The Department of Defense (DoD) this week issued the
long-awaited final rule addressing how DoD contractors and
subcontractors must safeguard unclassified technical information on
their corporate information systems.1 Although the final rule narrows a proposed
rule that DoD had published in June 2011, the rule still has wide
applicability to private sector information systems where DoD
technical information is stored or transmitted. DoD notes in the
preamble that the rule "is deemed necessary for the protection
of unclassified controlled technical information and it is
understood that implementing these controls may increase costs to
DoD."
The rule sets forth two main requirements. First,
contractors must satisfy security standards established by the
National Institute of Standards and Technology (NIST) to protect
"unclassified controlled technical information" (UCTI).
The requirements established by the rule are to be incorporated
into "all solicitations and contracts, including solicitations
and contracts using FAR part 12 procedures for the acquisition of
commercial items." Second, contractors must report to
DoD cyber incidents that "affect" UCTI "resident on
or transiting through the contractor's unclassified information
systems." Contractors are responsible for ensuring that
subcontractors comply with the rule's requirements, and the new
requirements must be incorporated into subcontracts at all tiers.
For these purposes, IT vendors, including Internet service
providers and cloud service providers, are considered
subcontractors.
Cybersecurity Controls
Although the security standards apply only to UCTI, UCTI is a broad
enough category that many contractors may possess substantial
amounts of UCTI on their corporate networks. The rule defines UCTI
as computer software or technical data with military or space
application that is subject to controls on access, use,
reproduction, modification, performance, display, release,
disclosure, or dissemination, and that is marked as controlled
information pursuant to DoD rules. Examples of technical
information that could be specially marked as UCTI include
"research and engineering data, engineering drawings, and
associated lists, specifications, standards, process sheets,
manuals, technical reports, technical orders, catalog-item
identifications, data sets, studies and analyses and related
information, and computer software executable code and source
code."
The cybersecurity protocols required for UCTI include standards on
authentication, training, incident response, contingency planning,
and access controls, among others, defined in NIST Special
Publication 800-53, ''Security and Privacy Controls for
Federal Information Systems and Organizations."2 If a required control is not
implemented, the contractor must explain in writing to the relevant
government contracting officer why either the control is not
applicable or an alternative measure is being used to achieve
"equivalent protection."
It is unclear how much data may ultimately be covered as UCTI. DoD
policies allow for data to be marked as controlled information if
it is export controlled, critical technology, operations security
data, software documentation, vulnerability information, test and
evaluation data, or foreign government information, among other
grounds.3 Most
contractors are unlikely to have separately configured networks for
housing and transmitting UCTI information. The rule requires that
contractors "[i]mplement information systems security in its
project, enterprise, or company-wide unclassified information
technology system(s) that may have unclassified controlled
technical information resident on or transiting through them."
Thus, as a practical matter, the requirements of the new rule may
well reach entire corporate networks even when such networks do not
contain significant amounts of UCTI (or a contractor does not have
a means of tracking and separating UCTI from other information on
its corporate networks). DoD states that audits will be conducted
at the discretion of the contracting officer in accordance with the
terms of a contract.
Cyber Incident Reporting
Cyber incident reporting obligations turn on, among other criteria,
whether a cyber incident could "allow unauthorized access to
the Contractor's unclassified information system on which
unclassified controlled technical information is resident on or
transiting" or "possible" compromise of UCTI.
Reports must be sent to DoD via http://dibnet.dod.mil/ within 72 hours of
discovery of any cyber incident and must include specific, detailed
data about the nature of the intrusion and any government projects
possibly implicated. Contractors are required to preserve data
about the cyber incident for 90 days, including "protect[ing]
images of known affected information systems and all relevant
monitoring/packet capture data for at least 90 days from the cyber
incident"; DoD may elect to conduct a "damage
assessment" and may demand access to all of the data collected
by the contractor about the incident. The rule requires contractors
to share with DoD all information requested about an incident
unless "there are legal restrictions that limit a
company's ability to share digital media," in which case
the contractor must explain to the contracting officer why
information is being withheld.
According to DoD, data from its current voluntary cyber reporting
programs suggest there may be five reports per company per year.
DoD also estimates a 3.5-hour burden per response. Based on our
experience, we believe the DoD estimate of the time to prepare a
single report across the 13 data points required by the rule may
significantly understate the time required to prepare accurate
cyber incident reports. Compliance with the cyber incident
reporting requirements will necessarily involve costs, both to
preserve data in a forensically sound manner and to assemble
information about any intrusion. Responding to damage assessment
requests may increase costs for some contractors and will likely
increase the need for corporate counsel to assess contractual or
other legal restrictions on sharing data about an incident.
Some contractors, especially large companies and institutions with
complex computer networks, may be required to make frequent
decisions about whether a particular incident triggers a reporting
requirement. The requirement to notify DoD does not turn on the
severity of an incident but instead turns on whether a particular
incident may "affect" UCTI either stored on a compromised
network or transiting that network. We anticipate that
contractors will need to develop protocols for identifying which
incidents must be reported to DoD pursuant to the new rule.
1 78 Fed. Reg. 69273 (Nov.
18, 2013), accessed at http://www.gpo.gov/fdsys/pkg/FR-2013-11-18/pdf/2013-27313.pdf.
2 http://nvlpubs.nist.gov/nistpubs/SpecialPublications/NIST.SP.800-53r4.pdf.
3 Department of Defense
Inst. 5230.24 (available at http://www.dtic.mil/whs/directives/corres/pdf/523024p.pdf).
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