[Federal Register: May 2, 2000 (Volume 65, Number 85)]
[Notices]
[Page 25508-25521]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02my00-85]
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OFFICE OF MANAGEMENT AND BUDGET
Procedures and Guidance; Implementation of the Government
Paperwork Elimination Act
AGENCY: Office of Management and Budget, Executive Office of the
President.
SUMMARY: The Office of Management and Budget (OMB) provides procedures
and guidance to implement the Government Paperwork Elimination Act
(GPEA). GPEA requires Federal agencies, by October 21, 2003, to allow
individuals or entities that deal with the agencies the option to
submit information or transact with the agency electronically, when
practicable, and to maintain records electronically, when practicable.
The Act specifically states that electronic records and their related
electronic signatures are not to be denied legal effect, validity, or
enforceability merely because they are in electronic form, and
encourages Federal government use of a range of electronic signature
alternatives.
Electronic Availability: This document is available on the Internet
in the OMB library of the ``Welcome to the White House'' home page,
http://www.whitehouse.gov/OMB/, the Federal CIO Council's home page,
http://cio.gov/,
[[Page 25509]]
and the Federal Public Key Infrastructure Steering Committee
home page, http://gits-sec.treas.gov/.
FOR FURTHER INFORMATION CONTACT: Jonathan Womer, Information Policy and
Technology Branch, Office of Information and Regulatory Affairs, (202)
395-3785. Press inquiries should be addressed to the OMB Communications
Office, (202) 395-7254. Inquiries may also be addressed to: Information
Policy and Technology Branch, Office of Information and Regulatory
Affairs, Office of Management and Budget, Room 10236 New Executive
Office Building, Washington, D.C. 20503.
SUPPLEMENTARY INFORMATION:
Background
This document provides Executive agencies the guidance required
under Sections 1703 and 1705 of the Government Paperwork Elimination
Act (GPEA), Public Law 105-277, Title XVII, which was signed into law
on October 21, 1998. GPEA is an important tool to improve customer
service and governmental efficiency through the use of information
technology. This improvement involves transacting business
electronically with Federal agencies and widespread use of the Internet
and its World Wide Web.
As public awareness of electronic communications and Internet usage
increases, demand for on-line interactions with the Federal agencies
also increases. Moving to electronic transactions and electronic
signatures can reduce transaction costs for the agency and its partner.
Transactions are quicker and information access can be more easily
tailored to the specific questions that need to be answered. As a
result data analysis is easier. These access and data analysis benefits
often have a positive spillover effect into the rest of the agency as
awareness of the agency's operations is improved. In addition,
reengineering the work process associated with the transaction around
the new electronic format can give rise to other efficiencies.
Public confidence in the security of the government's electronic
information processes is essential as agencies make this transition.
Electronic commerce, electronic mail, and electronic benefits transfer
can require the exchange of sensitive information within government,
between the government and private industry or individuals, and among
governments. These electronic systems must protect the information's
confidentiality, ensure that the information is not altered in an
unauthorized way, and make it available when needed. A corresponding
policy and management structure must support the hardware and software
that delivers these services.
To provide for a broad framework for ensuring the implementation of
electronic systems in a secure manner, the Administration has taken a
number of actions. In February 1996, OMB revised Appendix III of
Circular A-130, which provided guidance to agencies on securing
information as they increasingly rely on open and interconnected
electronic networks to conduct business. In May 1998, the President
issued Presidential Decision Directive 63, which set a goal of a
reliable, interconnected, and secure information system infrastructure
by the year 2003, and significantly increased security for government
systems by the year 2000 based on reviews by each department and
agency. In September, 1998, OMB and the Federal Public Key
Infrastructure Steering Committee published ``Access With Trust''
(available at http://gits-sec.treas.gov/). This report describes the
Federal government's goals and efforts to develop a Public Key
Infrastructure (PKI) to enable the widespread use of cryptographically-
based digital signatures. On December 17, 1999, the President issued a
Memorandum, ``Electronic Government,'' which called on Federal agencies
to use information technology to ensure that governmental services and
information are easily accessible to the American people (Weekly
Compilation of Presidential Documents, vol. 35, pp. 2641-43, (December
27, 1999); also available at http://cio.gov/). Among other things, the
President charged the Administrator of General Services, in
coordination with agencies, to assist agencies in the development of
private, secure and effective electronic communication across agencies
and with the public through the use of public key technology. This
technology can offer significant benefits in facilitating electronic
commerce through a shared, interoperable, government-wide
infrastructure.
What is the Purpose of GPEA?
GPEA seeks to ``preclude agencies or courts from systematically
treating electronic documents and signatures less favorably than their
paper counterparts'', so that citizens can interact with the Federal
government electronically (S. Rep. 105-335). It requires Federal
agencies, by October 21, 2003, to provide individuals or entities that
deal with agencies the option to submit information or transact with
the agency electronically, and to maintain records electronically, when
practicable. It also addresses the matter of private employers being
able to use electronic means to store, and file with Federal agencies,
information pertaining to their employees.
GPEA states that electronic records and their related electronic
signatures are not to be denied legal effect, validity, or
enforceability merely because they are in electronic form. It also
encourages Federal government use of a range of electronic signature
alternatives.
This guidance implements GPEA, fosters a successful transition to
electronic government as contemplated by the President's memorandum,
and employs where appropriate the work described in ``Access with
Trust.''
What Were the Comments on the Proposed Implementation?
On March 5, 1999, OMB published the ``Proposed Implementation of
the Government Paperwork Elimination Act'' for public comment. (64 FR
10896). It was also sent directly to Federal agencies for comment and
made available via the Internet. In addition, OMB met with relevant
committees and staff of many interested organizations including:
American Bar Association (both the Business Law and the Science and
Technology Sections); American Bankers Association; National Automated
Clearing House Association; National Governors Association; National
Association of State Information Resource Executives; National
Association of State Auditors, Controllers and Treasurers; National
Association of State Purchasing Officers; the Government of Canada; the
Government of Australia; and relevant industry forums. All were
uniformly positive about the content and tone of the guidance. OMB
received specific comments from 24 organizations. Most comments
proposed changes in clarity and detail. Where the comments added
clarity and did not contradict the goals of the guidance, they were
incorporated. The principal substantive issues raised in the comments
and our responses to them are described below.
I. Comments Regarding Risks and Benefits
A number of comments, including those from the Justice Department
and the General Accounting Office, requested that the guidance contain
further information on how to conduct the assessments of practicability
needed to determine the proper combination of technology and management
controls to manage the risk of converting transactions and record
keeping to
[[Page 25510]]
electronic form, and then conducting transactions electronically. Each
assessment should contain elements of risk analysis and measurements of
other costs and benefits. Most comments on assessment referred to the
risk analysis portion.
Risk analyses provide decisionmakers with information needed to
understand the factors that can degrade or endanger operations and
outcomes and to make informed judgments about what actions need to be
taken to reduce risk. Consistent with the Computer Security Act (40
U.S.C. 759 note), Appendix III of OMB Circular No. A-130, ``Security of
Federal Automated Information Resources,'' (34 FR 6428, February 20,
1996), Federal managers should design and implement their information
technology systems in a manner that is commensurate with the risk and
magnitude of harm from unauthorized use, disclosure, or modification of
the information in those systems. To determine what constitutes
adequate security, a risk-based assessment must consider all major risk
factors, such as the value of the system or application, threats,
vulnerabilities, and the effectiveness of current and proposed
safeguards. Low-risk information processes may need only minimal
consideration, while high-risk processes may need extensive analysis.
OMB reiterated these principles on June 23, 1999, in OMB Memorandum No.
99-20, ``Security of Federal Automated Information Resources,'' and
reminded agencies to continually assess the risk to their computer
systems and maintain adequate security commensurate with that risk,
particularly as they take increasing advantage of the internet and the
world wide web in providing information and services to citizens.
(Available at: http://cio.gov/ and http://whitehouse.gov/omb/memoranda/
m-99-20.html).
The Commerce Department's National Institute of Standards and
Technology (NIST) also recognizes the importance of conducting risk
analyses for securing computer-based resources. NIST provides guidance
on risk analysis (available at http://csrc.nist.gov/nistpubs):
``Good Security Practices for Electronic Commerce,
Including Electronic Data Interchange,'' Special Publication 800-9
(December 1993);
``An Introduction to Computer Security: The NIST
Handbook,'' Special Publication 800-12 (December 1995);
``Generally Accepted Principles and Practices for Securing
Information Technology Systems,'' Special Publication 800-14 (September
1996); and
``Guide for Developing Security Plans for Information
Technology Systems,'' Special Publication 800-18 (December 1998).
More recently, the General Accounting Office published
``Information Security Risk Assessment: Practices of Leading
Organizations,'' GAO/AIMD-00-33 (November 1999) (Available at http://
www.gao.gov/). This document is intended to help Federal managers
implement an ongoing information security risk analysis process by
suggesting practical procedures that have been successfully adopted by
organizations known for their good risk analysis practices. This
document describes various models and methods for analyzing risk, and
identifies factors that are important in a risk analysis.
