The following questions from Congress were recently answered by
NIST.

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                      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 its
     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 that 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 purchasing 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.