United States: GSA Plans To Formalize Cybersecurity Rule For Contractors

The General Services Administration's (GSA) newest regulatory agenda includes a plan to formalize cybersecurity rules for its government contractors. The anticipated proposed rule will impact a significant number of government contractors. Indeed, as recently as fiscal year 2016, 18,313 entities held GSA Schedules and received over $45 billion from government agencies. The GSA's anticipated action follows years of an increased effort by the US Government to impose cybersecurity safeguard requirements on contractors, something this Advisory briefly summarizes below. Moreover, GSA rulemaking on this issue may create momentum to promulgate a Federal Acquisition Regulation (FAR) rule to standardize the designation and treatment of Controlled Unclassified Information (CUI) as required by the National Archives and Record Administration (NARA) in its September 2016 final rule. This rule, among other things, provides that the National Institute of Standards and Technology (NIST) Special Publication (SP) 800-171, "Protecting Controlled Unclassified Information Systems and Organizations," establishes the requirements for contractors to protect CUI. Not only does the GSA regulatory agenda specifically reference NIST SP 800-171 as part of the substantive requirements in its anticipated proposed rule, but a forthcoming FAR rule would also likely incorporate the NIST requirement.

GSA's regulatory plan envisions an update to the General Services Administration Acquisition Regulation (GSAR) that requires contractors to:

  • Protect the confidentiality, integrity, and availability of unclassified GSA information and information systems from cybersecurity threats and vulnerabilities; and
  • Report cyber incidents that could potentially affect GSA or its customer agencies.
  • The GSA will initiate a formal rulemaking process later in 2018, which will provide a formal public comments period for each proposed new rule.

Background and Current Cybersecurity Requirements

The stated mission of the GSA is to deliver the best value in real estate, acquisition, and technology services to the government and the American people. To do so, GSA plays the role of the centralized procurement arm for the federal government. GSA already imposes cybersecurity requirements on its contractors. For example, as of July 31, 2017, GSA issued an order requiring that contractors responsible for managing Personally Identifiable Information (PII) and with access to federal information report all "suspected or confirmed breaches" of PII.

The current GSAR makes contractors "responsible for information technology (IT) security, based on . . . GSA risk assessments, for all systems connected to a GSA network or operated by the Contractor for GSA, regardless of location."

1 Other requirements include the submission of an IT Security Plan to the Contracting Officer. The IT Security Plan must currently "describe the processes and procedures that will be followed to ensure appropriate security of IT resources" developed and used for each particular contract. In addition, GSA contractors are required to develop a continuous IT monitoring strategy that includes: (1) A configuration management process for the information system and its constituent components; (2) A determination of the security impact of changes to the information system and environment of operation; (3) Ongoing security control assessments in accordance with the organizational continuous monitoring strategy; (4) Reporting the security state of the information system to appropriate GSA officials; and compliance with NIST SP 800-37 Revision 1, Guide for Applying the Risk Management Framework to Federal Information Systems: A Security Life Cycle Approach.

Proposed Cybersecurity Requirements

GSA's current regulatory agenda states that it intends to expand the scope of current cybersecurity requirements on contractors by promulgating two new regulations.

First, GSA intends to propose a rule regarding Information and Information Systems Security that updates GSAR 552-239-70, Information Technology Security Plan and Security Authorization, and GSAR 552.239-71, Security Requirements for Unclassified Information Technology Resources. GSA envisions that the updated rule will "mandate contractors protect the confidentiality, integrity, and availability of unclassified GSA information and information systems from cybersecurity vulnerabilities and threats." This updated rule would likely flow-down to the contractor compliance requirements with the Federal Information Security Modernization Act of 2014.

