VA Acquisition Regulation: Acquisition of Information Technology; and Other Contracts for Goods and Services Involving Information, VA Sensitive Information, and Information Security; and Liquidated Damages Requirements for Data Breach, 4739-4756 [2023-00586]

Agencies

• DEPARTMENT OF VETERANS AFFAIRS

[Federal Register Volume 88, Number 16 (Wednesday, January 25, 2023)]
[Rules and Regulations]
[Pages 4739-4756]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-00586]


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DEPARTMENT OF VETERANS AFFAIRS

48 CFR Parts 802, 804, 811, 812, 824, 839, and 852

RIN 2900-AQ41


VA Acquisition Regulation: Acquisition of Information Technology; 
and Other Contracts for Goods and Services Involving Information, VA 
Sensitive Information, and Information Security; and Liquidated Damages 
Requirements for Data Breach

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

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SUMMARY: The Department of Veterans Affairs (VA) is issuing a final 
rule amending the VA Acquisition Regulation (VAAR). This rulemaking 
revises the VAAR by adding a part covering Acquisition of Information 
Technology and revising coverage concerning Other Contracts for Goods 
and Services involving mandatory information, privacy, and security 
requirements to include policy concerning VA sensitive personal 
information, information security, and liquidated damages requirements 
for data breach in the following parts: Administrative and Information 
Matters; Describing Agency Needs; Protection of Privacy and Freedom of 
Information; as well as Acquisition of Commercial Products and 
Commercial Services. It also revises affected parts concerning 
Definitions of Words and Terms, and Solicitation Provisions and 
Contract Clauses.

DATES: Effective February 24, 2023.

FOR FURTHER INFORMATION CONTACT: Ms. Glacia A. Holbert, Senior 
Procurement Analyst, Procurement Policy and Warrant Management 
Services, 003A2A, 810 Vermont Avenue NW, Washington, DC 20420, (202) 
697-3614. (This is not a toll-free number.)

SUPPLEMENTARY INFORMATION: 

Background

    VA published a proposed rule in the Federal Register at 86 FR 64132 
on November 17, 2021, to amend the VAAR to implement and supplement the 
Federal Acquisition Regulation (FAR). VA provided a 60-day comment 
period for the public to respond to the proposed rule and submit 
comments. The public comment period closed on January 18, 2022. VA 
received ten comments from two respondents.
    This rulemaking is issued under the authority of the Office of 
Federal Procurement Policy (OFPP) Act which provides the authority for 
an agency head to issue agency acquisition regulations that implement 
or supplement the FAR.
    The VAAR has been revised to add new policy or regulatory 
requirements, to update existing policy, and to remove any redundant 
guidance where it may exist in affected parts, and to place guidance 
that is applicable only to VA's internal operating processes or 
procedures in the VA Acquisition Manual (VAAM).
    This rule adopts as a final rule the proposed rule published in the 
Federal Register on November 17, 2021, except for revisions to respond 
to the public comments as discussed below, and other technical non-
substantive changes to update terminology in accordance with FAR final 
rules and other minor administrative amendments as shown below.

Discussion and Analysis of Public Comments

    The first respondent references two VA information technology and 
security publications and observed that as the field of technology 
grows, fraudulent activity rises and notes that the proposed rule 
provides a layer of uniform security. The respondent goes on to note 
that liquidated damages are instrumental.
    VA appreciates the comment on the proposed rule. One of the VA 
Acquisition Regulation rewrite project objectives is to incorporate any 
new agency-specific regulations or policies to implement statutory and 
other requirements, to ensure VA can effectively execute its mission to 
serve Veterans. VA believes the regulation appropriately implements 
specific liquidated damages statutory requirements in the event of a 
data breach. The comments do not require the VA to make any revisions 
to the proposed rule. Therefore, VA is taking no action to revise the 
proposed rule based on these comments.
    Another respondent recommends revising the proposed notification 
and reporting of security and privacy incidents from ``within 1 hour of 
discovery to the contracting officer'' to ``notification of within 24 
hours of identification'' as being a more reasonable timeline.

