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A genetic algorithm based policy management system judges the validity of network events according to the rules defined in the rule base. These rules are either IP addresses or combination of IP address and some other parameters, such as port numbers etc. This paper discusses the design and benefits of rule base which is based on finite state machines. Since whenever a new network event comes, the process of judging the event should be less time consuming. This could be done by making the rule base efficient in terms of searching of rules. One of the way of doing so is using FSMpsilas. For a table having 232 (approx) entries, the searching time for a FSM based system is calculated mathematically to be 210 (approx), and the time complexity for same number of entries for a linear searching system will be 232 (approx) . In this paper a brief overview of finite state machines is presented. The proposed design of rule base is discussed in detail with its advantages.