Testimony 

Before the Subcommittee on Economic 

Security, Infrastructure Protection, and 

Cybersecurity, House Committee on 

Homeland Security

United States Government Accountability Office

GAO

For Release on Delivery 

Expected at 10:00 a.m. EDT 

June 22, 2005 INFORMATION SECURITY

Key Considerations Related 

to Federal Implementation 

of Radio Frequency 

Identification Technology 

Statement of Gregory C. Wilshusen, Director 

Information Security Issues 

GAO-05-849T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

www.gao.gov/cgi-bin/getrpt?GAO-05-849T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Greg 

Wilshusen at (202) 512-6244 or 

wilshuseng@gao.gov. 

Highlights of GAO-05-849T, a report to the 

Subcommittee on Economic Security, 

Infrastructure Protection, and 

Cybersecurity, House Committee on 

Homeland Security 

June 2005

INFORMATION SECURITY 

Key Considerations Related to Federal 

Implementation of Radio Frequency 

Identification Technology 

The main technology components of an RFID system are a tag, reader, and 

database. A reader scans the tag for data and sends the information to a 

database, which stores the data contained on the tag (see figure). 

Components of an RFID system 

The use of tags and databases raises important security considerations 

related to the confidentiality, integrity, and availability of the data on the 

tags, in the databases, and in how this information is being protected. Tools 

and practices such as implementing the risk-based framework mandated by 

the Federal Information Security Management Act of 2002 and employing 

encryption and authentication technologies can help mitigate these security 

considerations. 

Key privacy concerns include notifying individuals of the existence or use of 

the technology; tracking an individual’s movements; profiling an individual’s 

habits, tastes, or predilections; and allowing for secondary uses of the 

information. Tools and practices can help mitigate these considerations, 

including existing requirements contained in legislation and proposed 

measures such as a deactivation mechanism on the tag, among others. 

In addition to security and privacy, there are other areas of consideration 

related to the adoption of the technology. These areas include the reliability 

of the tags and readers; placement and orientation of the tag; costs and 

benefits associated with implementation; availability of tags; and 

environmental issues, such as the reuse and recycling of tags. 

Radio frequency identification 

(RFID) is an automated datacapture technology that can be 

used to electronically identify, 

track, and store information 

contained on a tag that is attached 

to or embedded in an object, such 

as a product, case, or pallet. 

Federal agencies have begun 

implementation of RFID 

technology, which can offer them 

new capabilities and efficiencies in 

operations. For example, the State 

Department has reported plans to 

use RFID technology in its 

electronic passports. The reduced 

cost of the technology has made 

the wide-scale use of it a real 

possibility for government and 

industry organizations. 

As requested, this testimony will 

provide an overview of the 

technology and discuss key 

security, privacy, and other 

considerations surrounding 

implementation of the technology 

in the federal government. It is 

based on our recently issued report 

(GAO-05-551).
Page 1 GAO-05-849T 

Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here today to present a summary of our work in the 

area of radio frequency identification (RFID) technology.1

 RFID is an 

automated data-capture technology that can be used to electronically 

identify, track, and store information contained on a tag. The tag can be 

attached to or embedded in the object to be identified, such as a product, 

case, or pallet. RFID provides identification and tracking capabilities by 

using wireless communication to transmit data. 

The technology can provide a more efficient method for federal agencies, 

manufacturers, retailers, and suppliers to collect, manage, disseminate, 

store, and analyze information on inventory, business processes, and 

security controls, among other functions, by providing real-time access to 

information. Several federal agencies have already begun testing and using 

the technology. For example, the State Department has reported plans to 

use RFID technology in its electronic passports. 

As requested, in my testimony today, I will present an overview of RFID 

technology and discuss the security, privacy, and other considerations 

surrounding RFID technology implementation in the federal government. 

My testimony today is based on our recently published report2

 on RFID 

technology and was prepared in accordance with generally accepted 

government auditing standards. 

RFID is an automated data-capture technology that can be used to 

electronically identify, track, and store information contained on a tag. 

