Electronic Government: Progress in Promoting Adoption of Smart	 
Card Technology (03-JAN-03, GAO-03-144).			 
                                                                 
Smart cards--credit-card-like devices that use integrated circuit
chips to store and process data--offer a range of potential uses 
for the federal government, particularly in increasing security  
for its many physical and information assets. GAO was asked to	 
review the use of smart cards across the federal government	 
(including identifying potential challenges), as well as the	 
effectiveness of the General Services Administration (GSA) in	 
promoting government adoption of smart card technologies.	 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-03-144 					        
    ACCNO:   A05776						        
  TITLE:     Electronic Government: Progress in Promoting Adoption of 
Smart Card Technology						 
     DATE:   01/03/2003 
  SUBJECT:   Computer security					 
	     Electronic government				 
	     Facility security					 
	     Information systems				 
	     Information technology				 
	     Interagency relations				 
	     Smart cards					 
	     DOD Common Access Card Program			 
	     Food Stamps					 
	     Head Start Program 				 
	     Special Supplemental Food Program for		 
	     Women, Infants, and Children			 
                                                                 
	     WGA Health Passport Project			 
	     Medicaid Program					 

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GAO-03-144

                                       A

Report to the Chairman, Subcommittee on Technology and Procurement Policy,
House of Representatives

January 2003 ELECTRONIC GOVERNMENT Progress in Promoting Adoption of Smart
Card Technology

GAO- 03- 144

Letter 1 Results in Brief 1 Background 5 Objectives, Scope, and
Methodology 10 Many Government Smart Card Projects Are under Way or
Planned,

Offering a Variety of Benefits 11 Successful Adoption of Smart Cards Can
Be Achieved If Challenges

Are Met 17 GSA*s Effectiveness in Facilitating Federal Smart Card Adoption
Has

Been Limited 26 Conclusions 34 Recommendations 35 Agency Comments and Our
Evaluation 36

Appendix

Appendix I: Information about Selected Government Smart Card Projects 38
Department of Defense 38 Department of the Interior 39 Department of
Transportation 40 Department of the Treasury 41 Department of Veterans
Affairs 42 Immigration and Naturalization Service 43 Western Governors*
Association 43

Glossary 46 Tables Table 1: Summary Information on 62 Federal Smart Card

Projects 13 Table 2: Status of Major Tasks from the EPIC and GSA Smart
Card

Plans 29 Figures Figure 1: A Typical Smart Card 6

Figure 2: Features That May Be Incorporated into Smart Cards 9 Figure 3:
Distribution of 62 Federal Projects by Project Phase 12

Abbreviations

CAC Common Access Card DOD Department of Defense EBT electronic benefits
transfer EPIC Electronic Processes Initiatives Committee FAA Federal
Aviation Administration GSA General Services Administration GSC- IAB
Government Smart Card Interagency Advisory Board HPP Health Passport
Project ID identification NIST National Institute of Standards and
Technology OIG Office of Inspector General OMB Office of Management and
Budget PKI public key infrastructure TSA Transportation Security
Administration VA Department of Veterans Affairs WGA Western Governors*
Association

Letter

January 3, 2003 The Honorable Tom Davis Chairman, Subcommittee on
Technology

and Procurement Policy Committee on Government Reform House of
Representatives

Dear Mr. Chairman: As you know, technology plays an important role in
helping the federal government provide security for its many physical and
information assets. In particular, *smart cards* 1 offer the potential to
significantly improve the process of verifying the identity of people
accessing federal buildings and

computer systems, especially when used in combination with other
technologies, such as biometrics. Further, smart cards can be used to
support other business- related functions, such as tracking immunization
records or storing cash value for electronic purchases. The General

Services Administration (GSA) has promoted the adoption of smart card
technology across government based on a goal, set in 1998, of equipping
all federal employees with a standardized smart card for a wide range of
services.

This report responds to your request that we review the federal
government*s progress in promoting the use of smart cards as a way to
streamline and better secure interactions between individuals and
government agencies. Specifically, we agreed to assess (1) the extent to
which federal agencies have adopted smart card technologies and realized
the associated benefits, (2) the challenges of adopting smart cards within

federal agencies, and (3) the effectiveness of GSA in promoting the
adoption of smart card technologies within the federal government.

Results in Brief As of November 2002, 18 agencies had reported initiating
a total of 62 smart card projects in the federal government. These
projects have provided a

range of benefits and services to agencies and individual cardholders.
Until 1 Smart cards are plastic devices* about the size of a credit card*
that use integrated circuit chips to store and process data, much like a
computer. This processing capability distinguishes these cards from
traditional magnetic stripe cards, which cannot process or exchange data
with automated information systems.

recently, many of these projects were small- scale demonstration projects,
involving as few as 100 cardholders and intended to show the value of
using smart cards for identification or to store cash value or other
personal information. However, over the last 2 years, much larger projects
have been initiated to provide agencywide identification credentials and
support advanced technologies to verify the identity of people accessing
computer systems. To date, the largest smart card program to be
implemented in the federal government is the Common Access Card (CAC)
program of the Department of Defense (DOD), which is intended to be used
for identification by about 4 million military and civilian personnel.
Results from projects that are already in place indicate that smart cards
offer many useful benefits, such as significantly reducing the processing
time required for deploying military personnel, tracking immunization
records of

children, and verifying the identity of individuals accessing buildings
and computer systems.

While the technology offers benefits, launching smart card projects*
whether large or small* has proved challenging to federal agencies.
According to agency officials, the multiple benefits of smart card
adoption can be achieved only if key management and technical challenges
are understood and addressed. Major implementation challenges include the
following:

 Sustaining executive- level commitment. Without executive- level support
and clear direction, large- scale smart card initiatives may encounter
organizational resistance and cost concerns that lead to delays or
cancellation. DOD officials stated that having a formal mandate to proceed
with their CAC program has been crucial to its success.

 Recognizing resource requirements. Implementing a smart card system can
be an expensive undertaking. Extensive upgrades may be needed to an
agency*s technical infrastructure, such as installing smart card readers
on every computer system or developing new back- end systems to process
and keep track of the identities associated with each card. If a public
key infrastructure (PKI) is implemented in conjunction with smart cards,
additional costs may be incurred to modify existing

software applications so that they work with smart cards and PKI. 2
Nevertheless, to obtain significant benefits such as increasing security
over buildings, safeguarding computer systems and data, and conducting
financial and nonfinancial transactions more accurately and efficiently,
these costs may be justified.

 Integrating physical and logical security practices across
organizations. The ability of smart card systems to address both physical
and *logical* security 3 means that unprecedented levels of cooperation
may be required among internal organizations that often had not previously
collaborated, such as physical security organizations and information
technology (IT) organizations. Further, a departmentwide smart card
initiative is likely to require substantial changes in existing processes
for credentialing individuals, verifying those credentials when presented
at building entrances, and accessing and using computer systems.

 Achieving interoperability among smart card systems. 4 As agencies
consider adopting smart cards and plan specific implementations, it will
be important to ensure that these implementations are consistent across
the government. Developing standards to ensure that smart cards, card
readers, and related technologies such as biometrics can interoperate
across government will be critical to realizing the benefits that could be
achieved by investments in such technologies.

 Maintaining the security of smart card systems and privacy of personal
information. Although concerns about security are a key driver for the
adoption of smart card technology in the federal government, the security
of smart card systems themselves is not foolproof and must be addressed
when agencies plan the implementation of smart card systems. In addition,
protecting the

2 A public key infrastructure is a system of computers, software, and data
that relies on certain cryptographic techniques for some aspects of
security. For more information, see U. S. General Accounting Office,
Information Security: Advances and Remaining Challenges to Adoption of
Public Key Infrastructure Technology, GAO- 01- 277 (Washington, D. C.:
Feb. 26, 2001).

3 Access to computer systems is known as *logical access,* in contrast to
*physical access,* which applies to buildings and other physical
facilities. 4 Interoperability is the ability of two or more systems or
components to exchange information and to use the information exchanged.

privacy of personal information is of growing concern and must be
addressed with regard to the data contained on smart cards.

These challenges have slowed the adoption of smart card technology in past
years; however, in the future, these challenges may prove less difficult,
not only because of increased management attention to securing federal

facilities and information systems, but also because technical advances
have improved the capabilities and reduced the cost of smart card systems.

GSA*s effectiveness in promoting smart card technology in the federal
government has been mixed. The agency has contributed significantly to
making it easier for federal agencies to acquire commercial smart card

products by implementing a governmentwide contracting vehicle based on
technical standards developed in collaboration with the National Institute
of Standards and Technology (NIST) and smart card vendors. Further, it has
taken action to organize federal smart card managers and share information
about the technology. While these activities have been helpful, GSA has
not taken other important steps to improve smart card initiatives and
deployment strategies. For example, GSA*s effectiveness in demonstrating
the value and readiness of smart card technology to other agencies and
officials was limited because of problems implementing its own internal
smart card systems and coordinating its smart card policies. Further, the
agency has not kept its administrative guidelines or implementation
strategy up to date. Nor has it established standards for the use of smart
cards as a component of federal building security processes. Finally, GSA
has not developed a framework for evaluating smart card implementations to
help agencies reduce risks and contain costs.

While GSA can unilaterally take a number of actions to promote smart card
adoption, it shares responsibility for governmentwide guidance with the
Office of Management and Budget (OMB) and NIST. OMB has statutory
responsibility to develop and oversee policies, principles, standards, and
guidelines used by agencies for ensuring the security of federal
information and systems, but it has not issued policy or guidance
specifically addressing smart cards since designating GSA the lead for
promoting the technology in 1996. NIST has continuing responsibility for
coordinating the development of technical standards required by GSA*s
governmentwide smart card contract.

To enhance governmentwide security over federal personnel, buildings, and
information systems, we are making recommendations to NIST, GSA,

and OMB to take actions aimed at better supporting agency efforts to
deploy interoperable smart- card- based identification systems. We
received written comments on a draft of this report from the Secretary of
Commerce and DOD*s Deputy Chief Information Officer. We also received oral
comments from officials of OMB*s Office of Information and Regulatory
Affairs, including the Information Policy and Technology Branch Chief;
from the Commissioner of the Immigration and Naturalization Service; from
GSA*s Associate Administrator for the Office of Governmentwide Policy; and
from officials representing FAA, the Maritime Administration, the
Transportation Security Administration, and Chief Information Officer of
the Department of Transportation. All the agency officials who commented
generally agreed with our findings and recommendations.

