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[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]

 
              HOW SECURE IS VETERANS' PRIVACY INFORMATION?

=======================================================================

                                HEARING

                               before the

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                 of the

                     COMMITTEE ON VETERANS' AFFAIRS
                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                         TUESDAY, JUNE 4, 2013

                               __________

                           Serial No. 113-21

                               __________

       Printed for the use of the Committee on Veterans' Affairs

                                 ______

                   U.S. GOVERNMENT PRINTING OFFICE 
82-237                     WASHINGTON : 2014
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                     COMMITTEE ON VETERANS' AFFAIRS

                     JEFF MILLER, Florida, Chairman

DOUG LAMBORN, Colorado               MICHAEL H. MICHAUD, Maine, Ranking 
GUS M. BILIRAKIS, Florida            Minority Member
DAVID P. ROE, Tennessee              CORRINE BROWN, Florida
BILL FLORES, Texas                   MARK TAKANO, California
JEFF DENHAM, California              JULIA BROWNLEY, California
JON RUNYAN, New Jersey               DINA TITUS, Nevada
DAN BENISHEK, Michigan               ANN KIRKPATRICK, Arizona
TIM HUELSKAMP, Kansas                RAUL RUIZ, California
MARK E. AMODEI, Nevada               GLORIA NEGRETE MCLEOD, California
MIKE COFFMAN, Colorado               ANN M. KUSTER, New Hampshire
BRAD R. WENSTRUP, Ohio               BETO O'ROURKE, Texas
PAUL COOK, California                TIMOTHY J. WALZ, Minnesota
JACKIE WALORSKI, Indiana

            Helen W. Tolar, Staff Director and Chief Counsel

                                 ______

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                    MIKE COFFMAN, Colorado, Chairman

DOUG LAMBORN, Colorado               ANN KIRKPATRICK, Arizona, Ranking 
DAVID P. ROE, Tennessee              Minority Member
TIM HUELSKAMP, Kansas                MARK TAKANO, California
DAN BENISHEK, Michigan               ANN M. KUSTER, New Hampshire
JACKIE WALORSKI, Indiana             BETO O'ROURKE, Texas
                                     TIMOTHY J. WALZ, Minnesota

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Veterans' Affairs are also 
published in electronic form. The printed hearing record remains the 
official version. Because electronic submissions are used to prepare 
both printed and electronic versions of the hearing record, the process 
of converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.

                            C O N T E N T S

                               __________

                              June 4, 2013

                                                                   Page

How Secure Is Veterans' Privacy Information?.....................     1

                           OPENING STATEMENTS

Hon. Mike Coffman, Chairman, Subcommittee on Oversight and 
  Investigations.................................................     1
    Prepared Statement of Hon. Coffman...........................    54
Hon. Ann Kirkpatrick, Ranking Minority Member, Subcommittee on 
  Oversight and Investigations...................................     2
    Prepared Statement of Hon. Kirkpatrick.......................    55
Hon. Jackie Walorski, Member, Committee on Veterans' Affairs, 
  U.S. House of Representatives, Prepared Statement only.........    55

                               WITNESSES

Linda A. Halliday, Assistant Inspector General for Audits and 
  Evaluations, Office of Inspector General, U.S. Department of 
  Veterans Affairs...............................................     3
    Prepared Statement of Ms. Halliday...........................    55
    Accompanied by:

      Ms. Sondra McCauley, Deputy Assistant Inspector General for 
          Audits and Evaluations, Office of Inspector General, 
          U.S. Department of Veterans Affairs
      Mr. Michael Bowman, Director, Information Technology and 
          Security Audits Division, Office of Inspector General, 
          U.S. Department of Veterans Affairs
Stephen W. Warren, Acting Assistant Secretary for Information and 
  Technology, U.S. Department of Veterans Affairs................    17
    Prepared Statement of Mr. Warren.............................    61
    Accompanied by:

      Mr. Stan Lowe, Deputy Assistant Secretary for Information 
          Security, Office of Information and Technology, U.S. 
          Department of Veterans Affairs
Jerry L. Davis, Former Deputy Assistant Secretary for Information 
  Security, Office of Information and Technology, U.S. Department 
  of Veterans Affairs............................................    41
    Prepared Statement of Mr. Davis..............................    62
    Executive Summary of Mr. Davis...............................    65

                        QUESTIONS FOR THE RECORD

Letter From: Hon. Coffman, Chairman, Subcommittee on Oversight & 
  Investigations, To: U.S. Department of Veterans Affairs........    65
Questions From: Hon. Coffman, To: U.S. Department of Veterans 
  Affairs........................................................    66
Questions From: Hon. Huelskamp, To: U.S. Department of Veterans 
  Affairs........................................................    67
Questions and Responses From: U.S. Department of Veterans Affairs    67

              HOW SECURE IS VETERANS' PRIVACY INFORMATION?

                         Tuesday, June 4, 2013

             U.S. House of Representatives,
                    Committee on Veterans' Affairs,
              Subcommittee on Oversight and Investigations,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to notice, at 2:50 p.m., in 
Room 334, Cannon House Office Building, Hon. Mike Coffman 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Coffman, Lamborn, Roe, Huelskamp, 
Walorski, Kirkpatrick, O'Rourke, and Walz.

             OPENING STATEMENT OF CHAIRMAN COFFMAN

    Mr. Coffman. Good afternoon. I would like to welcome 
everyone to today's hearing titled ``How Secure is Veterans' 
Private Information?'' Reports from VA's Office of Inspector 
General, private inspector consultants brought on by VA, and 
this Subcommittee's own investigation have revealed tremendous 
problems within VA's Office of Information and Technology. Some 
of these issues have been made public in the Inspector General 
reports which outline mismanagement of human measures and the 
lack of much-needed technical expertise.
    Other issues have been less publicized, such as those 
captured in the Deloitte, quote/unquote, ``DeepDive'' that 
identified gaps in OI&T's organizational structure and a poorly 
executed business model. The latter report recognized the 
growth of VA by 33 percent since 2006, growth that is mirrored 
by the expansion of VA's computer network. Unfortunately, there 
has not been a comparable growth in the technical personnel 
needed to manage security of VA's sprawling network.
    These failures have created problems for both the 
Department and for veterans. The Inspector General 
substantiated that VA was transmitting sensitive data, 
including personally identifiable information and internal 
network routing information, over an unencrypted 
telecommunications carrier network, both violations of Federal 
regulation and basic IT security. The IG also noted that VA has 
not implemented technical configuration controls to ensure 
encryption of sensitive data, despite VA and Federal 
information security requirements.
    Similarly, it is evident that software patches are not up-
to-date across the network, too many users have administrative 
access, security software is not up-to-date on older computers, 
and computer ports are not properly secured. There is little to 
no security of file transfer protocol and Web pages are 
vulnerable, allowing unauthorized access to veterans' 
unprotected personal information within the system.
    While these issues alone give cause for grave concern, this 
Subcommittee's investigation has identified even greater 
problems. The entire veteran database in VA, containing 
personally identifiable information on roughly 20 million 
veterans, is not encrypted, and evidence suggests that it has 
repeatedly been compromised since 2010 by foreign actors, 
including China and possibly by Russia.
    Recently, the Subcommittee discussed VA's authorization to 
operate, a formal declaration that authorizes operation of a 
product on VA's network which explicitly accepts the risk to 
agency operators and was told that, quote, ``VA's secrecy 
posture was never at risk,'' unquote. In fact, VA's security 
posture has been an unacceptable risk for at least 3 years as 
sophisticated actors use weaknesses in VA's security posture to 
exploit the system and remove veterans' information and system 
passwords. While VA knew foreign intruders had been in the 
network, the Department was never sure what exactly these 
foreign actors took because the outgoing data was encrypted by 
the trespassers.
    These actors have had constant access to VA systems and 
data, information which included unencrypted databases 
containing hundreds of thousands to millions of instances of 
veterans' information, such as veterans' and dependents' names, 
Social Security numbers, dates of birth, and protected health 
information. Notwithstanding these problems, VA has waived or 
arbitrarily extended accreditation of its security system on 
its network. It is evident that VA's waivers or extensions of 
accreditation only appear to resolve material weaknesses 
without actually resolving those weaknesses.
    VA's IT management knowingly accepted the security risk by 
waiving the security requirements even though such waivers are 
not appropriate. This lapse in computer security and the 
subsequent attempts by VA officials to conceal this problem are 
intolerable, and I look forward to a candid discussion about 
these issues.
    I now yield to Ranking Member Kirkpatrick for her opening 
statement.

    [The prepared statement of Chairman Coffman appears in the 
Appendix]

           OPENING STATEMENT OF HON. ANN KIRKPATRICK

    Mrs. Kirkpatrick. Thank you, Mr. Chairman.
    As the Department of Veterans Affairs works hard to serve 
the needs of today's veterans, they must work equally hard to 
protect their personal information. Today's hearing is an 
attempt to determine whether a veteran's private information is 
secure.
    Mr. Chairman, veterans need to know that when they ask the 
VA for services and benefits that they have earned, the 
information they submit in order to get those benefits will not 
be compromised under any circumstances. I hope that the VA came 
prepared today to provide assurances to Congress and veterans 
that their information technology systems are secure. We expect 
VA to also answer our questions directly and honestly. As we 
get questions from veterans in our district, we want to provide 
complete and honest answers to them.
    Congress received a letter from Mr. Jerry L. Davis, now a 
former employee at the VA, who states that, quote, ``There is a 
clear and present danger and risk of exposure and compromise of 
sensitive data,'' end quote.
    Mrs. Kirkpatrick. I share the Chairman's concern on whether 
VA is following the required government practices and policies 
regarding the monitoring and remediation of system risk.
    Two OIG reports, from 2012 and 2013, raised additional 
concerns. The 2012 report questions whether the agency has the 
proper strategic human capital management program to meet 
mission-critical system capabilities as the VA moves into the 
21st century. The second, 2013, OIG report faults VA for 
failing to secure private information by not encrypting health 
data transmitted to outpatient clinics and external business 
partners. The VA must address the concerns raised and assure 
veterans who come to the VA for assistance that their personal 
information is secure.
    I want to thank everyone for being here today. I would also 
like to thank the witnesses for their testimony and for 
answering questions about the security of veterans' private 
information at the Department of Veterans Affairs.
    Thank you, Mr. Chairman. I yield back.

    [The prepared statement of Hon. Kirkpatrick appears in the 
Appendix]

    Mr. Coffman. Thank you, Ranking Member Kirkpatrick.
    I would now like to welcome our first panel to the witness 
table. On this panel we will hear from Ms. Linda Halliday, 
Assistant Inspector General for Audits and Evaluations from the 
VA's Office of Inspector General. Accompanying Ms. Halliday is 
Ms. Sondra McCauley, Deputy Assistant Inspector General for 
Audits and Evaluations, and Mr. Michael Bowman, Director of the 
Information Technology and Security Audits Division.
    Before I recognize the panel, I ask that you please rise 
and raise your right hand.
    [Witnesses sworn.]
    Mr. Coffman. Ms. Halliday, you are now recognized for 5 
minutes.

TESTIMONY OF LINDA A. HALLIDAY, ASSISTANT INSPECTOR GENERAL FOR 
   AUDITS AND EVALUATIONS, OFFICE OF INSPECTOR GENERAL, U.S. 
DEPARTMENT OF VETERANS AFFAIRS, ACCOMPANIED BY SONDRA MCCAULEY, 
DEPUTY ASSISTANT INSPECTOR GENERAL FOR AUDITS AND EVALUATIONS, 
   OFFICE OF INSPECTOR GENERAL, U.S. DEPARTMENT OF VETERANS 
 AFFAIRS, AND MICHAEL BOWMAN, DIRECTOR, INFORMATION TECHNOLOGY 
AND SECURITY AUDITS DIVISION, OFFICE OF INSPECTOR GENERAL, U.S. 
                 DEPARTMENT OF VETERANS AFFAIRS

    Ms. Halliday. Mr. Chairman and Members of the Subcommittee, 
thank you for the opportunity to testify on VA's security of 
veterans private information. With me today are Ms. Sondra 
McCauley, my deputy, and Mr. Michael Bowman, the Director of 
the OIG's Information Technology Security Division.
    Secure systems and networks are essential to VA's programs 
and operations for delivering benefits and services to our 
Nation's veterans, yet OIG reports continue to disclose a 
pattern of ineffective information security which places VA at 
unnecessary risk. For more than 10 consecutive years, our 
consolidated financial statement audit reports have identified 
IT security as a material weakness.
    We also perform annual reviews of VA's compliance with the 
requirements of the Federal Information Security Management 
Act, known as FISMA. This act serves as a catalyst for 
developing the framework to protect agency IT systems and 
sensitive information.
    As last year's FISMA audit progressed, we did note VA 
focused more efforts to standardize information security 
controls. Mid-year in 2012, VA initiated CRISP, the Continuous 
Readiness and Information Security Program, to ensure year-
round monitoring and to establish a team responsible for 
resolving the IT material weakness. However, CRISP was not in 
place long enough to adequately improve the material weakness 
for last year's FISMA report. The report will be issued this 
month and will include 32 recommendations for improving VA's 
information security program.
    We found repeat weaknesses and vulnerabilities in four key 
areas. In the area of system access, we found password 
standards that were not consistently implemented and user 
accounts that were not enforcing minimal access privileges.
    In the area of configuration management, we found critical 
systems lacked appropriate baseline controls and up-to-date 
vulnerability patches. Also, the policies and procedures for 
authorizing, testing, and approval of system changes were not 
consistently implemented.
    In the area of security management, VA still had to address 
about 4,000 outstanding security vulnerabilities. We found its 
risk assessments and security plans were outdated and in some 
instances were not consistently put in place to reflect VA's 
current IT environment or Federal standards.
    In the fourth area, contingency planning, we found some 
plans were not fully tested or updated, and in addition, backup 
tapes were not always encrypted prior to being sent to offsite 
storage. More importantly, we continue to identify significant 
technical weaknesses in databases, servers, network devices 
supporting sensitive data exchanges among VA facilities. Many 
of these weaknesses are due to inconsistent program enforcement 
and ineffective communication between VA management and field 
offices.
    In addition to FISMA, OIG projects over the past 2 years 
have identified information security deficiencies, placing 
sensitive veterans data at risk of unauthorized access, loss, 
or disclosure. Specifically, we reported on a broad range of 
security concerns, including VA's transmission of sensitive 
data and internal network routing information over an 
unencrypted carrier network, and VA's external data-sharing 
agreements and system interconnections which resulted in 
unsecured electronic and hard copy data at VA medical centers 
and co-located research facilities. We reported that 48 percent 
of VA's 400,000 encryption software licenses, valued at about 
$5.1 million, remained unused, leaving VA computers vulnerable. 
And we reported on a backlog of personnel background checks 
which were inappropriately prohibiting some 3,000 contractors 
from working on awarded contracts.
    In summary, our audit reports and findings and 
recommendations provide a roadmap for VA to improve its 
information security program, and VA needs to focus on 
addressing previously reported security issues related to the 
IT material weakness, they need to remediate high-risk system 
issues in their Plans of Actions and Milestones, and they need 
to establish effective processes for continuous monitoring and 
to perform vulnerability assessments.
    Mr. Chairman, this concludes my statement, and we would be 
happy to answer any questions you or the Subcommittee may have.

