oversight

Implementation of the Managed Security Services Provider Contract

Published by the Department of Education, Office of Inspector General on 2010-09-24.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                      UNITED STATES DEPARTMENT OF EDUCATION
                                                           OFFICE OF INSPECTOR GENERAL


                                                                                                                        AUDIT SERVICES
                                                                  September 24, 2010

FINAL ALERT MEMORANDUM

TO:                     Danny Harris
                        Chief Information Officer
                        Office of the Chief Information Officer

                        Thomas Skelly
                        Acting Chief Financial Officer
                        Office of the Chief Financial Officer

FROM:                   Keith West /s/
                        Assistant Inspector General for Audit

SUBJECT:                Implementation of the Managed Security Services Provider Contract
                        Control Number ED-OIG/L19K0011

While reviewing the Department of Education’s (Department) corrective actions in response to
the Office of Inspector General’s (OIG) Alert Memorandum, “Conflicting Responsibilities
Included in the EDNet Contract Performance Work Statement,”1 we became aware that the
Department has not effectively implemented the Managed Security Services Provider (MSSP)
contract. Specifically, the Department terminated the initial contract due to contractor
performance problems and the subsequent contractor has been unable to provide the level of
service required by the contract. As a result, the Department has paid for services it has not
received and has still not ensured that its information technology (IT) network is adequately
protected. The purpose of this alert memorandum is to bring our concerns to your attention in
order to expedite corrective action.

Background

The Department awarded the Education Network (EDNet) contract, effective May 1, 2005, with
the goals of improving all services provided to the Department’s customers and to lower costs
through IT integration. The EDNet contract was structured under the Government-Owned
Contractor-Operated IT service model. The EDNet contractor’s responsibilities included
providing managed services such as server maintenance, messaging (email and Blackberry), and
end-user support for hardware and software.


1
    Control Number ED-OIG/L19G0009, dated February 16, 2007




    The Department of Education's mission is to promote student achievement and preparation for global competitiveness by fostering educational
                                                      excellence and ensuring equal access.
Final Alert Memorandum
ED-OIG/L19K0011                                                                                 Page 2 of 8
In October 2005, the OIG first reported that the EDNet contractor had conflicting responsibilities
because it was responsible for: 1) establishing, installing, configuring, and operating security
processes; 2) detecting and reporting any violations in the security processes it established and
operated; and 3) reporting such violations and incidents. As a result, in reporting on security
violations and incidents, the contractor could be negatively reporting on its own performance in
maintaining a secure network. The OIG recommended that the Department consider procuring
the services of an independent contractor with the responsibilities of identifying, responding to,
and reporting computer security incidents.2

OIG followed up on corrective actions in response to the October 2005 report during a
subsequent audit of the effectiveness of the Department’s management of the EDNet contract.3
OIG determined that the Department initiated actions to establish a separate contract, but a
planned acquisition was cancelled in August 2006. OIG issued an alert memorandum in
February 2007 that encouraged the Department to proceed as quickly as possible to eliminate the
conflict of responsibilities in the EDNet contract.4

In its response to the February 2007 alert memorandum, the Department indicated a revised
MSSP procurement with reworked requirements was in progress. The Department was
simultaneously procuring IT services to replace the EDNet contract, using a Contractor-Owned
Contractor-Operated (COCO) IT service model, under which the contractor is required to
provide the total IT infrastructure to support Department employees.5 In September 2007, the
Department subsequently awarded both the Education Department Utility for Communications,
Applications, and Technology Environment (EDUCATE) contract and the initial MSSP contract.

