ITAPS Comments on the Fiscal Year 2015 National Defense Authorization Act House-passed H.R & Senate Committee-reported S.

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1 ITAPS Comments on the Fiscal Year 2015 National Defense Authorization Act House-passed H.R & Senate Committee-reported S October 23, 2014 Table of Contents Sec 1083 of H.R Division E of H.R and H.R FITARA... 5 Section 901 of S Cloud Computing Report Language from H.R and S About ITAPS The Information Technology Alliance for Public Sector (ITAPS), a division of ITI, is an alliance of leading technology companies (including ICT companies and the defense industrial base (DIB)) offering the latest innovations and solutions to public sector markets. With a focus on the federal, state and local levels of government, as well as on educational institutions, the ITAPS team advocates for improved procurement policies and practices, while identifying business development opportunities and sharing market intelligence with our industry participants. Visit itaps.itic.org to learn more.

2 2 P a g e HOUSE SECTION 1083: REPORT ON CERTAIN INFORMATION TECHNOLOGY SYSTEMS AND TECHNOLOGY AND CRITICAL NATIONAL SECURITY INFRASTRUCTURE ISSUE: Section 1083 of H.R (Rep. Mike Rogers (R-AL) amendment no. 105) in the House-passed National Defense Authorization Act (NDAA) for fiscal year 2015 contains a provision that would require the Secretary of Defense and the Director of National Intelligence to submit to the appropriate congressional committees a notification of each instance in which the Secretary or the Director determine through analysis or reporting that an information technology or telecommunications component from a company suspected of being influenced by a foreign country, or a suspected affiliate of such a company, is competing for or has been awarded a contract to include the technology of such company or such affiliate into a covered network. A covered network is defined to include information technology or telecommunications networks of the Department of Defense (DoD) or the intelligence community (IC) as well as networks of network operators supporting systems in proximity to DoD or IC facilities. DISCUSSION: The IT Alliance for Public Sector (ITAPS) has strong concerns about Section 1083 for a number of reasons, as discussed below. In short, we fear the language in Section 1083 will not help the government achieve its security objectives and could have several unintended economic and security consequences. ITAPS supports the federal government s efforts to strengthen its cybersecurity posture through procurement. Improving and strengthening our nation s cyber posture is rightly a top priority for our government and changing how the federal government integrates security into its own procurement processes will help improve the cyber resiliency of the United States. Cybersecurity also is critical for ITAPS/ITI member companies. The protection of our customers, our brands, and our intellectual property - which are essential components of our business - is critical to our ability to grow and innovate in the future. We seek to maintain the highest levels of integrity in our products and services, regardless of whether they are sold to commercial or government markets. Moreover, as both providers and users of cybersecurity products and services, our members have extensive experience working with governments around the world on cybersecurity policy, and we are committed to working with the U.S. federal government to improve cybersecurity in its acquisition of goods and services. Our concerns are as follows: The language is ambiguous and many terms are not defined. The provision is written broadly and contains many undefined terms such as suspected and influence. The provision does not define the criteria required to warrant suspicion and is overly broad in nature. Furthermore, there is no definition of influenced by a foreign country or the criteria that will be used to determine influence, which could sweep into the bill s scope a whole range of multinational companies including U.S.-based ones who have R&D, manufacturing, and sales activities all over the world, and often related relationships with various governments. A vague reporting requirement based on analysis or reporting on U.S.-based subsidiaries of multinational corporations considered U.S. Persons under Executive Order by the heads of the military and IC raises unwelcome concerns over domestic surveillance on privately held information technology or telecommunications networks. Lastly, as noted above, the definition of covered network" includes information technology or telecommunications networks of network

