Department of Energy: Procedures Lacking to Protect Computerized Data
(Letter Report, 06/05/95, GAO/AIMD-95-118).

Pursuant to a congressional request, GAO provided information on the
alleged sale of surplus Department of Energy (DOE) computer equipment to
a private businessman, focusing on whether: (1) the sale actually
occurred; (2) the surplus computers contained any classified or
sensitive unclassified information; and (3) DOE is subject to Federal
Information Resources Management Regulation (FIRMR) guidance concerning
the security and protection of federal computer resources.

GAO found that: (1) between April 1, 1993, and September 30, 1994, DOE
sold 25 to 50 surplus personal computers to an Idaho salvage dealer; (2)
sales and inventory records did not indicate that the computers were
used for processing classified data; (3) it could not determine whether
the computers contained classified data, since the salvage dealer did
not maintain complete records of the computers purchased; (4) DOE
believes that some of the surplus computers contained sensitive data
because the contractors responsible for disposing of them did not have
written procedures on how to properly sanitize the computers; (5) DOE
has implemented procedures to prevent the improper disclosure of
sensitive data processed on its computers; and (6) DOE is subject to
FIRMR Bulletin C-22 which requires it to establish security safeguards
and procedures to ensure the proper disposition of sensitive automated
information, but it has not taken action to ensure that the provisions
are being implemented at DOE installations.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  AIMD-95-118
     TITLE:  Department of Energy: Procedures Lacking to Protect 
             Computerized Data
      DATE:  06/05/95
   SUBJECT:  Computer security
             Property disposal
             Surplus federal property
             Computer equipment management
             Classified records
             Internal controls
             Personal computers
             Information disclosure
             Information resources management
IDENTIFIER:  Pocatello (ID)
             DOE Classified Automated Information System Security Program
             
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Cover
================================================================ COVER


Report to the Ranking Minority Member, Committee on Governmental
Affairs, U.S.  Senate

June 1995

DEPARTMENT OF ENERGY - PROCEDURES
LACKING TO PROTECT COMPUTERIZED
DATA

GAO/AIMD-95-118

DOE Sensitive Data


Abbreviations
=============================================================== ABBREV

  ADP - automated data processing
  DOE - Department of Energy
  FIRMR - Federal Information Resources Management Regulation
  INEL - Idaho National Engineering Laboratory

Letter
=============================================================== LETTER


B-258977

June 5, 1995

The Honorable John Glenn
Ranking Minority Member
Committee on Governmental Affairs
United States Senate

Dear Senator Glenn: 

This report responds to your request for information regarding an
alleged sale of surplus Department of Energy (DOE) computer equipment
to an Idaho businessman.  Specifically, you asked us to determine
whether (1) the computer sale actually took place and (2) any surplus
computers sold to this businessman contained classified or sensitive
unclassified information.\1 You also asked us to determine whether
DOE is subject to Federal Information Resources Management Regulation
(FIRMR) Bulletin C-22, which provides guidance on the security and
privacy protection of federal computer resources. 


--------------------
\1 DOE Order 1360.2B defines sensitive unclassified information as
data that require protection because of statutory or regulatory
restrictions, or because inadvertent or deliberate misuse,
alteration, disclosure, or destruction could adversely affect
national or other DOE interests. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

Between April 1, 1993, and September 30, 1994, DOE's Idaho National
Engineering Laboratory (INEL) sold at least 25, but perhaps as many
as 50, surplus personal computers to a salvage dealer located in
Pocatello, Idaho.  We could not confirm the actual number of
computers sold because INEL is not required to document the
identities of purchasers of all categories of surplus automated data
processing (ADP) equipment.  In addition, the salvage dealer did not
maintain complete records of computers purchased. 

Sales and inventory records for the 25 computers that we could trace
to the salvage dealer did not indicate that any of these computers
had been designated or used to process classified data.  However, we
could not determine whether other computers sold to the salvage
dealer contained classified data because we could not account for or
examine all computers sold. 

