Information Security: Weaknesses Place Commerce Data and	 
Operations at Serious Risk (03-AUG-01, GAO-01-1004T).		 
								 
This testimony discusses information security controls over	 
computer systems at the Department of Commerce. Dramatic	 
increases in computer interconnectivity, especially in the use of
the Internet, are revolutionizing the way the government, the	 
nation, and much of the world communicate and conduct business.  
However, this widespread interconnectivity also poses significant
risks to the nation's computer systems and to the critical	 
operations and infrastructures they support. This testimony	 
provides information on the effectiveness of Commerce's (1)	 
logical access controls and other information system controls	 
over its computerized data, (2) incident detection and response  
capabilities, and (3) information security management program and
related procedures.						 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-01-1004T					        
    ACCNO:   A01520						        
  TITLE:     Information Security: Weaknesses Place Commerce Data and 
             Operations at Serious Risk                                       
     DATE:   08/03/2001 
  SUBJECT:   Computer security					 
	     Information systems				 
	     Information technology				 
	     Information resources management			 

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GAO-01-1004T
     
For Release on Delivery Expected at 9: 30 a. m. EDT Friday, August 3, 2001

GAO- 01- 1004T

INFORMATION SECURITY

Weaknesses Place Commerce Data and Operations at Serious Risk

Statement of Robert F. Dacey Director, Information Security Issues Testimony

Before the Subcommittee on Oversight and Investigations, Committee on Energy
and Commerce, House of Representatives

United States General Accounting Office

GAO

Page 1 GAO- 01- 1004T

Mr. Chairman and Members of the Committee: I am pleased to be here today to
discuss our analysis of the information security controls over unclassified
systems of the Department of Commerce (Commerce). Dramatic increases in
computer interconnectivity, especially in the use of the Internet, are
revolutionizing the way our government, our nation, and much of the world
communicate and conduct business, bringing vast amounts of information and
myriad resources and activities literally at our fingertips. However, along
with the enormous benefits it brings, this widespread interconnectivity
poses significant risks to our computer systems, and more important, to the
critical operations and infrastructures they support.

As with other organizations, Commerce relies extensively on computerized
systems and electronic data to support its mission. Moreover, Commerce
generates and disseminates some of the nation's most important economic
information that is of paramount interest to U. S. businesses, policymakers,
and researchers. Accordingly, the security of its systems and data is
essential to avoiding disruption in critical operations, data tampering,
fraud, and inappropriate disclosure of sensitive information. Further, there
has be a dramatic rise in the number and sophistication of cyberattacks on
federal information systems. My testimony today specifically focuses on the
effectiveness of Commerce?s (1) logical access controls and other
information system controls over its computerized data, 1 (2) incident
detection and response capabilities, 2 and (3) information security
management program and related procedures. 3 We reviewed Commerce?s
information security controls and currently have a draft report at Commerce
for comment.

1 Logical access controls are controls designed to protect computer
resources from unauthorized modification, loss, or disclosure, specifically
those controls that prevent or detect unauthorized access to sensitive data
and programs that are stored or transmitted electronically. 2 Incident
detection is the process of identifying that an intrusion has been
attempted, is occurring, or has occurred. Incident response is an action or
series of actions constituting a reply or reaction against an attempted or
successful intrusion. 3 Because of the sensitivity of specific weaknesses,
we do not discuss them here, but plan to issue a report designated for
"Limited Official Use," which describes in more detail the logical access
control weaknesses identified.

Page 2 GAO- 01- 1004T

At the seven Commerce organizations we reviewed, 4 significant and pervasive
computer security weaknesses exist that place sensitive Commerce systems 5
at serious risk. Using readily available software and common techniques, we
demonstrated the ability to penetrate sensitive Commerce systems from both
inside Commerce and remotely, such as through the Internet. Individuals,
both within and outside Commerce, could gain unauthorized access to these
systems and read, copy, modify, and delete sensitive economic, financial,
personnel, and confidential business data. Moreover, intruders could disrupt
the operations of systems that are critical to the mission of the
department. Additionally, unauthorized access to sensitive systems may not
be detected in time to prevent or minimize damage. The underlying cause for
the numerous weaknesses we identified was the lack of an effective program
to manage information security.

We identified vulnerabilities in four key areas in the bureaus we reviewed:

First, controls intended to protect information systems and critical data
from unauthorized access are ineffectively implemented, leaving sensitive
systems highly susceptible to intrusions or disruptions. Specifically,

Systems were either not configured to require passwords- including powerful
systems administrator accounts- or, if passwords were required, they were
relatively easy to guess, such as the word

?password? or commonly known default passwords supplied by vendors. Further,
(1) a significant number of passwords never expired, (2) individuals had
unlimited attempts to guess passwords, and (3) unencrypted passwords,
including those having powerful system administrator functions, could be
widely viewed. Commerce bureaus also granted excessive system administration
privileges to employees who did not require them, including 20 individuals
who had powerful system privileges that should be used only in exceptional
circumstances, such as recovery from a power failure.

4 The Commerce organizations we reviewed were the Office of the Secretary,
the Bureau of Export Administration, the Economic Development
Administration, the Economics and Statistics Administration, the
International Trade Administration, the Minority Business Development
Agency, and the National Telecommunications and Information Administration.
For the sake of simplification, throughout this testimony, we use the term
"bureaus" to refer to all seven of the Commerce organizations, although the
Office of the Secretary is not actually a bureau. 5 By ?sensitive" systems
we refer to the systems that Commerce has defined as critical to the mission
of the Department as well as systems that fit OMB Circular A- 130, Appendix
III, criteria for requiring special protection.

Page 3 GAO- 01- 1004T

The configuration of Commerce operating systems exposed excessive amounts of
system information to anyone, without the need for authentication, allowing
potential attackers to collect systems information that could be used to
circumvent security controls and gain unauthorized access. In addition,
Commerce did not properly configure operating systems to ensure that they
would be available to support bureau missions or prevent the corruption of
important data. For example, in a large computer system affecting several
bureaus, thousands of important programs had not been assigned unique names,
which could result in unintended programs being inadvertently run,
potentially corrupting data or disrupting system operations. In this same
system, because critical parts of the operating system were shared by the
test and production systems, changes in either system could corrupt or shut
down the other system. Additionally, unnecessary and poorly configured
system functions existed on important computer systems in all bureaus we
reviewed, allowing us to gain access from the Internet.

None of the Commerce bureaus reviewed had effective external and internal
network security controls. Our testing demonstrated that individuals, both
within and outside Commerce, could compromise external and internal security
controls to gain extensive unauthorized access to the department?s networks
and systems. We obtained such access as a result of weakly configured
external control devices, poorly controlled dial- up modems, and ineffective
internal network controls.

Second, we found other control weaknesses, including inadequate (1)
segregation of computer duties of the staff to mitigate the risk of errors
or fraud, (2) control of software changes to ensure that only authorized and
fully tested software is placed in operation, and (3) development of
comprehensive and completed recovery plans to ensure the continuity of
service in the event of a service disruption.

Third, Commerce is not adequately (1) preventing intrusions before they
occur, (2) detecting intrusions as they occur, (3) responding to successful
intrusions, or (4) reporting intrusions to staff and management. Thus, there
is little assurance that unauthorized attempts to access sensitive
information will be identified and appropriate actions taken in time to
prevent or minimize damage. For example, Commerce has not instituted key
measures to prevent incidents, such as acquiring software updates to correct
known vulnerabilities. During our testing we discovered 20 systems with
known vulnerabilities for which patches were available but not installed. As
a result of ineffective detection capabilities, the tested bureaus were
generally unable to detect our extensive intrusion activities (only two of
the bureaus had installed intrusion detection systems). Also,

Page 4 GAO- 01- 1004T

only one of the bureaus has established incident response procedures; in two
of five instances when our activity was detected, Commerce employees who
detected our testing inappropriately responded by launching attacks against
our systems. Moreover, these two incidents were never reported to the
bureaus? security officer.

Fourth, and most important, Commerce does not have an effective
departmentwide information security management program to ensure that
sensitive data and critical operations are adequately addressed and that
appropriate security controls are in place to protect them. Key issues
include

Lack of a strong centralized management function to oversee and coordinate
departmentwide security- related activities. At the time of our review,
Commerce's CIO, who had broad responsibility for information security
throughout the department, said that he believed that he did not have
sufficient resources or the authority to implement this program. This lack
of a centralized approach to managing security is particularly risky
considering the widespread interconnectivity of Commerce's systems.

Widespread lack of risk assessment. Commerce is doing little to understand
and manage risks to its systems. For example, as of March 2001, of the
bureaus' 94 sensitive systems we reviewed, 91 did not have documented risk
assessments, 87 had no security plans, and none were authorized 6 for
processing by Commerce management. Consequently, most of the bureaus'
systems are being operated without considering the risks associated with
their immediate environment. Moreover, several bureau officials acknowledged
that they had not considered how vulnerabilities in systems that
interconnected with theirs could undermine the security of their own
systems.

