Kaspersky Lab Set To Launch Federal Subsidiary To Go After U.S. Goverment IT Security Contracts

Russian antivirus giant Kaspersky Lab is preparing to launch a new company that will compete for lucrative cybersecurity contracts with U.S. government agencies.

The newly created company, Kaspersky Government Security Solutions Inc., is staffed with several former senior level systems engineers from Science Applications International Corporation (SAIC), a McLean, Va.-based IT engineering and government services contractor,.

Located in the Washington D.C. region, the new firm is a separate entity with different products and services than its North American commercial arm, which is headquartered in Woburn, Massachusetts.

Kaspersky Lab CEO Eugene Kaspersky announced last year his plans to open a Washington D.C. area office as a test to enter the federal market.

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Kasepersky Lab hired Adam Firestone, a veteran systems engineer, to oversee the Kaspersky Lab federal operations. He is serving as senior vice president and general manager out of its Washington, D.C. office.

Firestone spent 17 years at SAIC and also served briefly at WSO2 Inc., where he spearheaded the launch of the middleware platform maker's Federal Systems subsidiary as its director of defense and government solutions, according to his LinkedIn profile.

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In an interview with CRN, Chris Doggett, managing director of Kaspersky Lab North America said the federal arm reports through the company's North America unit, but structurally, it will be operated as an autonomous subsidiary.

Current partners under the North America channel program will not see any changes, Doggett said, adding that the new company may work with specialized public-sector contractors and consultants that specialize in providing federal government work.

"For various reasons we need to have clear compartmentalization of that company so there is no overlap with this company, whether it is budgetary, corporate legal structure, leadership people. It all has to be separate," Doggett told CRN. "This is a different type of business, much more specialized for the federal government space with different services and partners as well."

In addition to Firestone, the newly created Kaspersky Lab federal unit has two other SAIC veterans. Linda Merchlinsky, as vice president of government sector systems engineering, is also a veteran systems engineer and project manager. According to her LinkedIn profile, she spent 20 years at SAIC where she worked on projects for the federal government. Her most recent work was with Digital Infusion, a Gathersburg, Md.-based firm that specializes in big data analytics for the biotechnology industry.

Hilary MacMillan will serve as vice president and cybersecurity intelligence operations. She spent more than a decade at SAIC as a systems engineer working on a number of projects, including developing event simulation for the U.S. Navy.

Kaspersky Lab entered the U.S. commercial market in 2005 and gradually increased its presence with offerings aimed at small and midsize businesses. Analysts say the company has made gains against Intel Security (formerly McAfee) Symantec and Trend Micro in the endpoint protection market.

Eugene Kaspersky has been publicly shifting his company's attention onto critical infrastructure protection and the security of supervisory control and data acquisition systems, specialized platforms that monitor critical processes. The North American arm established a new sales team last year to capture larger enterprise deals.

In 2012, Kaspersky acknowledged an internal project to develop a secure, restricted operating system for the industrial control systems in power plants, chemical refineries and other highly sensitive facilities.

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Kaspersky Lab is moving into the federal market following the departure of several key executives who left after an apparent disagreement about company's strategy.

Stephen Orenberg, president of Kaspersky Lab's North America business and a 10-year company veteran and Nikolay Grebennikov, its chief technology officer and head of R&D, left in May. Petr Merkulov, Kaspersky Lab's North American executive vice president and a 10-year company veteran, and John Malatesta, who served as global head of corporate marketing, also left the company.

In an interview with CRN in February, Orenberg said part of the company's key U.S. plan was to establish stronger ties at the federal level, which included plans to open a Washington, D.C., office. Last year the firm held its first Cybersecurity Government Forum in Washington, D.C.

Retired Air Force General Michael Hayden, who served as director of the National Security Agency and Central Intelligence Agency, was a keynote speaker at the event. Officials from the U.S. Department of Homeland Security and other federal agencies also participated in the event.

In April, Kaspersky Lab held a cybersecurity forum in San Francisco that included former Secretary of U.S. Department of Homeland Security, Tom Ridge and Howard Schmidt, the former cybersecurity coordinator for the Obama Administration.

Kaspersky Lab's strong threat intelligence capabilities, focus on critical infrastructure protection and team of highly skilled programmers may become a significant part of the practice, said Rick Holland, a senior analyst at Forrester Research Inc. Working with federal government contracts is an entirely different culture than working with the private sector, which could be why the company is starting out with such a seasoned team, Holland said.

"Given it's a Russian company in the current political climate, its presence would very likely be a concern to some people in Washington D.C. circles," Holland said. "It's common to see security firms moving to take advantage of federal cybersecurity spend, because the technology problems are the same in many ways, but the sales process is completely different."

The Kaspersky unit could provide a threat intelligence data feed for agencies grappling with advanced threats, said Pete Lindstrom, a research director at Framingham, Mass.-based IDC. Additional products or services could be Kaspersky's impediment, Lindstrom said, adding that any firm with Russian or Chinese roots would have a significant challenge.

Kaspersky Lab could have focused on deeper penetration into the small and midsize market like its closest rival in the segment, UK-based Sophos, he said.

"There's no way around the issue of political instability in the world and more specifically the nature of the nation-state threat," Lindstrom said. "[Kaspersky Lab] is entering into a space with bigger hurdles when there are so many other opportunities for them out there. If they decided to think a little more outside the box, they could really come up with some alternative ways to generate revenue."