    [The prepared statement of Linda A. Halliday appears in the 
Appendix]
    Mr. Coffman. Thank, Ms. Halliday.
    How effective are VA facilities with protecting sensitive 
veteran data?
    Ms. Halliday. Well, based on our oversight, we're 
continuing to find information security vulnerabilities at 
almost every VA medical center we visit. We visit 20 to 30 
VAMCs a year as part of our FISMA work and we consistently find 
problems. The types of vulnerabilities include weak passwords, 
missing software patches, lack of software updates, excessive 
permissions, and unnecessary user accounts left on the system.
    Mr. Coffman. What are the foremost reasons why, after all 
this time, information security is still a major concern at the 
VA?
    Ms. Halliday. I would say that ineffective access controls, 
ineffective configuration management controls, I think 
ineffective management of systems interconnection and 
inadequate contractor oversight would be a fourth major reason.
    Mr. Coffman. Ms. Halliday, based on your ongoing oversight 
work, is VA likely to get rid of its IT security material 
weaknesses this year?
    Ms. Halliday. At this point it is too early to conclude. We 
do expect that the CRISP initiative, which is starting to 
provide continuous monitoring, will be in place for the entire 
12 months of this fiscal year 2013 FISMA review. Our concern, 
while we're seeing weaknesses occur with less frequency, they 
are still occurring and they are repeat occurrences and 
vulnerabilities that we have reported on in fiscal year 2012 
and earlier years.
    Mr. Coffman. What are VA's most significant risks related 
to adequately protecting its systems and sensitive data?
    Ms. Halliday. The first would probably be ineffective 
access controls. That's where critical systems had accounts 
with default passwords that were considered weak passwords, 
i.e. easy to guess. User accounts with access rights that were 
not appropriate. In other words, you want to make sure that all 
users have a need for that information and that they have a 
security level appropriate to that need. We also identify 
unsecured electronic and hard copy research data at VA medical 
centers and co-located research facilities.
    So that covers access controls. Then we have inconsistent 
configuration management controls. Systems include key 
databases supporting critical applications, but they are not 
patched timely or secured and configured to mitigate previously 
known information vulnerabilities. We have ineffective 
management of system interconnections. That's VA sensitive data 
such as health records and internal Internet protocol, 
addresses. They are transmitted between VA medical centers and 
the community-based outpatient clinics using unencrypted 
protocols. And then access control and configuration 
management. These are all very significant risks that VA faces.
    As far as inadequate contractor oversight, contractors 
without the appropriate security clearances are gaining access 
to some VA mission critical systems, and we did a report on not 
having security clearances in place before gaining access to 
the systems with contractors.
    Mr. Coffman. Moving forward, what steps can VA take to 
prevent the loss of sensitive data?
    Ms. Halliday. I think VA really needs to improve its 
continuous monitoring process to ensure all the controls are 
operating as intended, and it needs to address the external 
organizations that it works with to make sure that they are 
adequately protecting sensitive veteran data in accordance with 
the VA policy and FISMA requirements. VA needs to ensure all 
service provider contracts include provisions to implement 
information security protections in accordance with their 
policies and procedures.
    Mr. Coffman. Thank you.
    Ranking Member Kirkpatrick.
    Mrs. Kirkpatrick. You testified that there's a 10-year 
period of weakness and vulnerability. So there was a report 
given to the VA year after year after year. In that 10-year 
span, did you see an increase in vulnerability and weakness? A 
decrease? Can you quantify that for me over that 10-year 
period?
    Ms. Halliday. We do an audit of VA's consolidated financial 
statements annually and our contractors look at all of the 
controls associated with information security. They have felt 
that it has been a material weakness in VA for 10 full years.
    Mrs. Kirkpatrick. Has it been the same level of weakness 
and vulnerability? What I mean is, has it been getting worse 
for a while or has it gotten better?
    Ms. Halliday. I don't think you ever get the exact same 
level of vulnerability. I think our concern, we report out on 
these various problems based on the testing. A couple years 
ago, VA's Plan of Actions and Milestones addressing security 
vulnerabilities was almost at 15,000 items that were 
outstanding and unaddressed. This past year VA has gotten it 
down to about 4,000, but that's still 4,000 security weaknesses 
and vulnerabilities that haven't been addressed. It is too 
many.
    Mrs. Kirkpatrick. Do you think that the CRISP program is 
helping them address those vulnerabilities more quickly?
    Ms. Halliday. Based on the preliminary and early testing, 
yes. We are still seeing and identifying security weaknesses 
and vulnerabilities, but to a lesser extent that we've seen 
that in the past. I would also have to say that VA is actively 
working with us to try and make sure that they understand what 
we are finding as part of our FISMA testing, understand the 
full scope so that they can put the right fixes in place.
    Mrs. Kirkpatrick. That was going to be one of my questions. 
When you issue a report, do you actually have a conversation 
with leadership at the VA about what needs to be implemented?
    Ms. Halliday. Absolutely.
    Mrs. Kirkpatrick. And is that on an ongoing basis?
    Ms. Halliday. Yes, it is. With this information security 
material weakness rising to the last material weakness in the 
Department's financial statements, the Secretary on down 
through his chain of command has had it on their radar. They 
are working very hard. And we have made sure that we have been 
communicating with the Department. For example, that if we 
employ certain tools in our oversight to scan their systems, 
they are also acquiring those same state-of-the-art tools. So I 
think that there is an effort there, and at least this year and 
part of last year the communications have been better between 
what OIG is doing in the field, finding, and getting it 
remediated.
    Mrs. Kirkpatrick. I have one last question. I have a 
concern in your audit report. You say that you are concerned 
with a lack of human resources, and your statement says OIT 
experienced vacancies and excessive turnover in key leadership 
positions responsible for OIT's strategic human capital 
management program. Could you tell the Committee a little bit 
more about that? What do you mean by excessive turnover?
    Ms. Halliday. I'm going to ask Sondra McCauley to take 
that.
    Mrs. Kirkpatrick. If you could just quantify that and give 
some reasons why you think that's happening.
    Ms. McCauley. Excessive turnover in terms of the leadership 
within OIT in terms of managing the program. Turnover in terms 
of the program managers and project managers needed to manage 
each specific project, if you will, as well as a reliance on 
contractors to do a lot of the jobs that we really need 
government personnel to do.
    Mrs. Kirkpatrick. And why do you think that there is that 
excessive turnover?
    Ms. McCauley. Some of it was attributed to a lack of 
planning, that is the need for a human capital plan to really 
focus in on the succession planning at the leadership level. 
But also to better identify the skills that were needed to help 
manage these IT programs, and what would be a better 
contractor-to-FTE ratio to manage the programs.
    Mrs. Kirkpatrick. Okay. Thank you. I yield back, Mr. 
Chairman.
    Mr. Coffman. Thank you, Ranking Member Kirkpatrick.
    Mr. Lamborn, you are recognized for 5 minutes.
    Mr. Lamborn. Thank you, Mr. Chairman. And before I ask my 
questions, I want to thank you, Mr. Chairman, for having this 
hearing. This is such an important topic. And there is so much 
going on here that I was frankly not really aware of and should 
have been, and we need to be aware what's going on. So thank 
you for your leadership. This is so critical.
    Ms. Halliday, I am stunned about what's going on here. And 
you said in your written testimony, ``Lacking proper 
safeguards, IT systems are vulnerable to intrusions by groups 
seeking to obtain sensitive information, commit fraud, disrupt 
operations, or launch attacks against other systems. VA has at 
times been the victim of such malicious intent.''
    Can you tell us what you know about these malicious attacks 
on the VA's sensitive information? Who committed these?
    Ms. Halliday. I will let Mr. Bowman speak to this one. It 
is in his area.
    Mr. Bowman. Thank you.
    We were informed of an intrusion by foreign countries 
through the Network Security Operations Center. The specifics 
of that, the foreign countries have actually compromised the 
domain controller and gained access to email accounts and were 
taking email information of the senior leadership at VA. The 
difficult part was, is VA was unsure how the foreign countries 
gained access to the networks and what was actually being 
transmitted out of the VA networks back to the original source. 
That's the one that's most current that I'm aware of. We also 
reference 2006 with the stolen laptop and the loss of the 26 
million records. But those are the two main things that come to 
mind.
    As far as our ongoing FISMA work, we do continue to 
identify weaknesses with the critical databases that does host 
sensitive data, and the Web applications that are facing the 
Internet do have well-known vulnerabilities that could be 
exploited from the Internet. And these are ongoing from year-
to-year. So there are significant risks out there that are 
related to this.
    Mr. Lamborn. And why don't we know how much was taken?
    Mr. Bowman. A lot of it is having the right tools in place, 
such as intrusion-detection systems, and audit logs turned on. 
In some cases, VA doesn't have audit logs enabled, so it is 
unaware of how these systems have been infiltrated and what 
data has been captured and what has been transmitted. Good 
Intrusion Detection Systems on all the network segments are 
important to identify the attack signatures.
    Mr. Lamborn. Okay. What is the kind of sensitive 
information concerning a veteran like in my district back in 
Colorado Springs that could have been compromised?
    Mr. Bowman. It is more personal identifiable information 
that could be used to commit fraud. Let's say a malicious 
intruder gains access to a database and has the Social Security 
number, name, and the date of birth, they could use that to 
commit credit card fraud. And that's the main risk to veterans.
    Mr. Lamborn. And with the 20 or so million veterans who are 
on the system, the VA doesn't know how few or how many of their 
sensitive information like Social Security numbers have been 
compromised?
    Mr. Bowman. That's a potential risk.
    Mr. Lamborn. It could be all of them?
    Mr. Bowman. Yes, without having audit logging enabled, you 
don't know what has been compromised or how often those systems 
have been accessed in an unauthorized manner.
    Mr. Lamborn. Would either of you ladies like to add to what 
I've been asking?
    Ms. Halliday. No, I think Mike answered it perfectly.
    Mr. Lamborn. I'm just amazed at this. I mean, this is 
serious. And the VA has known about this for up to 10 years 
now?
    Mr. Bowman. We've reported significant vulnerabilities for 
well over 10 years, as indicated by the IT material weakness. 
In the last 5 years, we have increased our assessment of the 
security controls through our user vulnerability assessment 
tools, database tools, Web app tools, so we think our 
evaluation is more comprehensive. In the last 5 years, we've 
shown consistent vulnerabilities from year to year that put the 
VA systems at risk.
    Mr. Lamborn. And you mentioned potential state actors with 
malicious intent. Was that fairly recent that those attempts or 
those actions were detected?
    Mr. Bowman. I heard about that within the last year and a 
half.
    Mr. Lamborn. So there's a pattern of knowing about this for 
10 years leading up to a malicious capture of who knows how 
many Social Security numbers or other sensitive pieces of 
information of up to 20 million veterans within the last year 
and a half. Is that a proper understanding?
    Mr. Bowman. It is possible. We don't know.
    Mr. Lamborn. Thank you, Mr. Chairman. I yield back.
    Mr. Coffman. Thank you, Mr. Lamborn.
    Mr. O'Rourke for 5 minutes.
    Mr. O'Rourke. Thank you, Mr. Chair.
    For Ms. Halliday, I actually wanted to follow up on some 
questions Mr. Lamborn was asking. For a veteran back home in 
the districts we represent, specifically, have we seen any 
consequences that we've been able to document in terms of their 
information being stolen and used by someone who has broken 
into this system? And not necessarily in my district, but can 
you point to some examples of how this has affected people that 
we represent?
    Ms. Halliday. VA has an NSOC program where you report 
security incidents to them. They will prioritize it and start 
to work on the severity of those incidents. There is normally a 
good record then given of the facts of what happened and they 
will look at the controls and try to put the remediation in 
place. There are hundreds of incidents reported on an annual 
basis.
    Mr. O'Rourke. And can you take us through one to illustrate 
the consequences? For example, Social Security information was 
taken. They used that to impersonate that veteran to try to 
take benefits or to obtain credit cards or--
    Ms. Halliday. I do not have an example.
    Mr. O'Rourke. Okay. Let me just ask you or Mr. Bowman, do 
you know of examples that have been documented, specific 
consequences? I mean, I agree with what everyone has said so 
far, the overall problem and the threat represented by these 
security vulnerabilities is unacceptable and needs to be 
addressed and needs to be fixed, but I also want to understand 
the human dimension of this, what problems it has already 
caused for veterans, if any, if you've been able to document 
them. I am assuming there have been. So anyhow, that's 
something we would like to follow up on.
    Then I guess for Mr. Bowman, what's the expectation in 
terms of being able to address these? When should this 
Committee expect to hear back from Ms. Halliday at a future 
hearing that these findings and problems that have been 
uncovered have been addressed to our satisfaction and that we 
feel that we have a reasonable level of security, these threats 
have been closed, and we are now happy with that system? What's 
a date that you could point us towards?
    Mr. Bowman. VA plans to implement a fully developed 
continuous monitoring program within the next 6 to 8 months. 
Using that, they should have a better visibility of the 
security posture of their IT systems. We have 32 outstanding 
recommendations from our FISMA work that need to be addressed 
to improve the security posture. It will probably take VA well 
over a year, year and a half to get a good handle on that and 
address those issues.
    So if we could possibly convene maybe a year from now, VA 
may be able to communicate some significant progress in their 
IT security program; we will be able to communicate that as 
well.
    Mr. O'Rourke. And just to make sure that I understand what 
you just said, within 12 to 18 months those 32 recommendations 
would be implemented?
    Mr. Bowman. I don't know for sure, but I think that's a 
reasonable timeline if VA takes an aggressive approach for 
improving its security program.
    Mr. O'Rourke. Okay.
    Ms. Halliday. Sir, we just received the official comments 
from Mr. Warren on the 32 recommendations and the 
implementation plans that they will deploy regarding those 32 
recommendations. There are various timeframes associated with 
that. But our first conclusion will come at the end of this 
year's audit of the consolidated financial statements as to 
whether they would drop that material weakness or not, and all 
of the testing will be happening over the summer. So that 
report is issued on November 15th, and it will assess whether 
the material weakness remains or it drops to a significant 
deficiency. At this point, since VA has not fully implemented 
its continuous monitoring, Mike is exactly correct that it is 
probably going to take longer than a few months to take care of 
this.
    Mr. O'Rourke. Okay. Thank you.
    Mr. Chairman, I yield back.
    Mr. Coffman. Thank you, Mr. O'Rourke.
    Dr. Roe for 5 minutes.
    Mr. Roe. I thank the Chairman.
    Ms. Halliday, thank you and your team for the excellent 
work you've done and certainly informing our Committee of the 
problems. I guess my concern is, is that this mirrors and 
patterns many of the other hearings I've been to where we can't 
seem to get the electronic health record fixed year after year, 
and it looks like that security is a problem year after year. 
We just passed a bill in the House, CISPA.
    Most of us in this room have been to classified briefings 
on the security risks that this country has from outside bad 
actors. And I've got to go home this weekend, as every member 
up here does, and when this information gets out, veterans are 
going to come to me, there are many veterans sitting right up 
here at this dais, and they are going to say, are my records 
secure? And I'm going to have to look them in the eye and say, 
no, they are not, from what I've heard. And that's not a very 
acceptable answer, especially after 10 years, and especially 
after we know the risks in the government.
    You haven't looked at every other phase, but do other 
departments in the U.S. Government share these same problems? 
In other words, is this a systemic-wide problem across 
government or is this just VA specific? And you may not be able 
to answer that question.
    Ms. Halliday. I can't give you a definitive answer, but it 
is a problem for those agencies that are dealing with privacy-
type information.
    Mr. Roe. You know, we've been asked as a Congress, we've 
been instructed in private that it is a severe problem for 
business. We've been asked to look at some privacy issues about 
how you--and we have a department of government that's not even 
doing what we're asking business to do right now.
    I think there are a couple of things that I would like to 
ask just briefly, and government-wide we don't know. How will 
we know that when we do go home, when can we say that this 
information will be secure? And we certainly know how when you 
steal private information, whether it is through somebody 
getting your debit card number or whatever, what it is used 
for, it is basically just to steal from you. So is that it, 
just mainly you think, or is it access to other government 
agencies through the VA? Is this the back door to some other 
agencies?
    Ms. Halliday. When we can say that the security of veterans 
information has been taken care of, I think will be at the 
point when VA addresses all the recommendations in the reports 
that we have made with regards to FISMA. We've given them a 
roadmap to fix things. It is such a decentralized organization 
that they have to bring a culture of accountability, personal 
accountability for every action, and they need to make sure 
they have a consistent implementation of the policies and 
procedures. We don't quite see that yet with the FISMA testing 
or the testing done as part of the consolidated financial 
statements.
    Mr. Roe. Let's say you go to a VA medical center somewhere, 
and you mentioned that some of the software wasn't up to date, 
passwords, you can figure it out, 111, whatever, four 1s in a 
row, whatever. Who is responsible for that and what penalty is 
it if you don't do anything?
    Ms. Halliday. The responsibility lies with the CIO in the 
Department of Veterans Affairs and it tiers down through that 
organization.
    Mr. Roe. Okay. When a breach occurs, what does VA do then? 
When you know you've been hacked or there is an attempt. Let's 
see you haven't been breached, but you know that your firewall 
has been pinged, what do you do?
    Ms. Halliday. You assess the severity of it based on the 
facts you can determine. You get a team together to look at how 
to fix whatever controls are needed to be fixed related to what 
happened. And VA has been trying to do that, but they have a 
significant number of security incidents.
    Mr. Roe. And I'm thinking, I am a veteran, I'm sitting here 
thinking okay, we've lost a laptop computer with 20 million 
bits of information on it and the system is not secure now. 
That doesn't give me a lot of confidence if I go to the VA to 
hand over my Social Security number and all that.
    Ms. Halliday. Right. VA did mandate cybersecurity and 
privacy awareness training nationwide to bring down a level of 
personal accountability to every individual that's doing work 
and touching veteran-sensitive information to make sure it 
brought accountability to this process and requires individuals 
to sign a statement that they will protect the veteran's 
information. So that is a step in the right direction.
    Mr. Roe. Ms. Halliday, thank you. And I think we have our 
marching orders, and we will hear from the other two panels. 
But I think in 12 months we should be able to sit here, or 
less, and be able to look our veterans in the eye and say to 
them that your information is as secure as we can do it. I 
understand there is nothing that's 100 percent, I got that. But 
it is relatively secure. Am I correct in that?
    Ms. Halliday. Absolutely. Both the prior VA Secretary and 
the current have asked for the gold standard in protecting VA's 
veterans information, and I think the expectation should be 
nothing less.
    Mr. Roe. Thank you, Mr. Chairman. I yield back.
    Mr. Coffman. Mr. Walz for 5 minutes.
    Mr. Walz. Thank you, Mr. Chairman.
    Ms. Halliday and your team, thank you once again for 
coming.
    Again, we have been through these hearings and we listen to 
them. I guess the part I'm getting at is, and many of us, 
myself included, I've been advocating for more sharing of data, 
especially between DoD and VA, been advocating for being able 
to get some of that information to some of our partners, like 
the county veteran service officers, to help with claim 
processing, been advocating for bringing private medical data 
into the system to help speed the claims process.
    With that being said, with the VA and its research 
partners, how do they do the formal agreements between them? 
And I guess the point I'm getting at here is, is this issue 
we're addressing--and I would assume you have lots of contact 
with your private sector counterparts and best practices--this 
very same thing happens in the private sector, correct, but 
there's no requirement for them to report when there is a 
breach. Is that correct?
    Ms. Halliday. Pretty much, yes.
    Mr. Walz. How are these agreements done and if there's a 
breach at a research institution on the private sector side, 
how do we know they are reporting that breach back and who is 
ultimately responsible in those agreements?
    Ms. Halliday. Basically, you need a formal agreement that 
outlines the roles and responsibilities of both the external 
partner and VA. In that particular instance, we see some real 
inconsistencies and some of these agreements are not being put 
in place.
    The second you would like to do is make sure that, whatever 
arrangement VA is entering into, that organization has 
commensurate controls with VA so that they can adhere to VA's 
policies and procedures.
    Mr. Walz. But they are not required to adhere to FISMA, is 
that correct, private entity?
    Ms. Halliday. Right. But you can establish those terms in 
these agreements.
    Mr. Walz. Okay.
    Ms. Halliday. And that's where you should do that. Because 
if you have one side, securing veterans' information very 
tightly and another handling it very loosely, you have a 
problem.
    Mr. Walz. Is it safe to say we then do not know the scope 
of the problem yet if those are lacking, because there are 
many, many of these agreements.
    Ms. Halliday. Absolutely.
    Mr. Walz. Okay. So we have no idea on the scope of that.
    Ms. Halliday. Right.
    Mr. Walz. When you look at this, where is the model? Is 
there an entity, an institution that's out there that is the 
gold standard of best practices, how should this be done? I 
mean, there are standards and protocols that should be 
implemented. Who is doing it on the scale of VA? Is Citibank 
doing it? Is Credit Suisse doing it? Who is doing it that it 
looks correct? Because the targets here aren't necessarily 
targets because they are veterans. They are targets because 
they are easy, is that correct, or they are trying to make it 
easy in many cases. Can you give me an example of who is the 
gold standard?
    Ms. Halliday. We can't give you an example.
    Mr. Walz. Is that for lack of your knowledge on what others 
are doing or is that because there might not be one?
    Ms. Halliday. I would say more lack of our having direct 
knowledge of who is actually performing specific practices. 
Some people might attest that they do have a gold standard, but 
when you look behind it and you see breaches and problems with 
that. We haven't looked at that so I can't really answer.
    Mr. Walz. If we had some of them here to talk to us about 
the problems they are having, that might help us get an 
understanding of this and let the VA bring some of those things 
in.
    Ms. Halliday. I think there's always an opportunity to 
bring in best practices from the outside and from other Federal 
agencies.
    Mr. Walz. Okay. So if we implement all the protocols that 
you've put out there, and I think you gave me the number of 
4,000 potential weaknesses or vulnerabilities, if we 
implemented all of those and were able to do it, what's the 
cost associated with that? I understand what the cost of not 
doing it is great. It is a breach of trust and security of our 
veterans. What's the implication? Is that not something you 
factor in when you do your assessment?
    Ms. Halliday. Sir, I would not have that answer, but you 
should ask VA.
    Mr. Walz. Okay. Very good.
    All right. Well, again, I thank you for your service. It is 
invaluable. As I always say, the more that we can do to support 
the IG, the better government we get out of it. So thank you.
    Ms. Halliday. Thank you.
    Mr. Coffman. Mr. Huelskamp for 5 minutes.
    Mr. Huelskamp. Thank you, Mr. Chairman. I appreciate you 
providing the opportunity for this hearing. And I must say I 
have a lot of words to describe my feelings, and embarrassed by 
the actions or lack thereof by the VA might be one of those. 
Shocked. Surprised. I guess I will probably be even more 
surprised by later testimony.
    But if I understand correctly, one of the things that you 
did mention, that there was a violation or personal emails of 
the Secretary and high-level staff were compromised. And can 
you describe that a little bit further?
    Mr. Bowman. My understanding is that when the domain 
controllers got compromised, they got access to the senior 
leadership email accounts, and there is information that 
indicates that those emails were exported outside the VA 
network.
    The value of them is unknown. What they did with those 
emails is unknown. But whenever you compromise a domain 
controller, essentially you own the enterprise. That's the 
seriousness of it.
    Mr. Huelskamp. I appreciate that. You own access to 20 
million records, plus that of their dependents. What was the VA 
response when you brought that to their attention?
    Mr. Bowman. It wasn't formally communicated to me. I heard 
it in a meeting that was discussed between the NSOC. And they 
probably were unaware I was listening in, but that is just what 
I heard, just by observing some of these meetings and VA 
describing these events.
    Mr. Huelskamp. And this is very shocking, Mr. Chairman. I 
know we have a letter in front of us from a very high-ranking 
official at the VA that says, quote, ``VA's security posture 
was never at risk.'' Was never at risk. And that's a quote from 
a high-ranking official. And I would guess that perhaps they 
used email to put this together. Can you imagine the thought 
that the folks that were hacking the system were actually 
reading this email as they were exporting 20 million private 
records. And you indicated we do have evidence potentially of 
external state-sponsored espionage that might be occurring to 
the VA. One of you had indicated that was a possibility?
    Mr. Bowman. That's my understanding.
    Mr. Huelskamp. Okay. And did you bring this to the VA's 
attention and what was their response?
    Mr. Bowman. We haven't. With the FISMA work, we haven't 
specifically addressed that issue. We do get into incident 
handling and monitoring. And we identify every year there are 
network connections that aren't being monitored by VA. So the 
risk is that you could have systems compromised, data being 
transmitted externally, and VA could be unaware of it.
    Mr. Huelskamp. They could be unaware that the information 
is actually leaving. And if asked, they could potentially, even 
under oath say we know of no such transmission, which if I 
understand correctly might absolutely be true and would suggest 
obviously when you've given up control of the system like you 
indicated you would have actually no idea of the threat then?
    Mr. Bowman. That's correct.
    Ms. Halliday. Sir, one of the things that we do as part of 
our oversight is gain an understanding of what is happening in 
the VA environment, and then we send information to our 
contractor who is doing the actual FISMA assessment to put the 
right work steps in place to do full evaluations, to understand 
and properly assess the risks. That's all happening as part of 
the FISMA process.
    Mr. Huelskamp. And I appreciate your work. You have a very 
difficult task of identifying the problems and hopefully 
providing some solutions, but it is up to the VA, maybe after 
10 years, to finally implement some of those.
    The latest thing I see in your report is an incident from 
March 2013 in which sensitive, private, perhaps medical and 
personal data was transmitted over an unencrypted 
telecommunications carrier network. Can you tell me what 
happened when that personal data was transmitted unencrypted? 
Apparently VA did not know they were doing that. What's their 
response? You indicate that the management acknowledged this 
practice and formally accepted the security risk. Did they 
identify who was at risk, how they were at risk, and did they 
close this security gap?
    Mr. Bowman. Yes, we received a hotline complaint discussing 
the transmission of unencrypted data between the medical 
centers and the community-based outpatient clinics using 
unencrypted protocols over a telecommunication carrier network. 
We went and discussed with the network engineers and various 
levels with VA, and they admitted that this is a common 
practice.
    Mr. Huelskamp. They admitted this is a common practice.
    Mr. Bowman. It is a common practice. But a mitigating 
factor is, is they logically segment that traffic from other 
customer traffic. The downside of that is it still needs to be 
encrypted, and there are technological solutions that can 
encrypt that traffic when it is outside of VA's span of 
control. Now, VA responded to that report by saying they plan 
to implement encryption controls, so that will improve that 
risk of losing that data as it leaves VA's span of control.
    Mr. Huelskamp. I'm sorry, Mr. Chairman, one last question.
    So they planned. Do you know if they actually have 
implemented the encryption to protect sensitive data?
    Mr. Bowman. My understanding is that edge router encryption 
controls have not been implemented yet.
    Mr. Huelskamp. I yield back, Mr. Chairman.
    Mr. Coffman. Ms. Walorski for 5 minutes.
    Mrs. Walorski. Thank you, Mr. Chairman.
    I appreciate the report, I appreciate the information. I 
will tell you, when I was in the Indiana House, we did hold 
companies responsible for these massive breaches of identify 
theft, especially when a Social Security number was in the 
breach. And so we did have legislation and we still do, and I 
think 17 or 18 other States now have it as well, holding 
private companies responsible, and if there's a breach that the 
buck does stop with them for immediate information sharing, in 
some cases freezing credit reports.
    So my first question is on this information as it is leaked 
to a veteran in my district, say their Social Security number 
was accessed, are any of those Social Security numbers redacted 
or is this just free-flowing raw data that's going out the 
door?
    Mr. Bowman. Well, we don't have knowledge of any specific 
cases of data loss, other than the 2006 example, and in those 
cases VA is responsible for providing credit reporting services 
to the veterans who may have been harmed by this. But what we 
try to indicate, is that using unencrypted protocols, the risks 
remain, that the potential is there, and that VA needs to 
implement these proactive controls so these type of events do 
not occur going forward.
    Mrs. Walorski. But in light of the answers to the various 
questions up here, there obviously has been more than just one 
incident in 2006 when that information has been available. And 
so, you know, I think about this in my district. I have 52,000 
veterans in my district and then their extended families, and 
I'm thinking, you know, if this happened in the private sector, 
automatically this would have triggered--just the suspicion and 
the not knowing would have triggered an automatic credit freeze 
to the people that would be living in my district.
    So I'm looking at this from the standpoint of saying, you 
know, sending out an APB when I get out of here that says to 
the 52,000 vets in my district, better check your credit report 
because we have no idea that your information has not been 
breached, and to continually check that. And as we continue to 
tell people to go access their VSOs and go access their 
facilities because there's a long wait and the things we deal 
with on the veteran side, is how at risk they are with sharing 
that information in today's day with these violations.
    In the private sector, this type of an entity would never 
survive. The lawsuits that would come would shut them down 
because of private information being at risk and being taken 
and nobody responsible. So it is absolutely baffling to me that 
in addition to some of the other things that we have heard in 
this report, that the buck stops with the CIO, and we have had 
nothing but turnover, as you've reported, in this entity of 
this area of the VA to begin with. Has anybody ever been 
disciplined based upon the findings of your reports?
    Ms. Halliday. We can only make a recommendation. It is up 
to the Department to take the administrative action. That's the 
extent of our authority.
    Mrs. Walorski. Have any of your recommendations involved 
issues of employees or incompetence or training or things 
actually for the people who are actually working there taking 
this information?
    Ms. Halliday. Yes, I would say several, especially with our 
administrative investigations. It's looking at very specific 
personal accountability for actions.
    Mrs. Walorski. And are you asking specifically that 
supervisors and managers and CIOs and these kind of people that 
have been in charge, where the buck stops with this 
information, that they be disciplined, if not terminated?
    Ms. Halliday. We make a recommendation for appropriate 
administrative action and then generally give a discussion with 
that--
    Mrs. Walorski. And is the appropriate action usually 
termination? I'm not familiar with the protocol. What is the 
appropriate action on something like this large of a risk to 
this many people?
    Ms. Halliday. You would have to look at the severity of the 
incident, determine the exposure, determine what the 
accountability was. Was there intent? Was this a mistake that 
they may not have been able to prevent? And then when you do 
that, you apply the Douglas factors for discipline actions in 
the Federal Government?
    Mrs. Walorski. But my understanding would be, in the last 
10 years, based upon the previous questioning, that the 40 or 
so outstanding compliance issues that you have advocated that 
they follow, had those been followed in the last couple of 
years, we would have remedied this situation. So there has to 
be some kind of accountability still, and disciplinary actions, 
and the buck stops someplace with this staff, correct?
    Ms. Halliday. We absolutely think the Department should 
have implemented many of the FISMA recommendations and 
tightened controls early, and they would have less security 
incidents.
    Mrs. Walorski. Thank you.
    Thank you, Mr. Chairman. I yield back.
    Mr. Coffman. Thank you, panel. I appreciate your testimony. 
You are now excused.
    I now invite the second panel to the witness table.
    On this panel, we will hear from Mr. Stephen Warren, Acting 
Assistant Secretary for Information and Technology at the 
Department of Veterans Affairs. Accompanying Mr. Warren is Mr. 
Stan Lowe, Deputy Assistant Secretary for Information Security 
from the Office of Information and Technology at the Department 
of Veterans Affairs.
    Before I recognize the panel, I ask that you please rise 
and raise your right hand.
    [Witness sworn.]
    Mr. Coffman. You may be seated.
    Mr. Warren, you are now recognized for 5 minutes.

TESTIMONY OF STEPHEN W. WARREN, ACTING ASSISTANT SECRETARY FOR 
    INFORMATION AND TECHNOLOGY, U.S. DEPARTMENT OF VETERANS 
 AFFAIRS, ACCOMPANIED BY STAN LOWE, DEPUTY ASSISTANT SECRETARY 
FOR INFORMATION SECURITY, OFFICE OF INFORMATION AND TECHNOLOGY, 
              U.S. DEPARTMENT OF VETERANS AFFAIRS

    Mr. Warren. Chairman Coffman, Ranking Member Kirkpatrick, 
Members of the Subcommittee, thank you for inviting me to 
testify regarding the Department of Veterans Affairs 
Information Technology Security Program. Accompanying me today 
is Mr. Stanley Lowe, Deputy Assistant Secretary for Information 
Security.
    There is no higher priority than protecting the data that 
VA holds on our Nation's veterans. I, as well as the many IT 
employees at VA--over 56 percent are veterans themselves--take 
this responsibility very seriously.
    As the Committee knows, the Department received a wake-up 
call from the stolen laptop incident in 2006. As a result, the 
VA consolidated its disparate IT functions into a single, 
unified IT organization. VA's consolidated IT organization is 
responsible for providing the tools, services, and systems that 
are necessary to protect veterans' information at 153 
hospitals, 853 community-based outpatient clinics, 57 benefit 
processing offices, and over 160 cemeteries or memorial cites. 
Our network supports over 400,000 users and over 750,000 
individual devices. We are committed to protecting the 
information we hold on millions of veterans, their 
beneficiaries, and more than 300,000 VA employees.
    As we all know, IT security threats continue to evolve. To 
that end, we have implemented our continuous monitoring 
program, which continuously checks all IT systems and monitors 
every device attached to the VA network. VA launched the 
Continuous Readiness in Information Security Program, or CRISP, 
in 2012 to proactively address process and policy deficiencies, 
as well as architecture and configuration issues.
    As part of the CRISP effort, the VA conducts rigorous 
vulnerability scanning, continuous monitoring of patching and 
software inventory, implementing port security, anti-virus 
services, and encryption of nonmedical IT desktops and laptops.
    Through Web Application Security Assessments, VA is able to 
identify critical vulnerabilities and potential exploits in VA 
systems. We protect the network infrastructure by identifying 
all network assets, critical database stores, all external 
connections, and provide the Trusted Internet Connection 
Gateways services.
    In the past year, VA has measurably improved its security. 
The Department has ensured that over 98 percent of VA staff 
have received the mandatory security training they need to 
protect the information of veterans and their families. Only 
staff turnover prevents us from reaching 100 percent.
    After the 2006 incident, VA worked to ensure its laptop 
computers were encrypted to provide another layer of 
protection. Currently, over 98 percent of VA's nonmedical IT 
laptops are encrypted. The Department aims to complete the 
encryption of the final 2 percent by June 30.
    VA has a robust data breach notification process using a 
Data Breach Core Team. When the team determines that a 
potential breach may have occurred, they notify affected 
individuals and offer credit monitoring. VA also posts a 
monthly report of data breach notification on its Web site, and 
this report is provided to Congress, in addition to the 
required quarterly data breach report.
    VA has become one of the very best large organizations of 
providing notification if a potential breach occurred. This law 
requires notification within 60 days. A review of VA's incident 
tracking system over the current fiscal year indicates that VA 
takes, on average, 25 days to provide notice. VA's standards 
and practices exceed even the strictest Federal, State laws and 
policies.
    I would like to update you on our progress to extend VA's 
authority to operate, or ATOs. Before giving you this update, I 
would like to assure the Committee in the strongest terms that 
at no time was veterans' data placed at risk by this process. 
The signing of an ATO represents the final step in what is 
otherwise a continual process of security and management 
reviews.
    As the Committee is aware, VA has been working to extend 
nearly 600 ATOs over the last several months. We have worked to 
assure that requirements for each ATO are properly conducted 
and documented. VA trusts the ATO validation process and the 
work of the information security officers, facility CIOs, and 
system owners to ensure system security. This paper-based 
process validates that critical steps are being taken to 
protect our veterans' data.
    Mr. Chairman, VA places the highest priority on 
safeguarding veterans' and employees' personnel information. We 
are committed to information security. And although work 
remains, VA has made significant improvements in the last few 
years and strives to meet those highest standards in protecting 
our Nation's veterans' sensitive information.
    Thank you for your continued support of veterans, their 
families, and our efforts to protect veterans and their 
information. I am prepared to answer any questions by the 
Ranking Member, the Chairman, or the Members.

