Cybersecurity attracts Boeing, rival Lockheed

Lockheed Martin and Boeing, the world's biggest defense companies, are deploying forces and resources to a new battlefield: cyberspace.

The military contractors, eager to capture a share of a market that may reach $11 billion in 2013, have formed business units to tap increased spending to protect U.S. government computers from attack.

Boeing set up its Cyber Solutions division in August "because of a realization by the company that it's a very serious threat," said Barbara Fast, vice president of the unit.

Lockheed launched its cyber-defense unit in October.

President Bush announced a national cybersecurity plan in January to be supervised by the Department of Homeland Security, after attacks on U.S. government and private-sector networks by groups linked to foreign governments, organized crime gangs and hackers.

In a Dec. 8 report, a panel of experts said President-elect Obama should create a White House office for the effort.

"The whole area of cyber is probably one of the faster-growing areas" of the U.S. budget, said Lockheed executive Linda Gooden. "It's something that we're very focused on. I expect there will be a significant focus" under Obama.

Breaches on rise

The number of security breaches of U.S. and private-computer networks reported to the Homeland Security Department almost doubled to 72,000 in the fiscal year ended in October, said agency spokeswoman Amy Kudwa.

Government spending to secure military, intelligence and other agency computer networks is forecast to rise 44 percent to $10.7 billion in 2013 from $7.4 billion this year, according to market forecaster Input.

Security-system spending will grow 7 percent to 8 percent annually, "significantly faster" than information-technology, which has increased about 4 percent a year in the past five years, said John Slye, an Input analyst.

The possibility that the Obama administration may devote more resources to cybersecurity is attracting traditional defense contractors such as Lockheed and Raytheon to compete with established providers like McAfee and Symantec.

"Longer" than Boeing

Raytheon has been "at this a bit longer" than Boeing and Lockheed, said Raytheon's Steve Hawkins.

In the past 18 months, Raytheon acquired network-security providers Oakley Networks, SI Government Solutions and Telemus Solutions to boost its capabilities, Hawkins said.

To meet the likely demand, Raytheon plans to add 300 certified security engineers to its pool of 600 technicians.

Computer security is part of the company's intelligence and information systems unit, which contributed 12 percent of Raytheon's $21.3 billion in revenue last year.

"In the past year, cyber exploitation and malicious activity we've been experiencing on our networks has grown far more sophisticated than we thought was possible," Melissa Hathaway, of the Director of National Intelligence, said Dec. 10 at a conference sponsored by the Armed Forces Communication and Electronics Association. "We expect these trends to continue."

U.S. government agencies received an overall grade of "C" on computer security in fiscal 2007, according to a May report by the U.S. House Oversight and Government Reform Committee.

The Pentagon's "D-" was better than its failing grade in 2006, while the Treasury Department and the Nuclear Regulatory Commission each scored an "F." The Justice Department got an "A."

Weak on responses

Many agencies also were found lacking a crisis-response plan if their networks were to suffer a series of breaches, based on the outcome of a cybersecurity game organized this month by the consulting firm Booz Allen Hamilton and the nonpartisan Business Executives for National Security.

In the game, players were told university students received free portable computer drives and compact discs at a sports event. When the discs were plugged into computers, malicious software on the devices spread, shutting down networks in the government, financial institutions, and the transportation sector.

"We need to have a plan tailored for a cyber crisis," Homeland Security chief Michael Chertoff said at the end of the game.

If the U.S. computer networks are attacked by a terrorist group or a foreign government, "Is this an act of war? How do we respond?" he said. "We haven't put together that strategy yet."

Obama must assert that the "cyber-infrastructure of the United States is a vital asset for national security and the economy," according to a Dec. 8 report by the Center for Strategic and International Studies, a think tank.

That's just what Obama said he will do.

National adviser

"I'll declare our cyber-infrastructure a strategic asset, and appoint a National Cyber Advisor who will report directly to me," he said in July. "We'll coordinate efforts across the federal government, implement a truly national cybersecurity policy, and tighten standards to secure information."

Congress, too, will examine U.S. antitrust laws that may restrict companies from sharing information on cyber attacks in a crisis, said U.S. Rep. James Langevin, D-R.I., chairman of the House Homeland Security Subcommittee on Cybersecurity.

"It's going to be a multiyear, multibillion-dollar project to get the right cybersecurity mechanisms in place,"