FOIA REPLY FROM DEPT. OF COMMERCE.

UNITED STATES DEPARTMENT OF COMMERCE
BUREAU OF EXPORT ADMINISTRATION
WASHINGTON, D.C.

March 4, 1997

Mr. Charles R. Smith
SOFTWAR
7707 Whirlaway Drive
Midlothian,  VA  23112

Dear Mr. Smith:

This is in response to your Freedom of Information Act request
of January 1, 1997.  You requested information on the following:

- All data provided to and/or about Benard Nussbaum, Webb
Hubbell,John Huang, Moctar or James Riady, Ronald Brown, and/or
Vince Foster in association with project Clipper, encryption
software, legislation on encryption software, policy and
contractual arrangements.  Specifically, Clipper algorithm
information provided, policy and/or briefing papers in
connection with encryption software.

- Information on financial donations, meetings, negotiations,
and policy decisions in reference to missile, computer, and
encryption technology transfer to China military agencies as
illustrated in GAO report NSIAD-97-5.

- All information on contracts, negotiations or contacts between
Alltel Inc. (formally Systematics of Arkansas), and or the Rose
Office Law firm with the Department of Commerce.

- All data on contacts between Vince Foster, Ron Brown, Webb
Hubbell, and/or Benard Nussbaum with any foreign agents or
citizens possibly acting as agents for another nation.

Your request was referred to the Bureau of Export
Administration's Office of Strategic Trade and Foreign Policy
Controls.  We have identified and enclosed for release four
documents that originated in the Department of Commerce and are
responsive to the first category of your request.  Two other
documents which may be responsive originated in other agencies,
and are being referred there for review.  It is the
responsibility of the originating agency to decide on disclosure
and you will consequently hear from those agencies directly.

Sincerely yours,

James A. Lewis
Director 
Office of Strategic Trade and Foreign Policy Controls

enclosures:       (1)      Kammer to Markey 4/28/93 letter
                  (2)      Roberts to Brown 3/22/95 letter
                  (3)      Snyder to Brown  4/25/95 letter
                  (4)      Brown to Roberts 6/26/95 letter

TEXT OF KAMMER TO MARKEY 4/28/93.



UNITED STATES DEPARTMENT OF COMMERCE
NATIONAL INSTITUTE OF STANDARDS AND TECHNOLOGY
Gaithersburg, Maryland 20899
OFFICE OF THE DIRECTOR

4/28/93 (HAND WRITTEN)

The Honorable Edward J. Markey
Chairman, Subcommittee on
  Telecommunications and Finance
Committee on Energy and Commerce
House of Representatives
Washington, DC  20515-6119

Dear Mr. Chairman:

Thank you for your letter to Secretary Ron Brown regarding the
privacy and security of telecommunications transmissions and
data in a networked environment.  American industry is also
dependent upon advanced communications technology to protect
sensitive information, including trade secrets.

The "Clipper Chip" was designed to meet the needs of government
and industry for highly secure encryption technology while
accommodating the needs of law enforcement and national
security.  The "Clipper Chip," which can be used on a voluntary
basis by the private sector, meets these requirements in a cost-
effective, secure manner.  Enclosed with this letter are answers
to your questions on the chip.

I appreciate your continuing interest in these matters and look
forward to the results of your upcoming hearing on this issue.

Sincerely,

Raymond G. Kammer
Acting Director

Enclosure

Questions and Answers on the Administration's "Clipper Chip"
Technology

1.  Has the encryption algorithm or standard endorsed by the
Administration been tested by any entity other than NSA, NIST or
the vendor?  If so, please identify such entities and the
nature of testing performed.  If not, please describe any plans
to have the algorithm tested by outside experts and how such
experts will be chosen.

A:  No entities other than those listed have tested or studied
the algorithm.  The White House has stated that respected
experts from outside the government will be offered access to
the confidential details of the algorithm to assess it
capabilities and publicly report its findings.  It is
anticipated that this will occur over the next two months,
provided that appropriate security clearance and logistical
details can be worked out, but no detailed plans.

2.  Under the Administration's plan, what entities will be the
holders of the "keys" to decrypt scrambled data?  What
procedures or criteria will the Administration utilize to
designate such key holders?

A:  The President has directed the Attorney General to make all
arrangements with appropriate entities to hold the keys for the
key-escrow microcircuits installed in communications equipment.
In each case, the key holder must agree to strict security
procedures to prevent unauthorized release of the keys.  The
selection process, which is currently underway, is being
accomplished by the Attorney General, in accordance with the
President's instructions.

3.  Does the encryption algorithm endorsed by the Administration
contain a "trap door" or "back door," which could allow an
agency or entity of the Federal government to crack the code?

A:  No.

4.  It is clear that, over time, changes in technologies used
for communications will require new techniques and additional
equipment.  How will encryption devices adapt to the rapid
advancement of telecommunications technology?

A:  The microcircuit technology in which the "Clipper Chip"
algorithm is incorporated is expected to advance as technology
advances.  In addition, private sector firms will have market
incentives to design, and build more advanced products designed
to meet the ever-advancing demands of the marketplace.