    [The prepared statement of Stephen W. Warren appears in the 
Appendix]

    Mr. Coffman. Mr. Warren, given your knowledge of visitors 
in the network since 2010, and understanding that there were 
significant security weaknesses, why would you insist on 
conveying the message that veteran data is not at risk?
    Mr. Warren. Thank you, Chairman. I think that that actually 
is a great question to ask within the construct of information 
protection.
    I think it's very important to note that my partners in the 
Inspector General's Office used words such as could, might, 
potential, possible, is possible. When an audit takes place, 
when a review takes place, the focus is on what could happen. 
But remember, the existence of a risk is not the same as the 
removal of information out of the network.
    Several things need to exist. What needs to exist is the 
potential, and we try to drive those down as quick as we can. 
There needs to be an actor who has access and the ability to 
get to where that risk is. They need to be able to do that in 
such a way that they are not seen, and then they need to be 
able to move the information out of the network through all the 
sensors and past the gateway, as well as past our partners in 
DHS who are watching outside our gateway, and then remove it. 
So the piece we need to be very careful of is, we're talking 
about potentials, we're not talking about actuals. And so the--
    Mr. Coffman. I'm sorry. How do you define the difference 
between an actual and a potential? And I'm looking at an 
internal report on August 15, 2012, and it talks about an 
actual--at least it talks about that the network was 
penetrated. So how do you define actual versus potential?
    Mr. Warren. Sir, I don't have that report in front of me.
    Mr. Coffman. Well, I'll make it available to you.
    Mr. Warren. And I will gladly respond to the record, sir, 
in terms of that specific incident.
    Mr. Coffman. Sure. Okay.
    Mr. Coffman. Please define the difference between actual 
and potential.
    Mr. Warren. Potential is--and we'll do as an example your 
home computer. So if you do not update your--
    Mr. Coffman. How about we just stick with the VA system. 
Let's talk about that.
    Mr. Warren. Sure. We can talk about a desktop computer. 
Once a month Microsoft puts out a set of patches on Tuesdays. 
So every Tuesday, once a month, the first Tuesday Microsoft 
sends out a full set of patches. If we do not incorporate those 
patches into the system, the potential for somebody going to a 
Web site and the potential being exploited goes up. But the VA 
has a very aggressive program to make sure those desktop 
patches happen once a month as Microsoft puts it out. So if you 
don't do them and you don't do it over multiple months, the 
potential for the desktop to be compromised and the system 
itself to be compromised goes up.
    Mr. Coffman. It's my understanding you have not instituted 
all the patches in the VA system. Is that correct?
    Mr. Warren. I'm sorry, I missed the first part.
    Mr. Coffman. That you have not instituted all of the 
patches prescribed for the VA system.
    Mr. Warren. I would tell you, Mr. Chairman, that we have a 
very aggressive program to make sure the desktop computers are 
patched.
    Mr. Coffman. You're not answering my question.
    Mr. Warren. The intent is not--
    Mr. Coffman. To the VA system. Is it true that not all the 
patches have been applied as prescribed in the VA system? In 
the information network.
    Mr. Warren. Sir, there are about 750,000 devices in the 
network. So if you're asking does every single one of those 
devices have every single one of the patches that their 
manufacturers put out, the answer would be no because there are 
multiple times when that patch will actually break the 
application that you need to use, and therefore there is a 
waiver in place that says you don't patch that system because 
not working is actually worse than a potential risk within an 
environment which is--
    Mr. Coffman. Mr. Warren, why did you not previously 
disclose to the Committee that VA has had serious and 
continuous compromises of systems and data by nation-state 
sponsored actors?
    Mr. Warren. With all due respect, I do not believe it is a 
true statement, as you laid it out, that the VA has been 
continually compromised by foreign nation states. We have a 
strong partnership with Homeland Security, which watches the 
boundary for the Department.
    Mr. Coffman. Mr. Warren, has a foreign entity targeted and 
penetrated our network?
    Mr. Warren. I am aware of a single incident that our 
network operation center identified.
    Mr. Coffman. And when was that?
    Mr. Warren. It was last year. I will need to get back for 
the record in terms of the specific date.
    Mr. Coffman. Very well. And I will make this internal 
document available to you. And I think you can be informed that 
there actually have been quite a few breaches.
    Ranking Member Kirkpatrick.
    Mrs. Kirkpatrick. Thank you, Mr. Chairman. I'd like to 
follow that line of questioning.
    Mr. Warren, if a system is compromised, would you know? Or 
is it possible for it to be compromised and you to not know?
    Mr. Warren. I would tell you, with the controls that we 
emplace, with continuous monitoring, as well as the work that 
we do at our boundaries with Homeland Security and our NSOC, 
the probability of somebody being in the network and 
compromising a system without us knowing it is very, very low. 
But I can't argue the absolute.
    Mrs. Kirkpatrick. Can you provide for the Committee how 
many times the system has been hacked since the beginning of 
this year?
    Mr. Warren. I will gladly provide that for the record.
    Mrs. Kirkpatrick. Thank you. Was it your testimony that it 
takes you 25 days to notify the veteran that their personal 
information may have been compromised?
    Mr. Warren. Yes, ma'am. If I could expand on that.
    Mrs. Kirkpatrick. Would you expand on that, because that 
really concerns me. In 25 days everything could be wiped out 
for that person.
    Mr. Warren. Certainly, ma'am. What happens is as soon as--
and VA has a 1-hour reporting requirement--as soon as an 
employee believes the potential of something happening, they're 
supposed to notify our NSOC, and it is part of the reporting we 
do. At that point, we pull the team together and we ask the 
question: What and why? Is it real? And if it turns out we have 
an issue, the Data Breach Team--which meets once a week, which 
is made up of career staff who are outside the chain of 
command--they do the analysis of that potential breach and they 
determine if the potential was high enough that data had left. 
And normally, if there is just a little potential, the 
Department goes ahead and reaches out to all of those veterans 
with credit monitoring for a year. And the 25-day period is the 
time for the notification to the NSOC, the establishment of the 
team, the analysis of the data to make sure what was reported 
was actual. And in many cases--in fact, in most cases--it's the 
potential that is reported, and we reach out to veterans anyway 
and we offer that credit reporting.
    Mrs. Kirkpatrick. How many times have you had to notify 
veterans within the last year?
    Mr. Warren. Ma'am, I will get you that for the record in 
terms of the number of times that we notified veterans and 
offered credit reporting as a result of a potential data 
breach.
    Mrs. Kirkpatrick. Thank you. And was it also your testimony 
that by June 30 of this year your system will be encrypted?
    Mr. Warren. Actually, my testimony, ma'am, was that for all 
nonmedical IT laptops. So the ones that are under my 
responsibility, we will have the last of those encrypted.
    Mrs. Kirkpatrick. But the medical laptops will not be 
encrypted?
    Mr. Warren. No, ma'am. And, Ranking Member, the difficulty 
we have with medical devices is they're constrained by their 
certification from the FDA. And the concern is by putting 
encryption on that laptop, a medical device that has a laptop 
in it, you will actually impede the ability of that medical 
device to do its job.
    And so we've had lots of conversations with the FDA to 
figure out how you can do that. But when a device is certified 
that has a medical device in it, the condition of the device at 
the time of certification constrains what you can do 
afterwards. And so to handle that, we actually have a separate 
area, an isolated area in the VA network where we put those 
medical devices that are based on IT equipment. And we also go 
further by working with our partners in VHA where we start 
testing those devices to see if there is an impact to its job 
in terms of delivering care, or if we impact their 
certification boundary. And in cases where it isn't--and there 
is a tool called bar-code medication, which is what the nurses 
move through the wards--we are able to show that there was no 
impact, those medical device laptops are now encrypted. And so 
we work our way through that with our partners in the health 
administration and the biomed folks.
    Mrs. Kirkpatrick. I have one last question. Are you 
familiar with or have you heard the Inspector General talk 
about the fact there has been excessive turnover in key 
leadership positions and there's a lack of human resources in 
the IT departments? Do you agree with that statement?
    Mr. Warren. I would tell you that an organization going 
through transformation is a difficult place to work because 
everything is moving around you. And so we have had transition 
of staff. We've had transition of staff going out and coming 
in. This year, I believe I am 100 folks below my ceiling of 
about 8,500 individuals.
    Mrs. Kirkpatrick. Do you have a strategy to address that so 
you have adequate human resources?
    Mr. Warren. We do active recruiting. We work with the HR 
organization to figure out how do I do pools so I can make sure 
I've got project managers lined up, to make sure I have 
individuals lined up to bring them in.
    We also have a very strong focus on veterans. As an 
example, last year, 75 percent of my new hires were veterans, 
because that's very important to me, as a veteran, to make sure 
we're bringing our clients, if you will, into the organization 
to help us do a better job.
    Mrs. Kirkpatrick. Thank you, Mr. Warren. I yield back.
    Mr. Coffman. Mr. Warren, please be reminded that during the 
course of this oversight hearing and Committee investigation, 
it is a Federal crime, pursuant to 18 United States Code 
section 1001, in pertinent part, knowingly and willfully to 
falsify, conceal, or cover up a material fact, or to make any 
materially false, fictitious or fraudulent statement.
    Mr. Lamborn, you have 5 minutes.
    Mr. Lamborn. Thank you, Mr. Chairman.
    Mr. Warren, members of the previous panel testified under 
oath that foreign state actors have accessed sensitive 
information of veterans within the last 2 years and that the VA 
does not know how much information was stolen. Would you agree 
with that statement?
    Mr. Warren. I would say, Congressman Lamborn, there is that 
potential. I would tell you that, working with our partners at 
Homeland Security in terms of where they watch our gateway--so 
it's not just the VA connected to the world and everything 
happens, we have Homeland Security, if you will, at the gate. 
So I have our team on our side and Homeland Security on the 
other side. And between the two of us, we watch all the traffic 
going back and forth.
    So the ability of material to move, yes, there is always a 
potential. We referred to a particular incident that the 
Inspector General talked about. I was aware of that incident. 
So I would tell you that one, we know happened. With the other 
ones, it's still the potential and the probable, in terms of--
    Mr. Lamborn. And of the one that you will admit has 
happened, we don't know how much information was taken because 
it was encrypted before being exported. Isn't that correct? So 
we don't know how little or how much the data was that was 
stolen?
    Mr. Warren. Sir, my recollection of that report--and what 
I'd like to do is go back and review that report to give you 
the answer in terms of what came out and what the report was 
able to tell us given the conditions that existed.
    Mr. Lamborn. What kind of dependent information is put into 
some veterans' files?
    Mr. Warren. I would tell you, Congressman Lamborn, the 
veteran files are held in many locations in the VA, in many 
systems, whether in the electronic health record or whether in 
the new--used as part of the new VBMS system, as well as all 
the other systems. So the information necessary to provide 
benefits or services is what we--
    Mr. Lamborn. So it can include the names and Social 
Security numbers of dependents.
    Mr. Warren. If that's required as part of the claim or 
service process, sir.
    Mr. Lamborn. Another problem I have is--and this happened 
to me recently. I got a credit card in the mail. It turns out 
that my credit card issuer had been compromised, so everyone 
had to get a new credit card. And we had to go back and change 
the numbers on all our accounts. It was a big hassle. 
Fortunately, nothing was stolen that I know of. But what 
happens when a Social Security number is stolen? You can't 
replace that. I mean, we're talking about something really 
serious here. Are you aware of how serious this is?
    Mr. Warren. Congressman Lamborn, we take any potential 
incident and any incident very seriously. I take it personally. 
It's one of the reasons why the VA offers credit monitoring. So 
even when there is a potential, we reach out to the veteran and 
we offer them that credit monitoring for a year. We also have a 
1-800 number that we've made available to veterans if they have 
any questions so that they can reach out to us if by chance 
something does happen, so we can help them, walk them through 
that process.
    Mr. Lamborn. You said earlier that we place the highest 
priority on protecting this information, and yet members of the 
OIG indicated that for more than 10 consecutive years, 
independent public accounting firms under contract with OIG 
have identified information technology security controls in the 
VA as a material weakness. How can that condition have 
persisted for 10 years if that's your highest priority?
    Mr. Warren. Congressman Lamborn, thank you for that 
question. I would tell you that material weakness is actually a 
financial term. It's the same type of term used as part of 
Sarbanes-Oxley in terms of laying those financial controls on 
the organization. So the material weakness says there is a 
question about whether the financial data in the system is 
secure or not.
    So material weakness, yes. I will tell you that, as an 
organization, the Department wasn't going, we've got a material 
weakness, move on. Every year we took the inputs--and I've only 
been with the VA for 7 of those 10 years--every year I've been 
there we took those inputs and we laid out what we needed to 
do. We laid the resources on it. We put focus on training. And 
I will tell you it wasn't enough. And so 2 years ago, this 
major effort of doing CRISP, of taking the whole organization--
not just the IT organization, but taking the whole 
organization, because information protection is not just an IT 
thing.
    Mr. Lamborn. Well, I'll agree with one thing you've just 
said when you said it wasn't enough. I certainly agree with 
that.
    And how do we know that there isn't going to be some kind 
of document dump by a foreign actor, you know, WikiLeaks or 
something like that? I mean, there are so many things--health 
care records. There is such sensitive information in health 
care records. So we're not just talking about Social Security 
numbers, there's health care records. We shouldn't be here 
today, and I am sad that we are at this juncture right now.
    Mr. Chairman, I yield back.
    Mr. Coffman. Thank you, Mr. Lamborn.
    Mr. O'Rourke.
    Mr. O'Rourke. Thank you, Mr. Chairman.
    For Mr. Warren, I'm not as conversant in the details of 
these issues and the different systems and protocols involved 
as I would like to be, but I think it's fair to say that the 
picture you paint of the VA's IT system and the vulnerabilities 
is very different than the one that we just heard from, from 
Ms. Halliday. And I think you heard many of us say that what we 
heard presented was unacceptable in terms of the 
vulnerabilities, unacceptable in terms of the amount of time 
that the VA has known about those vulnerabilities without 
successfully addressing them, some concerns about when 
information was reported to this Committee and others in terms 
of breaches to the system and retrieval of information by 
foreign actors.
    Can you just, so in general terms that I can understand, 
address that discrepancy from what we just heard to what you're 
presenting? You seem to be saying that things are generally 
under control.
    Mr. Warren. I would tell you the state of security and the 
work we need to do is something that I wrestle with all the 
time. Am I satisfied with where we are? No, I'm not. Can we do 
better in terms of fixing the things that our partners in the 
IG and the audit community have identified? Yes. And we are 
dedicated to doing that.
    But the difference that you are hearing from myself versus 
the audit community is, they have to deal with potential: Is 
there a chance? Is there any opportunity for something like 
that to happen? And the answer will always be yes. It will 
always be yes, that there is a potential. So if you ever ask 
me, or even if you ask me today, can I guarantee that 
everything is perfect and wonderful? I could not give you that 
guarantee because it's constantly changing, the technology 
constantly changes.
    So my focus is more of a very pragmatic operational person 
whose job is to try and make sure we continue to deliver those 
benefits and services in a way that has the least risk, the one 
that does not put our veterans' information at risk while we do 
that. And again, is it where I want it to be? No. Do we 
continue to drive on getting it to where we need to be? Yes.
    Mr. O'Rourke. In terms of the 32 recommended steps that 
need to be implemented--and I asked the IG's Office about what 
the timeframe would be to implement those--do you agree that 
it's a 12-to-18-month implementation timeframe?
    Mr. Warren. Yes, sir. And in fact, when the report gets 
published, you will find there is a departmental response. And 
it actually lays out what it is that we have in place and what 
we are going to do. And I believe the latest date I have when I 
signed out that document with all the different organizations 
was September 2014 for some of the longer items. And I believe 
that fits within that 12-to-18-month period.
    But there are many things that are happening now. We have 
some significant things coming online at the end of August. 
There are things taking place between now and August. But the 
longer, harder ones take that extra time to get there.
    Mr. O'Rourke. And so there are no fundamental differences 
between your office and the IG's report in terms of what they 
just described to us in their findings, their vulnerabilities, 
and the seriousness of those vulnerabilities and threats?
    Mr. Warren. I will tell you, there were many reports 
referred to in the prior panel. You will find that if you look 
at the report and you look in the appendix, the place where the 
Department did not agree with the findings, you will find a 
statement in there that says--again, we always thank our 
partners to come in. We see them as part of the team. They give 
us that outside view. But where we disagreed with what their 
observations were, we normally state that in the document.
    So, given the Chairman's reminder, I need to make sure that 
where the Department did not agree, we stated in the report. 
And we also state what it is we're doing as a result of what 
they find and what our plan of actions are. And then we give a 
quarterly update to all of the things that we said we are going 
to do. And as the Acting Assistant Secretary, I sign off on 
every one of those quarterly reports in terms of what we said 
we were going to do, what did we do to ensure that we are 
responsive not only to what the Inspector General identified, 
but ensuring that we're doing everything we need to do to 
protect our veterans data.
    Mr. O'Rourke. Let me ask one more question. You've used the 
terms ``possible,'' ``probable'' and ``actual'' several times 
in response to our questions. A question I asked of the 
previous panel, can you tell us of an actual incident where, 
because of a security vulnerability, private information from a 
veteran was retrieved by someone to negatively impact that 
veteran, whether they stole their Social Security number or 
other personal data that was then used to harm that veteran?
    Mr. Warren. I am aware of several incidents, and I will 
describe one for you. It's an individual who accessed--he was a 
system administrator--again, not foreign, but domestic--
accessed the database and used the information to do identity 
theft. When identified, we refer those to the IG and they bring 
in criminal investigations. So, in that regard, there was an 
individual who breached the system. It is always referred to 
law enforcement. It is always referred to law enforcement. And 
then we provide credit monitoring, and we also work with the 
law enforcement folks to make sure that they have full access 
to do what they need to do.
    So I will tell you, large organization, lots of people, 
there are going to be folks who do bad things. As we find them, 
we refer them to law enforcement for them to take action. And 
then we just keep, as a result of what we saw--what then do we 
do, right; how did that person get in there. So you will see 
there is a very strong personal accountability program the 
Department is bringing onboard to go ask the question, are we 
hiring the right people? Do they have the right credentials? 
Are there flags here on their personnel records such that we 
really shouldn't be putting them into a position of trust--not 
an IT thing, but the broader aspect of how you hire folks and 
how you make sure you're bringing in the right folks.
    Mr. O'Rourke. Thank you.
    Thank you, Mr. Chairman.
    Mr. Coffman. Just real quick. When the OIG, in their 
report, said that your system got hacked by foreign actors, do 
you refute that as part of your response?
    Mr. Warren. So, again, I believe you're referring to that 
August report. Let me just make sure what you're referring to, 
Mr. Chairman, if I can. I don't have enough information to 
answer your question, sir.
    Mr. Coffman. So you're not aware--in the OIG report, in 
their testimony, when they were up here, they referenced that 
your system got hacked by foreign actors. First of all, do you 
acknowledge that?
    Mr. Warren. I believe I already have in my testimony, Mr. 
Chairman.
    Mr. Coffman. Yes or no?
    Mr. Warren. Yes.
    Mr. Coffman. Very well.
    Dr. Poe for 5 minutes.
    Mr. Roe. Thank you, Mr. Chairman.
    And a couple of questions that Congressman Lamborn talked 
about.
    One of the reasons that, the way I understand this from 
listening this afternoon, that you might not know what 
information is going out is that the information that people 
were after was not encrypted. But on the way out the door it 
was encrypted, so you couldn't read what was gone. So you could 
truthfully sit there and say we don't know what's been stolen 
because you really don't know. And it should just have been the 
other way around; we should have had the data encrypted so that 
nobody could have gotten a hold of it or done anything with it. 
Am I right or wrong with that? Did I misunderstand?
    Mr. Warren. No, Congressman Roe, you are actually laying it 
out appropriately. And again, with the report that we're 
referring to, glad to do a private briefing to the Committee 
with the details because of some of the issues around it.
    I will tell you that the area where the individuals were, 
were in the email area, in terms of pulling emails out. The one 
compensating controller, the thing we do as well, is many of 
our emails are encrypted. So the reference to unencrypted is 
information in databases. This particular information--which I 
believe has been referred to--deals with folks who went after 
email packages. In many cases, those are encrypted such that it 
would be difficult to read them. But again, because, as you 
rightfully pointed out, the data left the network encrypted, 
it's hard to say yes or no what it was.
    Mr. Roe. I understand that now. And let me ask, would any 
of this other information, since you-- do you cover the part of 
the VA involved in contracting? Is that data--not just personal 
information, but is contract data? In other words, if I'm 
bidding on a project out here, would a foreign competitor know 
what that contract was? Because we certainly have seen that in 
other areas. Is that possible?
    Mr. Warren. Sir, I can't refute the possible of any 
scenario in terms, again, there are no absolutes in information 
security. We strive to make sure there aren't any--
    Mr. Roe. Let me stop you. I've heard that before. This 
August 15th, there is an Office of Information Security, and 
you stated you heard--at least were known of one time that--I 
think that I understood this--that you had been hacked or 
pinged. March 10th and onward the DeepDive Analysis has been 
tracking activities of well-funded cyber-espionage teams that 
regularly target VA. Over the past 31 months, the DDA--that's 
the Direct Dive Analysis--has identified eight of these teams 
as part of our threat program. Each team is assigned a name--I 
won't go through that. Assigning a common nomenclature has 
allowed them to contribute each of their campaigns and see 
which one of them is the most effective. And it goes through 
how they were doing it. I'm sure you're aware of that.
    Mr. Warren. Yes, sir. The key reporting and the fusion 
technology team--so the individual whose report you're reading 
from--is an initiative that I started in terms of asking folks 
to go out and start pulling data and understand what was going 
on. What I think what you will see--
    Mr. Roe. Help clear me up because you said you only heard 
of one--you only knew of one incident, and yet you started 
this, which there are eight different teams that are looking. 
And it appears from this information we have--which it makes 
sense that they most like to hack us during holiday times, 
which makes sense, your defenses are down, Thanksgiving, 
Christmas, those times when we would be less--our defenses are 
up less.
    Mr. Warren. I think what you'll find, sir, if you read into 
that report, it's targeting. So the report, again, it's a very 
aggressive defensive policy in terms of through our network 
security folks is trying to identify where the threats are. 
Now, again, the August report we talked about, the specific 
instance where we saw the material leaving and some of the 
things that we did as a result of that, you will find there are 
reports like that that are published probably a couple times a 
month from the fusion team saying this is what we're tracking, 
this is what we're monitoring, this is what we're doing about 
it.
    Mr. Roe. But you wouldn't be tracking those if they weren't 
active.
    Mr. Warren. Sir, there are things known as honey pots, 
black holes, where the individual may try to come in. And what 
you do is you set up your perimeter so it looks like they're 
actually getting into data, but they're not. You're actually 
tracking and capturing them.
    The other piece, if I could, is there are actors you see 
inside, but you also set it up on the outside, where if they 
are trying to send data out, you basically put a trash can 
where the data goes versus leaving the Department.
    Mr. Roe. I have some more questions on that to see how many 
times that has happened. There is a note here I have that says 
over 400,000 systems in VA's network do not even have a basic 
security baseline installed. Is that correct or incorrect?
    Mr. Warren. Sir, I would need to basically validate where 
that report is coming from, and I will take that for the 
record.
    Mr. Roe. And lastly, just one quick question: Who are the 
state-sponsored actors that we're dealing with? You haven't 
called any names, but who are they?
    Mr. Warren. I would tell you, sir, that my preference is to 
do that in a closed session; otherwise I would put my clearance 
at risk, as well as the fines and penalties.
    Mr. Roe. That's fine. That's fine. I yield back.
    Mr. Coffman. Mr. Walz for 5 minutes, please.
    Mr. Walz. Thank you, Chairman.
    Thank you, Mr. Warren.
    Your data is on those computers too, correct, as a veteran?
    Mr. Warren. Yes, it is, sir.
    Mr. Walz. Okay. And you were over at FTC and DOE?
    Mr. Warren. Yes, sir. I was at the Federal Trade 
Commission, where I did the national Do Not Call Registry, 
something I'm very proud of, as well as annual credit 
monitoring that you can get, and then at the Department of 
Energy with the Weapons Clean Up Program.
    Mr. Walz. How does your knowledge over there--does the 
current job you're in correspond with you having a knowledge of 
those organizations and their ability to provide security over 
data? Because I'm assuming both of those have very sensitive 
data, especially DOE, in terms of state secrets and things like 
that. So is there a comparison there? Can you tell us how they 
function or how VA's system is in terms of robustness compared 
to those?
    Mr. Warren. I would tell you, sir, we are all facing the 
same threats. And we all put the protections in place and we 
work with each other. In fact, we have a very aggressive 
outreach program with the folks in the other organization. And 
there is also a larger effort through the Federal CIO Council 
to learn from each other and use our best practices because we 
are all facing that threat today.
    Mr. Walz. I agree. And this is what I'm trying to get at. 
And I think the gentlewoman from Indiana brought up a good 
point. States are trying to tackle this as they go. And I'm 
looking through, there's a Privacy Rights Organization 
Clearinghouse that, as we speak, in realtime is listing this: 
Health Information Trust of Frisco, Texas, 111 record 
compromised. A dentist in Rochester, New York, on June 3, theft 
of a laptop, 13,806 records.
    One, though, that comes in here--and I think it brings to 
the point of what we're trying to get at--is Hampton Roads 
Health System, Newport News, Virginia, talked about employees 
accessing information incorrectly. And it even notes in this 
that they were fired for that. And then of course there's 
malicious content and all that.
    The point I'm trying to figure out here is, when you do 
this, is data security an all-or-nothing, zero-sum proposition? 
Is it an impenetrable firewall, or it's open access, or are 
decisions made in the business community as well as you that 
risk assessment and what is acceptable risk is in that?
    I'm assuming in the private sector now--and listening to 
Ms. Walorski brought up a very good point--is there is a huge 
market in identity theft insurance, data breach insurance on 
that. Those insurance underwriters must be drawing some 
guidelines on what is acceptable risk and what is not. Does 
that pertain to what you're doing? Is the VA doing that very 
same risk analysis based on best practices of those 
underwriters?
    Mr. Warren. Yes, sir. We apply those same rules. It is 
baked into the standards that we follow. The National Institute 
of Standards and Trust applies those to us.
    And to your question about, is there an all or nothing? I 
think our partners at DoD found out with WikiLeaks, in a secure 
system, you still could not guarantee the material would not--
    Mr. Walz. Well, what I guess I'm asking for is, is it 
worth--and I'm going to come to this question is: What's the 
cost, have you figured, to implement OIG's recommendations? Is 
there a cost factor that takes into this? Say, for example, 
depending on where I'm at, versus a high crime versus a low 
crime neighborhood, I might not invest in the most robust 
security system, taking and thinking into--there hasn't been a 
crime in my neighborhood in 75 years. Those are things that we 
work in. Now, if I always want to be absolutely sure, I could 
go to the top of the line every time and implement that 
security. How do you view that at VA when you make those 
decisions?
    Mr. Warren. Sir, great question. Thank you for that 
question. We look at what the risk is. Is it something at the 
perimeter or is it something inside? Is the data inside 
something that has the highest level of need or something that 
is just transactional data? And the amount of resources we 
apply and the controls we put in place are actually tailored to 
the information that's in the system and the potential risk.
    Mr. Walz. Does OIG take that into consideration when they 
put out their recommendations, that you are doing--what you're 
telling me is, you are doing a risk analysis, a cost-benefit 
analysis. Is OIG asking or saying this is the ultimate perfect 
world, what it looks like in security? Are they factoring that 
in?
    Mr. Warren. I believe my partners in the Inspector General 
Office are taking that into consideration. But I will tell you 
they've done a fair appraisal, in terms of the FISMA audit, of 
areas where we need to continue our attention and focus. And I 
