This is the ninth in a series of Covington blogs on implementation of Executive Order 14028, “Improving the Nation’s Cybersecurity,” issued by President Biden on May 12, 2021 (the “Cyber EO”).  The first blog summarized the Cyber EO’s key provisions and timelines, and the secondthirdfourthfifthsixthseventh, and eighth blogs described the actions taken by various government agencies to implement the EO from June through December 2021, respectively.

This blog summarizes key actions taken to implement the Cyber EO during January 2022.  As with steps taken during prior months, the actions described below reflect the implementation of the EO within Government.  However, these activities portend further actions in February 2022 that are likely to impact government contractors, particularly those who provide software products or services to government agencies.

National Security Memorandum Issued on Application of Cyber EO Requirements to National Security Systems

On January 19, 2022, President Biden signed National Security Memorandum-8, “Memorandum on Improving the Cybersecurity of National Security, Department of Defense, and Intelligence Community Systems” (the NSM).  The NSM sets forth requirements for National Security Systems (NSS) that are equivalent to or exceed the cyber requirements for Federal Information Systems set forth in the Cyber EO. The NSM also establishes methods for obtaining exceptions to these requirements for unique mission needs.

Section 1 of the NSM addresses how requirements set forth in the Cyber EO will be applied to NSS.  In general, NSS are systems that involve:  intelligence activities, cryptologic activities related to national security, command and control of military forces, equipment that is an integral part of a weapon or weapons system, or are critical to the direct fulfillment of military or intelligence missions.[1]  The NSM states that Cyber EO Sections 1 (“Policy”) and 2 (“Removing Barriers to Sharing Threat Information”) apply to NSS in their entirety, except that the Director of the National Security Agency (“NSA”) (defined as the “National Manager”) shall exercise with respect to NSS the authorities granted the OMB Director and the Secretary of Homeland Security under Section 2 of the Cyber EO.  This means, among other things, that companies that contract with DOD and other national security agencies and whose performance involves NSS, may be subject to the cyber incident reporting and standard contractual clauses promulgated in the Federal Acquisition Regulation pursuant to section 2 of the Cyber EO.

Section 1 of the NSM also requires the Committee on National Security Systems (CNSS) and the national security/intelligence agencies to take several actions to modernize NSS consistent with Section 3 of the Cyber EO.  For example, the NSM requires all agencies that own or operate NSS to update their existing plans to use cloud technology and to develop plans to implement Zero Trust Architecture by March 18, 2022.  The NSM further requires owners or operators of NSS to implement multifactor authentication and encryption of data-in-transit and data-at-rest on such systems by July 18, 2022.  The NSM also requires NSS owners and operators to adhere to the standards for enhancing software supply chain security developed under section 4 of the Cyber EO except where “otherwise authorized by law” or where the National Manager grants an exception.  Section 3 of the NSM sets forth the procedures and conditions for granting exceptions to NSS from the requirements of the Cyber EO.

In addition to the requirements described above, the NSM requires national security agencies to adhere to a process to be developed by the Director of NSA to identify and then inventory the NSS under their control according by April 19, 2022.  This guidance and inventory will be critical to defining the scope of application of the requirements of the memorandum.

The NSM also requires such agencies to report all known or suspected compromises of or unauthorized access to such NSS to the Director of NSA in accordance with procedures to be developed by the Director of NSA.  The NSM authorizes the Director of NSA to issue Emergency Directives and Binding Operational Directives to NSS owners and operators that are similar to the directives that the Cybersecurity and Infrastructure Security Agency (CISA) is authorized to issue to civilian agencies.

Finally, the NSM requires the CNSS, by no later than April 19, 2022, to deliver a summary of NSS policy creation or adjustment and a timeline for their implementation to the Director of NSA.  This summary shall include any additional items not previously directed to the Director of NSAby the NSM, which presumably could form the basis for a modification or supplement to the NSM.