Background Today, federal employees are issued a wide variety of
identification (ID) cards, which are used to access federal buildings and
facilities, sometimes

solely on the basis of visual inspection by security personnel. These
cards often cannot be used for other important identification purposes*
such as gaining access to an agency*s computer systems* and many can be
easily forged or stolen and altered to permit access by unauthorized
individuals. In general, the ease with which traditional ID cards*
including credit cards* can be forged has contributed to increases in
identity theft and related security and financial problems for both
individuals and organizations. 5

Smart cards are plastic devices about the size of a credit card that
contain an embedded integrated circuit chip capable of both storing and
processing data. 6 Figure 1 shows a typical example of a smart card. The
unique advantage of smart cards* as opposed to cards with simpler
technology, such as magnetic stripes or bar codes* is that smart cards can
exchange data with other systems and process information rather than
simply serving

5 See U. S. General Accounting Office, Identity Theft: Available Data
Indicate Growth in Prevalence and Cost, GAO- 02- 424T (Washington, D. C.:
Feb. 14, 2002). 6 The term *smart card* may also be used to refer to cards
with a computer chip that only stores information without providing any
processing capability. Such cards, known as stored- value cards, are
widely used for services such as prepaid telephone service or satellite
television reception. While this report includes some information on
federal use of

stored- value cards, it focuses chiefly on cards with processing
capability.

as static data repositories. By securely exchanging information, a smart
card can help authenticate the identity of the individual possessing the
card in a far more rigorous way than is possible with simpler, traditional
ID

cards. A smart card*s processing power also allows it to exchange and
update many other kinds of information with a variety of external systems,
which can facilitate applications such as financial transactions or other
services that involve electronic record keeping.

Figure 1: A Typical Smart Card

Source: GSA.

Smart cards can also be used to significantly enhance the security of an
organization*s computer systems by tightening controls over user access. A
user wishing to log on to a computer system or network with controlled
access must *prove* his or her identity to the system* a process called
authentication. Many systems authenticate users by merely requiring them
to enter secret passwords, which provide only modest security because they
can be easily compromised. Substantially better user authentication can be
achieved by supplementing passwords with smart cards. To gain access under
this scenario, a user is prompted to insert a smart card into a reader
attached to the computer as well as type in a password. This
authentication process is significantly harder to circumvent because an
intruder would need not only to guess a user*s password but also to
possess the same user*s smart card.

Even stronger authentication can be achieved by using smart cards in
conjunction with biometrics. Smart cards can be configured to store
biometric information (such as fingerprint templates or iris scans) in
electronic records that can be retrieved and compared with an individual*s
live biometric scan as a means of verifying that person*s identity in a
way that is difficult to circumvent. A system requiring users to present a
smart card, enter a password, and verify a biometric scan provides what
security experts call *three- factor* authentication, the three factors
being

*something you possess* (the smart card), *something you know* (the
password), and *something you are* (the biometric). Systems employing
three- factor authentication are considered to provide a relatively high
level of security. The combination of smart cards and biometrics can
provide equally strong authentication for controlling access to physical
facilities. 7

Smart cards can also be used in conjunction with PKI technology to better
secure electronic messages and transactions. A properly implemented and
maintained PKI can offer several important security services, including
assurance that (1) the parties to an electronic transaction are really
whom they claim to be, (2) the information has not been altered or shared
with

any unauthorized entity, and (3) neither party will be able to wrongfully
deny taking part in the transaction. An essential component is the use of
electronic encryption keys, called *private keys,* that are unique to each
user and must be kept secret and secure. For example, storing and using
private keys on a user*s computer leaves them susceptible to attack
because a hacker who gains control of that computer may then be able to
use the private key stored in it to fraudulently sign messages and conduct
electronic transactions. However, if the private key is stored on a user*s
smart card, it may be significantly less vulnerable to attack and

compromise. Security experts generally agree that PKI technology is most
effective when deployed in conjunction with smart cards. 8

In addition to enhancing security, smart cards have the flexibility to
support a wide variety of uses not related to security. A typical smart
card in use today can store and process 16 to 32 kilobytes of data, while
newer

7 For more information about biometrics, see U. S. General Accounting
Office, Technology Assessment: Using Biometrics for Border Security, GAO-
03- 174 (Washington, D. C.: Nov. 15, 2002).

8 For more information about PKI technology, see U. S. General Accounting
Office,

Information Security: Advances and Remaining Challenges to Adoption of
Public Key Infrastructure Technology, GAO- 01- 277 (Washington, D. C.:
Feb. 26, 2001).

cards can accommodate 64 kilobytes. The larger the card*s electronic
memory, the more functions can be supported, such as tracking itineraries
for travelers, linking to immunization or other medical records, or
storing cash value for electronic purchases.

Other media* such as magnetic stripes, bar codes, and optical memory
(laser- readable) stripes* can be added to smart cards to support
interactions with existing systems and services or provide additional
storage capacity. For example, an agency that has been using magnetic
stripe cards for access to certain facilities could migrate to smart cards
that

would work with both its existing magnetic stripe readers as well as new
smart card readers. Of course, the functions provided by the card*s
magnetic stripe, which cannot process transactions, would be much more

limited than those supported by the card*s integrated circuit chip.
Optical memory stripes (which are similar to the technology used in
commercial compact discs) can be used to equip a card with a large memory
capacity for storing more extensive data* such as color photos, multiple
fingerprint images, or other digitized images* and making that card and
its stored data very difficult to counterfeit. 9

Smart cards are grouped into two major classes: contact cards and
*contactless* cards. Contact cards have gold- plated contacts that connect
directly with the read/ write heads of a smart card reader when the card
is inserted into the device. Contactless cards contain an embedded antenna
and work when the card is waved within the magnetic field of a card reader
or terminal. Contactless cards are better suited for environments where

quick interaction between the card and reader is required, such as
highvolume physical access. For example, the Washington Metropolitan Area
Transit Authority has deployed an automated fare collection system using

contactless smart cards as a way of speeding patrons* access to the
Washington, D. C., subway system. Smart cards can be configured to include
both contact and contactless capabilities, but two separate interfaces are
needed, because standards for the technologies are very different. Figure
2 shows some of the capabilities and features that can be

included in smart cards. 9 Cards with an optical memory stripe are known
as laser cards or optical memory cards.

Figure 2: Features That May Be Incorporated into Smart Cards Front of
smart card

John Doe Div 1

Digital photo DOB 01/ 01/ 01 ID# 123456

Contacts for integrated circuit chip Barcode

Inside of smart card

Wire coil antenna Embedded contactless integrated circuit Integrated
circuit chip

Back of smart card

Magnetic stripe Doe, John

1234567 123456

fjdkllasiriekljnklsoiernvmls Optical stripe

7654321 Source: GAO.

Since the 1990s, the federal government has considered the use of smart
card technology as one option for electronically improving security over
buildings and computer systems. In 1996, GSA was tasked with taking the
lead in facilitating a coordinated interagency management approach for the
adoption of multiapplication smart cards across government. The tasking
came from OMB, which has statutory responsibility to develop and oversee
policies, principles, standards, and guidelines used by agencies for
ensuring the security of federal information and systems. At the time, OMB
envisioned broad adoption of smart card technology throughout the
government, as evidenced by the President*s budget for fiscal year 1998,
which set a goal of enabling every federal employee ultimately to be able
to use one smart card for a wide range of purposes, including travel,
small purchases, and building access. In January 1998, the President*s
Management Council and the Electronic Processing Initiatives Committee 10
(EPIC) established an implementation plan for smart cards that called for
a governmentwide, multiapplication card that would support a range of

functions* including controlling access to government buildings* and
operate as part of a standardized system. More recently, several
legislative bills have been proposed or enacted in the wake of the events
of September 11, 2001, to enhance national security and counterterrorism
by using smart card and biometric technologies to better identify
individuals entering the country or gaining access to mass transportation
systems. 11

Objectives, Scope, and Our objectives were to assess (1) the extent to
which federal agencies have Methodology

adopted smart card technologies and realized the associated benefits, (2)
the challenges of adopting smart cards within federal agencies, and (3)
the effectiveness of GSA in promoting the adoption of smart card
technologies within the federal government.

To assess the extent of smart card adoption by federal agencies and
identify associated benefits and challenges, we reviewed smart card
project documentation, cost estimates, and other studies from GSA; OMB;

10 EPIC, an interagency body, was established to help improve the delivery
of electronic commerce activities across government and to assist the
President*s Management Council on such issues during the 1990s. In 2000,
EPIC was replaced by the Electronic Government Coordinating Committee.

11 These bills included the Enhanced Border Security and Visa Entry Reform
Act of 2002, P. L. No. 107- 173, 116 Stat. 543, and the Department of
Transportation and Related Agencies Appropriations Act, 2003, S. 2808, 107
th Cong. (2002).

the Western Governors* Association (WGA), which was responsible for a
smart card project funded in part by the Departments of Agriculture and
Health and Human Services; the Department of Justice*s Immigration and
Naturalization Service; DOD; and the Departments of Interior,
Transportation, Treasury, and Veterans Affairs (VA). We also held
discussions with key officials from these organizations regarding project
benefits and challenges. Discussions were also held with representatives
of the Smart Card Alliance, an association of smart card technology
vendors, regarding smart card technology benefits and challenges. In
addition, we reviewed publicly available materials and reports on smart
card technology issues and discussed key issues with representatives of
these organizations.

To assess GSA*s effectiveness in promoting the governmentwide adoption of
smart cards, we reviewed contract task orders, examined pilot project
documentation, and assessed smart card plans and other reports obtained
from the agency. We also held discussions with key officials in GSA*s
Office

of Governmentwide Policy, Federal Technology Service, and Public Building
Service to obtain information on internal pilot projects and other key
plans and documents. We analyzed reports and evaluations on the smart card
program obtained from GSA*s Office of Inspector General. To obtain
information on whether GSA had taken an effective leadership role

in fostering the adoption of smart card technology across government, we
interviewed officials from NIST; DOD; VA; the Departments of Interior,
Transportation, and Treasury; and OMB. We also interviewed officials from
WGA.

We performed our work between April and October 2002 in accordance with
generally accepted government auditing standards. Many Government

Since 1998, multiple smart card projects have been launched, addressing an
Smart Card Projects

array of capabilities and providing many tangible and intangible benefits,
such as ways to better authenticate the identity of cardholders, increase
Are under Way or

security over buildings, safeguard computer systems and data, and conduct
Planned, Offering a

financial and nonfinancial transactions more accurately and efficiently.
For Variety of Benefits

some federal agencies, the benefits of using smart card technology (such
as improving security over federal buildings and systems and achieving
other business- related purposes) have only recently been recognized, and
many agencies are still planning projects or evaluating the benefits of
this technology before proceeding with more wide- scale initiatives.
Still, results

from several ongoing smart card projects suggest that the technology
offers federal agencies a variety of benefits.

According to information obtained from GSA, OMB, and other federal
agencies, as of November 2002, 18 federal agencies were planning, testing,
operating, or completing a total of 62 smart card projects. These projects

varied widely in size and technical complexity, ranging from small- scale,
limited- duration pilot projects to large- scale, agencywide initiatives
providing multiple services. The projects were reported to be in varying
stages of deployment. Specifically, 13 projects were in the planning
stage, and 7 were being piloted. An additional 17 projects were listed as
operational, and 13 had been completed. No information was provided about
the project phase of the remaining 12 initiatives; it is not clear whether
these projects had moved beyond the planning or pilot testing phases.
Figure 3 shows the status of the 62 federal smart card projects identified
by GSA and OMB. Table 1 provides additional summary information about
these projects.