5.  What additional costs would the proposed encryption place on
the Federal government?  What is the estimated cost to consumers
and businesses which opt for the federal standard in their
equipment?

A:  It is anticipated the costs for "Clipper Chip" based
hardware products will be competitive with other hardware-based
solutions.  The chip itself is expected to be no more than
$26/each (in quantity) to product manufacturers.  As the
technology gains acceptance and production costs are minimized,
it is anticipated that the cost of the chip will fall
correspondingly.

The purchase of encryption technology, whether in the government
or private sector, is a decision which must be made by weighing
the costs of the products, maintenance, and administration
against the expected losses of information disclosure or other
loss. The "Clipper Chip" offers protection exceeding the
strength of many of the products on the market today.

6.  What is the Commerce Department's assessment of the
competitive impact of the Administration's endorsement of the
"Clipper Chip" technology on U.S. exports of computer and
telecommunications hardware and software products?

A:  The Administration's endorsement of the "Clipper Chip" is
unlikely to have any immediate impact on the competitiveness of
these industries in the export market.  Ultimately, the impact
upon exports will depend on the growth of encryption technology
as a percentage of these markets, customer demand for these
products and the importability of these devices into foreign
countries.  Currently, encryption technology encompasses a very
small percentage of the entire computer and telecommunications
hardware and software industry.  Please be aware that the
subject of cryptographic export controls will be examined by
comprehensive policy on encryption.

Meanwhile, products containing the "Clipper Chip" will initially
be handled in accordance with the State Department regulations
for the export of data encryption products.  An export license
will be required but likely approved for exports to American
firms and their subsidiaries overseas.  This same procedure is
now in place for exports of products containing the Data
Encryption Standard.

TEXT OF ROBERTS TO BROWN 3/22/95.



MCI Communications Corporation
1801 Pennsylvania Ave.  NW
Washington, DC  20006
202  887 2166

Bert C. Roberts, Jr.
Chairman and Chief Executive Officer

March 22, 1995

The Honorable Ronald H. Brown
Secretary of Commerce
14th and Constitution Avenue, N.W.
Washington, DC  20230

Dear Secretary Brown,

Prior to the last NIIAC meeting, I made a formal request that
Mega-Project III take the lead and review the issue of
cryptography export restrictions as part of their work effort in
that the NIIAC seemed an appropriate forum to discuss this issue
and make recommendations to the Administration.  I was extremely
disappointed to learn at the last NIIAC Council meeting that the
Mega-Project members elected not to take the initiative to
explore this issue.

In order to promote American businesses to actively participate
in the development and use of the NII and to promote a thriving
international commerce as the NII evolves, it is of crucial
importance that U.S. policy remove all restrictions on the
export of cryptographic hardware, software and information.
Attached is my memo to John Cooke and Esther Dyson along with a
brief summary on the cryptography issue provided by Vint Cerf.

I am bringing this matter to your attention in order for the
Department of Commerce to determine the most appropriate avenue
in which to pursue this issue which is of critical importance to
our international business commerce.

Sincerely,

Bert C. Roberts, Jr.

Attachment

cc:  Delano Lewis
       Ed McCracken

Attachment NOT included by Commerce Department

TEXT OF BROWN TO ROBERTS 6/26/95.



THE SECRETARY OF COMMERCE
Washington, D.C.  20230

JUN 26 1995

Mr. Bert C. Roberts, Jr.
Chairman and Chief Executive Officer
MCI Communications Corporation
1801 Pennsylvania Avenue, N.W.
Washington, D.C.  20006

Dear Mr. Roberts:

(***TRANSCRIBER NOTE***  "Mr. Roberts" is marked out with a
black pen and replaced with "Bert" in Ron Brown's handwriting)

Thank you for your letter concerning the issue of cryptography
export restrictions and its role in the field of international
electronic commerce and the National Information Infrastructure
(NII).  I am writing to inform you that the Department of
Commerce already has begun to examine the role these
restrictions play in the development of the NII and Global
Information Infrastructure (GII).

Currently, the Department is undertaking an interagency review
of encryption standards and regulations similar to those you
addressed.  The Bureau of Export Administration, for example, is
working on expanding general license eligibility to include
cellular phones with encryption capability.

I appreciate your comments regarding the importance of these
technologies, and your views on the relaxation or modification
of the restrictions on their export.  Certainly, the development
of electronic commerce both in the United States and around the
world will depend on participants being able to trust in the
security of the communications systems.

I appreciate your ongoing contribution to the National
Information Infrastructure Advisory Council and your leadership
of Mega-Project II, and look forward to your input on universal
access and universal service issues.

Sincerely,

"Ron"

Ronald H. Brown

(***TRANSCRIBER NOTE***  Handwritten below under signature line)

Hope to see you soon!  Congrat's on your big deal!  
RHB



All content COPYRIGHT SOFTWAR (C) 2000. Any reproduction or use of content herein must be approved by SOFTWAR.