OMB Issues Its Final Zero Trust Strategy

On January 26, 2022, the Acting OMB Director issued a Memorandum to the heads of Executive Branch departments and agencies that sets forth a final Zero Trust Architecture (ZTA) strategy for such departments and agencies pursuant to Section 3 of the Cyber EO.  The OMB Memorandum explains that “in the current threat environment, the Federal Government can no longer depend on conventional perimeter-based defenses to protect critical systems and data” and that “[a] key tenet of a zero trust architecture is that no network is implicitly considered trusted—a principle that may be at odds with some agencies’ current approach to securing networks and associated systems.”  Instead, the memorandum states that the Federal Government must transition to a “zero-trust approach” to information security, in which “anything and everything attempting to establish access must be verified.”

The OMB Memorandum requires agencies to achieve certain specified zero-trust goals by the end of FY 2024 (Sept. 30, 2024). These goals are based on the zero trust maturity model developed by CISA, which describes five complementary areas of effort (or “pillars”)–Identity, Devices, Networks, Applications and Workloads, and Data–and three themes that cut across these areas–Visibility and Analytics, Automation, and Orchestration.  The OMB Memorandum also directs agencies to take several interim steps prior to Sept. 30, 2024, including designating a ZTA strategy lead for the agency, updating their existing ZTA plans required by the Cyber EO to incorporate the additional requirements identified in the OMB Memorandum, and submitting to OMB and CISA an implementation plan for FY 2022-2024 with a budget estimate for FY 2024. The OMB Memorandum recognizes the costs of these efforts, but advises agencies to “internally source: funding, or to seek alternative funding from working capital funds or the Technology Modernization Fund, as necessary to achieve priority ZTA goals during FY 2022 and 2023.”  Although the Memorandum highlights the need to implement this strategy  to take advantage of the “rich security features present in cloud infrastructure,” it applies to on-premise and hybrid systems.

Implementation of the OMB Memorandum could have significant impact on the operations and information systems of federal agencies and their contractors.  For example, the Memorandum states that Multifactor Authentication (MFA) must be enforced at the application layer rather than the network layer (e.g., a virtual private network). It further requires phishing-resistant approaches to MFA such as the Federal Government’s Personal Identity Verification (PIV) standard or the World Wide Web Consortium’s “Web Authentication” Standard, as well as attribute-based access control, encryption of email traffic, application security testing, automation of security monitoring and enforcement, and encryption of data at rest.  While the OMB Memorandum does not address whether or to what extent agencies should impose ZTA requirements such as these on their contractors (through contract clauses) and subcontractors (by requiring flowdown of such clauses), some agencies may impose some or all of these requirements on their contractors and subcontractors in order to protect the agencies’ NSS.

NIST Issues Draft Report On Integrating Cybersecurity Risk Management Into Enterprise Risk Management and Announces Plan to Update Its Cybersecurity Framework

On January 26, 2022, the National Institute of Standards and Technology (NIST) issued for public comment a draft of NISTR 8286C, “Staging Cybersecurity Risks for Enterprise Risk Management and Governance Oversight.”  This document describes an enterprise risk profile (ERP) that supports the comparison and management of cyber risks along with other risk types. It identifies methods for combining risk information from across the enterprise, including notational examples for aggregating and normalizing the results from cybersecurity risk registers (CSRR), for the purpose of considering risk parameters, criteria, and business impacts. According to the draft document, this integration and normalization of risk information will inform enterprise-level  decision-making and monitoring, thereby helping to create a comprehensive picture of the enterprise’s overarching cyber risk.  Comments on the draft are due by March 11, 2022.

Draft NISTIR 8286C is the last in a series of publications implementing NISTIR 8286, “Integrating Cybersecurity and Enterprise Risk Management.” This series is designed to enable risk practitioners to integrate cybersecurity risk management processes and practices more fully into the broader enterprise risk process, and thereby to give senior management a clear understanding of the enterprise’s cybersecurity risk posture in the context of enterprise risk and strategic objectives.  Once the NISTIR 8286 series of publications become final, NIST intends to combine them into a new Special Publication (SP) 800-222, which will be called “Integrating Cybersecurity Risk Management With Enterprise Risk Management.”