The Department Has Not Effectively Implemented the Managed Security Services Provider
Contract

Termination of the Initial MSSP Contract

The Department awarded its initial contract for MSSP services to Global Analytic Information
Technology Services, Inc. (GAITS) on September 7, 2007 at a fixed cost of $5.1 million for the
base year. The acquisition was intended to provide services such as identifying, responding to,
and reporting computer security incidents. We noted the Department prepared numerous
documents identifying contractor performance problems shortly after award. These included:

       Correspondence between the Department and GAITS during the period September 2007
        through November 2007 regarding requirements for its subcontractor6 to complete system
        Certification and Accreditation (C&A) and related progress. This included email
        correspondence from the Department dated October 19, 2007 that identified

2
  Review of the Department’s Incident Handling Program and EDNet Security Controls (Control Number
ED-OIG/A11F0002).
3
  The Department’s Management of the EDNet Contract (Control Number ED-OIG/A19G0009), dated
April 17, 2007.
4
  See Footnote 1.
5
  Includes hardware and software, data centers, networks, etc.
6
  Symantec Managed Security Services
Final Alert Memorandum
ED-OIG/L19K0011                                                                           Page 3 of 8
       October 30, 2007 as the deadline for Department review and approval of C&A along with
       correspondence from the contractor dated November 26, 2007 indicating that C&A had
       not been resolved.
      A show cause notice dated December 3, 2007 that stated that GAITS had failed to meet
       the 60-day transition period contractual requirement and that the Department was
       considering terminating the contract for default.
      A stop work order dated February 12, 2008 that required the contractor and its
       subcontractor to immediately cease work on the contract.
      A memorandum to the contract file dated April 22, 2008 that concluded that GAITS
       failed to become fully operational by the required date despite being given every
       opportunity to correct identified performance issues.

Ultimately, the Department took action to terminate the contract for convenience effective
April 22, 2008. Based on a review of related documentation and discussions with Department
officials, it appeared that there were multiple reasons for the C&A related performance problems
and the termination of the initial MSSP contract:

      Department officials with responsibility for contract oversight believed the requirement
       for C&A was conveyed in its acquisition documents and understood by the contractor.
       However, a lack of clarity in the MSSP’s solicitation documents may have contributed to
       conflicting interpretations by the contractor and the Department.

       The Contracting Officer’s Representative (COR) indicated that GAITS was fully aware
       of C&A requirements and that GAITS made assertions in its oral presentations prior to
       award that C&A would be performed on its subcontractor’s systems. During discussions
       conducted during our review a Department official indicated that assertions made during
       oral presentations were non-binding, but the Department did not believe a written
       commitment to C&A was needed because language in the acquisition documentation
       required the contractor to abide by related Department guidance. However, a
       November 26, 2007 letter from the contractor stated it was experiencing performance
       delays in part because it did not anticipate having to do C&A work as it was not
       specifically defined in the Request for Proposal (RFP) or the resulting contract.

       We reviewed the MSSP RFP and found it contained the following clause:

              Potential offerors are directed to the security requirements under the clause
              entitled “Information Technology System Security Requirements”, ED 307-13.
              Technical Proposals must include a separate detailed plan for meeting these
              requirements, including any necessary subcontract applications. Submission of
              these plans shall serve as certifications of the offerors’ full intent for compliance.

       We reviewed ED 307-13 as incorporated in the RFP and found it stated the following:

              The Contractor and its subcontractors shall comply with Department Security
              policy requirements as set forth in:
Final Alert Memorandum
ED-OIG/L19K0011                                                                            Page 4 of 8
                   a. The Statement of Work of this contract;
                   b. The Privacy Act of 1974 (P.L.93-579, U.S.C. 552a);
                   c. The U. S. Department of Education Handbook for Information Assurance
                   Security Policy, OCIO [Office of the Chief Information Officer]-01
                   (March 2006); and
                   d. The U.S. Department of Education Departmental Directive OM
                   [Office of Management]:5-101, "Contractor Employee Personnel Security
                   Screenings."…

           We reviewed the U. S. Department of Education “Handbook for Information Assurance
           Security Policy,” OCIO-01, Section 3.8, dated March 31, 2006, and found it stated the
           following:

                   All Department major applications and general support systems shall be certified
                   and accredited prior to processing any Department information that has security
                   considerations due to its confidentiality, integrity, or availability requirements…
                   All Department IT systems must be accredited at minimum every three (3) years
                   and evaluated annually or whenever there is a significant change to the system’s
                   security posture. IT systems that are not major applications shall be certified and
                   accredited as part of their general support systems or shall be combined with other
                   systems.

