Critical Infrastructure Protection: Significant Challenges in	 
Protecting Federal Systems and Developing Analysis and Warning	 
Capabilities (12-SEP-01, GAO-01-1132T). 			 
								 
Federal computer systems are riddled with weaknesses that	 
continue to put critical operations and assets at risk. New	 
information security provisions introduced by Congress will be a 
major catalyst for federal agencies to improve their security	 
program management. To help maintain the momentum that the new	 
information security reform provisions have generated, federal	 
agencies must act quickly to implement strong security program	 
management. A key element of the strategy outlined in		 
Presidential Decision Directive (PDD) 63 was establishing the	 
National Infrastructure Protection Center as "a national focal	 
point" for gathering information on threats and facilitating the 
federal government's response to computer-based incidents. The	 
center has begun critical infrastructure protection efforts to	 
establish a foundation for future governmentwide efforts.	 
However, the analytical and information-sharing capabilities that
PDD 63 asserts are needed to protect the nation's critical	 
infrastructures have not yet been achieved.			 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-01-1132T					        
    ACCNO:   A01770						        
  TITLE:     Critical Infrastructure Protection: Significant	      
             Challenges in Protecting Federal Systems and Developing Analysis 
             and Warning Capabilities                                         
     DATE:   09/12/2001 
  SUBJECT:   Computer security					 
	     Computer viruses					 
	     Data integrity					 
	     Electronic data interchange			 
	     Electronic government				 
	     Fraud						 
	     Hackers						 
	     Information systems				 
	     Internet						 
	     Risk management					 
	     Code Red Computer Worm				 
	     Code Red II Computer Worm				 
	     DOD Department-wide Information			 
	     Assurance Program					 
								 
	     ILOVEYOU Computer Virus				 
	     IRS Electronic Filing System			 
	     SirCam Computer Virus				 

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GAO-01-1132T
     
For Release on Delivery Expected at 9: 30 a. m. EDT Wednesday, September 12,
2001

GAO- 01- 1132T

CRITICAL INFRASTRUCTURE PROTECTION

Significant Challenges in Protecting Federal Systems and Developing Analysis
and Warning Capabilities

Statement of Joel C. Willemssen Managing Director, Information Technology
Issues Testimony

Before the Committee on Governmental Affairs, U. S. Senate

United States General Accounting Office

GAO

Page 1 GAO- 01- 1132T

Mr. Chairman and Members of the Committee: I am pleased to be here today to
discuss efforts to protect federal agency information systems and our
nation?s critical computer- dependent infrastructures. Federal agencies, and
other public and private entities, rely extensively on computerized systems
and electronic data to support their missions. Accordingly, the security of
these systems and data is essential to avoiding disruptions in critical
operations, data tampering, fraud, and inappropriate disclosure of sensitive
information.

Today, I will provide an overview of our recent reports on federal
information security and critical infrastructure protection. Specifically, I
will summarize the pervasive nature of federal system weaknesses, outline
the serious risks to federal operations, and then detail the specific types
of weaknesses identified at federal agencies. I will also discuss the
importance of establishing a strong agencywide security management framework
and how new evaluation and reporting requirements can improve federal
efforts. Next, I will provide an overview of the strategy described in
Presidential Decision Directive (PDD) 63 for protecting our nation?s
critical infrastructures from computer- based attacks. Finally, I will
summarize the results of our recent report on the National Infrastructure
Protection Center (NIPC), an interagency center housed in the Federal Bureau
of Investigation (FBI), which is responsible for providing analysis,
warning, and response capabilities for combating computer- based attacks.

Results in Brief Because of our government?s and our nation?s reliance on
interconnected computer systems to support critical operations and
infrastructures, poor information security could have potentially
devastating implications for our country. Despite the importance of
maintaining the integrity, confidentiality, and availability of important
federal computerized operations, federal computer systems are riddled with
weaknesses that continue to put critical operations and assets at risk. In
particular, federal agencies continue to have deficiencies in their
entitywide security programs that are critical to their success in ensuring
that risks are understood and that effective controls are selected and
implemented. The new information security provisions that you, Mr. Chairman,
and Senator Thompson originally introduced as legislation will be a major
catalyst for federal agencies to improve their security program management.
To help maintain the momentum that the new information security reform
provisions have generated, federal agencies must act quickly to implement
strong security program management.

Page 2 GAO- 01- 1132T

A key element of the strategy outlined in PDD 63 was establishing the NIPC
as ?a national focal point? for gathering information on threats and
facilitating the federal government?s response to computer- based incidents.
The NIPC has initiated a variety of critical infrastructure protection
efforts that establish a foundation for future governmentwide efforts.
However, the analytical and information- sharing capabilities that PDD 63
asserts are needed to protect the nation?s critical infrastructures have not
yet been achieved. We made various recommendations to the Assistant to the
President for National Security Affairs and the Attorney General regarding
the need to more fully define the role and responsibilities of the NIPC,
develop plans for establishing analysis and warning capabilities, and
formalize information- sharing relationships with private- sector and
federal entities. To improve our nation?s ability to respond to computer-
based incidents, the administration should consider these recommendations as
it reviews how the government is organized to deal with information security
issues.

Background 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. The benefits
have been enormous. Vast amounts of information are now literally at our
fingertips, facilitating research on virtually every topic imaginable;
financial and other business transactions can be executed almost
instantaneously, often on a 24- hour- a- day basis; and electronic mail,
Internet web sites, and computer bulletin boards allow us to communicate
quickly and easily with a virtually unlimited number of individuals and
groups.

In addition to such benefits, however, this widespread interconnectivity
poses significant risks to our computer systems and, more important, to the
critical operations and infrastructures they support. For example,
telecommunications, power distribution, public health, national defense
(including the military?s warfighting capability), law enforcement,
government, and emergency services all depend on the security of their
computer operations. Likewise, the speed and accessibility that create the
enormous benefits of the computer age, if not properly controlled, allow
individuals and organizations to inexpensively eavesdrop on or interfere
with these operations from remote locations for mischievous or malicious
purposes, including fraud or sabotage.

Reports of attacks and disruptions are growing. The number of computer
security incidents reported to the CERT Coordination Centerï¿½ (CERT-

Page 3 GAO- 01- 1132T

CC) 1 rose from 9,859 in 1999 to 21,756 in 2000. For the first 6 months of
2001, 15,476 incidents were reported. 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
publication, hackers post 30 to 40 new tools to hacking sites on the
Internet every month.

Recent attacks over the past 2 months illustrate the risks. These attacks,
referred to as Code Red, Code Red II, and SirCam, have affected millions of
computer users, shut down Web sites, slowed Internet service, and disrupted
business and government operations. They have already reportedly caused
billions of dollars of damage, and their full effects have yet to be
completely assessed. Code Red attacks have reportedly (1) caused the White
House to change its website address, (2) forced the Department of Defense
(DOD) to briefly shut down its public websites, (3) infected Treasury?s
Financial Management Service causing it to disconnect its systems from the
Internet, (4) caused outages for users of Qwest?s highspeed Internet service
nationwide, and (5) delayed FedEx package deliveries. Our testimony last
month provides further details on the nature and impact of these attacks. 2

These are just the latest episodes. The cost of last year?s ILOVEYOU virus
is now estimated to be more than $8 billion. Other incidents reported in
2001 illustrate the problem further:

A hacker group by the name of ?PoizonB0x? defaced numerous government web
sites, including those of the Department of Transportation, the
Administrative Office of the U. S. Courts, the National Science Foundation,
the National Oceanic and Atmospheric Administration, the Princeton Plasma
Physics Laboratory, the General Services Administration, the U. S.
Geological Survey, the Bureau of Land Management, and the Office of Science
& Technology Policy. (Source: Attrition. org., March 19, 2001.)

