Workplace Privacy, Data Management & Security Report : Privacy Lawyers & Attorneys : Jackson Lewis Law Firm : Data Security, HIPAA & Confidentiality Issues

Prepared by Lillian Moon

The U.S. Department of Defense (DOD), General Services Administration (GSA) and National Aeronautics and Space Administration (NASA) on August 24, 2012, proposed amendments to the Federal Acquisition Regulation - the rules governing the process through which the government purchases goods and services - addressing data security.

In short, the proposed rule would add a required contract clause for federal contractors to “address requirements for the basic safeguarding of contractor information systems” containing or processing government information. DoD, GSA, and NASA all recognize that an outgrowth of the requirements for Federal agencies to provide information security for information and information systems that support agency operations and assets, as set forth under the Federal Information Security Management Act (FISMA) of 2002, includes the information and information systems managed by contractors.

The rule would apply to information provided by or generated for the Government that will be contained in or processed through a contractor’s or subcontractor’s information system. Basic safeguarding of such systems would include:

• Protecting information on public computers or web sites;
• Transmitting electronic information using technology and processes that provide the best level of security and privacy;
• Transmitting voice and fax information only with reasonable assurances that access is limited to authorized recipients;
• Protect information by at least one physical or electronic barrier;
• Sanitize media in accordance with the National Institute of Standards and Technology (NIST) before external release or disposal;
• Provide protection against computer intrusions and the unauthorized release of data including current and regularly updated malware protection services and security-relevant software upgrades.

Additionally, contractors would be required to include the substance of the contract clause in all subcontracts for subcontractors who may have information subject to the rule residing in or transiting through the subcontractors' information systems.

Federal contractors will need to reevaluate their information systems and written information security programs (WISPs) if this rule is made final and such provisions are added to their contracts.
 

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On December 18, 2010 President Obama signed into law the Social Security Number Protection Act of 2010. The law has two key components. 

First, the law establishes that no Federal, State, or local agency may display the Social Security account number of any individuals or any derivative of such number, on any check issued for payment by said agency. 

Second, the law prohibits Federal, State, or local agencies from employing, or entering into a contract for the use or employment of, prisoners in any capacity that would allow such prisoners access to the Social Security account numbers of other individuals. 

As employers have been grappling with the recent uptick in state laws addressing safeguards for Social Security numbers, this new law tightens protections at the federal level.   Additionally, federal contractors may need to consider how this change impacts their other obligations under the Federal Information Security Management Act.

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Federal contractors are subject to numerous requirements under federal law and, as we have previously highlighted here, need to keep pace with changes in law and regulation. 

Under the Federal Information Security Management Act of 2002 (FISMA) each federal agency is required to develop, document, and implement an agency-wide program to provide information security for the information and information systems that support the operations and assets of the agency, including those provided or managed by another agency, contractor, or other source. Accordingly, FISMA provides authority for the imposition of requirements on those companies which qualify as federal contractors. 

By way of example, the Centers for Medicare and Medicaid Services (CMS), as well as the Department of Veterans Affairs impose specific requirements on their contractors.   

Adding new data protection requirements for federal contractors who use or handle U.S. Department of Defense (DOD) information, the DOD earlier this year issued an advanced notice of proposed rulemaking regarding amendments, 75 F.R. 9563, to the Defense Federal Acquisition Regulation Supplement (DFARS). 

The proposed amendments require “adequate security,” defined as “protection measures … commensurate with the risks of loss, misuse, or unauthorized access to or modification of information,” and have three main subparts; basic safeguarding, enhanced safeguarding, and cyber intrusion reporting. 

Basic safeguards, required for any unclassified DOD information, include:

• Designating  the level of access and dissemination of informationProtecting DOD information on public computer or Web sites
• Transmitting electronic information using technology and processes that provide the best level of security and privacy
• Transmitting voice and fax information on with reasonable assurances that access is limited
• Protect information by at least one physical or electronic barrier
• Sanitize media in accordance with the National Institute of Standards and Technology (NIST) before external release or disposal
• Provide protection against computer intrusions and the unauthorized release of data. 

In addition to the basic safeguards outlined above, contractors are required to implement enhanced safeguards to certain types of data. The enhanced safeguards include:

• Encryption/Storage controls
• Network intrusion protection
• Implement information security controls

Additionally, a reporting requirement has now been proposed, requiring contractors to report to the DOD within 72 hours of any cyber intrusion event that affects DOD information resident on or transiting the contractor’s unclassified information systems.

The new proposed DOD amendments, along with the various other federal contractor requirements, including those imposed by CMS and the Department of Veterans Affairs, highlight the necessity for companies that qualify as federal contractors to be up to date on their legal obligations or risk loss of their federal contractor status. 

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