A review by the DOE Idaho Operations Chief Information Officer
concluded that some of the computers sold to the salvage dealer may
have contained sensitive data, but did not determine how many.  The
review reached this conclusion primarily because DOE's contractors
involved in excessing computers that may have contained sensitive
data did not have written procedures explaining how to properly
sanitize the computers. 

At our request, DOE officials reviewed information regarding
contractor personnel who used the 25 computers that could be traced
to the salvage dealer.  The officials told us that they could only
offer positive assurance that 11 of the computers were not used to
process classified or sensitive data.  We examined the contents of
the hard drives on four of the total quantity of computers sold to
the salvage dealer, and found numerous data files related to DOE's
spent nuclear fuel and radioactive waste management activities. 
However, security and program management officials at the Idaho
Operations Office and INEL reviewed these data and determined that
they were not sensitive. 

FIRMR Bulletin C-22 states that federal agencies, including DOE,
should establish security safeguards and procedures to ensure the
proper disposition of sensitive automated information.  Although DOE
has distributed Bulletin C-22 to its field and operations offices, it
has not taken actions to ensure that provisions of the Bulletin are
being implemented, and that all excess computers are properly
sanitized. 


   BACKGROUND
------------------------------------------------------------ Letter :2

INEL was established in 1949 as the National Reactor Testing Station
to develop commercial applications of nuclear power.  It currently
performs systems integration and engineering, research and
development, and project management to support environmental cleanup
and waste management, energy production and use, economic
competitiveness, and national security activities.  INEL is the lead
engineering laboratory for new technologies, and serves as the
applied engineering laboratory for the entire DOE complex. 

INEL is administered by DOE's Idaho Operations Office.  Until
September 1994, its work was performed by five separate management
and operating contractors--EG&G Idaho, Inc.; Westinghouse Idaho
Nuclear Company, Inc.; Babcock and Wilcox Idaho, Inc.; MK-Ferguson
Company; and Protection Technology Idaho, Inc.  In October 1994,
these contractors were replaced by the current contractor, Lockheed
Idaho Technologies Company. 

DOE's property management instructions state that property offices
must report all property that is no longer needed, including ADP
equipment, as excess.  DOE's order on unclassified computer systems
further states that all sensitive unclassified automated information
must be appropriately protected from unauthorized access or
disclosure, and tasks the Director of Information Resources
Management with developing and implementing Departmental policies and
procedures for protecting the transmission of such information. 

Idaho Operations officials stated that at the time of the computer
sales, the INEL contractors were supposed to transfer unneeded ADP
equipment to a property handling facility known as the "PC Store."
This facility was responsible for determining whether the equipment
was reusable or excess, and was supposed to erase any data left on
the hard disk drives.  Equipment declared excess was then forwarded
to an excess warehouse for donation or public sale. 

In accordance with Federal Property Management Regulations, DOE's
excess property is designated in two categories-- reportable and
nonreportable.  At the time of the computer sales, INEL contractors
considered excess property as being reportable to DOE if its
acquisition cost was more than $1,000 and if the property was less
than 8 years old.  DOE sales records for reportable property contain
information identifying the purchasers of excess equipment; however,
DOE sales records for nonreportable property do not contain
information identifying purchasers.  INEL documents showed that
between April 1, 1993, and September 30, 1994, its contractors
excessed over 900 items of ADP property, including 185 pieces of
reportable equipment and 723 pieces of nonreportable equipment. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :3

To address our objectives, we interviewed DOE headquarters and Idaho
Operations Office officials responsible for property and information
resources management; staff in DOE's inspector general's office; and
representatives of Lockheed Idaho Technologies Company.  We also
interviewed several employees who formerly worked for EG&G Idaho,
Inc.  However, we did not interview other representatives of the five
contractors operating INEL when the computers were sold because DOE
had terminated its contracts with them. 

