Category: Cybersecurity

Starting December 4th, Contractors Must Rid Supply Chains of Covered Articles and Sources Subject to FASC Orders

Robyn N. Burrows ●

Effective December 4, 2023, a new interim rule will prohibit contractors from delivering or using covered articles and sources subject to exclusion or removal orders issued under the Federal Acquisition Supply Chain Security Act of 2018 (“FASCSA”). The rule is intended to eliminate certain technology from the federal supply chain that foreign adversaries might exploit to commit malicious cyber acts. The interim rule allows the executive branch through the Federal Acquisition Security Council (“FASC”) to exclude certain technologies and manufacturers from federal procurements and even to require removal of covered articles from federal or contractor information systems during performance.

The rule imposes a host of new obligations, including certification, monitoring, and reporting requirements. This post provides practical guidance on the rule and several compliance tips to help contractors prepare for the December deadline.

Background

Congress passed Section 202 of the FASCSA to protect the information and communications technology (“ICT”) supply chain against threats and vulnerabilities that may lead to data and intellectual property theft, damage to critical infrastructure, or national security harm. The Act established the FASC as an interagency council authorized to make recommendations for orders that would require the removal of covered articles from agency information systems (removal orders) or the exclusion of sources or covered articles from agency procurement actions (exclusion orders) (collectively referred to as “FASCSA orders”).

In August 2021, the FASC issued a final rule establishing procedures for recommending removal and exclusion orders. The FASC evaluates supply chain risk based on several non-exclusive factors and sends its recommendations to the Secretaries of Homeland Security and Defense and the Director of National Intelligence to consider when deciding whether to issue a FASCSA order. If a FASCSA order is issued, agencies are required to implement the exclusion or removal order.

Continue reading “Starting December 4th, Contractors Must Rid Supply Chains of Covered Articles and Sources Subject to FASC Orders”

The FAR Council Proposes Standardizing Cybersecurity Requirements

Michael Joseph Montalbano and Oliver E. Jury ●

On October 3, 2023, the FAR Council proposed two potentially significant cybersecurity rules. We discussed FAR Case No. 2021-017, which would impose a range of new cyber incident reporting requirements on nearly all government contractors, earlier this week. This post discusses FAR Case No. 2021-019, which seeks to standardize cybersecurity contractual requirements across federal agencies.

Who Will the Standardization of Cybersecurity Contractual Requirements Affect?

Under the proposed rule, the FAR Council would promulgate two new FAR clauses, FAR 52.239-YY (Federal Information Systems Using Non-Cloud Computing Systems) and FAR 52.239-XX (Federal Information Systems Using Cloud Computing Services). As drafted, the rule would affect contracts that involve the development and maintenance of federal information systems (“FIS”).

What is an FIS? The proposed rule defines FIS as “an information system used or operated by an executive agency, by a contractor of an executive agency, or by another organization, on behalf of a government agency.”

FAR 52.239-YY would be required in contracts acquiring FIS services that include (or are anticipated to use) non-cloud computing services during contract performance. The proposed clause would require flowdown to subcontractors at all tiers (provided those subcontractors may use non-cloud computing services). There would be no exception for acquisitions below the simplified acquisition threshold or acquisitions for commercial products, including commercially available off-the-shelf (“COTS”) items and commercial services, “because Government data and systems require protection regardless of dollar value.”

The FAR 52.239-XX requirements would largely mirror those in FAR 52.239-YY, albeit for contractors using cloud-based computing services during performance. Contractors would need to comply with both proposed clauses if they use both non-cloud and cloud-based computing services in support of contract performance.

Continue reading “The FAR Council Proposes Standardizing Cybersecurity Requirements”

The FAR Council Proposes New Cyber Incident Reporting Requirements

Michael Joseph Montalbano and Oliver E. Jury ●

On October 3, 2023, the FAR Council issued two proposed cybersecurity rules that could have significant implications for both Government prime and subcontractors. This post discusses the first rule, FAR Case No. 2021-017, which, if implemented, will impose an array of new cyber incident reporting requirements on nearly all government contractors. The second rule, FAR Case No. 2021-019, seeks to standardize cybersecurity contractual requirements across Federal agencies. We discuss the first rule in further detail here.

Who Would Have to Comply with the New Cyber Incident Reporting Rule?

Under the proposed cyber incident rule, the FAR Council intends to promulgate a new FAR clause, FAR 52.239-ZZ. In its current form, FAR 52.239-ZZ would apply to all contracts where “information and communications technology” (“ICT”) is used or provided in the performance of the contract.

What is ICT? ICT is just about anything computer related. ICT includes computers and their peripheral equipment, telecommunications equipment, computer software, and electronic documents. In other words, if a contractor uses a computer or related device in the performance of a government contract, then FAR 52.239-ZZ would likely apply.

