What you Need to Know About the NIST RegulationsWhat are these regulations for defense contractors I’m hearing about?The Department of Defense, in conjunction with various federal agencies, have implemented an entirely new approach for safeguarding data. This approach is designed for government contractors. It instructs them as to how they should:Safeguard special kinds of data that exist throughout the contract fulfillment processReport breaches of their systems to the DoDFix any shortfalls in the security of their systemsIf you hold a contract with the DoD, or are fulfilling part of that contract on behalf of another contracting agency, these regulations apply to you. How will the federal government enforce and monitor these regulations?The federal government is coming at this from several angles, including:New DFARS clauses in your contractsNew laws that govern liability protections for government contractorsNew rules for how quickly you must report breaches to the DoDA written standard for security practices in your organizationThese new mechanisms went into effect on December 31st, 2018. If you are pursuing a DoD contract, you will need to meet these regulations before it can be granted. How are these federal enforcement strategies related?Here’s the best way to think of it: the contract clauses determine the standard you must follow. The standards (defined in the DFARS clauses) require that certain proofs of compliance or timely reports be submitted to your contracting officer, prime contractor, and/or the DoD CIO. Not following those standards can result in liability protections (afforded to you as a federal contractor) being lifted, which would expose you to criminal, civil, or administrative action. What DFARS clauses can I expect to find in my contracts?The presence of certain Defense and Federal Acquisition Regulation Supplement (DFARS) clauses in your contracts inform you that you must indeed follow these new procedures as a defense contractor.Some of the most common are:DFARS 252.204-7008: By submitting a bid for this contract, you are committing to implement a new data security standard (NIST Special Publication 800-171, “Protecting Controlled Unclassified Information in Nonfederal Systems and Organizations”) within 30 days of being awarded the contract.DFARS 252.204-7009: The controlled data you receive from the government can only be used for government contracting purposes. You must also make sure that your subcontractors understand and agree to this restriction.DFARS 252.239-7009: You must tell the federal government if you plan on using cloud computing while fulfilling the contract.DFARS 252.204-7012: This is the big clause. If this clause is found in your contract, then you must do the following:Adhere to all of the requirements found in NIST SP800-171 within 30 days of being awarded the contract.If you cannot meet a particular requirement in NIST SP800-171, you must request permission to vary from the standard. This request is submitted to your contracting officer and the DoD CIO.Any cloud services used to fulfill this contract must meet security requirements equivalent to those found in FedRAMP certifications for cloud service providers. These cloud providers must also follow the security and reporting guidelines found in this clause.You must report any cyber incidents to the DoD within 72 hours, using a medium assurance certificate for encrypted communications. You must also cooperate with the DoD in their investigation of the incident.You must enforce similar strategies amongst your own subcontractors, gaining approval for their organizations to vary from the NIST SP800-171 standards, and making sure that cyber incidents are properly reported. If these went into effect on December 31, 2017, why am I only hearing about them now?If you haven’t filled any contracts with the DoD since that time, it’s no surprise these requirements are new to you. Many prime contractors have been relying on blanket terms and conditions statements for years, and haven’t always communicated these new requirements clearly. Most of the information surrounding these clauses are written into the original sources sought statements and solicitations that your prime contractors reviewed when gaining their prime contract.Many of these new DFARS contract clauses are already being written into contracts by various federal agencies. Depending on how well these new clauses have been communicated to you by your contracting officer or prime contractor, you may not be aware of which clauses are in contracts that you are already fulfilling. How do I show that I’m compliant?Some prime contractors are asking for proof of compliance before you can bid on new contracts. The federal government (and contracting officers) are requiring proof of compliance within 30 days of contract award.Proof of compliance consists of three key documents:A system security plan. This document outlines the systems in your organization that collect, store, and transmit CUI. It will also show (usually as a diagram), how all those systems interconnect, and what their boundaries are. Finally, the document will contain an item-by-item list of all 110 NIST SP800-171 requirements, and a statement regarding your compliance with that requirement.A plan of action and milestones. For any areas where your organization is not compliant, you will describe how you will become compliant, or whether particular standards don’t apply to you. It’s important to note that you can still receive contract awards without being fully compliant, provided that your contracting officer accepts your plan of action, and the DoD CIO accepts any variances from the compliance standards.An incident response plan. This document will demonstrate that your organization has the ability to detect, mitigate, and report a cyber-incident to the DoD within the 72-hour timeline required by the DFARS clauses. What happens if I’m not compliant?If you receive a contract award, and are unable to prove compliance within 30 days, you will lose your award.If you fail to report cyber incidents to the DoD in a timely manner, or if upon further investigation the DoD discover malfeasance on your part in safeguarding controlled data, you will lose all liability protections that may apply to your business, and be subject to legal action by any number of federal agencies, or your prime contractors. What kind of commitment is required to meet this standard?The primary commitment of any organization meeting these compliance standards will be the time spent by their personnel. Even with the help of professionals, the organization will need to provide executive sponsorship, a team of operations, HR, and IT professionals, and must work towards a thorough understanding of the standards outlined in DFARS clauses.From a financial perspective; the costs of becoming compliant will vary greatly. Most small businesses we’ve met with have spent between $60,000 and $100,000 to become compliant. We’ve also helped some very small contractors achieve compliance for under $10,000, with ongoing costs of only a few thousand dollars per year.The costs associated with becoming compliant scale based on several factors:The size and complexity of the organizationThe number of systems that collect, store, and transmit CUIAny previous compliance efforts (ISO, ITAR, etc) which have accustomed the organization to compliance effortsThe presence of key technology investments (such as a domain network, strong Active Directory design, a next-generation firewall, etc) which can be adjusted, rather than replacedWritten policies, procedures, and response plansUltimately, an organization needs to make a long-term commitment to meet these standards, and to incorporate strong security practices into their culture. What should my next steps be?The first thing you should determine is whether you even want to fulfill defense contracts. Many organizations began government contracting as a way to diversify their revenue streams. That’s still a valid reason, but companies need to decide if they’re in a position to dedicate the time and resources towards meeting the standards that are defined in these clauses, and still be profitable.Next, you should map the presence of CUI in your organization, and determine how many of your systems, applications, and users are involved in processes that contain CUI. This will help you to understand whether CUI is pervasive throughout your organization, or whether it is contained within a few systems or user groups.Once you have a scope of CUI-related environments, you can decide whether you should apply the new standards to a controlled subset of your business, or across the entire organization. Understanding the “scope of standards” will allow you to scale your expectations for the commitment of time and resources required to continue government contracting.Brightline can assist with these steps, by providing information regarding DFARS, DFARS clauses, and the NIST SP800-171 standard. We can also apply our experience in meeting the NIST 800-171 requirements for cybersecurity to your business, and shorten the overall process for becoming compliant. Finally, we can assemble and organize the proper information necessary for submitting key documentation to the DoD, contracting officers, and prime contractors. Need to Print and Save For Later?Just download and print this FAQ for your later needs.Name*Email* CommentsThis field is for validation purposes and should be left unchanged. Contact Us to Learn MoreHave questions? We have answers.Name*Email* PhoneCommentsThis field is for validation purposes and should be left unchanged.