A quantitative risk analysis generally attempts to estimate the
monetary cost of risk compared with that of risk reduction techniques
based on (1) the likelihood that a damaging event will occur, (2) the
costs of potential losses, and (3) the costs of mitigating actions that
could be taken. Availability of data affects the extent to which risk
analysis results may be quantified reliably. The GAO report recognizes,
however, that reliable data on likelihood and risks often may not be
available, in which case a qualitative approach can be taken by
defining risk in more subjective and general terms such as high,
medium, and low. In this regard, qualitative analyses depend more on
the expertise, experience, and good judgment of the Federal managers
conducting the analysis. It also may be possible to use a combination
of quantitative and qualitative methods.
Other commenters wanted more guidance on how to weigh the risk
analysis with other costs and benefits. In combination with the risk
analysis, the results of a cost-benefit analysis should be used to
judge the practicability of such a process transformation. All major
information technology investments are evaluated under the Appendices
of OMB Circular No. A-130, ``Management of Federal Information
Resources'' and Part 3 of OMB Circular No. A-11 ``Planning, Budgeting,
and Acquisition of Capital Assets.'' Specific guidance on information
technology cost-benefit analysis is available from the Capital Planning
and IT Investment Committee of the Federal CIO Council in the recently
published ``ROI and the Value Puzzle.'' (Available at: http://cio.gov/
). When developing collections of information under the Paperwork
Reduction Act, agencies currently address the practicality of
electronic submission, maintenance, and disclosure. The GPEA guidance
builds on the requirements and scope of the PRA; all transactions that
involve Federal information collections covered under the PRA are also
covered under GPEA. In addition, agencies should follow OMB Memorandum
00-07 ``Incorporating and Funding Security in Information Systems
Investments'', issued February 28, 2000, which provides information on
building security into information technology investments (also
available at: http://cio.gov/).
The Department of Justice commented on the need for each agency to
consider the broad range of legal risks involved in electronic
transactions. Justice's comments are especially appropriate for
particularly sensitive transactions, including those likely to give
rise to civil or criminal enforcement proceedings and we expect them to
be further developed in Juctice's forthcoming practical guidance. The
risk analysis process required by the Computer Security Act and by good
practice must be tailored to the risks and related mitigation costs
that pertain to each system, as understood by the Federal managers most
knowledgeable with the systems. When evaluating legal risks, Federal
managers should consult with their legal counsel about any specific
legal implications due to the use of electronic transactions or
documents in the application in question. Agencies should also keep in
mind that GPEA specifically states that electronic records and their
related electronic signatures are not to be denied legal effect,
validity, or enforceability merely because they are in electronic form.
We are not, therefore, prescribing specific ``one size fits all''
requirements applicable to transactions regardless of sensitivity.
In light of all the above comments, we have added greater detail to
the practicability aspects of the guidance, and an expanded discussion
of cost-benefit analysis and its relation to risk analysis. We have
also placed additional emphasis on the need for risk analyses to
identify and address the full range of risks, including reasonably
expected legal and enforcement risks, and technological risks. Further,
we included a reporting mechanism in Part I Section 3 to facilitate the
assessment of practicability. Although many of the comments concern the
costs and risks of changing to electronic transactions, it is also
important to consider the full range of benefits that electronic
transactions can provide. Possible benefits include: increased partner
participation and customer satisfaction; reduced
[[Page 25511]]
transaction costs and increased transaction speed; improved record
keeping and new opportunities for analysis of information; and greater
employee productivity and enhanced quality of their output. An agency's
consideration of risks needs to be balanced with a full consideration
of benefits.
II. Comments Regarding Technology Neutrality
A number of comments concerned the emphasis on technology
neutrality with regard to the various electronic signature
alternatives. They suggested we endorse one electronic signature
technology in order to promote interoperability and ease of use. Other
commenters disagreed. They expressed concern that promoting one
technology requires predicting the direction and future of information
technology standards and practices, which is a notoriously difficult
task. Further, there are sometimes technologies that naturally fit
particular electronic transactions and are easier to implement from a
security, privacy, technical, or operational perspective than others.
For example, implementing a technology that is easy to use would
naturally fit when encouraging citizens to participate in electronic
transactions.
We do not believe it would be appropriate to endorse one
technology, and we share the concerns of those commenters who argued
against such an endorsement. At the same time, we recognize that
cryptographically-based digital signatures (i.e., public key
technology) hold great promise for ensuring both authentication and
privacy in networked interactions, and may be the only technology
available that can foster interoperability across numerous
applications. There are, however, applications where personal
identification numbers (PINs) and other shared secret techniques may
well be appropriate. These are generally relatively low risk
applications where interoperability is of lesser importance. A number
of agencies have successfully used PINs in groundbreaking applications,
particularly the Securities and Exchange Commission for regulatory
filings and the Internal Revenue Service for tax filings. They have
recognized the benefits of using PINs, but at the same time they are
planning for an eventual transfer to digital signatures.
Accordingly, the final guidance maintains the basic policy of
technology neutrality for automated transactions while recognizing that
agencies should select an alternative relative to the risk of the
application, and calls on agencies to consider all of the available
electronic signature technologies (including the advantages of public
key technology) as part of their assessments.
III. Comments Regarding Records Management
Several comments suggested that the guidance should give further
emphasis to the role of the National Archives and Records
Administration in working with the agencies to address the maintenance,
preservation, and disposal of Federal records that are associated with
electronic government transactions. We agree. The final guidance
explicitly addresses NARA's role in the area of electronic records
management, particularly as it relates to the use of electronic
signature technologies.
IV. Comments regarding privacy protection
Some commenters were concerned with the privacy implications of the
guidance. They want to ensure that any move to electronic transactions
does not encourage the gathering of unnecessary information, and that
Federal agencies adequately protect the personal information that does
need to be collected. We agree that agencies must incorporate privacy
protections when developing electronic processes. Several helpful
suggestions were made that have been incorporated into the final
guidance. With respect to a commenters' concern that agencies not
collect unnecessary information, the Privacy Act requires an agency to
``maintain in its records only such information about an individual as
is relevant and necessary to accomplish a purpose of the agency.'' 5
U.S.C. 552a(e)(1); see e.g. Reuber v. United States, 829 F. 2d 133,
138-40 (D.C.C. 1987). Furthermore, the collection by agencies of
unnecessary information would be contrary to the Paperwork Reduction
Act's mandate that agencies collect only information that is
``necessary for the proper performance of the functions of the agency''
and ``has practical utility.'' 44 U.S.C. 3508.
V. State, Local and Non-governmental Concerns
A number of comments were received from non-Federal entities. These
comments were primarily concerned with the broader implications of the
Act itself rather than the draft guidance. Specifically, some
governmental entities expressed concern that Federal adoption of
routine electronic transactions would require state and local
governments to provide equivalent access for citizens. Some commenters
were also concerned that they would be required to make all future
transactions with the Federal government in an electronic format.
Consultations with the state government groups identified above, during
and subsequent to the comment period, seem to have alleviated these
concerns significantly, particularly as we explained that GPEA
contemplates optional rather than mandatory electronic transactions
with the Federal government. Agencies are required to provide the
option to their transaction partners. Transaction partners are not
required to use the electronic option.
What Are the Future Plans for this Guidance?
We intend to place this guidance into an appendix of OMB Circular
A-130 as it is updated. OMB's final procedures and guidance on
implementing the Government Paperwork Elimination Act are set forth
below.
John T. Spotila,
Administrator, Office of Information and Regulatory Affairs.
April 25, 2000
M-00-10
Memorandum for the Heads of Departments and Agencies
From: Jacob J. Lew, Director
Subject: OMB Procedures and Guidance on Implementing the Government
Paperwork Elimination Act
This document provides Executive agencies with the guidance
required under Sections 1703 and 1705 the Government Paperwork
Elimination Act (GPEA), Public Law 105-277, Title XVII.
GPEA requires agencies, by October 21, 2003, to provide for the (1)
option of electronic maintenance, submission, or disclosure of
information, when practicable as a substitute for paper; and (2) use
and acceptance of electronic signatures, when practicable. GPEA
specifically states that electronic records and their related
electronic signatures are not to be denied legal effect, validity, or
enforceability merely because they are in electronic form.
GPEA is an important tool in fulfilling the vision of improved
customer service and governmental efficiency through the use of
information technology. This vision contemplates widespread use of the
Internet and its World Wide Web, with Federal agencies transacting
business electronically as commercial enterprises are doing. Members of
the public who wish to do business this way may avoid traveling to
government offices, waiting in line, or mailing paper forms. The
Federal government can also save time and money transacting business
electronically.
[[Page 25512]]
This guidance also implements part of the President's memorandum of
December 17, 1999, ``Electronic Government,'' which calls on Federal
agencies to use information technology in ensuring that governmental
services and information are easily accessible to the American people.
Among other things, the President charged the Administrator of General
Services, in coordination with appropriate agencies and organizations,
to assist agencies in developing private, secure, and effective
communication across agencies and with the public through the use of
digital signature technology.
Creating more accessible and efficient government requires public
confidence in the security of the government's electronic information
communication and information technology systems.
Electronic commerce, electronic mail, and electronic benefits
transfer can involve the exchange of sensitive information within
government, between government and private industry or individuals, and
among governments. Electronic systems must be able to protect the
confidentially of citizens' information, authenticate the identity of
the transacting parties to the degree required by the transaction,
guarantee that the information is not altered in an unauthorized way,
and provide access when needed.
To reach these goals, agencies must meet objectives outlined by
GPEA guidance. First, each agency must build on their existing efforts
to implement electronic government by developing a plan and schedule
that implement, by the end of Fiscal Year 2003, optional electronic
maintenance, submission, or transactions of information, when
practicable as a substitute for paper, including through the use of
electronic signatures when practicable.
Agencies must submit a copy of the plan to OMB by October 2000 and
coordinate the plan and schedule with their strategic IT planning
activities that support program responsibilities consistent with the
budget process (as required by OMB Circular A-11).
Attachment
Implementation of the Government Paper Work Elimination Act
contains:
Part I. What policies and procedures should agencies follow?
Section 1. What GPEA policies should agencies follow?
Section 2. What GPEA procedures should agencies follow?
Section 3. How should agencies implement these policies and
procedures?
Part II. How can agencies improve service delivery and reduce burden
through the use of electronic signatures and electronic transactions?
Section 1. Introduction and background
Section 2. What is an ``electronic signature?''
Section 3. How should agencies assess the risks, costs, and
benefits?
Section 4. What benefits should agencies consider in planning and
implementing electronic signatures and electronic transactions?
Section 5. What risk factors should agencies consider in planning
and implementing electronic signatures or electronic transactions?
Section 6. What privacy and disclosure issues affect electronic
signatures and electronic transactions?
Section 7. What are current electronic signature technologies?
Section 8. How should agencies implement electronic signatures and
electronic transactions?
Section 9. Summary of the procedures and checklist
Part I. What policies and procedures should agencies follow?
Section 1. What GPEA policies should agencies follow?
The Government Paperwork Elimination Act (GPEA) requires Federal
agencies, by October 21, 2003, to provide individuals or entities the
option to submit information or transact with the agency electronically
and to maintain records electronically when practicable. GPEA
specifically states that electronic records and their related
electronic signatures are not to be denied legal effect, validity, or
enforceability merely because they are in electronic form. It also
encourages Federal government use of a range of electronic signature
alternatives.
Sections 1703 and 1705 of GPEA charge the Office of Management and
Budget (OMB) with developing procedures for Executive agencies to
follow in using and accepting electronic documents and signatures,
including records required to be maintained under Federal programs and
information that employers are required to store and file with Federal
agencies about their employees. These procedures reflect and are to be
executed with due consideration of the following policies:
a. maintaining compatibility with standards and technology for
electronic signatures generally used in commerce and industry and by
State governments;
b. not inappropriately favoring one industry or technology;
c. ensuring that electronic signatures are as reliable as
appropriate for the purpose in question;
d. maximizing the benefits and minimizing the risks and other
costs;
e. protecting the privacy of transaction partners and third parties
that have information contained in the transaction;
f. ensuring that agencies comply with their recordkeeping
responsibilities under the FRA for these electronic records. Electronic
record keeping systems reliably preserve the information submitted, as
required by the Federal Records Act and implementing regulations; and
g. providing, wherever appropriate, for the electronic
acknowledgment of electronic filings that are successfully submitted.
Section 2. What GPEA procedures should agencies follow?
a. GPEA recognizes that building and deploying electronic systems
to complement and replace paper-based systems should be consistent with
the need to ensure that investments in information technology are
economically prudent to accomplish the agency's mission, protect
privacy, and ensure the security of the data. Moreover, a decision to
reject the option of electronic filing or record keeping should
demonstrate, in the context of a particular application and upon
considering relative costs, risks, and benefits given the level of
sensitivity of the process, that there is no reasonably cost-effective
combination of technologies and management controls that can be used to
operate the transaction and sufficiently minimize the risk of
significant harm. Accordingly, agencies should develop and implement
plans, supported by an assessment of whether to use and accept
documents in electronic form and to engage in electronic transactions.
The assessment should weigh costs and benefits and involve an
appropriate risk analysis, recognizing that low-risk information
processes may need only minimal consideration, while high-risk
processes may need extensive analysis.
b. Performing the assessment to evaluate electronic signature
alternatives should not be viewed as an isolated activity or an end in
itself. Agencies should draw from and feed
[[Page 25513]]
into the interrelated requirements of the Paperwork Reduction Act, the
Privacy Act, the Computer Security Act, the Government Performance and
Results Act, the Clinger-Cohen Act, the Federal Managers' Financial
Integrity Act, the Federal Records Act, and the Chief Financial
Officers Act, as well as OMB Circular A-130 and Presidential Decision
Directive 63.
c. The assessment should develop strategies to mitigate risks and
maximize benefits in the context of available technologies, and the
relative total costs and effects of implementing those technologies on
the program being analyzed. The assessment also should be used to
develop baselines and verifiable performance measures that track the
agency's mission, strategic plans, and tactical goals, as required by
the Clinger-Cohen Act.
d. In addition to serving as a guide for selecting the most
appropriate technologies, the assessment of costs and benefits should
be designed so that it can be used to generate a business case and
verifiable return on investment to support agency decisions regarding
overall programmatic direction, investment decisions, and budgetary
priorities. In doing so, agencies should consider the effects on the
public, its needs, and its readiness to move to an electronic
environment.
Section 3. How should agencies implement these policies and procedures?
a. To ensure a smooth and cost-effective transition to an
electronic government that provides improved service to the public,
each agency must:
(1) Develop a plan (including a schedule) by October, 2000 that
provides for continued implementation, by the end of Fiscal Year 2003,
of optional electronic maintenance, submission, or transaction of
information when practicable as a substitute for paper, including
through the use of electronic signatures when practicable. The plan
must address, among other things (and where applicable), the optional
use by employers of electronic means to store and file with Federal
agencies information about their employees. The plan should prioritize
agency implementation of systems or modules of systems based on
achievability and net benefit. The plan must be an addition to the
agency's strategic IT planning activities supporting program
responsibilities, as required by OMB Circular A-11. A copy of the plan
should be provided to OMB.
(2) For each agency information system identified in the plan
required in #1 above, consider relative costs, risks, and benefits
given the level of sensitivity of the process(es) that the system
supports. Agency considerations of cost, risk, and benefit, as well as
any measures taken to minimize risks, should be commensurate with the
level of sensitivity of the transaction. Low-risk information processes
may need only minimal consideration, while high-risk processes may need
extensive analysis.
(3) Based on the considerations in #2 each agency in its plan must
include:
(a) The name of the information process or group of processes being
automated.
(b) A brief description of the information processes being
automated. In addition, the description must:
1. Indicate whether further risk management measures are
appropriate.
2. Where such measures are appropriate, indicate when and how a
combination of information security practices, authentication
technologies, management controls, or other business processes for each
application will be practicable. In addition, if a particular
application is not practicable for conversion to electronic interaction
as part of the plan, agencies should explain the reasons and report any
strategy to make such conversion practicable.
(c) The date of automation for the information process(es). If the
implementation is judged to be not practicable by October 2003, that
conclusion may be noted instead of the date. The dates should reflect
the prioritization based on achievability and net benefit as discussed
in #1 above.
(4) Consistent with the plan take measures (including, if
necessary, amending regulations or policies to remove impediments to
electronic transactions) to: (a) implement optional electronic
submission, maintenance, or disclosure of information and the use of
any necessary electronic signature alternatives; and (b) permit private
employers who have record keeping responsibilities imposed by the
Federal government to store and file information pertaining to their
employees electronically.
(5) Ensure that measures taken under the plan reflect appropriate
information system confidentiality and security in accordance with the
Privacy Act, the Computer Security Act, as amended, and the guidance
contained in OMB Circular A-130, Appendices I and III; and ensure that
these measures use, to the maximum extent practicable, technologies
that are either prescribed in Federal Information Processing Standards
promulgated by the Secretary of Commerce or are supported by voluntary
consensus standards as defined in OMB Circular A-119, ``Federal
Participation in the Development and Use of Voluntary Consensus
Standards and Conformity Assessment Activities,'' (63 FR 8546; February
19, 1998).
(6) Report progress annually against the plan (including any
appropriate revisions to the schedule) above along with annual
performance reporting required under OMB Circular A-11.
(7) Consider the record keeping functionality of any systems that
store electronic documents and electronic signatures, to ensure users
have appropriate access to the information and can meet the agency's
record keeping needs.
(8) In developing collections of information under the Paperwork
Reduction Act, address whether optional electronic submission,
maintenance, or disclosure of information (including the electronic
storage and filing by employers of information about their employees)
would be practicable as a means of decreasing the burden and/or
increasing the practical utility of the collection.
b. Department of Commerce
The Department of Commerce must promulgate, in consultation with
the agencies and OMB, Federal Information Processing Standards as
appropriate to further the specific goals of GPEA. The Department
should also develop guidance in the area of authentication technologies
and implementations, including cryptographic digital signature
technology, with assistance from the Chief Information Officers Council
and the Public Key Infrastructure Steering Committee.
c. Department of the Treasury
The Department of the Treasury must develop, in consultation with
the agencies and OMB, policies and practices for the use of electronic
transactions and authentication techniques for use in Federal payments
and collections and ensure that they fulfill the goals of GPEA.
d. Department of Justice
The Department of Justice must develop, in consultation with the
agencies and OMB, practical guidance on legal considerations related to
agency use of electronic filing and record keeping.
e. National Archives and Records Administration
The National Archives and Records Administration must develop, in
consultation with the agencies and OMB, policies and guidance on the
management, preservation, and disposal of Federal records associated
with electronic government transactions, and
[[Page 25514]]
must give particular consideration to records issues associated with
the use of electronic signature technologies.
f. General Services Administration
The General Services Administration must support agencies'
implementation of digital signature technology and related electronic
service delivery.
g. Office of Management and Budget
OMB must provide continuing guidance and oversight for the
implementation of GPEA, including through its review of collections of
information under the Paperwork Reduction Act.
Part II. How can agencies improve service delivery and reduce
burden through the use of electronic signatures and electronic
transactions?
This part provides Federal managers with basic information to
assist in planning for an orderly and efficient transition to
electronic government. Agencies should begin their planning promptly to
ensure compliance with the timetable in GPEA.
Section 1. Introduction and Background
a. As required by GPEA, this Part provides guidance to agencies for
deciding whether to use electronic signature technology for a
particular application. GPEA requires Federal agencies, by October 21,
2003, to allow individuals or entities the option to submit information
or transact with the agencies electronically and to maintain records
electronically, when practicable. It specifically states that
electronic records and their related electronic signatures are not to
be denied legal effect, validity, or enforceability merely because they
are in electronic form. It also encourages Federal government use of a
range of electronic signature alternatives. The guidance helps agencies
consider which electronic signature technology may be most appropriate
and suggests methods to maximize the benefit of electronic information
while minimizing risk when implementing a particular electronic
signature technology to secure electronic transactions.
The guidance builds on the requirements and scope of the Paperwork
Reduction Act of 1995 (PRA). According to the PRA agencies must,
``consistent with the Computer Security Act of 1987 (CSA) (40 U.S.C.
759 note), identify and afford security protections commensurate with
the risk and magnitude of the harm resulting from the loss, misuse, or
unauthorized access to or modification of information collected or
maintained by or on behalf of an agency.'' 44 U.S.C. 3506(g)(3). In
addition, we note that all transactions that involve Federal
information collections covered under the PRA are also covered under
GPEA.
b. As GPEA, PRA, CSA, and the Privacy Act recognize, the goal of
information security is to protect the integrity and confidentiality of
electronic records and transactions that enable business operations.
Different security approaches offer varying levels of assurance in an
electronic environment and are appropriate depending on a balance
between the benefits from electronic information transfer and the risk
of harm if the information is compromised. Among these approaches (in
an ascending level of assurance) are:
(1) so-called ``shared secrets'' methods (e.g., personal
identification numbers or passwords),
(2) digitized signatures or biometric means of identification,
such as fingerprints, retinal patterns, and voice recognition, and
(3) cryptographic digital signatures (discussed in more detail
in Section 7).
Combinations of approaches (e.g., digital signatures with
biometrics) are also possible and may provide even higher levels of
assurance than single approaches by themselves. Deciding which to use
in an application depends first upon finding a balance between the
risks associated with the loss, misuse, or compromise of the
information, and the benefits, costs, and effort associated with
deploying and managing the increasingly secure methods to mitigate
those risks. Agencies must strike a balance, recognizing that achieving
absolute security is likely to be highly improbable in most cases and
prohibitively expensive if possible.
Section 2. What is an ``electronic signature?''
a. GPEA defines ``electronic signature'' as follows:
``* * * 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.'' (GPEA, section 1709(1)).
This definition is consistent with other accepted legal definitions
of signature. The term ``signature'' has long been understood as
including ``any symbol executed or adopted by a party with present
intention to authenticate a writing.'' (Uniform Commercial Code, 1-
201(39)(1970)). The ``Uniform Electronic Transactions Act,'' recently
adopted by the National Conference of Commissioners of Uniform State
Laws, and which is being enacted by the States, contains a similar
definition (see http://www.nccusl.org). These flexible definitions
permit the use of different electronic signature technologies, such as
digital signatures, personal identifying numbers, and biometrics
(section 7 provides more detail on electronic signature technologies).
While it is the case that, for historical reasons, the Federal Rules of
Evidence are tailored to support the admissibility of paper-based
evidence, the Federal Rules of Evidence have no actual bias against
electronic evidence.
b. In enacting GPEA, Congress addressed the legal effect and
validity of electronic signatures or other electronic authentication:
``Electronic records submitted or maintained in accordance with
procedures developed under this title, or electronic signatures or
other forms of electronic authentication used in accordance with such
procedures, must not be denied legal effect, validity, or
enforceability because such records are in electronic form'' (GPEA,
section 1707).
Section 3. How should agencies assess the risks, costs, and benefits?
To evaluate the suitability of electronic signature alternatives
for a particular application, the agency needs to perform an
assessment. The assessment should include a risk analysis, in cases
where the sensitivity of the transaction is sufficiently great, and a
cost-benefit analysis. The assessment identifies the particular
technologies and management controls best suited to minimizing the risk
and cost to acceptable levels, while maximizing the benefits to the
parties involved. Often parts of the assessment can be quantified, but
some factors--particularly the risk analysis usually can only be
estimated qualitatively.
Availability of data affects the extent to which risk can be
reliably quantified. A quantitative approach to risk analysis generally
attempts to estimate the monetary cost of risk compared to the cost of
risk reduction techniques based on:
(i) the likelihood that a damaging event will occur,
(ii) the costs of potential losses, and
(iii) the costs of mitigating actions that could be taken.
Reliable data on likelihood and costs may not be available. In this
case a qualitative approach can be taken by defining risk in more
subjective and general terms such as high, medium, and low. In this
regard, qualitative analyses depend more on the expertise, experience,
and good judgment of the
[[Page 25515]]
Federal managers conducting them than on quantified factors.
The same can be true with other costs and benefits. Some factors,
such as the value of deterring fraud, are difficult to quantify. If a
new automated system is less secure than an old, paper-based system,
attempts to commit fraud or to repudiate transactions may increase. It
usually is not possible to quantify in monetary terms attitudes such as
increased customer satisfaction and willingness to cooperate with an
agency, which may result from electronic processes designed to be user-
friendly. However, many costs (design, development, and implementation)
and benefits (reduced transaction costs, saved time etc.) can be
quantified, as is the case for other IT projects. Clearly, then, the
assessment should use a combination of quantitative and qualitative
methods to judge the practicability of any electronic transaction
method and should include a comprehensive risk analysis when warranted
by the sensitivity of the data and/or the transaction.
Those alternatives that minimize risk to an acceptable level should
be assessed in terms of net benefit to the agency and the customer in
order to determine the electronic signature most appropriate for the
transaction. If the net benefits are negative, the agency may determine
that using an electronic process is not practicable at this time. In
any event, all risk analyses are exercises in managerial judgment.
a. Consider the costs of risk mitigation. The assessment must
recognize that neither handwritten signatures nor electronic signatures
are totally reliable and secure. Every method of signature, whether
electronic or on paper, can be compromised with enough skill and
resources, or due to poor security procedures, practices, or
implementation. Setting up a very secure, but expensive, automated
system may in fact buy only a marginal benefit of deterrence or risk
reduction over other alternatives and may not be worth the extra cost.
For example, past experience with fraud risks, and a careful analysis
of those risks, shows that exposure is often low. If this is the case a
less expensive system that substantially deters fraud is warranted, and
not an absolutely secure system. Overall, security determination should
conform to the Computer Security Act: the level of security should be
commensurate with the level of sensitivity of the transaction.
b. Conduct a cost-benefit analysis to determine if an electronic
transaction is practicable. The primary goal of a cost-benefit analysis
should be to find a cost-effective package of security mechanisms and
management controls that can support automated systems using electronic
communications. In estimating the cost of any system, agencies should
include costs associated with hardware, software, administration, and
support of the system, both short-term and long-term. Agencies should
consider the following issues when framing the cost-benefit analysis:
(1) Offering more than one way to communicate electronically may
enable more people to conduct electronic transactions. If different
partners have different skills and differing security concerns,
providing a combination of mechanisms will meet the needs of a greater
number of possible partners. While admittedly adding cost, offering
multiple alternatives can add greater benefit, as well. Under GPEA, the
agency must considered this option whenever it expects to receive over
50,000 electronic submittals (per year) of a particular form.
(2) Electronic transactions can impose costs on the transaction
partners. Many electronic signature techniques require specialized
computer hardware and technical knowledge. The higher these threshold
costs are, the higher the participation costs are for users. Higher
costs will tend to narrow the range of potential users, which in turn
limits the benefits of electronic communications.
(3) Agencies should assess the costs of developing and maintaining
electronic transactions. Information technology costs continue to fall
and electronic signature techniques continue to evolve. As a result,
the agency should periodically redo its risk and cost-benefit analyses
on those programs where electronic transactions were initially deemed
impracticable to determine whether costs and/or technologies have
changed enough so that electronic transactions have become practicable.
(4) If the cost-benefit analysis of a proposed solution indicates
that the electronic solution is not cost effective, the agency should
seek to identify opportunities to reengineer the underlying process
being automated. Occasionally, practices and rules under the control of
an agency are based on factors or circumstances that may no longer
apply. In these cases new practices and rules should be proposed if the
changes do not undermine the objective or impair security, and if the
changes lead to a more efficient process.
c. Document the decision. The Computer Security Act gives agency
managers the responsibility to select an appropriate combination of
technologies, practices, and management controls to minimize risk cost-
effectively while maximizing benefits to all parties to the
transaction. Agency managers should document these decisions, however
qualitative, in the system security plan (see the NIST ``Guide for
Developing Security Plans for Information Technology Systems,'' Special
Publication 800-18 (December 1998)) for later review and adjustment.
Section 4. What benefits should agencies consider in planning and
implementing electronic signatures and electronic transactions?
Benefits from moving to electronic transactions and electronic
signatures include reduction in transaction costs for the agency and
the transaction partner. Transactions are quicker and it is often
easier to access information related to the transaction because it is
in electronic form. The electronic form often allows more effective
data analysis because the information is easier to access. Better data
analysis often improves the operation of the newly electronic
transaction. In addition, if many transactions are electronic and data
analysis can be done across transactions the benefits can spillover
into the rest of the agency as operational awareness of the entire
organization is improved. Moreover, business process reengineering
should accompany all attempts to facilitate a transaction through
information technology. Often the full benefits will be realized only
by restructuring the process to take advantage of the technology.
Merely moving an existing paper based process to an electronic one is
unlikely to reap the maximum benefits from the electronic system.
In order to account for all the benefits associated with electronic
transactions, agencies should keep common information technology
benefits in mind and look at the benefits realized by other agencies.
a. What are the benefits? Agencies should identify all the benefits
of automating program transactions and making those transactions
secure, such as:
(1) Increased speed of the transaction. The partner and the agency
may spend less time completing the transaction. The quicker speed
combined with putting the transaction online allows real-time help to
the transaction partner, providing a benefit not found in a paper based
transaction.
(2) Increased partner participation and customer satisfaction.
Often a decrease in partner transaction costs leads to more partners
completing the transaction. In addition, partners tend to
[[Page 25516]]
have a more positive view of the process given its speed and ease of
use.
(3) Improved record keeping efficiency and data analysis
opportunities. If data are easier to access and store then they can
enhance program evaluation and expand awareness of the effects of the
government program in question.
(4) Increased employee productivity and improved quality of the
final product. Electronic transactions tend to have fewer errors
because often the system minimizes retyping and automatically detects
certain errors. These benefits allow the employees to concentrate more
time on other matters.
(5) Greater information benefits to the public. Moving to
electronic transactions and electronic signatures often can make the
related information more accessible to the public and Freedom of
Information Act requests.
(6) Improved security. Designed, implemented, and managed properly,
electronic transactions can have fewer opportunities for fraud and more
robust security measures than paper and envelope transactions.
(7) Extensive security for highly sensitive information. Even
though implementing a more secure electronic signature option often is
more expensive initially than implementing less secure alternatives,
there could be larger expected benefits if the information being
protected is particularly sensitive.
b. What are examples of benefits from electronic signatures and
transactions? The following examples highlight agencies' experience in
gaining significant benefits from electronic transactions and
electronic signatures.
(1) The Internal Revenue Service uses electronic identification to
strengthen validation by incorporating electronic links between the
user and preexisting data about that user in the agency's records in
its TeleFile program. It enables selected taxpayers to file 1040EZs
with a touch-tone phone. Taxpayers get Customer Service Numbers (CSNs,
i.e., PINs) that they then use to sign their returns and which help to
validate their identities to the agency. Even though a CSN is not
unique to an individual taxpayer (since it is only five digits long),
the IRS authenticates the filer by using other identifying factors,
such as the taxpayer's date of birth, taxpayer identification number,
and by using additional procedures. This approach is not used over the
Internet. Instead, it occurs in short-term connections over telephone
lines, an environment where it is comparatively difficult for persons
to eavesdrop and steal information or substitute false information.
(2) Taxpayers who transmit their tax returns electronically give
high marks to the Internal Revenue Service's electronic filing
programs. The American Customer Satisfaction Index (ACSI) shows
customer satisfaction scores for IRS e-file exceed those for both the
government and retail sectors and rival those of the financial services
sector. For electronic tax return filers, the overall ACSI customer
satisfaction index is 74. This surpasses the rating among paper return
filers and compares with a government-wide satisfaction rating of 68.6.
In addition, 78% of customers with electronic filing experiences say
they are more satisfied now than two years ago. Other benefits of the
electronic filing program include:
(a) Refunds are received in half the time and even faster with
Direct Deposit.
(b) Its accuracy rate of over 99% reduces the chance of getting an
error notice from the IRS.
(c) It provides an IRS acknowledgment within 48 hours that the
return has been received.
(3) The General Services Administration, Federal Technology Service
conducted the FTS2001 Procurement in a totally paperless environment.
Beginning with the Request for Proposals (RFP) release, which was
digitally signed and posted on the internet along with a utility for
verifying the signature, through the issuance of the contracts to the
winning bidders in an electronic signing ceremony, no paper changed
hands at any time during the process. Bids from the offerors were
delivered on a single CD, in contrast with the previous FTS2000
solicitation that required several pallets of documentation for each
submission. It is estimated that the paper equivalent of this bid would
have resulted in a stack of paper approximately 5 stories high. This
electronic process resulted in efficiencies and savings to the
government of approximately $1,500,000 in time previously required to
process paperwork. The paperless process was enabled by issuing each
potential bidder a cryptographically-based digital signature
certificate housed on a hardware token.
(4) EDGAR, the Electronic Data Gathering, Analysis, and Retrieval
system, performs automated collection, validation, indexing,
acceptance, and forwarding of submissions by companies and others who
are required by law to file forms with the U.S. Securities and Exchange
Commission (SEC). Its primary purpose is to increase the efficiency and
fairness of the securities market for the benefit of investors,
corporations, and the economy by accelerating the receipt, acceptance,
dissemination, and analysis of time-sensitive corporate information
filed with the agency. Other benefits include:
(a) Elimination of the burdens and delays associated with
microfiching 10-12 million pages of information annually in a paper
format.
(b) Free SEC web site experiences over half a million hits daily,
many from individuals trying to improve the quality of their investment
decisions by examining disclosure documents. Prior to EDGAR,
individuals simply could not afford the typical, minimum cost of $25
per document.
(c) Full search capability allows improved ability to identify
incidents of new or unusual conditions in the reports that are filed
and allow rapid access to the information.
(5) The U.S. Customs Service automated much of the information
transactions with its import-export partners. It has allowed improved
accuracy, efficiency, speed, and the ability to analyze the
electronically filed data which has led to enforcement improvements.
The Automated Commercial System (ACS) is the system used to track,
control, and process all commercial goods imported into the United
States. ACS facilitates merchandise processing, significantly cuts
costs, and reduces paperwork requirements for both Customs and the
trade community.
Section 5. What risk factors should agencies consider in planning and
implementing electronic signatures or electronic transactions?
Properly implemented electronic signature technologies can offer
degrees of confidence in authenticating identity that are greater than
a handwritten signature can offer. These digital tools should be used
to control risks in a cost-effective manner. In determining whether an
electronic signature is sufficiently reliable for a particular purpose,
agency risk analyses need at a minimum to consider the relationships
between the parties, the value of the transaction, the risk of
intrusion, and the likely need for accessible, persuasive information
regarding the transaction at some later date. In addition, agencies
should consider any other risks relevant to the particular process.
Once these factors are considered separately, an agency should consider
them together to evaluate the sensitivity to risk of a particular
process, relative to the benefit that the process can bring.
[[Page 25517]]
a. What is the relationship between the parties? Agency
transactions fall into seven general categories, each of which may be
vulnerable to differing security risks:
(1) Intra-agency transactions (i.e., those which remain within the
same Federal agency).