           The MSSP Performance Work Statement (PWS)7 included the following statement:

                   The successful contractor’s service facility must demonstrate full and complete
                   compliance with the Departments [sic] security requirements (including
                   Information Assurance Site review/Survey)…

          The contractor’s technical proposal included a separate plan for how it would meet
           security requirements under ED 307-13 as Appendix 2. While this indicated the
           contractor would comply fully with the requirements of OCIO-01, C&A was not
           specifically addressed. A separate portion of the technical proposal appeared to indicate
           GAITS would rely, at least in part, on certifications and audits of its subcontractor to
           meet security requirements. The proposal specifically stated the following:

                   Processes and Procedures Fully Audited by Trusted Third Parties: Symantec
                   Managed Security Services meet the stringent industry best practices outlined in
                   both the BS7799 certification and SAS70 Type II audit standards. KPMG
                   performs these audits, thoroughly testing Symantec's policies, processes, and
                   procedures to ensure that they conform to the strict requirements of these two
                   industry-respected standards. Symantec is the only Managed Security Services
                   provider to pass these two key audits.



7
    Term used interchangeably with Statement of Work.
Final Alert Memorandum
ED-OIG/L19K0011                                                                                   Page 5 of 8
       The Department’s April 22, 2008 memorandum provided additional information about
        the cause of the contractor’s performance problems and the rationale behind the
        Department’s actions to end the contract. While the memorandum concluded that
        resolution of performance issues was unlikely, it stated that the Department decided to
        negotiate a settlement based on termination for convenience of the government. This
        decision was made because the Department was identified as a “minor contributing factor
        in the contractor’s inability to meet transition milestones.” The memorandum stated this
        was because the Department did not: 1) clearly indicate a requirement for C&A in the
        solicitation; 2) provide an adjustment to the 60-day transition period once the requirement
        was clarified; and 3) timely respond to inquiries and requests for meetings GAITS
        believed were imperative to the transition period progress. The memorandum further
        indicated that the potential for protracted and costly litigation if the contract was
        terminated for default was an additional factor in the decision to terminate for
        convenience.

Ultimately, the Department paid a settlement to GAITS in the amount of $1.5 million to end the
contract. The Department concluded the amount was acceptable because it represented an
amount that was significantly under the actual costs incurred by the contractor that were
allocable to the contract. However, the COR believed the Department received no valuable
services for the amount paid, as the contractor primarily completed activities such as planning
and scheduling.

Inability of the Current MSSP Contractor to Provide the Level of Service Required

After the Department terminated the GAITS contract, it initiated an additional effort to acquire
MSSP services. On August 18, 2008 the Department acquired the services of the Cyber Security
Management Center (CSMC) through an Inter Agency Agreement (IAA) with the Department of
Transportation (DOT) for a performance period of August 21, 2008 through August 20, 2009, for
a total order amount of $3.6M.8 The Memorandum of Agreement states that the objective of the
contract with the CSMC is to “provide continuous monitoring and testing to ensure the
EDUCATE contractor(s) delivers real-time detection, assessment, response and remediation
related to all relevant cyber incidents.” Subsequent to the execution of the agreement, there were
numerous indicators of problems with the structure of the agreement and the ability of the CSMC
to provide the level of service required.

The COR indicated that since the inception of the contract, CSMC experienced problems
obtaining access to the EDUCATE contractor’s systems. As a result, CSMC was unable to
provide the required services. However, the Department still renewed the IAA with CSMC for
the period August 17, 2009 through August 16, 2010 for a total order amount of $5.1M. The
COR indicated that the agreement was renewed with the hope that the CSMC would obtain
access to the EDUCATE system and the Department would receive the full value of services.

The Deputy Program Manager (PM) indicated he became aware in September 2009 that the
Department was not receiving services equivalent to the amount paid to CSMC after

8
  The total funds for the IAA are committed at the time of the agreement execution. DOT CSMC then draws down
the necessary funds from the account throughout the year.
Final Alert Memorandum
ED-OIG/L19K0011                                                                                      Page 6 of 8
                                                                                9
familiarizing himself with the agreement and its related performance. In an email sent to the
Director of Information Assurance and the COR, dated December 15, 2009, the Deputy PM
indicated his dissatisfaction with CSMC’s performance. The COR recommended that he draft a
notice of action memorandum. However, according to the Deputy PM, the memorandum was
drafted and sent to the COR but never sent to CSMC.