The ?Russian Hacker Association? offered over the Internet an e- mail
bombing system that would destroy a person?s ?web enemy? for a fee. (Source:
UK Ministry of Defense Joint Security Coordination Center.)

1 CERT Coordination Centerï¿½ 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. 2 Information
Security: Code Red, Code Red II, and SirCam Attacks Highlight Need for
Proactive Measures (GAO- 01- 1073T, August 29, 2001).

Page 4 GAO- 01- 1132T

Government officials are increasingly concerned about attacks from
individuals and groups with malicious intent, such as crime, terrorism,
foreign intelligence gathering, and acts of war. According to the FBI,
terrorists, transnational criminals, and intelligence services are quickly
becoming aware of and using information exploitation tools such as computer
viruses, Trojan horses, worms, logic bombs, and eavesdropping sniffers that
can destroy, intercept, or degrade the integrity of and deny access to data.
3 As greater amounts of money are transferred through computer systems, as
more sensitive economic and commercial information is exchanged
electronically, and as the nation?s defense and intelligence communities
increasingly rely on commercially available information technology, the
likelihood that information attacks will threaten vital national interests
increases. In addition, the disgruntled organization insider is a
significant threat, since such individuals with little knowledge about
computer intrusions often have knowledge that allows them to gain
unrestricted access and inflict damage or steal assets.

Weaknesses in Federal Systems Remain Pervasive

Since 1996, our analyses of information security at major federal agencies
have shown that federal systems were not being adequately protected from
computer- based threats, even though these systems process, store, and
transmit enormous amounts of sensitive data and are indispensable to many
federal agency operations. In September 1996, we reported that serious
weaknesses had been found at 10 of the 15 largest federal agencies, and we
concluded that poor information security was a

3 These terms are defined as follows: Virus: a program that ?infects?
computer files, usually executable programs, by inserting a copy of itself
into the file. These copies are usually executed when the ?infected? file is
loaded into memory, allowing the virus to infect other files. Unlike the
computer worm, a virus requires human involvement (usually unwitting) to
propagate. Trojan horse: a computer program that conceals harmful code. A
Trojan horse usually masquerades as a useful program that a user would wish
to execute. Worm: an independent computer program that reproduces by copying
itself from one system to another across a network. Unlike computer viruses,
worms do not require human involvement to propagate. Logic bombs: in
programming, a form of sabotage in which a programmer inserts code that
causes the program to perform a destructive action when some triggering
event occurs, such as terminating the programmer?s employment. Sniffer:
synonymous with packet sniffer. A program that intercepts routed data and
examines each packet in search of specified information, such as passwords
transmitted in clear text.

Page 5 GAO- 01- 1132T

widespread federal problem with potentially devastating consequences. 4 In
1998 and in 2000, we analyzed audit results for 24 of the largest federal
agencies; both analyses found that all 24 agencies had significant
information security weaknesses. 5 As a result of these analyses, we have
identified information security as a governmentwide high- risk issue in
reports to the Congress since 1997- most recently in January 2001. 6

Our most recent analysis, last April, of reports published since July 1999,
showed that federal computer systems continued to be riddled with weaknesses
that put critical operations and assets at risk. 7 Weaknesses continued to
be reported in each of the 24 agencies covered by our review, and they
covered all six major areas of general controls- the policies, procedures,
and technical controls that apply to all or a large segment of an entity?s
information systems and help ensure their proper operation. These six areas
are (1) security program management, which provides the framework for
ensuring that risks are understood and that effective controls are selected
and properly implemented, (2) access controls, which ensure that only
authorized individuals can read, alter, or delete data, (3) software
development and change controls, which ensure that only authorized software
programs are implemented, (4) segregation of duties, which reduces the risk
that one individual can independently perform inappropriate actions without
detection, (5) operating systems controls, which protect sensitive programs
that support multiple applications from tampering and misuse, and (6)
service continuity, which ensures that computer- dependent operations
experience no significant disruptions.

Our April analysis also showed that the scope of audit work performed has
continued to expand to more fully cover all six major areas of general
controls at each agency. Not surprisingly, this has led to the
identification of additional areas of weakness at some agencies. While these
increases in reported weaknesses are disturbing, they do not necessarily
mean that information security at federal agencies is getting worse. They
more likely indicate that information security weaknesses are becoming more
fully

4 Information Security: Opportunities for Improved OMB Oversight of Agency
Practices

(GAO/AIMD-96-110, September 24, 1996).

5 Information Security: Serious Weaknesses Place Critical Federal Operations
and Assets at Risk (GAO/ AIMD- 98- 92, September 23, 1998); Information
Security: Serious and Widespread Weaknesses Persist at Federal Agencies
(GAO/ AIMD- 00- 295, September 6, 2000). 6 High- Risk Series: Information
Management and Technology (GAO/ HR- 97- 9, February 1,

1997); High- Risk Series: An Update (GAO/ HR- 99- 1, January 1999); High
Risk Series: An Update (GAO- 01- 263, January 2001). 7 Computer Security:
Weaknesses Continue to Place Critical Federal Operations and Assets

at Risk (GAO- 01- 600T, April 5, 2001).

Page 6 GAO- 01- 1132T

understood- an important step toward addressing the overall problem.
Nevertheless, the results leave no doubt that serious, pervasive weaknesses
persist. As auditors increase their proficiency and the body of audit
evidence expands, it is probable that additional significant deficiencies
will be identified.

Most of the audits covered in our analysis were performed as part of
financial statement audits. At some agencies with primarily financial
missions, such as the Department of the Treasury and the Social Security
Administration, these audits covered the bulk of mission- related
operations. However, at agencies whose missions are primarily nonfinancial,
such as DOD and the Department of Justice, the audits may provide a less
complete picture of the agency?s overall security posture because the audit
objectives focused on the financial statements and did not include
evaluations of systems supporting nonfinancial operations. In response to
congressional interest, during fiscal years 1999 and 2000, we expanded our
audit focus to cover a wider range of nonfinancial operations. We expect
this trend to continue.

Risks to Federal Operations are Substantial

To fully understand the significance of the weaknesses we identified, it is
necessary to link them to the risks they present to federal operations and
assets. Virtually all federal operations are supported by automated systems
and electronic data, and agencies would find it difficult, if not
impossible, to carry out their missions and account for their resources
without these information assets. Hence, the degree of risk caused by
security weaknesses is extremely high.

The weaknesses identified place a broad array of federal operations and
assets at risk of fraud, misuse, and disruption. For example, weaknesses at
the Department of the Treasury increase the risk of fraud associated with
billions of dollars of federal payments and collections, and weaknesses at
DOD increase the vulnerability of various military operations. Further,
information security weaknesses place enormous amounts of confidential data,
ranging from personal and tax data to proprietary business information, at
risk of inappropriate disclosure. For example, in 1999, a Social Security
Administration employee pled guilty to unauthorized access to the
administration?s systems. The related investigation determined that the
employee had made many unauthorized queries,

Page 7 GAO- 01- 1132T

including obtaining earnings information for members of the local business
community.

