Information Security: Additional Actions Needed to Fully	 
Implement Reform Legislation (02-MAY-02, GAO-02-407).		 
                                                                 
In March, GAO testified on the federal government's fiscal-year  
implementation of legislative provisions for government 	 
Information Security Reform (See GAO-02-470T). GAO reported that 
implementation of the reforms addresses serious, pervasive	 
information security weaknesses. GAO also noted the Office of	 
Management and Budget needs to (1) further guide agencies and	 
encourage them to implement the reform provision requirements and
(2) provide Congress with the information it needs for overseeing
agencies' implementation, compliance, and corrective actions, as 
well as for its related budget deliberations.			 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-02-407 					        
    ACCNO:   A03215						        
  TITLE:     Information Security: Additional Actions Needed to Fully 
Implement Reform Legislation					 
     DATE:   05/02/2002 
  SUBJECT:   Computer security					 
	     Information resources management			 
	     Strategic planning 				 


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GAO-02-407
     
A

Report to the Subcommittee on Government Efficiency, Financial Management
and Intergovernmental Relations, Committee on Government Reform, House of
Representatives

May 2002 INFORMATION SECURITY Additional Actions Needed to Fully Implement
Reform Legislation

GAO- 02- 407

Lett er

May 2, 2002 The Honorable Stephen Horn Chairman, Subcommittee on Government
Efficiency, Financial Management and Intergovernmental Relations Committee
on Government Reform House of Representatives

The Honorable Janice Schakowsky Ranking Minority Member Subcommittee on
Government Efficiency, Financial Management and Intergovernmental Relations
Committee on Government Reform House of Representatives

In March, we testified before your subcommittee on the federal government?s
first- year efforts to implement legislative provisions for Government
Information Security Reform (the reform provisions). 1 In brief, we reported
that initial implementation of the reform provisions is a significant step
in improving federal agencies? information security programs and addressing
their serious, pervasive information security weaknesses, and has resulted
in agency benefits and important actions by

the administration to address information security. We also noted that
additional actions by the Office of Management and Budget (OMB) are needed
to (1) further guide agencies and encourage them to implement the reform
provision requirements and (2) provide the Congress with the information it
needs for overseeing agencies? implementation, compliance, and corrective
action efforts, as well as for its related budget deliberations. Such
actions should be taken immediately to

assist the agencies in their second- year effort to implement the reform
provisions and to aid the Congress in considering legislation to extend the
reform provision requirements beyond their original 2- year authorization. 2
1 U. S. General Accounting Office, Information Security: Additional Actions
Needed to Fully Implement Reform Provisions, GAO- 02- 470T (Washington, D.
C.: Mar. 6, 2002). 2 The reform provisions were enacted as Title X, Subtitle
G- Government Information Security Reform, Floyd D. Spence National Defense
Authorization Act for Fiscal Year 2001, P. L. 106- 398, October 30, 2000.
These provisions became effective November 29, 2000, and are in effect for 2
years after this date.

To help ensure that these actions are taken, we are making recommendations
to OMB based on the suggestions and issues raised in our March 2002
testimony for which we have not previously made

recommendations. This testimony is reprinted in appendix I. We performed our
work from May 2001 through March 2002 in accordance with generally accepted
government auditing standards. OMB provided us with comments

on a draft of this report, which are discussed in the ?Agency Comments?
section. Recommendations To facilitate more efficient and effective agency
management of and

reporting on the implementation of information security requirements of the
reform provisions, we recommend that the director of the Office of
Management and Budget direct his staff to provide additional guidance on

 appropriate performance measures to enable the agencies to better
determine and report their progress in implementing the security
requirements;

 more specific definitions and examples of information- security- related
costs to enable the agencies to more consistently identify, track, and
report these costs; and

 a more detailed description of the required scope of the annual management
reviews regarding the extent to which (1) systems must be reviewed annually
and (2) security controls must be tested and evaluated as part of this
review process.

To enhance oversight of federal information security by the Congress and its
related budget deliberations, we further recommend that the director of the
Office of Management and Budget  authorize the heads of federal departments
and agencies to release

information from their corrective action plans to the Congress and GAO that
would (1) identify specific weaknesses to be addressed, their relative
priority, the actions to be taken, and the timeframes for completing these
actions and (2) provide their quarterly updates on the

status of completing these actions;

 provide the Congress with appropriate summary information on the results
of the audits of the evaluations for information security programs for
national security systems; and

 in addition to the information currently reported, explicitly identify in
future OMB annual reports to the Congress, the overall status of agencies?
efforts to implement each of the information security program requirements
specified by the reform provisions. In addition, to help ensure that annual
independent evaluations appropriately consider all agency systems as
intended by the reform provisions, we also recommend that director of the
Office of Management and Budget, through its budgetary and reform provision
oversight responsibilities, encourage agencies? inspectors general to

 appropriately consider both financial and nonfinancial systems in
selecting the subset of systems for testing information security control
techniques during their annual independent evaluations,

 provide an independent assessment of agencies? corrective action plans in
their future evaluations, and

 obtain appropriate resources to support these evaluations and their other
information security audit needs. Agency Comments OMB?s Chief of the
Information Policy and Technology Branch, Office of Information and
Regulatory Affairs, provided us with oral comments on a

draft of this report. Emphasizing that comments pertain specifically to our
recommendations, the OMB chief generally concurred with the recommendations
and advised that OMB and the agencies identified similar areas for
improvement and have drafted revised fiscal year 2002 reporting guidance
that would address the recommendations as appropriate.

The OMB chief also wanted to clarify several key issues related to our
recommendations on providing to the Congress information on agencies
corrective action plans, reporting to the Congress on the status of
agencies? efforts to implement information security program requirements,
and the implementation of our recommendations within the context of OMB?s
statutory roles and responsibilities. The OMB chief noted that he recognizes
Congress?s oversight role regarding agencies? actions to correct information
security weaknesses, and at this time, OMB is continuing to develop a
solution for next year?s reporting to provide to the Congress

information on agencies? corrective actions. However, he emphasized that
since OMB?s objective is to maintain the confidentiality of predecisional
information contained in agencies? corrective action plans and that he

believed removing such information from current year plans would be
difficult, OMB is not having the agencies prepare information on their
current plans that would be releasable to the Congress.

The OMB chief was also concerned about whether the reform provisions require
OMB to specifically report to the Congress on the implementation of each of
the law?s information security program requirements. He believed that such
detailed reporting conflicts with OMB?s focus on overall information
security program management. Finally, in discussing

implementation of other recommendations regarding reporting information to
the Congress on national security systems and encouraging actions by
inspectors general, the OMB chief asked that his comments indicate that in
doing so, OMB remains cognizant of (1) its statutory role and
responsibilities related to national security systems and (2) the statutory
independence of the inspectors general.

Regarding OMB?s position on providing information on agencies? corrective
action plans to the Congress, we believe that the lack of such important
information for this year?s plans would delay Congress? consideration of
agencies? corrective actions in its oversight and budget deliberations for
federal information security for another year. We will continue to work with
OMB in an effort to find workable solutions to obtain this important
information from these first- year plans, as well as from future agency
corrective action plans. Regarding OMB?s concern about reporting to the

Congress on agencies? progress in implementing each information security
program requirement, the reform provisions require OMB to report to the
Congress each year on the results of the agencies? independent evaluations.
These evaluations are required to include an assessment (made on the basis
of testing) of the requirements of this law, which include specific
requirements for an agencywide information security program. OMB?s report to
the Congress this year provided much useful information, but did not
summarize the status of agencies? efforts to implement all requirements of
an information security program, such as agencies? progress in conducting
risk assessments. Thus, we continue to believe that OMB?s

report to the Congress should include the status of agencies? efforts to
implement each of the reform provisions? information security program
requirements. We are sending copies of this report to the chairmen and
ranking minority members of the Senate and House Committees on
Appropriations, the Senate and House Budget Committees, Senate Committee on

Governmental Affairs, the House Committee on Government Reform and its
Subcommittee on Technology and Procurement Policy, and the House Committee
on Energy and Commerce. We are also sending copies of this report to the
director of the Office of Management and Budget. Copies will also be made
available to others upon request.

Should you or your staff have any questions concerning this report, please
call me at (202) 512- 3317 or Ben Ritt, assistant director, at (202) 512-
6443. We can also be reached by e- mail at daceyr@ gao. gov and rittw@ gao.
gov, respectively. Key contributors to this assignment are listed in
appendix II.