At a virtual NIST event on draft NISTIR 8286C and enterprise risk management, a NIST official stated that NIST plans to issue a Request for Information (RFI) in February 2022 to gather information that it can use to update the Cybersecurity Framework (CSF) that it first published in 2014.  According to this official, the updated CSF (termed CSF 2.0) will incorporate two ongoing NIST supply chain initiatives.  The first of these initiatives consists of the work being done by NIST and other agencies under the Cyber EO to secure the software supply chain.  The second is the “National Initiative for Improving Security in Supply Chains (NIICS) that came out of a White House “Cybersecurity Summit” in August 2021 that the NIST official said is focused on the supply chain risks posed by hardware and firmware used in IT, Operational Technology (OT), and Internet-of-Things (IoT) systems.  NIST is hoping to issue the updated CSF 2.0 sometime in late 2022 or early 2023.

White House Holds Meeting on Open Source Software and DOD Issues Guidance for the Acquisition of Such Software

The White House held a meeting with Government and private sector attendees to discuss methods to improve the security of open source software on January 13, 2022.  As reflected in the public readout, the White House recognized that “[m]ost major software packages include open source software” and that [o]pen source software brings unique value.”  Nonetheless, the fact sheet also reflects that open source software “has unique security challenges, because of its breadth of use and the number of volunteers responsible for its ongoing security maintenance.”  The meeting attendees discussed three areas that are likely to serve as the outline for continued discussions between Government and industry in this area:  (1) preventing security defects and vulnerabilities in code and open source packages, (2) improving the process for finding defects and fixing them, and (3) shortening the response time for distributing and implementing fixes.

Shortly following this meeting, on January 24, 2022 DOD issued its own memorandum on open source software.  The memorandum noted that DOD’s 2018 Cyber Strategy directed DOD to use “secure” open source software and commercial off the shelf products where ever possible.  The memorandum noted however, that there remain concerns over the use of open source software, particularly because it could create a path for adversaries to introduce malicious code into DOD systems and because it could result in the disclosure of key innovations made on behalf of DOD.  To address these concerns, the memorandum outlines guidance for the acquisition of open source software, recommended that DOD officials focus on the relative likelihood that open source software will continue to be maintained by public developers, ensuring that open source software is only obtained from repositories that are trusted, evaluating the dependencies of open source software, including whether the software relies on modules that may be out of date, the relative amount of effort by the community developers to address vulnerabilities (e.g., use of tools, reporting, testing, etc.), whether the project maintains cryptographically protected integrity verification for released code, and what reviews may have taken place to mitigate the risk of influence by a foreign government actor.  The memorandum highlights that updates to the Defense Federal Acquisition Regulation Supplement are forthcoming to include specific guidance in DOD’s contracting regulations.

[1] This includes those systems defined as NSS in 44 U.S.C. 3552(b)(6) as well as all other Department of Defense and Intelligence Community systems, as described in 44 U.S.C. 3553(e)(2) and 3553(e)(3).

Robert Huffman

Bob Huffman represents defense, health care, and other companies in contract matters and in disputes with the federal government and other contractors. He focuses his practice on False Claims Act qui tam investigations and litigation, cybersecurity and supply chain security counseling and compliance…

Bob Huffman represents defense, health care, and other companies in contract matters and in disputes with the federal government and other contractors. He focuses his practice on False Claims Act qui tam investigations and litigation, cybersecurity and supply chain security counseling and compliance, contract claims and disputes, and intellectual property (IP) matters related to U.S. government contracts.

Bob has leading expertise advising companies that are defending against investigations, prosecutions, and civil suits alleging procurement fraud and false claims. He has represented clients in more than a dozen False Claims Act qui tam suits. He also represents clients in connection with parallel criminal proceedings and suspension and debarment.

Bob also regularly counsels clients on government contracting supply chain compliance issues, including cybersecurity, the Buy American Act/Trade Agreements Act (BAA/TAA), and counterfeit parts requirements. He also has extensive experience litigating contract and related issues before the Court of Federal Claims, the Armed Services Board of Contract Appeals, federal district courts, the Federal Circuit, and other federal appellate courts.

In addition, Bob advises government contractors on rules relating to IP, including government patent rights, technical data rights, rights in computer software, and the rules applicable to IP in the acquisition of commercial items and services. He handles IP matters involving government contracts, grants, Cooperative Research and Development Agreements (CRADAs), and Other Transaction Agreements (OTAs).

Susan B. Cassidy

Ms. Cassidy represents clients in the defense, intelligence, and information technologies sectors.  She works with clients to navigate the complex rules and regulations that govern federal procurement and her practice includes both counseling and litigation components.  Ms. Cassidy conducts internal investigations for government…

Ms. Cassidy represents clients in the defense, intelligence, and information technologies sectors.  She works with clients to navigate the complex rules and regulations that govern federal procurement and her practice includes both counseling and litigation components.  Ms. Cassidy conducts internal investigations for government contractors and represents her clients before the Defense Contract Audit Agency (DCAA), Inspectors General (IG), and the Department of Justice with regard to those investigations.  From 2008 to 2012, Ms. Cassidy served as in-house counsel at Northrop Grumman Corporation, one of the world’s largest defense contractors, supporting both defense and intelligence programs. Previously, Ms. Cassidy held an in-house position with Motorola Inc., leading a team of lawyers supporting sales of commercial communications products and services to US government defense and civilian agencies. Prior to going in-house, Ms. Cassidy was a litigation and government contracts partner in an international law firm headquartered in Washington, DC.

Photo of Michael Wagner Michael Wagner

Mike Wagner helps government contractors navigate high-stakes enforcement matters and complex regulatory regimes.

Combining deep regulatory knowledge with extensive investigations experience, Mr. Wagner works closely with contractors across a range of industries to achieve the efficient resolution of regulatory enforcement actions and government…

Mike Wagner helps government contractors navigate high-stakes enforcement matters and complex regulatory regimes.

Combining deep regulatory knowledge with extensive investigations experience, Mr. Wagner works closely with contractors across a range of industries to achieve the efficient resolution of regulatory enforcement actions and government investigations, including False Claims Act cases. He has particular expertise representing individuals and companies in suspension and debarment proceedings, and he has successfully resolved numerous such matters at both the agency and district court level. He also routinely conducts internal investigations of potential compliance issues and advises clients on voluntary and mandatory disclosures to federal agencies.

In his contract disputes and advisory work, Mr. Wagner helps government contractors resolve complex issues arising at all stages of the public procurement process. As lead counsel, he has successfully litigated disputes at the Armed Services Board of Contract Appeals, and he regularly assists contractors in preparing and pursuing contract claims. In his counseling practice, Mr. Wagner advises clients on best practices for managing a host of compliance obligations, including domestic sourcing requirements under the Buy American Act and Trade Agreements Act, safeguarding and reporting requirements under cybersecurity regulations, and pricing obligations under the GSA Schedules program. And he routinely assists contractors in navigating issues and disputes that arise during negotiations over teaming agreements and subcontracts.

Photo of Ryan Burnette Ryan Burnette

Ryan Burnette advises clients on a range of issues related to government contracting. Mr. Burnette has particular experience with helping companies navigate mergers and acquisitions, FAR and DFARS compliance issues, public policy matters, government investigations, and issues involving government cost accounting and the…

Ryan Burnette advises clients on a range of issues related to government contracting. Mr. Burnette has particular experience with helping companies navigate mergers and acquisitions, FAR and DFARS compliance issues, public policy matters, government investigations, and issues involving government cost accounting and the Cost Accounting Standards.  Prior to joining Covington, Mr. Burnette served in the Office of Federal Procurement Policy in the Executive Office of the President, where he worked on government-wide contracting regulations and administrative actions affecting more than $400 billion dollars’ worth of goods and services each year.