Significantly outdated and incomplete information security policies.
Commerce's information security policy, developed in 1993 and partially
revised in 1995, does not reflect current federal requirements for managing
computer security on a continuing basis, developing security plans,
authorizing processing, providing security awareness training, or performing
system reviews. Moreover, Commerce has not updated its policy to reflect the
risks of Internet use and has no policies establishing baseline security
requirements for all systems. For example, there is no policy specifying
required attributes

6 Authorization is the acceptance of risk by management, resulting in a
formal approval for the system to become operational or remain so after
significant system changes have been made.

Page 5 GAO- 01- 1004T

for passwords, such as minimum length and the inclusion of special
characters.

Inadequately promoted security awareness and training.

Although each of the seven bureaus reviewed have informal programs in place,
none have documented computer security training procedures that meet federal
requirements for ensuring that security risks and responsibilities are
understood by all managers, users, and system administrators.

Lack of an ongoing program to test and evaluate security controls. No
oversight reviews of the Commerce bureaus? systems have been performed by
the staff of Commerce?s information security program. Furthermore, the
bureaus we reviewed do not monitor the effectiveness of their information
security. Only one of the bureaus has performed isolated tests of its
systems.

The lack of an effective information security program is exacerbated by
Commerce's highly interconnected computing environment in which the
vulnerabilities of individual systems affect the security of systems in the
entire department. A compromise in a single poorly secured system can
undermine the security of the multiple systems that connect to it.

In the last 2 years, the Commerce CIO introduced several initiatives to
improve the security posture of the department, including a summary
evaluation of information security based on bureau self- assessments and
related follow- up. Also, in June 2001, after our fieldwork was completed,
the Secretary of Commerce approved a high- level Commerce information
technology (IT) restructuring plan. The acting CIO stated that Commerce is
developing a more detailed implementation plan. Regardless of its particular
approach, we have made recommendations that Commerce needs to implement in
order to address the weaknesses in its information security controls.

In the rest of my statement today, I will discuss in more detail the results
of our review of Commerce?s information security controls; these results are
included in our draft report, which also contains more detailed
recommendations.

Information security is an important consideration for any organization that
depends on information systems to carry out its mission. The dramatic
expansion in computer interconnectivity and the exponential increase in the
use of the Internet are changing the way our government, the nation, and
much of the world communicate and conduct business. Background

Page 6 GAO- 01- 1004T

However, risks are significant, and they are growing. The number of computer
security incidents reported to the CERT Coordination Center (CERT/ CC) 7
rose from 9,859 in 1999 to 21,756 in 2000. For the first 6 months of 2001,
the number reported was 15,476.

As the number of individuals with computer skills has increased, more
intrusion or ?hacking? tools have become readily available and relatively
easy to use. A potential hacker can literally download tools from the
Internet and "point and click" to start a hack. According to a recent
National Institute of Standards and Technology (NIST) publication, hackers
post 30 to 40 new tools to hacking sites on the Internet every month. The
successful cyber attacks against such well- known U. S. ecommerce Internet
sites as eBay, Amazon. com, and CNN. com by a 15- year old "script kiddie" 8
in February 2000 illustrate the risks. Without proper safeguards, these
developments make it easier for individuals and groups with malicious
intentions to gain unauthorized access to systems and use their access to
obtain sensitive information, commit fraud, disrupt operations, or launch
attacks against other organizations? sites.

Government officials are increasingly concerned about federal computer
systems, which process, store, and transmit enormous amounts of sensitive
data and are indispensable to many federal operations. The federal
government?s systems are riddled with weaknesses that continue to put
critical operations at risk. Since October 1998, the Federal Computer
Incident Response Center's (FedCIRC) 9 records have shown an increasing
trend in the number of attacks targeting government systems. In 1998 FedCIRC
documented 376 incidents affecting 2,732 federal civilian systems and 86
military systems. In 2000, the number of attacks rose to 586 incidents
affecting 575,568 federal systems and 148 of their military counterparts.
Moreover, according to FedCIRC, these numbers reflect only reported
incidents, which it estimates do not include as many as 80 percent of actual
security incidents. According to FedCIRC, 155 of the

7 CERT Coordination Center is a center of Internet security expertise
located at the Software Engineering Institute, a federally funded research
and development center operated by Carnegie Mellon University. CERT
Coordination Center is registered in the U. S. Patent and Trademark Office.
8 The term "script kiddie" is used within the hacker community in a
derogatory manner to refer to a hacker with little computer knowledge and
few abilities who breaks into systems using scripts posted to the Internet
by more skilled hackers. 9 FedCIRC, a component of the General Service
Administration's Technology Service, is the central coordinating activity
for reporting security related incidents affecting computer systems within
the federal government's civilian agencies and departments. Federal Systems
Are At

Risk

Page 7 GAO- 01- 1004T

incidents reported in 2000, which occurred at 32 agencies, resulted in what
is known as a ?root compromise.? 10 For at least five of the root
compromises, government officials were able to verify that access to
sensitive information had been obtained.

How well federal agencies are addressing these risks is a topic of
increasing interest in the executive and legislative branches. In January
2000, President Clinton issued a National Plan for Information Systems
Protection 11 and designated computer security and critical infrastructure
protection a priority management objective in his fiscal year 2001 budget.
The new administration, federal agencies, and private industry have
collaboratively begun to prepare a new version of the national plan that
will outline an integrated approach to computer security and critical
infrastructure protection.

The Congress, too, is increasingly interested in computer security, as
evidenced by important hearings held during 1999, 2000, and 2001 on ways to
strengthen information security practices throughout the federal government
and on progress at specific agencies in addressing known vulnerabilities.
Furthermore, in October 2000, the Congress included government information
security reform provisions in the fiscal year 2001 National Defense
Authorization Act. These provisions seek to ensure proper management and
security for federal information systems by calling for agencies to adopt
risk management practices that are consistent with those summarized in our
1998 Executive Guide. 12 The provisions also require annual agency program
reviews and Inspector General (IG) evaluations that must be reported to the
Office of Management and Budget (OMB) as part of the budget process.

The federal CIO Council and others have also initiated several projects that
are intended to promote and support security improvements to federal
information systems. Over the past year, the CIO Council, working with NIST,
OMB, and us, developed the Federal Information Technology Security
Assessment Framework. 13 The framework provides agencies with

10 A "root compromise" of a system gives the hacker the power to do anything
that a systems administrator could do, from copying files to installing
software such as "sniffer" programs that can monitor the activities of end
users. 11 Defending America?s Cyberspace: National Plan for Information
Systems Protection: An Invitation to a Dialogue.

12 Information Security Management: Learning From Leading Organizations
(GAO/ AIMD- 98- 68, May 1998). 13 Federal Information Technology Security
Assessment Framework, November 28, 2000.

Page 8 GAO- 01- 1004T

a self- assessment methodology to determine the current status of their
security programs and to establish targets for improvement. OMB has
instructed agencies to use the framework to fulfill their annual assessment
and reporting obligations.

Since 1996, our analyses of information security at major federal agencies
have shown that systems are not being adequately protected. Our previous
reports, and those of agency IGs, describe persistent computer security
weaknesses that place a variety of critical federal operations at risk of
inappropriate disclosures, fraud, and disruption. 14 This body of audit
evidence has led us, since 1997, to designate computer security as a
governmentwide high- risk area. 15

Our most recent summary analysis of federal information systems found that
significant computer security weaknesses had been identified in 24 of the
largest federal agencies, including Commerce. 16 During December 2000 and
January 2001, Commerce's IG also reported significant computer security
weaknesses in several of the department's bureaus and, in February 2001,
reported information security as a material weakness affecting the
department's ability to produce accurate data for financial statements. 17
The report stated that there were weaknesses in several areas, including
entitywide security management, access controls, software change controls,
segregation of duties, and service continuity planning. Moreover, a recent
IG assessment of the department's information security program found
fundamental weaknesses in the areas of policy and oversight. 18 Also, the IG
designated information security as one of the top ten management challenges
for the department.

14 Information Security: Serious Weaknesses Place Critical Federal
Operations and Assets at Risk (GAO/ AIMD- 98- 92, September 23, 1998). 15

High- Risk Series: Information Management and Technology ( GAO/ HR- 97- 9,
February 1997), High- Risk Series: An Update ( GAO/ HR- 99- 1, January
1999), and High- Risk Series: An Update (GAO- 01- 263, January 2001). 16
Information Security: Serious and Widespread Weaknesses Persist at Federal
Agencies (GAO/ AIMD00-

295 , September 6, 2000). 17 Department of Commerce's Fiscal Year 2000
Consolidated Financial Statements, Inspector General

Audit Report No. FSD- 12849- 1- 0001 (February 2001). 18 Office of the Chief
Information Officer: Additional Focus Needed on Information Technology
Security Policy and Oversight (Inspection Report No. OSE- 13573/ March
2001).