To determine the quantity of computers sold and whether any of the
computers contained classified or sensitive data, we reviewed INEL's
inventory tracking reports and sales records for all excessed ADP
equipment between April 1, 1993, and September 30, 1994.  In
addition, we reviewed Bulletin C-22 and directives detailing DOE
Headquarters and Idaho Operations Office requirements for the
security and disposition of excess computer resources. 

We also interviewed the Idaho salvage dealer and several individuals
to whom the salvage dealer subsequently resold the computers. 
Finally, we examined the contents of the hard drives on four of the
computers sold to the salvage dealer (three computers that the
salvage dealer had not disassembled or resold and one computer that
had been purchased by a local citizen that we could identify).  We
could only examine four of the total quantity of computers sold to
the salvage dealer because he had either disassembled the other
computers or resold them to individuals not identified in his sales
records. 

We performed our work between October 1994 and March 1995 in
accordance with generally accepted government auditing standards.  We
requested comments on a draft of this report from the Secretary of
Energy or her representative.  On May 8, 1995, officials at the
Department of Energy, including the Director of the Office of
Contractor Management and Administration, provided oral comments. 
These comments are discussed in the "Agency Comments and Our
Evaluation" section. 


   COMPUTERS WERE SOLD BUT
   QUANTITY CANNOT BE DETERMINED
------------------------------------------------------------ Letter :4

Between April 1, 1993, and September 30, 1994, DOE's INEL sold at
least 25, but perhaps as many as 50, surplus personal computers to a
salvage dealer located in Pocatello, Idaho.  INEL documents of its
reportable computer sales showed that the salvage dealer purchased 25
personal computers.  However, the salvage dealer told us that he
purchased approximately 50 personal computers. 

We could not determine exactly how many computers were sold because
the items that were sold included both reportable and nonreportable
ADP equipment, and the records of nonreportable property sales do not
identify purchasers.  In addition, the salvage dealer did not
maintain records of all of his computer purchases.  He also told us
that most of the computers had already been sold or disassembled,
making it impossible to accurately count his inventory.  According to
the salvage dealer, working parts from some systems were used to
replace nonworking parts in other systems.  The salvage dealer
estimated that through this process, he had rebuilt and sold about 30
computers to students and other local businesses. 


   CLASSIFIED AND SENSITIVE DATA
   MAY HAVE BEEN COMPROMISED
------------------------------------------------------------ Letter :5

We examined sales and inventory tracking records for the 25 computers
that could be traced to the salvage dealer.  We also examined the
contents of the hard drives on four of the computers that were sold
to the salvage dealer.\2 In both instances, we did not find any
information indicating that the computers had been designated or used
to process classified data.  DOE's Office of Inspector General also
reviewed information and computers related to the computer sales and
determined that classified data had not been compromised. 

DOE directives provide specific guidance for handling computers used
to process classified data.\3 Included in this guidance are
requirements for conspicuous external labels to indicate the highest
classification level of data processed, and for sanitization of the
storage media, memory, and hardware.  An Idaho Operations official
stated that, in accordance with the approved procedures, every
classified computer is sanitized prior to disposal.  However, we
could not determine whether some of the computers sold to the salvage
dealer contained classified data because most of the computers could
not be accounted for or examined. 

INEL contractors could also have sold computers containing sensitive
data.  A review by the DOE Idaho Operations Chief Information Officer
determined that sensitive data may have been left on some of the
computers because the contractors involved in excessing the computers
did not have written procedures explaining how to properly sanitize
the computers.  However, the review did not indicate how many of the
computers may have contained sensitive data. 

At our request, DOE officials reviewed information regarding the
contractor personnel who used the 25 computers that were traced to
the salvage dealer.  The officials could only offer positive
assurance that 11 of the computers had not been used to process
classified or sensitive data; they did not have sufficient
information to determine whether the remaining 14 computers had
processed classified or sensitive data. 

