findings were illustrated by the 2016 Mirai botnet 
attack, which exploited basic vulnerabilities in IoT technology 
to compromise an estimated 493,000 devices.\12\
---------------------------------------------------------------------------
    \11\GAO-17-75 at 28, supra note 7.
    \12\Joshua Abramson, DDoS Attacks: Bigger, Stronger, Scarier, 
SYMANTEC CORP. (Apr. 19, 2016), https://www.symantec.com/connect/blogs/
ddos-attacks-bigger-stronger-scarier.
---------------------------------------------------------------------------
    In May, 2019 the Secretaries of Commerce and Homeland 
Security published a report entitled, Enhancing the Resilience 
of the Internet and Communications Ecosystem Against Botnets 
and Other Automated, Distributed Threats.\13\ Among the 
findings of this report are that IoT devices need to be secure 
during all stages of the technology lifecycle and that market 
incentives are not aligned with the cybersecurity best 
practices.\14\ In 2018, DHS Assistant Secretary for 
Cybersecurity and Communications, Janette Manfra, echoed this 
idea during testimony before the Committee by stating that the 
Federal Government needs a ``higher level framework'' led by 
OMB to manage cybersecurity risk related to IoT devices that 
includes basic authentication measures.\15\
---------------------------------------------------------------------------
    \13\Sec. of Commerce, Sec. of Homeland Security, Enhancing the 
Resilience of the Internet and Communications Ecosystem Against Botnets 
and Other Automated, Distributed Threats. (May 22, 2018) available at 
https://www.commerce.gov/sites/default/files/media/files/2018/eo_13800_ 
botnet_report_-_finalv2.pdf.
    \14\Id. at 8.
    \15\Mitigating America's Cybersecurity Risks, supra note 6 
(Testimony of Janette Manfra).
---------------------------------------------------------------------------
    As a result, IoT device security does not end with the 
design, manufacture, and procurement of the device; rather 
ongoing efforts are necessary to discover and remediate 
vulnerabilities that create the potential for exploitation by 
bad actors. The Federal Cybersecurity Risk Determination Report 
and Action Plan, published by OMB, found that ``[a]n agency's 
ability to mitigate security vulnerabilities is a direct 
function of its ability to identify those vulnerabilities 
across the enterprise.''\16\ To affectively secure IoT devices 
in use on Federal networks, a comprehensive vulnerability 
disclosure program is an important step in identifying 
vulnerable IoT on a network.
---------------------------------------------------------------------------
    \16\Office of Management and Budget, Executive Office of the 
President, Federal Cybersecurity Risk Determination Report and Action 
Plan, 12 (2018), available at https://www.whitehouse.gov/wp-content/
uploads/2018/05/Cybersecurity-Risk-Determination-Report-FINAL_May-2018-
Release.pdf.
---------------------------------------------------------------------------
    The success of the ``Hack the Pentagon'' program led to the 
establishment of a formal Vulnerability Disclosure Policy 
(VDP),\17\ as well as legislation codifying DHS authority to 
create a process to easily report and mitigate 
vulnerabilities.\18\ Standards, policies, and practices for VDP 
of information technology, including IoT, consistent with the 
authorities and responsibilities established in the Federal 
Information Security Modernization Act of 2014 (FISMA14),\19\ 
is a fundamental aspect of securing networked technologies over 
the course of their life-cycle.
---------------------------------------------------------------------------
    \17\Id.
    \18\Pub. L. No. 115-390, Title I Sec. 101, (H.R. 7327, the 
``SECURE'' Technology Act).
    \19\Federal Information Security Modernization Act of 2014, Pub. L. 
No. 113-283, 44 U.S.C. Sec. 3553(a)(1).
---------------------------------------------------------------------------
    Federal agencies can better ensure the security of their 
networks with IoT devices that have basic cybersecurity 
requirements engineered into the devices, and with IT systems 
that are maintained throughout their life-cycle in a secure 
fashion. S. 734 codifies the ongoing work of NIST, OMB, and DHS 
to improve the resilience of IoT devices and Federal networks 
through enterprise-wide policies and procedures to manage this 
rapidly expanding emerging technology. The legislation ensures 
that the technical guidance developed by NIST on the security 
of IoT devices, from procurement to use, is implemented in 
policy and practice across the Federal enterprise. NIST has 
already begun to develop standards and guidelines necessary to 
help ``federal agencies and other organizations better 
understand and manage the cybersecurity and privacy risk 
associated with their IoT devices throughout the devices 
lifecycle.''\20\ Due to NIST's ongoing efforts to develop the 
information security standards and best practices for IoT 
management and use, this legislation did not further define the 
categories, computer functions, or types of devices covered 
under the term IoT to ensure NIST's work is not delayed.
---------------------------------------------------------------------------
    \20\National Institute of Standards and Technology, NIST IR 8228, 
Considerations for Managing IoT Cybersecurity and Privacy Risks (June 
2019).
---------------------------------------------------------------------------