Robert F. Dacey Director, Information Security Issues

Appendi x I

GAO?s March 6, 2002, Testimony United States General Accounting Office GAO
Testimony Before the Subcommittee on Government Efficiency, Financial
Management and Intergovernmental Relations, Committee on Government Reform,
House of Representatives

For Release on Delivery Expected at

INFORMATION 10 a. m. EST

Wednesday, March 6, 2002 SECURITY

Additional Actions Needed to Fully Implement Reform Legislation

Statement of Robert F. Dacey Director, Information Security Issues GAO- 02-
470T

Mr. Chairman and Members of the Subcommittee: I am pleased to be here today
to discuss efforts by the federal government to implement provisions for
Government Information Security Reform (the reform provisions) that were
enacted as part of the National Defense Authorization Act for Fiscal Year
2001. 1 Federal agencies rely extensively on computerized systems and
electronic data to support their missions and critical operations. Concerned
with reports that continuing, pervasive security weaknesses place federal
operations at significant risk of disruption, tampering, fraud, and
inappropriate disclosures of sensitive information, the Congress enacted the
reform provisions to reduce these

risks and provide more effective oversight of federal information security.
In my testimony today, I will first describe some of the improvement efforts
and benefits that have resulted from this first year implementation of the
reform provisions. Next, I will describe the results of our evaluation of
actions by the Office of Management and Budget (OMB), 24 of the largest
federal agencies, and these agencies? inspectors general (IGs) to implement
the reform provisions. As part of this discussion, I will also summarize the
overall results of these actions and, in particular, note any challenges to
effective implementation or oversight of the reform provisions.

Mr. Chairman, as you know we have been conducting a review of the
implementation of the reform provisions for you and the ranking member.
Today, I will provide the preliminary results of our review. In conducting
this review, we interviewed officials and staff in the offices of the chief

information officer (CIO) and the IGs for 24 of the largest federal
agencies. We reviewed OMB guidance and instructions related to the reform
provisions and, for the 24 agencies, analyzed summaries of their management
reviews of their information security programs. Further, we analyzed the
IGs? summaries and reports on their independent evaluations

of the agencies? information security programs. We also analyzed OMB?s
fiscal year 2001 report to the Congress on the results of these reviews and
evaluations. 2

1 Title X, Subtitle G- Government Information Security Reform, Floyd D.
Spence National Defense Authorization Act for Fiscal Year 2001, P. L. 106-
398, October 30, 2000. 2 Office of Management and Budget, FY 2001 Report to
Congress on Federal Government Information Security Reform. February 2002.
Page 1 GAO- 02- 470T

We performed this review from May 2001 to March 2002 in accordance with
generally accepted government auditing standards.

Background Dramatic increases in computer interconnectivity, especially in
the use of

the Internet, continue to revolutionize the way our government, our nation,
and much of the world communicate and conduct business. However, this
widespread interconnectivity also poses significant risks to our computer
systems and, more important, to the critical operations and infrastructures
they support, such as telecommunications, power distribution, public health,
national defense (including the military?s warfighting capability), law
enforcement, government, and emergency services. 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.

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 increases that information attacks will threaten vital national
interests. Further, the events of September 11, 2001, underscored the need
to protect America?s cyberspace against potentially disastrous cyber

attacks- attacks that could also be coordinated to coincide with physical
terrorist attacks to maximize the impact of both. Since September 1996, we
have reported that poor information security is a widespread federal problem
with potentially devastating consequences. 3 Although agencies have taken
steps to redesign and strengthen their information system security programs,
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 addition, in both 1998 and 2000, we analyzed audit
results for 24 of the largest federal agencies and found that all 24 had
significant information security

3 U. S. General Accounting Office , Information Security: Opportunities for
Improved OMB Oversight of Agency Practices. GAO/ AIMD- 96- 110. Washington,
D. C.: September 24, 1996. Page 2 GAO- 02- 470T

weaknesses. 4 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. 5 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. For example,

resources, such as federal payments and collections, could be lost or
stolen;

computer resources could be used for unauthorized purposes or to launch
attacks on others;

sensitive information, such as taxpayer data, social security records,
medical records, and proprietary business information, could be
inappropriately disclosed or browsed or copied for purposes of espionage or
other types of crime;

critical operations, such as those supporting national defense and emergency
services, could be disrupted;

data could be modified or destroyed for purposes of fraud or disruption; and

agency missions could be undermined by embarrassing incidents that result in
diminished confidence in their ability to conduct operations and fulfill
their fiduciary responsibilities. 4 U. S. General Accounting Office ,
Information Security: Serious Weaknesses Place Critical Federal Operations
and Assets at Risk. GAO/ AIMD- 98- 92. Washington, D. C.: September 23,
1998; Information Security: Serious and Widespread Weaknesses Persist at
Federal Agencies. GAO/ AIMD- 00- 295. Washington, D. C.: September 6, 2000.

5 U. S. General Accounting Office, High- Risk Series: Information Management
and Technology. GAO/ HR- 97- 9. Washington, D. C.: February 1, 1997; High-
Risk Series: An Update. GAO/ HR- 99- 1. Washington, D. C.: January 1999;
High Risk Series: An Update. GAO01- 263. Washington, D. C.: January 2001.
Page 3 GAO- 02- 470T

Concerned with accounts of attacks on commercial systems via the Internet
and reports of significant weaknesses in federal computer systems that make
them vulnerable to attack, on October 30, 2000, Congress enacted Government
Information Security Reform provisions as part of the Floyd D. Spence
National Defense Authorization Act for Fiscal Year 2001. These provisions
became effective November 29, 2000, and are

in effect for 2 years after this date. The reform provisions supplement
information security requirements established in the Computer Security Act
of 1987, the Paperwork Reduction Act of 1995, and the Clinger- Cohen Act of
1996 and are consistent with existing information security guidance issued
by OMB 6 and the National Institute of Standards and Technology (NIST), 7 as
well as audit and best practice guidance issued by GAO. 8 Most

importantly, however, the provisions consolidate these separate requirements
and guidance into an overall framework for managing information security and
establish new annual review, independent evaluation, and reporting
requirements to help ensure agency implementation and both OMB and
congressional oversight.

The legislation assigned specific responsibilities to OMB, agency heads and
CIOs, and the IGs. OMB is responsible for establishing and overseeing
policies, standards and guidelines for information security. This includes
the authority to approve agency information security programs, but delegates
OMB?s responsibilities with regard to national security systems to national
security agencies. OMB is also required to submit an annual report to the
Congress summarizing results of agencies? evaluations of their information
security programs. The reform provisions do not specify a date for this
report.

Each agency, including national security agencies, is to establish an
agencywide risk- based information security program to be overseen by the
agency CIO and ensure that information security is practiced throughout

6 Primarily OMB Circular A- 130, Appendix III, ?Security of Federal
Automated Information Resources,? February 1996. 7 Numerous publications
made available at http:// www. itl. nist. gov/ including National Institute
of Standards and Technology, Generally Accepted Principles and Practices for
Securing Information Technology Systems, NIST Special Publication 800- 14,
September 1996.

8 U. S. General Accounting Office, Federal Information System Controls
Manual, Volume 1- Financial Statement Audits. GAO/ AIMD- 12.19.6.
Washington, D. C.: January 1999; Information Security Management: Learning
from Leading Organizations. GAO/ AIMD- 98- 68. Washington, D. C.: May 1998.
Page 4 GAO- 02- 470T

the life cycle of each agency system. Specifically, this program is to
include

periodic risk assessments that consider internal and external threats to the
integrity, confidentiality, and availability of systems, and to data
supporting critical operations and assets;

the development and implementation of risk- based, cost- effective policies
and procedures to provide security protections for information collected or
maintained by or for the agency;

training on security responsibilities for information security personnel and
on security awareness for agency personnel;

periodic management testing and evaluation of the effectiveness of policies,
procedures, controls, and techniques;

a process for identifying and remediating any significant deficiencies;

procedures for detecting, reporting and responding to security incidents;
and

an annual program review by agency program officials. In addition to the
responsibilities listed above, the reform provisions require each agency to
have an annual independent evaluation of its information security program
and practices, including control testing and compliance assessment. The
evaluations of non- national- security systems are to be performed by the
agency IG or an independent evaluator, and the results of these evaluations
are to be reported to OMB. For the evaluation of national security systems,
special provisions include designation of evaluators by national security
agencies, restricted reporting of evaluation results, and an audit of the
independent evaluation performed by the IG or an independent evaluator. For
national security systems, only the results of each audit of an evaluation
are to be reported to OMB.