Figure 3: Distribution of 62 Federal Projects by Project Phase

Table 1: Summary Information on 62 Federal Smart Card Projects Number

of Federal agency

projects Status Description

Agriculture 1 1 operational Agriculture has implemented a system using a
24k chip card to automatically collect marketing data from peanut farmers
under the peanut quota system.

Commerce 5 1 planned NIST is in the planning phase of its smart card
project and is completing a 1 pilot feasibility study, exploring PKI and
biometrics. The Patent and Trademark (for 3, deployment

Office is piloting a smart card for its Patent Work at Home program using
twofactor status information not

authentication and PKI technology for secure remote logical access.
available)

This card is also used as a property pass and as a stored- value card for
transit subsidies.

DOD 26 1 planned Most of these pilots/ programs were used within bases or
among particular

3 pilot deployments and date back to the mid to late 1990s. The majority
of the

10 operational projects, a total of 22, used the smart card*s ability to
track various types of

6 completed information: inventory control, food service, manifesting, and
personnel

(for 6, deployment accountability. Physical and/ or logical access
capabilities were a part of a little

status information not less than half (10) of the projects. The largest
DOD deployment of smart

available) cards (1. 4 million cards), to date, is the CAC program, which
is still being implemented. DOD has set policy directing that all its
previous smart card programs be integrated into the CAC, with the
exception of financial

applications. CAC is planned for use by more than 4 million individuals
and features PKI, physical and logical access controls, and space reserved
for organization- specific applications, in addition to several
technologies already in use, such as magnetic stripes and barcodes.

Education 1 1 planned The Student Financial Assistance Office plans to use
approximately 1,344 smart cards for physical access, transit benefits, and
asset management. Energy 1 1 operational Energy has a project to issue
cards to 28 employees working to clean up and

shut down the Rocky Flats Technology site. The smart cards are to be used
for physical access to restricted areas. GSA 3 1 operational

GSA headquarters has a smart card in operation for physical and logical 2
completed access. Medical and meeting attendance applications have also
been

developed for use with this card. A completed pilot at GSA's Willow Wood
Facility used a smart card for logical and physical access, for property
management, and as a travel/ purchase/ phone card. Smart cards were also
used at the 1997 presidential inauguration for access control, housing,
and telephone support; they allowed security personnel to monitor
movements within the headquarters facility. HUD 2 1 pilot

The completed project used a 2k chip card for internal and physical access
at 1 completed HUD*s headquarters building. HUD discontinued the program
in 1997 and

decided to pursue proximity ID cards. Interior 3 1 planned

The National Park Service is planning to implement a Firefighters Training
2 pilot Card that will carry qualification and certification information.
The Bureau of (for 1, deployment

Land Management has distributed 1,100 cards to employees at five sites for
status information not

physical access and limited use with PKI- enabled applications. This pilot
will available)

most likely be expanded agencywide. The Minerals Management Service is
piloting a smart card with about half its employees (600 cards) and is
planning to test its security applications.

(Continued From Previous Page)

Number of Federal agency

projects Status Description

Justice 5 2 planned The organizations within Justice undertaking smart
card projects are the (for 3, deployment

Management Division, Civil Division, Federal Bureau of Investigation,
Office status information not

of Inspector General, and National Drug Intelligence Center. available)

Labor 1 1 operational Labor has 720 smart cards in use. NASA 1 1 planned
PKI certificates will be used to authenticate and grant NASA employees and

contractors physical and logical access at NASA facilities. National
Science 1 1 planned The National Science Foundation plans to issue 1,500
smart cards. Foundation Social Security

1 1 planned Within the Social Security Administration, 8, 868 cards will
be used to track Administration government property.

State 1 1 operational Approximately 1,250 cards have been issued to State
employees for physical and logical access. The cards also carry State PKI
certificates. Plans call for 20, 000 employees in the national capital
region to receive this card in the near future.

Transportation 3 3 planned Transportation is planning three pilot projects
to implement smart card technology. First, the FAA Identification Media
project plans to issue over 10, 000 cards to federal employees and
contract personnel primarily for physical access to FAA facilities.
Second, the Transportation Security Administration*s Transportation Worker
Identification Card is planned to be issued to approximately 10* 15
million transportation workers for physical and

logical access to facilities and systems. Third, a stored value card is
planned to be issued to 25, 000 Transportation employees as part of the
Federal Transit Administration Assistance program. Information gathered
using this card will provide better data for ridership analysis and
transit route planning.

Treasury 2 1 planned Treasury planned to distribute 10, 500 cards to test
various uses including 1 operational physical and logical access, property
management, biometrics, and food service eligibility. Upon validation,
officials expect the project to be expanded agencywide. IRS is using smart
cards to obtain secure dial- in access to the IRS local area network.

U. S. Agency for 1 1 completed The U. S. Agency for International
Development implemented a pilot smart International

card- based national electronic payment system in Armenia. The project has
Development

been discontinued. Veterans Affairs 3 1 operational

VA has issued 24,038 cards containing demographic, emergency, and (VA)
(for 2, deployment eligibility data as well as PKI certificates to allow
digital signatures on status information not electronic service delivery
transactions at two sites. An additional two VA available) hospital
locations separately tested smart cards as ID badges and for electronic
purchases to be used for vending, cash registers, and automatic teller
machines.

Source: GSA and OMB.

Many pilot projects initiated in the late 1990s deployed smart cards for
specific, limited purposes in order to demonstrate the usefulness of the
technology. For example, GSA distributed smart cards to approximately

3, 000 staff and visitors at the 1997 presidential inauguration to control
physical access to that event. The cards contained information that
granted individuals access to specific event activities and allowed
security personnel to monitor movements within the event*s headquarters
facility as

well as maintain records on those entering secure areas. Likewise, many
smart card pilot projects were implemented by the military services to
demonstrate the technology*s usefulness in enhancing specific business
operations, such as creating electronic manifests to help deploy military
personnel more efficiently, managing medical records for military
personnel, and providing electronic cash to purchase goods and food
services at remote locations. Officials at military bases and
installations

participating in these pilots reported that smart cards significantly
reduced the processing time required for deploying military personnel*
from several days to just a few hours.

Recently, broader and more permanent projects have begun. Among federal
agencies, DOD has made a substantial investment in developing and
implementing an agencywide smart card system. DOD*s CAC is to be used to
authenticate the identity of nearly 4 million military and civilian
personnel and to improve security over on- line systems and transactions.
The cards are being deployed in tandem with the rollout of a
departmentwide PKI. As of November 2002, DOD had issued approximately 1.4
million CACs to military and civilian personnel and had purchased card
readers and middleware 12 for about 1 million of its computers. More
information about DOD*s program appears in appendix I.

The Department of Transportation is also developing two large smart card
pilot projects, which will be focused on controlling access to and
improving security at the nation*s many transportation hubs as well as at
federal facilities controlled by the department. One pilot aims to
distribute smart cards to approximately 10,000 FAA employees and
contractor personnel for access to the department*s facilities. Subsequent
phases will be implemented across the agency to approximately 100,000
employees. In the second pilot, transportation worker identification cards
will be issued to about 15 million transportation workers across the
United States and is intended to improve physical and logical access to
public transportation 12 Middleware is software that allows a software
application running on another system to communicate and exchange data
with the integrated circuit chip on a smart card.

facilities. Transportation plans to document results from the pilot
project, including benefits and costs.

Other federal agencies are now using smart cards for controlling logical
access to computer systems and networks. For example, the Internal Revenue
Service (IRS) distributed smart cards to approximately 30,000 of its
revenue agents and officers for use when accessing the agency*s network
remotely through notebook computers. According to an IRS official, the
cards are still in use and working well.

In July 2002, the Department of the Treasury announced plans to launch a
pilot project to assess the use of smart cards for multiple purposes,
including both physical and logical access. Treasury plans to distribute
smart cards equipped with biometrics and PKI capabilities to approximately
7,200 employees during its pilot test. Treasury*s main department offices
and five Treasury bureaus will be involved in the pilot test: U. S. Secret
Service; IRS; Bureau of Alcohol, Tobacco, and Firearms; Bureau of
Engraving and Printing; and the Federal Law Enforcement Training Center.
According to Treasury officials, if the smart card pilot proves
successful, it will be implemented across the department.

While efforts such as these represent a recent trend toward adopting
agencywide smart cards for security functions, almost half (42 percent) of
the projects that have been undertaken to date, as identified by GSA and
OMB, involved storing either cash value on the cards for use in making
small purchases or other information for use in processing electronic

payment transactions, transit benefits, or agency- specific applications.
Many of these projects (45 percent) used smart cards that supported a
combination of media, such as magnetic stripes, bar codes, and optical
memory stripes. Further, the majority (86 percent) of these non*
securityoriented projects involved cards used internally, usually to
support formerly paper- based functions. For example, in October 1994, the
25 th Infantry Division in Hawaii was issued 30,000 smart cards configured
to

support medical documentation, mobility processing, manifesting, personnel
accountability, health care, and food service. In this pilot, the most
notable benefit was seen in deployment readiness. The deployment process,
which normally took a day or more, was reduced to a matter of hours.

In another example of a stored- value card project, the Departments of
Agriculture and Health and Human Services supported a project by the WGA
to issue smart cards to approximately 12,000 individuals* including

pregnant women, mothers, and children* who were eligible for electronic
benefits transfer (EBT) programs such as the Women, Infants, and Children
program, Head Start, Food Stamps, and other public health programs in
three different states. The smart cards contained a circuit chip that
included demographic, health, appointment, and EBT information, as well

as a magnetic stripe that included Medicaid eligibility information. The
smart cards also allowed grocery and retail establishments to track food
purchases and rebate offers or coupon redemptions more accurately. Users
helped control information stored on the card with a personal
identification number and were provided with kiosks to read or view
information stored on the card. According to WGA officials, the pilot was
a success because participants had immediate access to healthcare
appointment and immunization records. In addition, federal and state
agencies were able to track benefits and baby formula purchases more
accurately, resulting in manufacturers no longer questioning the process
used by these government organizations to collect millions in rebate
offers.

To demonstrate that a single smart card could have many uses and provide
many benefits, GSA*s Federal Technology Service introduced a multipurpose
smart card to its employees during a pilot project conducted in the summer
of 1999. The card functioned as a property management device, boarding
pass for American Airlines, credit card for travel, and stored- value
calling card. The card used fingerprint biometric technology, as well as
digital certificates for use in signing E- mail messages. In addition,

the card contained a contactless interface* an embedded antenna* that
allowed cardholders to access transit services by waving the card near a
card reader to electronically pay for these services.

Appendix I provides more detailed information about smart card projects at
several government agencies.

Successful Adoption of The benefits of smart card adoption identified by
agency officials can be Smart Cards Can Be

achieved only if key management and technical challenges are understood
and met. While these challenges have slowed the adoption of smart card
Achieved If Challenges

technology in past years, they may be less difficult in the future, not
only Are Met

because of increased management concerns about securing federal facilities
and information systems, but also because technical advances have improved
the capabilities and reduced the cost of smart card systems. Major
implementation challenges include

 sustaining executive- level commitment;

 recognizing resource requirements;  coordinating diverse, cross-
organizational needs and transforming organizational security practices;

 achieving interoperability among smart card systems; and  maintaining
security and privacy.