(2) Inter-agency transactions (i.e., those between Federal
agencies).
(3) Transactions between a Federal agency and state or local
government agencies.
(4) Transactions between a Federal agency and a private
organization such as: contractor, business, university, non-profit
organization, or other entity.
(5) Transactions between a Federal agency and a member of the
general public.
(6) Transactions between a Federal agency and a foreign government,
foreign private organization, or foreign citizen.
Risks tend to be relatively low in cases where there is an ongoing
relationship between the parties. Generally speaking, there will be
little risk of a partner later repudiating inter-or intra-governmental
transactions of a relatively routine nature, and almost no risk of the
governmental trading partner committing fraud. Similarly, transactions
between a regulatory agency and a publicly traded corporation or other
known entity regulated by that agency can often bear a relatively low
risk of repudiation or fraud, particularly where the regulatory agency
has an ongoing relationship with, and enforcement authority over, the
entity. For the same reasons, risks tend to be relatively low within
rulemaking contexts, as all parties can view the submissions of others
so the risk of imposture is minimized. Other types of transactions,
involving an ongoing relationship between an agency and non-
governmental entities and persons, can have varying degrees of risk
depending on the nature of the relationship between the parties; the
same would apply in the case of those Federal programs in which the
ongoing relationship is between entities that are acting (and
collecting information under the PRA) on behalf of an agency and such
non-governmental entities and persons--e.g., transactions between a
lender, guaranty agency, or other institution participating in a
Federal loan or financial aid program and another program participant
or a member of the general public, such as a borrower or grant
recipient. On the other hand, the highest risk of fraud or repudiation
is for a one-time transaction between a person and an agency that has
legal or financial implications. Agencies should also pay attention to
transactions with non-Federal entities, where the agency has a law
enforcement responsibility but does not have an ongoing relationship.
Transactions between a Federal agency and a foreign entity may entail
unique legal risks due to varying national laws and regulations. In all
cases, the relative value of the transaction needs to be considered as
well.
b. What is the value of the transaction? Agency transactions fall
into five general categories, each of which may be vulnerable to
different security risks:
(1) Transactions involving the transfer of funds.
(2) Transactions where the parties commit to actions or contracts
that may give rise to financial or legal liability.
(3) Transactions involving information protected under the Privacy
Act or other agency-specific statutes, or information with national
security sensitivity, obliging that access to the information be
restricted.
(4) Transactions where the party is fulfilling a legal
responsibility which, if not performed, creates a legal liability
(criminal or civil).
(5) Transactions where no funds are transferred, no financial or
legal liability is involved and no privacy or confidentiality issues
are implicated.
Agency risk analyses should attempt to identify the relative value
of the type of transaction being automated and factor that against the
costs associated with implementing technological and management
controls to mitigate risk. Note that the value of the transaction
depends on the perspective of the agency and the transaction partner.
In general, electronic signatures are least necessary in very low value
transactions and need not be used unless specifically required by law
or regulation (i.e. #5). Where authentication is necessary, the method
of electronic signature should be appropriate to the level of risk.
c. What is the risk of intrusion? The probability of a security
intrusion on the transaction can depend on the benefit to the potential
attackers and their knowledge that the transaction will take place.
Agency transactions fall into three categories:
(1) Regular or periodic transactions between parties are at a
higher risk than intermittent transactions because of their
predictability, causing higher likelihood that an outside party would
know of the scheduled transaction and be prepared to intrude on it.
(2) The value of the information to outside parties could also
determine their motivation to compromise the information. Information
relatively unimportant to an agency may have high value to an outside
party.
(3) Certain agencies, because of their perceived image or mission,
may be more likely to be attacked independent of the information or
transaction. The act of disruption can be an end in itself.
d. What is the likely need for accessible, persuasive information
regarding the transaction at a later point? Agency transactions fall
into seven general categories:
(1) Transactions where the information generated will be used for a
short time and discarded;
(2) Transactions where the information generated may later be
subject to audit or compliance;
(3) Transactions where the information will be used for research,
program evaluation, or other statistical analyses;
(4) Transactions where the information generated may later be
subject to dispute by one of the parties (or alleged parties) to the
transaction;
(5) Transactions where the information generated may later be
subject to dispute by a non-party to the transaction;
(6) Transactions where the information generated may later be
needed as proof in court;
(7) Transactions where the information generated will be archived
later as permanently valuable records.
When analyzing the benefits of converting from paper systems to
electronic systems, agencies should reflect on what information would
be lost in the conversion, e.g., an envelope containing a postmark and
the sender's fingerprints and handwriting, or the specific questions
that were asked on a questionnaire. Agencies should determine whether
collecting the potentially lost information is truly important and
whether an electronic system could cost-effectively collect and store
similarly useful information.
In some paper transactions requiring a party's signature, the
signature both identifies the party and establishes that party's intent
to submit a truthful answer. Sometimes a notary or other third party
signs as witness to the signature. When converting these transactions
to electronic systems, agencies should ensure that the selected
technology and its implementation are able to provide similar
functions.
Section 6. What privacy and disclosure issues affect electronic
signatures and electronic transactions?
Section 1708 of GPEA limits the use of information collected in
electronic signature services to communications with a Federal agency.
It directs
[[Page 25518]]
agencies and their staff and contractors not to use such information
for any purpose other than for facilitating the communication.
Exceptions exist if the person (or entity) that is the subject of the
information provides affirmative consent to the additional use of the
information, or if such additional use is otherwise provided by law.
Accordingly, agencies should follow several privacy principles:
a. Electronic signatures should only be required where needed. Many
transactions do not need, and should not require, identifying or other
information about an individual. For example, individuals generally
should not be required to provide personal information in order to
download public documents.
b. When electronic signatures are required for a transaction,
agencies should not collect more information from the user than is
required for the application of the electronic signature. When
appropriate, agencies are encouraged to use methods of electronic
signing that do not require individuals to disclose their identity.
This includes the ability of individuals in a group to be identified by
a group identifier rather than an individual identifier if the only
information needed to authenticate is the fact that the individual is a
member of the group.
c. Users should be able to decide how, when, and what type of
electronic authentication to use of those made available by the agency.
If none are acceptable the user should be able to opt out to a paper
process. If a user wants a certain mechanism for authentication to
apply only to a single agency or to a single type of transaction, the
user's desires should be honored, if practicable. Conversely, if the
user wishes the authentication to work with multiple agencies or for
multiple types of transactions, that should also be permitted where
practicable. Specifically, it should be consistent with how the agency
employs such means of authentication and with relevant statute and
regulation and only if it conforms to practicable costs and risks.
d. Agencies should ensure, and users should be informed, that
information collected for the purpose of issuing or using electronic
means of authentication will be managed and protected in accordance
with applicable requirements under the Privacy Act, the Computer
Security Act, and any agency-specific statute mandating the protection
of such information, as well as with any relevant Executive Branch and
agency specific privacy policies.
Section 7. What are current electronic signature technologies?
Questions regarding the following should be directed to the
Department of Commerce. This section addresses two categories of
security: (1) Non-cryptographic methods of authenticating identity; and
(2) cryptographic control methods. The non-cryptographic approach
relies solely on an identification and authentication mechanism that
must be linked to a specific software platform for each application.
Cryptographic controls may be used for multiple applications, if
properly managed, and may encompass both authentication and encryption
services. A highly secure implementation may combine both categories of
technologies. The spectrum of electronic signature technologies
currently available is described below.
a. Non-Cryptographic Methods of Authenticating Identity. (1)
Personal Identification Number (PIN) or password: A user accessing an
agency's electronic application is requested to enter a ``shared
secret'' (called ``shared'' because it is known both to the user and to
the system), such as a password or PIN. When the user of a system
enters her name, she also enters a password or PIN. The system checks
that password or PIN against data in a database to ensure its
correctness and thereby ``authenticates'' the user. If the
authentication process is performed over an open network such as the
Internet, it is usually essential that at least the shared secret be
encrypted. This task can be accomplished by using a technology called
Secure Sockets Layer (SSL), which uses a combination of public key
technology and symmetric cryptography to automatically encrypt
information as it is sent over the Internet by the user and decrypt it
before it is read by the intended recipient. SSL currently is built
into almost all popular Web browsers, in such a fashion that its use is
transparent to the end user. Assuming the password is protected during
transmission, as described above, impersonating the user requires
obtaining the user's password. This may be relatively easy if users do
not follow appropriate guidelines for password creation and use.
Agencies should establish adequate guidelines for password creation and
protection.
(2) Smart Card: A smart card is a plastic card the size of a credit
card containing an embedded integrated circuit or ``chip'' that can
generate, store, and/or process data. It can be used to facilitate
various authentication technologies also embedded on the same card. By
having different authentication choices the user can pick the
authentication technique that meets but does not exceed the information
requirement for the transaction. A user inserts the smart card into a
card reader device attached to a computer or network input device.