Finally, the reform provisions also assign additional responsibilities for
information security policies, standards, guidance, training, and other
functions to other agencies. These agencies are NIST, the Department of
Defense, the Intelligence Community, the Attorney General, the General
Services Administration (GSA), and the Office of Personnel Management. With
oversight jurisdiction for information security, this subcommittee has
continued to hold hearings on the status of information security in the
federal government. Most recently, on November 9, 2001, the subcommittee
issued information security ?grades? based primarily on the Page 5 GAO- 02-
470T

agencies? reform provision review summaries and IG evaluations that were
submitted to OMB. The overall grade for the federal government was an ?F.?
Results in Brief The initial implementation of the reform provisions is a
significant step in

improving federal agencies? information security programs and addressing
their serious, pervasive information security weaknesses. The legislation
consolidates information security requirements into an overall management
framework covering all agency systems, adds new statutory

evaluation and reporting requirements that facilitate implementation of
these requirements, and strengthens OMB and congressional oversight.
Agencies have noted benefits of this first- year implementation, including
increased management attention to and accountability for information
security. In addition, the legislation has resulted in other important
actions

by the administration to address information security, such as plans to
integrate information security into the President?s Management Agenda
Scorecard. OMB is using a combination of formal guidance, review and
analysis of agency- reported material, agency discussion and feedback, and
monitoring of corrective actions to oversee and coordinate agency compliance
with the requirements of the reform provisions. This oversight contributed
to agency implementation and reporting efforts. However, further guidance is
needed to ensure that agencies effectively implement these requirements and
can show their progress in these efforts. For example, OMB?s reporting
guidance required agencies to identify performance measures and actual
performance for implementing key security requirements like assessing risk
and testing and evaluating security controls, but did not provide guidance
on establishing such measures. Thus, agencies were left to independently
develop their own measures.

In February 2002, OMB released its required annual report to the Congress on
the results of agency evaluations. In this report, OMB commended agencies?
improvement efforts, but noted that many agencies have significant
deficiencies in every important area of security. OMB also identified a
number of common agency security weaknesses, including a lack of senior
management attention, inadequate accountability for job and program
performance, and a limited capability to detect vulnerabilities or
intrusions. Although OMB?s report provides an overview of agencies? progress
and status, the report does not specifically address several requirements of
the reform provisions, including the adequacy of agencies? corrective action
plans and the results of evaluations for national Page 6 GAO- 02- 470T

security systems. Further, OMB considers some agency material, such as
agencies? corrective action plans, to contain predecisional budget
information and will not authorize agencies to release this material to the
Congress or GAO. The lack of such important information limits congressional
oversight of agencies? implementation, compliance, and corrective action
efforts, as well as for budget deliberations. We plan to continue working
with OMB in an effort to find workable solutions to obtain the information
needed for congressional oversight. In response to the reform provisions,
agencies reviewed their information

security programs, reported the results of these reviews to OMB, and
developed plans to correct identified weaknesses. However, their reviews
showed that agencies have not established information security programs
consistent with the legislative requirements and that significant weaknesses
exist. Although agency actions are now underway to strengthen information
security and implement these requirements, significant improvement will
require sustained management attention and OMB and congressional oversight.

The IGs also played a critical role in this process by independently
evaluating the agencies? implementation efforts and verifying the
effectiveness of security controls. However, the IGs? first- year efforts to
evaluate agency information security were largely based on existing or
ongoing audit work to evaluate agency information security, which in a

number of instances, consisted primarily of audits of financial systems.
While their future evaluations should expand to include more systems
supporting nonfinancial operations, the IGs? first- year evaluations helped
identify significant weaknesses in all 24 of the largest federal agencies-

weaknesses that were not always identified by the agencies in their reports.

Given recent events and reports that critical operations and assets are
highly vulnerable to cyber attack, it is essential that the Congress have
adequate information to oversee and fund federal information security
efforts and that these efforts be guided by a comprehensive strategy for

improvement. OMB should, therefore, consider providing the Congress with
additional information that the agencies submitted under the reform
provisions, such as appropriate information from the agencies? corrective
action plans. In addition, there are a number of important steps that the
administration and the agencies should take to ensure that information
security receives appropriate attention and resources and that known
deficiencies are addressed, including delineating the roles and
responsibilities of the numerous entities involved in federal information
Page 7 GAO- 02- 470T

security and related aspects of critical infrastructure protection,
providing more specific guidance to agencies on the security controls that
they need to implement, and allocating sufficient agency resources for
information security.

Reform Provisions The initial implementation of the reform provisions is a
significant step in

Increase Management addressing the serious, pervasive weaknesses in the
federal government?s

information security. The legislation consolidates existing security
Attention to requirements and adds new statutory requirements designed to
improve Information Security

information security, such as independent evaluations and annual reporting.
In addition, implementation of the provisions has improved agency focus on
information security and resulted in important actions by the
administration.

Although security requirements existed in law and policy before this law,
the reform provisions put into law several important additional
requirements. First, the provisions require a risk- based security
management program covering all operations and assets of the agency and
those provided or managed for the agency by others to be implemented by
agency program managers and CIOs. Instituting such an approach is important
since many agencies had not effectively evaluated their information security
risks and implemented appropriate controls. Our studies of public and
private best practices have shown that effective security program management
requires implementing a process that provides for a cycle of risk management
activities as now included in the reform provisions. 9 Moreover, other
efforts to improve agency information security will not be fully effective
and lasting unless they are supported by a strong agencywide security
management program.

Second, the reform provisions require an annual independent evaluation of
each agency?s information security program. Individually, as well as
collectively, these evaluations can provide much needed information for
improved oversight by OMB and the Congress. Our years of auditing agency
security programs have shown that independent tests and evaluations are
essential to verifying the effectiveness of computer- based controls. Audits
can also evaluate agency implementation of management

9 U. S. General Accounting Office, Information Security Management: Learning
from Leading Organizations. GAO/ AIMD- 98- 68. Washington, D. C.: May 1998;
Information Security Risk Management: Practices of Leading Organizations.
GAO/ AIMD- 00- 33. Washington, D. C.: November 1999. Page 8 GAO- 02- 470T

initiatives, thus promoting management accountability. Annual independent
evaluations of agency information security programs will help drive reform
because they will spotlight both the obstacles and progress toward improving
information security and provide a means of measuring progress, much like
the financial statement audits required by

the Government Management Reform Act of 1994. Further, independent reviews
proved to be an important mechanism for monitoring progress and uncovering
problems that needed attention in the federal government?s efforts to meet
the Year 2000 computing challenge.

Third, the reform provisions take a governmentwide approach to information
security by accommodating a wide range of information security needs and
applying requirements to all agencies, including those engaged in national
security. This is important because the information security needs of
civilian agency operations and those of national security operations have
converged in recent years. In the past, when sensitive information was more
likely to be maintained on paper or in stand- alone computers, the main
concern was data confidentiality, especially as it pertained to classified
national security data. Now, virtually all agencies rely on interconnected
computers to maintain information and carry out operations that are
essential to their missions. While the confidentiality needs of these data
vary, all agencies must be concerned about the integrity and the
availability of their systems and data. It is important for

all agencies to understand these various types of risks and take appropriate
steps to manage them.

Fourth, the annual reporting requirements provide a means for both OMB and
the Congress to oversee the effectiveness of agency and governmentwide
information security, measure progress in improving information security,
and consider information security in budget deliberations. In addition to
management reviews, annual IG reporting of the independent evaluation
results to OMB and OMB?s reporting of these results to the Congress provide
the Congress with an objective assessment of agencies? information security
programs on which to base its oversight and

budgeting activities. This reporting also facilitates a process to help
ensure consistent identification of information security weaknesses by both
the IG and agency management.

In addition to new statutory provisions, first- year implementation of the
reform provisions has yielded significant benefits in terms of agency focus
on information security. A number of agencies stated that as a result of
implementing the reform provisions, they are taking significant steps to
Page 9 GAO- 02- 470T

improve their information security programs. For example, one agency stated
that the legislation provided it with the opportunity to identify some
systemic program- level weaknesses for which it plans to undertake separate
initiatives targeted specifically to improve the weaknesses. Other benefits
agencies observed included (1) higher visibility of information security
within the agencies, (2) increased awareness of information security
requirements among department personnel, (3) recognition that program
managers are to be held accountable for the security of their

operations, (4) greater agency consideration of security throughout the
system life cycle, and (5) justification for additional resources and
funding needed to improve security. Agency IGs also viewed the reform
provisions as a positive step towards improving information security
particularly by increasing agency management?s focus on this issue.

