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August 10, 2004:

The Honorable Tom Davis:

Chairman, Committee on Government Reform:

House of Representatives:

Dear Mr. Chairman:

Subject: Public Key Infrastructure: Examples of Risks and Internal 
Control Objectives Associated with Certification Authorities:

This letter is in response to your request that we examine our advice 
to executive branch agencies regarding commercial managed service 
public key infrastructure (PKI) solutions to see if the advice is 
consistent with current federal policy and private sector best 
practices. Specifically, over the past several years, staff from 
various agencies has asked for informal advice on these matters. Our 
informal advice was based on the control environment described to us by 
the agencies. This control environment, which is discussed later in 
this letter, resulted in the informal advice that the agencies may 
incur a greater burden in ensuring that a contract certification 
authority whose certificates are used in financial management 
applications[Footnote 1] has implemented an adequate system of internal 
controls than would be necessary if the certification authority were 
implemented internally. However, if agencies are willing to accept this 
potential increased burden by accepting and mitigating the potential 
risks (not all of which may be known and understood at this time) 
associated with commercial certification authorities contracting out, a 
certification authority may be able to provide the same level of 
security assurances as an internal certification authority. One key 
aspect of mitigating the risk will be the close involvement of agency 
personnel in the commercial implementation. We also told the agencies 
that until we were formally requested by an agency to review a 
commercial service provider's system, we could not express a formal 
position. To date, we have not received such a request.

We recognize that PKI services can be used to help mitigate the 
significant risks present in the federal information technology (IT) 
systems that have led GAO to conclude that information technology 
security is a high-risk area.[Footnote 2] Although PKI systems can help 
mitigate some of these risks, GAO and the executive branch have 
recognized that implementing an effective PKI solution is complex and 
the internal control techniques selected are a critical component of 
successful efforts. Accordingly, when agencies have requested our views 
on commercial managed service PKI systems, we have responded by 
providing the characteristics of good systems and examples of the types 
of controls we would expect to see should we audit such systems, 
regardless of whether they are operated by the agency or a contractor. 
This advice was grounded in our experience with electronic signature 
systems used in financial management systems and GAO's general internal 
control standards work under 31 U.S.C. § 3511. For this particular 
subject, we also used control objectives and security requirements 
generally outlined in executive branch documents such as Office of 
Management and Budget (OMB) Circular A-130, applicable National 
Institute of Standards and Technology (NIST) standards and guidance, 
the General Services Administration's (GSA) Federal Bridge 
Certification Authority's practices statement, and guidance on 
electronic records provided by the Department of Justice. The guidance 
contained in these documents is consistent with the internal controls 
discussed in this report.

One purpose of a PKI is to generate electronic signatures. In our 
evaluation of electronic signature systems, GAO has adopted criteria 
that are technology neutral. Similarly, the examples discussed in this 
letter of the types of risks that agencies need to consider in their 
efforts to implement a critical component of a PKI--the certification 
authority--and the examples of control objectives that can be used to 
help understand whether the control techniques selected are adequate to 
mitigate those risks generally apply to certification authorities 
regardless of whether they are operated by a commercial provider or the 
federal agency.

Background:

While we have performed several studies looking at OMB's leadership in 
the electronic signature areas at the request of congressional 
committees, we have not conducted a survey of private sector best 
practices in the PKI area.[Footnote 3] As you know, the Government 
Paperwork Elimination Act (GPEA) authorized OMB to develop procedures 
for the use and acceptance of electronic signatures by executive 
agencies.[Footnote 4] The act required that OMB develop those 
procedures in a manner that is "compatible with standards and 
technology for electronic signatures that are generally used in 
commerce and industry and by State governments."[Footnote 5] To this 
end, OMB is required to consult with private sector bodies and state 
entities that set standards for the use and acceptance of electronic 
signatures. Although OMB has developed this guidance, it does not 
specifically address the controls that are needed for Certification 
Authorities. Thus, when we respond to an agency's request for informal 
advice on a proposed PKI solution, we are not attempting to create 
policy regarding PKI solutions, but are giving our views on what we 
would consider an adequate internal control structure to address the 
risks associated with such systems based on the standards that we would 
follow when conducting an audit under our general audit authority using 
standards developed pursuant to our authority under 31 U.S.C. § 3511 
and relevant executive branch guidance. If we found that a particular 
system's internal controls were inadequate, or that the executive 
branch guidance was insufficient to adequately protect a PKI system, 
our report would include recommendations to improve the internal 
control environment.

