The article highlights that ArcSight is used by the Pentagon to protect classified networks, but the security risks are much broader. Any weaknesses the Russians discover could be used against any ArcSight customer.
What is HP Enterprise thinking? Near as I can tell, they only gave it away because the Russians asked nicely.
Supply chain security is very difficult. The article says that Russia demands source code because it's worried about supply chain security: "One reason Russia requests the reviews before allowing sales to government agencies and state-run companies is to ensure that U.S. intelligence services have not placed spy tools in the software." That's a reasonable thing to worry about, considering what we know about NSA's interdiction of commercial hardware and software products. But how can Group A convince Group B of the integrity and security of hardware/software without putting itself at risk from Group B?
This is one of the areas where open-source software has a security edge. If everyone has access to the source code -- and security doesn't depend on its secrecy -- then there's no advantage in getting a copy. As long as companies rely on obscurity for their security, these sorts of attacks are possible and profitable.
I wonder what sorts of assurances HP Enterprise gave its customers that it would secure its source code, and if any of those customers have negligence options against HP Enterprise.