The main technology components of an RFID system are a tag, reader, and 

database. A radio frequency reader scans the tag for data and sends the 

information to a database, which stores the data contained on the tag. 

Passive tags do not contain their own power source, such as a battery. The 

development of these inexpensive tags has created a revolution in RFID 

adoption and made wide-scale use of them a real possibility for 

government. 

 1

GAO, Information Security: Radio Frequency Identification Technology in the Federal 

Government, GAO-05-551 (Washington, D.C.: May 27, 2005.) 

2

GAO-05-551. 

Results in Brief 
Page 2 GAO-05-849T 

Several security and privacy issues are associated with federal and 

commercial use of RFID technology. The security of tags and databases 

raises important considerations related to the confidentiality, integrity, 

and availability of the data on the tags, in the databases, and in how this 

information is being protected. Tools and practices to address these 

security issues, such as compliance with the risk-based framework 

mandated by the Federal Information Security Management Act (FISMA) 

of 20023

 and employing encryption and authentication technologies, can 

help agencies achieve a stronger security posture. Among the key privacy 

issues are notifying individuals of the existence or use of the technology; 

tracking an individual’s movements; profiling an individual’s habits, tastes, 

or predilections; and allowing secondary uses of information. The Privacy 

Act of 1974 limits federal agencies’ use and disclosure of personal 

information,4

 and the privacy impact assessments required by the EGovernment Act of 2002 provide an existing framework for agencies to 

follow in assessing the impact on privacy when implementing RFID 

technology.5

 Additional measures proposed to mitigate privacy issues, 

such as using a deactivation mechanism on the tag, incorporating blocking 

technology to disrupt transmission, and implementing an opt-in/opt-out 

framework for consumers are in progress. 

In addition to security and privacy, there are other areas to consider 

related to the adoption of the technology. These areas include the 

reliability of the tags and readers, which do not consistently work with 

some products or in certain situations; placement and orientation of the 

tag, which can contribute to how effectively a tag can be read; costs and 

benefits associated with implementation; availability of tags; and 

environmental issues related to the reuse and recycling of tags. 

RFID technology uses wireless communication in radio frequency bands 

to transmit data from tags to readers. A tag can be attached to or 

embedded in an object to be identified, such as a product, case, or pallet. 

A reader scans the tag for data and sends the information to a database, 

which stores the data contained on the tag. For example, tags can be 

 3

44 U.S.C. § 3544 (b). 

4

5 U.S.C. § 552 a(a)(4). 

5

44 U.S.C. § 3501 note. See Office of Management and Budget M-03-22, Sept. 26, 2003. 

Background 
Page 3 GAO-05-849T 

placed on car windshields so that toll systems can quickly identify and 

collect toll payments on roadways. 

Interest in RFID technology began during World War II and has increased 

in the past few years. During the war, radio waves were used to determine 

whether approaching planes belonged to allies or enemies. Since then, 

exploration in radio technology research and development in commercial 

activities continued through the 1960s and evolved into marked 

advancements in the 1970s by companies, academic institutions, and the 

U.S. government. For example, at the request of the Department of Energy, 

Los Alamos National Laboratory developed a system to track nuclear 

materials by placing a tag in a truck and readers at the gates of secure 

facilities. This is the system used today in automated toll payment 

systems. 

The technology offers several improvements over its predecessor 

technologies, such as barcodes and magnetic stripe cards. For instance, a 

tag can carry more data than a barcode or magnetic stripe and can be 

reprogrammed with new information if necessary. Additionally, tags do 

not typically require a line of sight to be read, as barcodes do, and can be 

read more rapidly and over greater distances. Mandates by large retailers 

and the Department of Defense (DOD) requiring their top suppliers to use 

RFID tags, along with technological advancements and decreased costs, 

have spurred the proliferation of this technology. RFID technology is now 

being used in a variety of public and private-sector settings, ranging from 

tracking books in libraries to authenticating a key in order to start a 

vehicle. 

RFID is an automated data-capture technology that can be used to 

electronically identify, track, and store information contained on a tag. A 

radio frequency reader scans the tag for data and sends the information to 

a database, which stores the data contained on the tag. 