Sustaining Executive- Level Nearly all the officials we interviewed
indicated that maintaining executivelevel

Commitment commitment is essential to implementing a smart card system
effectively. According to officials both within DOD and in civilian
agencies,

the formal mandate of the Deputy Secretary of Defense to implement a
uniform, common access identification card within DOD was essential to
getting a project as large as the CAC initiative launched and funded. 13
The Deputy Secretary also assigned roles and responsibilities to the
military services and agencies and established a deadline for defining
smart card requirements. DOD officials noted that without such executive-
level support and clear direction, the smart card initiative likely would
have encountered organizational resistance and cost concerns that would
have led to significant delays or cancellation.

Treasury and Transportation officials also indicated that sustained
highlevel support had been crucial in launching smart card initiatives
within their organizations and that without this support, funding for such
initiatives probably would not have been available. In contrast, other
federal smart card pilot projects have been cancelled due to lack of
executive- level support. Officials at VA indicated that their pilot VA
Express smart card project, which issued cards to veterans for use in
registering at VA hospitals, would probably not be expanded to full- scale

implementation, largely because executive- level priorities had changed,
and support for a wide- scale smart card project had not been sustained.
Recognizing Resource

Smart card implementation costs can be high, particularly if significant
Requirements

infrastructure modifications are required or other technologies, such as
13 Deputy Secretary of Defense, Memorandum on Smart Card Adoption and
Implementation (Washington, D. C.: Nov. 10, 1999).

biometrics and PKI, are being implemented in tandem with the cards.
However, in light of the benefits of better authenticating personnel,
increasing security over access to buildings, safeguarding computer
systems and data, and conducting financial and nonfinancial transactions
more accurately and efficiently, these costs may be acceptable. Key

implementation activities that can be costly include managing contractors
and card suppliers, developing systems and interfaces with existing
personnel or credentialing systems, installing equipment and systems to
distribute the cards, and training personnel to issue and use smart cards.
As a result, agency officials stated that obtaining adequate resources was
critical to implementing a major government smart card system.

For example, Treasury*s project manager estimated the overall cost for the
departmentwide effort at between $50 and $60 million; costs for the FAA
pilot project, which have not yet been fully determined, are likely to
exceed $2.5 million.

At least $4.2 million 14 was required to design, develop, and implement
the WGA Health Passport Project (HPP) in Nevada, North Dakota, and Wyoming
and to service up to 30,000 clients. A report on that project acknowledged
that it was complicated and costly to manage card issuance activities. The
states encountered problems when trying to integrate legacy systems with
the smart cards and had difficulty establishing accountability

among different organizations for data stored on and transferred from the
cards. The report further indicated that help- desk services were
difficult to manage because of the number of organizations and outside
retailers, as well as different systems and hardware, involved in the
project; costs for this service likely would be about $200,000 annually.
15 WGA officials said they expect costs to decrease as more clients are
provided with smart cards and the technology becomes more familiar to
users; they also believe smart card benefits will exceed costs over the
long term.

The full cost of a smart card system can also be greater than originally
anticipated because of the costs of related technologies, such as PKI. For
example, DOD initially budgeted about $78 million for the CAC program in

14 According to the project*s final report, additional costs were incurred
that have not been quantified. 15 Jenny Bernstein, Robin Koralek, Cheryl
Owens, Nancy Pindus, and Barbara Selter, Final Report* The Health Passport
Project: Assessment and Recommendations (December 2001).

2000 and 2001 and expected to provide the device to about 4 million
military, civilian, and contract employees by 2003. It now expects to
expend over $250 million by 2003* more than double the original estimate.
Many of the increases in CAC program costs were attributed by DOD
officials to underestimating the costs of upgrading and managing legacy
systems and processes for card issuance. Card issuance costs likely will
exceed $75 million out of the over $250 million now provided for CAC
through 2003, based on information provided by DOD. These costs are for
installing workstations, upgrading legacy systems, and distributing cards
to personnel.

According to DOD program officials, the department will likely expend over
$1 billion for its smart cards and PKI capabilities by 2005. In addition
to the costs mentioned above, the military services and defense agencies
were required to fund the purchase of over 2.5 million card readers and
the middleware to make them work with existing computer applications, at a
cost likely to exceed $93 million by 2003. The military services and
defense agencies are also expected to provide funding to enable
applications to interoperate with the PKI certificates loaded on the
cards. DOD provided about $712 million to issue certificates to
cardholders as part of the PKI

program but provided no additional funding to enable applications. 16
Integrating Physical and

The ability of smart card systems to address both physical and logical
Logical Security Practices

(information systems) security means that unprecedented levels of Across
Organizations

cooperation may be required among internal organizations that often had
not previously collaborated, especially physical security organizations
and IT organizations. Nearly all federal officials we interviewed noted
that existing security practices and procedures varied significantly
across

organizational entities within their agencies and that changing each of
these well- established processes and attempting to integrate them across
the agency was a formidable challenge. Individual bureaus and divisions
often have strong reservations about supporting a departmentwide smart
card initiative because it would likely result in substantial changes to
existing processes for credentialing individuals, verifying those
credentials when presented at building entrances, and accessing and using
computer systems.

16 Office of the Inspector General, Department of Defense, Implementation
of DOD Public Key Infrastructure Policy and Procedures, Report No. D-
2002- 030 (Dec. 28, 2001).

DOD officials stated that it has been difficult to take advantage of the
multiapplication capabilities of its CAC for these very reasons. The card
is primarily being used for logical access* for helping to authenticate
cardholders accessing systems and networks and for digitally signing
electronic transactions using PKI. DOD only recently has begun to consider
ways to use the CAC across the department to better control physical
access over military facilities. Few DOD facilities are currently using
the card for this purpose. DOD officials said it had been difficult to
persuade personnel responsible for the physical security of military
facilities to establish new processes for smart cards and biometrics and
to make significant changes to existing badge systems.

In addition to the gap between physical and logical security
organizations, the sheer number of separate and incompatible existing
systems also adds to the challenge to establishing an integrated
agencywide smart card system. One Treasury official, for example, noted
that departmentwide initiatives, such as its planned smart card project,
require the support of 14 different bureaus and services. Each of these
entities has different systems and processes in place to control access to
buildings, automated systems, and electronic transactions. Agreement could
not always be reached on a

single business process to address security requirements among these
diverse entities.

Achieving Interoperability Interoperability is a key consideration in
smart card deployment. The value

Among Smart Card Systems of a smart card is greatly enhanced if it can be
used with multiple systems

at different agencies, and GSA has reported that virtually all agencies
agree that interoperability at some level is critical to widespread
adoption of smart cards across the government. However, achieving
interoperability has been difficult because smart card products and
systems developed in the past have generally been incompatible in all but
very rudimentary ways. With varying products available from many vendors,
there has been no obvious choice for an interoperability standard.

GSA considered the achievement of interoperability across card systems to
be one of its main priorities in developing its governmentwide Smart
Access Common ID Card contract. Accordingly, GSA designed the contract

to require awardees to work with GSA and NIST 17 to develop a government
interoperability specification. The specification, as it currently stands,
includes an architectural model, interface specifications, conformance
testing requirements, and data models. A key aspect of the specification
is that it addresses aspects of smart card operations that are not covered
by commercial standards. Specifically, the specification defines a uniform
set

of command and response messages for smart cards to use in communicating
with card readers. Vendors can meet the specification by writing software
for their cards that translates their unique command and response formats
to the government standard. Such a specification previously had not been
available.

According to NIST officials, the first version of the interoperability
specification, completed in August 2000, did not include sufficient detail
to establish interoperability among vendors* disparate smart card
products. The officials stated that this occurred because representatives
from NIST, the contractors, and other federal agencies had only a very
limited time to develop the first version. Version 2, 18 released in June
2002, is a significant improvement, providing better definitions of many
details, such as how smart cards should exchange information with software
applications and card readers. The revised specification also supports
DOD*s CAC data model in addition to the common data model developed for
the original specification. However, it may take some time before smart
card products that meet the requirements of version 2 are made available,
because the

contractors and vendors (under the Smart Access Common ID contract) will
have to update or redesign their products to meet the enhanced
specification. Further, potential interoperability issues may arise for
those agencies that purchased and deployed smart card products based on
the original specification.

While version 2 addressed important aspects of establishing
interoperability among different vendors* smart card systems, other
aspects remain unaddressed. For example, the version 2 specifications for

17 NIST is the lead agency in the Standards Technical Working Group, which
was established by the Government Smart Card Interagency Advisory Board
(GSC- IAB) to develop and update the Government Smart Card
Interoperability Specification. In addition, NIST is responsible for
developing a comprehensive conformance test program for the specification.

18 Government Smart Card Interoperability Specification, Version 2. 0,
NIST Internal Report 6887 (June 27, 2002).

*basic services interface* provide for just 21 common functions, such as
establishing and terminating a logical connection with the card in a
specified reader. Other fundamental functions* such as changing personal
ID numbers and registering cards when they are issued to users* are not
included in the basic services interface. For such functions, vendors must
use what are known as *extended service interfaces.* Because vendors are
free to create their own unique definitions for extended service
interfaces and associated software, interoperability problems may occur if
interface designs or software programs are incompatible. NIST officials
stated that, at the time the specification was finalized, it was not
possible to define a

standard for the functions not included in the basic services interface
because existing commercial products varied too widely. According to the
NIST officials, greater convergence is needed among smart card vendors*
products before agreement can be reached on standards for all important
card functions* including changing passwords or personal identification
numbers* as part of extended service interfaces.

In addition, the guidelines do not address interoperability for important
technologies such as contactless smart cards, biometrics, and optical
memory stripes. GSA and NIST officials indicated that federal agencies are
interested in adopting contactless and biometric technologies but that
more needs to be done to evaluate the technologies and develop a standard
architectural model to ensure interoperability across government. The
government has not yet adopted industry- developed contactless and
biometric standards, which are generally not extensive enough to ensure
interoperability among commercial products from different vendors.
According to one NIST official, a thorough risk assessment of optical
stripe technology needs to be conducted first, because the security issues
for a *passive* technology such as optical stripes are different from
those of *active* chip- based smart cards. 19 Although there is no work
under way to include optical stripe technology as an option within the
Government

Smart Card Interoperability Specification, the guidance does not preclude
the use of this technology. 19 Optical stripe technology is considered
*passive* because it simply serves as a platform to

store data; it cannot perform any processing functions. Chip- based cards,
however, are capable of actively processing information and interacting
with other systems.