will tell you the one thing that tells me that we're on the 
right path is we did this massive program last year called 
CRISP, which was more than just IT, it was the leadership of 
the organization--the VHAs, the VBAs, the NCAs. So they got 
engaged from the senior levels of what do we need to secure the 
enterprise. And we are seeing the critical things dealing with 
personal attitude by non-IT folks as well as IT folks is 
changing to where it needs to be.
    Mr. Walz. Well, if I heard that right, OIG did say they 
didn't give an assessment based on it hasn't run its whole 
course yet. So what your assessment is, is at the end of this, 
when you go back and look at what CRISP did, we're going to see 
a change across the spectrum, culturally and robustness of 
security.
    Mr. Warren. Yes, sir. We are seeing that change. And I will 
tell you the change will need to continue from here on out 
because we know that threat evolves with our change.
    Mr. Walz. I'm going to use my last 25 seconds here. You're 
not going to get the opportunity to do this, but following you, 
Mr. Davis is going to speak and there's going to be some 
questions of how things came out or why they came out. Is there 
anything you'd like to address? I'm out of time here. You know 
the situation, the memorandum and how things are going to play 
out, and I think it's only fair that you be able to respond.
    Mr. Warren. I would tell you, sir, I was perplexed by what 
happened and how it went down. I was troubled by the fact that 
there are two memos in circulation, a memo dated 29 January 
that I and leadership received, and the one that we received 
from the Committee that was signed on the 28th of January that 
we were not aware of the existence of it until Friday, when the 
Committee staff gave it to us. And the memos are almost 
identical except for one paragraph, and that paragraph says: 
``Clear and present danger.''
    I will tell you, if anyone tells me there's a clear and 
present danger, I pick them up and I walk them over to the IG 
and say, tell them what it is that I am missing here. I 
actually did that on the 29th with the memo received. That memo 
I took to the IG.
    On Friday, when I learned of the existence of a second memo 
different than the one the Department received, I took both of 
those memos and I reached to the IG and said, I need you to 
help me figure this out because I cannot figure out why the 
Department would get one memo with four paragraphs and the 
Committee would get a different memo with five paragraphs and 
the difference is ``clear and present danger.'' That was not 
communicated in the memo we received. And I'll tell you, I am 
still perplexed on why that would exist.
    Mr. Walz. Mr. Chairman, I thank you for indulging the extra 
time.
    Mr. Coffman. Ms. Walorski for 5 minutes.
    Mrs. Walorski. Thank you, Mr. Chairman.
    Mr. Warren, can you guarantee that the veterans in my 
district, in Indiana's Second District, have not suffered a 
security breach?
    Mr. Warren. Ma'am, I'd be lying to you if I made that 
guarantee. Again, it is all about what the risks are. And we 
try our darnedest--in fact, we do more than try our darnedest.
    Mrs. Walorski. But you can't guarantee that.
    Mr. Warren. I can't--and in fact, nobody--if someone sat 
here and guaranteed, you should haul them out of here--
    Mrs. Walorski. All right. Do you personally, sir, do you 
personally feel responsible for the fact that we have a Nation 
of veterans that are vulnerable?
    Mr. Warren. I care deeply that we are not further--
    Mrs. Walorski. Do you feel personally responsible, when you 
leave and check out at night and go home, do you feel 
responsible for the fact that there are various security 
breaches and our whole Nation's veterans are at risk?
    Mr. Warren. Ma'am, I go home tired every night for all the 
things that I do.
    Mrs. Walorski. Do you feel responsible for all the things 
that we talked about here today?
    Mr. Warren. Ma'am, I'm personally responsible for the 
organization as the Acting CIO.
    Mrs. Walorski. Thank you.
    I yield back my time to Dr. Roe.
    Mr. Roe. Just a couple of questions, and maybe I got to 
this before. But are the state actors, is that classified 
information? Because I've seen published reports. I mean, we've 
just had the Chinese in every headline in the world here 
saying, oh, it's not a big deal, it's not a big. We know it's a 
big deal. So who are the state actors?
    Mr. Warren. Sir, as a young lieutenant, one of the first 
briefings I got when I came onboard was that just because 
something is published in the press, if you receive a briefing 
that says it's classified, until the classifying authority says 
it's clear, it's classified no matter what you read.
    Mr. Roe. The briefings you've had, I mean, what you've got 
done right here, when you determine with what you're doing that 
somebody is trying to breach your firewalls and get into data 
that's in the VA system, that's classified information, you 
can't come here to this Committee and say, this is what 
happened?
    Mr. Warren. Sir, actually, you had asked me a different 
question, which was the naming of the actors. We work with 
Homeland Security on our boundary, so they are in constant 
communication with us. They are telling us when they see stuff. 
We are telling them when we see stuff.
    Mr. Roe. We want you to tell us when you see stuff. What's 
the problem with that? I thought that we all work for the 
American people.
    Mr. Warren. As do I, sir.
    Mr. Roe. Well, I include you. I said we all. You, me, 
everybody in this room who's here who's a public servant works 
for the American people. They have a right to know who's trying 
to get into their personal information. I would like to know 
who's trying to get into the veterans that I serve, the 70-
something thousand of them that live in northeast Tennessee.
    Mr. Warren. Congressman Roe, we would be glad to come up 
and give you that private briefing with all of the material you 
would like.
    Mr. Roe. I guess my question is--second question is--why is 
that classified? Why wouldn't that be public? When people are 
trying to steal from you, we ought to let the people in our 
country know who's trying to steal our own veterans' 
information, I think. I think that's very important to be 
public. Why are we hiding that? And that's above where you are, 
I understand that. But that's a philosophical question.
    The next question is, is that, when we come back a year 
from now--I've been here now 4-1/2 years, and I see problems 
that linger on and on and on. Are we going to come back 1 year 
from now and have the same conversation? And I totally agree 
with you, Mr. Warren, when you were saying you couldn't 
absolutely guarantee. I've had people come to me when I'm 
taking them to the operating room and say, will you guarantee 
that I'm going to live through the surgery? Well, I can't 
guarantee that. I got that. I understand that. But with as good 
a system, can we say a year from now that the IG, in fact, who 
gave a very good report, you will have met those metrics that 
you agree with, and then you all work out if you don't agree 
with them?
    Mr. Warren. Sir, I would like to take the 12 to 18 months 
the IG identified. But the intent is to clear as many of those 
as we can in the 12 months with the schedule we've given them, 
and to keep moving through those until we've cleared them all.
    Mr. Roe. I yield back.
    Mr. Coffman. Thank you, Mr. Chairman.
    Mr. Huelskamp.
    Mr. Huelskamp. Thank you, Mr. Chairman.
    Mr. Warren, the IG's testimony outlined some pretty serious 
deficiencies in the Office of Information and Technology. And 
according to the evidence, VA's network has been accessed by 
foreign state actors since March 2010. And in that fiscal year, 
and since then, you've received a grand total of more than 
$87,000 in bonuses. Can you explain how you merit such a large 
amount in bonuses?
    Mr. Warren. Sir, as you're aware, the way the compensation 
system works in the Federal Government is a performance plan is 
laid on an employee, as in myself. A supervisor sits down and 
lays out what I expect from you in the year. And based upon how 
you do, there is an appraisal given.
    Mr. Huelskamp. So how you did was worthy of $87,000 in 
bonuses? Is that your understanding?
    Mr. Warren. I believe, as a result of me exceeding the 
performance expectations that my leadership have laid on me, I 
was recognized with performance awards of that amount.
    Ms. Halliday. Okay. I'd like to ask a question as well, 
that you did state there were no absolutes in your mind in 
security. But we do have a letter here, a very absolute 
statement from your boss, the Secretary, that says, quote, ``To 
be clear, VA's security posture was never at risk.''
    Is that a true or false statement?
    Mr. Warren. I would tell you, sir, as the person who ghost 
wrote that memo, in terms of doing the staff work for the 
Secretary, I was not clear in my language and I take ownership 
of that.
    Mr. Huelskamp. Is it true or false?
    Mr. Warren. It is true with respect to the ATO process, 
which this memo was trying to answer. With respect to the 
broader question, as we've already talked about today, there 
always is some risk. And so again--
    Mr. Huelskamp. Is this a false statement then?
    Mr. Warren. I would not say it was a false statement, sir.
    Mr. Huelskamp. It's an inadequate statement? A mistake?
    Mr. Lowe, let me ask you a question: Have you ever brought 
to Mr. Warren's attention that there are significant security 
issues that need to be addressed?
    Mr. Lowe. Congressman, thank you.
    Have I ever brought attention to Mr. Warren that there are 
significant security issues that need to be addressed? No, sir, 
I have not.
    Mr. Huelskamp. You have not?
    Mr. Lowe. I have not.
    Mr. Huelskamp. Usually, I try to anticipate an answer. And 
to anticipate an answer that in your job you have never 
identified a single security risk really strains credibility. 
Your own testimony.
    So you've never sent an email, never made a statement to 
Mr. Warren or his superiors that there are any security risks 
in the IT system at the VA?
    Mr. Lowe. I brief Mr. Warren and the Secretary frequently 
on security risks for the organization.
    Mr. Huelskamp. Do you know how many foreign state actors 
have been identified as perhaps intruding upon the system?
    Mr. Lowe. I know that there are foreign state actors that 
are--
    Mr. Huelskamp. Do you know how many have you identified? Is 
there one or more?
    Mr. Lowe. Individual state actors?
    Mr. Huelskamp. The Individual states. It's a pretty clear 
question.
    Mr. Lowe. Yes, sir.
    Mr. Huelskamp. Have you identified more than one?
    Mr. Lowe. Yes, sir.
    Mr. Huelskamp. How many more? Mr. Warren said there was 
only one, in his earlier testimony. How many more were 
identified?
    Mr. Lowe. How many more state actors that are actively 
trying to penetrate the network or actors that have 
penetrated--
    Mr. Huelskamp. I'm guessing there will be a second round of 
questions, so it probably doesn't help to try to stall. Would 
you answer the question? How many more?
    Mr. Lowe. Sir, I have been in this position for 
approximately 90 days. I'm still trying to ascertain the state 
of the organization.
    Mr. Huelskamp. Have you seen any memos that would identify 
more than one?
    Mr. Lowe. More than one--
    Mr. Huelskamp. State actor. You believe there's more than 
one. Mr. Warren stated there was only one. You believe there's 
more than one. I am asking how many more?
    Mr. Lowe. I don't know the answer off the top of my head, 
sir. If I could get back to you on the record, I would 
appreciate it.
    Mr. Huelskamp. Well, I will note for the Committee I've had 
a grand total of, I believe 23 questions. I've been waiting for 
264 days for your agency to respond. As Dr. Roe mentioned, 
we're supposed to be working for the American people. And when 
your agency, your bosses refuse to answer questions, it looks 
like you're covering things up. When you say there's one state 
actor, he says there's more, he's only been here for 90 days, 
we've got a report from the people that work for you, Mr. 
Warren--you know this report. You know there's eight actors 
identified on here. And you claimed there's only one in your 
earlier testimony. I think that's embarrassing. It's not only 
embarrassing, you're sworn under oath. So I'm going to ask you 
one more time, how many state actors have you identified or 
believe are out there that have accessed the system for 20 
million veterans and their dependents?
    Mr. Warren. Congressman Huelskamp, I believe that question 
is directed to myself?
    Mr. Huelskamp. Is your name Mr. Warren? Answer the 
question, please. Let's get on with it. We're doing the 
business of answering questions. Please answer them. I come 
from Kansas. We don't go through all this trying to act like we 
don't know what the question is. I asked your name. Answer the 
question.
    Mr. Warren. I would tell you that the Department, through 
the NSOC, is aware of multiple state actors who are trying to 
take action against the Department.
    And I will tell you it is more than just state actors. It 
is very known in the community that it is more than countries. 
There are syndicates who have this as a money-making activity. 
And I believe that's also in the open press in terms of it's 
not just countries, it's individuals, it's groups of 
individuals. And it is not just veteran data they're going 
after, they go after your home, your home computer, Web sites 
you go to. And there is a very aggressive effort, and I know 
that Congress is engaged in terms of what's notification, what 
you should notify, how we share, and how do we do all those 
things.
    Mr. Huelskamp. But you're comfortable with the current 
security risk?
    Mr. Warren. I am not comfortable with the current security 
risk, sir. And again, I will tell you the safest computer is 
the one you don't hook up to the Internet.
    Mr. Coffman. Mr. Huelskamp, we'll do a second round.
    Mr. Huelskamp. Thank you, Mr. Chairman.
    Mr. Coffman. Mr. Warren, so we know that we've been hacked 
by a foreign actor, we know that, the VA system. We know that 
they encrypted their way out, exiting. So we don't know what 
they took. We know that the system contains the personal 
identification information for about 20 million veterans. So 
isn't it possible that they could have taken all of that--that 
there is an entity, having hacked our system, that has all the 
personal identifying information for all our 20 million 
veterans? Isn't that correct?
    Mr. Warren. Sir, I am very concerned about stringing all 
those facts together and stating a causality. In other words, 
this, this, this, this means.
    Mr. Coffman. Well, okay, let's walk through it then.
    Number one, our system has been hacked, correct?
    Mr. Warren. We are aware of incidents--
    Mr. Coffman. That's right. Number two, that they 
encrypted--that they penetrated the system, and they encrypted 
on their way out, so we don't know what files they took. Is 
that correct?
    Mr. Warren. In the incident referred to, there was data 
removed that was encrypted, yes, sir.
    Mr. Coffman. So we don't know what files they took, 
correct?
    Mr. Warren. We do not know what files they took out of the 
VA.
    Mr. Coffman. Had access to information pertaining to our 20 
million veterans, did they not?
    Mr. Warren. I would tell you, sir, that is the point where 
I diverge, because it's not clear where they had access, right. 
So you're assuming the VA is a small place with one computer.
    Mr. Coffman. You're right, we don't know. That's the 
problem. We don't know. That's right. And so the fact is that 
they had access to the 20 million veterans. Aren't you 
concerned about that?
    Mr. Warren. Sir, I am concerned any time veterans' data is 
put at risk.
    Mr. Coffman. Don't you feel that the veterans of this 
country--I being one of them, and there are some other veterans 
on this Committee--ought to be warned of that fact?
    Mr. Warren. I believe you are accomplishing that through 
this hearing, sir.
    Mr. Coffman. Should you have accomplished that?
    Mr. Warren. To what end, sir? To drive veterans away from 
the health care they need, the mental health care they need?
    Mr. Coffman. To inform them that they need to watch out, 
the fact their--that the system had been compromised, just as 
any private entity that had been compromised would notify the 
consumers that they serve. You, in fact, had an obligation to 
notify the consumers that you serve. That's the men and women 
that served this Nation in uniform.
    Mr. Warren. Yes, sir, as I did. And any time there is the 
potential where we believe there is the potential of a breach, 
we offer credit monitoring--
    Mr. Coffman. There was a breach.
    Mr. Warren. We offer credit monitoring for a year. We have 
a hotline to provide those services to individuals. In the 
past, we have received emails from Homeland Security--
    Mr. Coffman. Ranking Member Kirkpatrick.
    Mrs. Kirkpatrick. I yield back.
    Mr. Coffman. Mr. Lamborn.
    Mr. Lamborn. Thank you, Mr. Chairman, and once again, thank 
you for your leadership on this issue.
    Mr. Warren, it was testified under oath by the previous 
panel that when you own the domain controls you own the network 
and that that is what happened at the VA. Would you agree with 
that statement?
    Mr. Warren. I would tell you, sir, that when you have the 
domain controllers you can go where you would like. That is not 
necessarily the same as owning the network. Owning the network 
means you control what anybody does or anybody can do and where 
all the traffic goes. That is not the case.
    Mr. Lamborn. But if you are looking for information and you 
can go wherever you want to go, that is a pretty bad situation.
    Mr. Warren. As I believe I have--yes, sir.
    Mr. Lamborn. Can you tell me about the APO process, the 
certification process? I hope I am using the right terminology.
    Mr. Warren. Yes, sir. The authority to operate process is 
something that was established I think approximately in 2002 by 
the E-Gov Act. It was a paper process that was used, very 
routine eyes, very checklist focused, very document oriented, 
to if you are bringing a system online, are you putting it in a 
box and controlling all of the boundaries on the box in such a 
way that it was worth the risk to the organization for the 
system to run.
    Mr. Lamborn. Okay, thank you. So if you go to a vendor or 
if you go to someone in the VA and say I want you to certify 
that everything is working properly and is secure, how long 
would it normally take them to do that?
    Mr. Warren. So that the ATO process is actually an ongoing 
process. Multiple documents are on different schedules on when 
they are generated and when they are updated. As an example, 
COOP/COG, which deals with what do you do if a system breaks, 
that gets checked and exercised on an annual basis, and in fact 
every year the IG comes in and looks at have you done that? 
That is a part of that. There is a system security plan which 
is the description of it. There is the security controls in 
terms of what you are doing. There are the management controls 
in terms of what you put in place because technology can't do 
it. And there is a whole list of documents that you run 
through. Each of those are on a different schedule. So when you 
talk certifying, there are multiple steps in the process.
    Mr. Lamborn. Okay. What would be a normal range of high-end 
and low end of how long that certification would take?
    Mr. Warren. Sir, if you are referring to the last two 
steps, which I take it you are, which is the individual looking 
at all of the material that exists and asking is it relevant 
and correct and then recommending authorization, I believe you 
can do that in 2 weeks to 30 days if you have a well-run 
organization.
    Mr. Lamborn. Two weeks to 30 days.
    Mr. Warren. For the last two steps of the process. As I 
said, all of the other ones are ongoing. Those last two steps 
are validating that the individuals below, the information 
security officer, the system owner, the facility, have actually 
done all the things and certified, attested that all of the 
information is correct, that it is current. So that 
certification process is not a go do a lot of work. It is make 
sure all the folks below you, all the processes you are 
responsible for, have happened.
    Mr. Lamborn. So if you accepted certifications like that in 
that 2 weeks to 30 days or 2 months process, then you would 
also be trusting that everything before those last two steps 
had been accomplished on an ongoing and regular basis?
    Mr. Warren. Yes, sir. You count on the signature of the 
individual and the attestation they have done their job. And I 
will tell you, when we did that first cycle, of the 268 
documents that were signed, I rejected over 40 percent because 
when I looked at the underlying documentation, which is how I 
do things, it did not meet the standard and I sent them back to 
be redone. So the certifier said yep, it is ready, but when I 
did that first set, 44 percent did not meet it.
    Mr. Lamborn. So you would not accept an ATO without all of 
the previous steps having been done on an ongoing basis up to 
the last two steps and then reviewing it once again for those 
last two steps?
    Mr. Warren. Yes, sir.
    Mr. Lamborn. And you would not rush something through just 
to look good or something like that?
    Mr. Warren. Sir, my signature means a heck of a lot to me, 
so when I sign something saying that I am accepting the risk, I 
am accepting that risk. So I believe I laid out a responsible 
time period for something to be done and I had an expectation 
that the individual would have done all the things necessary 
such that when it got to me that it needed to be done. And in 
fact the action was given in November in a meeting where the 
individual accepted the responsibility to do the job by 
February. It had been talked about prior to that in multiple 
meetings about the need to fix that process. I was expecting at 
the end of the process that all of the things they were 
responsible for had happened. And even though they were, I 
still checked and rejected the ones that did not meet the 
standard.
    Mr. Lamborn. All right. Thank you.
    Mr. Coffman. Mr. Warren, a quick question. Did you mislead 
the Secretary of Veterans Affairs when you had inserted the 
language in the letter that was sent to me on May 14th, ``To be 
clear, VA security posture was never at risk.'' Did you mislead 
the Secretary?
    Mr. Warren. Mr. Chairman, I did not intend to mislead the 
Secretary.
    Mr. Coffman. But you did?
    Mr. Warren. I don't believe I did.
    Mr. Coffman. You did?
    Mr. Warren. I believe my answer was within the context of 
the question which was dealing with the ATO process.
    Mr. Coffman. Dr. Roe.
    Mr. Roe. Just very briefly. Mr. Warren, one of the things 
that is most important I think at the VA or with anyone in 
health care is trust. You have to trust not only the person 
that is seeing you, providing the care, but you have to trust 
that that information will be protected. Because many times it 
could be very embarrassing if something had occurred to you 
years ago that maybe current family members, other people don't 
know about, right now the relationships you have had, issues 
that come along, mental health care issues. That is why it is 
so--not just money, but that is why that is important.
    And I guess a question that I have, and the VA has not done 
an exemplary job, in 2006 with the laptop it took forever to 
notify people. Secondly, when the issue came along with the 
colonoscopies, that wasn't handled very well by the VA. And I 
don't think that veterans right now understand, as a matter of 
fact I guarantee you they won't until they see this hearing 
today and the word gets out among the veteran community that 
all of their personal information potentially is at risk.
    I guess the question I have for you is, are you concerned 
at all about your data in the VA, if you go to the VA, about 
your own personal information, you?
    Mr. Warren. Sir, I have no reservation about using VA 
benefits or services, placing the data, my data in the 
veterans' hands, into my staff's hands, into the rest of the 
VA. I believe we would be doing a disservice to our veterans by 
telling them, hey, there is a disproportionate risk and 
therefore you should not be coming to the VA for those services 
or benefits.
    We know health care, and as you have already talked about 
in other settings about mental health care and making sure our 
veterans get that, I would hate that this, the potential to 
drive folks away from the services and the benefits not only 
that they have earned but they need.
    Mr. Roe. But equally just as bad is to have that 
information once she have shared it with somebody, shared with 
the world, I think Mr. Lamborn said in a WikiLeak drop. I think 
the most compelling thing you said, and I have to agree with 
you the more I hear in these hearings I go to, is don't hook up 
a computer to the Internet if you don't want somebody to know 
about it. Apparently if you can't protect it, I mean that is 
what you said just a minute ago, whether you said that just out 
of exasperation or fact, but I think when you hook it up, you 
may be now, you may be an open book.
    Mr. Warren. I would tell you, sir, and it is a great area 
where we focus and it is the training of our workforce, our 
greatest asset and our greatest risk is our employee base, 
because if you do something without thinking, if you do not 
think about where you go--in other words, if you go out to the 
Internet and you say ``free car,'' and you go to that Web site 
to get that free car, you are actually downloading probably 
malicious software.
    Within the VA, we protect against that. But when you are at 
home, if you go to the wrong place or your child goes to the 
wrong place or a visiting sibling or niece, you are putting 
that computer at risk, right? And one of the programs that we 
have at the VA is, we don't allow you to hook your personal 
commuter up to the VA. We actually allow you to come into the 
VA through a virtual environment so you don't bring any of the 
things you have on your home computer.
    In fact, at the Federal Trade Commission before the virtual 
technology had really matured, we paid for anti-virus 
protection for individuals' personal computer because we knew 
if they had to use it to get into the VA through remote or into 
the Federal Trade Commission.
    At the VA we don't have to do that because we protect by 
doing virtual. But the behaviors that we build at the VA we 
want them to take home, because if you are at home dealing with 
identity theft because you did a bad thing unintentionally, you 
really can't do your job at the VA as a result of it.
    Active aggressive education. Posters. Some of the things 
that we have been exploring with, and we did it at the Federal 
Trade Commission, is you do spooks, right? You send individuals 
email at work intentionally, bad stuff, right, and you want 
them to basically do it. And you pop up and say don't do this 
for real, because this, if this had been a real one, you would 
have just compromised your system.
    Mr. Coffman. Mr. Walz.
    Mr. Walz. I yield back my time, Mr. Chairman.
    Mr. Coffman. Mr. Huelskamp.
    Mr. Huelskamp. Thank you, Mr. Chairman. I apologize for my 
emotion earlier. I have a 95-year-old veteran uncle, a Purple 
Heart recipient who is facing some medical problems and the 
thought that his records might be at risk is particularly 
worrisome to me. But I have a few more follow-up questions for 
Mr. Warren and his assistant on some budget issues.
    If I understand correctly, the VA intends to transfer 
almost $69 million to various IT efforts. Is any of that money 
destined for IT security?
    Mr. Warren. Sir, so I can make sure I am answering the 
question appropriately, is that referring to a reprogramming 
action that was sent up to the Hill, or is this something else?
    Mr. Huelskamp. That would be a reprogramming.
    Mr. Warren. This would be the reprogramming. I need to go 
back and confirm which accounts were being moved. I do not 
believe--in fact, I am pretty sure that that transfer would not 
be degrading any of the efforts we are doing in information 
security; that the work that we need to do to continue CRISP 
and to support the work on the material weakness that the IG 
has identified--
    Mr. Huelskamp. Is it enhancing your IT security efforts?
    Mr. Warren. I would tell you every day we are working on 
enhancing our--
    Mr. Huelskamp. With this transfer, are you moving money to 
enhance the IT security?
    Mr. Warren. The primary purpose of those dollars, sir, that 
transfer, is to move accounts, move dollars out of different 
accounts--
    Mr. Huelskamp. Are you using it for enhancing IT security? 
Yes or no.
    Mr. Warren. I will need to go back and confirm if we are 
moving funds into the information security accounts. I can't 
tell you that directly here, but I will get back to you, sir.
    Mr. Huelskamp. The second budget question would be, it is 
my understanding under your direction, the VA spent $14 million 
for a conference room, approximately $14 million for a 
conference room in Martinsburg, Virginia. Is that accurate?
    Mr. Warren. Sir, I would need to take that one for the 
record. The number I believe is high, but I need to go back and 
pull the records up to confirm.
    Mr. Huelskamp. When you say high, is that in the ballpark? 
Roughly? I appreciate getting the actual figures, but your best 
guess is how much was spent on this conference room?
    Mr. Warren. Sir, the reason I would like to take the 
question for the record is Martinsburg is a facility that has 
multiple conference facilities in it. It is a place where we 
have the NSOC in terms of our security group. So I don't know 
if it is facilities we built for them. There is a location for 
the Secretary and the leadership team. I don't know if it 
refers to that. We also have a command post for the IT 
organization in case we deploy there. So I don't know which one 
you are speaking to, so that is why I would like to take it for 
the record.
    Mr. Huelskamp. There is one here. It would be the one room 
that has a plaque on the wall with your name on it. And I don't 
know if we have a copy of that. That would be the plaque that 
is on the wall. So if you are going to look for the room--is it 
customary in the VA to put your name on a plaque on a wall?
    Mr. Warren. Sir, that is actually the plaque to the 
building, and I was the responsible official that worked with 
the Congress to get the funding for that location. And I 
believe if you look in any new building that has been built, 
the names of the individuals responsible normally appear on the 
plaque.
    Mr. Huelskamp. I would say actually say put about 300 
million taxpayers on there as the ones responsible for the 
building.
    The last thing I want to ask you about, you mentioned 
credit monitoring services.
    Mr. Warren. Yes, sir.
    Mr. Huelskamp. Who do you provide those to?
    Mr. Warren. We provide those in any case where we believe 
there is the potential for the release of veterans data.
    Mr. Huelskamp. So you do that on an individual--
    Mr. Warren. On an individual basis. A letter is sent out to 
each of the veterans where--
    Mr. Huelskamp. Do you know how many you have provided this 
for?
    Mr. Warren. I will take that for the record and get it back 
to you, sir.
    Mr. Huelskamp. Okay. So you actually have identified 
individuals you believe their data is at risk and provided them 
credit monitoring services if they so choose?
    Mr. Warren. Any time we believe there is the potential of 
the information being released, we offer the credit monitoring 
protection to those veterans.
    Mr. Huelskamp. Okay. And I understand you don't believe 
anything is actual, you don't have actually any loss of data. 
It is all potential.
    Mr. Warren. I will tell you, sir, we go the extra distance 
by offering that. We actually have a lower threshold for 
offering than anybody else because we want to be sure--
    Mr. Huelskamp. You know that how?
    Mr. Warren. Based upon our communication with the industry 
and conversations with folks who offer credit monitoring. I am 
not sure you will find other government agencies who offer 
credit monitoring if there is the potential of a risk. I think 
the VA is unique in that regard.
    Mr. Huelskamp. I look forward to that information, the 
exact numbers of folks you have identified potentially at risk.
    Mr. Warren. Yes, sir.
    Mr. Huelskamp. Thank you, Mr. Chairman. I yield back.
    Mr. Coffman. Potentially, I think that number is about 20 
million. Mr. Warren, thank you so much for your testimony 
today. Mr. Lowe, you are excused, both of you. Thank you. Stay 
around. I think if we have time we will do that classified 
setting after Mr. Davis gives testimony.
    On the last panel today is Mr. Jerry Davis, former Deputy 
Assistant Secretary for Information Security for the Office of 
Information and Technology at the Department of Veterans 
Affairs.
    Before I recognize you, Mr. Davis, I ask that you please 
rise and raise your right hand.
    [Witness sworn.]
    Mr. Coffman. Please take your seat and you will be 
recognized for 5 minutes, Mr. Davis.