Implementation of the reform provisions has also resulted in important
actions by the administration, which if properly implemented, should
continue to improve information security in the federal government. For
example, OMB has issued guidance that information technology investments
will not be funded unless security is incorporated into and funded as part
of each investment, and NIST has established a Computer Security Expert
Assist Team to review agencies? computer security management. The
administration also has plans to direct all large agencies to undertake a
review to identify and prioritize critical assets within the agencies and
their interrelationships with other

agencies and the private sector, as well as a cross- government review to
ensure that all critical government processes and assets have been
identified;

integrate security into the President?s Management Agenda Scorecard;

develop workable measures of performance;

develop e- training on mandatory topics, including security; and

explore methods to disseminate vulnerability patches to agencies more
effectively. Page 10 GAO- 02- 470T

OMB has Guided and On January 16, 2001, OMB issued guidance to the agencies
on implementing the reform provisions that summarized OMB, agency, and IG

Overseen Agency responsibilities, and provided answers to other specific
implementation Implementation

questions. 10 OMB followed up the implementation guidance with agency
reporting instructions first issued in draft form in April and then in final
form on June 22. 11 These final reporting instructions directed agencies to

transmit copies of the annual agency program reviews, IG independent
evaluations, and for national security systems, audits of the independent
evaluations to OMB 3 months later, on September 10, 2001- the same time they
were to submit their fiscal year 2003 budget materials. In addition to the
program reviews and evaluations, agency heads were also to provide a brief
executive summary developed by the agency CIO, agency program officials, and
the IG based on the results of their work.

The OMB reporting instructions also listed specific topics that the agencies
were to address, many of which were referenced back to corresponding
requirements of the reform provisions. These topics, which became the basic
structure of the executive summaries submitted by the agencies and most IGs,
basically asked that agencies identify, describe, or report:

1. Total security funding as found in the agency?s fiscal year 2001 budget
request, fiscal year 2001 budget enacted, and the fiscal year 2002 budget
request.

2. The total number of programs included in the program reviews or
independent evaluations. 3. The methods used to conduct the program reviews
and independent

evaluations. 4. Any material weakness in policies, procedures, or practices
as identified

and required to be reported under existing law. 5. The specific measures and
actual performance for performance measures

that agencies used to ensure that for operations and assets under their 10
?Guidance on Implementing the Government Information Security Reform Act,?
Memorandum for the Heads of Executive Departments and Agencies, Jack Lew,
Director, M- 01- 08, January 16, 2001. 11 ?Reporting Instructions for the
Government Information Security Reform Act,? Memorandum for the Heads of
Executive Departments and Agencies, Mitchell E. Daniels,

Jr., Director, M- 01- 24, June 22, 2001. Page 11 GAO- 02- 470T

control, agency program officials have assessed the risk, determined the
appropriate level of security, maintained an up- to- date security plan
(that is practiced throughout the life cycle) for each supporting system,
and

tested and evaluated security controls and techniques. 6. The specific
measures and actual performance for performance measures

that agencies used to ensure that the agency CIO (a) adequately maintains an
agencywide security program, (b) ensures the effective implementation of the
program and evaluates the performance of major agency components, and (c)
ensures that agency employees with significant security responsibilities are
trained. 7. How the agency ensures that employees are sufficiently trained
in their

security responsibilities to include identifying the total number of agency
employees, the types of security training available during the reporting
period, the number of agency employees that received each type of training,
and the total costs of providing such training. 8. The agency?s documented
procedures for reporting security incidents and

sharing information regarding common vulnerabilities. 9. How the agency
integrates security into its capital planning and

investment control process. 10. The specific methodology and how it has been
implemented by the agency

to identify, prioritize, and protect critical assets within its enterprise
architecture, including links with key external systems.

11. The specific measures and actual performance for performance measures
that the head of the agency used to ensure that the agency?s information
security plan is practiced throughout the life cycle of each agency system.

12. How the agency has integrated its information and information technology
security program with its critical infrastructure protection
responsibilities and other security programs. 13. The specific methods used
by the agency to ensure that contractorprovided services or services
provided by another agency are adequately

secure and meet the requirements of the reform provisions and other
governmentwide and agency policy and guidance. The reporting instructions
also included an additional requirement for

each agency head to work with the CIO and program officials to provide a
strategy to correct security weaknesses identified through the annual
program reviews, independent evaluations, other reviews or audits performed
throughout the reporting period, as well as any uncompleted actions
identified before the reporting period. Due to OMB by October 31, 2001, this
information was to include a ?plan of action and milestones? (corrective
action plan) that listed the weaknesses; showed required Page 12 GAO- 02-
470T

resources, milestones, and completion dates; and described how the agency
planned to address these weaknesses. In response to agency requests, on
October 17, OMB provided more detailed guidance for preparing and submitting
these corrective action plans, which also

provided a sample spreadsheet- type format. 12 The guidance also established
a requirement for agencies to submit quarterly status updates to OMB with
the first update due on January 31, 2002.

OMB?s guidance addressed many key information security requirements in the
reform provisions, and agencies generally considered the guidance beneficial
in summarizing their efforts to implement these requirements. However, with
their reports due to OMB on September 10, several agencies questioned the
timeliness of the final reporting guidance being

issued less than 3 months before this deadline. Several agencies also noted
the need for additional clarification or guidance in some areas. For
example, our analysis of agency executive summaries showed that many
agencies did not have or were still in the process of developing and
implementing security performance measures. Some thought additional guidance
on appropriate measures would be helpful and more cost- effective than
having each agency develop its own. Other agencies had questions regarding
what should be identified and reported as security costs in their budgets.

In addition to providing guidance, OMB also reviewed the results of
agencies? program reviews and independent evaluations and consulted with
officials in the agencies to clarify information and provide feedback. OMB
also sent letters to the agency heads that provided the results of its
assessment of the agencies? submissions for the reform provisions and either
conditionally approved or disapproved their information security programs.
Further, OMB states in its report to the Congress that it will discuss
security corrective action plans with each agency and monitor

their progress through the quarterly updates that agencies are to submit.
These actions should contribute to OMB?s effective oversight and help focus
agencies? improvement efforts. However, OMB?s sustained commitment to both
implementing the reform provisions and overseeing

12 ?Guidance for Preparing and Submitting Security Plans of Action and
Milestones,? Memorandum for the Heads of Executive Departments and Agencies,
Mitchell E. Daniels, Jr., Director, M- 02- 01, October 17, 2001. Page 13
GAO- 02- 470T

agencies will be critical to ensuring that agencies substantially improve
their information security programs.

Key Information On February 13, 2002, OMB released its required report to
the Congress to Needed for summarize the agency independent evaluations.
Based on reports from

over 50 departments and agencies and focusing on management issues as
Congressional

opposed to technical or operational issues, this report (1) provides an
Oversight

overview of OMB and agencies? implementation efforts; (2) summarizes the
overall results of OMB?s analyses; (3) includes individual agency summaries
for the 24 of the largest federal departments and agencies; and (4) includes
brief summary remarks for small and independent agencies. OMB notes that
although examples of good security exist in many

agencies, and others are working very hard to improve their performance,
many agencies have significant deficiencies in every important area of
security. In particular, the report highlights six common security

weaknesses:

a lack of senior management attention to information security; inadequate
accountability for job and program performance related to information
technology security; limited security training for general users,
information technology professionals, and security professionals;

inadequate integration of security into the capital planning and investment
control process;

poor security for contractor- provided services; and

limited capability to detect, report, and share information on
vulnerabilities or to detect intrusions, suspected intrusions, or virus
infections.

