New Year, New NISPOM

Stroock & Stroock & Lavan LLP

On December 21, 2020, the National Industrial Security Program Operating Manual (“NISPOM”) was published as a final rule in the Federal Register.  A revision to the NISPOM has been expected for a number of years, and is effective today, February 24, 2021.  A number of changes were made to this iteration of the NISPOM, but most of the changes merely formalize current U.S. government policies that were not previously described in the manual.  In any case, companies who currently possess, are in process for, or are seeking a facility security clearance should review how the NISPOM changes apply to their specific circumstances and goals going forward. 

Among the notable changes are:

  • Revisions to the National Interest Determination (“NID”) process based on Section 842 of the 2019 National Defense Authorization Act (“Section 842”), exempting certain Special Security Agreement (“SSA”) companies[1] from the NID requirement. See 32 CFR 117.11(d)(2)(iii)(A).
  • The creation of two forms of limited facility security clearances: (1) the limited entity eligibility determination due to foreign ownership, control or influence (“FOCI”) and (2) the limited entity eligibility determination (non-FOCI).  Both are similar to the former “limited facility security clearance” in that they allow entities to access classified information for a singular purpose or contract, when the entities do not or cannot fully implement the requirements of the National Industrial Security Program.  32 CFR 117.9(m) and 32 CFR 117.11(e).
  • More clear definition of the Senior Management Official (“SMO”) role at a facility holding a security clearance, including a description of the range of SMO obligations that exist under the NISPOM.  32 CFR 117.7(b)(2). 
  • The incorporation of procedures respecting Security Executive Agent Directive 3 (“SEAD 3”), which identifies certain obligations of individuals holding personnel security clearances and those in positions designated as sensitive, most notably, the requirement to obtain advance agency approval before conducting unofficial foreign travel.  See 32 CFR 117.8.

[1] Section 842 applies to SSA companies whose parent entities are organized in National Technology and Industrial Base countries (i.e., United Kingdom, Canada, Australia).

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.

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