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Senator Joseph Lieberman, chairman of the US Senate Governmental Affairs Committee, believes the fund would kick-start some of the more pressing IT security requirements throughout the US government and the private sector.
The proposal has attracted the support of Senator Robert Byrd, who this week is expected to include it in his plans to help the US recover from the 11 September terrorist attacks.
Lieberman's proposal comes on the heels of calls from Harris Miller, president of the Information Technology Association of America (ITAA), for the US Congress to "put some real money on the table" for IT security improvements.
Miller said $1bn falls far short of the $10bn necessary to effect real change. However, IT companies, from hardware and software vendors to networking, communications and security companies, still stand to gain if the US Congress approves the proposal, he added.
According to the proposal, the $1bn would be spent on projects to improve the US federal government's information security systems, protect critical infrastructure or provide stronger defences against natural and man-made threats.
Examples cited include the funding of an early warning detection system for the aviation industry that would identify suspected terrorists when they book a flight, and the creation of a secure intranet accessible to law enforcement agencies.
The proposal also suggests funding biometrics-enabled smartcards to confirm the identities of passengers and cross-check fingerprints or facial patterns against known terrorists. The money could also pay for additional bulk-explosives scanners for airports and other baggage-scanning equipment.
A national biological detection system could be set to provide early warning of biological terrorist attacks. Through enhancements to the US's communications infrastructure, authorities could receive online training on how to respond to chemical and biological incidents or other emergencies.
The transportation sector, one of the primary areas of concern for possible terrorist attacks, could also benefit from the funding. IT could help authorities develop a tracking system that would monitor the movement of hazardous materials around the country. IT tools could also provide real-time tracking of US-bound shipping containers, to allow better detection and location of high-risk shipments before they enter US ports.
The proposal still has to be approved by the US Congress, however, and Democrats and Republicans differ significantly on the details behind the plans.
"I don't think anyone knows what the final outcome will be," said Olga Grkavac, executive vice-president of the ITAA's Enterprise Solutions Division.
Alan Paller, director of the SANS Institute, questioned how the money would be used. "My concern would be the skill with which Washington consultants and IT vendors in particular might package every pet project as 'security-enhancing'," said Paller. "If there were a tough, rational culling process, I'd be a fan."