Overall, OMB views its report to the Congress and the agency reports to be a
valuable baseline to record agency security performance- a baseline captured
with more detailed information than previously available that will be useful
for oversight by agencies, IGs, OMB, GAO, and the Congress. While we agree
and believe that OMB?s report provides a useful overview

of OMB and agency efforts to comply with the reform provisions, certain
additional information not included in the report is necessary to fully
assess and oversee these efforts. The lack of such important information
limits congressional oversight for agencies? implementation, compliance,
Page 14 GAO- 02- 470T

and corrective action efforts, as well as for budget deliberations.
Specifically, OMB?s report does not address the following:

The report does not provide any specific analysis or opinion on the adequacy
of agency corrective action plans that were submitted to OMB in late October
of last year and included the planned timeframes for correcting security
weaknesses. Agency corrective actions are underway, and while OMB indicated
that performance in implementing these plans

would be reflected in next year?s report, information about the adequacy and
reasonableness of such plans and the related costs to implement them, as
well as an independent review, are important elements in congressional

oversight and budget deliberations. In August 2001, OMB sent a memorandum to
agency heads stating that it considered all reform provision material
prepared by the CIOs for OMB to be predecisional and not releasable the
public, the Congress, or GAO. In September, this subcommittee interceded to
request that OMB provide the agency executive summaries to you, and OMB
complied with this request. Recently, OMB agreed that it would also
authorize the agencies to release the more detailed material to us after the
agencies redact any sensitive information. OMB has continued to restrict
access to agency corrective

action plans. We plan to continue working with OMB in an effort to find
workable solutions to obtain the information needed for congressional
oversight. With the president requesting $4.2 billion for information

security funding for fiscal year 2003, congressional oversight of future
spending on information security will be important to ensuring that agencies
are not using the funds they receive to continue ad hoc,

piecemeal security fixes that are not supported by a strong agency risk
management process. Accordingly, OMB should consider authorizing agencies to
release appropriate information from the corrective action plans to the
Congress. Also, future IG evaluations need to provide an independent
assessment of agency corrective action plans.

The report discusses review results for national security systems in several
individual agency summaries, but does not summarize the overall results of
the audits of the evaluations for these systems, which the reform provisions
specifically require agencies to provide OMB and OMB to report subsequently
to the Congress. This lack of an overall summary was compounded by limited
access to information regarding national security systems by the director of
central intelligence (DCI). The reform provisions assign the DCI and the
secretary of defense specific responsibilities for national security
systems, including developing and ensuring that information security
policies, standards, and guidelines are implemented and designating the
entity to perform the independent Page 15 GAO- 02- 470T

Reform Provisions To implement the reform provisions, agencies conducted
management

assessments of their information security programs and systems and Spur
Agency Actions

followed OMB guidance to report their results. The methodologies that the
and Highlight

agencies used varied, but most indicated that they used NIST?s Security
Self- Assessment Guide to assist program officials in reviewing their
Continued programs. 13 Provided to help agencies perform self- assessments
of their

Weaknesses information security programs and to accompany the NIST-
developed

Federal IT Security Assessment Framework, 14 this guide uses an extensive
questionnaire containing specific control objectives and techniques against
which an unclassified system or group of interconnected systems can be
tested and measured. Most agencies considered this questionnaire

to be a useful tool and several modified or tailored it for their use. In
addition, several agencies used independent contractors to evaluate their
systems, and in at least one case, an agency had its program assessed by the
NIST Computer Security Expert Assist Team. 15 In addition to these
assessments of their information security programs, agencies also considered
the results of audit work performed by their IGs,

GAO, and others to help them identify information security weaknesses for
reporting to OMB and identifying corrective actions. In particular, a number
of agencies worked closely with the IGs to help ensure that they
consistently identified weaknesses.

Most agencies structured their executive summaries according to the 13
topics that OMB?s reporting instructions indicated they should address.
However, these summaries did not always provide all requested data or
provide context for determining the significance of their efforts. For

example, they did not indicate the extent to which agency programs and 13
National Institute of Standards and Technology Security Self- Assessment
Guide for Information Technology Systems, NIST Special Publication 800- 26,
November 2001. 14 National Institute of Standards and Technology, Federal
Information Technology Security Assessment Framework, prepared for the
Federal CIO Council by the NIST Computer Security Division Systems and
Network Security Group, November 28, 2000.

15 NIST created the Computer Security Expert Assist Team (CSEAT) to improve
federal critical infrastructure protection planning and implementation
efforts by assisting governmental entities in improving the security of
their information and cyber assets. The CSEAT review of an agency?s computer
security program is based on a combination of proven techniques and best
practices and results in an action plan that provides a federal agency with
a business- case- based roadmap to cost- effectively enhance the protection
of their information system assets. Page 17 GAO- 02- 470T

systems, contractor- supported operations, or national security system
programs were covered by their review. In general, our analyses of these
summaries showed that although agencies are making progress in addressing
information security, much remains to be done. None of the agencies had
fully implemented the

requirements of the reform provisions and all continue to have significant
information security weaknesses. In particular, we identified the following
key information security requirements of the reform provisions that were
problematic for the 24 agencies reviewed.

Extent that Agencies The reform provisions require agencies to perform
periodic threat- based Assess Risk is Unknown

risk assessments for systems and data. However, the agency and IG reports
indicated that most agencies could not demonstrate that periodic risk
assessments are being conducted. However, none of the 24 agencies had
conducted risk assessments for all their systems, and 11, or 46 percent, had
not established effective performance measures to show how well program
officials met these requirements.

Risk assessments are an essential element of risk management and overall
security program management and, as our best practice work has shown, 16 are
an integral part of the management processes of leading organizations. Risk
assessments help ensure that the greatest risks have been identified and
addressed, increase the understanding of risk, and provide support for
needed controls. Our reviews of federal agencies, however, frequently show
deficiencies related to assessing risk, such as security plans for major
systems that are not developed based on risks. As a result, the agencies had
accepted an unknown level of risk by default rather than consciously
deciding what level of risk was tolerable.

OMB reporting guidance addressed this requirement by asking agencies to
describe performance measures used to ensure that agency program officials
have assessed the risk to operations and assets under their control. In its
report to the Congress, OMB identified measuring performance as a common
weakness and covered risk assessments in its individual agency summaries.
OMB did not, however, identify the 16 GAO/ AIMD- 98- 68, May 1998. Page 18
GAO- 02- 470T

pervasive lack of risk assessments as an overall weakness in federal
information security. Policies and Procedures

The reform provisions require agencies to establish information security Not
Adequate

policies and procedures that are commensurate with risk and that
comprehensively address the other reform provisions. OMB?s report refers to
selected policies and procedures, but does not address them comprehensively.
Because risks are not adequately assessed, policies and procedures may be
inadequate or excessive. Also, our audits have identified instances where
agency policies and procedures did not comprehensively address all areas of
security, were not sufficiently

detailed, were outdated, or were inconsistent across the agency. Security
Training and

The reform provisions require agencies to provide training on security
Awareness Efforts

responsibilities for information security personnel and on security
Incomplete

awareness for agency personnel. Agency summaries showed that some agencies
provided little or no training, and many could not show to what extent
security training was provided. For example, 4 of the 24 agencies (17
percent) reported that they were still developing or implementing their

security awareness and training program. Further, 10 of the 24 agencies (42
percent) did not report data to indicate the number of agency employees
receiving security training, and 8 (33 percent) did not report the total
costs of providing such training.

Our studies of best practices at leading organizations have shown that these
organizations took steps to ensure that personnel involved in various
aspects of their information security programs had the skills and

knowledge they needed. 17 They also recognized that staff expertise had to
be frequently updated to keep abreast of ongoing changes in threats,
vulnerabilities, software, security techniques, and security monitoring
tools. In addition, our past information security reviews at individual
agencies have shown that they have not provided adequate computer security
training to their employees including contractor staff.

In its report to the Congress, OMB identified security education and
awareness as a common weakness and noted that OMB and federal 17 GAO/ AIMD-
98- 68. May 1998. Page 19 GAO- 02- 470T

agencies are now working through the new Critical Infrastructure Protection
Board?s education committee and the CIO Council?s Workforce Committee to
address this issue. Also, the CIO Council?s Best Practices Committee is
working with NIST through NIST?s Federal Agency Security

Practices Website to identify and disseminate best practices involving
security training. Finally, OMB notes that one of the administration?s
electronic government initiatives is to establish and deliver electronic
training.

