Electronic Government: Federal Agencies Continue to Invest in Smart Card Technology
Released: 2004-09-08T00:00:00

Letter

Background

Today, federal employees are issued a wide variety of identification (ID) cards, which are used to access federal buildings and facilities, sometimes solely on the basis of visual inspection by security personnel. These cards often cannot be used for other important identification purposes—such as gaining access to an agency’s computer systems—and many can be easily forged or stolen and altered to permit access by unauthorized individuals. In general, the ease with which traditional ID cards—including credit cards—can be forged has contributed to increases in identity theft and related security and financial problems for both individuals and organizations. One means to address such problems is offered by the use of smart cards.

Smart cards are plastic devices about the size of a credit card that contain an embedded integrated circuit chip capable of both storing and processing data. Figure 1 shows a typical example of a smart card. The unique advantage of smart cards—as opposed to cards with simpler technology, such as magnetic stripes or bar codes—is that smart cards can exchange data with other systems and process information rather than simply serving as static data repositories. By securely exchanging information, a smart card can help authenticate the identity of the individual possessing the card in a far more rigorous way than is possible with simpler traditional ID cards. A smart card’s processing power also allows it to exchange and update many other kinds of information with a variety of external systems, which can facilitate applications such as financial transactions or other services that involve electronic record-keeping.

Smart cards can also be used to significantly enhance the security of an organization’s computer systems by tightening controls over user access. A user wishing to log on to a computer system or network with controlled access must “prove” his or her identity to the system—a process called authentication. Many systems authenticate users by merely requiring them to enter secret passwords, which provide only modest security because they can be easily compromised. Substantially better user authentication can be achieved by supplementing passwords with smart cards. To gain access under this scenario, a user is prompted to insert a smart card into a reader attached to the computer as well as type in a password. This authentication process is significantly harder to circumvent because an intruder would need not only to guess a user’s password but also to possess the same user’s smart card.

Even stronger authentication can be achieved by using smart cards in conjunction with biometrics. Smart cards can be configured to store biometric information (such as fingerprint templates or iris scans) in electronic records that can be retrieved and compared with an individual’s live biometric scan as a means of verifying that person’s identity in a way that is difficult to circumvent. A system requiring users to present a smart card, enter a password, and verify a biometric scan provides what security experts call “three-factor” authentication, the three factors being “something you possess” (the smart card), “something you know” (the password), and “something you are” (the biometric). Systems employing three-factor authentication are considered to provide a relatively high level of security. The combination of smart cards and biometrics can provide equally strong authentication for controlling access to physical facilities.

Smart cards can also be used in conjunction with public key infrastructure (PKI) technology to better secure electronic messages and transactions. A properly implemented and maintained PKI can offer several important security services, including assurance that (1) the parties to an electronic transaction are really who they claim to be, (2) the information has not been altered or shared with any unauthorized entity, and (3) neither party will be able to wrongfully deny taking part in the transaction. Security experts generally agree that PKI technology is most effective when deployed in conjunction with smart cards.

In addition to enhancing security, smart cards have the flexibility to support a wide variety of uses not related to security. A typical smart card in use today can store and process 16 to 32 kilobytes of data, while newer cards can accommodate 64 kilobytes. The larger the card’s electronic memory, the more functions can be supported, such as tracking itineraries for travelers, linking to immunization or other medical records, or storing cash value for electronic purchases.

Smart cards are grouped into two major classes: contact cards and “contactless” cards. Contact cards have gold-plated contacts that connect directly with the read/write heads of a smart card reader when the card is inserted into the device. Contactless cards contain an embedded antenna and work when the card is waved within the magnetic field of a card reader or terminal. Contactless cards are better suited for environments where quick interaction between the card and the reader is required, such as high- volume physical access. For example, the Washington Metropolitan Area Transit Authority has deployed an automated fare collection system using contactless smart cards as a way of speeding patrons’ access to the Washington, D.C., subway system. Smart cards can be configured to include both contact and contactless capabilities, but two separate interfaces are needed because standards for the technologies are very different.