More recent audits in 2001 show that serious weaknesses continue to be a
problem and that critical federal operations and assets remain at risk.

In August, we reported that significant and pervasive weaknesses placed the
Department of Commerce?s systems at risk. Many of these systems are
considered critical to national security, national economic security, and
public health and safety. Nevertheless, we demonstrated that individuals,
both within and outside of Commerce, could gain unauthorized access to
Commerce systems and thereby 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. 8 Also, Commerce?s inspector general has also
reported significant computer security weaknesses in several of the
department?s bureaus and, in February 2001, reported multiple material
information security weaknesses affecting the department?s ability to
produce accurate data for financial statements. 9

In July, we reported serious weaknesses in systems maintained by the
Department of Interior?s National Business Center, a facility processing
more than $12 billion annually in payments that place sensitive financial
and personnel information at risk of unauthorized disclosure, critical
operations at risk of disruption, and assets at risk of loss. While Interior
has made progress in correcting previously identified weaknesses, the newly
identified weaknesses impeded the center?s ability to (1) prevent and detect
unauthorized changes, (2) control electronic access to sensitive
information, and (3) restrict physical access to sensitive computing areas.
10

In March, we reported that although the DOD?s Department- wide Information
Assurance Program had made progress in addressing information assurance, it
had not yet met its goals of integrating information assurance with mission
readiness criteria, enhancing information assurance capabilities and
awareness of department personnel, improving monitoring and management of
information assurance operations, and establishing a security management
infrastructure. As a result, DOD was unable to accurately determine the
status of information security across

8 Information Security: Weaknesses Place Commerce Data and Operations at
Serious Risk (GAO- 01- 751, August 13, 2001). 9 Department of Commerce?s
Fiscal Year 2000 Consolidated Financial Statements,

Inspector General Audit Report No. FSD- 12849- 1- 0001. 10 Information
Security: Weak Controls Place Interior's Financial and Other Data at

Risk (GAO- 01- 615, July 3, 2001).

Page 8 GAO- 01- 1132T

the department, the progress of its improvement efforts, or the
effectiveness of its information security initiatives. 11

In February, the Department of Health and Human Services? Inspector General
again reported serious control weaknesses affecting the integrity,
confidentiality, and availability of data maintained by the department. 12
Most significant were weaknesses associated with the department?s Centers
for Medicare and Medicaid Services (CMS), formerly known as the Health Care
Financing Administration, which was responsible, during fiscal year 2000,
for processing more than $200 billion in Medicare expenditures. CMS relies
on extensive data processing operations at its central office to maintain
administrative data, such as Medicare enrollment, eligibility and paid
claims data, and to process all payments for managed care. Significant
weaknesses were also reported for the Food and Drug Administration and the
department?s Division of Financial Operations.

These types of risks, if inadequately addressed, may limit the government?s
ability to take advantage of new technology and improve federal services
through electronic means. For example, this past February, we reported on
serious control weaknesses in the Internal Revenue Service?s (IRS)
electronic filing system, noting that failure to maintain adequate security
could erode public confidence in electronic filing, jeopardize the Service?s
ability to meet its goal of 80 percent of returns being filed electronically
by 2007, and deprive it of financial and other anticipated benefits.

Specifically, we found that, during the 2000 tax filing season, IRS did not
adequately secure access to its electronic filing systems or to the
electronically transmitted tax return data those systems contained. We
demonstrated that unauthorized individuals, both within and outside IRS,
could have gained access to these systems and viewed, copied, modified, or
deleted taxpayer data. In addition, the weaknesses we identified jeopardized
the security of the sensitive business, financial, and taxpayer data on
other critical IRS systems that were connected to the electronic filing
systems. The IRS Commissioner has stated that, in response to
recommendations we made, IRS completed corrective action for all the
critical access control vulnerabilities we identified before the 2001 filing
season and that, as a result, the electronic filing systems now
satisfactorily meet critical federal security requirements to protect the
taxpayer. 13 As

11 Information Security: Progress and Challenges to an Effective Defense-
wide Information Assurance Program (GAO- 01- 307, March 30, 2001). 12 Report
on the Financial Statement Audit of the Department of Health and Human
Services

for Fiscal Year 2000, A- 17- 00- 00014, February 26, 2001. 13 Information
Security: IRS Electronic Filing Systems (GAO- 01- 306, February 16,

2001).

Page 9 GAO- 01- 1132T

part of our audit follow up activities, we plan to evaluate the
effectiveness of IRS? corrective actions.

Addressing weaknesses such as those we identified in the IRS?s electronic
filing system is especially important in light of the administration?s plans
to improve government services by expanding use of the Internet and other
computer- facilitated operations- collectively referred to as electronic
government, or E- government. 14 Specific initiatives proposed for fiscal
year 2002 include expanding electronic means for (1) providing information
to citizens, (2) handling procurement- related transactions, (3) applying
for and managing federal grants, and (4) providing citizens information on
the development of specific federal rules and regulations. Anticipated
benefits include reducing the expense and difficulty of doing business with
the government, providing citizens improved access to government services,
and making government more transparent and accountable. Success in achieving
these benefits will require agencies and others involved to ensure that the
systems supporting E- government are protected from fraud, inappropriate
disclosures, and disruption. Without this protection, confidence in E-
government may be diminished, and the related benefits never fully achieved.

Control Weaknesses Across Agencies are Similar

Although the nature of agency operations and their related risks vary,
striking similarities remain in the specific types of general control
weaknesses reported and in their serious negative impact on an agency?s
ability to ensure the integrity, availability, and appropriate
confidentiality of its computerized operations. Likewise, similarities exist
in the corrective actions they must take. The following sections describe
the six areas of general controls and the specific weaknesses that were most
widespread at the agencies covered by our analysis.

Security Program Management

Each organization needs a set of management procedures and an organizational
framework for identifying and assessing risks, deciding

14 The President?s Management Agenda, Fiscal Year 2002, www. whitehouse.
gov/ omb/ budget.

Page 10 GAO- 01- 1132T

what policies and controls are needed, periodically evaluating the
effectiveness of these policies and controls, and acting to address any
identified weaknesses. These are the fundamental activities that allow an
organization to manage its information security risks in a cost effective
manner rather than reacting to individual problems in an ad- hoc manner only
after a violation has been detected or an audit finding reported.

Despite the importance of this aspect of an information security program,
poor security program management continues to be a widespread problem.
Virtually all the agencies for which this aspect of security was reviewed
had deficiencies. Specifically, many had not (1) developed security plans
for major systems based on risk (2) documented security policies, and (3)
implemented a program for testing and evaluating the effectiveness of the
controls they relied on. As a result, these agencies

were not fully aware of the information security risks to their operations,

had accepted an unknown level of risk by default rather than consciously
deciding what level of risk was tolerable,

had a false sense of security because they were relying on ineffective
controls, and

could not make informed judgments as to whether they were spending too
little or too much of their resources on security.