The main technology components of an RFID system are the tag, reader, 

and database. (See fig. 1.) 

RFID Technology 

Overview 
Page 4 GAO-05-849T 

Figure 1. Main Components of an RFID System 

An RFID tag, or transponder, consists of a chip and an antenna . A chip 

can store a unique serial number or other information based on the tag’s 

type of memory, which can be read-only, read-write, or write-once readmany. The antenna, which is attached to the microchip, transmits 

information from the chip to the reader. Typically, a larger antenna 

indicates a longer read range. The tag is attached to or embedded in an 

object to be identified, such as a product, case, or pallet, and can be 

scanned by mobile or stationary readers using radio waves. 

The simplest version of a tag is a passive tag. Passive tags do not contain 

their own power source, such as a battery, nor can they initiate 

communication with a reader. Instead, the tag responds to the reader’s 

radio frequency6

 emissions and derives its power from the energy waves 

transmitted by the reader. Under perfect conditions, the tags can be read7

from a range of about 10 to 20 feet.8

 The cost of passive tags ranges from 

20 cents to several dollars. Costs vary based on the radio frequency used, 

amount of memory, design of the antenna, and packaging around the 

transponder, among other tag requirements. Passive tags can operate at 

various frequencies. Examples of passive tag applications include mass 

transit passes, building access badges, and consumer products in the 

 6

Frequency is the number of radio waves that pass a given point during a fixed period of 

time (e.g., the number of complete oscillations per second of energy). 

7

The read range of a tag is based on the size of the antenna, frequency used, power of the 

reader, and the material between the tag and the reader. 

8

Although these tags can theoretically be read at 30 feet, when factoring in circumstances 

that can interfere with the read range (e.g., water and metal), the actual read distance is 

reduced to 10 feet or less. 

The Tag 
Page 5 GAO-05-849T 

supply chain. The development of these inexpensive tags has created a 

revolution in RFID adoption and made wide-scale use of them a real 

possibility for government and industry organizations. 

Semipassive tags9

 also do not initiate communication with the reader but 

contain batteries that allow the tag to perform other functions, such as 

monitoring environmental conditions and powering the tag’s internal 

electronics. These tags do not actively transmit a signal to the reader. 

Some semipassive tags remain dormant (which conserves battery life) 

until they receive a signal from the reader. The battery is also used to 

facilitate information storage. Semipassive tags can be connected to 

sensors to store information for container security devices. 

Active tags contain a power source and a transmitter, in addition to the 

antenna and chip, and send a continuous signal. These tags typically have 

read/write capabilities—tag data can be rewritten and/or modified. Active 

tags can initiate communication and communicate over longer distances—

up to 750 feet, depending on the battery power. The relative expense of 

these tags makes them an option for use only where their high cost can be 

justified. Active tags are more expensive than passive, costing about $20 or 

more per tag. Examples of active tag applications are toll passes, such as 

“E-Z pass,” and the in-transit visibility applications on major items and 

consolidated cargo moved by DOD. 

Tags have various types of memory, including read-only, read-write, and 

write-once read-many. Read-only tags have minimal storage capacity 

(typically less than 64 bits) and contain permanently programmed data 

that cannot be altered. These tags primarily contain item identification 

information and have been used in libraries and video rental stores. 

Passive tags are typically read-only. In addition to storing data, read-write 

tags can allow the data to be updated when necessary. Consequently, they 

have larger memory capacity and are more expensive than read-only tags. 

These tags are typically used where data may need to be altered 

throughout a product’s life cycle, such as in manufacturing or in supply 

chain management. A write-once, read-many tag allows information to be 

stored once, but does not allow subsequent alterations to the data. This tag 

provides the security features of a read-only tag while adding the 

additional functionality of read/write tags. 

 9

Semipassive tags are also referred to as semiactive or battery-assisted passive tags. 
Page 6 GAO-05-849T 

In order for an RFID system to function, it needs a reader, or scanning 

device, that is capable of reliably reading the tags and communicating the 

results to a database. A reader uses its own antenna to communicate with 

the tag. When a reader broadcasts radio waves, all tags designated to 

respond to that frequency and within range will respond. A reader also has 

the capability to communicate with the tag without a direct line of sight, 

depending on the radio frequency and the type of tag (active, passive, or 

semipassive) used. 