Since the 1990s, the federal government has considered the use of smart card technology as one option for electronically improving security over buildings and computer systems. In 1996, GSA was tasked with taking the lead in facilitating a coordinated interagency management approach for the adoption of multiapplication smart cards across government. The tasking came from OMB, which has statutory responsibility to develop and oversee policies, principles, standards, and guidelines used by agencies for ensuring the security of federal information and systems. To make it easier for federal agencies to acquire commercial smart card products, GSA developed the governmentwide Smart Card Access Common ID contracting vehicle, which also specified adherence to the government smart card interoperability specification that NIST developed in collaboration with smart card vendors.

In 2003, OMB, in accordance with the President’s vision of creating a more responsive and cost-effective government, issued a memorandum to federal chief information officers outlining details of the E-Authentication E-Government initiative on authentication and identity management. OMB also created the Federal Identity Credentialing Committee (FICC) to make policy recommendations and develop the Federal Identity Credentialing component of the Federal Enterprise Architecture, to include services such as identity proofing and credential management for the federal government. In February 2004, FICC issued policy guidance on the use of smart card–based systems in badge, identification, and credentialing systems with the objective of helping agencies plan, budget, establish, and implement credentialing and identification systems for government employees and their agents.

In our January 2003 report on smart cards, we made recommendations to OMB, NIST, and GSA. Specifically, we recommended that the Director, OMB, issue governmentwide policy guidance regarding adoption of smart cards for secure access to physical and logical assets; the Director, NIST, continue to improve and update the government smart card interoperability specification by addressing governmentwide standards for additional technologies—such as contactless cards, biometrics, and optical stripe media—as well as integration with PKI; and the Administrator, GSA, improve the effectiveness of its promotion of smart card technologies within the federal government by (1) developing an internal implementation strategy with specific goals and milestones to ensure that GSA’s internal organizations support and implement smart card systems consistently; (2) updating its governmentwide implementation strategy and administrative guidance on implementing smart card systems to address current security priorities; (3) establishing guidelines for federal building security that address the role of smart card technology; and (4) developing a process for conducting ongoing evaluations of the implementation of smart card–based systems by federal agencies to ensure that lessons learned and best practices are shared across government.

To date, all three agencies have taken actions to address the recommendations made to them. In response to our recommendation, OMB issued a July 3, 2003, memorandum to major departments and agencies directing them to coordinate and consolidate investments related to authentication and identity management, including the implementation of smart card technology. NIST has responded by improving and updating the government smart card interoperability specification to address additional technologies, including contactless cards and biometrics.GSA responded to our recommendations by updating its “Smart Card Policy and Administrative Guidance” to better address security priorities, including minimum security standards for federal facilities, computer systems, and data across the government. However, three of our four recommendations to GSA are still outstanding. GSA officials stated that they are working to address the recommendations to develop an internal GSA smart card implementation strategy, develop a process for conducting evaluations of smart card implementations, and share lessons learned and best practices across government. The responsibility for one recommendation— establishing guidelines for federal building security that address the role of smart card technology—was transferred to DHS.

Status of Previously Ongoing Smart Card Efforts

In January 2003, we reported that 18 federal agencies were planning, testing, operating, or completing 62 smart card projects. These projects varied widely in size and technical complexity, ranging from small-scale, limited-duration pilot projects to large-scale, agencywide initiatives providing multiple services. The projects were reported in varying stages of deployment. Specifically, 17 projects were listed as operational, 13 projects were in the planning stage, and 7 were being piloted. In addition, 10 were reported at that time as having been completed or discontinued for various reasons. No information was provided about the project phase of the remaining 15 initiatives.