[[Page 4740]]

    VA appreciates the comment and has considered the respondent's 
suggestion. VA is required to ensure immediate notification in the 
event of discovery so that action can be initiated. VA has determined 
that waiting until 24 hours vs. the originally specified ``within 1 
hour of discovery'' as set forth in the rule would potentially put 
Veteran's data at further risk. The one-hour notification requirement 
is consistent with existing VA policy that all contractors must 
currently comply with. In order to ensure VA continues to protect 
Veteran's data, the current reporting requirement is necessary. 
Therefore, VA is taking no action to revise the proposed rule based on 
these comments.
    The same respondent requests that VA elaborate on the liquidated 
damages that are proposed for contracts that will be subject to the 
clause. The respondent asked, ``How will such damages be assessed and 
enforced and is there potential for mitigation of any such damages?''
    As stated in the preamble of the proposed rule, the VA Secretary is 
required by statute (38 U.S.C. 5725(a)-(c)) to ensure that if a 
contract is entered into for the performance of any Department function 
that requires access to sensitive personal information that VA shall 
include, as a condition of the contract, that a contractor shall not, 
directly or through an affiliate of the contractor, disclose such 
information to any other person unless the disclosure is lawful and is 
expressly permitted under the contract. This statute also requires that 
each such contract be subject to liquidated damages to be paid by the 
contractor to VA in the event of a data breach of any sensitive 
personal information processed or maintained by the contractor or any 
subcontractor under the contract. The liquidated damages collected will 
be used for the purpose of VA providing credit protection services. The 
clause that sets forth the requirement is found in the proposed rule at 
section 852.211-76, Liquidated Damages--Reimbursement for Data Breach 
Costs. The clause states that if the contractor or any of its agents 
fails to protect VA sensitive personal information or otherwise engages 
in conduct which results in a data breach, the contractor shall, in 
place of actual damages, pay to the Government liquidated damages of 
[Contracting Officer inserts amount] per affected individual in order 
to cover costs related to the notification, data breach analysis and 
credit monitoring. The amount to be inserted by the contracting officer 
will be set forth in VA internal policy as the amount may change each 
year and would be inserted in the clause prior to contract award so 
contractors subject to the clause are aware. As stated in the clause, 
in the event the contractor provides payment of actual damages in an 
amount determined to be adequate by the contracting officer, the 
contracting officer may forgo collection of liquidated damages. Each 
situation will be handled by the contracting officer on a case-by-case 
basis under the terms and conditions of the clause as set forth in each 
contract.
    The comments do not require VA to make any revisions to the 
proposed rule. Therefore, VA is taking no action to revise the rule 
based on these comments.
    The respondent asks whether a contractor may defer to their own 
internal annual training programs already in place versus using VA 
furnished content.
    VA has considered the respondent's request to permit a contractor 
to use their own training in lieu of VA-specific training. However, to 
comply with Federal policy and requirements, VA implementing directives 
and policy require VA organizational users (to include contractors, 
employees, subcontractors, and associates) and nonorganizational users 
to adhere to prescribed VA Privacy and Information Security Awareness 
and Rules of Behavior training. This training is the same training VA 
employees are required to take. Therefore, all contractors, contractor 
employees, subcontractors and associates are required to take the VA 
specific training and submit certificates when required by the contract 
where access to VA information, information systems, and VA sensitive 
information is required as set forth in the applicable clause(s) that 
are inserted in solicitations and contracts. The training is specific 
to VA requirements in order to protect VA information, VA sensitive 
information and VA information systems.
    Therefore, VA is making no changes to the proposed rule as a result 
of this comment.
    The respondent also requests VA provide more specific requirements 
for background screening.
    Separately, specific requirements for background screening are set 
forth as applicable in each solicitation and contract. As this question 
is outside the scope of this proposed rule, VA is making no changes to 
the rule as a result of this comment.
    The respondent asks if the definition of the initiation of a 
Business Associate Agreement (BAA) criteria differ from the HHS 
language?
    To address the inquiry regarding the definition, VA refers the 
respondent to the definition of ``Business Associate Agreement (BAA)'' 
as set forth at VAAR 802.101. A Business Associate Agreement (BAA) 
means the agreement, as dictated by the Health Insurance Portability 
and Accountability Act of 1996 (HIAPA) Privacy Rule (45 CFR part 160), 
between the Veterans Health Administration (VHA) and a business 
associate, which must be entered into in addition to the underlying 
contract for services and before any release of protected health 
information (PHI) can be made to the business associate, in order for 
the business associate to perform certain functions or activities on 
behalf of VHA. VA applies the criteria as set forth in the HIPAA 
Privacy Rule.
    In VAAR section 824.103-70, Protection of privacy--general 
requirements and procedures related to Business Associate Agreements, 
VA policy states that to ensure compliance with unique responsibilities 
to protect PHI, contractors performing under VA contracts subject to 
unique PHI and HIPAA shall comply with requirements and the clause 
prescribed at section 804.1903, 852.204-71, Information and Information 
Systems Security.
    The respondent also inquires whether VA will require BAAs to be 
executed in exclusive support of this contract and held separate from 
the support of other organizational business?
    To address the inquiry regarding the definition, VA refers the 
respondent to the definition of ``Business Associate Agreement (BAA)'' 
as set forth at VAAR section 802.101. A BAA means the agreement, as 
dictated by the HIPAA Privacy Rule (45 CFR part 160), between VHA and a 
business associate, which must be entered into in addition to the 
underlying contract for services and before any release of protected 
health information (PHI) can be made to the business associate, in 
order for the business associate to perform certain functions or 
activities on behalf of VHA. VA applies the criteria as set forth in 
the HIPAA Privacy Rule.
    In VAAR section 824.103-70, Protection of privacy--general 
requirements and procedures related to Business Associate Agreements, 
VA policy states that to ensure compliance with unique responsibilities 
to protect protected health information PHI, contractors performing 
under VA contracts subject to unique PHI and HIPAA shall comply with 
requirements and the clause prescribed at section 804.1903, 852.204-71, 
Information and Information Systems Security.