Readers can process multiple items at once, allowing for increased read 

processing times. They can be mobile, such as handheld devices that scan 

objects like pallets and cases, or stationary, such as point-of-sale devices 

used in supermarkets. Readers are differentiated by their storage capacity, 

processing capability, and the frequencies they can read. 

The database is a back-end logistic information system that tracks and 

contains information about the tagged item. Information stored in the 

database can include item identifier, description, manufacturer, movement 

of the item, and location. The type of information housed in the database 

will vary by application. For instance, the data stored for a toll payment 

system will be different than the data stored for a supply chain. Databases 

can also be linked into other networks, such as the local area network, 

which can connect the database to the Internet. This connectivity can 

allow for data sharing beyond the local database from which the 

information was originally collected. 

Choice of radio frequency is a key operating characteristic of RFID 

systems. The frequency largely determines the speed of communication 

and the distance from which the tag can be read. Generally, higher 

frequencies indicate a longer read range. Certain applications are more 

suitable for one type of frequency than other types, because radio waves 

behave differently at each of the frequencies. For instance, low-frequency 

waves can penetrate walls better than higher frequencies, but higher 

frequencies have faster data rates. RFID systems use an unlicensed 

frequency range, classified as industrial-scientific-medical or short-range 

devices, which is authorized by the Federal Communications Commission 

(FCC).10 Devices operating in this unlicensed bandwidth may not cause 

 10In the United States, the FCC authorizes the use of the 2.4 GHz and the 902-928 MHz 

frequency range for industrial-scientific-medical and short-range devices, which includes 

RFID technology. 

The Reader

The Database 

RFID Systems Operate on 

Radio Frequencies 
Page 7 GAO-05-849T 

harmful interference and must accept any interference received. The FCC 

also regulates the specific power limit associated with each frequency. The 

combination of frequency and allowable power levels determine the 

functional range of a particular application, such as the power output of 

readers. 

The U.S. Department of State has reported plans to use RFID technology 

in its electronic passports.11 The United States and other countries are 

anticipating using the International Civil Aviation Organization12 (ICAO) 

Document 9303 standard, which prescribes an international format for 

passports, visas, and other official machine-readable travel documents. 

The security of tags and databases raises important considerations 

concerning the confidentiality, integrity, and availability of the data on the 

tags, in the databases, and in how this information is being protected. 

Measures to address these security issues, such as compliance with the 

risk-based framework mandated by the Federal Information Security 

Management Act (FISMA) of 2002 and employing encryption and 

authentication technologies, can help achieve a stronger security posture. 

Among the key privacy issues are notifying individuals of the existence or 

use of the technology; tracking an individual’s movements; profiling an 

individual’s habits, tastes or predilections; and allowing for secondary uses 

of information. Measures to mitigate these issues are in progress. 

Several agencies identified data confidentiality, integrity, and availability 

as key security considerations with implementing RFID technology. 

Specifically, these issues included ensuring that only authorized readers or 

personnel have access to information, maintaining the integrity of the data 

on the chip and stored in the databases, and ensuring that critical data is 

fully available when necessary. Other issues with implementing the 

technology included the potential for various attacks, such as 

 11The proposed U.S. electronic passport will resemble a regular passport with the addition 

of a small RFID chip embedded in the back cover. The chip will securely store the same 

data visually displayed on the photo page of the passport and will also include a digital 

photograph. 

12ICAO was chartered by the United Nations to regulate international aviation and includes 

the United States and 188 other nations. 

Security and Privacy 

Considerations with 

RFID 

Security Considerations 

Relate to Data 

Confidentiality, Integrity, 

and Availability 
Page 8 GAO-05-849T 

counterfeiting or cloning,13 replay,14 and eavesdropping; the possibility of 

electronic collisions when multiple tags and/or readers are present; and 

the presence of unauthorized components that may interfere or imitate 

legitimate system components. 

