From: Bloomberg

By Chris Strohm & Todd Shields

The Obama administration plans to boost U.S. spending on computer network security, including a 21 percent increase at the Pentagon, after reports of rising cyber attacks and electronic theft of secrets linked to China.

President Barack Obama yesterday proposed a $3.8 trillion budget for the fiscal year beginning Oct. 1. The document, an opening bid in negotiations with Congress, recommends more than $13 billion for cybersecurity, U.S. Chief Information OfficerSteven VanRoekel told reporters on a conference call.

“There’s hardly anything that the government’s doing new these days that doesn’t involve” information technology, VanRoekel said.

Pentagon spending on cybersecurity operations would jump to $4.7 billion in fiscal 2014 from $3.9 billion the prior year, Defense Comptroller Robert Hale told reporters yesterday.

Defense initiatives include creating teams of cybersecurity specialists to carry out defensive and offensive operations and constructing a new joint programs center for U.S. Cyber Command, the Pentagon said in its spending plan.

The White House is proposing a boost in funds to fight what National Security Adviser Thomas Donilon said in a March 11 speech is theft of intellectual property and trade secretsthrough “cyber intrusions emanating from China at a very large scale,” a point of contention with the Chinese government. The Chinese army may be behind the hacking of at least 141 companies worldwide since 2006, according to a Feb. 19 report from Alexandria, Virginia-based Mandiant Corp.

Cyber Vendors

The overall cybersecurity spending proposal of more than $13 billion is about $1 billion more than current levels, according to Ari Isaacman Astles, a spokeswoman for the White House Office of Management and Budget.

Increased U.S. computer security spending may benefit SAIC Inc. (SAI) and Northrop Grumman Corp. (NOC) in the defense area and Dell Inc. (DELL) and Hewlett-Packard Co. (HPQ) in the federal civilian space, according to data compiled by Bloomberg Government.

Cybersecurity is one of the few areas where Obama and Congress agree on increased spending, said Allan Holmes, director of technology research for Bloomberg Government.

“The White House and Congress understand that the lack of computer security means a threat to the economy and to the security of the nation,” Holmes said.

Heightened cybersecurity spending could benefit defense companies with data- and network-security expertise that are grappling with possible cuts in weapons systems.

‘Growth Opportunities’

BAE Systems Plc (BAESY) is “actively pursuing a number of growth opportunities” in cyber spending, DeEtte Gray, president of the London-based company’s intelligence and security division, said in an e-mail.

At Bethesda, Maryland-based Lockheed Martin Corp. (LMT), the largest federal contractor, “our portfolio of products, services, and technologies are well aligned with the government’s priorities” that include cybersecurity, space exploration, health care and energy, Jennifer Allen, a spokeswoman, said in an e-mail.

The Homeland Security Department is seeking $810 million to protect federal computers and help defend banks, utilities, and telecommunications networks from attacks in fiscal 2014, compared with $756.8 million enacted by Congress in the current year.

The agency’s budget request also includes $44 million in new funding to improve information sharing about hacker threats between government agencies and companies, which is part of a cybersecurity executive order Obama issued in February.

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