Maintaining the Security of Although concerns about security are a key
driver for the adoption of smart

Smart Card Systems and card technology in the federal government, the
security of smart card

Privacy of Personal systems is not foolproof and must be addressed when
agencies plan the

Information implementation of a smart card system. As discussed in the
background

section of this report, smart cards can offer significantly enhanced
control over access to buildings and systems, particularly when used in
combination with other advanced technologies, such as PKI and biometrics.
Although smart card systems are generally much harder to attack than
traditional ID cards and password- protected systems, they are not
invulnerable. In order to obtain the improved security services that smart
cards offer, care must be taken to ensure that the cards and their

supporting systems do not pose unacceptable security risks. Smart card
systems generally are designed with a variety of features designed to
thwart attack. 20 For example, cards are assigned unique serial numbers to
counter unauthorized duplication and contain integrated circuit chips that
are resistant to tampering so that their information cannot be easily
extracted and used. However, security experts point out that because a
smart- card- based system involves many different discrete elements that
cannot be physically controlled at all times by an organization*s security
personnel, there is at least a theoretically greater opportunity for
malfeasance than would exist for a more self- contained system. 21 In
fact, a smart- card- based system involves many parties (the cardholders,

data owner, computing devices, card issuer, card manufacturer, and
software manufacturer) that potentially could pose threats to the system.
For example, researchers have found ways to circumvent security measures
and extract information from smart cards, and an individual cardholder
could be motivated to attack his or her card in order to access and modify
the stored data on the card* perhaps to change personal information or
increase the cash value that may be stored on the card. Further, smart
cards are connected to computing devices (such as agency networks, desktop
and laptop computers, and automatic teller machines)

20 In this context, an attack is an attempt by one or more parties
involved in a smart- cardbased transaction to cheat by taking advantage of
potential weaknesses in the security of the card.

21 Bruce Schneier and Adam Shostack, *Breaking Up Is Hard to Do: Modeling
Security Threats for Smart Cards* in USENIX Workshop on Smart Card
Technology (USENIX Press, 1999), pp. 175* 185.

through card readers that control the flow of data to and from the smart
card. Attacks mounted on either the card readers or any of the attached
computing systems could compromise the safeguards that are the goals of
implementing a smart card system.

Smart cards used to support multiple applications may introduce additional
risks to the system. For example, if adequate care is not taken in
designing and testing each software application, loading new applications
onto existing cards could compromise the security of the other
applications already stored on the cards. In general, guaranteeing the
security of a

multiapplication card can be more difficult because of the difficulty of
determining which application is running inside a multiapplication smart
card at any given time. If an application runs at an unauthorized time, it
could gain unauthorized access to data intended only for other
applications.

As with any information system, the threats to a smart card system must be
analyzed thoroughly and adequate measures developed to address potential
vulnerabilities. Our 1998 report on effective security management
practices used by leading public and private organizations 22 and a
companion report on risk- based security approaches 23 identified key
principles that can be used to establish a management framework for an
effective information security program. In addition, the National Security
Agency*s draft guidelines 24 for placing biometrics in smart cards include
steps that could be taken to help protect information in smart card

systems, such as encrypting all private keys stored in the smart card and
defining a system security policy with a user certification process before
access to the system is granted.

In addition to security, protecting the privacy of personal information is
a growing concern and must be addressed with regard to the personal
information contained on smart cards. Once in place, smart- card- based
systems designed simply to control access to facilities and systems could

22 U. S. General Accounting Office, Information Security Management:
Learning from Leading Organizations, GAO/ AIMD- 98- 68 (Washington, D. C.:
May 1998). 23 U. S. General Accounting Office, Information Security Risk
Assessment: Practices of Leading Organizations, GAO/ AIMD- 00- 33
(Washington, D. C.: Nov. 1999). 24 National Security Agency, Guidelines
for Placing Biometrics in Smartcards, Draft Version 1. 0 (Sept. 15, 1998).

also be used to track the day- to- day activities of individuals,
potentially compromising their privacy. Further, smart- card- based
systems could be used to aggregate sensitive information about individuals
for purposes other than those prompting the initial collection of the
information, which could compromise privacy. The Privacy Act of 1974 25
requires the federal government to restrict the disclosure of personally
identifiable records maintained by federal agencies, while permitting
individuals access to their own records and the right to seek amendment of
agency records that are inaccurate, irrelevant, untimely, or incomplete.
Accordingly, agency officials need to assess and plan for appropriate
privacy measures when

implementing smart card systems. To address privacy concerns, officials
with the WGA indicated that some participants in the HPP were made aware
of the information that would be stored on their cards. Kiosks were
installed in some grocery stores to

encourage individuals to view the information stored on the cards.
Similarly, GSA officials provided employees access to information stored
on their headquarters ID cards and said they received few complaints about

the cards. While individuals involved in these projects had few concerns,
others may require more assurances about the information stored on smart
cards and how government agencies will use and share data. GSA, NIST, and
other agency officials indicated that security and privacy issues are
challenging, because governmentwide policies have not yet been established
and

widespread use of the technology has not yet occurred. As smart card
projects evolve and are used more frequently, especially by citizens,
agencies are increasingly likely to need policy guidance to ensure

consistent and appropriate implementation. GSA*s Effectiveness in

GSA*s efforts to promote smart card technology in the federal government
Facilitating Federal

have focused on coordination and contracting- related activities. The
agency has taken several useful actions to organize federal smart card
Smart Card Adoption managers and coordinate planning for the technology.
Its chief contribution Has Been Limited

has been to make it easier for federal agencies to acquire commercial
smart card products by implementing a governmentwide contracting mechanism
based on a standard developed in collaboration with NIST and smart card 25
5 U. S. C. S: 552a.

vendors. However, GSA has been less successful in other areas that are
also important for promoting adoption of smart cards. For example,
officials from other federal agencies indicated that GSA*s effectiveness
at demonstrating the technology*s readiness for deployment was limited by
its

lack of success in implementing smart cards internally or developing a
consistent agencywide position on the adoption of smart cards. Further,
the agency did not keep its implementation strategy or administrative
guidelines up to date. Nor has the agency established standards for the
use of smart cards as a component of federal building security processes.

Finally, GSA has not developed a framework for evaluating smart card
implementations to help agencies reduce risks and contain costs.

GSA Has Addressed Many GSA has advanced federal adoption of smart card
technology by addressing Planned Tasks Associated

many of the major tasks outlined in the 1998 EPIC plan* which called for a
with Promoting Smart Cards

standard governmentwide, multipurpose smart card system* and by developing
its own smart card plan. 26 In response to OMB*s 1996 tasking that GSA
take the lead in promoting federal adoption of smart cards, the agency
first established a technology office to support its smart card initiative
and work with the President*s Management Council on deploying

the technology across government. 27 Beginning in 1998, GSA took steps to
address tasks identified in the EPIC plan and its own plan, many of which
required the collaboration and support of multiple agencies. For example,
GSA worked with the Department of the Navy to establish a technology
demonstration center to showcase smart card technology and applications
and established a smart card project managers* group and Government Smart
Card Interagency Advisory Board (GSC- IAB). 28 The agency also established
an interagency team to plan for uniform federal access procedures, digital
signatures, and other transactions, and to develop federal smart card
interoperability and security guidelines. GSA*s Office of Governmentwide
Policy was similarly established to better coordinate and

26 GSA, Office of Smart Card Initiatives* Overview and Concepts (May
1998). The document includes 13 key objectives for implementation in 1998.
27 This office was eventually moved into the Federal Technology Service so
that it could also monitor 13 pilot projects aimed at fostering the
adoption of smart card technology. 28 In 2000, GSA established the
Government Smart Card Interagency Advisory Board to address government
smart card issues, standards, and practices as well as to help resolve
interoperability problems among agencies.

define governmentwide electronic policies and technology standards in
collaboration with other federal agencies and stakeholders. For many
federal agencies, GSA*s chief contribution to promoting federal adoption
of smart cards was its effort in 2000 to develop a standard contracting
vehicle for use by federal agencies in procuring commercial smart card
products from vendors. 29 Under the terms of the contract, GSA,

NIST, and the contract*s awardees worked together to develop smart card
interoperability guidelines* including an architectural model, interface
definitions, and standard data elements* that were intended to guarantee
that all the products made available through the contract would be capable
of working together. Major federal smart card projects, including DOD*s
CAC and Transportation*s planned departmentwide smart card, have used or
are planning to use the GSA contract vehicle.

GSA*s achievements in promoting the federal adoption of smart card
technology can be gauged by the progress it has made in addressing tasks
laid out in the EPIC plan and its own smart card plan. Table 2, which
provides more detailed information on major tasks from the EPIC and GSA
plans and their current status, shows that GSA has taken steps to address
many of these tasks.

29 GSA released the solicitation (GS- TFF- 99- 203) for its Smart
Identification Card on January 7, 2000. In May 2000, the contract was
awarded to five vendors.

Table 2: Status of Major Tasks from the EPIC and GSA Smart Card Plans Task
Source Milestone Status Comments

Form a customer advisory board to provide EPIC plan July 1997 Addressed
GSA established a GSC- IAB in 2000 and ongoing advice on the government*s
card service smart card project managers* group in program

1998. Establish interagency team to evaluate several

EPIC plan January Par tially GSC- IAB and NIST helped evaluate specific
smart card applications 1998 addressed some smart card applications and

standards, but not all issues have been addressed.

Establish a federal card services risk EPIC plan March 1998 Open Some
agencies have completed risk management forum assessments and shared the
information

with the smart card project managers group, but no forum has been
established to address outstanding issues across government.

Establish contract for common access ID EPIC, GSA

September Addressed The Smart ID contract was made program plans 1998
available for agency use in May 2000.

Develop and issue final federal smart card EPIC, GSA

June 1998 Addressed Working with NIST, GSA issued the first
interoperability guide plans version of the guidelines in August 2000

and revisions in June 2002. Prototype multiapplication cards EPIC plan
September

Addressed Since 1998, GSA and several other 1998 agencies have prototyped
multiapplication cards.

Establish a Web- based clearinghouse for smart EPIC plan May 1998
Addressed GSA established its smart card Web site cards at www. smart.
gov.

Establish interagency work groups to address GSA plan September

Addressed Through the GSC- IAB and NIST, common access and core card
applications 1998 common access and core card

applications and interfaces have been addressed. Implement and evaluate
pilot projects GSA plan March 1999 Partially

GSA launched several pilot projects but addressed did not always evaluate
the initiatives, according to the Office of Inspector General.

Work with international governments and GSA plan October

Par tially GSA and NIST are working with several establish on- line
services 1998 addressed international standards groups, but no on- line
services have been established.

Develop and implement a smart card pilot project GSA plan September

Par tially Some limited pilot project testing has to improve electronic
building access 1998 addressed been completed to improve electronic

building access. Work with Sandia National Laboratories to GSA plan
September

Par tially Framework is not yet complete, though develop a high- level
vulnerability assessment

1998 addressed some initial analysis has been framework for smart card
access controls

conducted.

(Continued From Previous Page)

Task Source Milestone Status Comments

Develop a joint security access program and GSA plan September

Open Although a technology center has been technology center to
demonstrate smart card

1998 established, no work has been completed technology

on a joint security access program. NIST and the Department of State
recently established an Interagency Interoperability Task Force to address
some of these issues.

Launch pilot internally and explore business lines GSA plan December
Addressed GSA established a business line for for smart cards 1999 smart
cards in 1999.

Develop biometric application interface program GSA plan September

Partially GSC- IAB, GSA, NIST, and DOD are for smart cards and conduct
pilot projects 1998 addressed considering standards for biometrics and
some pilots are under way.