Without effective security controls, data on the tag can be read by any 

compliant reader; data transmitted through the air can be intercepted and 

read by unauthorized devices; and data stored in the databases can be 

accessed by unauthorized users. 

Using security practices and tools such as the risk-based framework 

mandated by FISMA, encryption, and authentication can help mitigate the 

security considerations associated with implementing RFID technology. 

Implementing the security practices required in FISMA can help 

strengthen the security of RFID systems that store information transmitted 

from tags. FISMA requires each agency, including agencies with national 

security systems, to develop, document, and implement an agencywide 

information security program to provide information security for the 

information and information systems that support the operations and 

assets of the agency, including those provided or managed by another 

agency, contractor, or other source. Specifically, this program is to include 

• periodic assessments of the risk and magnitude of harm that could result 

from the unauthorized access, use, disclosure, disruption, modification, or 

destruction of information or information systems; 

• risk-based policies and procedures that cost-effectively reduce 

information security risks to an acceptable level and ensure that 

information security is addressed throughout the life cycle of each 

information system; 

• subordinate plans for providing adequate information security for 

networks, facilities, and systems or groups of information systems; 

 13Cloning an RFID tag occurs when an attacker produces an unauthorized copy of a 

legitimate tag. 

14A replay attack is an attack in which a valid data transmission is maliciously or 

fraudulently repeated, either by the originator or by an adversary who intercepts the data 

and retransmits it. 

Practices and Tools in 

Place to Address Security 

Considerations 
Page 9 GAO-05-849T 

• security awareness training for agency personnel, including contractors 

and other users of information systems that support the operations and 

assets of the agency; 

• periodic testing and evaluation of the effectiveness of information security 

policies, procedures, and practices, performed with a frequency depending 

on risk but no less than annually, and which includes testing of 

management, operational, and technical controls for every system 

identified in the agency’s required inventory of major information systems; 

• a process for planning, implementing, evaluating, and documenting 

remedial action to address any deficiencies in the information security 

policies, procedures, and practices of the agency; 

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

and 

• plans and procedures to ensure continuity of operations for information 

systems that support the operations and assets of the agency. 

Encrypting the data on the tags, in the air, or stored in a database may also 

reduce the risk of unauthorized use or changes. Using encryption may be 

particularly relevant for applications where sensitive information is 

contained on the tag. Encryption is the process of transforming ordinary 

data (commonly referred to as plaintext) into code form (ciphertext) using 

a special value known as a key and a mathematical process called an 

algorithm. Cryptographic algorithms are designed to produce ciphertext 

that is unintelligible to unauthorized users. Decryption of ciphertext is 

possible by using the proper key. Encryption technologies can be used to 

(1) hide information content, (2) prevent undetected modification, and (3) 

prevent unauthorized use. When properly implemented, encryption 

technologies may provide assurance regarding the confidentiality, 

integrity, or origin of information that has been exchanged. It may also 

provide a method by which the authenticity can be confirmed. Without 

strong encryption, the data may not be kept confidential. 

Authentication, which is the process of verifying the claimed identity of a 

user, can be used between tag and reader as a way to mitigate security 

risks. Authentication of readers can help prevent the unauthorized reading 

and/or writing to tags. 
Page 10 GAO-05-849T 

The extent and nature of the privacy issues related to the federal and 

commercial use depends on the specific proposed use. For example, using 

the technology for generic inventory control would not likely generate 

substantial privacy concerns. However, the use of RFIDs by the federal 

government to track the movement of individuals traveling within the 

United States could generate concern by the affected parties. Privacy 

issues associated with RFID implementation include notifying individuals 

of the existence or use of the technology; tracking an individual’s 

movements; profiling an individual’s habits, tastes or predilections; and 

allowing for secondary uses of information. 

• Notification. Individuals may not be aware that the technology is being 

used unless they are informed that the devices are in use. Therefore, 

unless they are notified, consumers may not be aware that the RFID tags 

are attached to or embedded in items they are browsing or purchasing or 

that the items purchased are being scanned. 