As for any set of internal controls, our views on whether commercial 
managed services for hosting PKI solutions are appropriate for certain 
federal agency needs are not static but depend on the application, 
level of risks, costs, and other factors, as required by numerous 
statutes. We generally recommend that a critical component of a PKI, 
the certification authority, remain under federal agency control when 
that certification authority is used in substantial financial 
management transactions. This position is based on the internal control 
structure, as described to us by the agencies, used by commercial 
certification authorities. Accordingly, the agencies may incur a 
greater burden in ensuring that a contract certification authority has 
implemented an adequate system of internal controls than would be 
necessary if the certification authority were implemented internally. 
However, if agencies are willing to accept this potential increased 
burden--which will require close involvement of agency personnel in the 
commercial implementation--contracting out a certification authority 
may be able to provide the same level of security assurances as an 
internal certification authority.[Footnote 6] We do not believe that 
there is any theoretical reason why a commercially provided 
certification authority cannot provide the same level of assurance as 
one maintained within a federal agency. The Department of Justice has 
issued guidelines that can help an agency understand the legal risks 
associated with contracting out data management and storage functions.

This letter also discusses some of the internal control risks 
associated with a certification authority that issues certificates that 
are used as evidence of an agency's intent to be bound to financial 
management transactions and some of the internal control objectives 
that are needed for such a certification authority regardless of 
whether it is hosted by a federal agency or a contractor. It also 
discusses agency use of certificates issued by commercial activities 
for financial management applications.

Digital Certificates and Certification Authorities Link Public Keys 
with Specific Users to Convey Trust:

A PKI is a system of hardware, software, policies, and people that can 
provide a range of security assurances including authentication, data 
integrity, data confidentiality, and nonrepudiation. PKIs provide a 
desired level of trust using public key-based cryptographic techniques 
to generate and manage electronic "certificates."[Footnote 7] These 
certificates are used to link an individual or other entity to a public 
key that can be used to validate the information provided by the entity 
or individual or facilitate data encryption. Specifically, these 
certificates are used to verify digital signatures (providing 
authentication and data integrity) and facilitate data encryption 
(providing confidentiality). A properly designed and implemented PKI 
can also be used to ensure that a given digital signature is still 
properly linked to the individual or entity associated with it 
(providing nonrepudiation). A properly designed and implemented PKI can 
satisfy the criteria we use to evaluate systems that produce electronic 
signatures.

In a small community where everyone knows everyone else, users can 
individually give their public keys to the people with whom they wish 
to deal. In a large-scale implementation, where it is necessary for 
individuals or entities that may not know each other to conduct 
transactions, it is impractical and unrealistic to expect that each 
user will have previously established relationships with all of the 
other potential users in order to obtain their public keys. One way 
around this problem is for all PKI users and relying entities to agree 
to trust a third party who is known to everyone. The basic technical 
components for achieving third-party trust include (1) digital 
certificates, which link an individual to that user's public key; (2) 
certification authorities, which create these certificates and vouch 
for their validity to the entities relying on the PKI; (3) registration 
authorities, which are in charge of verifying user identities so that 
the appropriate key pairs and digital certificates can be created; and 
(4) certification paths, which are used for recognizing and trusting 
digital certificates issued by other PKIs in order to create larger, 
connected networks of trust. In addition, a set of written policies 
establishes the security assurances that an organization needs to 
achieve and the practices and procedures that will be followed to 
achieve and maintain those assurances. Figure 1 shows the various 
components of a PKI, each of which will be discussed in more detail.

Figure 1: Basic Components of A PKI:

[See PDF for image]

[End of figure]

Certificates and Certification Authorities Are the Technical Mechanisms 
for Conveying Trust in a PKI:

A digital certificate is an electronic credential that guarantees the 
association between a public key and a specific entity.[Footnote 8] It 
is created by placing the entity's name, the entity's public key, and 
certain other identifying information in a small electronic document 
that is stored in a directory or other database. Directories may be 
publicly available repositories kept on servers that act like telephone 
books for users to look up others' public keys. The digital certificate 
itself is created by a trusted third party called a certification 
authority, which digitally signs the certificate, thus providing 
assurance that the public key contained in the certificate does indeed 
belong to the individual named in the certificate. A certification 
authority is responsible for managing digital certificates. The purpose 
of the certification authority is to oversee the generation, 
distribution, renewal, revocation, and suspension of digital 
certificates. The certification authority may set restrictions on a 
certificate, such as the starting date for which the certificate is 
valid as well as its expiration date. It is at times necessary to 
revoke digital certificates before their established expiration dates, 
for example, when the certificate holder leaves the issuing 
organization or when the private key is compromised. Therefore, the 
certification authority is also responsible for providing certificate 
status information and may publish a certificate revocation list in a 
directory or maintain an online status-checking mechanism. The PKI 
software in the user's computer can verify that the certificate is 
valid by first verifying that the certificate has not expired and then 
by assuring that it has not been revoked or suspended.

Before the certification authority can issue a certificate to a user, 
it must verify the user's identity in accordance with the 
organization's preset policies. In some cases, the certification 
authority is set up to perform the identification and authentication of 
users by itself, but often this function is delegated to separate 
entities called registration authorities. A user's identity is verified 
through one of two means, based on the level of security that is deemed 
necessary by the organization. In the first method, the user would need 
to appear in person at the registration authority and present identity 
documents such as a birth certificate or passport. A second, less 
secure method, involves the confirmation of a shared secret through an 
online application. For example, the user could verify his identity by 
confirming something that the agency already knows about him but which 
is not common knowledge, such as tax return information. After 
verifying the user's identity, the registration authority creates a 
unique user name. This unique name, which may include the user's given 
name, ensures that people who rely on the certificate can distinguish 
between several individuals with similar given names, much like an e-
mail address. The certification authority then creates the certificate 
that irrevocably links that unique name to the user's public key. 
Registration authorities focus on identifying and authenticating users; 
they do not sign or issue digital certificates. However, the 
registration authority is required to comply with preset standards for 
verifying a person's identity.