In responding to our survey regarding the 52 projects listed as ongoing in our previous report, agencies reported that as of June 2004, 28 had been terminated. Of the remaining projects, 11 were operational, 5 were in the planning or pilot phase, and agencies did not provide current information on 8. The operational and planned projects consist mostly of large-scale projects intended to provide identity credentials to an entire agency’s employees or other large groups of individuals. Figure 2 shows the current status of the 52 federal smart card projects that were previously reported as continuing. Table 1 provides summary information on the status of individual projects, providing reasons for any terminations.

Agencies reported that the majority (28) of the above projects had been terminated since our last review was conducted. According to agency officials, reasons for termination were primarily that the projects were absorbed into other smart card projects or were deemed no longer feasible. For example, DOD terminated 14 of 26 previously reported projects by substituting functionality provided by two large-scale smart card projects, the Common Access Card (CAC) and the EZPay (a project that was not previously reported). DOD’s CAC card is to be used to authenticate the identity of nearly 3.5 million military and civilian personnel and to improve security over online systems and transactions. The EZPay program is a stored-value card given to recruits at training installations to accelerate the processing time and thus maximize training time.

Table 2 provides further details on the remaining 16 ongoing projects. As the table shows, 12 of these are large-scale projects. Agencywide smart card projects are ongoing at NASA and the Departments of Defense, the Interior, State, and the Treasury.

These and other large projects will serve populations ranging up to 6 million. The cards will be used for identity credentials, physical access to buildings, logical access to computer systems, and stored value. The remaining 4 projects are used for similar purposes. However, they are smaller in scale, serving populations ranging from 612 to 3,100 individuals. For example, the Interior’s Minerals Management Service is planning a smart card program for use as identity credentials, and physical and logical access for about 2,100 employees.

In response to our survey, agency officials reported 8 additional smart card projects that were ongoing at the time of our last review but not previously reported. Four of the 8 projects were planned for multiple applications such as identity credentials and physical and logical access. The remaining 4 projects were planned for single applications such as stored value, logical access to computer systems and networks, or processing travel documents. Figure 3 shows the number of these projects by the type of applications planned and the stage of reported deployment. Table 3 provides more detailed status information on these projects.

Agencies across the Government Continue to Invest in Smart Card Projects

In response to our survey, agencies reported 10 smart card projects that were initiated since our last review was completed. Based on these reported projects, more agencies are using GSA’s Smart Card Access Common ID contracting vehicle to acquire smart card technology.

Federal Investments in Smart Card Projects

The 10 new projects identified in response to our survey vary in size, scope, and stage of deployment: planning, pilot, and operational. All of the projects are planned for multiple applications such as identity credentials and physical and logical access. Figure 4 shows the number of these projects by the type of application planned and the stage of reported deployment.

These 10 projects vary widely in size, including small-scale projects— involving smart cards issued to as few as 126 cardholders—as well as much larger scale initiatives. For example, Department of Labor officials reported that the Employment and Training Administration physical access control smart card was issued to 126 federal employees and contractors as of December 2003. This card is operational and will be issued to 175 cardholders when fully deployed; it is used for identity credentials and physical access to buildings and other facilities. In contrast, VA plans to issue an estimated 500,000 smart cards to employees and contractors under its Authentication and Authorization Infrastructure Project. Through this initiative, smart cards will be used for identity credentials, accessing buildings or other facilities, and accessing computer systems. Production began in July 2004.

Another example of a large-scale project is GSA’s Nationwide ID card. GSA plans to issue cards to 61,000 federal employees, contractors, and tenant agencies. Using this card, GSA plans to implement nationwide uniform credentials based on smart card technology by providing a single standard credential card for identification, building access, property management, and other applications. Table 4 provides status information on the 10 recently initiated smart card projects.

Agencies’ Reported Use of GSA’s Contracting Vehicle

GSA developed the Smart Card Access Common ID contracting vehicle to help make it easier for federal agencies to acquire commercial smart card products and services. According to the director of GSA’s Center for Smart Card Solutions, further guidance is planned that will require agencies to use the contracting vehicle or provide justification for not using it. The Director also stated that using GSA’s contract should help reduce the cost of smart cards and ensure that vendors incorporate interoperability specifications. Between December 2004 and December 2008, five agencies—including NASA and the Departments of Defense, Homeland Security, the Interior, and Veterans Affairs—are planning to make an aggregated purchase of up to 40 million cards through the GSA contract. As a part of this purchase, these agencies are scheduled to begin making quarterly procurements beginning in December 2004 of approximately 1.2 million cards.

