Lockheed Martin (LMT) may see their stock rebound after being pummeled last week by news the Obama administration was weighing its options in regard to a controversial program to replace the current fleet of Presidential helicopters, commonly referred to as Marine One.
What’s the good news? Well, there isn’t any.
Revelations surfaced this weekend that a defense contractor staff member had used a P2P file sharing program on their company computer, which also happened to contain classified information about the President’s iconic helicopter.
The information had made its way as far as an ISP address in Tehran, Iran:
ISR News — A Pittsburgh-area company that monitors peer-to-peer networks accessed with file-sharing software like LimeWire and Napster says it has identified a potentially serious security breach involving Marine One and an IP address in Tehran, Iran.
The company found a file detailing the helicopter’s blueprints and avionics package, which it then traced to its original source, Tiversa CEO Bob Boback told NBC affiliate WPXI, which reported the story Saturday.
It literally baffles the mind: Billions of dollars are spent on physical and information security every year, and it can all be trumped by one bonehead maneuver, or by one little lapse in judgment.
That is a tremendous amount of resources and effort committed to security just to have it undermined by the whim of one non-malicious individual, and it underscores the precariousness of even the most secure of systems.
The final bill for this breach may be hard to figure, as this could influence a decision by the Obama administration to continue funding for a Bush initiative to replace the current presidential helicopter fleet:
New York Times — A six-year-old project to build state-of-the-art presidential helicopters has bogged down in a contracting quagmire that will challenge Mr. Obama’s desire to rein in military contracting expenses. The price tag has nearly doubled, production has fallen years behind schedule and much of the program has been frozen until the new administration figures out what to do about it.
Equipped to deflect missile attacks and capable of waging war from the air, the new VH-71 helicopters would fly farther, faster and more safely than the current decades-old craft. But each improvement pushes up the cost. The program’s original $6.1 billion contract has ballooned to $11.2 billion, and the Pentagon notified Congress last month that it was so far over budget that the law required a review. The Obama administration now must determine if the project is essential to national security and if there are alternatives that would cost less.
Now it is up to defense and security experts to decide exactly what threat this exposed information may have.
“If the office of the presidency is vulnerable, then the country is vulnerable,” said Representative Joe Sestak of Pennsylvania, a Democrat and a retired Navy vice admiral. “However, the nation is crying for accountability, from Wall Street to Congress to Iraq.”
Any way this is sliced, it looks as though those in favor of putting an end to the VH-71 program may have a more difficult time making their case after this breach, and it could be a boon for Lockheed Martin and their British and Italian partners who would provide much of the design.
The program had previously been criticized as nothing more than a political bone thrown to the UK and Italy as a gratuity for their support for Bush’s War in Iraq.
As the program’s tab ballooned to over $12 billion dollars - about twice the initial bid for the project - and the economy began to fail, support for the program declined sharply:
New York Times — Asked about it in last year’s campaign, Mr. Obama promised to “take a close look” at the program, adding that it was “a lot of money, even in Washington.” The White House had no comment last week, but Geoff Morrell, the Pentagon press secretary, said Defense Secretary Robert M. Gates was rethinking the VH-71 and other projects that were “having execution problems.”
“We’re prepared to make some hard choices,” Mr. Morrell said.
Which brings us back to a point I have been trying to hammer away at all this year: Information security breaches have far reaching fiscal and national security repercussions, and they are not getting enough attention of the right kind, or from the right people.
Our team has been predicting that 2009 will be the year that InfoSec moves to the forefront of the economic crisis, and with Homeland Security implications.
This latest security breach further highlights the fact that the failure to secure information is the next major shareholder derivative, director and officer liability, regulatory, consumer product safety, and class-action issue to impact our economy.