During our examination of four of the computers that were sold to the
salvage dealer, we found numerous files containing data about DOE's
programs and activities.  For example, we found data files
identifying storage locations and estimated inventories of spent
nuclear fuel at DOE sites, as well as plans related to the management
and disposal of high-level radioactive waste.  We provided these data
to Idaho Operations officials and asked them to determine whether any
of these data were classified or sensitive.  In its response, the
Idaho Operations Office stated that a joint review of the data by the
Unclassified Computer Security Coordinator, the Spent Fuel Program
Manager, and INEL's Chemical Process Plant Facility Manager, had
determined that the data were not sensitive. 

According to the review by the Chief Information Officer, the
contractors involved in excessing computers that may have contained
sensitive data did not have (1) written ADP equipment excessing
procedures or (2) the equipment needed to effectively sanitize the
hard drives.  The report also noted that all of the contractors did
not follow the same process for transferring ADP equipment to the
excess warehouse.  For example, some of the contractors sent their
equipment to the PC Store, while others transferred it directly to
the excess warehouse.  The only way that the excess warehouse could
know whether equipment it received had been sanitized was if
annotations in the inventory tracking reports or markings affixed to
the equipment indicated so. 

We reviewed approximately 900 inventory tracking reports for excessed
ADP equipment and found only 10 annotated to state that the hard
drives had been erased or removed.  We also examined computers held
in the excess warehouse and by the salvage dealer, and saw no
markings affixed to any equipment indicating that it had been
sanitized. 

DOE Idaho Operations officials stated that because of the questions
raised regarding the computer sales, they have implemented various
measures aimed at preventing the improper disclosure of sensitive
data processed on their computers.  For example, on August 4, 1994,
the Idaho Operations Office placed a moratorium on the disposal of
all INEL surplus property.  In addition, the Office has issued policy
statements stipulating that all ADP equipment should be purged of all
information processing software and data prior to being excessed. 
However, these policy statements do not contain specific guidance
stating how to sanitize the ADP equipment. 


--------------------
\2 The four computers were among the total quantity of reportable and
nonreportable computers sold to the salvage dealer. 

\3 DOE 5639.6A, Classified Automated Information System Security
Program, and DOE M5639.6A-1, Manual of Security Requirements for the
Classified Automated Information System Security Program, July 15,
1994. 


   DOE IS SUBJECT TO FIRMR
   BULLETIN C-22
------------------------------------------------------------ Letter :6

FIRMR Bulletin C-22 states that federal agencies, including DOE,
should establish internal procedures to ensure the proper disposition
of sensitive automated information.  The Bulletin, issued in
September 1992 and supplemented in July 1994, also provides that
agencies should ensure that contractors acting on their behalf
maintain adequate security at their installations.  The procedures
for the proper disposition of sensitive automated information include
completely removing the sensitive data by either magnetically erasing
it from the disk storage media using approved equipment or by
destroying the storage media. 

An official in DOE's Office of Information Management told us that
they are aware of Bulletin C-22, and that they have distributed the
Bulletin to the field and operations offices for their use.  The
official also told us that they included information about the
Bulletin in DOE's draft Information Systems Security Program Manual,
and have incorporated language requiring the sanitization of excess
ADP equipment in DOE's draft property management regulations and
interim policies for controlling high-risk property.  However, the
official also stated that each office has discretion in how it
chooses to implement the Bulletin, and that DOE has not taken actions
to ensure that provisions of the Bulletin are being implemented.  In
addition, DOE officials stated that field and operations offices do
not have procedures that instruct all contractors on how to properly
dispose of excess ADP equipment, and that they cannot ensure that all
excess computers are properly sanitized. 


   CONCLUSIONS
------------------------------------------------------------ Letter :7

Although our reviews of sales records and some of the computers sold
to the salvage dealer did not reveal any specific instances in which
classified or sensitive data were compromised, DOE's Idaho Operations
Office and INEL may have compromised the security of such data by not
ensuring that all excess computers were adequately sanitized.  DOE's
Idaho Operations Office has begun implementing measures aimed at
preventing disclosures of sensitive systems and data, and the Office
of Information Management has distributed FIRMR Bulletin C-22 to
operations and field offices.  However, these offices have discretion
in how they choose to implement the Bulletin, and DOE has not ensured
that it is being implemented.  In addition, procedures that instruct
all contractors on how to properly dispose of excess ADP equipment
have not been established.  As a result, DOE operations continue to
be at risk of not adequately securing sensitive data. 


