When the Washington Post reported last month that the U.S. Department of Defense was crafting a new

personnel policy, industry went on red alert. The new policy stated that IT

companies with defense contracts would no longer be allowed to employ

non-U.S. citizens on unclassified projects. As the news broke, everyone from

H1-B subcontractors to tech industry leaders worried that this would lead to

thousands of layoffs and underqualified, poorly trained replacement hires.

Many security companies who contract with the DoD feel the policy is

dangerous. Losing qualified developers, regardless of their national

origins, would undermine the process of creating secure code, which

requires experienced teams where everyone is intimately familiar with the

project. But security companies -- many of them small contracting firms --

have been reluctant to criticize the DoD openly for fear of biting the hand

that feeds them. Their concerns have been voiced by professional

organizations like the Information Technology Association of America (ITAA).

Many of ITAA's members do contract security work with the U.S. government.

In the wake of the announcement, ITAA president Harris Miller wrote senior

defense officials a letter denouncing the new policy and requesting a public

airing of the issues it raises. "America's defense readiness depends on

having ready access to the best available technology and technical skill

sets," wrote Miller. "Precipitous action here could make it much more

difficult and expensive for the military services to acquire the requisite

IT services."

Although the DoD issued no formal reply, Pete Nelson, the DoD's deputy

director of personnel security, told SecurityFocus Online that the

department never intended to forbid contractors from hiring visa workers.

Instead, "they would be encouraged where appropriate and possible to hire

U.S. citizens, but it wouldn't be mandatory." Contractors will also have to

put all employees -- citizens and non-citizens alike -- through rigorous

security checks.

While this seems to be a softening of the DoD's earlier position, Nelson

admitted that the policy will probably result in job losses. "Every effort

shall be made to minimize the number of non-citizens in sensitive IT

positions," he said, adding that the department would probably define the

most sensitive category as people who work "deep in our systems,"

especially if they are developing or testing secure networks and databases.

Industry associations fear this will mean a brain drain in the security

industry, with highly qualified job candidates turning to private sector

contracts, or simply leaving the country altogether. The DoD's new policy

represents an about-face from pre-September 11 immigration policy. In 2000,

the INS increased its annual cap on new H1-Bs to an historical high of

195,000 (this was up from a prior limit of 115,000). 2001 also saw 195,000

H1-Bs issued to immigrant workers.

LAYOFFS ALREADY BEGINNING. Although the DoD won't reveal its official policy for at least several

weeks, the effect of the Pentagon announcement is already being felt. One

DoD subcontractor, speaking on condition of anonymity, said his company has

begun laying off employees who are in the U.S. on visas, and is refusing to

hire anyone who isn't a citizen. "All of us are very concerned," said the

worker, who, like many of his colleagues, is on an H1-B visa. "When I

referred my friend -- who is on a green card -- for one of our open

positions, I was told that new recruits must have U.S. citizenship. With

our projects going through different phases, I'm afraid that if I get

rolled off after phase two and will be needed again in phase four, with the

new regulation, I stand no chance of coming back on the project."

Another contractor, who does security testing on supply systems, stated his

fears simply. "I'm a green card holder and I have been working for the

federal government for six months. It's extremely difficult to find work in

the current economic situation, and I am the only one working in my family.

That makes my job crucial for us."

Murali Devarakonda says that the loss of qualified developers is a risk

because new, inexperienced hires may write bad code riddled with security

holes. Devarakonda, who helps organize the Immigrants Support Network

(www.isn.org) in Silicon Valley, says many government contractors in his

organization are actively looking for new jobs, and "people are also going

home after losing their jobs. It's going to be a nightmare for consulting

companies and employers."

Experts believe that the policy will hit the large South Asian high tech

community the hardest, but community leaders are more sanguine. Kanwal

Rekhi is a legendary Silicon Valley angel investor and the chairman of The

Indus Entrepreneurs, a powerful group of South Asian business leaders often

referred to as "the curry network." He scoffed at the DoD's new policy,

describing it as another example of the government shooting itself in the

foot. "They're going to lose smart people -- how are they going to manage

without using Indian software developers?" Rekhi says he worked for a

defense contractor throughout the 1970s, and "I was unhappy. I did my best

work after I chose to leave and became an entrepreneur. Nobody is really

worried about this policy because defense contracting jobs are the least

attractive."

It remains to be seen how the DoD's policy could affect commercial

industry. Network Associates, one of the biggest suppliers of consumer

security products, has a research branch called NAI Labs that is entirely

funded by the government. Reps said the company wasn't yet sure how the new

policy would affect employees, and that Network Associates hadn't yet

formulated a response.

Pentagon: Loyalty an issue

Immigration lawyers are telling tech workers on visas not to panic. Paul

Heller, an immigration lawyer practicing in San Francisco, says "the

key is not to freeze. The best protection is to be prepared ahead of time if

you feel this policy may affect you." He advises contractors who are worried

to start looking for another job now. If you get an offer, you can have a

new petition for an H1-B in the works even while you still hold one for your

current job. Also, losing your job isn't the end of the road. "Generally, if

you're not able to find work within 30 days of termination or layoff, you

can change your visa status." Hellers says. "It is true there is no 'grace

period' yet established by the INS, but in practice INS is not interested

in unnecessary denials, or preventing skilled workers from finding new

employment within a reasonable time." Of course, this has to be carefully

done, in consultation with a qualified immigration lawyer.

Other lawyers are urging visa-holders to organize against the new policy.

"This represents an opportunity to expand coalitions of immigrants who now

realize what's at stake with this War on Terrorism because it's affecting

them," says Philip Hwang, a staff attorney with the Lawyers Committee for

Civil Rights (LCCR) of the San Francisco

Bay Area. Hwang compares the DoD policy on IT security workers with the

situation facing immigrant baggage screeners at airports. "Many of the

screeners were lower-income immigrants, primarily Filipino in San Francisco.

They were qualified workers who had been trained, but because of new laws

[stipulating that airport screeners must be citizens] they're facing

layoffs."

Hwang believes that immigrants at all levels of the economic ladder are

seeing what they have in common now. "The message they're getting is that

immigrants can't be trusted and they're disloyal. And yet immigrants often

feel deep sense of connection to this country -- that's why they come

here."

Nelson from the DoD disagreed. He said, "Clearly non-U.S. citizens do not

owe their primary loyalty to the U.S. That's just a fact of life. That's why

non-U.S. citizens don't get security clearances."

Sergey Perepelitsa, a green card holder who's worked in the computer

security field since 1997, is disgusted by what he considers to be crass

economic motivations behind DoD rhetoric about loyalty. He sees DoD policy

as creating a new influx of "cheap imported brains" for the private sector.

"This policy makes the existing pool of cheap H1-B slaves even cheaper and

more efficient. They'll be forced out of government jobs and will have to

find another job for less or work harder for the same pay." Perepelitsa says

he immigrated to the United States because he thought America offered

freedom -- unlike Russia, where he grew up. But, "for the last couple of

years I've had a lot of deja-vu here in the U.S. because it reminded me of

what I saw in Russia in the 1980s. That's very alarming. If the U.S. slides

into this hole it will be hard to get back out of it." By Annalee Newitz