                        III. LEGISLATIVE HISTORY

    Senator Mark R. Warner (D-VA) introduced S. 734 on June 19, 
2019, with Senator Cory Gardner (R-CO), Senator Margaret Wood 
Hassan (D-NH), and Senator Steve Daines (R-MT).
    The Committee considered S. 734 at a business meeting on 
June 19, 2019. During the business meeting, Chairman Ron 
Johnson offered a substitute amendment as modified that removed 
the definition of IoT and clarified DHS's role in the 
development of OMB's guidelines for IoT devices, and in leading 
the VDP. S. 734 was ordered reported favorably as amended by 
the Johnson Substitute Amendment as modified by voice vote en 
bloc. The Senators present for the voice vote were Johnson, 
Portman, Paul, Lankford, Romney, Scott, Enzi, Hawley, Peters, 
Carper, Hassan, Sinema and Rosen.

        IV. SECTION-BY-SECTION ANALYSIS OF THE BILL, AS REPORTED

Section 1. Short title

    This section established that the bill may be cited as the 
``Internet of Things Cybersecurity Improvement Act of 2019'' or 
the ``IoT Cybersecurity Improvement Act of 2019.''

Section 2. Definitions

    This section includes definitions of the terms ``Agency,'' 
``Director,'' ``Information System,'' ``Secretary,'' and 
``Security Vulnerability.''

Section 3. National Institute of Standards and Technology 
        considerations and recommendations regarding managing Internet 
        of Things cybersecurity risks

    Subsection (a) requires the Director of the NIST to 
develop, consistent with ongoing efforts, standards and 
guidelines for the Federal government on the appropriate use 
and management of Internet of things devices, including 
cybersecurity risks.
    Subsection (b) requires the Director of NIST to brief 
appropriate committees of Congress on the increasing 
convergence of traditional information technology devices, 
networks, and systems.

Section 4. Policies and principles for Federal agencies on use and 
        management of Internet of Things devices

    Subsection (a) requires the Director of OMB, in 
consultation with the Secretary of Homeland Security, to issue 
policies and principles consistent on the use of IoT devices 
based on the standards and guidelines developed under section 
3(a).
    Subsection (b) requires that the policies and guidelines 
developed by OMB for IoT devices is consistent with the Federal 
Information Security Management Act, as found in subchapter II 
of chapter 35 of title 44, of United States Code.
    Subsection (c) requires the Director of OMB and Secretary 
of Homeland Security to regularly review the policies and 
principles for the use and management of IoT devices.

Section 5. Guidelines on coordinated disclosure of security 
        vulnerabilities relating to information systems, including 
        Internet of Things devices

    Subsection (a) requires the Director of NIST, in 
consultation with cybersecurity researchers and private-sector 
industry experts, to establish guidelines for reporting, 
coordinating, publishing, and receiving of information about 
and the resolution of security vulnerabilities related to 
agency information systems.
    Subsection (b) lays out the elements of the coordinated 
vulnerability disclosure guidelines. The guidelines shall be 
consistent with industry best practices and Standards 29147 and 
30111 of the International Standards Organization; and shall 
incorporate vulnerability information on IoT devices and how to 
disseminate information on the resolution of security or 
personal information vulnerabilities on agency information 
systems.
    Subsection (c) requires the Director of OMB and Secretary 
of Homeland Security to regularly review the policies and 
principles for the use and management of IoT devices.
    Subsection (d) required the Director of OMB to provide 
oversight and implement the guidelines laid out in section 5 
subsection (a) of this bill.
    Subsection (e) requires that the Secretary of DHS provide 
technical and operational assistance to implement section 5 
subsection (a) of this bill.

Section 6. Implementation of coordinated disclosure of security 
        vulnerabilities relating to agency information systems, 
        including Internet of Things devices

    Subsection (a) requires that, once the Director of NIST 
publishes guidelines required under section 5(a), within 180 
days, the Director of OMB should publish policies on 
vulnerabilities regarding information systems and IoT devices.
    Subsection (b) establishes procedures whereby the Secretary 
of DHS and Director of OMB develop procedures for each Federal 
agency to publish and receive information on vulnerabilities 
regarding information systems and IoT devices.
    Subsection (c) creates a limitation to subsection (b) that 
prohibits agencies to use or acquire IoT devices from 
contractors if the contractors fail to comply with section 
5(a).
    Subsection (d) requires the Secretary of DHS to ensure that 
procedures outlined by subsection (b) are consistent with NIST 
standards.