Security Controls Not Under the reform provisions, one of the
responsibilities of the agency head

Adequately Tested and is to ensure that appropriate agency officials are
responsible for

Evaluated periodically testing and evaluating the effectiveness of policies,

procedures, controls, and techniques. Many of the 24 agencies we contacted
said that they primarily relied on management self- assessments to review
their programs or systems this first year and did not perform any control
testing as part of these assessments. Several agencies indicated that
control testing was part of their certification and accreditation processes,
but also reported that many systems were not certified and accredited. 18
Periodically evaluating the effectiveness of security policies and controls

and acting to address any identified weaknesses are fundamental activities
that allow an organization to manage its information security risks cost
effectively, rather than reacting to individual problems ad hoc only after a
violation has been detected or an audit finding has been reported. Further,
management control testing and evaluation as part of the program reviews can
supplement control testing and evaluation in IG and GAO audits to help
provide a more complete picture of the agencies? security postures.

OMB?s report to the Congress also did not specifically identify lack of
control testing as a common weakness, but did address it as part of the
individual agency summaries.

18 Certification is a formal review and test of a system?s security
safeguards to determine whether or not they meet security needs and
applicable requirements. Accreditation is the formal authorization for
system operation and is usually supported by certification of the system?s
security safeguards, including its management, operational, and technical
controls. Page 20 GAO- 02- 470T

Remedial Actions May Not The reform provisions require that agencies develop
a process for

be Adequate ensuring that remedial action is taken to address significant
deficiencies.

While we were unable to review the adequacy of corrective action plans
submitted to OMB, our audits have identified instances in which items on
other agency corrective action plans were not independently verified or
considered with respect to other systems that might contain the same or
similar weakness. We have also noted instances where agencies had no

process to accumulate identified deficiencies across the agency. Given these
prior findings, it is important that corrective action plans be carefully
reviewed.

Incident- Handling and The reform provisions require agencies to implement
procedures for

Information- Sharing detecting, reporting, and responding to security
incidents. Of the 24 Procedures Not

agencies we reviewed, 18 (75 percent) reported that they had documented
Implemented

incident handling procedures, but had not implemented these procedures
agencywide. In addition, 5 agencies (22 percent) reported that their
procedures did not cover reporting incidents to the Federal Computer
Incident Response Center (FedCIRC) 19 or law enforcement.

Even strong controls may not block all intrusions and misuse, but
organizations can reduce the risks associated with such events if they
promptly take steps to detect intrusions and misuse before significant
damage can be done. In addition, accounting for and analyzing security
problems and incidents are effective ways for an organization to gain a
better understanding of threats to its information and of the cost of its
security- related problems. Such analyses can also pinpoint vulnerabilities
that need to be addressed to help ensure that they will not be exploited
again. In this regard, problem and incident reports can provide valuable
input for risk assessments, help in prioritizing security improvement
efforts, and be used to illustrate risks and related trends in reports to

senior management. Our information security reviews also confirm that
federal agencies have not adequately (1) prevented intrusions before they
occur, (2) detected intrusions as they occur, (3) responded to successful
intrusions, or (4)

19 GSA?s FedCIRC provides a central focal point for incident reporting,
handling, prevention and recognition for the federal government. Its purpose
is to ensure that the government has critical services available in order to
withstand or quickly recover from attacks against

its information resources. Page 21 GAO- 02- 470T

reported intrusions to staff and management. Such weaknesses provide little
assurance that unauthorized attempts to access sensitive information will be
identified and appropriate actions taken in time to prevent or minimize
damage.

In its report to the Congress, OMB identified ?detecting, reporting, and
sharing information on vulnerabilities? as a common agency weakness. It also
noted that ongoing activity to address this issue includes FedCIRC?s
quarterly reporting to OMB on the federal government?s status on security
incidents and GSA?s, under OMB and Critical Infrastructure Protection

Board guidance, exploring of methods to disseminate vulnerability patches to
all agencies more effectively.

Critical Assets Identified, The reform provisions require that each
agencywide information security

But Not Ranked program ensure the integrity, confidentiality, and
availability of systems

and data supporting the agency?s critical operations and assets. Of the 24
agencies covered by our review, 15 had not implemented an effective
methodology such as Project Matrix reviews 20 to identify their critical

assets, and 7 had not determined the priority for restoring these assets
should a disruption in critical operations occur.

At many of the agencies we have reviewed, we found incomplete plans and
procedures to ensure that critical operations can continue when unexpected
events occur, such as a temporary power failure, accidental loss of files,
or a major disaster. These plans and procedures are incomplete because
operations and supporting resources had not been fully analyzed to determine
which were most critical and would need to be restored first. Further,
existing plans were not fully tested to identify their weaknesses. As a
result, many agencies have inadequate assurance that

they can recover operational capability in a timely, orderly manner after a
disruptive attack.

OMB?s report to the Congress does not specifically address the overall
extent to which agencies identified and prioritized their critical assets,
but does cover this topic in the individual agency summaries. Also, OMB

20 The Department of Commerce?s Critical Infrastructure Assurance Office
established Project Matrix to provide a standard methodology for identifying
all assets, nodes, networks, and associated infrastructure dependencies and
interdependencies required for the federal government to fulfill its
national security, economic stability, and critical public health and safety
responsibilities to the American people. Page 22 GAO- 02- 470T

indicates that it will direct all large agencies to undertake a Project
Matrix review, and once these reviews are completed, it will identify
crossgovernment activities and lines of business for Matrix reviews.

Agency Efforts to Ensure Under the reform provisions, agencies are required
to develop and

Security of ContractorProvided implement risk- based, cost- effective
policies and procedures to provide Services are

security protections for information collected or maintained either by the
Limited

agency or for it by another agency or contractor. Laws and policies have
included security requirements for years, but agency reports indicate that
although most included security requirements in their service contracts,

most not did they have a process to ensure the security of services provided
by a contractor or another agency.

OMB reported this as a common weakness in its report to the Congress noting
that activities to address this issue include (1) working under the guidance
of an OMB- led security committee established under Executive Order 13231 to
develop recommendations addressing security in contracts themselves, 21 and
(2) working with the CIO Council and the Procurement Executives Council to
establish a training program that ensures appropriate security training for
contractors.

Agencies May Not Identify The reform provisions require agencies to examine
the adequacy and

All Significant Security effectiveness of information security policies,
procedures, and practices,

Weaknesses and to report any significant deficiency found as a material
weakness

under the applicable criteria for other laws, including the Clinger- Cohen
Act of 1996, the Chief Financial Officers Act of 1990, and the Federal
Managers Financial Integrity Act. Although most agencies reported security
weaknesses, several did not identify all weaknesses highlighted in the IGs?
independent evaluations. For example, two IGs identified security
weaknesses, but the CIOs did not identify any weaknesses in their executive
summaries because they were not considered material weaknesses.

As I will illustrate next in my discussion of the results of the IGs?
independent evaluations, our latest analyses of audit results for the 24
agencies confirmed that all agencies had significant information security

21 ?Critical Infrastructure Protection in the Information Age,? Executive
Order 13231, October 16, 2001. Page 23 GAO- 02- 470T

weaknesses. Such weaknesses should be identified and reported in the CIOs?
reports consistent with the IGs? independent evaluations to ensure that they
are appropriately considered in implementing corrective actions. IG Role
Critical to

The reform provisions assign the agency IGs a critical role in the overall
implementation and reporting process. Each agency is to have the IG or
Agency other independent evaluator annually evaluate its information
security Implementation and

program and practices. This evaluation is to include testing of the
effectiveness of information security control techniques for an appropriate
Reporting subset of the agency?s information systems and an assessment of
the agency?s compliance with the legislation; it may also use existing
audits, evaluations, or reports relating to the programs or practices of the
agency. For national security systems, the secretary of defense or DCI
designates who is to perform the independent evaluation, but the IG is to
perform an audit of the evaluation. The results of each evaluation of non-
nationalsecurity systems and of the audit of the evaluation for national
security systems are to be reported to OMB.

Individually, as well as collectively, the annual independent evaluations
provide much needed information for improved oversight by OMB and the
Congress. Our years of auditing agency security programs have shown that
independent tests and evaluations are essential to verifying the

effectiveness of computer- based controls. The independent evaluations can
also evaluate agency implementation of management initiatives, thus
promoting management accountability. Moreover, an annual independent
evaluation of agency information security programs will help drive reform
because it will spotlight both the obstacles and progress toward improving

information security. For this first- year evaluation and reporting for the
reform provisions, IGs primarily performed the independent evaluations and
largely relied on existing or ongoing work to evaluate agency security, most
of which was related to their financial statement audits. With the reform
provisions applicable to essentially all major systems including national
security systems, as well as other types of risk beyond financial
statements, future

IG independent evaluation efforts will have to expand their coverage to
include such additional risks and more nonfinancial systems, particularly
for agencies with significant nonfinancial operations such as the
departments of Defense and Justice. An important step toward ensuring
information security is to fully understand the weaknesses that exist, and
Page 24 GAO- 02- 470T

as the body of audit evidence expands, it is probable that additional
significant deficiencies will be identified. However, this expanded coverage
will also place a significant new burden on existing audit capabilities,
which will require ensuring that agency IGs have sufficient resources to
either perform or contract for the needed work.