Access Controls Access controls limit or detect inappropriate access to
computer resources (data, equipment, and facilities), thereby protecting
these resources against unauthorized modification, loss, and disclosure.
Access controls include physical protections- such as gates and guards- as
well as logical controls, which are controls built into software that
require users to authenticate themselves (through the use of secret
passwords or other identifiers) and limit the files and other resources that
authenticated users can access and the actions that they execute. Without
adequate access controls, unauthorized individuals, including outside
intruders and former employees, can surreptitiously read and copy sensitive
data and make undetected changes or deletions for malicious purposes or
personal gain. Also, authorized users can intentionally or unintentionally
modify or delete data or execute changes that are outside their span of
authority.

For access controls to be effective, they must be properly implemented and
maintained. First, an organization must analyze the responsibilities of
individual computer users to determine what type of access (e. g., read,
modify, delete) they need to fulfill their responsibilities. Then, specific

Page 11 GAO- 01- 1132T

control techniques, such as specialized access control software, must be
implemented to restrict access to these authorized functions. Such software
can be used to limit a user?s activities associated with specific systems or
files and keep records of individual users? actions on the computer.
Finally, access authorizations and related controls must be maintained and
adjusted on an ongoing basis to accommodate new and departing employees, as
well as changes in users? responsibilities and related access needs.

Significant access control weaknesses were reported for all the agencies
covered by our analysis, as shown by the following examples:

Accounts and passwords for individuals no longer associated with the agency
were not deleted or disabled nor were they adjusted for those whose
responsibilities, and thus need to access certain files, changed. As a
result, at one agency, former employees and contractors could still and in
many cases did read, modify, copy, or delete data. At this same agency, even
after 160 days of inactivity, 7,500 out of 30,000 users? accounts had not
been deactivated.

Users were not required to periodically change their passwords.

Managers did not precisely identify and document access needs for individual
users or groups of users. Instead, they provided overly broad access
privileges to very large groups of users. As a result, far more individuals
than necessary had the ability to browse and, sometimes, modify or delete
sensitive or critical information. At one agency, all 1,100 users were
granted access to sensitive system directories and settings. At another
agency, 20,000 users had been provided access to one system without written
authorization.

Use of default, easily guessed, and unencrypted passwords significantly
increased the risk of unauthorized access. During testing at one agency, we
were able to guess many passwords based on our knowledge of commonly used
passwords and were able to observe computer users? keying in passwords and
then use those passwords to obtain ?high level? system administration
privileges.

Software access controls were improperly implemented, resulting in
unintended access or gaps in access- control coverage. At one agency data
center, all users, including programmers and computer operators, had the
ability to read sensitive production data, increasing the risk that such
sensitive information could be disclosed to unauthorized individuals. Also,
at this agency, certain users had the unrestricted ability to transfer
system files across the network, increasing the risk that unauthorized
individuals could gain access to the sensitive data or programs.

Page 12 GAO- 01- 1132T

To illustrate the risks associated with poor authentication and access
controls, in recent years we have begun to incorporate network vulnerability
testing into our audits of information security. Such tests involve
attempting- with agency cooperation- to gain unauthorized access to
sensitive files and data by searching for ways to circumvent existing
controls, often from remote locations. Our auditors have been successful, in
almost every test, in readily gaining unauthorized access that would allow
both internal and external intruders to read, modify, or delete data for
whatever purpose they had in mind. Further, user activity was inadequately
monitored. Also, much of the activity associated with our intrusion testing
has not been recognized and recorded, and the problem reports that were
recorded did not recognize the magnitude of our activity or the severity of
the security breaches we initiated.

Software Development and Change Controls

Controls over software development and changes prevent unauthorized software
programs or modifications to programs from being implemented. Key aspects of
such controls are ensuring that (1) software changes are properly authorized
by the managers responsible for the agency program or operations that the
application supports, (2) new and modified software programs are tested and
approved before they are implemented, and (3) approved software programs are
maintained in carefully controlled libraries to protect them from
unauthorized changes and ensure that different versions are not
misidentified.

Such controls can prevent errors in software programming as well as
malicious efforts to insert unauthorized computer program code. Without
adequate controls, incompletely tested or unapproved software can result in
erroneous data processing that, depending on the application, could lead to
losses or faulty outcomes. In addition, individuals could surreptitiously
modify software programs to include processing steps or features that could
later be exploited for personal gain or sabotage.

Weaknesses in software program change controls were identified for almost
all the agencies for which these controls were evaluated. Examples of
weaknesses in this area included the following:

Testing procedures were undisciplined and did not ensure that implemented
software operated as intended. For example, at one agency, senior officials
authorized some systems for processing without testing access controls to
ensure that they had been implemented and were operating effectively. At
another agency, documentation was not retained to demonstrate user testing
and acceptance.

Page 13 GAO- 01- 1132T

Implementation procedures did not ensure that only authorized software was
used. In particular, procedures did not ensure that emergency changes were
subsequently tested and formally approved for continued use and that
implementation of ?locally developed? (unauthorized) software programs was
prevented or detected.

Agencies? policies and procedures frequently did not address the maintenance
and protection of program libraries.

Segregation of Duties Segregation of duties refers to the policies,
procedures, and organizational structure that help ensure that one
individual cannot independently control all key aspects of a process or
computer- related operation and thereby conduct unauthorized actions or gain
unauthorized access to assets or records without detection. For example, one
computer programmer should not be allowed to independently write, test, and
approve program changes.

Although segregation of duties alone will not ensure that only authorized
activities occur, inadequate segregation of duties increases the risk that
erroneous or fraudulent transactions could be processed, improper program
changes implemented, and computer resources damaged or destroyed. For
example,

an individual who was independently responsible for authorizing, processing,
and reviewing payroll transactions could inappropriately increase payments
to selected individuals without detection or

a computer programmer responsible for authorizing, writing, testing, and
distributing program modifications could either inadvertently or
deliberately implement computer programs that did not process transactions
in accordance with management?s policies or that included malicious code.

Controls to ensure appropriate segregation of duties consist mainly of
documenting, communicating, and enforcing policies on group and individual
responsibilities. Segregation of duties can be enforced by a combination of
physical and logical access controls and by effective supervisory review. We
identified weaknesses in segregation of duties at most agencies covered by
our analysis. Common problems involved computer programmers and operators
who were authorized to perform a variety of duties, thus providing them the
ability to independently modify, circumvent, and disable system security
features. For example, at one data

Page 14 GAO- 01- 1132T

center, a single individual could independently develop, test, review, and
approve software changes for implementation.

Segregation of duties problems were also identified related to transaction
processing. For example, at one agency, 11 staff members involved with
procurement had system access privileges that allowed them to individually
request, approve, and record the receipt of purchased items. In addition, 9
of the 11 staff members had system access privileges that allowed them to
edit the vendor file, which could result in fictitious vendors being added
to the file for fraudulent purposes. For fiscal year 1999, we identified 60
purchases, totaling about $300,000, that were requested, approved, and
receipt- recorded by the same individual.

Operating System Software Controls

Operating system software controls limit and monitor access to the powerful
programs and sensitive files associated with the computer systems operation.
Generally, one set of system software is used to support and control a
variety of applications that may run on the same computer hardware. System
software helps control and coordinate the input, processing, output, and
data storage associated with all applications that run on the system. Some
system software can change data and program code on files without leaving an
audit trail or can be used to modify or delete audit trails. Examples of
system software include the operating system, system utilities, program
library systems, file maintenance software, security software, data
communications systems, and database management systems.

Controls over access to and modification of system software are essential in
providing reasonable assurance that operating system- based security
controls are not compromised and that the system will not be impaired. If
controls in this area are inadequate, unauthorized individuals might use
system software to circumvent security controls to read, modify, or delete
critical or sensitive information and programs. Also, authorized users of
the system may gain unauthorized privileges to conduct unauthorized actions
or to circumvent edits and other controls built into application programs.
Such weaknesses seriously diminish the reliability of information produced
by all applications supported by the computer system and increase the risk
of fraud, sabotage, and inappropriate disclosure. Further, system software
programmers are often more technically proficient than other data processing
personnel and, thus, have a greater ability to perform unauthorized actions
if controls in this area are weak.

Page 15 GAO- 01- 1132T

The control concerns for system software are similar to the access control
issues and software program change control issues discussed earlier.
However, because of the high level of risk associated with system software
activities, most entities have a separate set of control procedures that
apply to them. Weaknesses were identified at each agency for which operating
system controls were reviewed. A common type of problem reported was
insufficiently restricted access that made it possible for knowledgeable
individuals to disable or circumvent controls in a variety of ways. For
example, at one agency, system support personnel had the ability to change
data in the system audit log. As a result, they could have engaged in a wide
array of inappropriate and unauthorized activity and could have subsequently
deleted related segments of the audit log, thus diminishing the likelihood
that their actions would be detected.

Further, pervasive vulnerabilities in network configuration exposed agency
systems to attack. These vulnerabilities stemmed from agencies? failure to
(1) install and maintain effective perimeter security, such as firewalls and
screening routers, (2) implement current software patches, and (3) protect
against commonly known methods of attack.

Service Continuity Controls

Finally, service continuity controls ensure that when unexpected events
occur, critical operations will continue without undue interruption and that
crucial, sensitive data are protected. For this reason, an agency should
have (1) procedures in place to protect information resources and minimize
the risk of unplanned interruptions and (2) a plan to recover critical
operations should interruptions occur. These plans should consider the
activities performed at general support facilities, such as data processing
centers, as well as the activities performed by users of specific
applications. To determine whether recovery plans will work as intended,
they should be tested periodically in disaster simulation exercises.

Losing the capability to process, retrieve, and protect electronically
maintained information can significantly affect an agency?s ability to
accomplish its mission. If controls are inadequate, even relatively minor
interruptions can result in lost or incorrectly processed data, which can
cause financial losses, expensive recovery efforts, and inaccurate or
incomplete financial or management information. Controls to ensure service
continuity should address the entire range of potential disruptions. These
may include relatively minor interruptions, such as temporary power failures
or accidental loss or erasure of files, as well as major disasters, such as
fires or natural disasters, that would require

Page 16 GAO- 01- 1132T

reestablishing operations at a remote location. Service continuity controls
include (1) taking steps, such as routinely making backup copies of files,
to prevent and minimize potential damage and interruption, (2) developing
and documenting a comprehensive contingency plan, and (3) periodically
testing the contingency plan and adjusting it as appropriate.

Service continuity control weaknesses were reported for most of the agencies
covered by our analysis. Examples of weaknesses included the following:

Plans were incomplete because operations and supporting resources had not
been fully analyzed to determine which were the most critical and would need
to be resumed as soon as possible should a disruption occur.

Disaster recovery plans were not fully tested to identify their weaknesses.
For example, periodic walkthroughs or unannounced tests of the disaster
recovery plan had not been performed. Conducting these types of tests
provides a scenario more likely to be encountered in the event of an actual
disaster.

Security Program Management Can Be Improved With New Evaluation and
Reporting Requirements

The audit reports cited in this statement and in our prior information
security reports include many recommendations to individual agencies that
address specific weaknesses in the areas I have just described. It is each
individual agency?s responsibility to ensure that these recommendations are
implemented. Agencies have taken steps to address problems, and many have
remedial efforts underway. However, these efforts will not be fully
effective and lasting unless they are supported by a strong agencywide
security management framework.

Establishing such a management framework requires that agencies take a
comprehensive approach that involves both (1) senior agency program managers
who understand which aspects of their missions are the most critical and
sensitive and (2) technical experts who know the agencies? systems and can
suggest appropriate technical security control techniques. We studied the
practices of organizations with superior security programs and summarized
our findings in a May 1998 executive guide entitled

Page 17 GAO- 01- 1132T

Information Security Management: Learning From Leading Organizations (GAO/
AIMD- 98- 68). Our study found that these organizations managed their
information security risks through a cycle of risk management activities
that included

assessing risks and determining protection needs,

selecting and implementing cost- effective policies and controls to meet
these needs,

promoting awareness of policies and controls and of the risks that prompted
their adoption among those responsible for complying with them, and

implementing a program of routine tests and examinations for evaluating the
effectiveness of policies and related controls and reporting the resulting
conclusions to those who can take appropriate corrective action.

In addition, a strong, centralized focal point can help ensure that the
major elements of the risk management cycle are carried out and serve as a
communications link among organizational units. Such coordination is
especially important in today?s highly networked computing environments.

Implementing this cycle of risk management activities is the key to ensuring
that information security risks are adequately considered and addressed on
an ongoing, agencywide basis. Included within it are several steps that
agencies can take immediately. Specifically, they can (1) increase
awareness, (2) ensure that existing controls are operating effectively, (3)
ensure that software patches are up- to- date, (4) use automated scanning
and testing tools to quickly identify problems, (5) propagate their best
practices, and (6) ensure that their most common vulnerabilities are
addressed. Although none of these actions alone will ensure good security,
they take advantage of readily available information and tools and, thus, do
not involve significant new resources. As a result, they are steps that can
be made without delay.

Due to concerns about the repeated reports of computer security weaknesses
at federal agencies, in 2000, you, Mr. Chairman, and Senator Thompson
introduced government information security reform legislation to require
agencies to implement the activities I have just described. This legislation
was enacted in late 2000 as part of the fiscal year 2001 National Defense
Authorization Act. In addition to requiring security program management
improvements, the new provisions require that both management and agency
inspectors general annually evaluate agency information security programs.
The Office of Management and Budget (OMB) has asked agencies to submit the
results of their program reviews

Page 18 GAO- 01- 1132T

and the results of their inspector general?s independent evaluation this
week. In accordance with the new law, OMB plans to develop a summary report
to the Congress later this year. This summary report, and the subordinate
agency reports, should provide a more complete picture of the status of
federal information security than has previously been available, thereby
providing the Congress and OMB with an improved means of overseeing agency
progress and identifying areas needing improvement.

This annual evaluation and reporting process is an important mechanism,
previously missing, for holding agencies accountable for implementing
effective security and managing the problem from a governmentwide
perspective. We are currently reviewing agency implementation of the new
provisions.

Critical Infrastructure Protection Efforts Supplement Traditional
Information Security

Beyond the risks of computer- based attacks on critical federal operations,
the federal government has begun to address the risks of computer- based
attacks on our nation?s computer- dependent critical infrastructures, such
as electric power distribution, telecommunications, and essential government
services. Although these efforts pertain to many traditional computer
security issues, such as maintaining the integrity, confidentiality, and
availability of important computerized operations, they focus primarily on
risks of national importance and encompass efforts to ensure the security of
privately controlled critical infrastructures.

The recent history of federal initiatives to address these computer- based
risks includes the following.

In June 1995, a Critical Infrastructure Working Group, led by the Attorney
General, was formed to (1) identify critical infrastructures and assess the
scope and nature of threats to them, (2) survey existing government
mechanisms for addressing these threats, and (3) propose options for a full-
time group to consider long- term government responses to threats to
critical infrastructures. The working group identified critical
infrastructures, characterized threats to them, and recommended creating a
commission to investigate such issues.

Page 19 GAO- 01- 1132T

In February 1996, the National Defense Authorization Act required the
executive branch to provide a report to the Congress on the policies and
plans for developing capabilities to defend against computer- based attacks,
such as warnings of strategic attacks against the national information
infrastructure. 15 Later that year, the Permanent Subcommittee on
Investigations, Senate Committee on Governmental Affairs, began to hold
hearings on security in cyberspace. Since then, congressional interest in
protecting national infrastructures has remained strong.

In July 1996, in response to the recommendation of the 1995 working group,
the President's Commission on Critical Infrastructure Protection was
established to further investigate the nation's vulnerability to both cyber
and physical threats.

In October 1997, the President?s Commission issued its report, 16 which
described the potentially devastating implications of poor information
security from a national perspective.

In response to the commission?s report, the President initiated actions to
implement a cooperative public/ private approach to protecting the nation?s
critical infrastructures by issuing PDD 63 in May 1998. The directive called
for a range of activities to improve federal agency security programs,
establish a partnership between the government and private sector, and
improve the nation?s ability to detect and respond to serious attacks. The
directive established critical infrastructure protection as a national goal,
stating that, by the close of 2000, the United States was to have achieved
an initial operating capability and, no later than 2003, the capability to
protect the nation's critical infrastructures from intentional destructive
acts.

To accomplish its goals, PDD- 63 designated the National Coordinator for
Security, Infrastructure Protection, and Counter- Terrorism, who reports to
the Assistant to the President for National Security Affairs, to oversee the
development and implementation of national policy in this area. The
directive also established the National Plan Coordination staff, which
became the Critical Infrastructure Assurance Office, an interagency office
housed in the Department of Commerce responsible for planning infrastructure
protection efforts. It further authorized the FBI to expand its National
Infrastructure Protection Center (NIPC) and directed the NIPC to gather
information on threats and coordinate the federal government?s response to
incidents affecting infrastructures.

15 National Defense Authorization Act of Fiscal Year 1996 , Pub. L. 104-
106, Div. A, Title X, Subtitle E, Section 1053. 16 Critical Foundations:
Protecting America's Infrastructures, the Report of the President's
Commission on Critical Infrastructure Protection, October 1997.

Page 20 GAO- 01- 1132T

In addition, the directive designated ?lead agencies? to work with
privatesector and government entities in each of eight infrastructure
sectors and five special function areas. For example, the Department of the
Treasury is responsible for working with the banking and finance sector, and
the Department of Energy is responsible for working with the electric power
industry. Similarly, regarding special function areas, DOD is responsible
for national defense, and the Department of State is responsible for foreign
affairs. To facilitate private- sector participation, PDD 63 encouraged the
creation of Information Sharing and Analysis Centers (ISACs) that could
serve as mechanisms for gathering, analyzing, and appropriately sanitizing
and disseminating information to and from infrastructure sectors and the
NIPC. Figure 1 depicts the entities with critical infrastructure protection
responsibilities as outlined by PDD 63.

Page 21 GAO- 01- 1132T

Figure 1: Critical Infrastructure Protection Responsibilities as Outlined by
PPD 63

Source: The Critical Infrastructure Assurance Office. Infrastructure

Sectors Critical

Infrastructure Coordination

Group Lead Agencies

for Sector Liaison

Lead Agencies for Special

Functions Information and communication

Banking and finance Water supply Aviation, highway, mass

transit, pipelines, rail, waterborne commerce

Emergency law enforcement Emergency fire services, continuity of government

Electric power, oil and gas production and storage

Public health services Commerce

Treasury EPA

Transportation Justice/ FBI

FEMA Energy

HHS Justice/ FBI

(Law enforcement internal security)

CIA (Intelligence)

State (Foreign affairs)

DOD (National defense)

OSTP (Research and

development) Information Sharing and

Analysis Center( s) National Infrastructure

Protection Center National Infrastructure

Assurance Council Assistant to the

President for National Security Affairs

National Coordinator

Critical Infrastructure Assurance Office

Principals Committee President

Page 22 GAO- 01- 1132T

Shortly after the initial issuance of PDD 63, we reported on the importance
of developing a governmentwide strategy that clearly defines and coordinates
the roles of new and existing federal entities to ensure governmentwide
cooperation and support for PDD 63. 17 Specifically, we noted that several
of PDD 63?s provisions appeared to overlap with existing requirements
prescribed in the Paperwork Reduction Act; OMB Circular A- 130, Appendix
III; the Computer Security Act; and the ClingerCohen Act. In addition, some
of the directive?s objectives were similar to objectives being addressed by
other federal entities, such as developing a federal incident handling
capability, which was then in the process of being addressed by the National
Institute of Standards and Technology and the federal Chief Information
Officers Council. 18 At that time, we recommended that OMB, which, by law,
is responsible for overseeing federal information security, and the
Assistant to the President for National Security Affairs ensure such
coordination.

In July 2000, we reported that a variety of activities had been undertaken
in response to PDD 63, including developing and reviewing individual agency
critical infrastructure protection plans, identifying and evaluating
information security standards and best practices, and the White House?s
issuing its National Plan for Information Systems Protection 19 as a first
major element of a more comprehensive strategy to be developed. 20 At that
time, we reiterated the importance of defining and clarifying organizational
roles and responsibilities, noting that numerous federal entities were
collecting, analyzing, and disseminating data or guidance on computer
security vulnerabilities and incidents and that clarification would help
ensure a common understanding of (1) how the activities of these many
organizations interrelate, (2) who should be held accountable for their
success or failure, and (3) whether such activities will effectively and
efficiently support national goals.

The administration is currently reviewing the federal strategy for critical
infrastructure protection that was originally outlined in PDD 63. On May 9,
the White House issued a statement saying that it was working with federal
agencies and private industry to prepare a new version of a

?national plan for cyberspace security and critical infrastructure 17
Information Security: Serious Weaknesses Place Critical Federal Operations
and Assets at Risk (GAO/ AIMD- 98- 92, September 23, 1998). 18 The federal
incident handling program is now operated by the Federal Computer Incident
Response Center at the General Services Administration. 19 Defending
America?s Cyberspace: National Plan for Information Systems Protection:
Version 1.0: An Invitation to a Dialogue, The White House, January 7, 2000.

20 Critical Infrastructure Protection: Challenges to Building a
Comprehensive Strategy for Information Sharing and Coordination (GAO/ T-
AIMD- 00- 268, July 26, 2000).

Page 23 GAO- 01- 1132T

protection? and reviewing how the government is organized to deal with
information security issues.

