Two Recent Executive Agency Actions Lay the Groundwork for a FAR Cybersecurity Clause in 2016
- Government contractors should expect an amendment to the Federal Acquisition Regulation in 2016 that mandates cybersecurity clauses and standards.
- Companies can prepare now by comparing new government standards to their existing system protections.
- As part of this process, companies should not just be reviewing the capabilities of their information systems, but also their written information assurance policies, training materials, and employment and third-party agreements.
Federal government contractors handling Controlled Unclassified Information (CUI) should take notice of two recent executive agency actions. Combined, they lay the groundwork for a new cybersecurity clause to be added to the Federal Acquisition Regulation (FAR) in 2016.
The National Archives and Record Administration (NARA) is the Executive Agent for handling CUI. In May, NARA proposed a rule (the NARA CUI regulation) to establish policies for federal agencies on designating, safeguarding, disseminating, marking and disposing of CUI. The proposal requires agencies whose contractors handle CUI to impose contractual requirements that are consistent with the new NARA policies. Importantly for government contractors, NARA announced that in 2016, it will sponsor a single FAR clause that will apply specific information security requirements to contractors handling CUI.
To that end, in June 2015, the National Institute for Standards and Technology (NIST) finalized a publication creating standards for contractors holding or processing CUI. This publication is the NIST Special Publication 800-171, "Protecting Controlled Unclassified Information in Nonfederal Information Systems and Organizations." As described below, the new NIST publication contains very specific measures for ensuring information security and is an important new compliance tool.
In anticipation of NARA’s 2016 FAR clause proposal, government contractors should now be examining the NIST publication to compare its requirements to their own information security practices and policies. This exercise may also be useful in terms of responding to the increasing number of government solicitations incorporating information security as an evaluation factor.
Breadth of CUI
Before summarizing the requirements of the NARA CUI regulation and NIST 800-171, it is important to appreciate the potential breath of CUI and its relevance to government contractors. The NARA proposed rule defines it as information that laws, regulations or government-wide policies require to have safeguarding or dissemination controls (excluding classified information). Examples of CUI include the following:
- export-controlled information
- information marked "For Official Use Only"
- information potentially covered by an exemption to disclosure under the Freedom of Information Act (such as trade secret information)
- law enforcement sensitive information
- unclassified controlled nuclear information
- information on security measures
- limited distribution information
- sensitive but unclassified information
- foreign government information
- technical information
Multiple agencies, including DoD, the Department of State and the National Geospatial-Intelligence Agency, use the CUI designation. Given the prevalence of CUI throughout the federal government, a substantial percentage of government contractors will be affected by the 2016 CUI clause.
NARA Proposed Rulemaking
As explained above, the May 2015 NARA proposal outlines requirements for federal agencies, but authorizes them to apply similar policies to their contractors. It focuses on how agencies are to handle, store, disseminate and dispose of CUI. It categorizes CUI into "CUI Basic," which is subject to the default set of standards, and "CUI Specified," which refers to CUI that is subject to its own unique set of standards.
While focused on establishing CUI protections for federal agencies, the NARA CUI regulation contains several provisions that will directly affect contractors. For example, contractors fall within the regulation's definition of "authorized holder," and the NARA proposed regulations set forth general standards for protecting CUI in discussions and in circumstances when it is outside of a controlled environment. They also outline how it may be transmitted: Use of the U.S. Postal Service or other commercial delivery services is acceptable, in-transit automatic tracking is recommended, and the outside of the package should not be marked "CUI."
Another provision impacting contractors directly is the requirement for agencies to create a process for challenging CUI designations. If the challenger and the agency cannot resolve the issue, the regulations provide for an appeals process to be heard by NARA as the CUI Executive Agent.
While the proposed NARA CUI regulation focuses on federal agencies, its preamble makes clear that NARA's objective is also to alleviate the difficulty faced by government contractors in trying to comply with the current scheme of agency-by-agency information system requirements. The
proposal acknowledges that many of these existing guidelines are specific to government systems and are difficult for contractors to implement within the contexts of their own systems. To address this issue, NARA has partnered with NIST to develop a set of standards to apply directly to the contractor environment. The immediate result of this collaboration is NIST 800-171. The longer-term impact will be the 2016 FAR rulemaking translating these standards into a FAR clause.
One of the more significant aspects of NIST 800-171 is its recognition that contractors typically have existing information technology infrastructures, making it impractical to mandate CUI protections that are more appropriate to designing and purchasing systems from scratch. The publication allows contractors to implement alternative, but equally effective, security measures to compensate for the inability to satisfy a particular requirement.
With these general principles as background, NIST Publication 800-171's requirements are structured around 14 security "families," such as Configuration Management or Access Control. Each family is assigned "Basic Security Requirements" and "Derived Security Requirements." The Basic Requirements are the high-level and fundamental standards. The Derived Requirements supplement the Basic Requirements, and they are based on the moderate baseline measures contained in NIST Publication 800-53 (which sets standards for federal information systems) that are tailored to government contractor information systems.
NIST 800-171 also includes an appendix cross-referencing the security controls from publications such as NIST 800-53 to each of the specific Basic and Derived Requirements. Therefore, NIST 800-171 contains increasingly specific measures to achieve the Basic Security Requirements identified for each security family.
To illustrate how NIST 800-171 works in practice, the 14 security requirement families are:
- Access Control
- Awareness and Training
- Audit and Accountability
- Configuration Managements
- Identification and Authorization
- Incident Response
- Media Protection
- Personnel Security
- Physical Protection
- Risk Assessment
- Security Assessment
- System and Communications Protection
- System and Information Integrity
An Audit and Accountability Example
Using the Audit and Accountability family as an example, NIST 800-171 outlines the following Basic Requirements, against which a contractor’s audit system is to be measured:
- create, protect and retain information system audit records to the extent needed to enable the monitoring, analysis, investigation and reporting of unlawful, unauthorized or inappropriate system activity
- ensure that the actions of individual information system users can be uniquely traced to those users so that they can be held accountable for their actions
Next, to ensure that a contractor's information security audit controls can meet these overarching standards, NIST 800-171 sets forth the following seven specific controls for Audit and Accountability in the Derived Security Requirements category:
- review and update audited events
- provide an internal alert to the appropriate management officials in the event of an audit process failure
- use automated mechanisms to integrate and correlate audit review, analysis, and reporting processes for investigation and response to indications of inappropriate, suspicious or unusual activity
- provide audit reduction and report generation to support on-demand analysis and reporting
- provide an information system capability that compares and synchronizes internal system clocks with an authoritative source to generated time stamps for audit records
- protect audit information and audit tools from unauthorized access, modification and deletion
- limit management of audit functionality to a subset of privileged users
Taking the second item – audit process failure alerts – as an example, if a contractor wants more detailed guidance as to what constitutes an acceptable alert in the event of an audit process failure, NIST 800-171's appendix is an index cross-referencing the relevant sections of NIST 800-53 and other government publications that more specifically address audit process failure alerts.
NIST Publication 800-171, therefore, provides a very useful checklist, at both a high and particularized level, against which government contractors can compare their existing information security control systems, policies and practices. Given the promise of a 2016 FAR clause, contractors should begin this comparison process now in order to prepare for the upcoming contractual requirements.
As part of this process, companies should not just be reviewing the capabilities of their information systems, but also their written information assurance policies, training materials, and employment and third-party agreements. Bringing a contractor information security system into compliance even in advance of the FAR amendment may also be a smart competitive move, because government agencies increasingly are including cybersecurity as an evaluation factor in their solicitations. For these reasons, NIST 800-171 is a significant compliance document for government contractors.