United States: 2015 National Defense Authorization Act Requires New Cyber Breach Reporting

Last Updated: December 19 2014
Article by Mary Beth Bosco

Mary Elizabeth Bosco is a Partner in Holland & Knight's Washington D.C. office

"Operationally Critical Contractors" Are Required to "Rapidly" Report All Data Breaches

HIGHLIGHTS:

  • The U.S. secretary of defense must publish new procedures 90 days after the bill is signed.
  • These new procedures will create a separate category for "operationally critical contractors" who support DoD transportation and logistics.
  • These contractors will be required to "rapidly" report cyber incursions to DoD.

Congress passed the Carl Levin and Howard P. "Buck" McKeon National Defense Authorization Act for Fiscal Year 2015 (NDAA or Act) on Dec. 12, 2014. The NDAA for 2015 creates a new cyber breach reporting requirement affecting Department of Defense (DoD) contractors supporting transportation and logistics in connection with contingency operations.

Section 877 of the Act requires the secretary of defense to establish procedures for reporting cyber incidents experienced by "operationally critical contractors" within 90 days of the Act becoming law. The new procedures must contain an explanation of how DoD will identify operationally critical contractors and how it will notify them of their designation. The NDAA for 2015 defines an operationally critical contractor as a "critical source of supply for airlift, sealift, intermodal transportation services, or logistical support that is essential to the mobilization, deployment, or sustainment of the Armed Forces in a contingency operation." This new class of contractors will therefore include companies, such as commercial airlines or rail or motor carriers, that transport DoD personnel, equipment or supplies, including fuel.

Rapid Reporting of Data Breaches Is Required

Once identified by DoD, an operationally critical contractor must "rapidly" report all cyber incidents affecting its networks or systems. The 2015 NDAA does not further define the term "rapidly." The breach report must include all of the following:

  • an assessment of the effect of the cyber incident on the contractor's ability to meet its contractual requirements
  • the techniques or methods used in the cyber incident
  • a sample of any malicious software to the extent identified
  • a summary of the information compromised by the cyber incident

DoD's new procedures must also contain mechanisms for DoD to assist operationally critical contractors, if requested, to detect and mitigate cyber incursions.

The 2015 NDAA cyber provisions balance DoD's need to know about cyber incursions with protection of contractors' proprietary and sensitive information. The provisions require DoD to implement "reasonable" protections for trade secrets, commercial or financial information, and information that can be used to identify a specific person. In addition, the provisions limit dissemination of information contained in the cyber incident reports to:

  • entities with missions that could be affected by the information
  • entities involved in the diagnosis, detection, or mitigation of cyber incidents
  • entities conducting counterintelligence or law enforcement investigations
  • entities engaged in national security operations

Finally, the Act limits DoD's access to contractor equipment or information to that which is necessary to determine whether and what information created by or for DoD was successfully exfiltrated.

DoD Relies on Contractors for Transportation and Logistics Support

A Senate Armed Services Committee (SASC) Report released earlier this year prompted the new provisions. DoD is heavily reliant on contractors for transportation and logistics support. The 2015 NDAA Committee Report cites the U.S. Cyber Command's estimate that more than 80 percent of DoD logistics are transported by private companies and that private airlines provide more than 90 percent of DoD's passenger movements and one-third of its bulk cargo movements. These companies therefore constitute attractive cyber targets for foreign government and other persistent threats. Yet, despite the importance of the private sector to DoD's ability to mobilize, the SASC Report found that the U.S. Transportation Command (TRANSCOM) was not aware of the vast majority of successful intrusions into its contractors' networks. The new provisions described above are therefore directed at addressing the revealing of those threats and improving the way in which DoD receives, assesses, and disseminates information about successful intrusions into the networks of its mobilization and logistics support contractors.

Private Transportation Companies Need to Follow DoD's Progress on the New Procedures

It is not clear from the Act's language whether DoD will choose to issue the new procedures as an interim final rule, or first propose them and allow for comment from industry. In either case, it is clear that private transportation companies such as airlines or rail or motor carriers supporting DoD may soon find themselves subject to cyber breach reporting and response requirements. These companies should monitor DoD's progress on the new procedures, as well as other DoD cybersecurity requirements, in order to be prepared to comply with the new regulations when they are issued. In that connection, DoD published regulations earlier this year which set forth cybersecurity protections for unclassified controlled technical information (UCTI). Among other requirements, those regulations (Defense Federal Acquisition Regulation Supplement 252.204-7012) contained a 72-hour reporting period. The UCTI regulations may provide a preview into what the logistics/transportation cybersecurity controls will contain.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions