Defense Industrial Base

On March 12, 2024, the Department of Defense (DoD) published a final rule, revising the eligibility criteria for the voluntary DoD Defense Industrial Base (DIB) Cybersecurity (CS) Activities Program.  The intent of the rule is to permit all defense contractors that own or operate unclassified information systems that process, store, or transmit covered defense information to participate in the program.  Previously, only cleared contractors were permitted to participate in the sharing of this information.  The final rule also amends identity proofing requirements by eliminating the need to obtain a medium security certificate to participate in either the voluntary or mandatory reporting regimes.  The rule will take effect on April 11, 2024, and DoD anticipates a significant increase in contractor participation.

Additional information about the rule is outlined below.Continue Reading DoD Expands Contractor Cybersecurity Information Sharing Program

On March 8, 2022, the Department of Justice announced the first settlement of a case under the Civil Cyber-Fraud Initiative.  Established in October 2021, the Initiative aims to utilize the government’s authority under the civil False Claims Act to pursue alleged instances of fraud and misrepresentation concerning cyber practices.  (We previously wrote about the Initiative here.)  The Initiative has been a point of emphasis in DOJ speeches and public comments in recent months.  This settlement is a milestone in the rollout of the program and confirmation that DOJ intends to take allegations of cyber fraud seriously.
Continue Reading First Settlement of DOJ Civil Cyber-Fraud Initiative

On the heels of the FTC’s opposition to Lockheed Martin’s acquisition of Aerojet Rocketdyne and Lockheed’s termination of the deal, the Department of Defense (DoD) released a report expressing concerns about the state of competition among its contractors.  Of particular note, the report encourages DoD action to (1) increase oversight of M&A transactions and (2) obtain greater IP rights in matters involving defense industrial base contractors.  Although the report is light on specifics and identifies objectives that are in some tension with each other, the report is a reminder to companies that the U.S. Government, the single largest purchaser in the country, remains focused on enhancing competition. To that end, we anticipate seeing Executive Branch action in the coming months that seeks to further that policy objective.
Continue Reading DoD Signals Increased Scrutiny of Gov Con M&A and Renewed Interest in Background IP Rights

On February 24, 2021, President Biden signed an Executive Order entitled “Executive Order on America’s Supply Chains” (the “Order”). Among other things, the Order is an initial step toward accomplishing the Biden Administration’s goal of building more resilient American supply chains that avoid shortages of critical products, facilitate investments to maintain America’s competitive edge, and…

It goes without saying that the COVID-19 pandemic has significantly affected the Department of Defense (“DoD”) and the defense industrial base.  And while Congress has taken steps to mitigate these impacts, the sheer scale of the pandemic’s effects pose a continuing challenge to both DoD and its contractors.  Now a group of major defense contractors has submitted a pair of joint letters to the Pentagon and OMB highlighting the need for further action and the risk to the defense industrial base if such actions are not taken.
Continue Reading Defense Contractors Say Section 3610 and Other Contractor Support Measures Require Relief

On Friday January 31, 2020, Ellen Lord, Under Secretary of Defense for Acquisition and Sustainment, Kevin Fahey, Assistant Secretary of Defense for Acquisition, and Katie Arrington, the Chief Information Security Officer for the Department of Defense (“DoD”), briefed reporters on the release of the Cybersecurity Maturity Model Certification (“CMMC”) Version 1.0.  We have discussed draft…

On December 13, the Department of Defense (“DoD”) released the latest version of its Cybersecurity Maturity Model Certification (“CMMC”).  This is the third iteration of the draft model that DoD has publicly released since it issued the first draft in October.  (We previously discussed Version 0.4 and Version 0.6 of the CMMC in prior blog posts.)

DoD describes the CMMC as “a DoD certification process that measures a DIB sector company’s ability to protect FCI [Federal Contract Information] and CUI [Controlled Unclassified Information].”  DoD has stated publicly that it intends to begin incorporating certification requirements into solicitations starting in Fall 2020, with compliance audits beginning in late 2020 or early 2021.  Depending the sensitivity of the information that contractors will receive in the course of performing work for DoD, they will be expected to demonstrate compliance through third party audits with the requirements set forth under one of five certification levels.  This applies even where contractors will not be handling FCI or CUI in the course of performing their contracts.[1]

The two most significant updates to the model in this version of the draft are (i) the addition of “Practices” for obtaining Level 4 and 5 certifications, and (ii) an expansion of “clarifications” section, which now covers the requirements of Levels 2 and 3 of the model, in addition to Level 1.  These changes and others are discussed in more detail below.  Given the expected release in late January 2020, it is likely that the requirements in this draft will closely resemble those that will be set forth in Version 1.0 of the CMMC framework, which is anticipated to serve as the basis for the first contractor audits.Continue Reading DoD Releases Version 0.7 of Its Cybersecurity Maturity Model Certification

On November 7, the Office of the Assistant Secretary of Defense for Acquisition released Version 0.6 of its draft Cybersecurity Maturity Model Certification (CMMC) for public comment. The CMMC was created in response to growing concerns by Congress and within DoD over the increased presence of cyber threats and intrusions aimed at the Defense Industrial Base (DIB) and its supply chains.