In response to our survey, the majority of the agencies (4 of 7) that reported new initiatives told us that they purchased smart cards under the GSA contract. The remaining agencies cited reasons for not acquiring smart cards under the GSA contract, such as purchase arrangements with another agency or purchases under other types of contracts.

Implementation of Agencywide Smart Card Initiatives

Agencies continue to move towards integrated agencywide initiatives that use smart cards as identity credentials that agency employees can use to gain both physical access to facilities, such as buildings, and logical access to computer systems and networks. In some cases, additional functions, such as asset management and stored value, are also being included. Nine agencies reported such projects: 4 of these were reported in our prior report, and 5 are recently initiated efforts. These projects are in various stages of deployment.

One of the largest agencywide efforts is DHS’s identification and credentialing project. The agency plans to issue 250,000 cards to employees and contractors. This is a comprehensive identification and credentialing effort that will use PKI technology for logical access and proximity chips for physical access. Authentication will rely on biometrics with a personal identification number as a backup. Other recently initiated agencywide smart card projects include GSA’s Nationwide Identification, VA’s Authentication and Authorization Infrastructure Project, and the Department of Labor’s E-Authentication project. Table 5 summarizes both previously reported and recently initiated agencywide smart card efforts.

Agency Comments and Our Evaluation

We received oral comments on a draft of this report from GSA’s Associate Administrator, Office of Governmentwide Policy, and from officials of OMB’s Office of Information and Regulatory Affairs and its Office of General Counsel. Both GSA and OMB generally agreed with the content in the draft report. In addition, each agency provided technical comments, which have been addressed where appropriate in the final report.

We will provide copies of this report to the Director of OMB and the Administrator of GSA, and the report will be available at no charge on the GAO Web site at http://www.gao.gov.

Should you have any questions on matters contained in this report, please contact me at (202) 512-6240 or John de Ferrari, Assistant Director, at (202) 512-6335. We can also be reached by e-mail at koontzl@gao.gov and deferrarij@gao.gov, respectively. Other key contributors to this report were Tonia Brown, Barbara Collier, Felipe Colón, Pamlutricia Greenleaf, and Joel Grossman.

Objectives, Scope, and Methodology

Our objectives were to (1) determine the current status of smart card projects under way at the time of our last review, (2) identify and determine the status of projects initiated since our last review was completed, and (3) identify integrated agencywide smart card projects that are currently under way.

To address these objectives, we developed a questionnaire and surveyed 24 federal agencies. These included agencies that are subject to the provisions of the Chief Financial Officers Act as well as the Department of Homeland Security. The survey included the 18 agencies pursuing smart card projects that were identified in our previous report.

The practical difficulties of conducting any survey may introduce errors. For example, differences in how a particular question is interpreted, the sources of information available to respondents, or the types of people who do not respond can introduce unwanted variability into the survey results. We included steps in both the data collection and data analysis stages for the purpose of minimizing such errors.

We analyzed information obtained through the survey to develop summary results and identify trends. To ensure the reliability of the information reported through the survey, we obtained available supporting documentation—such as project plans and descriptions—to verify (1) reported planning and implementation dates and (2) the numbers of smart cards issued as of December 31, 2003, or planned for issuance. As needed, we conducted follow-up interviews with agency officials responding to the survey to further ensure that the information provided was current and accurate. In addition, we contacted GSA officials to discuss agencies’ use of the Smart Card Access Common ID contract and other governmentwide implementation issues.

We performed our work in Washington, D.C., and Atlanta, Georgia, between November 2003 and July 2004, in accordance with generally accepted government auditing standards.

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