   RECOMMENDATION
------------------------------------------------------------ Letter :8

We recommend that the Secretary of Energy direct the Deputy Assistant
Secretaries for Information Management and for Procurement and
Assistance Management to develop and implement procedures in DOE's
operations and field offices that instruct all contractors on the
proper disposal of excess ADP equipment.  These procedures should
include instructions on how contractors should properly sanitize
excess computers.  The Secretary should then require all operations
and field offices to adhere to these procedures when disposing of
excess ADP equipment. 


   AGENCY COMMENTS AND OUR
   EVALUATION
------------------------------------------------------------ Letter :9

DOE officials, including the Director of the Office of Contractor
Management and Administration, provided oral comments on a draft of
this report.  The officials generally concurred with the report's
findings, but disagreed with certain facts and characterizations. 
Specifically, the officials disagreed with our position that
classified data may have been compromised through the sale of surplus
computers.  They stated that our overall discussion of this issue was
misleading and that it portrayed INEL as having sold computers that
contained classified data because it could not prove otherwise.  The
officials stated that it would be more appropriate to assume that no
computers containing classified data were sold because (1) Idaho
Operations officials told us that all computers used to process
classified data were sanitized in accordance with established
procedures and (2) we did not identify any computers containing
classified data during our review. 

We have revised the report to more clearly present our discussion on
classified data.  However, we disagree with the position that we
should assume that no computers containing classified data were sold. 
Although Departmental procedures provide specific guidance for
handling computers used to process classified data, Idaho Operations
Officials were unable to determine whether or not some of the
computers sold had processed classified data.  The lack of
Departmental assurance that all computers were properly sanitized
prior to being excessed increases the possibility that computers
containing both classified and sensitive data may have been sold. 

The officials also expressed concern that the report did not
recognize actions that DOE has taken to implement FIRMR Bulletin
C-22.  The officials highlighted several efforts, including (1)
issuance of the Bulletin to DOE's operations and field offices, (2)
discussion on the Bulletin in DOE's draft Information Systems
Security Program Manual, and (3) incorporation of language requiring
the sanitization of excess ADP equipment in DOE's draft property
management regulations and its interim policies for controlling high-
risk property.  While we agree that these efforts are good first
steps toward ensuring proper and adequate sanitization of excess ADP
equipment, DOE's field and operations offices still have not
implemented procedures to ensure that all contractors properly
dispose of excess ADP equipment.  Without these procedures, DOE
cannot ensure that its operations adequately secure sensitive data. 


---------------------------------------------------------- Letter :9.1

As agreed with your office, unless you publicly announce the contents
of this report earlier, we plan no further distribution until 30 days
after the date of this letter.  At that time, we will send copies of
this report to the Secretary of Energy and to appropriate
congressional committees.  Copies will also be made available to
others upon request. 

Please call me at (202) 512-6253 if you or your staff have any
questions.  Major contributors to this report are listed in appendix
I. 

Sincerely yours,

Joel C.  Willemssen
Director, Information Resources
 Management/Resources, Community,
 and Economic Development


MAJOR CONTRIBUTORS TO THIS REPORT
=========================================================== Appendix I

ACCOUNTING AND INFORMATION
MANAGEMENT DIVISION, WASHINGTON,
D.C. 

Valerie C.  Melvin, Assistant Director
Shirley E.  Todd, Senior Auditor
Keith Rhodes, Technical Assistant Director

DENVER REGIONAL OFFICE

Peter Fernandez, Evaluator-in-Charge

OFFICE OF THE GENERAL COUNSEL

John A.  Carter, Senior Attorney
