Strengthening Third-Party Contracts To Lower Breach Risks

FTC breach, contract deficiencies highlight importance of including security provisions within technology contracts

Details emerged this week that showed that recent Anonymous hacks of Federal Trade Commission (FTC) websites could potentially have been prevented had the FTC not dispensed with security provisions in a contract with the third-party vendors who hosted the sites. As organizations continue to divide labor in IT—particularly in development of public-facing websites—the incident could prove a good lesson in the importance of shoring up contract language and SLAs to ensure third parties are not adding undue risks of data breaches in the future.
In the case of the FTC, the federal agency suffered two embarrassing breaches within the last two months. In January, Anonymous attacked the FTC’s OnGuardOnline.gov site and this month it again hacked the FTC’s Bureau of Consumer Protection site. The websites in question were open to attack due to a failure to patch the server operating systems and applications associated with the site, a weakness that Anonymous took advantage of to publicize its distaste for the Anti-Counterfeiting Trade Agreement (ACTA) backed by the federal government.
“Even more bothersome than your complete lack of competence in maintaining your own f***ing websites and serving the citizens you are supposed to be protecting, is the US federal government’s support of ACTA,” Anonymous wrote about its most recent attack.
The sites in question were developed by public relations firm Fleishman-Hilliard, which hosted the sites on resources provided by hosting and cloud services provider Media Temple. The two firms are currently duking it out in a very public finger-pointing spat reported by Ars Technica, which also brought to light the fact that the $1.5 million contract to develop the sites initially included security provisions during the acquisition process but then dropped those requirements.
According to John Nicholson, counsel for the global sourcing practice at Washington, D.C.-based law firm Pillsbury Winthrop Shaw Pittman LLP, these days such contract omissions are pretty rare, but they still happen.
“Its unusual, particularly these days when sensitivity to security and privacy is high, but gaps in functionality like this arent unheard of,” he says. “When dealing with cloud / hosting agreements, any time the supplier isnt responsible for the end-to-end service, and the integration of all of the subsidiary functions provided by third parties, things like this can happen.”
Nicholson believes that while the FTC hacks were not necessarily as devastating as others elsewhere that exposed large repositories of personally identifiable information, they do highlight some of the issues posed by contracting for technology services.
“Given the way that functions at different levels of the stack are being disaggregated, it can be complicated to figure out whos responsible for what and where they are,” he says. “The physical servers hosting a site might be in a server-hotel data center run by one party, while the entity who is responsible for the websites themselves might be another party, and the websites might call to applications or databases that are hosted and managed by entirely different companies. Without someone responsible for the overall integration, things can slip through the cracks and important details can be missed.”
He believes that outsource projects need to include the same risk assessment considerations that any in-house IT project should be weighed against. The key, he says, is to think of the risks and tie them to requirements before the work is scoped.
“Security needs to be baked into the requirements for the service because the level of security you get is part of the cost-benefit/risk analysis for the deal. If you want a solution that is highly secure, there are design choices that need to be made that have cost implications, but they reduce overall risk,” Nicholson says. “On the other hand, if youre not that worried about security, or if the thing you’re dealing with doesnt need a lot of protection, then it doesnt make sense to pay for a Bradley Assault Vehicle when you need Volvo-level safety.”
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Strengthening Third-Party Contracts To Lower Breach Risks