New FAR Rules Likely For "Critical Infrastructure" Contractors

by Perkins Coie
Contact

On February 12, 2013, President Obama signed an Executive Order (the Order) intended to enhance the cybersecurity of the country's critical infrastructure.  According to the Order, "[t]he cyber threat to critical infrastructure continues to grow and represents one of the most serious national security challenges we must confront."  The Order requires federal agencies and critical infrastructure owners and operators to work together to reduce cyber risks, and calls for the development of new security standards and best practices for critical infrastructure owners and operators.

In addition, the Order portends the establishment of new evaluation criteria and contractual obligations for government contractors.  Among other things, the Order instructs the General Services Administration (GSA) and the Department of Defense (DoD) to consider incorporating cybersecurity standards into federal acquisition planning and contract administration.

It seems likely that in the months ahead the Federal Acquisition Regulation (FAR) will be amended to include new cybersecurity requirements.  A proposed cybersecurity law the White House sent to Congress in May of 2011 may offer clues about the potential shape and scope of these FAR requirements.  The White House's proposed legislation would have required critical infrastructure owners and operators to develop plans, based on federally developed, risk-based standards, for addressing cyber threats.  Such plans would have been reviewed by third-party, commercial auditors.   In addition, the proposed legislation would have established a comprehensive data breach notification requirement intended to "simplify[] and standardiz[e] the existing patchwork of 47 state laws."

It would not be surprising, then, in the wake of the Order, to see similar requirements contractually imposed on federal contractors that operate cyber systems, and to see cybersecurity issues become part of agency evaluation criteria in managing procurements and awarding contracts.  To win contracts, a cyber system operator likely will need to have effective plans and systems in place, along with an ability to write proposals that explain convincingly how those plans and systems will help the cyber system operator deter and stand up to threats.  These obligations will likely be triggered where the offeror or contractor is an entity designated as part of the U.S. critical infrastructure, or where the offeror, after contract award, will operate a facility that has been deemed part of the U.S. critical infrastructure.

The Order defines the term "critical infrastructure" as "systems and assets, whether physical or virtual, so vital to the United States that the incapacity or destruction of such systems and assets would have a debilitating impact on security, national economic security, national public health or safety, or any combination of those matters."  Section 1016 of the USA PATRIOT Act (P.L.107-56) (Oct. 16, 2001) employs the same definition.  Examples of sectors likely to be deemed "critical infrastructure" include the following: 

  • Agriculture
  • Food
  • Water
  • Public Health 
  • Emergency Services
  • Government
  • Defense Industrial Base
  • Information and Telecommunications
  • Energy
  • Transportation
  • Banking and Finance
  • Chemical Industry
  • Postal and Shipping

The Department of Homeland Security, DoD and the Department of Treasury will be responsible for determining which entities are part of the critical infrastructure.  The Order requires that the secretary of homeland security establish a process through which entities can challenge a classification and request reconsideration.

Contractors that want to be a part of the process now should consider getting involved in the DHS Critical Infrastructure Partnership Advisory Council. They might also review the National Institute of Standards and Technology "preliminary Framework" when it is published (within 240 days of the date of the Order) and consider providing comments.

While the Order will create new obligations for some federal contractors, it should also engender new opportunities.  For example, the Order directs the Secretary of Homeland Security to "expand the use of programs that bring private sector subject-matter experts into Federal service on a temporary basis" and seeks to "establish a consultative process to coordinate improvements to the cybersecurity of critical infrastructure."

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Perkins Coie | Attorney Advertising

Written by:

Perkins Coie
Contact
more
less

Perkins Coie on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.