While no format was prescribed for their evaluation reports, most IGs
prepared an executive summary and report which, at OMB?s request, addressed
the specific topics identified in OMB?s reporting guidance. This made
comparison of agency and IG results easier, and better highlighted
discrepancies. For the most part and particularly where the CIO and IG
offices coordinated their responses, the IG evaluations were consistent with
what the agencies reported. However, there were areas where the CIO reviews
and the IG evaluations did not agree in their assessments of the agencies?
progress in implementing the requirements of the reform

provisions. Reasons cited include different interpretations of the law or
guidance and the time lag between the audit reports the IG used for its
evaluation and the possibly more current status reflected in the CIO?s
review.

However, perhaps the most important area of the IGs? independent evaluations
is their identification of the agency?s significant information security
weaknesses for which they identified essentially known weaknesses including,
but not limited to, those considered material weaknesses under reporting
requirements for other legislation. To

summarize these identified weaknesses, we also analyzed the results of IG
and GAO audit reports published from July 2000 through September 2001,
including the results of the IGs? independent evaluations. These analyses
showed significant information security weaknesses in all major areas of the
agencies? 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. Figure 1 illustrates the

distribution of weaknesses across the 24 agencies for the following six
general control areas: (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 Page 25 GAO- 02- 470T

applications from tampering and misuse; and (6) service continuity, which
ensures that computer- dependent operations experience no significant
disruptions.

Figure 1: Information Security Weaknesses at 24 Major Agencies

Significant weak esses Area ot reviewed No significant weaknesses identified
24 cies

20 Age

16 of 12

8 Number 4

0 Program

Access Software Segregatio

Operati g Service

management change

of duties system

continuity Source: Audit reports issued July 2000 through September 2001.

Our analysis shows that weaknesses were most often identified for security
program management, access controls, and service continuity controls. For
security program management, we found weaknesses for all

24 agencies in 2001 as compared to 21 agencies (88 percent) in a similar
analysis in 2000. 22 For access controls, we also found weaknesses for all
24 agencies in 2001- the same condition we found in 2000. For service
continuity controls, we found weaknesses at 19 of the 24 agencies (79
percent) as compared to 20 agencies or 83 percent in 2000.

Reform Provisions Agencies identified challenges during their first- year
implementation of Create Agency and IG the reform provisions, some of which,
according to the agencies, limited

Challenges the extent of their efforts. Perhaps most significantly, several
agencies acknowledged that they had not been reviewing their systems
according to existing requirements in OMB Circular A- 130. As a result, they
did not have

system reviews they could use to help respond to review requirements of the
reform provisions. In addition, several agencies sought contractor
assistance, but said that delays in obtaining this help limited what they
could do in time to meet the September 10 deadline for reporting to OMB.

22 U. S. General Accounting Office , Computer Security: Critical Federal
Operations and Assets Remain at Risk. GAO/ T- AIMD- 00- 314. Washington, D.
C.: September 11, 2000. Page 26 GAO- 02- 470T

For example, one agency was still trying to obtain contractor services as
late as July 2001 with the reporting deadline only 2 months away. Also,
several agencies noted that late final guidance from OMB on reporting also
limited what they could do to gather and report information. Many

agencies also had not maintained data that OMB requested be reported, such
as training statistics and actual performance measure results that would
help them demonstrate the extent to which they had met security
requirements.

One final challenge emphasized by many agencies was the need for adequate
funding to implement security requirements. Several agencies noted that
funding limitations had directly affected their ability to implement
existing security requirements and, thus, affected their

compliance with the reform provisions. Although, in most instances, this
issue involved a lack of funding, in at least one agency, CIO staff pointed
to specific security funding the agency received as key to the improvement
efforts it has undertaken in recent years.

While citing funding as an implementation challenge, agencies apparently had
difficulty identifying how much they spend related to information security.
The security costs that OMB requested agencies to report were not provided
in some cases. In addition, for costs that were provided, there was no
detail as to what these costs consisted of or how they are actually
reflected in agency budget submissions. Further, while most of the 24
agencies we reviewed reported that they had integrated security

into their capital planning and investment control process, 19 (79 percent)
reported that they had not included security requirements and costs on every
fiscal year 2002 capital asset plan submitted to OMB.

In addition to incomplete security cost data, costs that were reported to
OMB varied widely. On the basis of the final costs shown in OMB?s report to
the Congress, we present, in figure 2, the 24 agencies? fiscal year 2002
security funding as a percentage of their total information technology
spending. These percentages range from a high of 17.0 percent for the
Department of Labor to a low of 1.0 percent for the Department of
Agriculture. Page 27 GAO- 02- 470T

Figure 2: Percentage of Agency Fiscal Year 2002 Information Technology ( IT)
Budget Allocated t IT Security

OMB reports that it assessed the agencies? performance against the amount
they spent and did not find that increased security spending equals
increased security performance. As a result, it concludes that there is no

evidence that poor security is a result of lack of money, and that
improvements in security performance will come from agencies giving
significant attention to the security weaknesses it describes in its report.
While security funding might not always correlate with security

performance, information security does involve costs, and OMB acknowledges
the importance of this funding by requiring agencies to identify security
funding in their budget submissions. We also agree with OMB that much can be
done to cost- effectively address common weaknesses, such as security
training, across government rather than piecemeal by agency. At the same
time, however, agencies have specific weaknesses that they must correct. OMB
has required agencies to identify these weaknesses and to indicate the level
of resources required to correct them in their corrective action plans.

From the IGs? perspective, several have indicated that the requirement for
an annual evaluation will represent a challenge because of their difficulty
in obtaining adequate resources in today?s competitive market for

information security professionals. Further, by conducting an evaluation
every year, these IGs believe they will lose the ability to deploy current
limited resources in other important areas and may have to limit the scope
of their work. Page 28 GAO- 02- 470T

Improvement Efforts As I discussed previously, a number of improvement
efforts have been

undertaken in the past few years both at an agency and governmentwide are
Underway, But

level. Among these efforts and partially in response to the events of
Challenges to Federal September 11, 2001, the president created the Office
of Homeland Security, with duties that include coordinating efforts to
protect critical Information Security

public and private information systems within the United States from Remain

terrorist attack. The president also (1) appointed a special advisor for
cyberspace security to coordinate interagency efforts to secure information
systems and (2) created the President?s Critical Infrastructure Protection
Board to recommend policies and coordinate programs for

protecting information for critical infrastructure. The board is to include
a standing committee for executive branch information systems security,
chaired by an OMB designee.

These actions are laudable. However, given recent events and reports that
critical operations and assets continue to be highly vulnerable to computer-
based attacks, the government still faces a challenge in ensuring that risks
from cyber threats are appropriately addressed in the context of the broader
array of risks to the nation?s welfare. Accordingly, it is

important that federal information security efforts be guided by a
comprehensive strategy for improvement. In 1998, shortly after the initial
issuance of Presidential Decision Directive (PDD) 63 on protecting the
nation?s critical infrastructure, we recommended that OMB, which, by law, is
responsible for overseeing federal information security, and the

assistant to the president for national security affairs work together to
ensure that the roles of new and existing federal efforts were coordinated
under a comprehensive strategy. 23 Our more recent reviews of the National
Infrastructure Protection Center and of broader federal efforts to counter
computer- based attacks showed that there was a continuing need to

clarify responsibilities and critical infrastructure protection objectives.
24 As the administration refines the strategy that it has begun to lay out
in recent months, it is imperative that it takes steps to ensure that
information security receives appropriate attention and resources and that
known deficiencies are addressed. 23 U. S. General Accounting Office,
Information Security: Serious Weaknesses Place Critical Federal Operations
and Assets at Risk. GAO/ AIMD- 98- 92. Washington, D. C.: September 23,
1998.