3 3 P a g e operators supporting systems in proximity to DoD or IC facilities, another undefined term vast in scope. In fact, DoD and ODNI do not have the authority to assess privately held telecommunications or information technology networks or the private facilities, businesses or residences that are in proximity to DoD or IC facilities. We believe this could have unintended consequences and encroach upon civil rights and liberties. Moreover, the text s ambiguous, vague wording will place stakeholders at risk of not accomplishing the statutory objectives. Standing alone, a company s relationship with a foreign country may not be dispositive as to whether its products or services are secure. Product security is a function of how a product is made, used, and maintained, not only by whom or where it is made, or by the relationship a vendor has with any particular government. Geographic restrictions may not be helpful to improving cybersecurity and could in fact preclude a customer from procuring the best or most appropriate technologies for the mission. There is strong potential for global backlash on U.S. ICT companies. Governments around the world closely watch U.S. policies, and a U.S. law (or even proposal) that would discriminate against a vendor based on its relationship with a foreign country (or government) could embolden other governments to enact similar restrictions as a condition of sale into their own markets. Such an eventuality is particularly concerning, and perhaps even likely, given the heightened suspicion and scrutiny many foreign governments are shining on U.S-based ICT companies in light of the Snowden revelations and stories about U.S. ICT companies collusion with the U.S. government. In fact, governments already are enacting or proposing policies that are causing U.S. firms to be shut out of foreign markets, and Section 1083 may only serve to fan those flames. It is unclear what DoD, ODNI or Congress will do with these findings. The proposal does not define what is expected to be done with the report information, nor is it clear to industry how reports to Congress would meaningfully address any threats or vulnerabilities that may be identified. As noted above, identification of products in IT or telecommunications networks that are influenced by a foreign country does not, in and of itself, identify a potential risk. We would also express strong concerns about these reports being used pursuant to Section 806 of the FY 2011 NDAA (PL ) and Section 310 of the FY 2012 Intelligence Authorization Act (PL ) to exclude vendors from a contract with the federal government without notification to the vendor (or its affiliates). Exclusion without an opportunity for the vendor to rebut or mitigate a concern could have a number of unintended consequences. A company could become known, either openly or confidentially, as a tainted source and their government business eventually could cease to exist. Furthermore, such a cessation of government business could trigger clauses in companies commercial contracts that bar them from business if the federal government has excluded them as a source. Thus, should the government exclusion become known to their commercial customers, it is not unreasonable to expect that commercial business for the excluded company also would be affected, if not cease. The economic impact from the exclusion of any one reasonably sized innovative commercial IT or telecommunications company under such conditions could easily have an impact in the hundreds of millions and cost countless jobs. The provision is not clear on whether this report will be classified or shared with other federal agencies or entities outside government. The proposal also does not identify whether the company owning or operating the suspected IT or telecommunications network or the manufacturer of the suspected item will be notified of the report to Congress, thereby permitting rebuttal, mitigation or elimination of the risk. Such a lack of information sharing could have significant consequences for a company if the report is accidently released and the company has not been given the option to remedy the risk.

4 4 P a g e RECOMMENDATION: The member companies represented by ITAPS have long-shared a common interest with Congress to ensure the quality and performance of the products they manufacture or integrate for both the commercial and public sector markets. These interests have produced a multitude of industry-led initiatives to address risks that may be found in the globally sourced supply chains of today s interconnected global economy. These industry-led efforts have also shared the objectives of scores of legislative proposals and executive branch initiatives to improve security in the federal government supply chain. Section 1083 causes more questions and confusion and offers no meaningful solutions to improving the integrity of information technology and telecommunication products and services. ITAPS strongly recommends that Section 1083 be removed from the final version of the bill because it does not meaningfully address risks and has significant potential to cause irreparable economic harm to U.S.-based corporations.