GSA has also said that this new rule will require that Contracting Officers include the applicable GSA cybersecurity requirements in statements of work in order to ensure compliance. In addition, the new rule may require that statements of work incorporate best practices for preventing cyber incidents. Finally, GSA's regulatory agenda demonstrates an intent to expand cybersecurity requirements to a contractor's internal systems, external systems, cloud systems, and mobile systems. Such an expanded mandate could require significant investment and overhaul of a contractor's current IT environment. We expect the public comment period to open in April 2018 and close in June 2018.

Second, GSA intends to propose a rule regarding Cyber Incident Reporting to update GSA Order CIO 9297.2 and to incorporate the order into the GSAR. As mentioned above, this order requires contractors to report all "suspected or confirmed breaches" of PII whether in electronic or physical form. But this proposed rule will likely expand cyber incident reporting to situations beyond breaches involving PII. For instance, GSA said that the proposed rule will require contractors to report any cyber incident where the confidentiality, integrity, or availability of GSA information or information systems are potentially compromised, or where the confidentiality, integrity, or availability of information or information systems owned or managed by or on behalf of the US Government is potentially compromised. Such a proposed rule for GSA contractors would expand the scope of cyber incidents that require notification. The proposed Cyber Incident Reporting will also likely include authority for the government to access a contractor's information systems after a cyber incident. Other expected requirements include:

  • That contractors preserve images of infected or breached systems and may require mandatory employee training regarding cybersecurity.
  • A cyber incident reporting clause in all GSA contracts and those orders placed against GSA multiple award contracts.
  • A timetable for reporting cyber incidents.
  • A delineation of roles and responsibilities regarding cyber incident reporting among GSA contracting officers, contractors, and the agencies ordering from a GSA contract.
  • Rules regarding how the government will protect attributional and a contractor's proprietary information provided in a cyber incident report.

GSA has indicated that the public comments period will open in August 2018 and close in October 2018.

These anticipated proposed rules would augment current cybersecurity rules already in place for government contractors. Moreover, current cybersecurity rules indicate potential requirements that GSA may likewise impose. For instance, where a contractor or subcontractor may have Federal Contract Information (FCI) residing in or transiting through its information system, then Federal Acquisition Regulation 52.204-21 requires the contracting officer to insert the Basic Safeguarding of Covered Contractor Information Systems clause. This clause is meant to protect "federal contract information," which the FAR defines as "information, not intended for public release, that is provided by or generated for the Government under the contract to develop or deliver a product or service to the Government, but not including information provided by the Government to the public."

If applicable, the clause requires that the contractor and subcontractor apply 15 basic safeguarding requirements and procedures to protect the covered information systems. These requirements include, but are not limited to limiting access to authorized users, limiting the functions of authorized users, authenticating or verifying users and devices prior to granting access to an information system, destroying FCI media prior to disposal, controlling physical access to information system equipment, monitoring and controlling organizational communications at the boundaries of the covered information system, and maintaining virus protections, and performing of periodic network scans. Using these requirements as a touchstone, GSA could implement similar security requirements on GSA contractors.

Department of Defense FAR Supplement (DFARS) clause 252.204-7012, titled Safeguarding Covered Defense Information and Cyber Incident Reporting, also outlines certain cybersecurity requirements that GSA may find relevant.

2 For example, DFARS 7012 requires that contractors provide "adequate security." This includes any network operated on behalf of the Government, including cloud-based services and any other IT system. Further, DFARS 7012 incorporates the security requirements listed in NIST SP 800-171. We have written an advisory on the NIST requirements here. Finally, DFARS 7012 also imposes a mandatory cyber incident reporting requirement, similar to the one GSA anticipates to include in its proposed rule. Under the DFARS rules, after discovery of a cyber incident, contractors must review for evidence of compromised covered defense information, must preserve and protect images of all known affected systems, and if requested provide the Department of Defense with access to information.

These current rules provide guideposts on how GSA may draft its proposed cybersecurity rules. Contractors should begin compiling their compliance lessons learned from DFARS 7012, NIST SP 800-171, and FAR 52.204-21, so that lessons learned can be incorporated into comments to the proposed new rules.

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.

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