24 U. S. General Accounting Office, Critical Infrastructure Protection:
Significant Challenges in Developing National Capabilities. GAO- 01- 323.
Washington, D. C.: April 25, 2001; Combating Terrorism: Selected Challenges
and Related Recommendations. GAO- 01- 822. Washington, D. C.: September 20,
2001. Page 29 GAO- 02- 470T

First, it is important that the federal strategy delineate the roles and
responsibilities of the numerous entities involved in federal information
security and related aspects of critical infrastructure protection. Under
current law, OMB is responsible for overseeing and coordinating federal
agency security, and NIST, with assistance from the National Security

Agency, is responsible for establishing related standards. In addition,
interagency bodies- such as the CIO Council and the entities created under
PDD 63 on critical infrastructure protection- are attempting to coordinate
agency initiatives. Although these organizations have developed
fundamentally sound policies and guidance and have undertaken potentially
useful initiatives, effective improvements are not yet taking place.
Further, it is unclear how the activities of these many organizations
interrelate, who should be held accountable for their success or failure,
and whether they will effectively and efficiently support national goals.

Second, more specific guidance to agencies on the controls that they need to
implement could help ensure adequate protection. Currently, agencies have
wide discretion in deciding what computer security controls to implement and
the level of rigor with which to enforce these controls. In theory, this
discretion is appropriate since, as OMB and NIST guidance states, the level
of protection that agencies provide should be commensurate with the risk to
agency operations and assets. In essence,

one set of specific controls will not be appropriate for all types of
systems and data. Nevertheless, our studies of best practices at leading
organizations have shown that more specific guidance is important. 25 In
particular, specific mandatory standards for varying risk levels can clarify
expectations for information protection, including audit criteria; provide a
standard framework for assessing information security risk; help ensure that
shared data are appropriately protected; and reduce demands for limited
resources to independently develop security controls. Implementing such
standards for federal agencies would require developing a single set of
information classification categories for use by all agencies to define the
criticality and sensitivity of the various types of information they
maintain. It would also necessitate establishing minimum mandatory
requirements for protecting information in each classification

category. 25 GAO/ AIMD- 98- 68, May 1998. Page 30 GAO- 02- 470T

Third, ensuring effective implementation of agency information security and
critical infrastructure protection plans will require active monitoring by
the agencies to determine if milestones are being met and testing to
determine if policies and controls are operating as intended. Routine
periodic audits, such as those required by the reform provisions, would
allow for more meaningful performance measurement. In addition, the annual
evaluation, reporting, and monitoring process established through these
provisions, is an important mechanism, previously missing, to hold agencies
accountable for implementing effective security and to manage

the problem from a governmentwide perspective. Fourth, the Congress and the
executive branch can use audit results to monitor agency performance and
take whatever action is deemed advisable to remedy identified problems. Such
oversight is essential for holding agencies accountable for their
performance, as was demonstrated by the OMB and congressional efforts to
oversee the Year 2000 computer challenge.

Fifth, agencies must have the technical expertise they need to select,
implement, and maintain controls that protect their information systems.
Similarly, the federal government must maximize the value of its technical
staff by sharing expertise and information. Highlighted during the Year

2000 challenge, the availability of adequate technical and audit expertise
is a continuing concern to agencies. Sixth, agencies can allocate resources
sufficient to support their information security and infrastructure
protection activities. Funding for security is already embedded to some
extent in agency budgets for computer system development efforts and routine
network and system management and maintenance. However, some additional
amounts are likely to be needed to address specific weaknesses and new
tasks. OMB and congressional oversight of future spending on information
security will be important to ensuring that agencies are not using the funds
they receive to continue ad hoc, piecemeal security fixes that are not
supported by a strong agency risk management process.

Seventh, expanded research is needed in the area of information systems
protection. While a number of research efforts are underway, experts have
noted that more is needed to achieve significant advances. As the director
of the CERTï¿½ Coordination Center testified before this subcommittee last
September, ?It is essential to seek fundamental technological solutions and

to seek proactive, preventive approaches, not just reactive, curative Page
31 GAO- 02- 470T

approaches.? In addition, in its December 2001 third annual report, the
Advisory Panel to Assess Domestic Response Capabilities for Terrorism
Involving Weapons of Mass Destruction (also known as the Gilmore Commission)
recommended that the Office of Homeland Security develop and implement a
comprehensive plan for research, development, test, and evaluation to
enhance cyber security. 26 In summary, first- year implementation of the
reform provisions has

resulted in a number of positive initiatives and benefits, and OMB, the
agencies, and the IGs all undertook efforts to implement these provisions.
However, faced with limited past efforts to implement security and other
obstacles, agencies in their reviews did not provide the scope or depth of
coverage intended, particularly in testing and evaluating controls. The IGs

also had to rely primarily on their existing work for this first- year
effort. Consequently, much work remains to be done to achieve the objectives
of the reform legislation. In addition, OMB did not report to the Congress
on key elements of the provisions, such as the adequacy of agencies?
corrective action plans and overall evaluation results for national security
systems, or provide supporting information. We plan to continue to work

with OMB in an effort to find workable solutions to obtain the information
needed for congressional oversight. These factors limit congressional
insight into the status of information security for the federal government,
as well as its ability to perform its responsibilities for oversight and
budget deliberations. Further, with the increasing threat to critical
federal operations and assets and poor federal information security, as
indicated by reform provision reviews and evaluations, it is imperative that
the administration and the agencies implement a comprehensive strategy for
improvement that emphasizes information security and addresses known
weaknesses.

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

26 Third Annual Report to the President and Congress of the Advisory Panel
to Assess Domestic Response Capabilities for Terrorism Involving Weapons of
Mass Destruction. December 15, 2001. Page 32 GAO- 02- 470T

Contact If you should have any questions about the testimony, please contact
me at (202) 512- 3317. I can be reached by e- mail at daceyr@ gao. gov.
(310151) Page 33 GAO- 02- 470T

Appendi x II

GAO Contact and Staff Acknowledgments GAO Contact Ben Ritt, (202) 512- 6443
Acknowledgments In addition to the person named above, Ronald Beers, Justin
Booth,

Jean Boltz, Debra Conner, Larry Crosland, Kirk Daubenspeck, Patrick Dugan,
Sophia Harrison, Danielle Hollomon, David Irvin, Carol Langelier, Paula
Moore, Freda Paintsil, Ronald Parker, Crawford Thompson, William Thompson,
Rosanna Villa, Charles Vrabel, William Wadsworth, and Gregory Wilshusen made
key contributions to this report.

(310149)

a

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Appendix I

Appendix I GAO?s March 6, 2002, Testimony

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evaluation of the information security program and practices for these
systems. As part of our review, DCI staff declined to meet with us to

discuss the guidance and assistance they provided agencies to implement the
reform provisions for national security systems. The DCI stated that our
inquiry related to matters of intelligence oversight, which are under the
purview of the congressional entities charged with overseeing the
intelligence community. While evaluations and audits of evaluations for
systems under the control of the DCI are available only to the appropriate
oversight committees of Congress, OMB is required to report to the

Congress on the results of audits of evaluations that the agencies submit to
OMB for national security systems. We acknowledge the sensitivity of this
information. Nevertheless, because the review, evaluation, and reporting
requirements of the reform provisions apply to national security systems, as
well as non- national- security systems, this lack of high- level summary
information on implementation of the provisions and the security for
national security systems limits the ability of the Congress to provide
governmentwide oversight for information security. Consequently, we believe
that OMB should consider providing appropriate information on national
security systems to the Congress.

OMB?s report identifies lack of top management attention as a common
weakness. It also notes that agencies have not implemented all the
requirements of the legislation, and that it either disapproved or only
conditionally approved the information security programs of each of the 24
agencies. However, the report does not address the status or

effectiveness of the agencies? efforts to implement specific requirements of
an agencywide information security program such as conducting risk
assessments and testing and evaluating controls. OMB addresses these
requirements in its individual agency summaries, but does not provide any
overall results. Our analyses showed that most agencies have not fully
implemented requirements to assess risk and test and evaluate controls and
that this represents systemic weaknesses in the federal government?s
information security. Such requirements are critical elements of an overall
information security program, and the Congress should be fully informed on
the status of agency efforts to implement and comply with them. To address
this, in its future annual reports to the Congress, OMB should consider
explicitly identifying the overall status of agency efforts to implement
each of the requirements for agency information security programs.

Appendix I GAO?s March 6, 2002, Testimony

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Appendix II

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