Continue reading “The FAR Council Proposes New Cyber Incident Reporting Requirements”

Accreditation Body Releases CMMC Assessment Guidance

Stay up to date by subscribing to our blog. Add your e-mail address to the Subscribe box on the right (below the post on mobile) to get our timely posts delivered directly to your inbox.

Michael Joseph Montalbano ●

In July 2022, the Accreditation Body (“AB”) of the Cybersecurity Maturity Model Certification program (“CMMC”) released a 47-page CMMC Assessment Process guide (“CAP Guide”). The CAP Guide outlines the assessment process for contractors seeking a CMMC level 2 certification, which, as we discussed in earlier posts, is the required certification level for all contractors who expect to receive or store Controlled Unclassified Information (“CUI”).

The CAP Guide has been widely criticized by members of the Defense Industrial Base for being overly complicated and contrary to the Department of Defense’s (“DoD”) stated intention to reduce the complexity and cost of the CMMC program for small businesses. However, assuming it is adopted by the DoD, the CAP Guide includes helpful guidance for contractors that are beginning to prepare for their CMMC level 2 assessment.

Continue reading “Accreditation Body Releases CMMC Assessment Guidance“

Is Your Company Prepared for the New Cyber Incident Reporting Requirements?

Michael J. Montalbano

Stay up to date by subscribing to our blog. Add your e-mail address to the Subscribe box on the right (below the post on mobile) to get our timely posts delivered directly to your inbox.

On March 11, 2022, President Biden signed into law the Cyber Incident Reporting for Critical Infrastructure Act of 2022. The Law includes new reporting requirements for companies who experience cyber incidents or make ransomware payments.

Under the Law, covered entities that experience covered cyber incidents must report the incident to the Cybersecurity and Infrastructure Security Agency (“CISA”) within 72 hours after the covered entity reasonably believes that a covered cyber incident has occurred. Covered entities must also notify CISA within 24 hours of making a ransomware payment.

The new cyber reporting law tasks CISA with creating more precise definitions for who constitutes a “covered entity” and what constitutes a “cyber incident.” Even the general language of the statute, however, provides some guidance for companies.

Continue reading “Is Your Company Prepared for the New Cyber Incident Reporting Requirements?”

CMMC 2.0 Brings Much Needed Relief to the Defense Industrial Base

Michael J. Montalbano

In response to more than 850 public comments, the Department of Defense (“DOD”) has decided to significantly revamp the Cybersecurity Maturity Model Certification (“CMMC”) program. On November 4, 2021, DOD announced that it was replacing the current CMMC program with CMMC 2.0, which is expected to significantly reduce the regulatory burden on companies in the Defense Industrial Base (“DIB”). DOD made three significant changes through the new CMMC 2.0 program:

Reduces the number of CMMC levels. As we explained in earlier posts, CMMC 1.0 originally had five CMMC levels of ascending sophistication. CMMC 2.0 now only has three levels:

      • CMMC 2.0 Level One: This level will apply to most DIB companies and requires compliance with 17 basic cyber hygiene practices.
      • CMMC 2.0 Level Two: This level applies to DIB companies who will receive controlled unclassified information (“CUI”) and is expected to align with the requirements under NIST SP 800-171. Notably, DOD already requires most DIB companies receiving CUI to comply with NIST SP 800-171 through the cybersecurity DFARS clause 252.204-7012.
      • CMMC 2.0 Level Three: DOD is still developing the requirements for this level, but we expect that this level will apply to only the most sensitive and high-risk DOD projects.
Continue reading “CMMC 2.0 Brings Much Needed Relief to the Defense Industrial Base”

Department of Justice to Prioritize Cybersecurity Fraud through New Civil Cyber-Fraud Initiative

Sharon R. Klein, Jennifer A. Short, and Robyn N. Burrows

Sharon R. Klein headshot image
Jennifer A. Short headshot image


On October 6, 2021, the U.S. Department of Justice (“DOJ”) announced a new Civil Cyber-Fraud Initiative to pursue cybersecurity fraud matters using the enforcement mechanisms of the False Claims Act (“FCA”).

This initiative follows DOJ’s four-month effort to review its cybersecurity strategy and reflects the government’s increased focus on contractor data security. Led by the Civil Division’s Commercial Litigation Branch, Fraud Section—i.e., the DOJ Section responsible for investigating and litigating FCA matters—the initiative targets government contractors and grant recipients that “put U.S. information or systems at risk” by “knowingly”:

      • providing deficient cybersecurity products or services;
      • misrepresenting the company’s cybersecurity practices or protocols; or
      • violating their obligations to monitor and report cybersecurity incidents and breaches.

We discuss the cybersecurity landscape preceding the new initiative, possible impacts and focus areas of the initiative, and how contractors should prepare for potential enforcement.