Because registration of large numbers of people in person can be 
expensive, in some situations an organization may determine that a less 
expensive registration process is adequate, even though the result 
would be a somewhat lower assurance of correct authentication. 
Regardless, a critical link in any PKI is the binding process used to 
associate the user with the user's public key. PKIs implemented by 
separate organizations, such as individual federal agencies, can be 
combined to create a larger interconnected system, such as a government 
wide, national, or international PKI. To do this, entities within each 
component system need a way to reliably establish an electronic path to 
the certification authorities that generate digital certificates for 
users within the other component systems. There are three major 
approaches, or certification path models, for doing this. First, the 
trust list method relies on all components accepting a specific list of 
trusted certification authorities. This approach is used by Web 
browsers. Second is the hierarchical model, in which a single "root" 
certification authority issues certificates to subordinate 
certification authorities located in each component system. Third is a 
mesh architecture, in which nonhierarchical links are established among 
certification authorities in separate components that are not 
subordinated to each other. For a complete discussion of these three 
different certification path models, see our report on the PKI 
issues.[Footnote 9]

Implementation Policies Establish Trust Levels for PKIs:

Organizations may choose varying levels of trust for different kinds of 
transactions or other electronic functions. As noted, one organization 
may require users to register for their digital certificates by 
visiting the registration authority in person, while another may allow 
users to register by providing identifying information online. One 
organization may require that users protect their digital certificates 
with a more secure hardware device, such as a smart card, while another 
may be satisfied with a less secure software storage device. One 
organization may require that the digital certificate itself contain 
certain information that limits the size and scope of the electronic 
transaction while another may not put any limits on the use of the 
certificate. Each agency will have to develop its own implementation 
policies to meet the requirements of its particular business model for 
electronic transactions using PKI and set forth in its implementation 
policies what types of certificates it will issue or accept. Two 
documents, called the certificate policy and the certification 
practices statement, are usually employed to provide these policies.

The certificate policy is a set of rules governing the intended use of 
certificates and the level of trust that a particular PKI will support. 
It contains items such as the obligations of the certification 
authority, its liabilities and warranties, confidentiality policy, 
identification and authentication requirements, and details of what 
information will be contained in the certificates. The certificate 
policy provides the criteria that can be used by others to determine 
whether to trust certificates issued by the certification authority and 
is also the basis for accreditation of the certification authority. The 
second document, called a certification practices statement, contains a 
more detailed description of the mechanics followed by a certification 
authority in issuing and otherwise managing certificates. It outlines 
the procedures used to implement the policies with regard to 
certificate issuance, user identification and registration, 
certificate lifetimes and revocation, and publishing practices for 
certificates and certificate revocation lists. It also states the 
operational practices followed by the certification authority to ensure 
security. The certification practices statement is used to outline 
operational procedures for the certification authority's personnel and 
also provides additional information to the relying party.

Attributes of Valid Electronic Signatures and Their Use in PKIs:

Since the early 1980s, GAO has reviewed systems generating electronic 
signatures that are used in financial management systems. In performing 
this work, we reviewed the role that a signature plays in a traditional 
paper-based system when that signature is used as evidence of an intent 
to bind an individual to a given transaction. On the basis of what we 
found, we identified a set of technology neutral attributes of a valid 
signature acceptable for use in financial management systems.[Footnote 
10] Using these attributes, we stated that electronic signature systems 
are adequate to provide evidence of an agency's intent to be bound to 
financial transactions when the signatures generated by those systems 
are (1) unique to the signer, (2) under the signer's sole control, (3) 
capable of being verified, and (4) linked to the data in such a manner 
that if the data are changed, the signature is invalidated upon 
verification.[Footnote 11] These criteria are technology 
neutral,[Footnote 12] and the cryptographic properties associated with 
digital signature technologies can be used to develop and implement a 
public key-based system that has the ability to meet these criteria. 
These criteria also comply with the definition of an electronic 
signature in Section 1710 of GPEA, which states that the term 
"'electronic signature' means a method of signing an electronic message 
that--(A) identifies and authenticates a particular person as the 
source of the electronic message; and (B) indicates such person's 
approval of the information contained in the electronic message.":

Risks Associated with Certification Authorities:

As noted in your letter, several agencies have stated that GAO is 
concerned about whether a commercially managed service PKI could be 
used for their encryption needs. In our discussions, we have told the 
agencies that what they should be most concerned about are the 
increased levels of risks associated with this environment. We also 
told the agencies that until we could review the specific controls used 
by a given solution, we would be unable to express an opinion on the 
adequacy of a particular internal control solution. However, we 
expressed concerns about whether the internal control structure 
normally associated with commercially hosted services as described to 
us would be adequate when the certificates generated by those services 
were used as evidence of a federal agency's intent to be bound to a 
financial management transaction. The concerns that we raised are 
similar to those we would raise should a federal agency implement a 
certification authority using similar procedures. To date, no agency 
has requested that we undertake the review necessary to provide our 
opinion on whether a specific commercial solution would provide 
adequate controls to address our internal control concerns.