STATEMENT OF JERRY L. DAVIS, FORMER DEPUTY ASSISTANT SECRETARY 
FOR INFORMATION SECURITY, OFFICE OF INFORMATION AND TECHNOLOGY, 
              U.S. DEPARTMENT OF VETERANS AFFAIRS

    Mr. Davis. Chairman Coffman, Ranking Member Kirkpatrick, 
and Members of the Subcommittee, thank you for the opportunity 
to convey my concerns to you regarding the protection of 
information systems and information, which includes sensitive 
veteran data at the Department of Veterans Affairs.
    From August 2010 until February 2013 I have served as the 
Deputy Assistant Secretary Information Security and Chief 
Information Security Officer at the VA. As the DAS IS, I served 
as the most senior civil servant staff member within VA with 
responsibility for oversight and accountability and the 
protection of VA information, VA privacy, records management, 
and the Freedom of Information, FOIA, Act process.
    At that time, the time of my departure from VA in early 
February 2013, I was one, if not the longest serving chief 
information security officer in the Federal Government, with 
nearly a decade of service in that role spread across multiple 
Federal agencies. I am also a Marine veteran, having served in 
combat with distinction during the first Gulf War, so the 
appointment to the position as the VA CISO had special meaning. 
It was a position that I did not take lightly and I was and I 
still am extremely proud to have had an opportunity to serve 
our country, and equally proud to have had an opportunity to 
serve the veteran community.
    My time at VA was largely filled with a great sense of 
pride because of the purpose and mission of VA and because of 
my role, which had a direct and positive impact on the veteran 
community. However, there came a time at the end of my tenure 
where my pride turned to serious consternation, and that 
consternation remains to this day.
    In nearly 20 years of building and managing security 
programs across government and private industry, I have never 
seen an organization with as many unintended security 
vulnerabilities. Upon my arrival in late August 2010, I 
inherited results of more than 15 continuous years of an 
unintended and documented material weakness in IT security 
controls. This material weakness included more than 13,000 
uncompleted IT security corrective actions. These 13,000 
corrective actions will require more than 100,000 sub-actions 
to fully remediate and manage IT security vulnerabilities and 
improve the VA security posture. In early September 2010, I was 
also advised that nearly 600 VA systems' Authority to Operate 
had expired and there was no plan in place to bring these 
systems into compliance.
    Despite the voluminous number of uncompleted corrective 
actions and expired ATOs, the most concerning issue was a 
conversation I had with the VA Principle Deputy Assistant 
Secretary Steph Warren, who told me shortly after my arrival 
that we have uninvited visitors in the network. Further 
discussion with the VA network security operations team 
indicated that VA became aware of a serious network compromise 
in March 2010 and these uninvited visitors were nation-state 
sponsored attackers.
    Over the course of time while working with the VA NSOC and 
external agencies I learned that these attackers were a nation-
state sponsored cyber espionage unit and that no less than 
eight different nation-state sponsored organizations had 
successfully compromised VA networks and data or were actively 
attacking VA networks, attacks that continue at VA to this very 
day.
    These group of attackers were taking advantage of weak 
technical controls within the VA network. Lack of controls such 
as encryption on VA data bases holding millions of sensitive 
records, web applications containing common exploitable 
vulnerabilities, and weak authentication to sensitive systems 
contributed to successful unchallenged and unfettered access 
and exploitation of VA systems and information by this specific 
group of attackers.
    During my tenure, I consistently ensured that each instance 
of attack or compromise by these group of attackers was 
documented and communicated to the VA OIT leadership through 
specialized reporting called Key Investigative Reporting 
performed by the NSOC Deep Dive analysis team and biweekly 
security meetings with the VA Principle Deputy Assistant 
Secretary, Mr. Steph Warren.
    From late August 2010 until my departure in early February 
2013, I planned for and executed with support from various sub 
offices within OIT a series of initiatives and activities 
needed to improve network and system security with the 
particular focus on defending the network against sophisticated 
and targeted attacks levied by nation-state sponsored 
organizations. Some of these initiatives included a web 
application security program, the VA software assurance 
program, continuous monitoring and diagnostics of VA 
information systems, mandating encryption of all VA databases, 
and supported the reduction of the total number of VA databases 
hosting sensitive veteran information.
    During my tenure as CISO, with the support of VA as a 
whole, we were able to close more than 10,000 of the 13,000 
security corrective actions. In all, VA personnel executed more 
than 100,000 sub actions. While these actions did improve 
security from a compliance perspective, there still existed a 
problem of fully implementing adequate technical security 
controls needed to defend network systems and system 
information from nation-state sponsored attackers.
    The heart of selecting the proper technical controls meant 
fully understanding the threat actors, their tactics, 
techniques and procedures, and along with systems and network 
vulnerabilities in implementing a program that could 
continuously report on and remediate identified vulnerabilities 
in a near realtime fashion.
    Over time, the Office of Information Security worked to 
enhance a comprehensive program called Continuous Monitoring 
and Diagnostics that would provide adequate security of VA 
systems and networks by continually evaluating certain 
technical controls in a near realtime fashion. There is proof 
that a good CMD program monitoring the correct controls can 
significantly improve information security and is consistent 
with the direction that the Federal Government is taking in 
securing Federal systems. It is also significantly superior to 
even a good paper-based ATO process.
    It is my testimony that at the time of my departure from VA 
that the process required for the DAS IS to make an attestation 
that VA systems were adequately secure was completely faulty 
and improper and implementation of the process veteran systems 
and VA information to further risk of compromise. It was 
confirmed to me by the VA information security staff charged 
with executing the process that it was flawed, provided no 
value, and that providing a positive attestation to the 
adequacy of security controls would seriously compromise the 
integrity of the VA security program. I subsequently conveyed 
this message to the Assistant Secretary and the PDAS by formal 
memorandum and in conversation to the PDAS between January 15, 
2013, and January 23, 2013.
    VA Handbook 6500.3 states that the DAS is responsible for 
reviewing all C&A packages and making a decision recommendation 
to the authorizing official to issue an IATO, ATO or Denial of 
Authorization to operate; and providing an IATO extension in 
the event local management can demonstrate continuous 
monitoring and security due diligence are being provided.
    In accordance with VA information security policy and 
following VA information security procedures as a DAS IS, I 
elected to recommend a denial of Authority to Operate and also 
elected to recommend movement of VA systems over the course of 
eight months into an enhanced continuous monitoring program 
where systems technical controls can be centrally managed and 
evaluated in a near realtime fashion. I based my decision on 
the guidance provided by the information security team on the 
fact that the paper-based process would not keep highly 
sophisticated nation-state sponsored attackers from further 
compromising VA data.
    Furthermore, as each VA system was transitioned into the 
continuous monitoring program, additional specific critical 
controls would be evaluated for adequacy before being fully 
granted a full ATO. These additional critical controls are 
proven to slow and repeal sophisticated nation-state sponsored 
attackers from compromising information systems and data. This 
was an agreed upon process with the VA information security 
team and a process that had been briefed by me to the Director 
of IT Audits and Security within the VA Office of the Inspector 
General several weeks before the process implementation.
    Despite the authority granted to the DAS IS, to make the 
recommendation to deny authorization, the VA OIT PDAS made a 
concerted effort to circumvent my authority and influence my 
decision to make a recommendation to the accrediting official 
that 545 VA systems be given an interim authority to operate. 
Furthermore, VA handbook and policy 6500.3 and VA policy 6500 
provides no role or authority for the PDAS, OIT with regard to 
the program or processes governing authority to operate.
    To this end, I would recommend to this Subcommittee some 
recommendations. Review all key investigation reports and Deep 
Dive analysis reports and Web Application Security Program 
reports to assess the damage and depth of exposure, extent of 
compromise to VA systems and compromise to Veteran information, 
and regularly report to the House Committee on Veterans Affairs 
on progress made with respect to mitigating access to VA 
systems and veteran information by nation-state sponsored 
organizations.
    Assess previously identified web application exposures and 
assess for potential compromise of veteran data, both PII and 
PHI.
    Include web application exposures as part of the Data 
Breach Core Team evaluation process.
    Assess the potential compromise to non-VA networks sharing 
an interconnection with VA's networks.
    Designate the VA network as a compromised environment and 
establish controls that are effective and support the 
reclamation of control back to VA from nation-state sponsored 
organizations.
    Move the VA systems into a full continuous monitoring and 
diagnostics program with near realtime situation awareness of a 
security posture with a focus on the 20 critical controls.
    Increase VA funding for VA security programs and number of 
information security officers supporting VA field offices and 
facilities.
    Move reporting lines for the DAS Information Security 
directly to the Assistant Secretary OIT or to the Office of the 
Secretary, VA.
    Assess the past and present practices of the OIT leadership 
with regard to decisions made in the protection of VA systems 
and information.
    I would like to thank the Members of the Subcommittee for 
your time today and I look forward to any questions you may 
have.

    [The prepared statement of Jerry L. Davis appears in the 
Appendix]

    Mr. Coffman. Thank you, Mr. Davis. Mr. Davis, in your 
experience, what would be the intended use for their access 
once these actors gained access into the network?
    Mr. Davis. The actors, once they get inside a network, 
depending on what their goals and objectives are, could be a 
number of things. So initially, once they get inside a network 
they establish a foothold and that foothold is actually meant 
and designed to allow them access into the network at another 
given time. So basically what they do is, they install 
backdoors into the network. Once they are inside the network 
and they have established those backdoors, they then attempt to 
move laterally throughout the network by compromising 
passwords, user names and things of that nature, and elevating 
their privileges so they can further move throughout the 
network and start looking at systems to potentially compromise.
    Their long-term objective is to maintain a presence inside 
the network for whatever they need to do. So by maintaining the 
presence means that they will attack multiple systems, they 
will continue to steal passwords, user names, things of that 
nature, so they can maintain their presence, and then 
essentially take whatever data that they deem may be important 
for them.
    Mr. Coffman. Mr. Davis, can you elaborate on these nation-
state attackers?
    Mr. Davis. So within VA I saw--we dealt with approximately 
eight different types of attackers or groups or organizations. 
In looking at reporting that was put out by industry experts, 
particularly a report in February of 2013, Mandiant, they 
identified attackers coming from the People's Republic of 
China, the People's Liberation Army, and in information that I 
had at the time and looking back when we did the analysis on 
those individuals, we identified that it was also the same 
groups. One the groups we called were the Comment Crew, and 
they are known to be sponsored by the People's Liberation Army.
    Mr. Coffman. Mr. Davis, how does an organization defend 
against these sophisticated attackers once they are in the 
network?
    Mr. Davis. Once they are in the network, once you 
understand that they are in the network, you have to do 
something which I call is, you are in a compromised 
environment. So there is a number of things that you need to do 
to understand how do you reclaim that environment.
    The first thing you need to do is identify which systems 
were compromised, do a forensics evaluation if you can on what 
was actually taken, remove users from resources around the 
network and then do things such as look at what we call 
indications of compromise.
    So this is basically digital fingerprints that we would 
have of different groups who have compromised other 
environments and we now have their fingerprints. You will look 
for these indications of compromise and then basically go back 
and remediate all of those areas where you believe the 
compromise took place or where you know the compromise took 
place.
    So if you know that the compromise was a missing patch, you 
have to start patching past the systems. The problem is, is 
that once you realize that the individuals are in the network, 
on average, they have already compromised the environment for 
generally up to a year by the time you figured out they have 
been in the network. So you may go back and patch a particular 
system, but they have already established backdoors elsewhere 
in the network. So it becomes sometimes chasing your tail 
around and around in circles in trying to identify where they 
are. So you may patch, but they will pop up again somewhere 
else. So it takes over time a number of years, months to years, 
to go through the organization systematically and plug these 
holes.
    DoD puts out a very good document, it is not classified, it 
is sensitive but it is the not classified, that is called 
Operating in a Compromised Environment, and it teaches 
organizations, it is instructions on how you actually operate 
in a compromised environment and reclaim that environment.
    Mr. Coffman. Mr. Walz.
    Mr. Walz. Thank you, Chairman. Mr. Davis, thank you. Thank 
you for your service both in uniform and after.
    I am going to try and go back at this issue because I think 
the issue of security and veterans security is paramount. The 
accusations that have been laid out, I am going to get at this 
and try and figure it out. Can you tell me, was this issue over 
you pointing out that there were problems, did that lead to 
your departure from VA?
    Mr. Davis. The problems at VA didn't lead to my departure. 
Like I said earlier, we had worked through a tremendous number 
of corrective actions. You know, as I said earlier, I worked 
through about--of the 13,000, we had gotten through about 
10,000 of them. At that time I felt that the work that I was 
doing at VA, some other opportunities came up. I had an 
opportunity to move back to the West Coast where I am from 
originally and be closer to my family out there, was part of 
the reason why I elected to move back.
    Mr. Walz. Because you signed off, if I am right here, in 
August 31 of 2011 you did the extensions on the ATOs.
    Mr. Davis. That is correct.
    Mr. Walz. And then again you met with Mr. Warren on 
November 29th about the expiring ATOs, and then on December 
21st you informed him of your resignation. It is just personal 
timing on all this, is why this hit like this?
    Mr. Davis. Yes, it was the timing. I had actually notified 
the previous Assistant Secretary Mr. Baker before November that 
I would be departing. I had just had a one-on-one with him and 
said that I have an opportunity to go back to the West Coast. I 
don't have anything in writing but there has been a formal 
offer. When I get a formal offer--
    Mr. Walz. This was all prior to December 31st on the 
expiring ATOs.
    Mr. Davis. That is correct.
    Mr. Walz. Why would they have asked you when they knew you 
were leaving, you had already signed on to these, do you think 
it was appropriate at that time? Now, you say, the thing that I 
am going at is under duress. What did they do or ask you to do 
that violated your conscience on this to sign these things?
    Mr. Davis. The process to do the Authority to Operate, it 
is a sign-off that says--that gives my attestation that the 
systems are adequately secure. The process is pretty involved 
and very extensive. So the problem that I had was that the 
process was asked to be short-circuited. In other words, an 
email had come out from the OIT front office indicating that 
Mr. Warren wanted all the authorities who operate to be signed 
by the time I left, and that was 2 weeks. This is January 11th. 
So my team forwarded that to me--
    Mr. Walz. Why didn't you just say no and walk away? Because 
what you are asking here is signing off on a system that is 
going to possibly lead to the breach of this. You knew it 
wasn't working. You knew that there were violations made. But 
by putting your name on it, it gave the authorization to move 
it forward. You were already leaving your job and had notified 
them, and then a month later a memo is sent, and I am going to 
get to that in a minute, two different ones, and I find out 
about it here for this hearing. I am still trying to get at 
this.
    Mr. Davis. Yes, sir. At that point, I did say no in 
writing, in memorandum form to Mr. Baker, and that would have 
been on or about January 15th, immediately after I became aware 
that I was needed to sign these before I had departed. In the 
memorandum that I sent to Mr. Baker, I said that this is 
improper because all of the activities that are needed to make 
a decision on authorities to operate can't be done in 2 weeks. 
I said there is going to be errors and omissions and that it 
was improper, we would jeopardize the integrity of security.
    Mr. Walz. Did someone threaten you?
    Mr. Davis. I wouldn't say--no one threatened me, but 
basically I was told that I would not be getting--be given a 
transfer date, a transfer date would not be given to the agency 
that picked me up until I signed off on the documentation.
    Mr. Walz. Who told you that about the transfer?
    Mr. Davis. Mr. Warren.
    Mr. Walz. Mr. Warren said you would not be given a transfer 
date if you wouldn't sign on a document that your conscience 
told you was wrong?
    Mr. Davis. That is correct. And that was--I contacted the 
senior executive HR because the new organization was contacting 
me and asking me when was I going to be coming on board, 
because I had told them back in December that I would give VA 
30 days to work through whatever I had left to do and I would 
be coming on board. At this point they are contacting VA. They 
are asking when am I going to get a release date. I contacted 
HRHCS and I was told that Mr. Warren said that you would not be 
given a release date because you still had a project to finish.
    Mr. Walz. Did he miss this last paragraph in the memo you 
gave him? The one I have here says I attest that there is a 
clear and present danger and risk of exposure and compromise of 
the sensitive data.
    He testified under oath that he never got that, that this 
was added to the letter that was sent to Congress on January 
28th, and on January 29th he got the letter without that there.
    Mr. Davis. He did indeed, sir, get a different copy.
    Mr. Walz. Why a different copy?
    Mr. Davis. Let me explain what happened. I originally--that 
was the original letter that I had written, and that letter was 
on an internal--a letter that was going to VA internally and it 
had concurrently copied all the Members of Congress. My 
business office came back to me, because we were putting it 
through the official VA system, my business office came back to 
me and said we don't concurrent copy Members of Congress on 
letters of this type. They get an individual memorandum. So I 
said okay.
    So they went ahead and drafted the individual memorandum in 
the background. Meanwhile, what I did was, I had someone look 
at the letter and they said they didn't like the language. They 
said I don't like the language. They said you probably should 
change this language at the bottom. It sounds a little bit 
dramatic and that sort of thing.
    Mr. Walz. Well, when I read this letter, the most important 
paragraph is the last one.
    Mr. Davis. Yes. It was--someone told me that I asked to--
the person I asked to look at it thought it was overly 
dramatic. I said, you know, this is a dramatic thing, but maybe 
it is. So I did change the letter. But what had happened was I 
sent that inside, but then later on before I left, I had gotten 
copies of the original letters that came up here to the Members 
of Congress and those had went out.
    Mr. Walz. Okay, I will yield back. We will wait if there is 
a second round of questions.
    Mr. Coffman. Mr. Lamborn.
    Mr. Lamborn. Thank you, Mr. Chairman.
    Continuing on these ATOs, Mr. Warren testified that in a 
well run organization you can finish up the last two steps 
prior to signing off on an ATO in as little as 2 weeks. Now, 
you did not feel that that was appropriate though, and why not?
    Mr. Davis. Because the team that was putting together, 
which was the security team that worked under me that runs the 
what we call assessment and authorization process, they looked 
at the process--they put together the process, looked at it, 
brought it to me and said, sir, do not sign these, the process 
is not good. But I already knew that just by looking at what 
was coming up to me for me to sign that it wasn't a good 
process.
    Mr. Lamborn. So in an ideal situation, if it was a well run 
organization you could do that. So you are saying it wasn't a 
well run organization?
    Mr. Davis. The ATO process that was taking place at the 
very end was not the general ATO process that we had done in 
the 2-1/2 years that I had been there. It was cut short, very 
abbreviated, to make this 2-week timeframe. And I said there is 
no way you can certify and accredit 600 systems in a 2-week 
timeframe by going through all the controls.
    The bigger problem that I had was there is a checklist, and 
some individuals have already testified to this. That on that 
checklist we were asking people out in the field to validate 
that the controls had not changed. My team that came back to me 
in reaching out to the field, one of the reasons they told me 
not to sign the document is because the individuals who were 
supposed to sign off on the checklist delegated the authority 
down, down, down into the organization to hurry up and meet the 
timeframe.
    So you had individuals that had no concept about the 
security posture of the system checking off on this checklist 
and then sending them up to me for signature, and I just 
refused to sign them.
    Mr. Lamborn. Thank you. That is very illuminating, and I am 
sorry that we are even in this posture today. I am sorry that 
we have to have this hearing.
    You mentioned encryption and others have talked about that. 
Was it a negligent practice or a deficient practice not to have 
veterans' personal information encrypted so that one of these, 
up to eight state actors or state sponsored or outside actors, 
had they accessed it, it would have been not usable to them?
    Mr. Davis. That is correct. Encryption of any sensitive 
data is a general policy. When I got to VA and we started 
looking, the VA policy, which is Directive 6500, encryption on 
databases was basically optional. So in 2012, I said absolutely 
not. I am mandating that all databases be encrypted because of 
the issues of individuals being in the network who could 
quite--pretty simply, once you got into the database you had 
everything that you needed.
    Mr. Lamborn. Now, those of us, some of us anyway on this 
panel have been concerned about what would have been able to be 
accessed. Am I correct in assuming that this would include, of 
the 20 million veterans on the system, Social Security numbers 
and names, ages and possibly Social Security numbers of 
dependents and sometimes personal health information?
    Mr. Davis. Sure. Some of the systems that were compromised, 
if they had that information in them obviously they would take 
that. In some of the studies that my organization did when we 
were looking at web applications, and web applications that 
have a database connected to the back end it has veterans' 
information, my team will run security software tools and it 
will tell them if that application is vulnerable to attack and 
how easily it is vulnerable and exploitable.
    My team at that time found a number of applications that 
had veteran information, 30 million instances of veteran 
information that was exploitable, and they exploited the system 
to show that it was exploitable inside those systems; Social 
Security numbers, date of birth, so on and so forth.
    Mr. Lamborn. And what about, and I don't know if there is 
going to be a second round or not, I may have to pursue this 
later, but what about access to other networks? Like, I know 
DoD and VA interact a lot, at least in the health care issue. 
What possible access could this allow if someone was 
controlling VA or at least had domain control to get into other 
networks?
    Mr. Davis. As we talked about earlier, the team did these 
key investigative reports, so specifically looking at the 
nation-state sponsored attackers. And one of the compromises 
that they picked up on, this report was right as I was leaving, 
this came out on January 9th, 2013, there was an incident that 
took place where the team, and I will just kind of read it, it 
says the teams in turn simply gains initial access to an 
enterprise via spear pfishing by moving laterally previously 
through compromised trusted networks.
    I will jump forward in this report, and what they have said 
is that--has targeted and compromised one or more systems 
within the Silver Spring office site code, many of which are 
virtual private network users. Based on information collected 
from open source intelligence and interviews of targeted users, 
the Deep Dive analysis team considers the Bidirectional Health 
Information Exchange Program to be a high value target for this 
team. The BHIE program is a joint information technology data 
exchange initiative between the Department of Defense, DoD, and 
VA. The team may be interested in the data residing in the 
system and the network interconnections between the VA and DoD 
allowing this program to function or both.
    Mr. Lamborn. Thank you.
    Mr. Coffman. Dr. Roe.
    Mr. Roe. Thank you. A couple of things I want to just go 
over very quickly and then yield my time. In March 2010, these 
uninvited visitors were nation-state sponsored attackers. Over 
the course of time, while working with the VA, the NSOC team 
and external agents learned that these attackers were a nation-
state sponsored cyber espionage unit and that no less than 
eight different nation-state sponsored organizations had 
successfully compromised VA networks or data or were actively 
attacking, not necessarily compromised but attacking VA 
networks, and attacks continue to VA to this day. Is that a 
correct statement?
    Mr. Davis. That is correct.
    Mr. Roe. So to this date, to date perhaps these attacks are 
taking place. The other question I have is, that I think you 
just stated, and you said the PLA without any hesitation. I 
guess I would have to ask Mr. Warren, why couldn't he say the 
PLA? He didn't mention that. It is not any big secret to 
anybody.
    Mr. Davis. It is in the public domain.
    Mr. Roe. Yes, it is.
    Mr. Davis. And that is what I am going off. I am going off 
the report that came out in the public domain that listed these 
groups of individuals, organizations, and based on that 
information that is in this public domain report, we could 
accurately say that those are the same individuals. Even the 
nomenclature is the same.
    Mr. Roe. And I am not a technical person so stop me if I am 
off base, but you mentioned that once that system has been 
compromised, that piece of malware is in the system, there are 
ways you can operate around it.
    Mr. Davis. Yes.
    Mr. Roe. But would encryption work once you have been 
compromised? Once that malware--do you follow me?
    Mr. Davis. Right. So it depends on what exactly the malware 
is that they put on the system. Your encryption would be of 
little value to you if--once the malware is on the system, the 
malware can then go out and call down other tools into the 
environment. And some of the tools that they do remotely is 
they pulled down keystroke logging. So if they have those types 
of tools, a keystroke logger on that system, when you go to log 
in to decrypt, they have the decryption password for that 
system.
    Mr. Roe. So they get your password that way.
    Mr. Davis. That is correct.
    Mr. Roe. And do you know that that has happened? When you 
have got the system up now, let's say you are back there, would 
you know that has happened to you, that they swiped the 
password?
    Mr. Davis. We know that the way these individuals work that 
it is a typical tactic for them to, if they compromise 
something such as a domain controller as was said earlier, or 
particularly the domain controllers, the domain controller has 
a file on it called the SAM file and that file is the 
securities accounts manager. In that file are all the password 
accounts for the users in the network. So if they have got the 
domain controller, they will grab the SAM file. When they 
encrypt the information, generally, if it is going out and it 
is encrypted, I know they hit a domain controller. I guarantee 
they probably took the SAM file. They are going to go back, 
crack it later and are going to take every password that was on 
that system.
    Mr. Roe. So you better change your password pretty often?
    Mr. Davis. Yes, you would have to change all the--but the 
problem is, if you have compromised the domain controller, you 
have to change the password to the domain controller as well 
because they are on a controller. If you are just changing 
passwords without changing the domain controller, they are just 
grabbing that as it goes along.
    Mr. Roe. Well, I want to thank all of the people here 
today, Ms. Halliday, certainly your team and every one of you. 
I have learned a lot today, and I think we will continue.
    Mr. Chairman, thanks for holding this hearing.
    Mr. Coffman. Mr. Huelskamp.
    Mr. Huelskamp. Thank you, Mr. Chairman. I just want to 
follow up on a statement that Dr. Roe mentioned in which he 
stated that you learned about these attackers were a nation-
state sponsored cyber espionage unit with no less than eight 
different nation-state sponsored organizations. Who told you 
this, how did you determine that, and was that common knowledge 
in the IT network?
    Mr. Davis. It was put together through information that the 
VA Information Security Team, they are called the Enterprise 
Network Defense Team, they put that information together 
because they track, as Mr. Warren stated earlier, they track 
all these issues across the network. They produce these 
reports. They would send them to me and Mr. Warren and a couple 
other folks and I would read through them and work out a plan 
of action or strategy to work through this.
    Mr. Huelskamp. So the report you mentioned, which I believe 
we have a copy of, both reports, did Mr. Warren receive these 
reports as well?
    Mr. Davis. Yes, he was on that email distribution list. I 
think it was only Mr. Warren, myself and maybe one other 
person. There is like three people.
    Mr. Huelskamp. Did you discuss this issue of nation-state 
sponsored organizations with Mr. Warren?
    Mr. Davis. We did from time to time initially when I first 
came on board at VA. He told me that we have uninvited visitors 
in the network. I pretty much knew what that meant. I had dealt 
with it before. And then going on in subsequent talks, from 
time to time I had a biweekly security meeting with Mr. Warren. 
It would come up about these attackers in the network. If we 
had an incident it might be the topic of the day that we had an 
incident and we are trying to work through it. So, yes, we 
definitely talked about it.
    Mr. Huelskamp. And above Mr. Warren, did you discuss with 
any of his superiors about that or did you just leave it in his 
hands?
    Mr. Davis. I generally--my reporting line was to Mr. 
Warren, so generally, I didn't have a great opportunity to talk 
to folks above Mr. Warren.
    Mr. Huelskamp. Did you ever email them with the information 
or include them on an email distribution about this issue?
    Mr. Davis. No. I just worked directly with Mr. Warren on 
those things.
    Mr. Huelskamp. Okay. I think you were here earlier, but a 
statement from Mr. Shinseki indicates that, again to be clear, 
VA security posture was never at risk. Your opinion on that, 
Mr. Davis. Is that an accurate statement?
    Mr. Davis. I would say that is not an accurate statement.
    Mr. Huelskamp. Okay. Did Mr. Warren ever tell you that was 
an inaccurate statement? Did you ever discuss something along 
those lines?
    Mr. Davis. At the time when we were doing the ATOs in the 
memorandum and at the time when he visited my office, I believe 
it was January 22nd, I said that, you know, that the process 
was just bad and basically, as I wrote in the memo, I repeated 
the words that it jeopardized the integrity of the security 
program.
    Mr. Huelskamp. Lastly, I didn't get a chance to ask 
questions on this issue, but recently it has come up that 
numerous other Secretary and high level individuals in 
Washington have at times used private apparently non-secure 
email systems to communicate and to conduct business. Do you 
know if that was occurring at the VA?
    Mr. Davis. I couldn't say definitely. I would suspect that 
people do do that, but I have no direct knowledge that anybody 
was doing it. I was not asked to investigate or anything like 
that.
    Mr. Huelskamp. Okay. Were there any VA policies about doing 
that?
    Mr. Davis. I believe there is a VA policy. I believe it 
would be more on the--possibly on the HR side of the house, but 
it may also be in the security policy, that official business 
you have to conduct using VA provided email systems and things 
of that nature. But I don't know the exact policy that that 
would be. But I am pretty sure that it is in policy.
    Mr. Huelskamp. And then lastly and I will yield back, Mr. 
Chairman, I wasn't trying to figure out what you were doing on 
personal time, but the testimony you have given sometimes has 
not matched up with earlier testimony as I understood that. Do 
you have any printed out emails or anything in your possession 
that would help establish the veracity of some of the 
discussions today, or is that all retained entirely by the 
Department?
    Mr. Davis. Anything that I have with me, it is free to go 
to the Committee. It is a lot--some of this is off the public 
Internet and some of them are internal VA documentation and 
email systems information, things like that, that--some of them 
I would be concerned that where there are system compromise--or 
system issues, exposures of data, that it identifies the 
particular vulnerability in the system. So I would ask that the 
system piece of it be stripped out.
    Mr. Huelskamp. I understand. Last, Mr. Chairman, Mr. Davis, 
as I understand it, you have 20 years of experience in the 
private and public sector dealing with system security and it 
still is your recommendation that the VA network should be 
designated as a compromised environment. Is that still your--
    Mr. Davis. That is correct.
    Mr. Huelskamp. Thank you, Mr. Chairman. I yield back.
    Mr. Coffman. Thank you, Mr. Huelskamp. Does anybody have 
any questions they would like to ask?
    Very well. Our thanks. Mr. Davis, thank you very much for 
your testimony today. You are now excused.
    It is obvious from what we have heard here today that VA 
needs to take action to improve its IT security. The 
Subcommittee looks forward to working with VA to address these 
serious deficiencies and ensure that all steps are being taken 
to safeguard the information of our veterans. In that vein, I 
ask that in 30 days VA provide this Subcommittee a specific 
plan to address all of its IT vulnerabilities.
    I ask unanimous consent that all Members have 5 legislative 
days to revise and extend their remarks and include extraneous 
material. Without objection, so ordered.
    Mr. Weaver, the Committee will be in touch with you to 
establish a date and time for a separate meeting for a 
classified brief--
    Mr. Warren. Warren.
    Mr. Coffman. Mr. Warren, I am sorry. I was looking at you. 
Mr. Warren, okay.
    I would like to once again thank all of our witnesses and 
audience members for joining us today in conversation. This 
hearing is now adjourned.