5 5 P a g e H.R HOUSE DIVISION E and H.R. 1232: FEDERAL INFORMATION TECHNOLOGY ACQUISITION REFORM ACT (FITARA) ISSUE: Information technology (IT) is a mission critical component of success for the United States government today. The way in which the departments and agencies procure IT, however, was designed in decades past; it does not allow the government to acquire cutting edge technologies in the most effective way, and inhibits the warfighter s ability to utilize best in breed products and services to protect themselves and their units on the battlefield and in cyberspace. Division E, the Federal Information Technology Acquisition Reform Act (FITARA), of the H.R. 4435, the FY15 National Defense Authorization Act (NDAA), seeks to address some of these barriers by reforming IT acquisition. The Senate Homeland Security and Governmental Affairs Committee has also advanced a version of FITARA, H.R. 1232, that includes some of the same provisions and objectives. ITAPS believes that these proposals can be consolidated to fashion an effective reform provision. Specifically, the H.R version of FITARA seeks to give enhanced management and budgetary authorities to the Chief Information Officers (CIOs), provides tools for multi-year revolving funds for IT investments, encourages the departments and agencies to transition to the cloud to garner maximum efficiency and cost savings, improves data center optimization, strengthens the IT acquisition workforces, and encourages enhanced communications with industry partners. The Senate committeeapproved version, H.R. 1232, includes enhanced CIO authorities, IT management risk mitigation strategies, a governmentwide software purchasing program, and data center consolidation initiatives. DISCUSSION: We support inclusion of the following elements from both of these proposals into a final FITARA provision and believe they should be adopted as part of the FY15 NDAA conference report: Enhanced Authorities for the Civilian Chief Information Officers ITAPS supports enhanced authority for CIOs, including consolidation of the position to improve management of IT investment decisions, reduce redundancy, and drive efficiency across the entire department. ITAPS further supports provisions establishing direct executive agency personnel engagement in the IT investment strategy for the agency. 1 In the context of considering provisions for CIO authority as part of FITARA, we must call attention to Section 901 of S and the support ITAPS offers below for enhancing the roles and responsibilities it establishes for the Office of the CIO at the Department of Defense. We believe that the provisions of Section 101 of H.R 1232 as passed by the Senate Homeland Security and Governmental Affairs Committee, and Section 901 of S as passed by the Senate Armed Services Committee, can and should be reconciled to improve the CIO role in IT investment decisions across the federal government. Data Center Optimization ITAPS supports provisions that seek to create effective data center optimization plans. These plans would establish metrics for optimizing data center usage and drive efficiencies in their utilization, while also encouraging the wider use of commercial data centers and commercial cloud services. The bill seeks to eliminate non-optimized data centers, 1 Included in the OMB 25-point plan for IT Investment and Management

6 6 P a g e and, subject to appropriations, use the savings achieved to promote other IT capabilities and services throughout the agency involved. Furthermore, the Senate s version of H.R is missing some of the key provisions that have enjoyed multi-stakeholder support 2 as part of FITARA since its inception. We believe that some of these missing elements must be added back in if the language is to satisfy the bill s original intention. Considering that the CBO score is neutral on these provisions, we further believe that reintroducing the elements that are not currently in H.R is not in conflict with the Senate s goals for this bill, either. Multi-Year Revolving Funds for IT Investment (Section 5503(c) of H.R. 4435) ITAPS strongly supports the funding availability for agencies wishing to transition to the cloud. We see this as a significant improvement that will allow the government acquisition of technology to keep pace with innovation, and to provide more flexibility in budget models than currently exists. We further believe that flexible funding mechanisms should be extended to all IT investments as recommended in the OMB 25 Point Implementation Plan to Reform Federal Information Technology Management. 3 Transition to the Cloud (Section 5503 of H.R. 4435) ITAPS supports the provisions that promote the government s transition to a cloud services environment, particularly in light of the data center consolidation provisions already included in this proposal. Industry has emphasized the need for government to utilize the most innovative advancements in information technology to increase efficiency and reduce costs, and transitioning to the cloud will provide the government with more reliable, more affordable, and more flexible access to IT infrastructure than currently exists. Strengthening the IT Acquisition Workforce (Section of H.R. 4435) ITAPS is very supportive of provisions that enhance the IT acquisition workforce s capabilities. These provisions, particularly regarding the development of a career path for IT program management, represent a key step toward meaningful improvements in the management of IT investments. 4 Enhanced Communication with Industry (Section 5506 of H.R. 4435) ITAPS supports the provisions that encourage a more robust dialogue between industry and government. This promotes responsible and constructive dialogues between federal acquisition personnel and industry and we strenuously encourage this point. 5 Finally, as the committees consider inclusion of other elements of these proposals, we would note the following sections as needing further attention before they would be ready for inclusion in the conference report: Industry believes that technology inventories in the federal government should account for all IT assets, not just software. In point of fact, it is not possible to determine if one has the appropriate number of software licenses without determining the number of devices where it may be used. (Section 5301 of H.R. 4435) 2 ITAPS letter to House Oversight and Government Reform Committee on May 21, Included in the OMB 25 point plan for IT Investment and Management 4 Included in the OMB 25 point plan for IT Investment and Management 5 Included in the OMB 25 point plan for IT Investment and Management

