May 16, 2025

Inherited Risk: How Shifting Federal Responsibilities Are Putting State and Local Data Security at Risk—and How to Fix It

Federal workforce reductions and program decentralization have left state and local data security at risk, forcing governments to manage not just more services—but more sensitive data than ever before. From elections to public health to infrastructure, agencies are expected to deliver and protect critical information, all while working with smaller teams and tighter budgets.

As a result, many organizations turn to encrypted USB drives for tasks like:

  • Election result transfers
  • Secure inter-agency file sharing
  • Offline backups for public safety or health data
  • Air-gapped program distribution

But here’s the catch: the majority of encrypted USBs currently in use across agencies contain Chinese encryption chips—leaving critical data vulnerable to foreign surveillance, backdoors, and policy violations.

Growing Data Volumes, Shrinking Resources

USB devices have become the de facto method for moving and protecting data in disconnected or high-security environments. But without the right security infrastructure, these devices can become the weakest link in your agency’s cyber posture.

Relying on outdated or insecure storage—especially when used for sensitive data—can lead to:

  • Accidental exposure of citizen or voter information
  • Lost or stolen devices without tracking or audit logs
  • Inability to prove compliance during audits

And yet, these devices remain in daily use due to cost concerns or the false assumption that “any encrypted drive will do.”

Foreign Encryption ChipsThe Threat You Can’t See

Many of these devices are built with encryption chips manufactured in China, which, under China’s National Intelligence Law, can be used to:

  • Insert hidden backdoors
  • Access or transmit cryptographic keys
  • Allow covert surveillance or tampering

These threats aren’t theoretical—they’re embedded in the hardware itself. Once deployed, there’s no way to verify or mitigate what these chips are capable of. In the wrong hands, even “encrypted” data becomes accessible.

TAA Compliance Isn’t a Guarantee of Safety

Most IT teams look for TAA-compliant products during procurement. But here’s the problem:

TAA compliance only ensures where the device was assembled—not where every component was made.

This loophole allows devices assembled in “trusted” countries to still include Chinese-made encryption chips—effectively undermining the purpose of TAA in the first place.

Agencies often pay a premium for these so-called “secure” encrypted USBs, only to discover later that they’re not protected at the component level. That’s not just a waste—it’s a risk.

The Real Cost of a Breach You Could Have Prevented

The financial and reputational damage from a single compromised USB device can be devastating:

  • Average cost of a public sector breach: $2.6M+
  • Investigations, regulatory fines, and reputational fallout
  • Public distrust, political scrutiny, and loss of confidence

Using hardware with unknown origins or no upgradeability increases this risk. You may not see it—until it’s too late.

DataLocker: Built for State and Local Data Security, Trusted by Government

DataLocker: Built for Local Agencies, Trusted by Government

DataLocker’s encrypted USB drives (like the Sentry 5, K350, and DL4 FE ) are:

  • Built with non-Chinese encryption chips
  • Fully TAA-compliant from chip to assembly
  • FIPS 140-2/3 certified and trusted by federal and state governments
  • Designed for read-only, one-use, or secure multi-use configurations
  • Offer upgradeable firmware paths for long-term viability

Paired with SafeConsole, agencies can:

  • Remotely lock, wipe, reset passwords, or manage devices
  • Enforce read-only or geofencing policies
  • Maintain audit trails and role-based access controls
  • Manage thousands of devices across departments

Secure the Data, Earn the Trust

The federal government may have shifted the responsibility—but the risk is still yours to manage. Choosing the right hardware means choosing peace of mind, regulatory confidence, and a platform that can scale with your state and local data security needs.

Protect your community with secure, upgradeable, and TAA-compliant storage.

Request a complimentary demonstration of DataLocker