    [Whereupon, at 5:40 p.m., the Subcommittee was adjourned.]

                            A P P E N D I X

                              ----------                              

           Prepared Statement of Hon. Mike Coffman, Chairman

    Good afternoon. I would like to welcome everyone to today's hearing 
titled ``How Secure is Veterans' Private Information?''
    Reports from VA's Office of Inspector General, private sector 
consultants brought on by VA, and this Subcommittee's own investigation 
have revealed tremendous problems within VA's Office of Information and 
Technology.
    Some of these issues have been made public in Inspector General 
reports which outlined mismanagement of human resources and the lack of 
much needed technical expertise. Other issues have been less 
publicized, such as those captured in the Deloitte (``deep dive'' that 
identified gaps in OI&T's organizational structure and a poorly 
executed business model.
    The latter report recognized the growth of VA by thirty-three 
percent since 2006; growth that is mirrored by the expansion of VA's 
computer network. Unfortunately, there has not been a comparable growth 
in the technical personnel needed to manage security of VA's sprawling 
network.
    These failures have created problems for both the Department and 
for veterans.
    The Inspector General substantiated that VA was transmitting 
sensitive data, including personally identifiable information and 
internal network routing information, over an unencrypted 
telecommunications carrier network--both violations of Federal 
regulation and basic IT security. The IG also noted that VA has not 
implemented technical configuration controls to ensure encryption of 
sensitive data despite VA and Federal information security 
requirements.
    Similarly, it is evident that software patches are not up to date 
across the network, too many users have Administrator access, security 
software is not up to date on older computers, and computer ports are 
not properly secured. There is little to no security of file transfer 
protocol, and web pages are vulnerable allowing unauthorized access to 
veterans' unprotected personal information within the system.
    While these issues alone give cause for grave concern, this 
Subcommittee's investigation has identified even greater problems. The 
entire veteran database in VA, containing personally identifiable 
information on roughly 20 million veterans, is not encrypted, and 
evidence suggests that it has repeatedly been compromised since 2010 by 
foreign actors, including in China and possibly in Russia.
    Recently, the Subcommittee discussed VA's Authorization to Operate, 
a formal declaration that authorizes operation of a product on VA's 
network which explicitly accepts the risk to agency operations, and was 
told that ``VA's security posture was never at risk.''
    In fact, VA's security posture has been an unacceptable risk for at 
least three years as sophisticated actors use weaknesses in VA's 
security posture to exploit the system and remove veterans' information 
and system passwords. While VA knew foreign intruders had been in the 
network, the Department was never sure what exactly these foreign 
actors took, because the outgoing data was encrypted by the 
trespassers.
    These actors have had constant access to VA systems and data, 
information which included unencrypted databases containing hundreds of 
thousands to millions of instances of Veteran information such as 
veterans' and dependents' names, social security numbers, dates of 
birth, and protected health information.
    Notwithstanding these problems, VA has waived or arbitrarily 
extended accreditation of its security systems on its network. It is 
evident that VA's waivers or extensions of accreditation only 
``appear'' to resolve material weaknesses without actually resolving 
those weaknesses.
    VA's IT management knowingly accepted the security risks by waiving 
the security requirements even though such waivers are not appropriate. 
This lapse in computer security and the subsequent attempts by VA 
officials to conceal this problem are intolerable and I look forward to 
a candid discussion about these issues.
    I now yield to Ranking Member Kirkpatrick for her opening 
statement.

                                 
               Prepared Statement of Hon. Ann Kirkpatrick

    Thank you, Mr. Chairman.
    As the Department of Veterans Affairs works hard to serve the needs 
of today's veterans they must work equally hard to protect their 
personal information.
    Today's hearing is an attempt to determine whether a veterans' 
private information is secure. Mr. Chairman, veterans need to know that 
when they ask VA for the services and benefits they have earned, the 
information they submit in order to get those benefits will not be 
compromised under any circumstances.
    I hope that the VA came prepared today to provide assurances to 
Congress and veterans that that all their information technology 
systems are secure. We expect VA to also answer our questions directly 
and honestly. As we get questions from veterans in our districts we 
want to provide complete and honest answers to them.
    Congress received a letter from Mr. Jerry L. Davis, now a former 
employee at VA, who states that ``there is a clear and present danger 
and risk of exposure and compromise of the sensitive data.'' I share 
the Chairman's concern on whether VA is following the required 
government practices and policies regarding the monitoring and 
remediation of system risk.
    In addition, two OIG reports from 2012 and 2013 raise additional 
concerns. The 2012 report questions whether the agency has the proper 
Strategic Human Capital Management program to meet mission-critical 
system capabilities as VA moves in the 21st century. The second 2013 
OIG report faults VA for failing to ensure private information by not 
encrypting health data transmitted to outpatient clinics and external 
business partners. The VA must address the concerns raised and assure 
veterans who come to VA for assistance that their personal information 
is secure.
    I want to thank everyone for being here today. I would also like to 
thank the witnesses for their testimony and for answering our questions 
about the security of veterans' private information at the Department 
of Veterans' Affairs.
    Thank you Mr. Chairman. I yield back.

                                 
               Prepared Statement of Hon. Jackie Walorski

    Mr. Chairman and Ranking Member, it's an honor to serve on this 
Committee.
    I thank you for holding this hearing on such an important issue 
affecting our veterans and their sensitive personal information.
    There are over 22 million veterans who have proudly served this 
country and who we are indebted to for their selfless call to protect 
the freedoms which we cherish. \1\ The fact that the personal 
information of many of these veterans may have been compromised is 
completely unacceptable.
---------------------------------------------------------------------------
    \1\ Veteran population estimates, as of September 30, 2012, are 
produced by the VA Office of the Actuary (VetPop 2011). http://
www.va.gov/vetdata/Veteran--Population.asp.
---------------------------------------------------------------------------
    The VA's Office of Information and Technology has proven inept at 
securing the Department's information systems and has consequentially 
exposed veteran information.
    Our veterans are comprised of an exceptional group of men and 
women, including their families, who should not live in fear of their 
private information getting into the wrong hands.
    I look forward to working my colleagues and our panelists to 
establish an immediate plan of action that will address this serious 
problem.
    Thank you.

                                 
                Prepared Statement of Linda A. Halliday

    Mr. Chairman and Members of the Subcommittee, thank you for the 
opportunity to discuss the Office of Inspector General's (OIG) work 
regarding the securing of veterans' private information by VA. I am 
accompanied by Ms. Sondra McCauley, Deputy Assistant Inspector General 
for Audits and Evaluations, and Mr. Michael Bowman, Director, OIG's 
Information Technology and Security Audits Division.
BACKGROUND
    Secure systems and networks are integral to supporting the range of 
VA mission-critical programs and operations. Information technology 
(IT) safeguards are essential due to the wide availability of hacking 
tools on the internet and the advances in the effectiveness of attack 
technology. Lacking proper safeguards, IT systems are vulnerable to 
intrusions by groups seeking to obtain sensitive information, commit 
fraud, disrupt operations, or launch attacks against other systems. VA 
has at times been the victim of such malicious intent. In the past, VA 
has reported security incidents in which sensitive information has been 
lost or stolen, including personally identifiable information (PII), 
potentially exposing millions of Americans to the loss of privacy, 
identity theft, and other financial crimes. The need for an improved 
approach to information security is apparent, and one that senior VA 
leaders well recognize.
    In response to the need to improve security controls, VA has made 
progress defining policies and procedures supporting its Department-
wide information security program. However, VA continues to face 
significant challenges implementing effective access controls, 
configuration management controls, and contingency planning to protect 
mission-critical systems from unauthorized access, alteration, or 
destruction. VA has taken positive steps to safeguard personal and 
proprietary information used by VA employees and contractors. Key 
actions have included:

      Mandating cyber security and privacy awareness training 
to ensure that VA and contract employees are familiar with applicable 
laws, regulations, and policies.
      Reviewing the accuracy of position sensitivity level 
designations for VA and contract employees.
      Strengthening its policies and procedures for identifying 
and reporting incidents involving information management and security 
violations to ensure that the incidents are promptly and thoroughly 
investigated.
      Establishing a clear chain of command and accountability 
structure for information security.

    These were good first steps toward improving information security; 
however, more needs to be done. Over recent years, the OIG has 
conducted a series of reviews to help VA overcome its information 
security challenges by identifying the underlying causes for VA's 
security vulnerabilities and deficiencies. These include our statutory 
work, reviews of complaints to the OIG Hotline, and proactive reviews 
of internal controls. Our report findings have disclosed a pattern of 
ineffective information security controls that expose VA's mission-
critical systems and sensitive data to unnecessary risk. We believe our 
corresponding audit recommendations provide a roadmap for VA to improve 
the effectiveness of its information security program and safeguard the 
sensitive data needed to support delivery of benefits and services to 
our Nation's veterans.

STATUTORILY-REQUIRED REVIEWS
    For more than 10 consecutive years, independent public accounting 
firms under contracts with the OIG identified information technology 
security controls as a material weakness as a result of their annual 
audits of VA's Consolidated Financial Statements. Work on these audits 
supports our annual Federal Information Security Management Act (FISMA) 
assessments. FISMA requires agencies to develop, document, and 
implement agency-wide information security risk management programs and 
prepare annual reports. FISMA also requires that each year, the OIG 
assess the extent to which VA complies with FISMA's information 
security requirements, information security standards developed by the 
National Institute of Standards and Technology, and the annual 
reporting requirements from the Office of Management and Budget.
    In the middle of FY 2012, while our annual FISMA assessment was 
ongoing, VA instituted the Continuous Readiness in Information Security 
Program (CRISP) to ensure continuous monitoring year-round and 
establish a team responsible for resolving the IT material weakness. As 
our FISMA work progressed, we noted more focused VA efforts to 
implement standardized information security controls across the 
enterprise. We also saw improvements in role-based and security 
awareness training, contingency plan testing, reducing the number of 
outstanding Plans of Action and Milestones (POA&Ms), developing initial 
baseline configurations, reducing the number of IT individuals with 
outdated background investigations, and improving data center web 
application security. However, the CRISP initiative was not launched 
until March 2012 and the improved processes had not been implemented 
for an entire fiscal year with the opportunity to demonstrate sustained 
improvements in information security.
    For FY 2012, we provided a draft report to VA for review and 
comments and we expect to issue our report in June 2013. The report 
will discuss control deficiencies in four key areas:
    Configuration Management Controls are designed to ensure critical 
systems have appropriate security baseline controls and up-to-date 
vulnerability patches implemented. However, we found:

      Systems including key databases supporting various 
applications were not timely patched or securely configured to mitigate 
known and unknown information security vulnerabilities.
      Baseline configurations, including implementation of the 
Federal Desktop Core Configuration, were not consistently implemented 
to mitigate significant system security risks and vulnerabilities 
across the facilities.
      Change control policy and procedures for authorizing, 
testing, and approval of system changes were not consistently 
implemented for the networks and mission critical system hardware and 
software changes.

    Access Controls are designed to ensure that password standards are 
consistently implemented across the enterprise and that user accounts 
are monitored to enforce minimal access privileges necessary for 
legitimate purposes and to eliminate conflicting roles. Our FISMA 
assessment revealed that:

      Password standards were not consistently implemented and 
enforced across multiple VA systems, including the network domain, 
databases, and mission critical applications. In addition, multi-factor 
authentication for remote access had not been implemented across the 
agency.
      Inconsistent reviews of networks and application user 
access resulted in numerous generic, system, and inactive user accounts 
that were not removed and/or deactivated from the system, and users 
with access rights that were not appropriate.
      Proper completion of user access requests was not 
consistently performed to eliminate conflicting roles and enforce 
principles of least system privilege.
      Lack of monitoring of access in the production 
environment for individuals with elevated application privileges for a 
major application.

    Security Management is designed to ensure that system security 
controls are effectively monitored on an ongoing basis and system 
security risks are effectively remediated through corrective action 
plans or compensating controls. We will report that:

      Security management documentation, including the risk 
assessments and System Security Plans, were outdated and did not 
accurately reflect the current system environment or Federal standards.
      Background reinvestigations were not performed timely or 
tracked effectively. In addition, personnel were not receiving the 
proper level of investigation for the sensitivity levels of their 
positions.
      Scheduled completion dates for POA&Ms were updated 
without written justification and supporting documentation was not 
adequate to justify POA&M closures.

    Contingency Planning Controls ensure that mission-critical systems 
and business processes can be restored in the event of a disaster or 
emergency. However, we determined that:

      Contingency plan documentation had not been updated to 
reflect lessons learned from the contingency and disaster recovery 
tests, and detailed recovery procedures for all system priority 
components had not been documented and/or did not reflect current 
operating conditions.
      Backup tapes were not encrypted prior to being sent to 
offsite storage at selected facilities and data centers.

    More importantly, we continue to identify significant technical 
weaknesses in databases, servers, and network devices that support 
transmitting sensitive information among VA's Medical Centers, Data 
Centers, and VA Central Office. Many of these weaknesses are due to 
inconsistent enforcement of an agency-wide information security program 
across the enterprise and ineffective communication between VA 
management and the individual field offices. Therefore, VA needs to 
improve its monitoring process to ensure controls are operating as 
intended at all facilities and communicate security deficiencies to the 
appropriate personnel to implement corrective actions.
    We have identified and reported deficiencies where control 
activities were not appropriately designed or operating effectively. 
The dispersed locations, the continued reorganization of VA business 
units, and the diversity in applications adversely affected facilities 
and management's ability to consistently remediate IT security 
deficiencies agency-wide. For example, VA's complex and dispersed 
financial system architecture had resulted in a lack of common system 
security controls and inconsistent maintenance of IT mission-critical 
systems. Consequently, VA continues to be challenged by a lack of 
consistent and proactive enforcement of established policies and 
procedures throughout its geographically dispersed portfolio of legacy 
applications and newly implemented systems. In addition, VA lacks an 
effective and consistent corrective action process for identifying, 
coordinating, correcting, and monitoring known internal security 
vulnerabilities on databases, web applications, and networks 
infrastructures.
    Our FY 2012 FISMA report will include 27 current recommendations to 
the Acting Assistant Secretary for Information and Technology for 
improving VA's information security program. The report also highlights 
five unresolved recommendations from prior years' assessments for a 
total of 32 outstanding recommendations. Overall, we are recommending 
that VA focus its efforts in the following areas:

      Addressing security-related issues that contributed to 
the IT material weakness reported in the FY 2012 audit of the 
Department's consolidated financial statements.
      Remediating high-risk system security issues in its Plans 
of Action and Milestones.
      Establishing effective processes for evaluating 
information security controls via continuous monitoring and 
vulnerability assessments.

    We continue to evaluate VA's progress during our ongoing FY 2013 
FISMA audit and acknowledge increased VA efforts to improve information 
security, but we are still identifying repeat deficiencies, albeit to a 
lesser extent. This fall, upon completion of our FY 2013 FISMA testing 
and related work, we will make a determination as to whether VA's 
improvement efforts are successful in overcoming the IT material 
weakness.

OTHER REPORTS RELATED TO INFORMATION SECURITY
    Over the past 2 years, we have issued a series of audits and 
reviews that have identified VA's information security controls 
deficiencies. Our reports disclosed a number of issues, including 
ineffective management of systems interconnections and sensitive data 
exchanges, delayed contractor background investigations, and inadequate 
access controls that placed sensitive veterans' data at unnecessary 
risk.

Review of Alleged Transmission of Sensitive VA Data Over Internet 
        Connections
    In March 2013, we substantiated an allegation made through the OIG 
Hotline that VA was transmitting sensitive data, including PII and 
internal network routing information, over an unencrypted 
telecommunications carrier network. VA Office of Information Technology 
(OIT) personnel disclosed that VA typically transferred unencrypted 
sensitive data, such as electronic health records and internal internet 
protocol addresses, among certain VA Medical Centers and Community 
Based Outpatient Clinics using an unencrypted telecommunications 
carrier network. OIT management acknowledged this practice and formally 
accepted the security risk of potentially losing or misusing the 
sensitive information exchanged.
    VA has not implemented technical configuration controls to ensure 
encryption of sensitive data despite VA and Federal information 
security requirements. Without controls to encrypt the sensitive VA 
data transmitted, veterans' information may be vulnerable to 
interception and misuse by malicious users as it traverses unencrypted 
telecommunications carrier networks. Further, malicious users could 
obtain VA router information to identify and disrupt mission-critical 
systems essential to providing health care services to veterans.
    VA acknowledged transmitting PII over privately segmented networks 
to support service to veterans. VA concurred with our recommendations 
to improve the protection of sensitive data transmitted over the 
unencrypted carrier networks and implement configuration controls to 
ensure encryption of such data. VA clarified that it employs an 
industry telecommunications carrier network to provide a segmented 
network for transmitting PII, but noted that these network links are 
not currently employing encryption controls to protect sensitive data.
    VA did not agree with the assertion that PII and internal network 
routing information were being transmitted over unsecured internet 
connections. However, based on interviews with OIT personnel at VA 
Medical Centers as well as information provided by the OIG Hotline 
complainant, we maintain that PII and router information were being 
transmitted unencrypted through a telecommunications carrier that also 
provided internet services to customers outside of VA. Nonetheless, we 
commend OIT for performing a review of the locations associated with 
the Hotline complaint and inspecting communication networks to ensure 
proper segmentation of VA networks from internet connections. We 
recognize that industry telecommunications carriers can segment data 
traffic from unsecured Web connections. However, we believe the risk 
remains that sensitive VA data and router information can be 
compromised when it is transmitted across unencrypted 
telecommunications carrier networks outside of VA's span of technical 
control. More specifically, the network alone does not provide 
encryption, integrity, or authentication protections for the 
transmission of sensitive data and such services may be vulnerable to 
denial of service or sniffing attacks by malicious users. The Assistant 
Secretary for Information and Technology acknowledged these information 
security risks by stating OIT will review technical network 
communications practices across the enterprise and take corrective 
actions without hesitation.

