Do You Want to Classify That? Consider the Cost

Defense Contractors

One of the impetus behind less classification in government is the long-tail administrative cost associated with handling classified materials. The information must be secured, then when the “review by date” arrives, it must be administratively reviewed for declassification and then availed to the public. All these steps incur both current and future cost. An actuarial’ s nightmare in trying to budget for the cost to handle the security and then declassification of the oodles of information being secured by the United States government.

In the 2016 ISOO (Information Security Oversight’s Office) Report for Fiscal Year 2016, as required by Executive Order 13526, “Classified National Security Information,” classification costs are discussed in detail. In preparing their report they looked at the nitty-gritty involved in protecting classified information, the cost of which is estimated to be $16.89 billion, of which $2.38 billion is borne by the intelligence community. The authors note how just over 14 percent of all classification costs are incurred by the intelligence community.  Areas which were measured by the ISOO included:

  • Personnel Security
    • Government – In 2016, personnel security costs rose approximately 22 percent, to $2.38 billion, Much of the increase in expenses was due to the increase in the number of background investigations.
  • Physical Security
    • Government – In 2016, the physical security costs rose approximately 5 percent, to $2.43 billion. The increase can be attributed primarily to the purchase and installation of security equipment: alarms, cameras, intrusion detection, and access control systems.
  • Classification Management
    • Government – Classification management saw an increase of 4 percent to $383.62 million, which is considered on par, and as anticipated.
  • Declassification
    • Government – Declassification in 2016, saw a modest increase of 2 percent to $108.54 million.
  • Protection and Maintenance for Classified Information Systems
    • Government – The costs for 2016 associated with the protection and maintenance surrounding classified information systems was $6.36 billion, a decrease of 21 percent.
  • Operations Security (OPSEC) & Technical Surveillance Countermeasures (TSCM)
    • Government – OPSEC & TSCM combined costs were approximately $210.48 million, a decrease of 7 percent.
  • Education, Training and Awareness
    • Government – While training, education and awareness saw an increase of 7 percent for a total of $733.57 million.
  • Security Management, Oversight and Planning
    • Government – In 2016, the largest increase in spending occurred within security management, oversight and planning with a total of $4.27 billion, an increase of 73 percent. The ISOO attributes this to a single agency adjusting the way it measures and understanding what goes into this category and the creation of a computer based training on national security by another agency.
  • Unique/Miscellaneous
    • Government – The costs of SCIFs, classified copiers, and emergency operations centers provided a cost of approximately $20.42 million an increase of 38 percent from prior year.

Industry costs for FY2016 is estimated to have been approximately $1.27 billion or an increase of .32 percent, yes less than one percent. A review of the data from 2007-2016 show this amount fluctuates very little.

As FSO’s engage with their NISP clients and customers, the costs associated with dealing with the classified information which may be shared with the contracting facility is significant and should be factored into the operational expenses and budgets.

Christopher Burgess (@burgessct) is an author and speaker on the topic of security strategy. Christopher, served 30+ years within the Central Intelligence Agency. He lived and worked in South Asia, Southeast Asia, the Middle East, Central Europe, and Latin America. Upon his retirement, the CIA awarded him the Career Distinguished Intelligence Medal, the highest level of career recognition. Christopher co-authored the book, “Secrets Stolen, Fortunes Lost, Preventing Intellectual Property Theft and Economic Espionage in the 21st Century” (Syngress, March 2008).

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