Certification authorities, when used to bind agencies, their employees, 
and others contracting with agencies for financial management 
transactions, are a critical component of a PKI regardless of whether a 
federal or commercial entity operates the certification authority 
because of the importance that the certification authority has in the 
PKI trust model. As discussed earlier, the certification authority is 
the entity that the other users of the PKI trust to guarantee the 
association between a public key and a specific user or entity. 
Accordingly, if the certification authority is compromised the impacts 
can be catastrophic to an agency's operations. This is especially true 
if the compromise is not immediately detected for some period of time 
since improper certificates could be issued to individuals or 
organizations that could be used to make improper payments for one or 
many improper transactions. Since all parties trust the certificates 
issued by the certification authority, an undetected compromise may, 
depending on what other controls are present, result in the systems 
that rely on those certificates making improper payments. For example, 
a financial management system may rely on a contracting officer's 
certificate to ensure that an obligation is valid before entering it 
into its records. The financial management system may also rely on a 
certificate issued to another individual to validate that the goods and 
services associated with that contract have been received and accepted 
by the agency. Once the financial management system is notified that an 
invoice has been received for these goods and services, it may 
automatically generate a payment since (1) a valid obligation has been 
recorded, (2) the goods and services called for in the obligating 
document have been received and accepted, and (3) an invoice has been 
received. This is a classic automated three-way match that leading 
financial management systems perform to reduce the costs associated 
with payment processing.[Footnote 13] Simply stated, because of the 
trust the system places in the certificates issued by the certification 
authority, the system may securely transmit an improper payment based 
on the compromise. Once an agency has detected the compromise, it must 
take actions to attempt to collect any improper payments.

Even if the compromise is detected in a timely manner, the impacts can 
be catastrophic to an agency's operations regardless of whether a loss 
of funds occurs from the compromise. As we have noted, systems must be 
set up to positively identify internal and external users, issue them 
digital certificates, and manage the exchange and verification of 
certificates. Should the certification authority be compromised, the 
agency would have to go through the time consuming and costly process 
of reissuing digital certificates in accordance with the agency's 
policies and procedures. Certificates used for critical financial 
management applications should be issued based on split knowledge and 
dual control concepts and the individual's identity should be validated 
by personally appearing before the registration authority. For some 
agencies a compromise could mean reissuing tens of thousands 
certificates. If an agency has integrated its PKI into its systems, a 
significant disruption can result if the agency has to shut down 
associated systems because of a compromised PKI. For example, users may 
not be able to use those systems until they have received new 
certificates. In a non-PKI context, when one agency decided to shut 
down its financial management operations so that it could convert to a 
new system, we understand that the agency incurred over $1 million in 
late payment penalties as a result of the financial management system 
not being available. When the system has PKI, even if the agency 
bypasses the existing control process, the agency exposes itself to 
other attacks since the system is no longer using one of its critical 
control techniques to ensure data integrity -the PKI. Regardless of the 
decision, the agency is exposing itself to increased risks by (1) not 
processing transactions or (2) processing transactions without an 
adequate level of data integrity. As we have noted, procedures for 
exception processing need to be carefully planned since exception 
processing that is not as good as the primary process can be exploited 
as a security hole.[Footnote 14]

In cases where a certification authority is compromised, the agency 
should have recovery plans in place to mitigate the damage. As a part 
of each agency's information security program which OMB must approve, 
agencies are required to have plans and procedures to ensure continuity 
of operations for information systems that support agency operations 
and assets, regardless of whether those operations and assets are 
managed by another agency, contractor, or other source.[Footnote 15] 
Though necessary to ensure continuity of operations, the implementation 
of a plan to address the compromise and recover the necessary PKI 
functionality may likely cause an agency to incur significant costs.

Special Risks When Commercial Activities Host Certification 
Authorities:

Pursuant to GPEA, the Justice Department (Justice) issued guidance that 
identifies issues that need to be addressed when using contractors to 
perform critical record-keeping functions. Justice stated that 
"agencies should ensure: (1) that an electronic process collects all 
relevant information; (2) that the information is retained properly; 
and (3) that the information is readily accessible" to ensure the 
availability of information in an electronic process. It also noted 
that the "potentially lengthy period of time between the collection of 
information and its use in many situations, including litigation, 
highlights the importance of these issues."[Footnote 16] Maintaining 
and securing proper electronic records is an important function of the 
certification authority.