NIPC Progress Has Been Mixed

A key element of the strategy outlined in PPD 63 was the establishment of
the NIPC as ?a national focal point? for gathering information on threats
and facilitating the federal government?s response to computer- based
incidents. Specifically, the directive assigned the NIPC the responsibility
for providing comprehensive analyses on threats, vulnerabilities, and
attacks; issuing timely warnings on threats and attacks; facilitating and
coordinating the government?s response to computer- based incidents;
providing law enforcement investigation and response, monitoring
reconstitution of minimum required capabilities after an infrastructure
attack; and promoting outreach and information sharing.

In April, we reported on the NIPC?s progress in developing national
capabilities for analyzing threat and vulnerability data and issuing
warnings, responding to attacks, and developing information- sharing
relationships with government and private- sector entities. 21 Overall, we
found that while progress in developing these capabilities was mixed, the
NIPC had initiated a variety of critical infrastructure protection efforts
that had laid a foundation for future governmentwide efforts. In addition,
the NIPC had provided valuable support and coordination related to
investigating and otherwise responding to attacks on computers. However, at
the close of our review, the analytical and information- sharing
capabilities that PDD 63 asserted are needed to protect the nation?s
critical infrastructures had not yet been achieved, and the NIPC had
developed only limited warning capabilities. Developing such capabilities is
a formidable task that experts say will take an intense interagency effort.

Multiple Factors Have Limited Development of Analysis and Warning
Capabilities

PDD 63 assigns the NIPC responsibility for developing analytical
capabilities to provide comprehensive information on changes in threat
conditions and newly identified system vulnerabilities, as well as timely

21 Critical Infrastructure Protection: Significant Challenges in Developing
National Capabilities (GAO- 01- 323, April 25, 2001).

Page 24 GAO- 01- 1132T

warnings of potential and actual attacks. This responsibility requires
obtaining and analyzing intelligence, law enforcement, and other information
to identify patterns that may signal that an attack is underway or imminent.

Since its establishment in 1998, the NIPC has issued a variety of analytical
products, most of which have been tactical analyses pertaining to individual
incidents. These analyses have included (1) situation reports related to law
enforcement investigations, including denial- of- service attacks that
affected numerous Internet- based entities, such as eBay and Yahoo, and (2)
analytical support of a counterintelligence investigation. In addition, the
NIPC has issued a variety of publications, most of which were compilations
of information previously reported by others with some NIPC analysis.

The use of strategic analysis to determine the potential broader
implications of individual incidents has been limited. Such analysis looks
beyond one specific incident to consider a broader set of incidents or
implications that may indicate a potential threat of national importance.
Identifying such threats assists in proactively managing risk, including
evaluating the risks associated with possible future incidents and
effectively mitigating the impact of such incidents.

Three factors have hindered the NIPC?s ability to develop strategic
analytical capabilities.

First, there is no generally accepted methodology for analyzing strategic
cyber- based threats. For example, there is no standard terminology, no
standard set of factors to consider, and no established thresholds for
determining the sophistication of attack techniques. According to officials
in the intelligence and national security community, developing such a
methodology would require an intense interagency effort and dedication of
resources.

Second, the NIPC has sustained prolonged leadership vacancies and does not
have adequate staff expertise, in part because other federal agencies have
not provided the originally anticipated number of detailees. For example, at
the close of our review in February, the position of Chief of the Analysis
and Warning Section, which was to be filled by the Central Intelligence
Agency, had been vacant for about half of the NIPC?s 3- year existence. In
addition, the NIPC had been operating with only 13 of the 24 analysts that
NIPC officials estimate are needed to develop analytical capabilities.

Third, the NIPC did not have industry- specific data on factors such as
critical system components, known vulnerabilities, and interdependencies.

Page 25 GAO- 01- 1132T

Under PDD 63, such information is to be developed for each of eight industry
segments by industry representatives and the designated federal lead
agencies. However, at the close of our work in February, only three industry
assessments had been partially completed, and none had been provided to the
NIPC.

To provide a warning capability, the NIPC established a Watch and Warning
Unit that monitors the Internet and other media 24 hours a day to identify
reports of computer- based attacks. As of February, the unit had issued 81
warnings and related products since 1998, many of which were posted on the
NIPC?s Internet web site. While some warnings were issued in time to avert
damage, most of the warnings, especially those related to viruses, pertained
to attacks underway. The NIPC?s ability to issue warnings promptly is
impeded because of (1) a lack of a comprehensive governmentwide or
nationwide framework for promptly obtaining and analyzing information on
imminent attacks, (2) a shortage of skilled staff, (3) the need to ensure
that the NIPC does not raise undue alarm for insignificant incidents, and
(4) the need to ensure that sensitive information is protected, especially
when such information pertains to law enforcement investigations underway.

However, I want to emphasize a more fundamental impediment in the NIPC?s
progress that echoes our previously reported concerns about the need for a
more clearly defined critical infrastructure protection strategy.
Specifically, evaluating its progress in developing analysis and warning
capabilities was difficult because the entities involved in the government?s
critical infrastructure protection efforts did not share a common
interpretation of the NIPC?s roles and responsibilities. Further, the
relationships between the Center, the FBI, and the National Coordinator for
Security, Infrastructure Protection, and Counter- Terrorism at the National
Security Council were unclear regarding who has direct authority for setting
NIPC priorities and procedures and providing NIPC oversight. In addition,
its own plans for further developing its analytical and warning capabilities
were fragmented and incomplete. As a result, no specific priorities,
milestones, or program performance measures existed to guide NIPC?s actions
or provide a basis for evaluating its progress.

In our April report, we recognized that the administration was reviewing the
government?s infrastructure protection strategy and recommended that, as the
administration proceeds, the Assistant to the President for National
Security Affairs, in coordination with pertinent executive agencies,

Page 26 GAO- 01- 1132T

establish a capability for strategically analyzing computer- based threats,
including developing related methodology, acquiring staff expertise, and
obtaining infrastructure data,

require development of a comprehensive data collection and analysis
framework and ensure that national watch and warning operations for
computer- based attacks are supported by sufficient staff and resources, and

clearly define the role of the NIPC in relation to other government and
private- sector entities.

In commenting on a draft of the report, the Special Assistant to the
President and Senior Director for Legislative Affairs at the National
Security Council stated that our report highlighted the need for a review of
the roles and responsibilities of the federal agencies involved in U. S.
critical infrastructure protection support. In addition, he stated that the
administration will consider our recommendations as it reviews federal cyber
activities to determine how the critical infrastructure protection function
should be organized. The Special Assistant to the President added that some
functions might be better accomplished by distributing the tasks across
several existing federal agencies, creating a ?virtual analysis center? that
would provide not only a governmentwide analysis and reporting capability,
but that could also support rapid dissemination of cyber threat and warning
information.

NIPC Coordination and Technical Support Have Benefited Investigative and
Response Capabilities

PDD 63 directed the NIPC to provide the principal means of facilitating and
coordinating the federal government?s response to computer- based incidents.
In response, the NIPC undertook efforts in two major areas: providing
coordination and technical support to FBI investigations and establishing
crisis- management capabilities.