Through discussions with Department officials and review of project status reports, we found
that CSMC was not able to meet all of its Service Level Agreements (SLA)10 from the inception
of the agreement. Seven of nine COR inspection reports for the period ended January 31, 2010
identified problems with performance of individual SLAs. Problems included items such as the
inability to perform (b) (2)
            , failure to acquire tools necessary to perform penetration testing, lack of feedback on
work relating to (b) (2)     monitoring and reporting, and lack of documentation from CSMC
showing compliance with SLA terms.

In January 2010, the EDUCATE Independent Verification &Validation (IV&V) contractor sent
an email to the Director of Information Assurance outlining concerns with CSMC’s
performance. These included items such as ineffective weekly meetings, ineffective project
management by the Department and CSMC, lack of detailed schedules to assess performance,
and unclear “ownership.” The IV&V suggested several corrective actions, including production
of a Service Compliance Matrix that lists the status of each deliverable, documentation of
CSMC’s efforts in a weekly status report, and requiring CSMC to develop a Work Breakdown
Structure of all required items to include who is in charge of actions and what is to be completed.
According to the IV&V, some of the recommendations were implemented, but the degree to
which they were implemented varied.

The COR prepared a memorandum dated March 15, 2010 that concluded that the Department is
not receiving equitable services for the costs incurred. The COR attached a compliance matrix to
the memorandum that indicated that CSMC was non-compliant with 11 of the 15 measured
performance standards (73 percent) during year two of the agreement. While the attachment
showed 10 of the 11 non-complaint areas (91 percent) as having 0 percent compliance, only 2 of
the 11 instances of noncompliance (18 percent) were solely attributed to CSMC. The COR
further concluded that it was unlikely performance could be improved because of barriers and
obstacles presented by the EDUCATE COCO environment. The COR suggested that the IAA be
renegotiated to reflect the scope of work CSMC was able to perform and that the Department
seek recovery of $2.1M for a portion of the services paid for but not provided. This amount
assumes the agreement would be renegotiated as of April 2010 (i.e. so as not to penalize CSMC
for year one and the portion of year two prior to renegotiation). The memorandum also indicated
the COR had completed market analysis that concluded that common, related services were
available in the commercial sector at a substantial cost savings from what was being paid to
CSMC. The Deputy PM wrote a memorandum addressed to the COR and Director of



 The Deputy PM began working on the DOT CSMC agreement in March 2009.
9

10
  SLAs are agreements that set expectations between the service provider and the customer. The SLA describes
what will be done and how well it will be done, thus providing the basis for measuring, tracking and managing
service performance against service levels.
Final Alert Memorandum
ED-OIG/L19K0011                                                                         Page 7 of 8
Information Assurance, dated April 15, 2010, that concurred with the conclusions and
recommendations noted by the COR.

The inability of the current MSSP contractor to provide the level of service required occurred for
several reasons. Numerous individuals, documents, and reports indicated CSMC did not have a
level of access to the EDUCATE network that was necessary to fully meet the requirements of
the agreement. However, we found that the EDUCATE PWS did include a provision for such
access that should have been enforced, as stated in Section C.40(d):

       The government will have a Managed Security Services Provider (MSSP) that is required
       to perform IV&V on all IT resources, systems, and networks storing, accessing, or
       transmitting government data. The contractor shall allow all necessary access to the
       MSSP in performing authorized activities including but not limited to:
               (1) Vulnerability scanning on hosts and networks;
               (2) Access control audits on hosts and networks

We noted a specific concern expressed by the EDUCATE contractor that related to the impact
the MSSP contractor’s access to the system may have on the EDUCATE contractor’s
performance with regard to its SLAs. According to the EDUCATE CO, concerns over
accessibility were discussed during weekly EDUCATE CO/COR meetings during the life of the
CSMC contract. Because the topic was not consistently included on meeting agendas the CO
believed the issue was being actively resolved.