The Justice document recognized that "creative strategies can address 
some agency information management needs, such as ensuring the 
accessibility or the reliability of information." However, it noted 
that the use of outside parties to perform data storage functions 
traditionally performed by agency personnel can also create a variety 
of additional risks that should be carefully considered before turning 
over an agency's files to a private party. The Justice document 
outlined a number of actions that would need to be taken to provide the 
agency with reasonable assurance that the contractor adequately 
protects its electronic records. These steps included (1) choosing 
outside parties with care, (2) clearly outlining responsibilities 
before initiating the relationship, (3) placing reliance on an outside 
party only gradually, (4) closely monitoring the outside party, (5) 
regularly revisiting the nature and success of the relationship, (6) 
taking advantage of appropriate industry standards, and (7) developing 
backup plans.

When a third party operates a certification authority, the federal 
agency is highly dependent on the provider's system of internal 
controls over such items as software development, physical security 
decisions, and operations management. Justice noted that agencies 
should especially consider the regular use and reuse of auditing or 
certification procedures to examine whether the outside party is 
following appropriate practices and that other steps may be helpful as 
well in reducing particular risks associated with the use of outside 
parties. The report noted that in a recent case where at least 43,000 
electronic messages were "lost," there was a misunderstanding between 
the agency, which believed that backups were being made both on a daily 
basis and a periodic systemwide basis, and the agency's contractor, 
which had been doing neither. A contributing factor to the loss of the 
messages may have been that the audit log features had been turned off 
to improve system performance. The practice of relying on a contractor 
to perform certification authority functions is very similar to relying 
on a commercial off the shelf (COTS) system. Because internal control 
structures for PKI should be developed in accordance with the specific 
needs of each agency, it is not clear whether commercial products, as 
we have generally discussed with agencies, can meet the internal 
control standards necessary to properly manage risk as outlined in the 
following section.[Footnote 17]

Examples Of Internal Controls Associated with Issuing Certificates:

The exact internal control structure needed for a given PKI should be 
developed based on an effective risk management approach that uses 
quantitative and qualitative factors. We have also found it useful to 
frame the discussion of a conceptual system approach around the control 
objectives that should be accomplished by the system. This process 
allows an evaluation that does not specify a given architecture and 
allows an agency to implement a solution that best meets its needs. The 
following examples of the types of control objectives that we might 
look for in reviewing a PKI for audit purposes are derived from various 
sources, including our internal control standards, OMB's Circular A-
130, Appendix III, and GSA's Federal Bridge Certification Authority's 
practices statement:

Split knowledge and dual control should be utilized to ensure that 
certificates issued to a given user are authorized and proper. Since a 
certificate is the means used to ensure that a given user 
electronically signed a given message, it is critical that the process 
used to link a certificate with a given user ensure that at least two 
different entities authorize the issuance of a given certificate in 
order to ensure that only the signer can generate a given signature. As 
noted in our Standards for Internal Control in the Federal 
Government,[Footnote 18] key duties and responsibilities need to be 
divided or segregated among different people to reduce the risk of 
error or fraud. This should include separating the responsibilities for 
authorizing transactions, processing and recording them, and reviewing 
the transactions, i.e., no one individual should control all key 
aspects of a transaction or event. Having one individual, such as a 
user's supervisor, notify the certification authority that a 
certificate should be issued to a given entity and having another 
individual, such as the registration authority, notify the 
certification authority that the agency prescribed policies and 
procedures for identifying that user have been followed help to 
accomplish this objective since a rogue registration authority does not 
have the ability to generate unauthorized certificates unless someone 
else authorizes the transaction. In addition, another individual should 
monitor the certificate issuance and maintenance processes to help 
ensure the integrity of the certification authority processes.

The certification authority should log the critical certification 
authority activities, e.g., certificate generation requests, 
certificate revocation, rejected transactions, and requests to obtain 
keys used to decrypt data[Footnote 19] in a manner that will detect 
deliberate or inadvertent modification of the data. The maintenance of 
adequate audit logs is critical to an effective PKI solution since 
these logs are used to help ensure that the prescribed policies and 
procedures and the resulting controls have been effectively 
implemented. For example, having the registration authority and another 
individual send electronically signed messages to the certification 
authority that a given certificate should be issued and then saving 
these signed messages in an audit log provides assurance to (1) the 
certification authority that at least two properly authorized 
individuals have approved the issuance of a certificate and (2) the 
system administrator and external reviewers that the certification 
authority is only issuing certificates to authorized individuals since 
the certification authority lacks the information to generate the 
necessary electronic signatures in a properly designed system.

Cryptographic modules used for certification authorities should have 
adequate controls to ensure that the critical keying material is 
properly protected from unauthorized disclosure. By its very nature, a 
PKI depends on cryptographic modules to perform their critical 
functions. Because of the important role that the certification 
authority plays in the PKI trust model, it is critical that its 
cryptographic operations be performed without compromise and that the 
cryptographic keys be maintained under split knowledge and dual control 
when the cryptographic module does not protect them. Accordingly, we 
believe that, for certain applications,[Footnote 20] the cryptographic 
module used in certification authorities should be hardware based and 
validated to comply with at least the level 3 criteria specified in the 
Federal Information Processing Standard (FIPS) 140-2--Security 
Requirements for Cryptographic Modules[Footnote 21] since the level 3 
requirements contained in FIPS 140-2, coupled with the process to 
validate that these modules comply with the given standards, allows an 
agency to obtain reasonable assurance that critical controls such as 
key generation, key storage, and algorithm compliance with standards 
are met by this critical piece of the PKI.