Information from the card's chip is provided to the computer only when
the user also enters a PIN, password, or biometric identifier
recognized by the card. Thus, the user authenticates to the card,
making available electronic credentials which can then be used by the
computer or network to strongly authenticate the user for transactions.
This method offers far greater security than the typical use of a PIN
or password, because the shared secret is between the user and the
card, not with a remote server or network device. Moreover, to
impersonate the user requires possession of the card as well as
knowledge of the shared secret that activates the electronic
credentials on the card. Thus, proper security requires that the card
and the PIN or password used to activate it be kept separate. This is
not a concern if a biometric is used for the latter purpose.
(3) Digitized Signature: A digitized signature is a graphical image
of a handwritten signature. Some applications require an individual to
create his or her hand-written signature using a special computer input
device, such as a digital pen and pad. The digitized representation of
the entered signature may then be compared to a previously-stored copy
of a digitized image of the handwritten signature. If special software
judges both images comparable, the signature is considered valid. This
application of technology shares the same security issues as those
using the PIN or password approach, because the digitized signature is
another form of shared secret known both to the user and to the system.
The digitized signature can be more reliable for authentication than a
password or PIN because there is a biometric component to the creation
of the image of the handwritten signature. Forging a digitized
signature can be more difficult than forging a paper signature since
the technology digitally compares the submitted signature image with
the known signature image, and is better than the human eye at making
such comparisons. The biometric elements of a digitized signature,
which help make it unique, are in measuring how each stroke is made--
duration, pen pressure, etc. As with all shared secret techniques,
compromise of a digitized signature image or characteristics file
[[Page 25519]]
could pose a security (impersonation) risk to users.
(4) Biometrics: Individuals have unique physical characteristics
that can be converted into digital form and then interpreted by a
computer. Among these are voice patterns (where an individual's spoken
words are converted into a special electronic representation),
fingerprints, and the blood vessel patterns present on the retina (or
rear) of one or both eyes. In this technology, the physical
characteristic is measured (by a microphone, optical reader, or some
other device), converted into digital form, and then compared with a
copy of that characteristic stored in the computer and authenticated
beforehand as belonging to a particular person. If the test pattern and
the previously stored patterns are sufficiently close (to a degree
which is usually selectable by the authenticating application), the
authentication will be accepted by the software, and the transaction
allowed to proceed. Biometric applications can provide very high levels
of authentication especially when the identifier is obtained in the
presence of a third party to verify its authenticity, but as with any
shared secret, if the digital form is compromised, impersonation
becomes a serious risk. Thus, just like PINs, such information should
not be sent over open networks unless it is encrypted. Moreover,
measurement and recording of a physical characteristic could raise
privacy concerns where the biometric identification data is shared by
two or more entities. Further, if compromised, substituting a
different, new biometric identifier may have limitations (e.g., you may
need to employ the fingerprint of a different finger). Biometric
authentication is best suited for access to devices, e.g. to access a
computer hard drive or smart card, and less suited for authentication
to software systems over open networks.
b. Cryptographic Control. Creating electronic signatures may
involve the use of cryptography in two ways: symmetric (or shared
private key) cryptography, or asymmetric (public key/private key)
cryptography. The latter is used in producing digital signatures,
discussed further below.
(1) Shared Symmetric Key Cryptography
In shared symmetric key approaches, the user signs a document and
verifies the signature using a single key (consisting of a long string
of zeros and ones) that is not publicly known, or is secret. Since the
same key does these two functions, it must be transferred from the
signer to the recipient of the message. This situation can undermine
confidence in the authentication of the user's identity because the
symmetric key is shared between sender and recipient and therefore is
no longer unique to one person. Since the symmetric key is shared
between the sender and possibly many recipients, it is not private to
the sender and hence has lesser value as an authentication mechanism.
This approach offers no additional cryptographic strength over digital
signatures (see below). Further, digital signatures avoid the need for
the shared secret.
(2) Public/Private Key (Asymmetric) Cryptography--Digital
Signatures
(a) To produce a digital signature, a user has his or her computer
generate two mathematically linked keys--a private signing key that is
kept private, and a public validation key that is available to the
public. The private key cannot be deduced from the public key. In
practice, the public key is made part of a ``digital certificate,''
which is a specialized electronic file digitally signed by the issuer
of the certificate, binding the identity of the individual to his or
her private key in an unalterable fashion. The whole system that
implements digital signatures and allows them to be used with specific
programs to offer secure communications is called a Public Key
Infrastructure, or PKI.
(b) A ``digital signature'' is created when the owner of a private
signing key uses that key to create a unique mark (the signature) on an
electronic document or file. The recipient employs the owner's public
key to validate that the signature was generated with the associated
private key. This process also verifies that the document was not
altered. Since the public and private keys are mathematically linked,
the pair is unique: only the public key can validate signatures made
using the corresponding private key. If the private key has been
properly protected from compromise or loss, the signature is unique to
the individual who owns it, that is, the owner cannot repudiate the
signature. In relatively high-risk transactions, there is always a
concern that the user will claim someone else made the transaction.
With public key technology, this concern can be mitigated. To claim he
did not make the transaction, the user would have to feign loss of the
private key. By creating and holding the private key on a smart card or
an equivalent device, and by using a biometric mechanism (rather than a
PIN or password) as the shared secret between the user and the smart
card for unlocking the private key to create a signature this concern
can be mitigated. In other words, combining two or three distinct
electronic signature technology approaches in a single implementation
can enhance the security of the interaction and lower the potential for
fraud to almost zero. Furthermore, by establishing clear procedures for
a particular implementation of digital signature technology, so that
all parties know what the obligations, risks, and consequences are,
agencies can also strengthen the effectiveness of a digital signature
solution.
The reliability of the digital signature is directly proportional
to the degree of confidence one has in the link between the owner's
identity and the digital certificate, how well the owner has protected
the private key from compromise or loss, and the cryptographic strength
of the methodology used to generate the public-private key pair. The
cryptographic strength is affected by key length and by the
characteristics of the algorithm used to encrypt the information.
Further information on digital signatures can be found in ``Access with
Trust'' (September 1998) (http://gits-sec.treas.gov/).
c. Technical Considerations of the Various Electronic Signature
Alternatives. (1) To be effective, each of these methods requires
agencies to develop a series of policy documents that provide the
important underlying framework of trust for electronic transactions and
which facilitate the evaluation of risk. The framework identifies how
well the user's identity is bound to his authenticator (e.g., his
password, fingerprint, or private key). By considering the strength of
this binding, the strength of the mechanism itself, and the sensitivity
of the transaction, an agency can determine if the level of risk is
acceptable. If an agency has experience with the technology, existing
policies and documents may be available for use as guidance. Where the
technology is new to an agency, this may require additional effort.
(2) While digital signatures (i.e. public key/private key) are
generally the most certain method for assuring identity electronically,
the policy documents must be established carefully to achieve the
desired strength of binding. The framework must identify how well the
signer's identity is bound to his or her public key in a digital
certificate (identity proofing). The strength of this binding depends
on the assumption that only the owner has sole possession of the unique
private key used to make signatures that are validated with the public
key. The strength of this binding
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also reflects whether the private key is placed on a highly secure
hardware token, such as a smart card, or is encapsulated in software
only; and how difficult it is for a malefactor to deduce the private
key using cryptographic methods (which depends upon the key length and
the cryptographic strength of the key-generating algorithm).
A Public Key Infrastructure (PKI) is one mechanism to support the
binding of public keys with the user's identity. A PKI can provide the
entire policy and technical framework for the systematic and diligent
issuance, management and revocation of digital certificates, so that
users who wish to rely on someone's certificate have a firm basis to
check that the certificate has not been maliciously altered, and to
confirm that it remains active (i.e., has not been revoked because of
loss or compromise of the corresponding private key). This same
infrastructure provides the basis for interoperability among different
agencies or entities, so that a person's digital certificate can be
accepted for transactions by organizations external to the one that
issued it.
(3) By themselves, digitized (not digital) signatures, PINs,
biometric identifiers, and other shared secrets do not directly bind
identity to the contents of a document as do digital signatures which
actually use the document information to make the signature. For shared
secrets to bind the user's identity to the document, they must be used
in conjunction with some other mechanism. Biometric identifiers such as
retinal patterns used in conjunction with digital signatures can offer
far greater proof of identify than pen and ink signatures.
(4) While not as robust as biometric identifiers and digital
signatures, PINs have the decided advantage of proven customer and
citizen acceptance, as evidenced by the universal use of PINs for
automated teller machine transactions. PINs combined with encrypted
Internet sessions, particularly through the use of Secure Sockets Layer
technology on the World Wide Web, are very popular for retail consumer
transactions requiring credit card or other personal authenticating
information. This may well be suited for a variety of government
applications. Also, secure Web browsers are increasingly being designed
to accommodate digital signatures, making this approach a possible
interim step towards implementing the more robust authentication
provided by digital signatures.