Section 7. Waiver

    This section allows the head of an agency to use an IoT 
device without regard to any policy under several requirements. 
The requirements include that the IoT device is necessary for 
research or national security, appropriate to the function of a 
device, secured, and of a greater quality or of a lesser cost 
than one that already meets guidelines.

                   V. EVALUATION OF REGULATORY IMPACT

    Pursuant to the requirements of paragraph 11(b) of rule 
XXVI of the Standing Rules of the Senate, the Committee has 
considered the regulatory impact of this bill and determined 
that the bill will have no regulatory impact within the meaning 
of the rules. The Committee agrees with the Congressional 
Budget Office's statement that the bill contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform bill (UMRA) and would impose no costs 
on state, local, or tribal governments.

             VI. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

                                     U.S. Congress,
                               Congressional Budget Office,
                                Washington, DC, September 13, 2019.
Hon. Ron Johnson,
Chairman, Committee on Homeland Security and Governmental Affairs, U.S. 
        Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 734, the Internet of 
Things Cybersecurity Improvement Act of 2019.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is David Hughes.
            Sincerely,
                                         Phillip L. Swagel,
                                                          Director.
    Enclosure.

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

    Under S. 734, the National Institute of Standards and 
Technology (NIST) would develop guidelines on the appropriate 
and secure use of Internet of things (IoT) devices by federal 
agencies and develop minimum information security requirements 
for agencies to manage security vulnerabilities for those 
devices.\1\ In addition, the Office of Management and Budget 
(OMB) would promulgate standards for federal IoT devices that 
are consistent with NIST's standards and guidelines. OMB would 
review and revise those standards at least once every five 
years and develop waivers to exclude certain IoT devices. OMB 
would report to the Congress annually from 2020 through 2025 on 
the effectiveness of the standards and on the types and number 
of excluded devices.
---------------------------------------------------------------------------
    \1\The IoT consists of devices connected to one another and to a 
network for exchanging data without human interaction. See Suzy E. 
Park, Internet of Things (IoT): An Introduction, In Focus Report 11239 
(Congressional Research Service, June 4, 2019), https://go.usa.gov/
xVcdR.
---------------------------------------------------------------------------
    Under S. 734, NIST also would publish standards for federal 
agencies, contractors, and vendors to systematically report and 
resolve security vulnerabilities for IoT devices. Each agency's 
chief information officer would be required to ensure 
compliance. OMB would establish federal standards for that 
coordinated reporting process that are consistent with NIST's 
standards and guidelines.
    Using information from NIST, CBO estimates that 
implementing the bill would cost $35 million over the 2019-2024 
period, assuming appropriation of the necessary amounts.
    The costs of the legislation (detailed in Table 1) fall 
within budget function 370 (commerce and housing credit).

                 TABLE 1.--ESTIMATED INCREASES IN SPENDING SUBJECT TO APPROPRIATION UNDER S. 734
----------------------------------------------------------------------------------------------------------------
                                                                 By fiscal year, millions of dollars--
                                                      ----------------------------------------------------------
                                                        2019    2020    2021    2022    2023    2024   2019-2024
----------------------------------------------------------------------------------------------------------------
Estimated Authorization..............................       0      11       6       6       6       6        35
Estimated Outlays....................................       0      11       6       6       6       6        35
----------------------------------------------------------------------------------------------------------------

    In 2020, CBO estimates that NIST and OMB would spend a 
total of $11 million to develop the IoT guidelines and 
standards. Of that amount CBO estimates that NIST would spend a 
little more than $3 million to hire 11 employees and that OMB 
would spend about $350,000 to hire 2 employees. Those newly 
hired NIST staff would develop the new federal guidelines and 
provide technical assistance to federal agencies. In addition, 
CBO estimates that NIST would spend a little more than $3 
million to hire contractors and convene workshops to assist 
with guideline development. Finally, CBO estimates that NIST 
would spend around $4 million to update their National 
Vulnerability Database (NVD) to account for the vulnerability 
of IoT data.
    After 2020, CBO estimates that NIST and OMB would spend 
approximately $6 million annually to update the IoT guidelines 
and standards, report to Congress, and further update the NVD.
    On September 13, 2019, CBO transmitted a cost estimate for 
H.R. 1668, the Internet of Things Cybersecurity Improvement Act 
of 2019, as ordered reported by the House Committee on 
Oversight and Reform on June 12, 2019. S. 734 and H.R. 1668 are 
similar and CBO's cost estimates are the same for both pieces 
of legislation.
    The CBO staff contact for this estimate is David Hughes. 
The estimate was reviewed by H. Samuel Papenfuss, Deputy 
Assistant Director for Budget Analysis.

       VII. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    Because this legislation would not repeal or amend any 
provision of current law, it would not make changes in existing 
law within the meaning of clauses (a) and (b) of paragraph 12 
of rule XXVI of the Standing Rules of the Senate.

                                  [all]