• Tracking. Tracking is real-time, or near-real-time, surveillance in which a 

person’s movements are followed through RFID scanning. Media reports 

have described concerns about ways in which anonymity is likely to be 

undermined by surveillance. As previously reported, many civil liberties 

groups are concerned about the application of this technology to track 

individuals’ movements, such as in a public school setting, and the 

resulting loss of anonymity in public places.15 Additionally, periodic public 

surveys have revealed a distinct unease with the potential ability of the 

federal government to monitor individuals’ movements and transactions. 

• Profiling. Profiling is the reconstruction of a person’s movements or 

transactions over a specific period of time, usually to ascertain something 

about the individual’s habits, tastes, or predilections. Because tags can 

contain unique identifiers, once a tagged item is associated with a 

particular individual, personally identifiable information can be obtained 

and then aggregated to develop a profile of the individual. As previously 

reported,16 profiling for race, ethnicity, or national origin has caused public 

debate in recent years. Both tracking and profiling can compromise an 

individual’s privacy and anonymity. 

 15GAO, Technology Assessment: Using Biometrics for Border Security, GAO-03-174

(Washington, D.C.: Nov. 15, 2002). 

16GAO-03-174. 

Privacy Issues 

Surrounding RFID Use 
Page 11 GAO-05-849T 

• Secondary uses. In addition to issues about the planned uses of such 

information, there is also concern surrounding the possibility that 

organizations could develop secondary uses for the information; that is, 

information collected for one purpose tends over time to be used for other 

purposes as well. This has been referred to as “mission-” or “functioncreep.” The history of the Social Security number, for example, gives 

ample evidence of how an identifier developed for one specific use has 

become a mainstay of identification for many other purposes, 

governmental and nongovernmental.17 Secondary uses of the Social 

Security number have been a matter not of technical controls but rather of 

changing policy and administrative priorities. 

The widespread adoption of the technology can contribute to the 

increased occurrence of these privacy issues. As previously mentioned, 

tags can be read by any compatible reader. If readers and tags become 

ubiquitous, tagged items carried by an individual can be scanned 

unbeknownst to that individual. Further, the increased presence of readers 

can provide more opportunities for data to be collected and aggregated. As 

the uses of technology proliferate, consumers have raised concerns about 

whether certain collected data might reveal personal information such as 

medical predispositions or personal health histories and that the use of 

this information could result in denial of insurance coverage or 

employment to the individual. For example, the use of RFID technology to 

track over-the-counter or prescription medicines has generated substantial 

controversy. 

Implementing privacy practices and tools, such as existing requirements 

contained in the Privacy Act of 1974 and the E-Government Act of 2002, 

and employing proposed measures such as a deactivation mechanism on 

the tag, blocking technology to disrupt transmission, and an opt-in/opt-out 

framework for consumers can help mitigate some of these privacy issues. 

These proposed techniques may address some of the privacy issues and 

are in progress. 

An existing legal framework that addresses the privacy issues under which 

federal agencies operate when implementing any new information 

technology is defined in the Privacy Act of 1974, which limits federal 

agencies’ use and disclosure of personal information. The act’s protections 

 17GAO, Social Security Numbers: Government Benefits from SSN Use but Could Provide 

Better Safeguards, GAO-02-352 (Washington, D.C.: May 31, 2002). 

Practices and Tools to 

Mitigate Privacy Issues Are 

in Progress 
Page 12 GAO-05-849T 

are keyed to the retrieval of personal information by a “name, or the 

identifying number, symbol, or other identifying particular assigned to the 

individual, such as a finger or voice print or a photograph.”18 The Privacy 

Act generally covers federal agency use of personal information, 

regardless of the technology used to gather it. As a practical matter, 

however, the Privacy Act is likely to have a limited application to the 

implementation of RFID technology because the act only applies to the 

information once it is collected, not to whether or how to collect it. The EGovernment Act’s privacy impact assessments requirement, however, 

provides a means of evaluating whether or not to collect information 

based on privacy concerns. 