Page 9 GAO- 01- 1004T

Commerce's missions are among the most diverse of the federal government's
cabinet departments, covering a wide range of responsibilities that include
observing and managing natural resources and the environment; promoting
commerce, regional development, and scientific research; and collecting,
analyzing, and disseminating statistical information. Commerce employs about
40,000 people in fourteen operating bureaus with numerous offices in the U.
S. and overseas, each pursuing disparate programs and activities.

IT is a critical tool for Commerce to support these missions. The department
spends significant resources- reportedly over $1.5 billion in fiscal year
2000- on IT systems and services. As a percentage of total agency
expenditures on IT, Commerce ranks among the top agencies in the federal
government, with 17 percent of its $9- billion fiscal year 2000 budget
reported as spent on IT.

A primary mission of Commerce is to promote job creation and improved living
standards for all Americans by furthering U. S. economic growth, and the
seven bureaus we reviewed support this mission through a wide array of
programs and services. Commerce uses IT to generate and disseminate some of
the nation?s most important economic information. The International Trade
Administration (ITA) promotes the export of U. S. goods and services- which
amounted to approximately $1.1 trillion in fiscal year 2000. Millions of
American jobs depend on exports, and with 96 percent of the world's
consumers living outside U. S. borders, international trade is increasingly
important to supporting this mission. The Economics and Statistics
Administration (ESA) develops, prepares, analyzes, and disseminates
important indicators of the U. S. that present basic information on such key
issues as economic growth, regional development, and the U. S. role in the
world economy. This information is of paramount interest to researchers,
business, and policymakers.

The Bureau of Export Administration (BXA), whose efforts supported sales of
approximately $4.2 billion in fiscal year 1999, assists in stimulating the
growth of U. S. exports while protecting national security interests by
helping to stop the proliferation of weapons of mass destruction. Sensitive
data such as that relating to national security, nuclear proliferation,
missile technology, and chemical and biological warfare reside in this
bureau's systems.

Commerce's ability to fulfill its mission depends on the confidentiality,
integrity, and availability of this sensitive information. For example,
export data residing in the BXA systems reflect technologies that have both
civil and military applications; the misuse, modification, or deletion
Commerce Missions

Are Diverse

Page 10 GAO- 01- 1004T

of these data could threaten our national security or public safety and
affect foreign policy. Much of these data are also business proprietary. If
it were compromised, the business could not only lose its market share, but
dangerous technologies might end up in the hands of renegade nations who
threaten our national security or that of other nations.

Commerce's IT infrastructure is decentralized. Although the Commerce IT
Review Board approves major acquisitions, most bureaus have their own IT
budgets and act independently to acquire, develop, operate, and maintain
their own infrastructure. For example, Commerce has 14 different data
centers, diverse hardware platforms and software environments, and 20
independently managed e- mail systems. The bureaus also develop and control
their own individual networks to serve their specific needs. These networks
vary greatly in size and complexity. For example, one bureau has as many as
155 local area networks and 3,000 users spread over 50 states and 80
countries. Some of these networks are owned, operated, and managed by
individual programs within the same bureau.

Because Commerce does not have a single, departmentwide common network
infrastructure to facilitate data communications across the department, the
bureaus have established their own access paths to the Internet, which they
rely on to communicate with one another. In April 2001, the department
awarded a contract for a $4 million project to consolidate the individual
bureaus' local area networks within its headquarters building onto a common
network infrastructure. However, until this project is completed, each of
the bureaus is expected to continue to configure, operate, and maintain its
own unique networks.

Recognizing the importance of its data and operations, in September 1993
Commerce established departmentwide information security policies that
defined and assigned a full set of security responsibilities, ranging from
the department level down to individual system owners and users within the
bureaus. Since 1998, the Commerce CIO position has been responsible for
developing and implementing the department?s information security program.
An information security manager, under the direction of the CIO's Office of
Information Policy, Planning, and Review, is tasked with carrying out the
responsibilities of the program. The CIO's responsibilities for the security
of classified systems has been delegated to the Office of Security.
Commerce?s IT

Infrastructure Is Decentralized

Improvements to Information Security Have Been Initiated

Page 11 GAO- 01- 1004T

In the last 2 years, the CIO introduced several initiatives that are
essential to improving the security posture of the department. After a 1999
contracted evaluation of the bureaus' security plans determined that 43
percent of Commerce's most critical assets did not have current information
system security plans, the CIO issued a memorandum calling for the bureaus
to prepare security plans that comply with federal regulations. Also, in May
2000, the Office of the CIO performed a summary evaluation of the status of
all the bureaus' information security based on the bureaus' own self-
assessments. The results determined that overall information security
program compliance was minimal, that no formal information security
awareness and training programs were provided by the bureaus, and that
incident response capabilities were either absent or informal. The Commerce
IG indicated that subsequent meetings between the Office of the CIO and the
bureaus led to improvements. The Office of the CIO plans to conduct another
evaluation this year and, based on a comparison with last year's results,
measure the bureaus? success in strengthening their security postures.

Finally, for the past year, the CIO attempted to restructure the
department's IT management to increase his span of control over information
security within the bureaus by enforcing his oversight authority and
involvement in budgeting for IT resources. However, this initiative was not
approved before the CIO?s resignation in 2001. In June 2001, after our
fieldwork was completed, the Secretary of Commerce approved a high- level
Commerce IT restructuring plan. The acting CIO stated that a task force is
developing a more detailed implementation plan.

A basic management objective for any organization is the protection of its
information systems and critical data from unauthorized access.
Organizations accomplish this objective by establishing controls that limit
access to only authorized users, effectively configuring their operating
systems, and securely implementing networks. However, our tests identified
weaknesses in each of these control areas in all of the Commerce bureaus we
reviewed. We demonstrated that individuals, both external and internal to
Commerce, could compromise security controls to gain extensive unauthorized
access to Commerce networks and systems. These weaknesses place the bureaus?
information systems at risk of unauthorized access, which could lead to the
improper disclosure, modification, or deletion of sensitive information and
the disruption of critical operations. As previously noted, because of the
sensitivity of specific weaknesses, we plan to issue a report designated for
"Limited Official Use," which describes in more detail each of the computer
security Logical Access

Controls Were Inadequate

Page 12 GAO- 01- 1004T

weaknesses identified and offers specific recommendations for correcting
them.

Effective system access controls provide mechanisms that require users to
identify themselves and authenticate 19 their identity, limit the use of
system administrator capabilities to authorized individuals, and protect
sensitive system and data files. As with many organizations, passwords are
Commerce?s primary means of authenticating user identity. Because system
administrator capabilities provide the ability to read, modify, or delete
any data or files on the system and modify the operating system to create
access paths into the system, such capabilities should be limited to the
minimum access levels necessary for systems personnel to perform their
duties. Also, information can be protected by using controls that limit an
individual?s ability to read, modify, or delete information stored in
sensitive system files.

User ID and Password Management Controls Were Not Effective

One of the primary methods to prevent unauthorized access to information
system resources is through effective management of user IDs and passwords.
To accomplish this objective, organizations should establish controls that
include requirements to ensure that well- chosen passwords are required for
user authentication, passwords are changed periodically, the number of
invalid password attempts is limited to preclude password guessing, and the
confidentiality of passwords is maintained and protected.

All Commerce bureaus reviewed were not effectively managing user IDs and
passwords to sufficiently reduce the risk that intruders could gain
unauthorized access to its information systems to (1) change system access
and other rules, (2) potentially read, modify, and delete or redirect
network traffic, and (3) read, modify, and delete sensitive information.
Specifically, systems were either not configured to require passwords or, if
passwords were required, they were relatively easy to guess. For example,

powerful system administrator accounts did not require passwords, allowing
anyone who could connect to certain systems through the network to log on as
a system administrator without having to use a password,

19 Authenticating is the process of verifying that a user is allowed to
access a system or an account. System Access

Controls Were Weak

Page 13 GAO- 01- 1004T

systems allowed users to change their passwords to a blank password,
completely circumventing the password control function,

passwords were easily guessed words, such as "password,"

passwords were the same as the user's ID, and

commonly known default passwords set by vendors when systems were originally
shipped had never been changed.

Although frequent password changes reduce the risk of continued unauthorized
use of a compromised password, systems in four of the bureaus reviewed had a
significant number of passwords that never required changing or did not have
to be changed for 273 years. Also, systems in six of the seven bureaus did
not limit the number of times an individual could try to log on to a user
ID. Unlimited attempts allow intruders to keep trying passwords until a
correct password is discovered.