To read the full client alert, please visit our website. 

New Department of Defense Regulations Clarify Contractors’ Responsibilities to Comply with NIST SP 800-171 and CMMC Requirements

Robyn N. Burrows and Michael J. Montalbano

On September 29, 2020, the Department of Defense (“DoD”) issued a long-awaited, interim rule to strengthen cybersecurity protections throughout the Defense Industrial Base. The new rule establishes how DoD will assess contractors under current cybersecurity regulations set out by the National Institute of Standards and Technology Special Publication 800-171 (“NIST Requirements”) and the newly established Cybersecurity Maturity Model Certification (“CMMC”) program. The interim rule goes into effect on November 30, 2020; although, as we have discussed in earlier posts, DoD will gradually roll out the CMMC over the next five years.

NIST Self-Assessment Requirements

The first part of the new rule applies to contracts that incorporate DFARS 252.204-7012, which requires contractors and subcontractors that have access to covered defense information to comply with the NIST Requirements. Under the new rule, these entities will need to conduct a “Basic” self-assessment of their compliance with the NIST Requirements, and submit the results of that assessment to DoD through the Supplier Performance Risk System (“SPRS”). Contractors will need to update this self-assessment every three years or sooner if required by a contract. Starting November 30, 2020, contractors will not be eligible for new contracts (including task orders and delivery orders) or for options on existing contracts, unless the self-assessment score is posted on SPRS. DoD expects that it will take 30 days from submission to have the self-assessment score posted on SPRS, so it is important for contractors to submit their assessment at least 30 days prior to the November 30, 2020 implementation date. Continue reading “New Department of Defense Regulations Clarify Contractors’ Responsibilities to Comply with NIST SP 800-171 and CMMC Requirements”

Preparing for the Rollout of the Cybersecurity Maturity Model Certification: It Is All about the Timing

Michael Joseph Montalbano

The Department of Defense (“DoD”) is expected to begin rolling out the Cybersecurity Maturity Model Certification (“CMMC”) program later this year. As a brief refresher, the CMMC is a certification system implemented by DoD to protect Controlled Unclassified Information (“CUI”) and other sensitive contract information. There are five CMMC levels of ascending sophistication. The most common CMMC levels are expected to be Level 1 and Level 3. Level 1 will require contractors to put into place basic safeguarding practices to protect federal contract information. Level 3 will require contractors to put into place more stringent safeguarding practices that are designed to protect CUI. Contractors receive their CMMC after they pass an assessment by a CMMC Third Party Assessment Organization (“C3PAO”) or an individual assessor.

Although DoD will not fully implement the CMMC program until 2026, more and more contracts will require offerors to hold a CMMC demonstrating that their organizations have implemented the necessary cybersecurity controls. A nightmare scenario for any defense contractor is to find itself unable to compete for a lucrative DoD contract due to insufficient time to obtain the required CMMC before proposal deadlines. Fortunately, the Accreditation Body (“AB”) that is responsible for rolling out the CMMC program has provided estimated timelines for contractors seeking a CMMC. Continue reading “Preparing for the Rollout of the Cybersecurity Maturity Model Certification: It Is All about the Timing”

New DoD Cybersecurity Regulations Are Coming—Is Your Company Ready?

Michael Joseph Montalbano

In January, the Department of Defense (“DoD”) released more information on its much-anticipated Cybersecurity Maturity Model Certification (“CMMC”) framework. While a final rule is not expected until the fall, contractors need to begin preparing now so they do not miss out on DoD contract opportunities.

What Is the CMMC?

The CMMC is a certification system that all DoD prime and subcontractors must comply with to be eligible to compete for and perform future DoD contracts. Under the new CMMC requirements, an accreditation body tapped by DoD will begin training third-party assessors in the spring of 2020, who will in turn certify defense contractors under the CMMC. There will be five CMMC certification levels, of ascending sophistication:

    • Level 1 – Basic Cyber Hygiene
    • Level 2 – Intermediate Cyber Hygiene
    • Level 3 – Good Cyber Hygiene
    • Level 4 – Proactive
    • Level 5 – Advanced / Progressive

The contractor must comply with a combination of the following cybersecurity safeguards, depending on the certification level a contractor wants to achieve: (1) FAR 52.204 (Basic Safeguarding of Covered Contractor Information Systems); (2) NIST Special Publication 800-171 Revision 1 (“NIST Requirements”); (3) select subsets of a supplement to the NIST Requirements called NIST SP 800-171B; and (4) up to 171 “practices” identified in the CMMC. Though this may sound like a lot for contractors to process, DoD has released helpful appendices that put many of the requirements in easy-to-understand terms. Continue reading “New DoD Cybersecurity Regulations Are Coming—Is Your Company Ready?”

%d