Physical control of the certification authority's critical hardware and 
software should remain under federal agency control. The number of 
attacks that can be launched against a certification authority can be 
reduced if the attacker does not have physical access to the device. 
For example, if agency personnel obtain and install the hardware and 
software used, they can implement a process to ensure that these items 
come from trusted sources and that the devices have not been modified 
in such a manner that would compromise their operations. This should 
not be construed to mean that an agency cannot physically locate its 
certification authority on the premises of a contractor. As noted 
earlier, the Justice Department has outlined a number of factors that 
must be addressed when contracting out critical functions relating to 
agency record keeping. We believe that the items identified by Justice 
apply to certification authorities. Accordingly, should an agency 
decide that it would like to contract out its certification authority 
functions, it should comply with the Justice guidelines and ensure that 
the controls provide the same degree of assurance that would be present 
if the agency maintained physical access and control over the 
certification authority.

These control objectives have been outlined in executive branch 
documents. For example, in a document developed for the Department of 
Energy for its PKI,[Footnote 22] NIST outlined similar control 
objectives and security requirements that a certification authority 
should perform. The control objectives outlined above are also similar 
to those contained in the Federal Bridge Certification Authority's 
practices statement.[Footnote 23] It requires that all software and 
hardware installed in or run on its certification authority be 
purchased using an accountable method of packaging and delivery that 
will be used to provide a continuous chain of accountability from the 
vendor to the facility and that installation is performed under multi-
person control with only Federal Bridge Certification Authority 
authorized personnel.

In addition to using these control objectives, agencies can use 
documents produced by NIST to help assess their risks and identify 
appropriate control techniques to address those risks. Title III of the 
E-Government Act (Public Law 107-347), titled the Federal Information 
Security Management Act of 2002 (FISMA), tasked NIST to develop: 

* standards to be used by all federal agencies to categorize all 
information and information systems collected or maintained by or on 
behalf of each agency based on the objectives of providing appropriate 
levels of information security according to a range of risk levels;

* guidelines recommending the types of information and information 
systems to be included in each such category; and:

* minimum information security requirements (i.e., management, 
operational, and technical controls) for information and information 
systems in each such category.

The documents that NIST has developed in response to these tasks can be 
found at http://csrc.nist.gov/sec-cert/ca-library.html.

Commercial Certification Authority Control Environment Discussed with 
Agencies:

Our limited understanding of the commercially managed solutions is 
consistent with the information contained in your letter, which states 
that these services allow the agency to outsource the technical 
operations of the certification authority while allowing the government 
to maintain full control over certificate registration and policies. We 
recognize that one reason that an agency may want to contract out the 
operation of a certification authority is because the agency does not 
believe that operating a certification authority is one of its core 
competencies.[Footnote 24] Contracting out the mechanics of certificate 
issuance is only a part of the cost of a PKI. The labor-intensive 
process costs associated with user registration will still be borne by 
the agency. In addition, the agency will have to integrate the PKI 
security features into its applications. As we noted in our February 
2001 report, developing, implementing, and enforcing a complete set of 
policies and procedures is likely to require a substantial effort on 
the part of each agency. Even if agencies contracted out the mechanics 
of certificate issuance, as noted in your letter, they would still be 
responsible for the costly user registration and security processes.

Using a certification authority where the registration process is 
handled by the agency while a contractor handles the certificate 
issuance requires the agency to understand the risks that are being 
undertaken and whether the strong binding that may be required by the 
agency during registration is maintained throughout the certificate 
issuance process. As we noted earlier, to date, we have not formally 
been requested by an agency to review a commercial service provider's 
system. However, on the basis of our informal discussions, we have some 
concerns on whether the models that have been discussed with us 
maintain a strong binding.

One conceptual approach for a commercial certification authority that 
has been discussed uses the following process to issue a certificate:

* User appears before the agency's registration authority that follows 
the prescribed policies to ensure that the user should be issued a 
certificate.

* Registration authority logs onto the commercial certification 
authority via the Internet over an encrypted channel using a user 
identification code and password.

* After authenticating the registration authority by using the 
registration authority's user identification code and password, the 
commercial certification authority issues the requested certificates to 
the user, e.g., a digital signature certificate and a certificate that 
can be used for data encryption.

This model has several risks that can weaken the link between the 
registration process and the resulting certificate. These 
include:[Footnote 25]

The certificate is issued based solely on the representation by a 
registration authority that the certificate should be issued to a given 
user. This would allow a rogue registration authority to generate 
unauthorized certificates. It is our understanding that the commercial 
certification authority is not responsible for any liabilities 
associated with certificates that were issued improperly based on 
information obtained from a registration authority.

