VA spends more than $14 million handling data breach

The Veterans Affairs Department is burning through $200,000 a day to operate a call center for veterans and active-duty service members seeking information on last month's data breach, officials from the Veterans Benefits Administration told lawmakers Tuesday.

In addition to the more than $7 million spent operating the call center since the department announced the breach 30 days ago, a mailing to 17.5 million veterans cost the department about $1 million for printing and another $6 million-plus for postage.

VA freed up the money by reprogramming funds with the consent of the House and Senate appropriations committees.

The department contracted out the call center through the General Services Administration, according to VBA officials. Scripted responses to anticipated questions were written for the call centers and a VBA employee has been assigned to provide assistance at each center, officials said.

While VA concluded that the May 3 incident compromised personal information for 26.5 million people, only 17.5 million records contained complete, accurate data. About 7 million records lacked Social Security numbers, making it impossible for the agency to track addresses for those veterans. In some other cases, people were deceased, officials said.

VA has prepared to shift up to $25 million of its fiscal 2006 funding to handle the initial expenses linked to the theft of a laptop computer and an external hard drive containing the records from an employee's suburban Maryland home.

VA officials told lawmakers Tuesday that they would not speculate on whether fiscal 2007 funds would be tapped to handle the ongoing response.

In response to the breach, Ronald Aument, VBA deputy undersecretary for benefits, said in his testimony before the House Veterans' Affairs subcommittees on Disability Assistance and Memorial Affairs and Economic Opportunity that every agency employee will have completed training programs on privacy and cybersecurity by June 30.

The agency has compiled a list of all VBA databases holding sensitive information and a workgroup will provide recommendations for improving the protection of that data, Aument said.

Since VA Secretary James Nicholson suspended all telework at the VBA, among other preventative measures, the agency has been considering various ways of protecting sensitive data that is moved from the office to an alternative worksite, often an employee's home.

VBA also has purchased new encryption technology for all agency laptop computers and is considering increasing the use of network servers for accessing information, in an attempt to reduce the amount of information employees store locally their computers, Aument said.

He added that rapid expansion of information technology has presented the department with security and privacy challenges.

"IT can make our services better and faster, but the vulnerabilities increase just as fast," he said.

VA has discussed changing its reliance on Social Security numbers as unique identifiers, Aument said, adding that might not be a workable solution since the Defense Department and other agencies also use Social Security numbers for that purpose and VA interacts with those agencies.

Michael Staley, VA assistant inspector general for auditing, told lawmakers that even if all IG recommendations were followed, he could not say for sure that the data breach would have been averted.

A draft report on the agency's fiscal 2005 Federal Information Security Management Act audit from the IG office includes 17 recommendations for improving information security practices, including encrypting sensitive information on the agency's networks and setting policies on employee background checks.

Also testifying before the subcommittees was the director of information security issues at the Government Accountability Office, Gregory Wilshusen, who said while VA's initial steps appeared to be helpful in addressing information security weaknesses, "they are not sufficient to establish a comprehensive information security program."

"Once the actions and policies are in, they need to execute them, and that will take time and effort," Wilshusen said. "The true test will be whether the VA can implement the policies over the long-term."

In related news, Sens. George Allen, R-Va.; Larry Craig, R-Idaho; and Kay Bailey Hutchison, R-Texas; introduced an amendment to the fiscal 2007 Defense Authorization bill (S. 2766) Monday that would require VA to contract with a private sector firm to provide credit monitoring and data theft protection services to veterans and armed service members.

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