In addition, the Department did not always have a structure in place to effectively monitor the
performance of the IAA and did not react to concerns identified by key oversight officials. As
previously noted, the Department did not assign a Deputy PM until
7 months into the contract and did not timely resolve performance issues identified by its
EDUCATE IV&V contractor, progress reports, and internal correspondence.

As a result, the Department paid for a level of service that CSMC was not able to provide and
still does not have assurance that its IT network is adequately secured.

According to the COR, the OCIO is planning a revised approach where the Department will
perform functions that the CSMC cannot because of network access limitations. The Deputy PM
provided OIG with CSMC’s proposal for an additional year of support beginning
August 11, 2010 for a total cost of $3.1M. The COR stated OCIO has requested $1.5M for tools
and software to allow the Department to perform its own testing of the EDUCATE contractor’s
system and will hire two staff to perform this function.

Recommendations

We recommend that the Chief Information Officer and Chief Financial Officer:

1.1    Formally review and evaluate alternatives for obtaining MSSP services and proceed with
       a solution that best serves the interests of the Department in a cost effective manner. A
Final Alert Memorandum
ED-OIG/L19K0011                                                                         Page 8 of 8
       solution should be implemented as quickly as possible to ensure the Department’s
       network is adequately protected.

1.2    In any future acquisitions, ensure key MSSP contract requirements are clearly identified
       in the RFP and resulting contract.

1.3    Actively enforce the terms of Section C.40(d) of the EDUCATE PWS to ensure adequate
       access to contractor systems for the performance of MSSP services.

1.4    Establish a process, to include the assignment of an accountable official, for timely
       resolving issues applicable to the MSSP.

Department Comments

A draft of this memorandum was provided to OCIO and the Office of the Chief Financial Officer
(OCFO) for comment. In its response to the draft alert memorandum, OCIO/OCFO generally
concurred with our findings, concurred with each of our recommendations, and described
corrective actions already taken or planned. OCIO stated it partially concurred that the MSSP
contract failed to have a structure to effectively monitor the performance of the IAA, outlining
monitoring activities conducted by the COR from the initial IAA deployment. The response is
included in its entirety as Attachment 2 to this memorandum.

OIG Response

While we acknowledge that a monitoring structure was in place, we specifically questioned the
effectiveness of the structure due to the limited action taken by the Department over a two year
period to correct the causes of the identified performance problems.

We conducted our work in accordance with the OIG quality standards for alert memoranda.

Corrective actions proposed (resolution phase) and implemented (closure phase) will be
monitored and tracked through the Department’s Audit Accountability and Resolution Tracking
System.

Alert memoranda issued by the Office of Inspector General will be made available to members
of the press and general public to the extent information contained in the memoranda is not
subject to exemptions in the Freedom of Information Act (5 U.S.C. § 552).

The publication of this report includes the redaction of information that we have concluded may
pose risks to agency regulation or security measures.

For further information, please contact Michele Weaver-Dugan, Director, Operations Internal
Audit Team, at (202) 245-6941.
                                                                       Attachment 1


                  Acronyms/Abbreviations Used in this Report

C&A          Certification and Accreditation

CO           Contracting Officer

COCO         Contractor Owned Contractor Operated

COR          Contracting Officer’s Representative

CSMC         Cyber Security Management Center

Department   U.S. Department of Education

DOT          Department of Transportation

EDUCATE      Education Department Utility for Communications, Applications and
             Technology Environment

FAR          Federal Acquisition Regulation

GAITS        Global Analytic Information Technology Services, Inc.

IAA          Inter Agency Agreement

IT           Information Technology

IV&V         Independent Verification and Validation

MSSP         Managed Security Services Provider

OCIO         Office of the Chief Information Officer

OCFO         Office of the Chief Financial Officer

OIG          Office of Inspector General

OM           Office of Management

PM           Program Manager

PWS          Performance Work Statement

RFP          Request for Proposal

SLA          Service Level Agreements
Attachment 2
                              Attachment 2




          (b) (2)
(b) (2)




                    (b) (2)
(b) (2)
Attachment 2