DOD PKI plan raises liability, relevance issues

The Defense Department is building a system for communicating with its contractors using dual-key encryption. This initiative will make it possible for DOD and its contractors to conduct paperless contracting in nearly complete security. But DOD and the private sector should recognize that DOD's planned system eventually could become irrelevant and raise serious issues of liability.

In an effort to meet a directive to go paperless, DOD is developing a public-key infrastructure (PKI), an innovative "dual-key" system for encryption in which a sender encrypts a message using a private key. The encrypted message is sent electronically to the recipient, who uses the sender's public key, which complements the private key, to decipher the message. The public key is available from a so-called trusted third party, which, at the request of the message recipient, will provide the public key with a certificate of assurance. The trusted third party is known as a certification authority (CA).

The CA is the genius of the PKI system. Even if the sender and recipient have no other relationship (for example, they may be strangers on the Internet), they can still exchange encrypted messages by using this dual-key system. If the CA can be trusted, then the system will be secure and reliable.

The Defense Information Systems Agency has taken a lead in developing PKI policies. One of DISA's first initiatives— and by far the most important to the contracting community— is its plan to build a secure infrastructure for communications between DOD and its contractors. As part of this plan, DISA is developing a protocol for approving what DOD calls private external certification authorities (ECAs), which will operate outside DOD. These private CAs will serve as the linchpins to electronic commerce between DOD and its contractors.

Under the DISA plan, private CAs, or ECAs as DOD calls them, will submit to DOD their qualifications to become certified. Among other things, a prospective CA must explain security procedures per an industry-standard framework. The framework is, in essence, a checklist and establishes the criteria for a Certification Practice Statement, which is a CA's statement of its policies and practices. By referencing a CA's practice statement, users in the electronic marketplace can determine whether a CA is using sufficiently secure practices and policies.

It is not yet clear what benchmarks DOD will use in certification. What is clear, however, is that under the current DISA plan, outside contractors can serve as ECAs, even if they are not certified. DOD warns that "non-DOD entities who use uncertified ECAs face a risk that...integrity of electronic transactions will be compromised." But because DISA is using largely industry-standard benchmarks for certification, it is logical that CAs could meet industry benchmarks for security without gaining DISA certification. By allowing contractors to use non-certified CAs, DISA unfortunately may undercut its own certification process. Ultimately, the DOD certification process could die of irrelevance.

Another potentially troubling aspect of DISA's system is DISA's approach to liability for lost or compromised messages. DISA explicitly disavows all liability.

"Contract clauses should be developed to ensure that contractors are aware that any damages incurred as a result of using an ECA, certified or not, cannot be shifted to the government," DISA noted.

Where contractors can control their CAs, it is logical for those contractors to bear the risk of failures in their CAs. But the same logic— which allocates risk to the party best able to mitigate that risk— suggests that DISA cannot, and should not, disclaim liability for all damages incurred as a result of using an ECA.

What can the procurement community— both public and private— do to prepare for PKI in federal contracting? Most obviously, members of the community should learn as much as they can about PKI. Contractors and agencies embarking on PKI also should recognize that encryption carries with it costs and responsibilities.

Having a public key to distribute is much like having a driver's license. Before allowing users to embark on encrypted commerce, agencies and companies should ensure that their users know the rules of the new electronic highway of electronic commerce.

Yukins is a partner at the law firm Holland & Knight LLP, and Carnahan is the president of CYIOS Corp., a PKI solutions provider.

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