First, the NIPC provided valuable coordination and technical support to FBI
field offices, that established special squads and teams and one regional
task force in its field offices to address the growing number of computer
crime cases. The NIPC supported these investigative efforts by (1)
coordinating investigations among FBI field offices, thereby bringing a
national perspective to individual cases, (2) providing technical support in
the form of analyses, expert assistance for interviews, and tools for

Page 27 GAO- 01- 1132T

analyzing and mitigating computer- based attacks, and (3) providing
administrative support to NIPC field agents. For example, the NIPC produced
over 250 written technical reports during 1999 and 2000, developed
analytical tools to assist in investigating and mitigating computer- based
attacks, and managed the procurement and installation of hardware and
software tools for the NIPC field squads and teams.

While these efforts benefited investigative efforts, FBI and NIPC officials
told us that increased computer capacity and data transmission capabilities
would improve their ability to promptly analyze the extremely large amounts
of data that are associated with some cases. In addition, FBI field offices
were not yet providing the NIPC with the comprehensive information that NIPC
officials say is needed to facilitate prompt identification and response to
cyber incidents. According to field office officials, some information on
unusual or suspicious computer- based activity had not been reported because
it did not merit opening a case and was deemed to be insignificant. To
address this problem, the NIPC established new performance measures related
to reporting.

Second, the NIPC developed crisis- management capabilities to support a
multiagency response to the most serious incidents from the FBI?s
Washington, D. C., Strategic Information Operations Center. From 1998
through early 2001, seven crisis- action teams had been activated to address
potentially serious incidents and events, such as the Melissa virus in 1999
and the days surrounding the transition to the year 2000, and related
procedures have been formalized. In addition, the NIPC coordinated the
development of an emergency law enforcement plan to guide the response of
federal, state, and local entities.

To help ensure an adequate response to the growing number of computer
crimes, we recommended in our April report that the Attorney General, the
FBI Director, and the NIPC Director take steps to (1) ensure that the NIPC
has access to needed computer and communications resources and (2) monitor
the implementation of new performance measures to ensure that field offices
fully report information on potential computer crimes to the NIPC.

Page 28 GAO- 01- 1132T

Progress in Establishing Information- Sharing Relationships Has Been Mixed

Information sharing and coordination among private- sector and government
organizations are essential for thoroughly understanding cyber threats and
quickly identifying and mitigating attacks. However, as we testified in July
2000, 22 establishing the trusted relationships and information- sharing
protocols necessary to support such coordination can be difficult.

NIPC?s success in this area has been mixed. For example, the InfraGard
Program, which provides the FBI and the NIPC with a means of securely
sharing information with individual companies, was viewed by the NIPC as an
important element in building trust relationships with the private sector.
As of January 2001, the InfraGard program had grown to about 500 member
organizations, and, recently, NIPC officials told us that InfraGard
membership has continued to increase. However, of the four information
sharing and analysis centers that had been established as focal points for
infrastructure sectors, a two- way, information- sharing partnership with
the NIPC had developed with only one- the electric power industry. The
NIPC?s dealings with two of the other three centers primarily consisted of
providing information to the centers without receiving any in return, and no
procedures had been developed for more interactive information sharing. The
NIPC?s information- sharing relationship with the fourth center was not
covered by our review because the center was not established until mid-
January 2001, shortly before the close of our work. However, according to
NIPC and ISAC officials, the relationships have improved since our report.

Similarly, the NIPC and the FBI made only limited progress in developing a
database of the most important components of the nation?s critical
infrastructures- an effort referred to as the Key Asset Initiative. Although
FBI field offices had identified over 5,000 key assets, at the time of our
review, the entities that own or control the assets generally had not been
involved in identifying them. As a result, the key assets recorded may not
be the ones that infrastructure owners consider the most important.

22 Critical Infrastructure Protection: Challenges to Building a
Comprehensive Strategy for Information Sharing and Cooperation (GAO/ T-
AIMD- 00- 268, July 26, 2000). Testimony before the Subcommittee on
Government Management, Information and Technology, Committee on Government
Reform, House of Representatives.

Page 29 GAO- 01- 1132T

Further, the Key Asset Initiative was not being coordinated with other
similar federal efforts at DOD and the Department of Commerce.

In addition, the NIPC and other government entities had not developed fully
productive information- sharing and cooperative relationships. For example,
federal agencies have not routinely reported incident information to the
NIPC, at least in part because guidance provided by the federal Chief
Information Officers Council, which is chaired by the Office of Management
and Budget, directs agencies to report such information to the General
Services Administration?s Federal Computer Incident Response Center.
Further, NIPC and Defense officials agreed that their information- sharing
procedures needed improvement, noting that protocols for reciprocal
exchanges of information had not been established. In addition, the
expertise of the U. S. Secret Service regarding computer crime had not been
integrated into NIPC efforts. According to the NIPC director, the
relationship between the NIPC and other government entities has improved
since our review. In recent testimony, officials from Federal Computer
Incident Response Center and the U. S. Secret Service discussed the
collaborative and cooperative relationships between their agencies and the
NIPC.

The NIPC has been more successful in providing training on investigating
computer crime to government entities, which is an effort that it considers
an important component of its outreach efforts. From 1998 through 2000, the
NIPC trained about 300 individuals from federal, state, local, and
international entities other than the FBI. In addition, the NIPC has advised
several foreign governments that are establishing centers similar to the
NIPC.

To improve information sharing, we recommended in our April report that the
Assistant to the President for National Security Affairs

direct federal agencies and encourage the private sector to better define
the types of information necessary and appropriate to exchange in order to
combat computer- based attacks and to develop procedures for performing such
exchanges,

initiate development of a strategy for identifying assets of national
significance that includes coordinating efforts already underway, and

resolve discrepancies in requirements regarding computer incident reporting
by federal agencies.

Page 30 GAO- 01- 1132T

We also recommended that the Attorney General task the FBI Director to

formalize information- sharing relationships between the NIPC and other
federal entities and industry sectors and

ensure that the Key Asset Initiative is integrated with other similar
federal activities.

In commenting on a draft of this report, the Special Assistant to the
President and Senior Director for Legislative Affairs at the National
Security Council said that the administration will consider our
recommendations as it reviews federal cyber activities to determine how the
critical infrastructure protection function should be organized.

* * * * * In conclusion, efforts are underway to mitigate the risks of
computerbased attacks on federal information systems and on our national
computer dependent infrastructures. However, recent reports and events
indicate that these efforts are not keeping pace with the growing threats
and that critical operations and assets continue to be highly vulnerable to
computer- based attacks. The evaluation and reporting requirements of the
new Government Information Security Reform provisions should help provide a
more complete and accurate picture of federal security weaknesses and a
means of measuring progress. In addition, it is important that the
government ensure that our nation has the capability to deal with the
growing threat of computer- based attacks in order to mitigate the risk of
serious disruptions and damage to our critical infrastructures. The
analysis, warning, response, and information- sharing responsibilities that
PDD 63 assigned to the NIPC are important elements of this capability.
However, developing the needed capabilities will require overcoming many
challenges. Meeting these challenges will not be easy and will require clear
central direction and dedication of expertise and resources from multiple
federal agencies, as well as private sector support.

Mr. Chairman, this concludes my statement. I would be pleased to answer any
questions that you or other members of the Committee may have at this time.
If you should have any questions later about this testimony, please contact
me at (202) 512- 6253. I can also be reached by e- mail at willemssenj@ gao.
gov.

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