Report finds contractors face significant security threats

EDITOR'S NOTE: This story first appeared on FCW.com

As lawmakers and regulators weigh increased action on the rules and laws governing data breach disclosures, a survey of more than 1,200 federal contractors found a significant number of firms have suffered breaches since 2016.

Cybersecurity firm BitSight said in a report Feb. 15 that 5.6 percent of aerospace and defense contractors and 4.3 percent of technology contractors reported at least one data breach since 2016. Healthcare contractors were the most frequent breach reporters, at 8 percent.

"Not only can these breaches often affect government and private sector employees, they may expose data that is fundamental to national security," the authors warn.

The survey also found that a large number of contractors are dependent on a common set of cloud service providers for hosting, email and domain services, something the authors worry could cause problems if any of the major providers are breached or knocked offline for an extended period of time.

"Given the high dependency rates on certain service providers, an outage of top hosting, email, and DNS providers would likely impact many, if not all federal agencies in some manner," the write.

The survey looked at internal data as well as public sources like usaspending.gov to evaluate 1,212 randomly selected firms with at least $10,000 in federal contract revenue. It examined contractor performance across a range of cybersecurity metrics, including prevalence of data breaches, network encryption and email security, botnet infections and reliance on outdated internet browsers.

Citing an internal ranking formula, BitSight found that technology contractors on average ranked below federal agencies and in the bottom half of the six contractor industries evaluated for cybersecurity resilience.

More government agencies are revising or augmenting their policies around data breach notification for contractors. The General Services Administration posted a Jan. 12 notice in the Federal Register that it is updating cybersecurity requirements for GSA contractors who deal with unclassified systems across the federal government. The new rules, which must first go through a public comment period, will include tighter breach reporting timeframes that require vendors to report any security incident "that could potentially affect GSA or its customer agencies."

The Department of Defense finalized similar guidelines in 2017 requiring its contractors to report a data breach within 72 hours of discovery.

Pam Walker, senior director for federal public sector technology at the Information Technology Alliance for Public Sector, told FCW that most government contracts already contain language governing breach notification procedures, and that new rules like the one under consideration at GSA are more about collating and streamlining contract language and requirements across federal agencies.

"What they're doing is everybody had different requirements in their contracts, so this is really standardizing across the government what should be included instead of one agency requiring one and another requiring another," she said.

The report lands the same week as House Financial Services Committee held a hearing examining the potential for new breach notification laws.

Software Alliance Vice President for Global Policy Aaron Cooper testified to lawmakers that his organization supported legislation to not only require companies to provide faster and more formal transparency when their systems are hacked, but also ensure "reasonable data security practices."

"Experts suggest that more than 90 percent of data breaches could be preventable through basic cyber hygiene," said Cooper. "Compromised or weak user credentials account for the vast majority of hacking-related breaches, and patched software could prevent nearly 80 percent of security incidents."

However, Walker expressed concern that government contractors already face an avalanche of regulations, policies and contract guidelines for data breach notification issued by multiple agencies.

"There's a policy tension between expecting commercial technology but also imposing all of these different government requirements that add on additional cost and [burdens]," she said.