Further, all Commerce bureaus reviewed did not adequately protect the
passwords of their system users through measures such as encryption, as
illustrated by the following examples:

User passwords were stored in readable text files that could be viewed by
all users on one bureau?s systems.

Files that store user passwords were not protected from being copied by
intruders, who could then take the copied password files and decrypt user
passwords. The decrypted passwords could then be used to gain unauthorized
access to systems by intruders masquerading as legitimate users.

Over 150 users of one system could read the unencrypted password of a
powerful system administrator's account.

Control of System Administration Functions Was Not Adequate

System administrators perform important functions in support of the
operations of computer systems. These functions include defining security
controls, granting users access privileges, changing operating system
configurations, and monitoring system activity. In order to perform these
functions, system administrators have powerful privileges that enable them
to manipulate operating system and security controls. Privileges to perform
these system administration functions should be granted only to employees
who require such privileges to perform their responsibilities and who are
specifically trained to understand and exercise those

Page 14 GAO- 01- 1004T

privileges. Moreover, the level of privilege granted to employees should not
exceed the level required for them to perform their assigned duties.
Finally, systems should provide accountability for the actions of system
administrators on the systems.

However, Commerce bureaus granted the use of excessive system administration
privileges to employees who did not require such privileges to perform their
responsibilities and who were not trained to exercise them. For example, a
very powerful system administration privilege that should be used only in
exceptional circumstances, such as recovery from a power failure, was
granted to 20 individuals. These 20 individuals had the ability to access
all of the information stored on the system, change important system
configurations that could affect the system?s reliability, and run any
program on the computer. Further, Commerce management also acknowledged that
not all staff with access to this administrative privilege had been
adequately trained.

On other important systems in all seven bureaus, system administrators were
sharing user IDs and passwords so that systems could not provide an audit
trail of access by system administrators, thereby limiting accountability.
By not effectively controlling the number of staff who exercise system
administrator privileges, restricting the level of such privileges granted
to those required to perform assigned duties, or ensuring that only well-
trained staff have these privileges, Commerce is increasing the risk that
unauthorized activity could occur and the security of sensitive information
be compromised.

Access to Critical Systems and Sensitive Data Files Was Not Adequately
Restricted

Access privileges to individual critical systems and sensitive data files
should be restricted to authorized users. Not only does this restriction
protect files that may contain sensitive information from unauthorized
access, but it also provides another layer of protection against intruders
who may have successfully penetrated one system from significantly extending
their unauthorized access and activities to other systems. Examples of
access privileges are the capabilities to read, modify, or delete a file.
Privileges can be granted to individual users, to groups of users, or to
everyone who accesses the system.

Six of the seven bureaus' systems were not configured to appropriately
restrict access to sensitive system and/ or data files. For example,
critical system files could be modified by all users to allow them to bypass
security controls. Also, excessive access privileges to sensitive data files

Page 15 GAO- 01- 1004T

such as export license applications were granted. Systems configured with
excessive file access privileges are extremely vulnerable to compromise
because such configurations could enable an intruder to read, modify, or
delete sensitive system and data files, or to disrupt the availability and
integrity of the system.

Operating system controls are essential to ensure that the computer systems
and security controls function as intended. Operating systems are relied on
by all the software and hardware in a computer system. Additionally, all
users depend on the proper operation of the operating system to provide a
consistent and reliable processing environment, which is essential to the
availability and reliability of the information stored and processed by the
system.

Operating system controls should limit the extent of information that
systems provide to facilitate system interconnectivity. Operating systems
should be configured to help ensure that systems are available and that
information stored and processed is not corrupted. Controls should also
limit the functions 20 of the computer system to prevent insecure system
configurations or the existence of functions not needed to support the
operations of the system. If functions are not properly controlled, they can
be used by intruders to circumvent security controls.

Excessive System Information Was Exposed

To facilitate interconnectivity between computer systems, operating systems
are configured to provide descriptive and technical information, such as
version numbers and system names, to other computer systems and individuals
when connections are being established. At the same time, however, systems
should be configured to limit the amount of information that is made
available to other systems and unidentified individuals because this
information can be misused by potential intruders to learn the
characteristics and vulnerabilities of that system to assist in intrusions.

20 Operating system functions are capabilities added to the operating system
to support specific processing requirements necessary for the system to
perform its intended purpose. Examples of operating system functions include
the capability to receive electronic mail, the capability have technical
support performed remotely, the capability to transfer data between
different types of computer systems, and the capability to have users safely
execute powerful programs without granting those users powerful access
privileges. Operating Systems

Were Ineffectively Secured

Page 16 GAO- 01- 1004T

Systems in all bureaus reviewed were not configured to control excessive
system information from exposure to potential attackers. The configuration
of Commerce systems provided excessive amounts of information to anyone,
including external users, without the need for authentication. Our testing
demonstrated that potential attackers could collect information about
systems, such as computer names, types of operating systems, functions,
version numbers, user information, and other information that could be
useful to circumvent security controls and gain unauthorized access.

Operating Systems Were Poorly Configured

The proper configuration of operating systems is important to ensuring the
reliable operation of computers and the continuous availability and
integrity of critical information. Operating systems should be configured so
that the security controls throughout the system function effectively and
the system can be depended on to support the organization?s mission.

Commerce bureaus did not properly configure operating systems to ensure that
systems would be available to support bureau missions or prevent the
corruption of the information relied on by management and the public. For
example, in a large computer system affecting several bureaus, there were
thousands of important programs that had not been assigned unique names. In
some instances, as many as six different programs all shared the same name,
many of which were different versions of the same program. Although
typically the complexity of such a system may require the installation of
some programs that are identically named and authorized programs must be
able to bypass security in order to operate, there were an excessive number
of such programs installed on this system, many of which were capable of
bypassing security controls. Because these different programs are
identically named, unintended programs could be inadvertently run,
potentially resulting in the corruption of data or disruption of system
operations. Also, because these powerful programs are duplicated, there is
an increased likelihood that they could be misused to bypass security
controls.

In this same system, critical parts of the operating system were shared by
the test and production systems used to process U. S. export information.
Because critical parts were shared, as changes are made in the test system,
these changes could also affect the production system. Consequently, changes
could be made in the test system that would cause the production system to
stop operating normally and shut down. Changes in the test system could also
cause important Commerce data in the production system to become corrupted.
Commerce management acknowledged that

Page 17 GAO- 01- 1004T

the isolation between these two systems needed to be strengthened to
mitigate these risks.

Systems Had Unnecessary and Poorly Configured Functions

Operating system functions should be limited to support only the
capabilities needed by each specific computer system. Moreover, these
functions should be appropriately configured. Unnecessary operating system
functions can be used to gain unauthorized access to a system and target
that system for a denial- of- service attack. 21 Poorly configured operating
system functions can allow individuals to bypass security controls and
access sensitive information without requiring proper identification and
authentication.

Unnecessary and poorly configured system functions existed on important
computer systems in all the bureaus we reviewed. 22 For example, unnecessary
functions allowed us to gain access to a system from the Internet. Through
such access and other identified weaknesses, we were able to gain system
administration privileges on that system and subsequently gain access to
other systems within other Commerce bureaus. Also, poorly configured
functions would have allowed users to bypass security controls and gain
unrestricted access to all programs and data.

Networks are a series of interconnected information technology devices and
software that allow groups of individuals to share data, printers,
communications systems, electronic mail, and other resources. They provide
the entry point for access to electronic information assets and provide
users with access to the information technologies they need to satisfy the
organization?s mission. Controls should restrict access to networks from
sources external to the network. Controls should also limit the use of
systems from sources internal to the network to authorized users for
authorized purposes.

21 A denial- of- service attack is an attack in which one user takes up so
much of a shared resource that none of the resources is left for other
users. Denial- of- service attacks compromise the availability of the
resources. There are two types of denial- of- service attacks. The first
type of attack attempts to damage or destroy resources so you cannot use
them. The second type of attack overloads some system service or exhausts
some resource, thus preventing others from using that service. 22 Because of
the sensitivity of this information, specific vulnerabilities are not
discussed in this testimony. However, the report designated for "Limited
Official Use" will describe in more detail the vulnerable functions we
identified and offer specific recommendations for correcting them. Network
Security

Was Ineffective

Page 18 GAO- 01- 1004T

External threats include individuals outside an organization attempting to
gain unauthorized access to an organization?s networks using the Internet,
other networks, or dial- up modems. Another form of external threat is
flooding a network with large volumes of access requests so that the network
is unable to respond to legitimate requests, one type of denial- ofservice
attack. External threats can be countered by implementing security controls
on the perimeters of the network, such as firewalls, 23 that limit user
access and data interchange between systems and users within the
organization?s network and systems and users outside the network, especially
on the Internet. An example of perimeter defenses is only allowing pre-
approved computer systems from outside the network to exchange certain types
of data with computer systems inside the network. External network controls
should guard the perimeter of the network from connections with other
systems and access by individuals who are not authorized to connect with and
use the network.