Employing a mechanism that can deactivate, or “kill,” a tag at the point of 

sale, can prevent tracking of the individual and item once the tag leaves a 

store. This feature would still provide the supply chain tracking benefits to 

the retailer without providing additional information about the consumer 

beyond the point of sale. However, enforcement may be a challenge, as a 

tag may inadvertently be deactivated or remain dormant with the potential 

to be reactivated. Additionally, consumers opting to have the tags 

deactivated may have to undergo additional procedures that may cost time 

or money. 

Another proposed method is blocking technology. Devices that can disrupt 

the transmission of all or selected information contained on a tag would 

be embedded in an object that is carried or worn near RFID tags that the 

individual wants blocked. This technology, however, has not yet been fully 

developed. One challenge to its development may be the constant 

proximity required between the blocker tag and the tag in order to disrupt 

data transmission. Consumers may not consistently remember to 

juxtapose the tags, thereby reducing the effectiveness of the technology. A 

physical method of blocking currently in use is aluminum-coated Mylar19

bags, which can absorb or diffuse RFID signals when placed over the tag. 

An example is in toll payment systems where aluminum-coated Mylar bags 

are issued along with the tag so that drivers can place their tags in the bag 

to prevent them from being read inadvertently. Additionally, the State 

Department is reported to have plans to include metal inside U.S. passport 

 185 U.S.C. §552a(a)(4). 

19Mylar is a registered trademark of Dupont Tejin Films that generally refers to plastic film. 

A common application is packaging film for food, electronics, and medical devices. 
Page 13 GAO-05-849T 

jackets to help prevent the chip from being read by anyone except 

customs and border agents. 

Government and industry groups have also proposed using an opt-in/optout framework. This framework would provide consumers with an option 

to voluntarily participate in RFID transactions that gather data about 

them. Consumers would be informed of the existence of the tags and the 

type of information that would be collected and could then decide whether 

to participate in the transaction or opt out. A concern of this hybrid 

system is the potential disparity in benefits received between consumers 

who opt in versus those who opt out, similar to customer loyalty cards, 

and the notion that this framework might penalize consumers who 

articulate their privacy preferences. Also, a study by the RAND 

Corporation has suggested that organizations using RFID workplace 

access devices should implement “fair information practices” and 

communicate those policies to employees.20

In addition to privacy and security, other areas of consideration related to 

the adoption of RFID technology include the reliability of tags and readers, 

the placement of the tags, the costs and benefits of implementation, the 

availability of tags, and environmental issues. 

Reliability. Currently, tags are not always reliable and will not work with 

some products or in certain situations. When something close to the 

reader or tag interferes with the radio waves, read-rate accuracy 

decreases. For instance, defective tags created by the manufacturer can be 

unreadable or tags may be damaged during the supply chain process. 

Additionally, readers can produce false negatives (a reader does not read a 

valid tag that passes within the prescribed range) or false positives (a tag 

not intended to be read inadvertently passes within range of a reader), 

which typically occur with closely packed items where multiple tags are 

near each other. Further, environmental conditions, such as temperature 

and humidity, can make tags unreadable. Experts have indicated that tags 

read at high speeds have a significant decrease in read rate. As the 

technology continues to mature, these limitations may eventually be 

addressed, but currently they remain a challenge to organizations. 

 20The RAND Corporation, Privacy in the Workplace: Case Studies on the Use of Radio 

Frequency Identification in Access Cards, RB-9107-RC (Santa Monica, Calif.: 2005). 

Other Areas of 

Consideration Are 

Relevant to RFID Adoption 
Page 14 GAO-05-849T 

Placement. The placement and orientation of the tag contributes to how 

effectively the reader can scan it. Factors to consider in tag placement are 

read and nonread points on objects such as items, cases, or pallets; 

locations that minimize the risk of damage to the tag and have the highest 

potential for a successful passive tag reading; and read points in specific 

environments, such as an item running through a conveyor belt at various 

speeds. 

Some organizations, such as DOD, have documented procedures for tag 

placement to help ensure placement precision, consistency, and efficiency. 

Determining optimal tag placement may require software or an automated 

application to improve this otherwise manual process. 