The authentication of the registration authority to the certification 
authority is based on user identification codes and passwords. This is 
a weak form of authentication and allows the certification authority 
(or someone who has gained unauthorized access to this system) to have 
the knowledge necessary to masquerade as the registration authority 
since it can easily obtain a given user's authentication information. 
Therefore, it may be very difficult to determine whether a given 
registration authority actually requested a given certificate or to 
prove that the registration authority did request a given certificate. 
The complexity of the problem is increased since the commercial 
provider will maintain and be able to control all the records necessary 
to "prove" who performed a given action.

Although we have not been asked by a federal agency to review a given 
commercial solution, as discussed in the previous section, we have 
given some thought to the functionality that should be provided by a 
certification authority and the conceptual types of controls needed to 
ensure that the certificates generated are adequate to bind a user to 
that user's certificates.

Commercial Certification Authorities Play a Role in a Federal Agency's 
PKI:

Several federal agencies use products that perform certification 
authority functions that have been developed by the private sector. It 
is our understanding that these agencies have acquired the commercial 
product and then installed it in a federal facility with federal 
personnel holding security clearances performing the critical 
functions. These activities may also use contractors to help maintain 
the system. Assuming that adequate controls have been implemented over 
this process, this approach should be able to adequately address the 
risks associated with a certification authority.

Agency use of certificates generated by commercial activities also has 
the potential to adequately address the risks associated with a 
certification authority that is not under the total control of a 
federal agency. For example, a common method of facilitating secure 
transactions through the Internet is to use a protocol known as the 
secure sockets layer (SSL) to encrypt the data that are transmitted 
between a user's computer and an electronic commerce Web site. A PKI 
certificate is used in this process in order for the browser to 
authenticate the server that the browser is connecting with and 
establishing an encrypted session between the user's browser and the 
server. Federal agencies, such as the United States Mint, use 
certificates issued by commercial entities to establish these 
connections for their e-commerce activities. In addition, a federal 
agency may need to conduct business with a private sector counterpart 
that only has a certificate issued by a private sector entity. The 
federal agency, after conducting an appropriate risk analysis, may 
conclude that the certificates used by the private sector entity 
provide reasonable assurance that those certificates are adequate to 
bind the private sector entity to a given type of transaction. For 
example, an agency may desire that a vendor submit a bid proposal and 
digitally sign the proposal in such a manner that would commit the 
vendor to the information contained in that proposal. Rather than 
issuing all potential vendors certificates so that this can be 
accomplished, the agency may decide that a given type of certificate 
issued by commercial certification authorities is adequate based on the 
agency's risk analysis. The exact process that should be used by 
agencies making this determination is beyond the scope of this letter.

As agreed with your office, unless you announce the contents of this 
report earlier, we will not distribute it until 30 days after its date. 
At that time, we will send copies to other interested congressional 
committees. We will also be sending copies to the Director, Office of 
Management and Budget. Copies of this report will be made available to 
others upon request. The report is also available at no charge on GAO's 
Web site at http://www.gao.gov.

If you have any questions concerning this report, please contact me 
(202) 512-6412 or by e-mail at rhodesk@gao.gov or Chris Martin, Senior 
Level Technologist for Cryptography and Systems Development, at (202) 
512-9481 or by e-mail at martinj@gao.gov.

Sincerely yours,

Signed by: 

Keith A. Rhodes:

Chief Technologist:

Center for Technology and Engineering:

(460573):

FOOTNOTES

[1] Financial management systems include financial systems and the 
financial portions of mixed systems necessary to support financial 
management, including automated and manual processes, procedures, 
controls, data, hardware, software, and support personnel dedicated to 
the operation and maintenance of system functions. Financial systems 
are composed of one or more applications that are used for (1) 
collecting, processing, maintaining, transmitting, or reporting data 
about financial events; (2) supporting financial planning or budgeting 
activities; (3) accumulating and reporting cost information; or (4) 
supporting the preparation of financial statements. Mixed systems 
support both financial and nonfinancial functions of the federal 
government or components thereof. (Federal Financial Management 
Improvement Act of 1996, Pub. L. No. 104-208, div. A., § 101(f), title 
VIII, 110 Stat. 3009, 3009-389 (Sept. 30, 1996)).

[2] U. S. General Accounting Office, High-Risk Series: Protecting 
Information Systems Supporting the Federal Government and the Nation's 
Critical Infrastructures, GAO-03-121 (Washington, D.C.: January 2003).

[3] See U.S. General Accounting Office, Information Security: Advances 
and Remaining Challenges to Adoption of Public Key Infrastructure 
Technology, GAO-01-277 (Washington, D.C.: February 26, 2001), and U.S. 
General Accounting Office, Information Security: Status of Federal 
Public Key Infrastructure Activities at Major Federal Departments and 
Agencies, GAO-04-157 (Washington, D.C.: December 15, 2003). Although 
GAO has not issued a best practices guide that applies to certification 
authorities, GAO has issued several guides to help agencies understand 
information technology risks and evaluate their systems. For example, 
see U.S. General Accounting Office, Information Security Risk 
Assessment: Practices of Leading Organizations--A Supplement to GAO's 
May 1998 Executive Guide on Information Security Management, GAO/AIMD-
00-33 (Washington, D.C.: November 1999), Federal Information System 
Controls Audit Manual: Volume I Financial Statement Audits, GAO/AIMD-
12.19.6 (Washington, D.C.: Jan. 1999), and Executive Guide: Information 
Security Management--Learning from Leading Organizations, GAO/AIMD-98-
68 (Washington, D.C.: May 1998).