Develop interagency framework for managing GSA plan Fall 1998 Open GSC-
IAB, GSA, and NIST are card services across government, including
considering evaluation and testing suites evaluating and testing for
compliance

for smart cards but have not yet developed an interagency framework.

Source: GAO.

GSA Has Not Fully Although GSA accomplished many of the tasks for
promoting smart card

Addressed Other Key adoption that were planned in 1998, many additional
activities essential to

Promotion Activities advancing the adoption of smart cards across
government still need to be

addressed. Evolving federal security needs and steady advances in smart
card technology mean that federal agency needs likely have changed since
1998. For example, in the wake of the events of September 11, 2001,
increased management attention has been paid to security both for access
to federal buildings as well as for protecting information systems. At the
same time, advances in smart card technology have led to commercial
products that are both cheaper and more capable, potentially altering
cost/ benefit calculations that agencies may have made in the past. Thus
far, OMB has not issued any further policy or guidance related to smart
card

technology, although it was in the process of identifying and examining
smart card technology issues at the time of our review.

In light of factors that have arisen or changed since GSA*s smart card
promotion objectives were set in 1998, we identified the following four
specific issues that have not been addressed by GSA:

 Showing leadership by successfully adopting smart cards internally. A
key element of effectively promoting the adoption of a new technology such
as smart cards is to demonstrate the technology*s effectiveness in an
operational setting by successfully undertaking well- coordinated

pilot projects that demonstrate the technology*s benefits. One of the
objectives in GSA*s 1998 smart card plan was to lead by example in
implementing and showcasing smart cards. Yet GSA*s pilot projects have

generally not allowed the agency to lead by example. According to a report
completed by GSA*s Office of Inspector General (OIG) in September 2000,
there has been *no continued centralized management or direction of GSA*s
internal smart card implementation, nor any coordination and monitoring of
pilots.* 30 For example, the OIG reported that some of GSA*s projects
lacked management support and adequate funding, resulting in delays and
partially completed project tasks. In terms of coordination, GSA has been
unable to develop and implement a

strategy to deploy smart card technology in a standard manner across the
agency. For example, two divisions within GSA, the Federal Supply Service
and the Public Building Service, while operating in areas where smart
cards have a known benefit, did not use GSA*s standard governmentwide
contracting vehicle, which requires adherence to the

government smart card interoperability specification. In addition, draft
guidance on implementing a standard smart- card- based identification
system across GSA was not prepared until April 2002 and is still
incomplete and unapproved.

Officials at three federal agencies, actively engaged in developing their
own smart card systems, said that GSA*s internal track record for
implementation had raised doubts about its ability to promote smart cards
governmentwide. A Department of the Interior official stated that GSA had
not been successful in building a business case for smart card adoption,
and that, as a result, the Public Building Service was not

supporting the Federal Technology Service*s efforts to implement smart
card technology at government facilities, causing problems for tenant
agencies looking to move to smart- card- based systems. Similarly, a DOD
official stated that GSA did not have the expertise to successfully
implement smart cards or assist others attempting to do so because it
lacked practical experience deploying the technology internally and

working collaboratively with different organizations on management and
technical issues.  Maintaining an up- to- date implementation strategy
and smart card

guidelines. GSA*s implementation strategy for smart cards consists of 30
Office of Inspector General, GSA, Review of Smart Card Initiatives, Report
Number A000874 (Sept. 11, 2000), p. 5.

the plan it prepared in 1998 as well as the EPIC plan, also developed in
1998. Neither addresses recent issues related to smart card
implementation, such as advances in smart card technology or increased
federal security concerns since the attacks of September 11, 2001. In
2002, GSA began to survey federal agencies, through the GSC- IAB, on smart
card implementation issues they were experiencing. 31 According to GSA
officials, the GSC- IAB survey will provide input to the agency that can
be used to update its agenda for promoting federal smart card adoption.
However, GSA has not yet committed to developing a new planning document
with revised objectives and milestones.

GSA also has not updated its smart card administrative guidelines since
2000. In October 2000, GSA issued its guidelines for implementing smart
cards in federal agencies. 32 GSA developed the guidelines *to provide
step- by- step guidance for those agencies wishing to utilize the Smart
Identification Card contract vehicle to procure and implement an
interoperable employee identification card.* Although the stated purpose
of this document was to complement the Smart Identification Card contract,
the section discussing standards and specifications does not refer to the
government smart card interoperability specification recently developed by
GSA and NIST, nor does it provide explicit guidance on using the
interoperability specification or other critical technologies, such as
contactless cards and biometrics.

 Coordinating the adoption of standard federal building security
processes. GSA has not taken action to develop and coordinate standard
procedures for federal building security, which would help agencies
implement smart- card- based ID systems in a consistent and effective
manner. GSA is responsible for managing security at over 7,300 federal
facilities, with widely varying security needs. 33 In 1999, several
internal 31 GSA contracted with Maximus, a private consulting firm, to
conduct a survey of agencies,

private sector partners, and others to help identify issues critical to
the smart card initiative and define future goals and objectives for the
GSC- IAB. 32 GSA, Smart Card Policy and Administrative Guidelines (Oct.
20, 2000). 33 The Department of Justice established five security
categories for federal buildings, ranging from facilities that require
limited security (category 1) to buildings that require a maximum level of
security mechanisms or safeguards (category 5). No criteria exist on the
security or electronic devices that need to be installed at facilities
that fall within these categories.

GSA organizations* including the Office of Governmentwide Policy, the
Federal Technology Service, the Federal Supply Service, and the Public
Building Service* proposed working together to develop a standard approach
for federal building security using smart card technology. However, this
proposal has not been adopted, nor has any alternative

strategy been developed for deploying smart card technology at federal
facilities. Officials in the Federal Technology Service and the Public
Building Service said that they intended to work together to develop a
strategy for smart card use at federal facilities, but they have not yet
begun to do so. 34

Although not part of a concerted standards setting process, the Federal
Technology Service*s recently launched pilot smart card project could
serve in the future as a basis for a federal building security standard.
The pilot involved upgrading and standardizing building security systems
at three government facilities in Chicago, Illinois. The project is based
on smart cards with biometric capabilities to identify employees entering
these facilities. At least three federal agencies are expected to
participate in the project, and its costs have been estimated to range
between $450, 000 and $500,000. If the project is successful, it may serve
as an example for other federal agencies interested in using smart card
technology for their building security processes.

 Evaluating projects to reduce implementation risks and costs. Although
GSA has developed administrative and business case guidelines to help
agencies identify smart card benefits and costs, as well as establishing
the smart card program managers* group and the GSC- IAB to discuss project
issues, it has not established a framework for evaluating smart card
projects to help agencies minimize implementation costs and risks and
achieve security improvements. In September 2000, the GSA OIG reported
that measurable standards were needed to assess smart card projects and
help GSA lead the smart card program. It also suggested that more
information and lessons learned from smart card pilot projects were needed
to make improvements in the federal smart card program and to better
ensure success. 35 GSA 34 For a discussion of the full range of building
security technologies, including smart cards,

see U. S. General Accounting Office, National Preparedness: Technologies
to Secure Federal Buildings, GAO- 02- 687T (Washington, D. C.: Apr. 25,
2002).

35 Office of the Inspector General, GSA, Review of Smart Card Initiatives,
Report A000874 (Sept. 11, 2000).

agreed with the issues identified by the OIG but has not yet taken action
to address recommendations cited in the report.

Officials from other agencies indicated that more information is needed on
smart card implementation costs and opportunities for cost savings to help
agencies make a business case for the technology and to address
implementation challenges. According to one agency official, more
information sharing is needed on smart card implementation strategies that
work and that help reduce project management costs and problems with
software and hardware implementation. Agency officials also indicated that
measures are needed to determine whether smart cards are working as
intended to improve security over federal buildings, computer systems, and
critical information, as called for by the President*s Management Agenda
and the Office of Homeland Security. GSA officials indicated that many of
these issues likely would be addressed by the GSC- IAB at some later date
but that no specific milestones for doing so had been set.

Conclusions Progress has been made in implementing smart card technology
across government, with increasingly ambitious projects, such as DOD*s
CAC,

being initiated in recent years as federal managers focus on implementing
smart cards to enhance security across organizations. To successfully
implement smart- card- based systems, agency managers have faced a number
of substantial challenges, including sustaining executive- level
commitment, obtaining adequate resources, integrating physical and logical
security practices, achieving interoperability among smart card systems,
and maintaining system security and privacy of personal information. As
both technology and management priorities evolve, these challenges may be
becoming less insurmountable, particularly with the increased priority now
being placed on heightened security practices to better maintain homeland
security. Further, the interoperability challenge may be significantly
reduced as continuing efforts are made to increase the scope and
usefulness of the government smart card interoperability specification.

However, without overall guidance and budgetary direction from OMB,
agencies may be unnecessarily reluctant to take advantage of the potential
of smart cards to enhance security and other agency operations. Although
OMB has statutory responsibility to develop and oversee policies,

standards, and guidelines used by agencies for ensuring the security of
federal information and systems, it has not issued any guidance or policy

on governmentwide adoption of smart cards since 1996, when it designated
GSA the lead for promoting federal adoption of the technology.

GSA continues to play an important role in assisting agencies as they
assess the potential of smart cards and move to implement them. GSA has
already provided important technical and management support by developing
the Smart Access Common ID contract vehicle, supporting NIST*s development
of the government smart card interoperability specification,

and setting up the GSC- IAB. However, GSA has not taken all the steps it
could have to provide full support to agencies contemplating the adoption
of smart cards. Its implementation strategy and administrative guidance
have not been kept up to date and do not address current priorities and

technological advances. Nor have building security standards been adopted
or an evaluation process developed that address implementation of smart
card systems. If such tasks were addressed, federal agency IT managers
would face fewer risks in deciding how and under what circumstances to
implement smart- card- based systems.

Recommendations We recommend that the Director, OMB, issue governmentwide
policy guidance regarding adoption of smart cards for secure access to
physical

and logical assets. In preparing this guidance, OMB should seek input from
all federal agencies that may be affected by the guidance, with particular
emphasis on agencies with smart card expertise, including GSA, the GSCIAB,
and NIST.

We recommend that the Director, NIST, continue to improve and update the
government smart card interoperability specification by addressing
governmentwide standards for additional technologies* such as contactless
cards, biometrics, and optical stripe media* as well as integration with
PKI, to ensure broad interoperability among federal agency systems.

We recommend that the Administrator, GSA, improve the effectiveness of its
promotion of smart card technologies within the federal government by

 developing an internal implementation strategy with specific goals and
milestones to ensure that GSA*s internal organizations support and
implement smart card systems, based on internal guidelines drafted in
2002, to provide better service and set an example for other federal
agencies;

 updating its governmentwide implementation strategy and administrative
guidance on implementing smart card systems to address current security
priorities, including minimum security standards for federal facilities,
computer systems, and data across the government;

 establishing guidelines for federal building security that address the
role of smart card technology; and  developing a process for conducting
ongoing evaluations of the

implementation of smart- card- based systems by federal agencies to ensure
that lessons learned and best practices are shared across government.