The model updates Version 0.4, which DoD released on September 4, 2019, and which we wrote about here. The CMMC establishes the framework necessary for contractors to obtain one of five certification levels necessary to perform work on certain DoD contracts, including those that require the handling of Controlled Unclassified Information. Whereas Version 0.4 merely listed the capabilities, controls, and processes that were expected to apply to each certification level, this version provides some additional discussion and clarification to assist contractors with meeting Level 1 certifications.

DoD has not explicitly asked for comment on this version of the CMMC, and has stated that the updated model is being released “so that the public can review the draft model and begin to prepare for the eventual CMMC roll out.” For this reason, although additional changes are to be expected to the model, contractors should review the general requirements closely to ensure that they are positioned to continue bidding on DoD contracts once DoD begins including a requirement to obtain a specific certification level in Requests for Proposal in Fall 2020.
Continue Reading DoD Releases Version 0.6 of its Cybersecurity Maturity Model Certification

On September 4, the Office of the Assistant Secretary of Defense for Acquisition released Version 0.4 of its draft Cybersecurity Maturity Model Certification (CMMC) for public comment.  The CMMC was created in response to growing concerns by Congress and within DoD over the increased presence of cyber threats and intrusions aimed at the Defense Industrial Base (DIB) and its supply chains.  In its overview briefing for the new model, DoD describes the draft CMMC framework as a “unified cybersecurity standard” for DoD acquisitions that is intended to build upon existing regulations, policy, and memoranda by adding a verification component to cybersecurity protections for safeguarding Controlled Unclassified Information (CUI) within the DIB.  As discussed in a prior post, the model describes the requirements that contractors must meet to qualify for certain maturity certifications, ranging from Level 1 (“Basic Cyber Hygiene” practices and “Performed” processes) through Level 5 (“Advanced / Progressive” practices and “Optimized” processes), with such certification determinations to generally be made by third party auditors.

The CMMC establishes a new framework for defense contractors to become certified as cybersecurity compliant.  DoD has stated that it intends to release Version 1.0 of the CMMC framework in January 2020 and will begin using that version in new DoD solicitations starting in Fall 2020.  Notwithstanding the pendency of these deadlines, a large number of questions remain outstanding.  DoD is seeking feedback on the current version of the model by September 25, 2019.
Continue Reading DoD Releases Public Draft of Cybersecurity Maturity Model Certification and Seeks Industry Input

(This article was originally published in Law360 and has been modified for this blog.)

Peter Navarro, assistant to the president for trade and manufacturing policy, recently offered in a New York Times op-ed that “[a] strong manufacturing base is critical to both economic prosperity and national defense.” The Trump Administration’s maxim that “economic security is national security” is rooted in several government initiatives, ranging from large-scale policy reforms (like renegotiating the North American Free Trade Agreement and strengthening the so-called “Buy American Laws”) to more granular contracting procedures (like the Department of Defense’s proposed changes to commercial item contracting and increased scrutiny of security across all levels of defense supply chains).

Business leaders should therefore pay close attention to the government’s long-awaited interagency assessment of the manufacturing and defense industrial base, available in unclassified form here.  The report was commissioned by Executive Order 13806, which described “[s]trategic support for a vibrant domestic manufacturing sector, a vibrant defense industrial base, and resilient supply chains” as “a significant national priority.”  The Department of Defense served as the lead agency coordinating the report, in partnership with the White House’s Office of Trade and Manufacturing Policy.

Throughout the 140-page report, the Interagency Task Force (the “Task Force”) identifies myriad threats, risks and gaps in the country’s manufacturing and industrial base, and concludes that “[a]ll facets of the manufacturing and defense industrial base are currently under threat, at a time when strategic competitors and revisionist powers appear to be growing in strength and capability.”  To address these concerns, the Task Force lays out a methodology, diagnosis, and framework for policy recommendations and gives the government significant flexibility in crafting responses.  The report recommends – and we expect the President to issue – a follow-on Executive Order directing action on those responses.  That creates an opportunity for industry to participate in shaping the major implementing policies and regulations that are coming. 
Continue Reading “Economic Security Is National Security”: Key Takeaways from the Defense Industrial Base Report