[4] Public Law 105-277, § 1703 (1998).

[5] Id. at 1703(b)(1)(A).

[6] The exact process that should be used to obtain a contractor for 
these services is beyond the scope of this letter. However, the 
acquisition process should, at a minimum, conform to the requirements 
contained in the Competition in Contracting Act of 1984 (41 U.S.C. § 
253, et seq.) for civilian agencies and the National Defense 
Authorization Act for Fiscal Year 2003 (10 U.S.C. § 2304, et seq.) for 
defense agencies.

[7] Additional information on public key cryptography and PKI issues 
can be found in our report on challenges associated with implementing 
PKI technologies. U.S. General Accounting Office, Information Security: 
Advances and Remaining Challenges to Adoption of Public Key 
Infrastructure Technology, GAO-01-277 (Washington, D.C.: February 26, 
2001).

[8] Certificates can be issued to computer equipment and processes as 
well as to individuals. For example, companies that do a lot of 
business over the Internet obtain digital certificates for their 
computer servers. These certificates are used to authenticate the 
servers to potential customers, who can then rely on the servers to 
support the secure exchange of encrypted information, such as passwords 
and credit card numbers.

[9] GAO-01-277.

[10] U.S. General Accounting Office, Maintaining Effective Control over 
Employee Time and Attendance Reporting, GAO-03-352G (Washington, D.C.: 
January 2003).

[11] See U.S. General Accounting Office, Corps of Engineers Electronic 
Signature System, GAO/AIMD-97-18R (Washington, D.C.: November 19, 1996) 
and U.S. General Accounting Office, State Electronic Signature System, 
GAO/AIMD-00-227R (Washington, D.C.: July 10, 2000).

[12] The last of the four criteria applies to electronic media.

[13] U.S. General Accounting Office, Streamlining the Payment Process 
while Maintaining Effective Internal Control, GAO/AIMD-21.3.2 
(Washington, D.C.: May 2000), provides additional information on 
payment processing.

[14] U.S. General Accounting Office, Information Security: Challenges 
in Using Biometrics, GAO-03-1137T (Washington, D.C.: September 9, 
2003).

[15] 44 U.S.C. § 3544(b)(8).

[16] U.S. Department of Justice, Legal Considerations in Designing and 
Implementing Electronic Processes: A Guide for Federal Agencies 
(Washington, D.C.: November 2000).

[17] In a related matter, a Department of Defense study on COTS 
acquisitions found that the marketplace, not the program manager, 
drives development of the commercial item and that development of 
commercial items is driven primarily by the vendors' perceptions of 
what will sell to the largest number of potential users. Department of 
Defense, Commercial Item Acquisition: Considerations and Lessons 
Learned, (Washington, D.C.: June 26, 2000).

[18] U.S. General Accounting Office, Standards for Internal Control in 
the Federal Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: November 
1999).

[19] In order to ensure that the user has sole control over the key 
used to generate electronic signatures used to bind an individual, the 
key should only be stored in a cryptographic device under that user's 
sole control. In other words, keys for signing documents should not be 
archived or stored in a device that is not under that user's sole 
control. On the other hand, the keys needed to decrypt a message should 
be archived and provided to authorized parties should the need arise. 
For example, a user may lose the token containing the encryption key 
and be unable to read messages encrypted with that encryption key until 
that key is restored to a new token.

[20] Certification authorities used to generate federal agency 
certificates that are used in financial management applications is one 
example.

[21] National Institute of Standards and Technology, Security 
Requirements for Cryptographic Modules, FIPS 140-2 (Gaithersburg, MD: 
May 25, 2001).

[22] National Institute of Standards and Technology, PKI Specifications 
to Support the DoE Travel Manager Program, (Gaithersburg, MD: August 
15, 1996).

[23] General Services Administration, Public X.509 Certification 
Practice Statement (CPS) for the Federal Bridge Certification Authority 
(FBCA), (March 7, 2003).

[24] Core competencies can be defined as those specific areas of 
knowledge and expertise that the agency considers vital to its success. 
In may be argued that the agency can obtain better results from areas 
that are not part of its core competencies by using service providers 
that deliver such services through their own core competencies. 
However, agencies still need to have sufficient expertise to oversee 
the contractors that it hires to perform these services.

[25] Although these are examples, not all of the risks associated with 
a certification authority may be known at this time. Therefore, 
agencies conducting a risk analysis of certification authorities need 
to adopt a process that will be able to ensure that the significant 
risks for a given application have been properly identified.