White House plans to regulate contractor computer security

This story has been updated.

The Obama administration has drafted plans to require federal contractors to adopt specific cybersecurity safeguards for company equipment that transmits government information.

The proposed regulations come as the White House considers issuing an executive order that would regulate computer security at all critical businesses. Industry backlash stopped Congress from mandating such reforms.

NASA, the Defense Department and the General Services Administration, which purchases goods and services for agencies across government, released the draft rules Friday. Under the plan, doing business with the government would be contingent on agreeing to protect corporate-owned devices and federal data on websites.

This regulation “would add a contract clause to address requirements for the basic safeguarding of contractor information systems that contain or process information provided by or generated for the government (other than public information),” the proposal states.

The provision calls for only a few computer protections and leaves vendors substantial flexibility, which troubles some computer security experts. Specifically, the administration wants “current and regularly updated” malware blockers, such as antivirus or antispyware mechanisms, as well as “prompt” installation of software patches and other security updates. Federal data posted to company Web pages must be secured through passwords or other technological restrictions.

Information and equipment also would have to be sheltered by one physical element, such as a locked case, and one digital defense, such as a login.

Alan Paller, research director for the SANS Institute who frequently advises the administration, called the plan “worse than useless.”

He said the requirements will provide agencies with a false sense of security. The proviso does not elaborate on the degree to which antimalware software must be “current and regularly updated” or provide a timeline for the “prompt” application of patches, Paller said. And the clause is silent on limiting administrative privileges, which grant networkwide access, he added.

“Who are these people who can be so cavalier in the face of a massive buildup of attacks so great that it caused the head of MI5 -- Jonathan Evans -- 60 days ago to break a two year silence to call ‘astonishing?,’ ” Paller said, referring to remarks by the chief of the United Kingdom’s intelligence agency on June 25. Evans’ full statement was, “The extent of what is going on is astonishing -- with industrial-scale processes involving many thousands of people lying behind both state-sponsored cyberespionage and organized cybercrime.”

The new legal language would apply to all contractors and subcontractors “regardless of size or business ownership,” agency officials said.

While debating the rider, officials considered the financial burden on companies, but decided cleanup charges for neglecting to guard government data would outweigh additional security expenses.

“The resultant cost impact is considered not significant, since the first-level protective measures (i.e., updated virus protection, the latest security software patches, etc.) are typically employed as part of the routine course of doing business,” the notice states. On the other hand, “the cost of not using basic information technology system protection measures would be a significant detriment to contractor and government business.”

Contractors are still evaluating the framework to ensure it does not hamper technological advancements or strain budgets.

Trey Hodgkins, senior vice president at TechAmerica, a trade group, said, “Because it covers any government information, it covers the entire corporate network for both classified and unclassified data.  While the proposal sets requirements for what appear to be prudent business practices, we have asked our members to assess the impact, administrative burden and costs from both a technical and security perspective.”

He added, “Whatever those burdens, they will be ultimately borne by the taxpayer.  What we want to make sure we are not doing is establishing requirements that tie the hands of industry to be innovative in the face of evolving cyber threats.” 

Federal officials, for years, have admitted that adversaries are targeting NASA and Pentagon intelligence handled by contractors.

NASA, where contractors outnumber federal employees, reported 5,408 computer security incidents in 2010 and 2011 in which outsiders either installed malicious software or accessed systems. Some of the hacks may have been organized by foreign spies seeking to further national agendas, according to the space agency’s inspector general. About 90 percent of NASA’s funding goes to contractors.

During one cyber strike on a defense contractor in March 2011, attackers believed to be sponsored by a foreign intelligence service excised 24,000 files related to weapons systems, Pentagon officials said. A July 2011 leak of 90,000 military email addresses and passwords at defense contractor Booz Allen Hamilton later resulted in online fraud, FBI officials said.