Internal threats come from sources that are within an organization?s
networks, such as a disgruntled employee with access privileges who attempts
to perform unauthorized activities. Also, an intruder who has successfully
penetrated a network?s perimeter defenses becomes an internal threat when
the intruder attempts to compromise other parts of an organization?s network
security as a result of gaining access to one system within the network. For
example, at Commerce, users of one bureau who have no business need to
access export license information on another bureau?s network should not
have had network connections to that system. External network security
controls should prevent unauthorized access from outside threats, but if
those controls fail, internal network security controls should also prevent
the intruder from gaining unauthorized access to other computer systems
within the network.

None of the Commerce bureaus reviewed had effective external and internal
network security controls. Individuals, both within and outside Commerce,
could compromise external and internal security controls to gain extensive
unauthorized access to Commerce networks and systems. Bureaus employed a
series of external control devices, such as firewalls, in some, but not all,
of the access paths to their networks. However, these controls did not
effectively prevent unauthorized access to Commerce

23 Firewalls are hardware and software components that protect one set of
system resources (e. g., computers and networks) from attack by outside
network users (e. g., Internet users) by blocking and checking all incoming
network traffic. Firewalls permit authorized users to access and transmit
privileged information and deny access to unauthorized users.

Page 19 GAO- 01- 1004T

networks from the Internet or through poorly controlled dial- up modems that
bypass external controls. For example, four bureaus had not configured their
firewalls to adequately protect their information systems from intruders on
the Internet. Also, six dial- up modems were installed so that anyone could
connect to their network without having to use a password, thereby
circumventing the security controls provided by existing firewalls.

Our testing demonstrated that, once access was gained by an unauthorized
user on the Internet or through a dial- up modem to one bureau?s networks,
that intruder could circumvent ineffective internal network controls to gain
unauthorized access to other networks within Commerce. Such weak internal
network controls could allow an unauthorized intruder or authorized user on
one bureau?s network to change the configuration of other bureaus? network
controls so that the user could observe network traffic, including passwords
and sensitive information that Commerce transmits in readable clear text,
and disrupt network operations.

The external and internal security controls of the different Commerce bureau
networks did not provide a consistent level of security in part because
bureaus independently configured and operated their networks as their own
individual networks. For example, four of the bureaus we reviewed had their
own independently controlled access points to the Internet.

Because the different bureaus' networks are actually logically
interconnected and perform as one large interconnected network, the
ineffective network security controls of one bureau jeopardize the security
of other bureaus? networks. Weaknesses in the external and internal network
controls of the individual bureaus heighten the risk that outside intruders
with no prior knowledge of bureau user IDs or passwords, as well as Commerce
employees with malicious intent, could exploit the other security weaknesses
in access and operating system controls discussed above to misuse,
improperly disclose, or destroy sensitive information.

In addition to logical access controls, other important controls should be
in place to ensure the confidentiality, integrity, and reliability of an
organization's data. These information system controls include policies,
procedures, and techniques to provide appropriate segregation of duties
among computer personnel, prevent unauthorized changes to application
programs, and ensure the continuation of computer processing operations
Other Information

System Controls Were Not Adequate

Page 20 GAO- 01- 1004T

in case of unexpected interruption. The Commerce bureaus had weaknesses in
each of these areas that heightened the risks already created by their lack
of effective access controls.

A fundamental technique for safeguarding programs and data is to segregate
the duties and responsibilities of computer personnel to reduce the risk
that errors or fraud will occur and go undetected. OMB A- 130, Appendix III,
requires that roles and responsibilities be divided so that a single
individual cannot subvert a critical process. Once policies and job
descriptions that support the principles of segregation of duties have been
established, access controls can then be implemented to ensure that
employees perform only compatible functions.

None of the seven bureaus in our review had specific policies documented to
identify and segregate incompatible duties, and bureaus had assigned
incompatible duties to staff. For example, staff were performing
incompatible computer operations and security duties. In another instance,
the bureau's security officer had the dual role of also being the bureau's
network administrator. These two functions are not compatible since the
individual's familiarity with system security could then allow him or her to
bypass security controls either to facilitate performing administrative
duties or for malicious purposes.

Furthermore, none of the bureaus reviewed had implemented processes and
procedures to mitigate the increased risks of personnel with incompatible
duties. Specifically, none of the bureaus had a monitoring process to ensure
appropriate segregation of duties, and management did not review access
activity. Until Commerce restricts individuals from performing incompatible
duties and implements compensating access controls, such as supervision and
review, Commerce?s sensitive information will face increased risks of
improper disclosure, inadvertent or deliberate misuse, and deletion, all of
which could occur without detection.

Also important for an organization's information security is ensuring that
only authorized and fully tested software is placed in operation. To make
certain that software changes are needed, work as intended, and do not
result in the loss of data and program integrity, such changes should be
documented, authorized, tested, and independently reviewed. Federal
guidelines emphasize the importance of establishing controls to monitor the
installation of and changes to software to ensure that software Computer
Duties Were Not

Properly Segregated Software Changes Were Not Adequately Controlled

Page 21 GAO- 01- 1004T

functions as expected and that a historical record is maintained of all
changes. 24

We have previously reported on Commerce's lack of policies on software
change controls. 25 Specific key controls not addressed were (1) operating
system software changes, monitoring, and access and (2) controls over
application software libraries including access to code, movement of
software programs, and inventories of software. Moreover, implementation was
delegated to the individual bureaus, which had not established written
policies or procedures for managing software changes.

Only three of the seven bureaus we reviewed mentioned software change
controls in their system security plans, while none of the bureaus had
policies or procedures for controlling the installation of software. Such
policies are important in order to ensure that software changes do not
adversely affect operations or the integrity of the data on the system.
Without proper software change controls, there are risks that security
features could be inadvertently or deliberately omitted or rendered
inoperable, processing irregularities could occur, or malicious code could
be introduced.

Organizations must take steps to ensure that they are adequately prepared to
cope with a loss of operational capability due to earthquakes, fires,
sabotage, or other disruptions. An essential element in preparing for such
catastrophes is an up- to- date, detailed, and fully tested recovery plan
that covers all key computer operations. Such a plan is critical for helping
to ensure that information system operations and data can be promptly
restored in the event of a service disruption. OMB Circular A- 130, Appendix
III, requires that agency security plans assure that there is an ability to
restore service sufficient to meet the minimal needs of users. Commerce
policy also requires a backup or alternate operations strategy.

The Commerce bureaus we reviewed had not developed comprehensive plans to
ensure the continuity of service in the event of a service disruption.
Described below are examples of service continuity weaknesses we identified
at the seven Commerce bureaus.

24 NIST Special Publication 800- 18: Guide for Developing Security Plans for
Information Technology Systems, December 1998.

25 Software Change Controls at Commerce (GAO/ AIMD- 00- 187R, June 30,
2000). Service Continuity

Planning Was Incomplete

Page 22 GAO- 01- 1004T

None of the seven bureaus had completed recovery plans for all of their
sensitive systems.

Although one bureau had developed two recovery plans, one for its data
center and another for its software development installation center, the
bureau did not have plans to cover disruptions to the rest of its critical
systems, including its local area network.

Systems at six of the seven bureaus did not have documented backup
procedures.

One bureau stated that it had an agreement with another Commerce bureau to
back it up in case of disruptions; however, this agreement had not been
documented.

One bureau stated in its backup strategy that tapes used for system recovery
are neither stored off- site nor protected from destruction. For example,
backup for its network file servers is kept in a file cabinet in a bureau
official's supply room, and backup tapes for a database and web server are
kept on the shelf above the server. In case of a destructive event, the
backups could be subject to the same damage as the primary files.

Two bureaus had no backup facilities for key network devices such as
firewalls.

Until each of the Commerce bureaus develops and fully tests comprehensive
recovery plans for all of its sensitive systems, there is little assurance
that in the event of service interruptions, many functions of the
organization will not effectively cease and critical data will be lost.