Agency Comments and We received written comments on a draft of this report
from the Secretary

Our Evaluation of Commerce and DOD*s Deputy Chief Information Officer. We
also

received oral comments from officials of OMB*s Office of Information and
Regulatory Affairs, including the Information Policy and Technology Branch
Chief; from the Commissioner of the Immigration and Naturalization
Service; from GSA*s Associate Administrator for the Office of
Governmentwide Policy; and from officials representing FAA, the Maritime
Administration, the Transportation Security Administration, and Chief
Information Officer of the Department of Transportation. All the agency
officials who commented generally agreed with our findings and
recommendations.

In addition, Commerce commented that a governmentwide smart card program
was needed and that a central activity should be created to manage and
fund such an initiative. However, we believe that, with sufficient policy
guidance and standards to ensure broad interoperability among agency
systems, agencies can effectively develop smart card programs tailored to
their individual needs that also meet minimum requirements for
governmentwide interoperability.

DOD commented that NIST should be tasked with taking the lead in
developing and maintaining interoperability standards for smart cards and
biometrics. DOD also stressed the importance of biometric technology
interoperability with smart cards in support of the adoption of a single
set of authenticating credentials for governmentwide use. Finally, DOD
also commented that the use of smart card technology for federal building

security should be strengthened. We believe our recommendations are
consistent with the department*s comments.

GSA noted that significant work had gone into developing smart card
technology and provided additional details about activities it has
undertaken that are related to our recommendations.

In addition, each agency provided technical comments, which have been
addressed where appropriate in the final report.

Unless you publicly announce the contents of this report earlier, we plan
no further distribution until 30 days from the report date. At that time,
we will send copies of this report to the Ranking Minority Member,
Subcommittee on Technology and Procurement Policy, Committee on Government
Reform, and other interested congressional committees. We will also send
copies to the Director, OMB; the Director, NIST; and the Administrator,
GSA. Copies will be made available to others upon request. In addition,
this

report also will be available at no charge on our home page at http://
www. gao. gov.

If you have any questions concerning this report, please call me at (202)
512- 6240 or send E- mail to koontzl@ gao. gov. Other major contributors
included Barbara Collier, Jamey Collins, John de Ferrari, Steven Law,
Freda Paintsil, and Yvonne Vigil.

Sincerely yours, Linda D. Koontz Director, Information Management Issues

Appendi xes Information about Selected Government Appendi x I

Smart Card Projects As part of our review, we examined smart card projects
managed by the Departments of Defense (DOD), Interior, Transportation,
Treasury, and Veterans Affairs (VA), as well as the Immigration and
Naturalization Service (INS) and the Western Governors* Association (WGA).
These

projects supported a variety of applications and used or considered smart
card technology to improve logical and physical controls over systems and
facilities, as well as to store information for other purposes, such as
conducting financial transactions. The following provides more information
on these projects.

Department of Defense In 1999, the Deputy Secretary of Defense issued a
policy directive that called for the implementation of a standard smart-
card- based identification

system for all active duty military personnel, DOD civilian employees, and
eligible contractor personnel, to be called the Common Access Card (CAC)
program. 36 The directive assigned the Department*s Chief Information
Officer overall responsibility to develop departmentwide smart card policy
and conduct oversight of the program. Further, the Department of the Navy
was made responsible for developing departmentwide interoperability
standards for using smart card technology, and the National Security
Agency was given the lead for developing a departmentwide public key
infrastructure (PKI) program to be integrated with the CAC.

In October 2000, Defense began initial rollout with plans to distribute
cards to approximately four million individuals across the department by
2003. The CAC is equipped with a 32- kilobyte chip formatted in a standard
manner to ensure interoperability among the military services and defense
agencies. It also includes a set of PKI credentials, including an
encryption key, signing key, and digital certificate. To obtain a CAC,
individuals must produce multiple forms of identification. DOD*s PKI-
enabled computer systems then examine the digital certificate produced by
a user*s card to determine whether the cardholder is granted access to
specific DOD systems. DOD is working to adapt its E- mail systems to work
with PKI to better ensure that electronic messages are accessible only by
designated recipients. In addition, according to DOD, cardholders will be
able in the future to electronically sign travel vouchers using the
digital certificates on their cards.

36 Deputy Secretary of Defense, Memorandum on Smart Card Adoption and
Implementation (Washington, D. C.: Nov. 10, 1999).

In the future, DOD plans to add biometrics and other advanced capabilities
to the CAC. Biometric data will be stored on the card and could include
fingerprints, palm prints, iris scans, or facial features. To store these
data, the amount of memory on the card would be doubled from 32 kilobytes
to 64 kilobytes. DOD also plans to improve physical security controls over
installations and bases by adding a contactless chip to the CAC to avoid
delays when military personnel enter facilities.

Department of the In January 2002, the Department of the Interior*s Bureau
of Land Interior

Management (BLM) launched a smart card pilot project to help improve
security over its sites and employees. The bureau has 164 major sites and
approximately 13,000 full- and part- time employees, including
contractors. About 1,100 employees were given smart cards for personal
identification and to improve safeguards at pilot sites in Nevada and
Arizona. The pilot*s goal was to demonstrate the feasibility and
interoperability of smart cards and to communicate their potential to
employees throughout the bureau. In addition to distributing 1,000 more
smart cards to bureau employees by November 2002, the bureau expects to
equip about 1,000 of the existing cards with PKI certificates to be used
with PKI- enabled software applications to improve security over systems
and electronic transactions. According to bureau officials, the project
has been a success, and it plans

to continue the rollout of smart cards to remaining employees. The
bureauwide rollout is scheduled to begin in January 2003. The total
estimated cost of the effort is $5.8 million, and according to the
bureau*s business case, this effort will break even in 2004. This includes
all contracts, labor costs, software, hardware, and maintenance costs over
a 5- year life cycle. The full implementation of the smart card system is
expected to eliminate redundant administrative processes for personal
identification and open up opportunities for additional applications by
establishing digital certificates for creating digital signatures. All new
and future building locations are planned to be equipped with the smart
card

technology necessary to pursue this effort, and many existing sites are
being upgraded. BLM has reported experiencing a 70 percent drop in the
cost of physical access systems since the cards* initial deployment. In
one of the pilot locations, all processes are to be outsourced (except for
human resources, physical access, and security officer functions), with
bureau

employees making all policy and business decisions.

Department of The Department of Transportation currently has two large
smart card

Transportation projects targeted for deployment. In the first pilot, the
Federal Aviation

Administration (FAA) plans to distribute smart cards internally to
approximately 10,000 employees and on- site contractor support personnel
primarily to secure physical access to the agency*s facilities. Recently,
the FAA released a request for proposal outlining minimum requirements for
smart card credentials. The agency plans to procure smart cards through
the General Services Administration (GSA) Smart Access Common ID

contract and will apply GSA*s interoperability specification. The card is
planned to be a Java- based 37 hybrid (contact and contactless) card,
containing a 32- kilobyte chip as well as a magnetic stripe and barcode.
The card will likely also feature a biometric for enhanced authentication
(most likely fingerprint data).

The second pilot is being managed by the Transportation Security
Administration (TSA), which is scheduled to be transferred to the
Department of Homeland Security on March 1, 2003. For this pilot, the TSA
plans to issue smart identification (ID) cards to up to 15 million
*transportation workers** defined as any persons who require unescorted
access to a secure area in any transportation venue. The pilot project
will be focused on major airports, seaports, and railroad terminals and
will

include all modes of transportation. TSA*s goal is to create a
standardized, universally recognized and accepted credential for the
transportation industry. Initially, the transportation worker ID will be
used for obtaining physical access to transportation facilities.
Subsequently, a phased approach will be used to add logical access
capabilities to the card. According to agency officials, the card will be
designed to address a minimum set of requirements, but it will remain
flexible to support additional requirements as needed. The card will be
used to verify the identity and security level of the cardholder, and
local authorities will grant access in accordance with local security
policies.

TSA has established working groups for various aspects of system
development, such as card design, identity documentation requirements, and
card policy. To share costs and leverage existing resource investments,

37 Java is a high- level, object- oriented programming language developed
by Sun Microsystems that is well suited for use on the World Wide Web.
Java card technology supports multiple, independently secure applications
with a single smart card and is

compatible with existing smart card standards from many organizations,
such as the internationally recognized International Standards
Organization.

TSA is currently working with INS on its entry/ exit project to use
established land, air, and sea ports as checkpoints. In addition, TSA has
established working relationships with industry groups and coordinated
with other agencies, such as Treasury and the Federal Bureau of

Investigation, and is looking to develop cost sharing strategies for
future implementations.

TSA*s budget for fiscal year 2003 was not determined at the time of our
review, and agency officials said that the availability of funds would
determine how quickly the pilot would be implemented. The pilot will

likely be implemented within the next 3 years. According to one agency
official, the TSA program, if implemented successfully, would likely
become the largest civilian agency smart card initiative to date.

Department of the The Department of the Treasury plans to launch a proof
of concept project

Treasury to assess several smart card technologies for possible agencywide
use for

both physical and logical access. The project is being funded and managed
by Treasury*s Chief Information Officer Council at a cost of $2.8 million.
Six Treasury organizations are participating in the pilot: the Secret
Service; the Internal Revenue Service; the Bureau of Alcohol, Tobacco and
Firearms;

the Bureau of Engraving and Printing; the Federal Law Enforcement Training
Center; and the main department. The Secret Service has been designated
the lead bureau and will also lead the future departmentwide smart card
project. In total, Treasury plans to issue about 10,000 smart cards. These
cards are to be Java- based devices with 32 kilobytes of storage, capable
of supporting multiple technologies for use in various configurations. For
example, the cards will support both contact and contactless access,
although not all will contain biometrics. All the cards are expected to
contain PKI certificates for creating digital signatures and encrypting E-
mail messages. The cards are also expected to be equipped with two-
dimensional barcodes and a magnetic stripe to enable integration with
existing systems.

Like DOD, Treasury plans to allocate space on the card for individual
bureaus to use in creating their own applications, such as the Federal Law
Enforcement Training Center*s plan to use the cards when issuing uniforms
to students. A Treasury official believes that using smart cards will
simplify certain processes, such as property and inventory management,
that are currently paper- based and labor- intensive.

Information from this proof of concept project will be used to launch an
agencywide smart card project. GSA*s Smart Access Common ID Contract and
interoperability guidelines will be used to ensure that appropriate smart
card technologies are evaluated. The proof of concept is expected to last
about 6 months, with the pilot ending in January 2003. At that time, a
report will be completed, and a business case for an agencywide smart card
solution will likely be prepared. Preliminary cost estimates for
implementing a Treasury- wide smart card system, which would support
around 160,000 employees, is in the range of $50 to $60 million.

Department of In April 2001, the Department of Veterans Affairs (VA) began
issuing cards

Veterans Affairs for its VA Express Registration Card pilot project.
Initiated in 1999, the

project was to provide agency customers with a smart card carrying medical
and personal information that could be used to speed up registration at VA
hospitals. The card was also intended to be usable by non- VA hospitals
equipped with the necessary readers to access patients* VA benefits
information.

At the time of our review, about 24,000 smart cards had been issued
through two VA hospitals located in Milwaukee, Wisconsin, and Iron
Mountain, Michigan. The cards are PKI enabled and can also be used
throughout VA*s network of hospitals* the majority of which do not have

smart card readers* because they include all the same patient information
found printed on the front of the older Veteran Identification Cards,
which are still in use. The PKI capabilities of the card allow patients
with a home computer and card reader to securely access their information
on- line and digitally sign forms, saving time and offering convenience
for both the patient and the agency. For those without Internet access,
kiosks were installed at the two pilot locations, allowing Express Card
holders to access their information, make any necessary changes, or
request PKI

certificates. The VA Express Card program used GSA*s Smart Access Common
ID contract for procurement and technical assistance.

According to agency officials, using the Express Card reduced registration
time at hospitals by 45 minutes. Patients involved in the pilot project
had access to express registration services, thus saving time. However,
although the Express Card program is still in use, VA officials have
decided

not to expand beyond the two pilot locations. The reasons given were the
expense of back- end automation, complications integrating the new system
with legacy systems, and the lack of an existing card reader
infrastructure at other VA hospitals. The agency maintains card
management, support,

and issuance capabilities at the pilot locations to support the smart
cards that are still in use.

Immigration and The Department of Justice*s INS currently has a card-
based project under

Naturalization Service way to control access at the nation*s borders. The
project includes two

types of cards* Permanent Resident Cards and Border Crossing Cards (also
known as *Laser Visas*). As part of the Border Crossing Cards project, INS
is working with the Department of State to produce and distribute the
cards. Under the Illegal Immigration Reform and Immigrant Responsibility
Act of 1996, 38 every Border Crossing Card issued after October 1, 2001,
is required to contain a biometric identifier and be machine readable. The
Laser Visas will store biographical information

along with a photograph of the cardholder and an image of the cardholder*s
fingerprints. The Permanent Resident Cards will store similar information.
Information from the Laser Visas is stored in a central INS database. As
of June 2002, more than five million Laser Visas and approximately six
million Permanent Resident Cards had been issued. The Permanent Resident
Card and Laser Visa make use of optical stripe technology, with storage
capacity ranging from 1.1 megabyte to 2.8 megabytes, to store large
amounts of information, but they do not contain integrated circuit chips
to process data. As part of a cost- benefit analysis conducted in 1999,
INS considered implementing chip- based smart cards and determined that
smart card technology was not the best solution. This decision was based,
in part, on the limited storage capacity of smart cards

at the time. INS examined smart cards with 8 kilobytes of memory, which
did not provide enough memory to store the fingerprint data required by
law. Smart cards now have a storage capacity of up to 64 kilobytes and are
capable of storing color photo images of individuals as well as full
fingerprint images.

Western Governors* In June 1999, WGA launched the Health Passport Project
(HPP) in three

Association states* Nevada, North Dakota, and Wyoming* to evaluate and
test a range of applications and technologies based on a common smart card
platform.

38 The Illegal Immigration Reform and Immigrant Responsibility Act of 1996
was enacted as division C of the Omnibus Consolidated Appropriations Act,
P. L. No. 104* 208, 110 Stat. 3009546 (1996).

The project was to be conducted within an 18- month demonstration period
and be integrated with other state- administered prenatal, physician care,
nutrition, and early childhood education programs. Each state was

expected to maintain common demographic information as well as clinical
data on individuals participating in the pilot project. Selected sites
also tested unique applications related to electronic benefits transfer
(EBT),

insurance eligibility, and health appointment information. WGA had overall
responsibility for managing the HPP contract, and each state was
responsible for providing on- site management, technical support, and
funding as needed. The Departments of Agriculture and Health and Human
Services also provided project funding and support, with GSA providing
technical assistance as requested. The HPP initiative involved the
distribution of 2,348 cards to individuals in Bismarck, North Dakota; 991
cards in Cheyenne, Wyoming; and 8,459 cards in Reno, Nevada. With
additional state funding, the HPP initiative has continued to operate
beyond the demonstration period, which concluded in December 2001.

The HPP platform consists of smart cards, special card readers attached to
health providers* personal computers, card readers installed at grocery or
retail establishments and register systems, servers to maintain backup
databases, kiosks, and a network. The health passport card contains an 8-
kilobyte chip, storing demographic, health, and benefit information on
participants as well as a magnetic stripe for Medicaid eligibility

information. Smart card readers are used to read and write information to
the card. These devices are linked to HPP workstations and to the Women,
Infants, and Children EBT application, which allows benefits to be stored
on the card and used at grocery and retail establishments that have card
readers installed at point- of- sale register locations. Kiosks are free-
standing machines that operate by a touch screen feature and read
information

stored on the card. In December 2001, the Urban Institute and the Maximus
consulting firm prepared a report for WGA, which reviewed the results of
the HPP initiative. The report stated that HPP was successful in bringing
a concept to life. HPP enabled participants to use the EBT and healthcare
appointment and immunization information more effectively and
conveniently, because information was stored on the card. Project
participants also liked using the cards and kiosks to access their
personal information, and many liked being able to electronically track
appointments and health care records. In addition, retailers liked the
cards and the ability to track EBT data more accurately. WGA officials
further noted that HPP has helped federal and state governments maintain
more

accurate information on EBT distributions and baby formula purchases,
which can be used to request coupon rebates from manufacturers. More
accurate sales information is available and shared with manufacturers to
resolve disputes over rebates and to obtain more timely refunds.

Glossary Attack An attempt by one or more parties involved in a smart-
card- based

transaction to cheat by taking advantage of potential weaknesses in the
security of the card.

Authentication The process of confirming an asserted identity with a
specified or understood level of confidence. Biometrics Measures of an
individual*s unique physical characteristics or the unique ways that an
individual performs an activity. Physical biometrics include

fingerprints, hand geometry, facial patterns, and iris and retinal scans.
Behavioral biometrics include voice patterns, written signatures, and
keyboard typing techniques.

Biometric template A digital record of an individual*s biometric features.
Typically, a *livescan* of an individual*s biometric attributes is
translated through a specific algorithm into a digital record that can be
stored in a database or on an

integrated circuit chip card. Card edge The set of command and response
messages that allow card readers to communicate effectively with the chips
embedded on smart cards.

Contactless smart card A smart card that can exchange information with a
card reader without coming in physical contact with the reader.
Contactless smart cards use 13.56 megahertz radio frequency transmissions
to exchange information with card readers.

Confidentiality The assurance that information is not disclosed to
unauthorized entities or processes.

Digital signature A special encrypted code, attached to an electronic
message, that can be used to prove to a third party that the message was,
in fact, signed by the originator. Digital signatures may also be attached
to other electronic information and programs so that the integrity of the
information and programs may be verified at a later time.

Electronic government Government*s use of technology, particularly Web-
based applications, to enhance the access to and delivery of government
information and services to citizens, business partners, employees, other
agencies, and government

entities.

Identification The process of determining to what identity a particular
individual corresponds.

Interoperability The ability of two or more systems or components to
exchange information and to use the information that has been exchanged.

Middleware Software that allows a software application running on another
system to communicate and exchange data with the integrated circuit chip
on a smart card.

Nonrepudiation The assurance that the identity of the sender of an
electronic message can be proven and that delivery of the message to the
recipient can also be proven so that neither party can later deny having
processed the message.

Privacy The ability of an individual to decide when and on what terms
elements of his or her personal information should be revealed.

Public key infrastructure (PKI) A system of hardware, software, and
policies, and people that, when fully and properly implemented, can
provide a suite of information security assurances* including
confidentiality, data integrity, authentication, and nonrepudiation* that
are important in protecting sensitive communications and transactions.

Smart card A tamper- resistant security device* about the size of a credit
card* that relies on an integrated circuit chip for information storage
and processing.

(310433)

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GAO United States General Accounting Office

Progress has been made in implementing smart card technology across
government. As of November 2002, 18 federal agencies had reported
initiating a total of 62 smart card projects. These projects have provided
a range of benefits and services, ranging from verifying the identity of
people accessing buildings and computer systems to tracking immunization
records.

To successfully implement such systems, agency managers have faced a
number of substantial challenges: * sustaining executive- level commitment
in the face of organizational

resistance and cost concerns;  obtaining adequate resources for projects
that can require extensive

modifications to technical infrastructures and software;  integrating
security practices across agencies, a task requiring

collaboration among separate and dissimilar internal organizations; 
achieving smart card interoperability across the government;  maintaining
the security of smart card systems and privacy of personal

information. In helping agencies to overcome these challenges, not only
GSA but also the Office of Management and Budget (OMB) and the National
Institute of Standards and Technology (NIST) have roles to play. As the
federal government*s designated promoter of smart card technology, GSA
assists agencies in assessing the potential of smart cards and in
implementation. Although GSA has helped agencies significantly by
implementing a governmentwide, standards- based contracting vehicle, it
has not kept guidance up to date and has not addressed important subjects,
such as building security standards, in its guidance. Further, OMB, which
is responsible for setting policies for ensuring the security of federal
information and systems, has not issued governmentwide policy on adoption
of smart cards. In its role of setting technical standards, NIST is
responsible for the government smart card interoperability specification,
which does not yet address significant emerging technologies. Updated
guidance, policy, and standards would help agencies to take advantage of
the potential of smart cards to enhance security and other agency
operations.

A typical smart card (not to scale)

Source: GSA. ELECTRONIC GOVERNMENT

Progress in Promoting Adoption of Smart Card Technology

www. gao. gov/ cgi- bin/ getrpt? GAO- 03- 144. To view the full report,
including the scope and methodology, click on the link above. For more
information, contact Linda Koontz at (202) 512- 6240 or koontzl@ gao. gov.
Highlights of GAO- 03- 144, a report to the

Chairman, Subcommittee on Technology and Procurement Policy, House of
Representatives

January 2003

Smart cards* credit- card- like devices that use integrated circuit chips
to store and process data* offer a range of potential uses for the federal
government, particularly in increasing security for its many physical and
information assets. GAO was asked to review the use of smart cards across
the federal government (including identifying potential challenges), as
well as the effectiveness of the General Services Administration (GSA) in
promoting government adoption of smart card technologies.

GAO recommends, among other things, that GSA establish guidelines for
federal building security that address smart card technology; that OMB
establish policy on adoption of smart cards for physical and logical
security; and that NIST continue to improve and update the government
smart card interoperability specification.

In commenting on a draft of this report, agency officials generally agreed
with its content and recommendations.

Page i GAO- 03- 144 Progress in Promoting Smart Cards

Contents

Contents Page ii GAO- 03- 144 Progress in Promoting Smart Cards

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Appendix I Information about Selected Government Smart Card Projects

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Appendix I Information about Selected Government Smart Card Projects

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Appendix I Information about Selected Government Smart Card Projects

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Appendix I Information about Selected Government Smart Card Projects

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Appendix I Information about Selected Government Smart Card Projects

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