Audit of VA System Interconnections With Research and University 
        Affiliates
    In October 2012, we reported on the effectiveness of VA's 
management of network interconnections and sensitive data exchanges 
with its research and university affiliates. Our audit disclosed that 
VA has not consistently managed its systems interconnections and data 
exchanges with its external research and university affiliates. Despite 
Federal requirements, VA could not readily account for the various 
systems linkages and sharing arrangements. VA also could not provide an 
accurate inventory of the research data exchanged, where data was 
hosted, or the sensitivity levels. In numerous instances, we identified 
unsecured electronic and hardcopy research data at VA Medical Centers 
and co-located research facilities.
    We determined that VA's data governance approach has been 
ineffective to ensure that research data exchanged is adequately 
controlled and protected throughout the data life cycle. VA and its 
research partners have not consistently instituted formal agreements 
requiring that hosting facilities implement controls commensurate with 
VA standards for protecting the sensitive data. The responsible 
Veterans Health Administration program office's decentralized approach 
to research data collection and oversight at a local level has not been 
effective to safeguard sensitive VA information. Because of these 
issues, VA data exchanged with its research partners was considered to 
be at risk of unauthorized access, loss, or disclosure.
    VA has the opportunity to further serve veterans by supplying the 
patient and medical data needed to achieve advancements in medical 
research and health care services. However, providing such sensitive 
data through electronic or hard copy means without effective 
information security controls and oversight has left the data 
susceptible to unauthorized access, loss, or disclosure. Leaving 
hosting facilities responsible for data governance at the local level 
without coordinated involvement of all stakeholders has proven 
ineffective and improvements are needed.
    Establishing formal information security agreements is one method 
of documenting data sharing agreements and ensuring that hosting 
facilities institute information security controls commensurate with VA 
standards. Further, a centralized data governance and storage approach 
would ensure researchers effectively control and securely manage 
sensitive VA research information over the data life cycle. Such 
measures are key to protect veterans' PII and personal health 
information and promote continued advancements in medical research now 
and for the future. VA generally concurred with our report 
recommendations. VA is taking corrective actions, however, all 
recommendations remain open as full implementation has not occurred.

Review of Alleged Incomplete Installation of Encryption Software 
        Licenses
    In October 2012, we substantiated a Hotline allegation that OIT had 
not installed and activated an additional 100,000 licenses purchased in 
2011. As of July 2012, OIT officials stated they had installed and 
activated only a small portion, about 65,000 (16 percent), of the total 
400,000 licenses procured. OIT did not install and activate all of the 
licenses due to inadequate planning and management of the project. 
Specifically, OIT did not allow time to test the software to ensure 
compatibility with VA computers, ensure sufficient human resources were 
available to install the encryption software on VA computers, and 
adequately monitor the project to ensure encryption of all VA laptop 
and desktop computers.
    As such, 335,000 (84 percent) of the total 400,000 licenses 
procured, totaling about $5.1 million in questioned costs, remained 
unused as of 2012. Given changes in VA technology since 2006, VA lacked 
assurance the remaining software licenses were compatible to meet 
encryption needs in the current computer environment. Further, because 
OIT did not install all 400,000 encryption software licenses on VA 
laptop and desktop computers, veterans' PII remained at risk of 
inadvertent or fraudulent access or use.
    We recommended the Assistant Secretary for Information and 
Technology complete an assessment of the encryption software project to 
determine whether the software was compatible with VA's operating 
systems and still met VA needs. Based on the assessment, we recommended 
that VA terminate the project or develop a plan, including adequate 
human resources and project monitoring, to ensure installation and 
activation of the remaining encryption software licenses. The Assistant 
Secretary for Information and Technology concurred with our finding and 
recommendations and is taking steps to move forward with the software 
implementation.

Review of Alleged Delays in VA Contractor Background Investigations
    In September 2012, we reported on the merits of a complaint 
regarding ineffective VA management of its contractor background 
investigations. We substantiated that VA could improve management of 
its contractor background investigations. Specifically, VA had a 
backlog of 3,000 contractor background investigations as of April 2012, 
despite process improvements and a reduction in pending cases in recent 
months. VA also inappropriately prohibited contractors from working on 
awarded contracts although VA policy only requires initiating, not 
fully completing, investigations before contractors could start work.
    According to VA officials, delays occurred due to ineffective 
management within VA's program office which is responsible for 
initiating and adjudicating background investigations; staff 
misunderstanding VA's personnel security requirements and investigative 
processes; and no effective centralized system to monitor progress in 
addressing the backlog. In the absence of a system linking contractors 
needing background investigations with underlying contracts, we could 
not determine whether VA unnecessarily paid for contractors not yet 
authorized to work on awarded contracts. Nonetheless, VA officials said 
the backlog adversely affected their ability to fully staff major IT 
initiatives.
    Our report provided several recommendations for improving 
procedures to reduce the backlog of contractor background 
investigations and implementing a central case management system to 
monitor contractor status and associated costs during the background 
investigation process. VA generally concurred with our findings and 
recommendations and has reported corrective actions to address them.

Review of Alleged Mismanagement of the Systems To Drive Performance 
        Project
    In February 2012, we reported that VA's Office of Management did 
not effectively manage the Systems to Drive Performance (STDP) project. 
We substantiated that VA did not adequately protect sensitive VA 
information from unauthorized access and disclosure. Specifically, we 
determined that more than 20 system users had inappropriate access to 
sensitive STDP information. On a specific note, VA's National Data 
Systems Group did not consistently approve requests for user access. 
Furthermore, project managers did not report unauthorized access as a 
security event, as required by VA policy. Security deficiencies 
occurred because STDP project managers were not fully aware of VA's 
security requirements for system development and had not formalized 
user account management procedures. Inadequate Information Security 
Officer oversight also contributed to weaknesses in user account 
management and the failure to report the granting of excessive user 
rights as security violations. As a result, VA lacked assurance of 
adequate control and protection of sensitive STDP data.
    VA concurred with our findings and recommendation to ensure that 
employees assigned to the STDP project receive the role-based security 
training needed to address the issues highlighted in the report. 
Additionally, VA agreed to assign an Information Security Officer to 
the project to ensure VA's information security requirements are met. 
Corrective actions have been taken and these recommendations are now 
closed.

Review of Alleged Unauthorized Access to VA Systems
    In July 2011, we reported on the merits of an OIG Hotline 
allegation that certain contractors without proper security clearances 
gained unauthorized access to VA networks and Veterans Health 
Information System and Technology Architecture (VistA) systems at 
multiple VA medical facilities. Our review substantiated the allegation 
and found that contractors improperly used other employees' Virtual 
Private Network user accounts to gain unauthorized access to VA systems 
and networks. The review also substantiated that contractor personnel 
did not obtain appropriate background security clearances before 
gaining access to VA systems and networks. Contractors admitted to 
sharing two of their employees' user accounts to access VA networks on 
a number of occasions for maintenance and monitoring of contractor 
systems. Further, contractors could not provide evidence that it 
readily initiated actions to terminate user accounts after the 
employee's separation date.
    VA policy specifically prohibits the sharing of user accounts and 
requires the closing of user accounts as part of proper user account 
management. Further, VA policy requires VA personnel to regularly 
review user account access for inappropriate or unusual activity and 
take necessary actions. Contractors stated they did not fully 
understand VA's information security requirements regarding user 
account access and did not believe additional user accounts were 
needed. Additionally, VA did not actively monitor user account activity 
or readily communicate with contractors the need periodically to 
identify and terminate unnecessary user accounts. Without effective 
controls to prevent unauthorized access by contractors, VA information 
systems and sensitive veterans' data are vulnerable to increased risks 
of compromised availability, integrity, and confidentiality. The lack 
of individual accountability over user accounts provides ample 
opportunities to conceal malicious activity such as theft or misuse of 
veterans' data. VA concurred with our findings and recommendations. 
However, the report remains open because a key recommendation regarding 
contractor security controls and practices has not been implemented 
almost 2 years after we issued the report.

CONCLUSION
    Well-publicized information security incidents at VA demonstrate 
that weaknesses in information security policies and practices expose 
mission-critical systems and data to unauthorized access and 
disclosure. Through its CRISP initiative, VA has strengthened its 
efforts to define policies and procedures supporting its agency-wide 
information security program. However, its highly decentralized and 
complex system infrastructure poses significant challenges to 
implementing effective access controls, system interconnection 
controls, configuration management controls, and contingency planning 
practices that adequately protect mission-critical systems from 
unauthorized access, alteration, or destruction. Until VA fully 
implements key elements of its information security program and 
addresses our outstanding audit recommendations, VA's mission-critical 
systems and sensitive veterans' data remain at increased and 
unnecessary risk of attack or compromise.
    Mr. Chairman, this concludes my statement. We would be happy to 
answer any questions you or other Members of the Subcommittee may have.

                                 

                Prepared Statement of Stephen W. Warren

Introduction
    Chairman Coffman, Ranking Member Kirkpatrick, Members of the 
Subcommittee: thank you for inviting me to testify regarding the 
Department of Veterans Affairs' (VA) Information Technology (IT) 
security strategy. I appreciate the opportunity to discuss VA's plans, 
actions, and accomplishments in IT security.
    Protecting the data that VA holds on Veterans is as important as 
the Veterans themselves. As the committee knows, the Department 
received a wakeup call from the incident in 2006 involving a stolen 
laptop which contained unencrypted information on over 19 million 
Veterans. As a result of this incident, VA consolidated its disparate 
IT functions into a single, unified IT organization. This consolidation 
has benefited VA in many ways, especially in terms of strengthening its 
information security posture. VA's consolidated IT organization is 
responsible for protecting Veteran information at 153 hospitals, 853 
community-based outpatient clinics, 57 benefits processing offices, and 
131 cemeteries and 33 soldier's lots and monument sites. Our network 
supports over 400,000 users, and over 750,000 devices.
    We remain committed to protecting the information we hold on 
millions of Veterans and their beneficiaries and more than 300,000 VA 
employees by providing round-the-clock security of VA's enterprise and 
infrastructure. The Department fully supports the White House's 
information security initiatives such as two-factor authentication 
using HSPD-12 compliant PIV cards, which the VA is in the process of 
implementing. The Department continues to improve the security posture 
of the VA network through our Visibility into Everything initiative, 
which allows VA to see and manage all of its devices and network 
components in real time. The continuous monitoring program is 
responsible for checking IT systems and monitoring every desktop and 
laptop computer attached to the VA network.
    To reinforce our commitment to information security, we are 
fostering a culture change to ensure that all users on our system 
follow all necessary and required IT and privacy protection rules. VA 
launched the Continuous Readiness in Information Security Program 
(CRISP) in 2012 to proactively address process and policy deficiencies 
and architecture and configuration issues. As part of the CRISP effort, 
VA conducts rigorous vulnerability scanning, continuous monitoring of 
patching and software inventory, implementing port security, anti-virus 
services, and encryption of non-medical IT laptops.
    Through Web Application Security Assessments, VA is able to 
identify critical vulnerabilities and potential exploits in VA 
applications that store millions of records of sensitive data. The 
network infrastructure is protected through identification of all 
network assets and critical database stores, identification of all 
connections, and providing the Trusted Internet Connection Gateways 
services for mail, content filtering, name resolution and firewall 
protection.
    In the past year, VA improved its security posture. The Department 
has ensured that over 98 percent of VA staff have received the 
mandatory information security training they need to protect the 
information of Veterans and their families. We have also completed a 
number of business impact assessments for contingency planning.
    After the 2006 laptop incident, VA worked to ensure its laptop 
computers were encrypted to provide another layer of protection. 
Currently, over 98 percent of VA's non-medical IT laptops are 
encrypted. VA has around 2,500 unencrypted laptops remaining and, with 
the exception of laptops with specific waivers (specific medical uses, 
research laptops using software where encryption would disable the 
device, service/maintenance laptops that do not connect to VA's network 
or store sensitive information, and laptops purchased by VA and given 
to Veterans as part of a A rehabilitation program) the Department 
expects to complete encryption of all laptops by June 30, 2013.

Data Breaches
    The Department has worked hard to regain the trust of Veterans 
after the stolen laptop incident in 2006. VA now has a robust data 
breach notification process, using a Data Breach Core Team (DBCT), 
which provides advance planning, guidance, analysis, and direction 
regarding the potential loss of Protected Health Information (PHI), 
Personally Identifiable Information (PII), or both. The DBCT serves as 
the decision making body between the functional area(s) affected, VA 
organizations, and external stakeholders.
    The DBCT is made up of representatives from across nearly every 
part of the VA enterprise. When the DBCT determines that a breach is 
reportable, notification is made to the affected individuals and credit 
monitoring is extended. VA also posts a monthly report of data breach 
notifications on its Web site and holds a press call with reporters to 
discuss the contents of the report. The report is also provided to 
Congress, in addition to a quarterly data breach report.
    VA has become one of the very best large organizations at providing 
notification when a breach occurs. For example, while the HITECH Breach 
Notification Rule requires covered entities to provide notification 
within 60 calendar days after discovery of the breach, and the 
strictest state laws require notice within 45 days after discovery of a 
breach, VA policy requires notification within 30 days. A review of 
VA's incident tracking system over the current fiscal year indicates 
that VA takes, on average, 25 days to provide notice. VA's standards 
and practices exceed even the strictest Federal and state laws and 
policies.

Conclusion
    Mr. Chairman, VA places the highest priority in safeguarding 
Veterans' and employees' personal information. We are committed to 
information security, and although work remains, VA has made 
significant improvements made in the last few years and strives to meet 
the highest standards in protecting sensitive information. Thank you 
for your continued support of Veterans, their families, and of our 
efforts to protect Veterans and their private information. I am 
prepared to answer any questions you and other Members of the 
Subcommittee may have.

                                 

                  Prepared Statement of Jerry L. Davis

INTRODUCTION
    Chairman Coffman, Ranking Member Kirkpatrick and members of the 
Subcommittee, thank you for the opportunity to convey my concerns to 
you regarding the protection of information systems and information, 
which includes sensitive Veteran data at the Department of Veterans 
Affairs (VA).
    From August 2010 until February 2013, I served as the Deputy 
Assistant Secretary, Information Security (DAS IS) and Chief 
Information Security Officer (CISO) at the VA. As the DAS IS, I served 
as the most senior civil service staff member within VA with 
responsibility for oversight and accountability in the protection of VA 
information, VA privacy, records management and the Freedom of 
Information Act (FOIA) process. At the time of my departure from VA in 
early February 2013, I was one, if not the longest serving Chief 
Information Security Officer (CISO) in the federal government with 
nearly a decade of service in that role spread across multiple federal 
agencies. I am also a Marine Veteran having served in combat with 
distinction during the First Gulf War, so the appointment to the 
position as the VA CISO had special meaning. It was a position that I 
did not take lightly and I was and I still am extremely proud to have 
had an opportunity to serve our country and equally proud to have had a 
great opportunity to serve the Veteran community.
    My time at VA was largely filled with a great sense pride because 
of the purpose and mission of VA and because of my role, which had a 
direct and positive impact on the Veteran community. However there came 
a time at the end of my tenure where my pride turned to serious 
consternation and that consternation remains this very day.

SECURITY POSTURE IN 2010: VA's COPROMISED ENVIRONMENT
    In nearly 20 years of building and managing security programs 
across government and private industry, I had never seen an 
organization with as many unattended IT security vulnerabilities. Upon 
my arrival in late August 2010 I inherited the results of more than 15 
continuous years of an unattended and documented material weakness in 
IT security controls. This material weakness included more than 13,000 
uncompleted IT security corrective actions. These 13,000 security 
corrective actions would require more than 100,000 sub actions to fully 
remediate and manage IT security vulnerabilities and improve the VA 
security posture. In early September 2010, I also was advised that 
nearly 600 VA systems' Authority to Operate (ATO) had expired and there 
was no plan in place to bring these systems into compliance.
    Despite the voluminous number of uncompleted corrective actions and 
expired ATOs, the most concerning issue was the conversation I had with 
the VA Principle Deputy Assistant Secretary (PDAS), Stephen Warren, who 
told me shortly after my arrival that ``We have uninvited visitors in 
the network''. Further discussion with the VA Network Security 
Operations (NSOC) team indicated that VA became aware of a serious 
network compromise in March 2010 and these ``uninvited visitors'' were 
nation-state sponsored attackers. Over the course of time while working 
with the VA NSOC team and external agencies, I learned that these 
attackers were a nation-state sponsored cyber espionage unit and that 
no less than eight (8) different nation-state sponsored organizations 
had successfully compromised VA networks and data or were actively 
attacking VA networks; attacks that continue at VA to this very day. 
These groups of attackers were taking advantage of weak technical 
controls within the VA network. Lack of controls such as encryption on 
VA databases holding millions of sensitive records, web applications 
containing common exploitable vulnerabilities and weak authentication 
to sensitive systems contributed to the successful unchallenged and 
unfettered access and exploitation of VA systems and information by 
this specific group of attackers.
    During my tenure, I consistently insured that each instance of 
attack or compromise by these group of attackers was documented and 
communicated to the VA OIT leadership through specialized reporting 
called Key Investigative Reporting (KIR) performed by the NSOC Deep 
Dive Analysis (DDA) team and biweekly security meetings with the VA 
Principle Deputy Assistant Secretary (PDAS), Mr. Stephan Warren.

MITIGATION ACTIVITIES 2010-2013
    From late August 2010 until my departure in early February 2013, I 
planned for and executed with support from various sub offices within 
OIT a series of initiatives and activities needed to improve network 
and systems security with a particular focus on defending the network 
against sophisticated and targeted attacks levied by nation-state 
sponsor organizations. Some of these initiatives included the Web 
Applications Security Program (WASP), the VA Software Assurance 
Program, Continuous Monitoring and Diagnostics (CMD) of VA information 
systems, and mandating encryption of VA databases, and supported the 
reduction of the total number of VA databases hosting sensitive Veteran 
information.
    During my tenure as CISO, with the support of VA as a whole, we 
were able to close more than 10,000 of the 13,000 security corrective 
actions. In all, VA personnel executed more than 100,000 sub actions. 
While these actions did improve security from a compliance perspective, 
there still existed a problem of fully implementing adequate technical 
security controls needed to defend networks, systems and sensitive 
information from nation-state sponsored attackers. The heart of 
selecting the proper technical controls meant fully understanding the 
threat actors, their tactics, techniques and procedures (TTPs) and 
along with system and network vulnerabilities and implementing a 
program that could continuously report on and remediate identified 
vulnerabilities in a near real time fashion.
    Over time, the Office of Information Security (OIS) worked to 
enhance a comprehensive program called Continuous Monitoring and 
Diagnostics (CMD) that would provide adequate security of VA systems 
and networks by continually evaluating certain technical controls in a 
near real time fashion. There is proof that a good CMD program 
monitoring the correct controls can significantly improve information 
security and is consistent with the direction that the federal 
government has taken in securing federal systems. It is also 
significantly superior to even a good paper based ATO process.

OIT LEADERSHIP DEVIATES FROM ATO PROCESS
    It is my testimony that at the time of my departure from VA that 
the processes required for the DAS, IS to make an attestation that VA 
systems were adequately secure was completely faulty and improper and 
the implementation of the process exposed Veteran systems and VA 
information to further risk of compromise. It was confirmed to me by 
the VA information security staff charged with executing the process 
that it was flawed, provided no value and that a providing a positive 
attestation to the adequately of security controls would seriously 
compromised the integrity of the VA security program. I subsequently 
conveyed this message to the Assistant Secretary and the PDAS by formal 
memorandum and in conversation to the PDAS between January 15, 2013 and 
January 23, 2013.
    VA Handbook 6500.3 states that the DAS, IPRM (now called DAS,IS) is 
responsible for:

    (3) Reviewing all C&A packages and making a decision recommendation 
to the AO to issue an IATO, ATO or Denial of Authorization [emphasis 
added] to operate; and

    (4) Providing an IATO extension in the event local management can 
demonstrate continuous monitoring and security due diligence are being 
provided . . . .

    In accordance with VA information security policy and following VA 
information security procedures, As the DAS, IS, I elected to recommend 
a denial of an authority to operate and also elected to recommend 
movement of VA systems over the course of eight (8) months into an 
enhanced continuous monitoring program, where systems technical 
controls could be centrally managed and evaluated in a near real time 
fashion. I based my decision on the guidance provided by the 
information security team and on the fact that the paper based process 
would not keep highly sophisticated nation-state sponsored attackers 
from further compromising VA data. Furthermore, as each VA system was 
transitioned into the continuous monitoring program, additional 
specific critical controls would be evaluated for adequacy before being 
granted a full ATO. These additional critical controls are proven to 
slow and repel sophisticated, nation-state sponsored attackers from 
compromising information systems and data. This was an agreed upon 
process with the VA information security team and a process that had 
been briefed by me to the Director of IT Audits and Security within the 
VA Office of the Inspector General (OIG) several weeks before the 
process implementation.
    Despite the authority granted to the DAS, IS to make a 
recommendation to deny authorization, the VA OIT PDAS made a concerted 
effort to circumvent my authority and influence my decision to make a 
recommendation to the Accrediting Official (AO) that 545 VA systems be 
given an IATO. Furthermore, VA handbook 6500.3 and VA policy 6500, 
provides for no role or authority for the PDAS, OIT with regard the 
program or processes governing Authority to Operate.

RECOMMENDATIONS
    To this end, I would recommend that this subcommittee:

    1. Review all VA Key Investigative Reports (KIRs) and Deep Dive 
Analysis (DDA) reports and Web Application Security Program reports 
(WASP) to assess the damage and depth of exposure, extent of compromise 
to VA systems and compromise of Veteran information; and

    2. Regularly report to the House Committee on Veteran Affairs on 
progress made with respect to mitigating access to VA systems and 
Veteran information by nation-state sponsored organizations;

    3. Assess previously identified web application exposures and 
assess for potential compromise of Veteran data, both PII and PHI;

    4. Include web application exposures as part of the Data Breach 
Core Team (DBCT) evaluation process;

    5. Assess the potential compromise to non VA networks sharing an 
interconnection with VA's network;

    6. Designate the VA network as a ``compromised environment'' and 
establish controls that are effective and support the reclamation of 
control back to VA from nation-state sponsored organizations;

    7. Move the VA systems into a full continuous monitoring and 
diagnostics program with near real time situational awareness of its 
security posture with a focus on the 20 critical controls;

    8. Increase VA funding for information security programs; and 
number of Information Security Officers (ISOs) supporting VA field 
offices and facilities

    9. Move reporting lines for the DAS, IS directly to the AS, OIT or 
to the Office of the Secretary, VA

    10. Assess the past and present practices of the OIT leadership 
with regard to decisions made in the protection of VA systems and 
information.

    I would like to thank the members of the subcommittee for your time 
today and I look forward to any questions you may have.
Executive Summary
    At the Department of Veterans Affairs (VA), the Deputy Assistant 
Secretary for Information Security (DAS, IS) is responsible for 
information security and privacy strategy, management, policy, 
procedures, oversight and reporting. VA handbook 6500.3, Certification 
and Accreditation (C&A) of VA Information Systems, Holds the DAS, IS 
responsible for;

    Reviewing all final C&A packages and making a decision 
recommendation to the AO to issue an IATO [Interim Authority to 
Operate], ATO [Authority to Operate], or Denial of Authorization to 
operate . . . `` and ``Providing an IATO extension in the event local 
management can demonstrate continuous monitoring and security due 
diligence are being provided . . . ''

    Beginning in early 2010 and continuing through late 2012, VA 
systems had been under repeated attacks and data compromised by no less 
than eight (8) groups of well organized and sophisticated nation-state 
sponsored actors who appear to have had unfettered and at times, 
unchallenged access to VA networks, systems and information. Internal 
reporting by the Office of Information Security (OIS) to the Principle 
Deputy Assistant Secretary (PDAS), Office of Information and Technology 
(OIT) kept the PDAS informed of the condition regarding exposures of 
Veteran dated in information systems. This reporting further confirmed 
to the PDAS by his own admission in late 2010 that ``uninvited visitors 
were in the [VA] network'' and thus continued to be a persistent threat 
and risk to VA systems and sensitive information and other 
interconnected non-VA networks.
    Security enhancements and programs put into place by the DAS, IS 
beginning in late 2010 through early 2013, revealed over time that 
significant amounts of Veteran data was exposed to potential compromise 
by any attacker from both the Internet and from within the VA network 
infrastructure.
    Because of unfettered access to VA systems and information by 
sophisticated attackers and lack of adequate controls to ensure 
protection of Veteran information, in January 2013, the DAS, IS 
operating under the authority of VA policy and FISMA, determined that 
the newly derived C&A process was not proper and inadequate for 
securing VA systems holding sensitive information. Despite the 
recommendation from the DAS, IS to the Assistant Secretary, OIT to 
reconsider an IATO using the inadequate process, the PDAS used his 
official position to influence the DAS, IS to sign an attestation that 
systems were adequately secure for more than 250 ATOs, and essentially 
exposing VA systems and sensitive data to further risk of compromise 
and exposure.

                                 
                        Questions For The Record
 Letter From: Hon. Mike Coffman, Chairman, Subcommittee on Oversight & 
                         Investigations, To: VA
    October 22, 2013

    The Honorable Eric K. Shinseki
    Secretary
    U.S. Department of Veterans Affairs
    810 Vermont Avenue, NW
    Washington, DC 20420

    Dear Mr. Secretary:

    Please provide written responses to the attached questions for 
record for the Oversight and Investigations Subcommittee hearing 
entitled ``How Secure is Veterans' Private Information'' that took 
place on June 4, 2013.
    In responding to these questions for the record, please answer each 
question in order using single space formatting. Please also restate 
each question in its entirety before each answer. Your submission is 
expected by the close of business on July 25, 2013, and should be sent 
to Ms. Bernadine Dotson at [email protected].
    If you have any questions, please call Mr. Eric Hannel, Majority 
Staff Director of the Oversight & Investigations Subcommittee, at 202-
225-3527.