As our government becomes increasingly dependent on information systems to
support sensitive data and mission critical operations, it is essential that
agencies protect these resources from misuse and disruption. An important
component of such protective efforts is the capability to promptly identify
and respond to incidents of attempted system intrusions. Agencies can better
protect their information systems from intruders by developing formalized
mechanisms that integrate incident handling functions with the rest of the
organizational security infrastructure. Through such mechanisms, agencies
can address how to (1) prevent intrusions before they occur, (2) detect
intrusions as they occur, (3) respond to successful intrusions, and (4)
report intrusions to staff and management. Poor Incident

Detection and Response Capabilities Further Impair Security

Page 23 GAO- 01- 1004T

Although essential to protecting resources, Commerce bureau incident
handling capabilities are inadequate in preventing, detecting, responding
to, and reporting incidents. Because the bureaus have not implemented
comprehensive and consistent incident handling capabilities, decisionmaking
may be haphazard when a suspected incident is detected, thereby impairing
responses and reporting. Thus, there is little assurance that unauthorized
attempts to access sensitive information will be identified and appropriate
actions taken in time to prevent or minimize damage. Until adequate incident
detection and response capabilities are established, there is a greater risk
that intruders could be successful in copying, modifying, or deleting
sensitive data and disrupting essential operations.

Accounting for and analyzing computer security incidents are effective ways
for organizations to better understand threats to their information systems.
Such analyses can also pinpoint vulnerabilities that need to be addressed so
that they will not be exploited again. OMB Circular A- 130, Appendix III,
requires agencies to establish formal incident response mechanisms dedicated
to evaluating and responding to security incidents in a manner that protects
their own information and helps to protect the information of others who
might be affected by the incident. These formal incident response mechanisms
should also share information concerning common vulnerabilities and threats
within the organization as well as with other organizations. By establishing
such mechanisms, agencies help to ensure that they can more effectively
coordinate their activities when incidents occur.

Although the Commerce CIO issued a July 1999 memorandum to all bureau CIOs
outlining how to prevent, detect, respond to, and report incidents, the
guidance has been inconsistently implemented. Six of the seven bureaus we
reviewed have only ad hoc processes and procedures for handling incidents.
None have established and implemented all of the requirements of the memo.
Furthermore, Commerce does not have a centralized function to coordinate the
handling of incidents on a departmentwide basis.

Two preventive measures for deterring system intrusions are to install (1)
software updates to correct known vulnerabilities and (2) messages warning
intruders that their activities are punishable by law. First, federal
guidance, industry advisories, and best practices all stress the importance
Incident Handling

Mechanisms Have Not Been Established or Implemented

Incidents Could Be Prevented

Page 24 GAO- 01- 1004T

of installing updated versions of operating system and the software that
supports system operations to protect against vulnerabilities that have been
discovered in previously released versions. If new versions have not yet
been released, ?patches? that fix known flaws are often readily available
and should be installed in the interim. Updating operating systems and other
software to correct these vulnerabilities is important because once
vulnerabilities are discovered, technically sophisticated hackers write
scripts to exploit them and often post these scripts to the Internet for the
widespread use of lesser skilled hackers. Since these scripts are easy to
use, many security breaches happen when intruders take advantage of
vulnerabilities for which patches are available but system administrators
have not applied the patches. Second, Public Law 99- 74 requires that a
warning message be displayed upon access to all federal computer systems
notifying users that unauthorized use is punishable by fines and
imprisonment. Not only does the absence of a warning message fail to deter
potential intruders, but, according to the law, pursuing and prosecuting
intruders is more difficult if they have not been previously made fully
aware of the consequences of their actions.

Commerce has not fully instituted these two key measures to prevent
incidents. First, many bureau systems do not have system software that has
been updated to address known security exposures. For example, during our
review, we discovered 20 systems with known vulnerabilities for which
patches were available but not installed. Moreover, all the bureaus we
reviewed were still running older versions software used on critical control
devices that manage network connections. Newer versions of software are
available that correct the known security flaws of the versions that were
installed. Second, in performing our testing of network security, we
observed that warning messages had not been installed for several network
paths into Commerce systems that we tested.

Even though strong controls may not block all intrusions, organizations can
reduce the risks associated with such events if they take steps to detect
intrusions and the consequent misuse before significant damage can be done.
Federal guidance emphasizes the importance of using detection systems to
protect systems from the threats associated with increasing network
connectivity and reliance on information systems. Additionally, federally
funded activities, such as CERT/ CC, the Department of Energy's Computer
Incident Advisory Capability, and FedCIRC are available to assist
organizations in detecting and responding to incidents. Incident Detection

Capabilities Have Not Been Implemented

Page 25 GAO- 01- 1004T

Although the CIO?s July memo directs Commerce bureaus to monitor their
information systems to detect unusual or suspicious activities, all the
bureaus we reviewed were either not using monitoring programs or had only
partially implemented their capabilities. For example, only two of the
bureaus had installed intrusion detection systems. Also, system and network
logs frequently had not been activated or were not reviewed to detect
possible unauthorized activity. Moreover, modifications to critical
operating system components were not logged, and security reports detailing
access to sensitive data and resources were not sent to data owners for
their review.

The fact that bureaus we reviewed detected our activities only four times
during the 2 months that we performed extensive external testing of Commerce
networks, which included probing over 1, 000 system devices, indicates that,
for the most part, they are unaware of intrusions. For example, although we
spent several weeks probing one bureau's networks and obtained access to
many of its systems, our activities were never detected. Moreover, during
testing we identified evidence of hacker activity that Commerce had not
previously detected. Without monitoring their information systems, the
bureaus cannot

know how, when, and who performs specific computer activities,

be aware of repeated attempts to bypass security, or

detect suspicious patterns of behavior such as two users with the same ID
and password logged on simultaneously or users with system administrator
privileges logged on at an unexpected time of the day or night.

As a result, the bureaus have little assurance that potential intrusions
will be detected in time to prevent or, at least, minimize damage.

The CIO's July memo also outlines how the bureaus are to respond to detected
incidents. Instructions include responses such as notifying appropriate
officials, deploying an on- site team to survey the situation, and isolating
the attack to learn how it was executed.

Only one of the seven bureaus reviewed has documented response procedures.
Consequently, we experienced inconsistent responses when our testing was
detected. For example, one bureau responded to our Incident Response

Procedures Have Not Been Established

Page 26 GAO- 01- 1004T

scanning of their systems by scanning ours in return. 26 In another bureau,
a Commerce employee who detected our testing responded by launching a
software attack against our systems. In neither case was bureau management
previously consulted or informed of these responses.

The lack of documented incident response procedures increases the risk of
inappropriate responses. For example, employees could

take no action,

take insufficient actions that fail to limit potential damage,

take overzealous actions that unnecessarily disrupt critical operations, or

take actions, such as launching a retaliatory attack, that could be
considered improper.

The CIO's July memo specifically requires bureau employees who suspect an
incident or violation to contact their supervisor and the bureau security
officer, who should report the incident to the department's information
security manager. Reporting detected incidents is important because this
information provides valuable input for risk assessments, helps in
prioritizing security improvement efforts, and demonstrates trends of
threats to an organization as a whole.

The bureaus we reviewed have not been reporting all detected incidents.
During our 2- month testing period, 16 incidents were reported by the seven
bureaus collectively, 10 of which were generated to report computer viruses.
Four of the other six reported incidents related to our testing activities,
one of which was reported after our discovery of evidence of a successful
intrusion that Commerce had not previously detected and reported. However,
we observed instances of detected incidents that were not reported to bureau
security officers or the department's information security manager. For
example, the Commerce employees who responded to our testing by targeting
our systems in the two instances discussed above did not report either of
the two incidents to their own bureau's security officer.

26 Scanning is a favorite approach of computer hackers to discover what
computer network services a computer provides so that it can be probed for
vulnerabilities. Bureaus Have Not Been

Reporting Incidents

Page 27 GAO- 01- 1004T

By not reporting incidents, the bureaus lack assurance that identified
security problems have been tracked and eliminated and the targeted system
restored and validated. Furthermore, information about incidents could be
valuable to other bureaus and assist the department as a whole to recognize
and secure systems against general patterns of intrusion.

The underlying cause for the numerous weaknesses we identified in bureau
information system controls is that Commerce does not have an effective
departmentwide information security management program in place to ensure
that sensitive data and critical operations receive adequate attention and
that the appropriate security controls are implemented to protect them. Our
study of security management best practices, as summarized in our 1998
Executive Guide, 27 found that leading organizations manage their
information security risks through an ongoing cycle of risk management. This
management process involves (1) establishing a centralized management
function to coordinate the continuous cycle of activities while providing
guidance and oversight for the security of the organization as a whole, (2)
identifying and assessing risks to determine what security measures are
needed, (3) establishing and implementing policies and procedures that meet
those needs, (4) promoting security awareness so that users understand the
risks and the related policies and procedures in place to mitigate those
risks, and (5) instituting an ongoing monitoring program of tests and
evaluations to ensure that policies and procedures are appropriate and
effective. However, Commerce's information security management program is
not effective in any of these key elements.

