Costs to classify information continue to rise

Government spending on classification activities reached record levels in 2004, report shows.

The amount of money the federal government spent on classifying information continued to rise in 2004, topping out at $7.2 billion, according to a new report.

Comparatively, the amount that the private sector spent on classification activities in 2004 was $823 million, the lowest since 2001, according to an annual report from the National Archives and Records Administration's Information Security Oversight Office, which is responsible for monitoring and regulating the government's use of classification authorities.

The report was based on how much 41 agencies estimated they spent to classify, safeguard and declassify national security information. The total amount does not include cost estimates from the CIA, which are classified.

In 2003, the government spent $6.5 billion on classification activities while the private sector spent $1 billion. Government spending on classification activities has risen every year since 1996.

The increased spending in 2004 was primarily driven by three factors: physical security, information technology security, and security management and planning.

The report stated that "the fortified homeland defense posture being adopted by many agencies has generated entirely new physical and information technology requirements." Many agencies reported that they are installing new secure facilities and communications systems, such as sensitive compartmented information facilities and emergency operational control centers.

Several agencies also stated they are setting up continuity of operations sites, locations where officials can work if their offices are destroyed. The report stated those efforts have created a need for more secure facilities and communications.

"All of these factors account for most of the increases in the three main drivers cited above, and the upward trend in these areas will likely continue," the report stated.

The amount that the private sector alone spent to classify information on critical infrastructure, such as vulnerabilities to telecommunications networks and physical buildings, dropped by 18 percent between 2003 and 2004. Because of this, the oversight office concluded that post-9/11 increases in security spending apparently are beginning to slow.