(5) It is important to remember that technical factors are but one
aspect to be considered when an agency plans to implement electronic
signature-based applications. Other important aspects are considered in
the following sections.
Section 8. How should agencies implement electronic signatures and
electronic transactions?
After the agency has conducted the assessment and identified an
appropriate electronic signature technology alternative that may be
used to secure an automated business process, the agency will proceed
to implement this decision. For any electronic transaction, agencies
should collect and record adequate information regarding the content,
process, and identities of the parties involved. In doing so, agencies
should consider the following:
a. Build from a policy framework. GPEA applies to interactions
between outside entities and the Federal government, as well as to
transactions and record keeping required by parties under Federal
programs. Accordingly, agencies should consider whether their policies
or programmatic regulations support the use and enforceability of
electronic signature alternatives to handwritten signatures as well as
to electronic record keeping under Federal programs. If necessary,
agencies should develop a strategy to make any revisions needed to
achieve this goal. In addition, by clearly informing the transaction
partners that electronic signatures and records will be acceptable and
used for enforcement purposes, their legal standing is enhanced.
Several agencies have already chosen to promulgate policies or
regulations on this issue, including:
(1) Securities and Exchange Commission (17 C.F.R. Part 232),
electronic regulatory filings;
(2) Environmental Protection Agency (55 FR 31,030 (1990)), policy
on electronic reporting;
(3) Food and Drug Administration (21 C.F.R. Part 11), electronic
signatures and records;
(4) Internal Revenue Service (Treasury Reg. 301.6061-1), signature
alternatives for tax filings;
(5) Federal Acquisition Regulation (48 C.F.R. Parts 2 and 4),
electronic contracts;
(6) General Services Acquisition Regulation (48 C.F.R. Part
552.216-73), electronic orders;
(7) Federal Property Management Regulations (41 C.F.R. Part 101-
41), electronic bills of lading.
(8) Administrative Committee of the Federal Register (1 C.F.R. Part
18.7), electronic signatures on documents submitted for publication in
the Federal Register.
(9) Commodity Futures Trading Commission (17 C.F.R. Part 1.4 and
Part 1.3(tt)), electronic signatures for filings.
When specifying the requirements for electronic record keeping by
regulated entities or government business partners (e.g. contractors or
grantees), particularly the maintenance of electronic forms pertaining
to employees by employers, agencies should consult the ``Performance
Guideline for the Legal Acceptance of Records Produced by Information
Technology Systems,'' developed by the Association for Information and
Image Management (ANSI/AIIM TR31). This set of documents offers
suggestions for maximizing the likelihood that electronically filed and
stored records will be accorded full legal recognition. If an agency
chooses to use digital signature technology, a regulation might specify
that each individual will be issued a unique digital signature
certificate to use, agree to keep the private key confidential, agree
to accept responsibility for anything that is submitted using that key,
or accept other conditions under which the agency will accept
electronic submissions.
b. Where necessary, use a mutually understood, signed agreement
between the person or entity submitting the electronically-signed
information and the receiving Federal agency. As a matter of
efficiency, arrangements with large numbers of customers may be best
accomplished by setting forth an agency's terms and conditions in a
policy or regulation. Arrangements with smaller numbers of customers
may lend themselves to one or more agreements, using a document
referred to as a ``terms and conditions'' agreement. These agreements
can ensure that all conditions of submission and receipt of data
electronically are known and understood by the submitting parties. This
is particularly the case where terms and conditions are not spelled out
in agency programmatic regulations.
c. Minimize the likelihood of repudiation. Agencies should develop
well-documented mechanisms and procedures to tie transactions to an
individual in a legally binding way. For example, the integrity of even
the most secure digital signature rests on the continuing
confidentiality of the private key, so instituting procedures for
ensuring the confidentiality of the private key would be in an agency's
interest. Similarly, in the case of electronic signatures based on the
use of shared secrets like PINs or passwords, the integrity of the
transaction depends on the user not disclosing the shared secret, so an
agency should have
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procedures for encouraging the maintenance of the PIN's integrity. If a
defendant is later charged with a crime based on an electronically
signed document, he or she would have every incentive to show a lack of
control over (or loss of) the private key or PIN, or in the case of a
PIN, that the government failed to protect the PIN on its computer
system. Indeed, if that defendant plans to commit fraud, he or she may
intentionally compromise the secrecy of the key or PIN, so that the
government would later have a more difficult time uniquely linking him
or her to the electronic transaction. Promulgating policies and
procedures that ensure the integrity of security tools helps counter
such fraudulent attempts.
Thus, transactions which appear to be at high risk for fraud, e.g.,
one-time high-value transactions with persons not previously known to
an agency, may require extra safeguards or may not be appropriate for
electronic transactions. One way to mitigate this risk might be to
require that private keys be generated and kept on hardware tokens,
making possession of the token a critical requirement. Another way to
guard against fraud is to include other identifying data in the
transaction that links the key or PIN to the individual, preferably
something not readily available to others.
It is also important to establish that the user of the digital
signature or PIN/password is fully aware of obligations he or she is
agreeing to by signing at the time of signature. This can be ensured by
programming appropriate ceremonial banners into the software
application that alert the individual of the gravity of the action she
is about to undertake. The presence of such banners can later be used
to demonstrate to a court that the user was fully informed of and aware
of what he or she was signing.
d. Carefully control access to the electronic data, after receipt,
yet make it available in a meaningful and timely fashion. Security
measures should be in place that ensure that no one is able to alter a
transaction, or substitute something in its place, once it has been
received by the agency unless the alteration is a valid correction
contained in an electronically certified re-transmission. This can be
achieved with a digital signature because it binds the identity of the
individual making the signature to the entire document, so any
subsequent change would be detected. Thus, the receiving agency needs
to take prudent steps to control access to the electronic transaction
through such methods as limiting access to the computer database
containing the transaction, and performing processing with the data
using copies of the transaction rather than the original. The
information may be needed for audits, disputes, or court cases many
years after the transaction itself took place. Agencies should make
plans for storing data and providing meaningful and timely access to it
for as long as such access will be necessary.
e. Ensure the ``Chain of Custody.'' Electronic audit trails must
provide a chain of custody for the secure electronic transaction that
identifies sending location, sending entity, date and time stamp of
receipt, and other measures used to ensure the integrity of the
document. These trails must be sufficiently complete and reliable to
validate the integrity of the transaction and to prove, (a) that the
connection between the submitter and the receiving agency has not been
tampered with, and (b) how the document was controlled upon receipt.
f. Consider providing an acknowledgment of receipt. The agency's
system for receiving electronic transactions may be required by statute
to have a mechanism for acknowledging receipt of transactions received
and acknowledging confirmation of transactions sent, with specific
indication of the party with whom the agency is dealing.
g. Obtain legal counsel during the design of the system. Collection
and use of electronic data may raise legal issues, particularly if it
is information that bears on the legality of the process, may
eventually be needed for proof in court, or involves questions of
privacy, confidentiality, or liability.
Section 9. Summary of the Procedures and Checklist
To summarize the process and restate the principles that agencies
should employ to evaluate authentication mechanisms (electronic
signatures) for electronic transactions and documents, the following
steps apply:
a. Examine the current business process that is being considered
for conversion to employ electronic documents, forms or transactions,
identifying customer needs and demands as well as the existing risks
associated with fraud, error or misuse.
b. Identify the benefits that may accrue from the use of electronic
transactions or documents.
c. Consider what risks may arise from the use of electronic
transactions or documents. This evaluation should take into account the
relationships of the parties, the value of the transactions or
documents, and the later need for the documents.
d. Consult with counsel about any agency specific legal
implications about the use of electronic transactions or documents in
the particular application.
e. Evaluate how each electronic signature alternative may minimize
risk compared to the costs incurred in adopting an alternative.
f. Determine whether any electronic signature alternative, in
conjunction with appropriate process controls, represents a practicable
trade-off between benefits on the one hand and cost and risk on the
other. If so, determine, to the extent possible at the time, which
signature alternative is the best one. Document this determination to
allow later reevaluation.
g. Develop plans for retaining and disposing of information,
ensuring that it can be made continuously available to those who will
need it, for managerial control of sensitive data and accommodating
changes in staffing, and for ensuring adherence to these plans.
h. Develop management strategies to provide appropriate security
for physical access to electronic records.
i. Determine if regulations or policies are adequate to support
electronic transactions and record keeping, or if ``terms and
conditions'' agreements are needed for the particular application. If
new regulations or policies are necessary, disseminate them as
appropriate.
j. Seek continuing input of technology experts for updates on the
changing state of technology and the continuing advice of legal counsel
for updates on the changing state of the law in these areas.
k. Integrate these plans into the agency's strategic IT planning
and regular reporting to OMB.
l. Perform periodic review and re-evaluation, as appropriate.
[FR Doc. 00-10801 Filed 5-1-00; 8:45 am]
BILLING CODE 3110-01-U