Establishing a central management function is the starting point of the
information security management cycle mentioned above. This function
provides knowledge and expertise on information security and coordinates
organizationwide security- related activities associated with the other four
segments of the risk management cycle. For example, the function researches
potential threats and vulnerabilities, develops and adjusts organizationwide
policies and guidance, educates users about current information security
risks and the policies in place to mitigate those risks, and provides
oversight to review compliance with policies and to test the effectiveness
of controls. This central management function is

27 Information Security Management: Learning From Leading Organizations
(GAO/ AIMD- 98- 68, May 1998). Commerce Does Not

Have An Effective Information Security Management Program

Centralized Management Is Weak

Page 28 GAO- 01- 1004T

especially important to managing the increased risks associated with a
highly connected computing environment. By providing coordination and
oversight of information security activities organizationwide, such a
function can help ensure that weaknesses in one unit's systems do not place
the entire organization's information assets at undue risk.

According to Commerce policy, broad program responsibility for information
security throughout the department is assigned to the CIO. Department of
Commerce Organization Order 15- 23 of July 5, 2000, specifically tasks the
CIO with developing and implementing the department's information security
program to assure the confidentiality, integrity, and availability of
information and IT resources. These responsibilities include developing
policies, procedures, and directives for information security; providing
mandatory periodic training in computer security awareness and accepted
practice; and identifying and developing security plans for Commerce systems
that contain sensitive information. Furthermore, the CIO is also formally
charged with carrying out the Secretary's responsibilities for computer
security under OMB Circular A130, Appendix III for all Commerce bureaus and
the Office of the Secretary.

An information security manager under the direction of the Office of the CIO
is tasked with carrying out the responsibilities of the security program.
These responsibilities, which are clearly defined in department policy,
include developing security policies, procedures, and guidance and assuring
security oversight through reviews, which include tracking the
implementation of required security controls.

Commerce lacks an effective centralized function to facilitate the
integrated management of the security of its information system
infrastructure. At the time of our review, the CIO, who had no specific
budget to fulfill security responsibilities and exercised no direct control
over the IT budgets of the Commerce bureaus, stated that he believed that he
did not have sufficient resources or the authority to implement the
department information security program. Until February 2000, when
additional staff positions were established to support the information
security manager?s responsibilities, the information security manager had no
staff to discharge these tasks. As of April 2001, the information security
program was supported by a staff of three.

Commerce policy also requires each of its bureaus to implement an
information security program that includes a full range of security
responsibilities. These include appointing a bureauwide information

Page 29 GAO- 01- 1004T

security officer as well as security officers for each of the bureau's
systems.

However, the Commerce bureaus we reviewed also lack their own centralized
functions to coordinate bureau security programs with departmental policies
and procedures and to implement effective programs for the security of the
bureaus' information systems infrastructure. For example, four bureaus had
staff assigned to security roles on a part- time basis and whose security
responsibilities were treated as collateral duties.

In view of the widespread interconnectivity of Commerce's systems, the lack
of a centralized approach to the management of security is particularly
risky since there is no coordinated effort to ensure that minimal security
controls are implemented and effective across the department. As
demonstrated by our testing, intruders who succeeded in gaining access to a
system in a bureau with weak network security could then circumvent the
stronger network security of other bureaus. It is, therefore, unlikely that
the security posture of the department as a whole will significantly improve
until a more integrated security management approach is adopted and
sufficient resources allotted to implement and enforce essential security
measures departmentwide.

As outlined in our 1998 Executive Guide, understanding the risks associated
with information security is the second key element of the information
security management cycle. Identifying and assessing information security
risks helps to determine what controls are needed and what level of
resources should be expended on controls. Federal guidance requires all
federal agencies to develop comprehensive information security programs
based on assessing and managing risks. 28 Commerce policy regarding
information security requires (1) all bureaus to establish and implement a
risk management process for all IT resources and (2) system owners to
conduct a periodic risk analysis for all sensitive systems within each
bureau.

28 The February 1996 revision to OMB Circular A- 130, Appendix III, Security
of Federal Automated Information Resources, requires agencies to use a risk-
based approach to determine adequate security,

including a consideration of the major factors in risk management: the value
of the system or application, threats, vulnerabilities, and the
effectiveness of current or proposed safeguards. Additional guidance on
effective risk assessment is available in NIST publications and in our
Information Security Risk Assessment: Practices of Leading Organizations
(GAO/ AIMD- 00- 33). Risks Are Not Assessed

Page 30 GAO- 01- 1004T

Commerce bureaus we reviewed are not conducting risk assessments for their
sensitive systems as required. Only 3 of the bureaus' 94 systems we reviewed
29 had documented risk assessments, one of which was still in draft.
Consequently, most of the bureaus' systems are being operated without
consideration of the risks associated with their immediate environment.

Moreover, these bureaus are not considering risks outside their immediate
environment that affect the security of their systems, such as network
interconnections with other systems. Although OMB Circular A- 130, Appendix
III, specifically requires that the risks of connecting to other systems be
considered prior to doing so, several bureau officials acknowledged that
they had not considered how vulnerabilities in systems that interconnected
with theirs could undermine the security of their own systems. Rather, the
initial decision to interconnect should have been made by management based
on an assessment of the risk involved, the controls in place to mitigate the
risk, and the predetermined acceptable level of risk. The widespread lack of
risk assessments, as evidenced by the serious access control weaknesses
revealed during our testing, indicates that Commerce is doing little to
understand and manage risks to its systems.

Security Plans Are Not Prepared Once risks have been assessed, OMB Circular
A- 130, Appendix III, requires agencies to document plans to mitigate these
risks through system security plans. These plans should contain an overview
of a system's security requirements; describe the technical controls planned
or in place for meeting those requirements; include rules that delineate the
responsibilities of managers and individuals who access the system; and
outline training needs, personnel controls, and continuity plans. In
summary, security plans should be updated regularly to reflect significant
changes to the system as well as the rapidly changing technical environment
and document that all aspects of security for a system have been fully
considered, including management, technical, and operational controls.

29 For purposes of reviewing Commerce?s information management security
program, we identified these 94 sensitive systems in the seven bureaus based
on our discussions with bureau officials. We also included systems from an
inventory of the bureaus' most critical systems that had been prepared by a
contractor as part of an assessment of Commerce's Critical Infrastructure
Protection Plan as well as from an inventory of critical systems compiled by
the department in preparing for their Y2K remediation efforts.

Page 31 GAO- 01- 1004T

None of the bureaus we reviewed had security plans for all of their
sensitive systems. Of the 94 sensitive systems we reviewed, 87 had no
security plans. Of the seven systems that did have security plans, none had
been approved by management. Moreover, five of these seven plans did not
include all the elements required by OMB Circular A- 130, Appendix III.
Without comprehensive security plans, the bureaus have no assurance that all
aspects of security have been considered in determining the security
requirements of the system and that adequate protection has been provided to
meet those requirements.

Systems Are Not Authorized OMB also requires management officials to
formally authorize the use of a system before it becomes operational, when a
significant change occurs, and at least every 3 years thereafter. 30
Authorization provides quality control in that it forces managers and
technical staff to find the best fit for security, given technical
constraints, operational constraints, and mission requirements. By formally
authorizing a system for operational use, a manager accepts responsibility
for the risks associated with it. Since the security plan establishes the
system protection requirements and documents the security controls in place,
it should form the basis for management's decision to authorize processing.

As of March 2001, Commerce management had not authorized any of the 94
sensitive systems that we identified. According to the more comprehensive
data collected by the Office of the CIO in March 2000, 92 percent of all the
department's sensitive systems had not been formally authorized. The lack of
authorization indicates that systems' managers had not reviewed and accepted
responsibility for the adequacy of the security controls implemented on
their systems. As a result, Commerce has no assurance that these systems are
being adequately protected.

The third key element of computer security management, as identified during
our study of information security management practices at leading
organizations, is establishing and implementing policies. Security policies
are important because they are the primary mechanism by which management
communicates its goals and requirements. Federal guidelines require agencies
to frequently update their information security policies in order to assess
and counter rapidly evolving threats and vulnerabilities.

30 Authorization is sometimes referred to as "accreditation." Needed
Policies Have Not

Been Established

Page 32 GAO- 01- 1004T

Commerce's information security policies are significantly outdated and
incomplete. Developed in 1993 and partially revised in 1995, the
department's information security policies and procedures manual,
Information Technology Management Handbook, Chapter 10, ?Information

Technology Security,? and attachment, ?Information Technology Security? does
not comply with OMB?s February 1996 revision to Circular A- 130, Appendix
III, and does not incorporate more recent NIST guidelines. For example,
Commerce?s information security policy does not reflect current federal
requirements for managing computer security risk on a continuing basis,
authorizing processing, providing security awareness training, or performing
system reviews. Moreover, because the policy was written before the
explosive growth of the Internet and Commerce?s extensive use of it,
policies related to the risks of current Internet usage are omitted. For
example, Commerce has no departmentwide security policies on World Wide Web
sites, e- mail, or networking.