    Sincerely,

    Mike Coffman
    Chairman
    Subcommittee on Oversight & Investigations

    MC/hr

                                 
    Questions for the Record from Subcommittee Chairman Mike Coffman

    1. The OIG indicates that IT security has been a material weakness 
at VA for more than 10 years. Why did VA OI&T wait until 2012 to 
institute a proactive initiative like the Continuous Readiness in 
Information Security Program (CRISP) to try to address this issue?

    2. The OIG's more recent Semiannual Report states that OI&T has 11 
reports open containing 60 recommendations with 14 open for more than 
year. Can you explain why you concur with OIG recommendations but can't 
seem to complete the actions necessary to close the recommendations?

      For example, one report will be open for 2 years come 
July and yet the most significant recommendation remains open - which 
deals with reviewing contractor security controls and practices to 
ensure compliance with VA's information security requirements.

    3. What steps is VA taking to eliminate the IT Material weakness in 
FY 13?

    4. Why does VA have so many repeat findings and recommendations 
from the OIG's FISMA work? Why has VA not made any significant progress 
towards eliminating these long standing recommendations?

    5. What actions is VA taking to eliminate the use of clear text 
protocols used to transmit medical information between the VAMCs and 
the CBOCs over external service provider networks?

    6. Based on the information provided in the Deloitte's deep dive 
report detailing inefficiencies in OI&T operations, what steps will the 
CIO take to improve delivery of IT services?

    7. How will the issuance of the PIV badge affect the ability of the 
Department to respond to Congressional requests, litigation demands, 
and other similar requests to search, decrypt, and release bulk volumes 
of VA emails? Does the planned roll-out of the PIV badge tied to 
automatic encryption hinder timely responses to such requests in any 
way?

    8. Why is it that the PMAS processes only focuses on meeting 
milestones and schedule but there are no metrics around quality, 
functionality and customer satisfaction?

    9. The VA regulations on Information Security Matters at 38 CFR 
Part 75 appear to authorize an accelerated response with notice to the 
subjects of a data breach and/or an offer of credit protection 
services. How many times has credit protection service been offered to 
veterans for FY 2008-2012 and for each such instance, to how many 
veterans were such services offered? Please provide the annual cost for 
credit services for each year between FY 2008-2012.

    10. Under the regulations at 38 CFR Part 75, if the Secretary 
determines that individual notice is not warranted for a data breach, 
then an independent risk analysis is required to be performed. How many 
risk analyses have been performed in accordance with these provisions 
for FY 2008 to present? Please describe each occurrence of such 
analysis including the findings and conclusions. Please also indicate 
each date and instance in which a data breach was reported to OMB and/
or to Congress within FY 2008 to present.

    11. By letter to the committee dated May 14, 2013, you stated: ``To 
be clear, VA's security posture was never at risk.'' Please explain how 
this statement is true given the admissions uncovered in the hearing 
that systems and networks had been breached by foreign state actors and 
the testimony of OIG that, at one point, there were 4000 open 
vulnerabilities. If the statement was untrue when made (as it certainly 
appears), please describe what disciplinary action is being taken for 
the subordinates responsible.

    12. Reports indicate that VA became aware in January, 2013, of an 
incident where attackers used a spearphishing attack to gain access to 
a joint VA-DoD network dealing with health data. How many instances 
have hackers tried to use VA networks to gain access to Defense 
Department computer systems? Please describe each instance and what 
corrective actions were taken in response.

                                 
        Questions for the Record from Congressman Tim Huelskamp

    1. I reiterated in my questioning during your testimony, if you 
could please communicate with the appropriate individual my request for 
answers to the letters I sent to the Department of Veteran Affairs on 
September 23, 2012 and October 3, 2012? If you need a copy of those 
questions, my office would be happy to provide those to you.

    2. Your explanation for receiving $87,000 in bonuses was that you 
met the performance expectations laid out for you by your leadership--
could you please provide further explanation of those expectations to 
my office?

    3. Can you please provide information on how data security at the 
Department of Veteran Affairs compares with industry standards outside 
the federal government? Specifically, please describe the current data 
encryption process used by the Department of Veteran Affairs.

    4. It was stated during the hearing that outside foreign agents 
have had access to information in the Veterans Affairs database. Could 
you please provide to me detailed information on who has accessed the 
data, the date(s) it was accessed, and what the Department of Veteran 
Affairs has done to prevent future compromises to the system?

                                 
   Questions and Responses From: U.S. Department of Veterans Affairs
Questions for the Record from Subcommittee Chairman Mike Coffman

    1. The OIG indicates that IT security has been a material weakness 
at VA for more than 10 years. Why did VA OI&T wait until 2012 to 
institute a proactive initiative like the Continuous Readiness in 
Information Security Program (CRISP) to try to address this issue?

    VA Response: VA has been taking proactive steps to strengthen IT 
security for many years. Prior to 2006, information technology (IT) at 
the Department of Veterans Affairs (VA) was decentralized. Among other 
implications, this decentralization made securing the vast VA 
enterprise information systems, and thus ending the material weakness, 
virtually impossible. The lack of an ability to address the material 
weakness in IT was one of the primary reasons the Department, with the 
help of Congress, began to consolidate IT functions into the Office of 
Information and Technology (OIT) in 2006. As a result of IT 
consolidation, all governance, funding, and implementation of IT 
programs and security controls are managed out of VA Central Office 
(VACO). VA's consolidation of OIT was not completed until 2009.
    After consolidation, VA managed its information security posture as 
an IT concern. Prior to 2012, information security was seen by some as 
only an IT issue. Today, VA recognizes information security is a 
Department-wide concern and responsibility of every single VA employee. 
In order to bring leadership and field-level focus on the goal of 
ending the material weakness, the Continuous Readiness in Information 
Security Program (CRISP) was formed in 2012 under a new innovative 
management methodology. The CRISP effort consolidates all of the 
disparate material-weakness related initiatives under the leadership of 
one focused team across VA. Moreover, CRISP is more than just a 
program, but rather is a culture change to be embedded throughout the 
agency. CRISP is steered by VA executive leadership and executed by two 
OIT co-managers. This collaborative approach with senior leader 
oversight allowed for more consistent communication, implementation, 
and consolidation of tasks downstream, more accurate reporting and 
oversight upstream, and meant a more agile governance of the program.

    2. The OIG's more recent Semiannual Report states that OI&T has 11 
reports open containing 60 recommendations but can't seem to complete 
the actions necessary to close the recommendations?

      For example, one report will be open for 2 years come 
July and yet the most significant recommendation remains open - which 
deals with reviewing contractor security controls and practices to 
ensure compliance with VA's information security requirements.

    VA Response: VA appreciates the work conducted by the Office of 
Inspector General (OIG) to ensure that the Department is following the 
correct path in working to serve Veterans. VA takes OIG's 
recommendations seriously, and where we concur with the 
recommendations, we work to implement the recommendations to OIG's 
satisfaction as quickly as possible.
    VA's OIT acknowledges that it has several outstanding 
recommendations over a year old. Many of these recommendations have 
either been submitted to OIG for closure, or are in the process of 
being implemented. VA will continue to work with its OIG partners to 
implement and close all outstanding recommendations.
    VA has furnished OIG with what it believes to be responses 
sufficient to close the open recommendation for its oldest reports.

    3. What steps is VA taking to eliminate the IT Material weakness in 
FY 13?

    VA Response: VA's OIT has made strides to improve its information 
security program. While many of the changes in fiscal year (FY)2012 
were recognized by OIG during the FY 2012 audits, those changes were 
not in place long enough to assure auditors a permanent process had 
been firmly established. In FY 2013, VA focused on the four major areas 
of repeat material weakness findings which are: Configuration 
Management, Access Controls, Security Documentation, and Contingency 
Planning. The CRISP team and VA leadership are optimistic that the 
progress made from FY 2012 have been sustained, and when coupled with 
the early audit results this year, will show positive improvements 
during the remainder of FY 2013 audit results. FY 2013 also includes 
the introduction of a new office which focuses on patch management and 
baseline configuration management. While this program is new to FY 
2013, it is demonstrating promise in its effectiveness.
    FY 2014 continues to bring other significant changes in working 
towards security improvement. Some examples of major initiatives 
include the Department-wide implementation of a Governance, Risk, and 
Compliance (GRC) tool (begun in
    FY 2013) which will aid in the assessments of the overall security 
posture within VA as well as the funding approval for a Security 
Information and Event Management (SIEM) tool to provide an audit log 
and event management oversight capability.
    All of these efforts are in conjunction with VA's 18-month plan in 
response to OIG's Federal Information Security Management Act (FISMA) 
Audit. The plan, provided to OIG and part of their FISMA report, 
addresses each and every OIG recommendation with a plan to remediate 
the recommendation at various intervals, but no later than 18 months. 
This plan includes work to complete implementation of a risk governance 
structure, completion of a process for better documenting Plans of 
Actions and Milestones, update system security plans, finish 
implementing strong password requirements on all computers, continue 
reviewing user accounts for correct level of user access, implement a 
mechanism for ensuring antivirus definitions are installed and up to 
date, and others.

    4. Why does VA have so many repeat findings and recommendations 
from the OIG's FISMA work? Why has VA not made any significant progress 
towards eliminating these long standing recommendations?

    VA Response: As stated above, VA takes OIG's recommendations 
seriously and is working to implement the recommendations with which VA 
concurs as quickly as possible, including several targeted efforts as 
outlined in the 18-month plan to address recommendations in OIG's FISMA 
report. Many of the recommendations are technical in nature and require 
extensive research, and detailed implementation plans spanning more 
than a year in order to request closure of the recommendation by OIG. 
All findings have remediation plans either currently in development or 
execution which will position VA to address OIG's FISMA 
recommendations.

    5. What actions is VA taking to eliminate the use of clear text 
protocols used to transmit medical information between the VAMCs and 
the CBOCs over external service provider networks?

    VA Response: OIT does not agree with the conclusion reached by OIG 
in its recent report regarding data transmission. In its final report, 
OIG acknowledges that VA does not send unencrypted sensitive 
information over the public Internet. However, VA does not agree with 
OIG's assertion in its final report that the manner with which VA 
transmits data over its network necessarily exposes sensitive data to 
non-VA personnel.
    Although OIT does not agree with OIG's findings in the OIG final 
report, we concurred with the recommendation to immediately conduct a 
comprehensive review. The information contained in the OIG report is 
incorrect for the specific network links cited in Veterans Integrated 
Service Network 23, and is inaccurate of the network as a whole.
    VA takes a defense-in-depth approach to the protection of data in 
flight. Encryption is being deployed at the network layer as well as 
means to encrypt data in flight at the application layer. The 
Department is already approximately two thirds done with deployment of 
a Transmission Control Protocol/Internet Protocol (TCP/IP) Layer 3 bulk 
encryption solution for wide area network (WAN) links to its major 
facilities including medical centers, regional offices, and data 
centers. This would eliminate the passing of ``clear text'' across 
those VA WAN links regardless of the use of private external service 
provider networks as an underlying transport. Encryption for the links 
to major facilities is scheduled to be completed by the end of the 
calendar year and the same solution is being extended to the 
Department's Community-Based Outpatient Clinics.
    In addition to the bulk WAN encryption, there is encryption at the 
application layer in some instances related to the transmission of 
medical and other sensitive data. For terminal emulation sessions to 
its hospital information systems (VistA), for instance, VA uses secure 
shell which encrypts all traffic transmitted between the end user 
client and the VistA system. For the bulk transmission of VistA data, 
the VistA systems end user clients and other VA servers have the 
capability to use secure file transmission protocol which encrypts the 
data in flight. For other types of sensitive transmissions, VA staff 
and systems have standard public key infrastructure (PKI) capabilities 
to digitally sign and encrypt any transmissions and, for document 
encryption and user-based controls, VA has Rights Management Services 
(RMS). RMS encrypts documents regardless of where and how they are 
transmitted and controls how the recipient is permitted to handle the 
document (e.g., whether they are permitted to forward it, print it, 
store it, etc.). VA also uses secure socket layer and transport layer 
security, which encrypts sensitive http transmissions. All of these 
methods are in place and encrypt data transmissions independent of 
whether or not the underlying network is, itself, encrypted.

    6. Based on the information provided in the Deloitte's deep dive 
report detailing inefficiencies in OI&T operations, what steps will the 
CIO take to improve delivery of IT services?

    VA Response: VA is working hard to position its IT organization as 
a product and service delivery organization focused on providing 
quality customer service. VA asked for the Deloitte survey to be 
conducted specifically to help address any existing issues in order to 
meet the goal of improving customer service. As part of our culture of 
constant measurement and evaluation against goals and objectives, 
leadership asked for a tough and thorough analysis to evaluate the 
effectiveness of the Service Delivery organization.
    Since the delivery of the Deloitte deep dive report, we have worked 
on expediting initiatives already in place designed to improve service 
delivery and have begun two related efforts to address customer service 
and communications issues. We are currently exploring ways of 
accelerating the implementation of the National Service Desk, which we 
believe will streamline and improve our efficiency in capturing issues 
facing our customers so they can be addressed and resolved more quickly 
and analyzed more comprehensively so as to enable proactive efforts to 
do IT preventive maintenance interventions, where necessary.
    In terms of new efforts, we established a Customer Advisory Tiger 
Team in April 2013, comprised of members of field-based employees from 
the Veterans Health Administration (VHA) and OIT as recommended by the 
Assistant Deputy Undersecretary for Health and the Acting Assistant 
Secretary for Information and Technology. This tiger team is tasked to 
explore the impact of OIT organizational initiatives, such as the 
establishment of regional service lines. Recommendations resulting from 
the work of this committee were presented to the Acting Assistant 
Secretary for OIT in August 2013. In addition, we have begun an effort 
toward enhancing field communications and dialogue between VACO and the 
field through direct meetings, mostly via teleconferencing, with field 
leadership in the Veterans Benefits Administration (VBA) regional 
offices, VA medical centers, and National Cemetery Administration 
offices, working to identify and solve issues identified through focus 
group dialogues and intervention by our customer service improvement 
council. Using the October 2013 VA-wide customer satisfaction survey as 
a launching point, this program of structured interviews will identify 
six issues to address nationwide on a quarterly basis. The first of 
several quarterly reports is due at the end of this month, and the six 
initial issues we seek to address were identified in August 2013. The 
investigation process will continue with additional interviews in the 
next two quarters.
    OIT leadership is actively working with field staff to keep 
communication lines open as changes to the organization are developed 
and implemented. The Acting Assistant Secretary for OIT conducts weekly 
calls with IT field leadership to keep them informed and involved in 
this significant initiative to transform service delivery at VA. VA 
will keep the committee informed after recommendations are selected for 
adoption and the initial set of six customer concern issues are 
selected for resolution.

    7. How will the issuance of the PIV badge affect the ability of the 
Department to respond to Congressional requests, litigation demands, 
and other similar requests to search, decrypt and release bulk volumes 
of VA emails? Does the planned roll-out of the PIV badge tied to 
automatic encryption hinder timely responses to such requests in any 
way?

    VA Response: The issuance and use of Personal Identity Verification 
(PIV) cards will improve the security posture of VA by ensuring only 
authorized employees have access to general information systems by 
requiring a higher level of assurance through using multi-factor 
authentication. Multi-factor authentication and hard PKI certificates 
associated with the PIV card will improve network access and help 
secure VA and Veteran's information. The use of PIV cards with hard PKI 
certificates to encrypt/decrypt email complicates the response to e-
Discovery request. We have several efforts underway to improve our 
response times when dealing with emails encrypted with a hard PKI 
certificate, as VA understands the importance of complying with such 
requests.

    8. Why is it that the PMAS processes only focuses on meeting 
milestones and schedule but there are no metrics around quality, 
functionality and customer satisfaction?

    VA Response: The Project Management Accountability System (PMAS) is 
an evolving IT project development methodology and management oversight 
system. From the very inception of PMAS, VA leadership planned to 
systematically expand the scope and function of PMAS over time. PMAS 
was initially implemented to ensure on-time delivery of IT 
capabilities. PMAS' initial focus on schedule was the most impactful to 
reviving the IT delivery rate at VA. However, PMAS continues to evolve 
and now also includes quality, functionality and customer satisfaction 
elements.
    PMAS Guide 4.0, dated November 7, 2012, establishes current PMAS 
policy. PMAS mandates that IT customers be engaged in the process of 
identifying the functionalities and capabilities that new IT projects 
are to deliver. Before development of a new IT project begins, as well 
as during the development process, the customer is intricately involved 
and their satisfaction is a critical element in the ability of that 
project to continue development. In addition, PMAS requires direct and 
continual participation by the customer across the entire life cycle of 
project development via the Integrated Project Team. Specifically, PMAS 
policy mandates that the Project Manager and the customer agree not 
only on the IT capability to be delivered, but also on the schedule by 
which the new IT capability is to be developed.
    At the conclusion of each development period, called increments, 
the customer must approve of the capabilities which were delivered. 
Without this measure of customer satisfaction being achieved, the 
project cannot continue development. To deliver on time, the capability 
must be delivered to a production environment by the scheduled 
increment delivery date, and the customer must agree that the 
capability meets desired functionality and schedule goals.
    Recently, measuring functionality (scope) has also been added to 
PMAS by capturing function points delivered in an IT project's 
increment. Function points measure an amount of business functionality 
delivered by the IT system to its users. By capturing these metrics, 
analysis can be conducted to also measure the effectiveness and 
efficiency of functionality delivered to the VA enterprise.
    In addition to measuring functionality, PMAS is now able to capture 
costs per increment by integrating data from the Budget Tracking Tool 
and PMAS data to achieve a cost per increment.
    The PMAS program will continue to mature; the near-future will 
focus on: ???(1) increasing customer satisfaction by assisting the 
customer in determining and measuring the business value the increment 
delivers; (2) recognizing and verifying the progress toward achieving 
the customers' strategic goals and objectives; and (3) determining the 
quality of the code delivered to production.

    9. The VA regulations on Information Security Matters at 38 CFR 
Part 75 appear to authorize an accelerated response with notice to the 
subjects of a data breach and/or an offer of credit protection 
services. How many times has credit protection service been offered to 
veterans for FY 2008-2012 and for each such instance, to how many 
veterans were such services offered? Please provide the annual cost for 
credit services for each year between FY 2008-2012.

    VA Response: The following table demonstrates the number of credit 
monitoring offers extended by VA, and the cost to the agency.

----------------------------------------------------------------------------------------------------------------
                        FY                                      Issued                          Cost
----------------------------------------------------------------------------------------------------------------
FY 2009...........................................                        20,287                         97,519
----------------------------------------------------------------------------------------------------------------
FY 2010...........................................                        28,369                        148,367
----------------------------------------------------------------------------------------------------------------
FY 2011...........................................                        26,980                         74,908
----------------------------------------------------------------------------------------------------------------
FY 2012...........................................                        16,160                         39,498
----------------------------------------------------------------------------------------------------------------
FY 2013*..........................................                        11,485                         25,156
----------------------------------------------------------------------------------------------------------------
*so far through July

    VA has reached out to Veterans Service Organizations to help 
encourage Veterans who are offered credit monitoring to accept the 
service.

    10. Under the regulations at 38 CFR Part 75, if the Secretary 
determines that individual notice is not warranted for a data breach, 
then an independent risk analysis is required to be performed. How many 
risk analyses have been performed in accordance with these provisions 
for FY 2008 to present? Please describe each occurrence of such 
analysis including the findings and conclusions. Please also indicate 
each date and instance in which a data breach was reported to OMB and/
or to Congress within FY 2008 to present.

    VA Response: The results of several contracted Independent Risks 
Analysis' (IRA) VA has conducted are below. The costs for each IRA are 
at least $29,000 and as much as $67,000. In 2012 alone, there were 
4,724 incidents. Conducting an IRA for each incident would have cost 
the Government over $136 million. The costs are not justified by the 
results from the IRAs. Of note, VA's OIG has declined to conduct IRA's 
as authorized by 38 U.S.C. Sec.  5724(a).
    In order to protect our Nation's Veterans, VA uses a very low 
threshold for offering credit protection services when a Veteran's 
sensitive personal information is the subject of a data breach. All 
reported incidents are triaged by VA's Incident Response Team and 
forwarded to the Department-wide Data Breach Core Team (DBCT) to 
determine when credit monitoring or notification letters are required. 
The DBCT team performs the same function as the IRA at a much lower 
cost.
    Additionally, the Department routinely performs other monitoring 
activities to ensure information is protected and has not been 
compromised, including conducting quarterly generalized data breach 
analysis on the 20 million Veterans names in the Beneficiary 
Identification Record Locator Subsystem to determine if any anomalies 
indicating identity theft warrant intervention on behalf of the 
Veteran. If such anomalies are detected, individual Veterans are 
notified by mail. This proactive data breach analysis identifies both 
potential identity theft that may be the result of undetected VA data 
breaches and identity theft unrelated to VA experienced by the Veteran 
population.

    1. April 2008 - An Independent Risk Analysis (IRA) was completed on 
an incident that involved unaccounted for IT Equipment Inventory losses 
across VA. A reasonable risk of harm was not found. Approximately 
$53,000.

    2. June 2008 - An IRA was completed on an incident that involved 
lost CD's at VBA regional offices. A reasonable risk of harm was not 
found. Approximately $29,000.

    3. October 2009 - An IRA was completed on an incident that involved 
contracted transcription services done for various facilities within 
VHA. A reasonable risk of harm was not found. Approximately $67,000.

    4. April 2011 - An IRA was contracted regarding an OIT employee in 
Fayetteville, North Carolina, who was stealing identities. The contract 
was cancelled in September 2011, after the employee was convicted and 
the OIG determined the investigation was complete. Credit protection 
services were provided due to reasonable risk of harm.

    11. By letter to the committee dated May 14, 2013, you stated: ``To 
be clear, VA's security posture was never at risk.'' Please explain how 
this statement is true given the admissions uncovered in the hearing 
that systems and networks had been breached by foreign state actors and 
the testimony of OIG that, at one point, there were 4000 open 
vulnerabilities. If the statement was untrue when made (as it certainly 
appears), please describe what disciplinary actions is being taken for 
the subordinates responsible.

    VA Response: As has been previously explained to the committee on 
July 12, 2013, this statement came in the context of a response to an 
inquiry on a particular topic. On April 25, 2013, VA received a letter 
from Congressman Coffman asking how VA will renew its ``Authorizations 
to Operate'' (ATO) various IT systems ``without compromising system 
security.'' The Secretary responded to this question in a letter on May 
14, 2013, outlining the ATO process and stating that through this 
process, ``VA's security posture was never at risk.'' As the Acting 
Assistant Secretary for OIT, Mr. Stephen Warren indicated in the 
testimony at the June 4, 2013, Subcommittee hearing, that specific 
phrase in the letter was and is clearly referring to the context of the 
letter: The process to approve ``Authorizations to Operate'' did not 
``compromise system security.'' The line did not - and was not meant 
to--imply that normal operation of VA systems were never at risk based 
on other factors. Further, as you know, Mr. Warren indicated in the 
hearing that his office drafted that letter for the Secretary's 
signature and that in retrospect Mr. Warren believes he could have been 
more clear. Regardless, the sentence is within the context of the ATO 
situation and responds to Congressman Coffman's request for assurance 
that the process of renewing ATOs would not put VA systems at risk.

    12. Reports indicate that VA became aware in January, 2013, of an 
incident where attackers used a spearphishing attack to gain access to 
a joint VA-DoD network dealing with health data. How many instances 
have hackers tried to use VA networks to gain access to Defense 
Department computer systems? Please describe each instance and what 
corrective actions were taken in response.

    VA Response: A response to this question was provided in a briefing 
to Committee staff on July 12, 2013. VA is bound by agreements with 
outside agencies to not reveal information they report to the 
department in public documents or settings. This has been explained to 
committee staff several times.
Questions for the Record from Congressman Tim Huelskamp

    1. I reiterated in my questioning during your testimony, if you 
could please communicate with the appropriate individual my request for 
answers to the letters I sent to the Department of Veteran Affairs on 
September 23, 2012 and October 3, 2012? If you need a copy of those 
questions, my office would be happy to provide those to you.

    VA Response: VA provided a response to Congressman Huelskamp's 
October 3, 2012, letter on January 24, 2013. A response to Congressman 
Huelskamp's September 23, 2012, letter will be provided as soon as it 
is available.

    2. Your explanation for receiving $87,000 in bonuses was that you 
met the performance expectations laid out for you by you leadership--
could you please provide further explanation of those expectations to 
my office?

    VA Response: Mr. Warren met and exceeded the performance 
expectations set by his supervisors. As a Senior Executive, Mr. Warren 
was responsible for meeting the executive core requirements of leading 
change, leading people, being results-driven, exercising business 
acumen, and building coalitions. Mr. Warren has excelled in these areas 
as reflected in the performance appraisals.

    3. Can you please provide information on how data security at the 
Department of Veteran Affairs compares with industry standards outside 
the federal government? Specifically, please describe the current data 
encryption process used by the Department of Veteran Affairs.

    VA Response: Effectively comparing data security at VA to industry 
standards largely depends on what sector of industry is being used for 
comparison. VA is on par with health care providers in terms of data 
security based on publicly available data regarding Health Insurance 
Portability and Accountability Act reports to the Department of Health 
and Human Services. VA has made great strides in encrypting laptops and 
desktops, having completed approximately 99.6 percent encryption of 
laptops and 70 percent encryption of desktops, with the remainder of 
desktop encryption to be completed by the end of the calendar year.

    4. It was stated during the hearing that outside foreign agents 
have had access to information in the Veterans Affairs database. Could 
you please provide to me detailed information on who has accessed the 
data, the date(s) it was accessed, and what the Department of Veteran 
Affairs has done to prevent future compromises to the system?

    VA Response: A response to this question was provided in a briefing 
to Committee staff on July 12, 2013. VA is bound by agreements with 
outside agencies to not reveal information they report to the 
department in public documents or settings. This has been explained to 
committee staff several times.

                                 
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