[ISN] Cyberwarfare May Be A Bust For Many Defense Contractors

From: InfoSec News <alerts_at_private>
Date: Wed, 11 May 2011 03:10:34 -0500 (CDT)

By Loren Thompson
Business in The Beltway
May 9, 2011

As federal spending on national security has leveled off in recent 
years, big defense contractors have worked hard to secure a role in one 
of the few market segments expected to keep growing: cyberwarfare. It’s 
a relatively new field where the terminology hasn’t stabilized yet, but 
for the purposes of this posting, cyberwarfare means three things: 
attacking enemy networks, exploiting enemy information flows, and 
defending friendly networks. Most of the money Washington is currently 
spending on cyberwarfare goes to the latter activity -- securing 
friendly networks -- but offensive activities seem to be growing faster 
over time. They’re really just different sides of the same coin, since 
it’s hard to be good at defending computer networks if you don’t have a 
thorough understanding of how to attack them.

The cyber goldrush was sparked in 2008 when President Bush signed two 
directives establishing a Comprehensive National Cybersecurity 
Initiative in response to the growing number of digital assaults on 
federal networks. The initiative was a signal to industry that a new 
demand driver had appeared in the marketplace just as everyone was 
getting ready for a prolonged downturn in military purchases. Seeing few 
other domestic opportunities on which to place bets with the cash they 
had accumulated during flush years, military contractors poured into the 
cyberwarfare field, building operations centers, purchasing niche 
players, and competing aggressively for contracts. The thinking was that 
cyber threats would keep proliferating for the foreseeable future, and 
defense companies were more likely to have the necessary clearances and 
market knowledge to compete in cyberwarfare than outsiders like Google 
or Microsoft.

No doubt about it, the cyberwarfare market has grown fast, helped along 
by an Obama Administration commitment to expand and refine the digital 
security efforts of its predecessors. Within months after taking office, 
President Obama established an executive-branch cybersecurity 
coordinator and a new Cyber Command colocated with the super-secret 
National Security Agency at Fort Meade, MD. NSA does most of the 
government’s eavesdropping, so putting the command nearby and making its 
head the same general who runs the spy agency was a no brainer: NSA 
already had the ability to monitor internet traffic for hackers and 
other malefactors. Setting up the new command, staffing components from 
each military service, and implementing more stringent network security 
procedures at each federal agency will generate about $9 billion in 
federal outlays this year. Additional billions will be spent on 
classified programs to probe and monitor foreign networks, such as those 
in China.

But even as the government’s cyberwarfare effort expands, some industry 
executives are beginning to wonder just how lucrative this new 
opportunity is likely to be. They already know it can’t fill the revenue 
hole created by cancellation of dozens of weapons programs in recent 
years, and now they’re starting to suspect the cyber field is so 
hyper-competitive and volatile they can’t even count on it for 
significant earnings anytime soon. Once you get past all the fashionable 
rhetoric about information-age warfare and anarchy on the web, it’s easy 
to see why they might be having second thoughts. Let’s consider the many 
ways in which the cyberwarfare market should raise red flags for 


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Received on Wed May 11 2011 - 01:10:34 PDT

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