Costs and Benefits. Best practices for information technology 

investment dictate that prior to making any significant project investment 

the costs and benefits of the system should be analyzed and assessed in 

detail.21 The cost of the tags generally falls on the supplier, as it is the 

supplier who tags the items. Retailers see benefits from RFID tags such as 

improved product visibility during the supply chain process. Suppliers can 

also see such benefits when they go beyond the “slap and ship”22 model 

and find new ways to make the technology add value to gain a return on 

investment. According to the National Institute of Standards and 

Technology, smaller suppliers may earn little to no return because the 

costs associated with implementing the technology, such as hardware, 

software, infrastructure middleware,23 and training will be a substantial 

portion of a small supplier’s budget. Additionally, their price per-tag may 

be high since they do not order large quantities. Organizations need to 

determine if the cost of implementing this technology, which is still in the 

early stages of adoption, is worth the increased ability to collect and 

analyze data. 

Availability. With increasing adoption of RFID technology, the 

availability of tags may emerge as a growing concern. The increased 

adoption of the technology will result in greater demand for tags. As a 

 21GAO, Aviation Security: Challenges in Using Biometric Technologies, GAO-04-785T

(Washington, D.C.: May 19, 2004). 

22Slap and ship” is when a supplier tags the products with an RFID tag right before shipping 

them to the retailer. Suppliers who slap and ship generally will not benefit from the 

technology because they do not make use of it for their own benefit. 

23Middleware is software that connects two otherwise separate applications. 
Page 15 GAO-05-849T 

result, the demand for tags may eventually outstrip the supply. Even if 

industry can keep up with the demand, damage to the tags during 

production may create a shortage. For instance, according to a research 

group’s survey of RFID vendors, up to 30 percent of chips are damaged 

during production when they are attached to their antennae, and an 

additional 10 to 15 percent are damaged during the printing process. 

Improving tag manufacturing and quality control processes may help 

increase the availability of operative tags. 

Environment. In September 2004, the Environmental Protection Agency 

(EPA) and the Office of the Federal Environmental Executive (OFEE) 

cohosted a workshop on the impact of tags on the reuse and recycling of 

packaging materials. Tags contain silicon, adhesives, and nickel, and the 

antennae are typically made from copper, aluminum, or, if printed, silver. 

According to OFEE, these elements of the tags are potential contaminants 

for recyclers and manufacturers using recycled materials. As such, OFEE 

and EPA believe that it is essential that these industries begin to 

understand the potential impacts of having tags on packaging materials 

and pallets and plan how to minimize the impact on the environment. One 

manufacturer remarked on the lack of practicality in recycling because of 

the small amount of silicon used in the chip. Currently, EPA does not 

provide clear national guidelines on electronic waste (e-waste) disposal 

nor has it defined its e-waste goals and measures. Consequently, states are 

pursuing their own mechanisms to regulate e-waste. As tagging begins to 

include cases, additional environmental issues may arise because cases 

are not reusable, in contrast to the pallets, which are reusable. 

In summary, RFID technology can provide new capabilities as well as an 

efficient method for federal agencies, manufacturers, retailers, and other 

organizations to collect, manage, disseminate, store, and analyze 

information on inventory, business processes, and security controls by 

providing real-time access to information. The use of the technology, 

however, raises several security and privacy considerations that may 

affect federal agencies’ decisions to implement the technology. Key 

security issues include protecting the confidentiality, integrity, and 

availability of the data and information system. The privacy issues include 

notifying consumers; tracking an individual’s movements; profiling an 

individual’s habits, tastes, and predilections; and allowing for secondary 

uses of information. In addition, other areas such as the reliability, 

placement, and availability of tags, along with the cost and benefits of 

implementation and environmental concerns, are factors to consider. 
Page 16 GAO-05-849T 

Mr. Chairman, this concludes my statement. I look forward to your 

questions. 

Should you have any questions about this testimony, please contact Greg 

Wilshusen at (202) 512-6244 or by e-mail at wilshuseng@gao.gov. Other 

individuals who made key contributions to this testimony include Nancy 

Glover, Min Hyun, Stephanie Lee, and Suzanne Lightman. 

Contacts and 

Acknowledgments 

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