Further, Commerce has no departmental policies establishing baseline
security requirements for all systems. For example, there is no departmental
policy specifying required attributes for passwords, such as minimum length
and the inclusion of special characters. Consequently, security settings
differ both among bureaus and from system to system within the same bureau.
Furthermore, Commerce lacks consistent policies establishing a standard
minimum set of access controls. Having these baseline agencywide policies
could eliminate many of the vulnerabilities discovered by our testing, such
as configurations that provided users with excessive access to critical
system files and sensitive data and expose excessive system information, all
of which facilitate intrusions.

The Director of the Office of Information Policy, Planning, and Review and
the Information Security Manager stated that Commerce management recognizes
the need to update the department information security policy and will begin
updating the security sections of the Information Technology Management
Handbook in the immediate future.

The fourth key element of the security management cycle involves promoting
awareness and conducting required training so that users understand the
risks and the related policies and controls in place to mitigate them.
Computer intrusions and security breakdowns often occur because computer
users fail to take appropriate security measures. For this reason, it is
vital that employees who use computer systems in their day- to- day
operations are aware of the importance and sensitivity of the information
they handle, as well as the business and legal reasons for maintaining its
confidentiality, integrity, and availability. Security Awareness and

Training Are Not Adequately Promoted

Page 33 GAO- 01- 1004T

OMB Circular A- 130, Appendix III, requires that employees be trained on how
to fulfill their security responsibilities before being allowed access to
sensitive systems. The Computer Security Act mandates that all federal
employees and contractors who are involved with the management, use, or
operation of federal computer systems be provided periodic training in
information security awareness and accepted information security practice.
Specific training requirements are outlined in NIST guidelines, 31 which
establish a mandatory baseline of training in security concepts and
procedures and define additional structured training requirements for
personnel with security- sensitive responsibilities.

Overall, none of the seven bureaus had documented computer security training
procedures and only one of the bureaus had documented its policy for such
training. This bureau also used a network user responsibility agreement,
which requires that all network users read and sign a one- page agreement
describing the network rules. Officials at another bureau stated that they
were developing a security awareness policy document.

Although each of the seven bureaus had informal programs in place, such as a
brief overview as part of the one- time general security orientation for new
employees, these programs do not meet the requirements of OMB, the Computer
Security Act, or NIST Special Publication 800- 16. Such brief overviews do
not ensure that security risks and responsibilities are understood by all
managers, users, and system administrators and operators. Shortcomings in
the bureaus' security awareness and training activities are illustrated by
the following examples.

Officials at one bureau told us that they did not see training as an
integral part of its security program, and provided an instructional
handbook only to users of a specific bureau application.

Another bureau used a generic computer- based training course distributed by
the Department of Defense that described general computer security concepts
but was not specific to Commerce's computing environment. Also, this bureau
did not maintain records to document who had participated.

Another bureau had limited awareness practices in place such as distribution
of a newsletter to staff, but had no regular training program.

31 Information Technology Security Training Requirements: A Role- and
Performance- Based Model (NIST Special Publication 800- 16, April 1998).

Page 34 GAO- 01- 1004T

Officials at this bureau told us that they were in the process of assessing
its training requirements.

Only one Commerce bureau that we reviewed provided periodic refresher
training. In addition, staff directly responsible for information security
do not receive more extensive training than overviews since security is not
considered to be a full- time function requiring special skills and
knowledge. Several of the computer security weaknesses we discuss in this
testimony indicate that Commerce employees are either unaware of or
insensitive to the need for important information system controls.

The final key element of the security management cycle is an ongoing program
of tests and evaluations to ensure that systems are in compliance with
policies and that policies and controls are both appropriate and effective.
This type of oversight is a fundamental element because it demonstrates
management?s commitment to the security program, reminds employees of their
roles and responsibilities, and identifies and corrects areas of
noncompliance and ineffectiveness. For these reasons, OMB Circular A- 130,
Appendix III, directs that the security controls of major information
systems be independently reviewed or audited at least every 3 years.
Commerce policy also requires information security program oversight and
tasks the program manager with performing compliance reviews of the bureaus
as well as verification reviews of individual systems. The government
information security reform provisions of the fiscal year 2001 National
Defense Authorization Act require annual independent reviews of IT security
in fiscal years 2001 and 2002.

No oversight reviews of the Commerce bureaus' systems have been performed by
the staff of Commerce's departmentwide information security program. The
information security manager stated that he was not given the resources to
perform these functions. Furthermore, the bureaus we reviewed do not monitor
the effectiveness of their information security. Only one of the bureaus has
performed isolated tests of its systems. In lieu of independent reviews, in
May 2000, the Office of the CIO, using a draft of the CIO Council's Security
Assessment Framework, requested that all Commerce bureaus submit a self-
assessment of the security of their systems based on the existence of risk
assessments, security plans, system authorizations, awareness and training
programs, service continuity plans, and incident response capabilities. This
selfassessment did not require testing or evaluating whether systems were in
compliance with policies or the effectiveness of implemented controls.
Nevertheless, the Office of the CIO?s analysis of the self- assessments
Policies and Controls Are

Not Monitored

Page 35 GAO- 01- 1004T

showed that 92 percent of Commerce's sensitive systems did not comply with
federal security requirements. Specifically, 63 percent of Commerce's
systems did not have security plans that comply with federal guidelines, 73
percent had no risk assessments, 64 percent did not have recovery plans, and
92 percent had not been authorized for operational use.

The information security manager further stated that, because of the
continued lack of resources, the Office of the CIO would not be able to test
and evaluate the effectiveness of Commerce's information security controls
to comply with the government information security reform provisions
requirement of the fiscal year 2001 National Defense Authorization Act.
Instead, the information security manager stated that he would again ask the
bureaus to do another self- assessment and would analyze the results. In
future years, the information security manager intends to perform hands- on
reviews as resources permit.

* * * * * * * * * * * * * * * * * In conclusion, Mr. Chairman, the
significant and pervasive weaknesses that we discovered in the seven
Commerce bureaus we tested place the data and operations of these bureaus at
serious risk. Sensitive economic, personnel, financial, and business
confidential information are exposed, allowing potential intruders to read,
copy, modify, or delete these data. Moreover, critical operations could
effectively cease in the event of accidental or malicious service
disruptions.

Poor detection and response capabilities exacerbate the bureaus'
vulnerability to intrusions. As demonstrated during our own testing, the
bureaus' general inability to notice our activities increases the likelihood
that intrusions will not be detected in time to prevent or minimize damage.

These weaknesses are attributable to the lack of an effective information
security program, that is, lack of centralized management, a risk- based
approach, up- to- date security policies, security awareness and training,
and continuous monitoring of the bureaus' compliance with established
policies and the effectiveness of implemented controls. These weaknesses are
exacerbated by Commerce's highly interconnected computing environment in
which the vulnerabilities of individual systems affect the security of
systems in the entire department, since a compromise in a single poorly
secured system can undermine the security of the multiple systems that
connect to it.

Page 36 GAO- 01- 1004T

To address these weaknesses, we are recommending that the Secretary

direct the Office of the CIO and the bureaus to develop and implement an
action plan for strengthening access controls for Commerce's systems
commensurate with the risk and magnitude of the harm resulting from the
loss, misuse, or modification of information resulting from unauthorized
access. Specifically, this action plan should address the logical access
control weaknesses and other information system weaknesses that are
summarized in our draft report,

direct the Office of the CIO to establish a departmentwide incident handling
function with formal procedures for preparing for, detecting, responding to,
and reporting incidents, and

direct the Office of the CIO to develop and implement an effective
departmentwide security program. Such a program should include establishing
a central information security function to manage an ongoing cycle of the
following security activities:

assessing risks and evaluating needs,

updating the information security program policies,

developing and implementing a computer security awareness and training
program, and

developing and implementing a management oversight process that includes
periodic compliance reviews and tests of the effectiveness of implemented
controls.

We also recommend that the Secretary of Commerce, the Office of the CIO, and
the bureau CIOs direct the appropriate resources and authority to fulfill
the security responsibilities that Commerce policy and directives task them
with performing and to implement these recommendations.

We also recommend that the Secretary take advantage of the opportunity that
the installation of the new network infrastructure will provide to improve
security.

Mr. Chairman, this concludes my statement. I would be pleased to respond to
any questions that you or other members of the Committee may have at this
time.

If you should have any questions about this testimony, please contact me at
(202) 512- 3317. I can also be reached by e- mail at daceyr@ gao. gov.

(310125) Contacts and

Acknowledgments
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