7 7 P a g e ITAPS believes that more efficient software-licensing agreements can be achieved; however, such actions should be informed by an inventory of IT assets and is worthy of further study. (Section 5502 of H.R and Section 103(b) of H.R. 1232) Industry continues to have concerns about strategic sourcing generally and does not believe the concept has adequately matured. (Section 5501 of H.R and Section 103(a) of H.R. 4435) ITAPS believes that transparency regarding blanket purchase agreements and cost data without context does not serve to improve acquisition decisions. (Section 5503 of H.R. 4435) RECOMMENDATION: ITAPS believes that both chambers of Congress share mutual goals regarding FITARA, and that developing a compromise version can be a step in the right direction to improving how the government acquires IT. In order to achieve a successful outcome, we believe the conference process should yield a FITARA section that can be fashioned by combining the following elements of these various proposals: CIO Authority (Section 101 of H.R. 1232) Data Center Optimization (Section 202 of H.R. 1232) Multi-Year Revolving Funds for IT Investment (Section 5503(c) of H.R. 4435) Transition to the Cloud (Section 5503 of H.R. 4435) Strengthening the IT Acquisition Workforce (Section of H.R. 4435) Enhanced Communication with Industry (Section 5506 of H.R. 4435) Furthermore, we must note that FITARA should not be seen as an end to the effort to improve the way the federal government acquires and manages IT and IT investments. However, these provisions are steps that can be taken now and would serve to advance the effort in the short term. To achieve a meaningful and lasting solution to the complex issues surrounding federal acquisition, we must include in the final product a restoration of commercial item preferences, better management of IT investments, a focus on improving the acquisition workforce, a rationalization of the oversight environment, more flexibility in IT investment and funding options, and an alignment with the realities of our trade interests and a global market. 6 ITAPS advocates for a concerted review of the entire acquisition process, like that undertaken in the mid-1990s by the Section 800 Panel, or, more recently, the efforts of the House and Senate Armed Services Committees, to provide an effective venue for the discussions and recommendations still needed in order to achieve true federal IT acquisition reform. 6

8 8 P a g e Senate Section 901: Reorganization of the Office of the Secretary of Defense and Related Matters ISSUE: The Department of Defense relies heavily on the authorities and responsibilities of its management in order to be successful on the battlefield. Senate Section 901, Reorganization of the Office of the Secretary of Defense and Related Matters, combines the Deputy Chief Management Officer (DCMO) with the office of the Chief Information Officer (CIO) to become the Chief Management Officer (CMO). This change will elevate within the department the authorities established by the Clinger-Cohen Act for the office of CIO, thereby increasing the level of senior leadership engagement in information technology (IT) investment and management decisions. DISCUSSION: Industry has long supported senior executive engagement in IT investment and management decisions as a very significant determinant for success in IT programs. Section 901 restores the role and authorities of the CIO within the Department of Defense to a senior executive level and provides the level of attention that contributes to success. RECOMMENDATION: ITAPS supports Senate Section 901 and encourages its inclusion in the final passage of the FY15 NDAA. Furthermore, we believe that this provision is complementary to Division E, the Federal Information Technology Acquisition Reform Act (FITARA), in the House-passed version of the NDAA. Both address the need for enhancing the authorities and roles of the office of the CIO and should be reconciled in conference to permit passage of FITARA, as amended, as part of the final FY15 NDAA.

9 9 P a g e Senate Report (S. 2410) Title III Operation and Maintenance: Measuring Department of Defense use of commercial cloud computing capabilities and services House Report (H.R. 4435) Title VIII Acquisition Policy, Acquisition Management, and Related Matters Items of Special Interest: Independent Assessment of Department of Defense Cloud Computing Acquisition and Brokerage Policies ISSUE: Both the House and Senate reports to the fiscal year 2015 National Defense Authorization Act (NDAA) call for the Department of Defense (DoD) to conduct an assessment on the use of commercial cloud computing acquisition, capabilities and services. DISCUSSION: ITAPS strongly supports the House and Senate provisions to assess DoD s progress in evaluating and adopting commercial cloud capabilities. We also support assessing and comparing the features, security, performance cost, and functionality of the comparable cloud offerings developed by the Defense Information Systems Agency. With budget cuts and sequestration, commercial cloud solutions have been proven to deliver savings in a national security environment. Encouraging adoption of commercial cloud offerings for the provision of public, hybrid, private and community clouds can play an important role in delivering greater capabilities, exposing data to the service member and driving savings and efficiencies within the department. RECOMMENDATION: ITAPS supports the oversight the committees have undertaken on this important issue and would encourage continued attention to these report requests and the implementation of subsequent recommendations.

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