[[Page 4741]]

    To address the respondent's second inquiry whether VA will require 
BAAs to be executed in exclusive support of a contract, as stated at 
VAAR section 824.103-70 of the rule, paragraph (a), which describes 
HIPAA Business Associate Agreement requirements, providing that, under 
the HIPAA Privacy and Security Rules (see 45 CFR part 160), a covered 
entity (VHA) must have a satisfactory assurance that its protected 
health information will be safeguarded from misuse. To do so, a covered 
entity enters into a BAA with a contractor (now the business 
associate), which obligates the business associate to only use the 
covered entity's PHI for the purposes for which it was engaged, provide 
the same protections and safeguards as is required from the covered 
entity, and agree to the same disclosure restrictions to PHI that is 
required of the covered entity. This specific VA requirement is in 
concert with the specified HIPAA Privacy Rule (see 45 CFR part 160).
    The public is also invited to see VA Directive 6066, Protected 
Health Information (PHI) and Business Associate Agreements Management, 
as referenced at paragraph (c). Contractors will be required to execute 
BAAs as required by the contract. Contractors should contact the 
cognizant contracting officer and contracting officer's representative, 
as required, for questions regarding BAAs which may have previously 
been executed and filed with the VHA (the only administration of the 
Department of Veterans Affairs that is a HIPAA covered entity under the 
HIPAA Privacy Rule).
    The comments do not require the VA to make any revisions to the 
proposed rule. Therefore, VA is taking no action to revise the rule 
based on these comments.
    The respondent requests that VA elaborate on the details of what 
would be expected to be included in the Information Technology Security 
Plan.
    VA has considered the respondent's comment and is slightly editing 
the clause at 852.239-70, Security Requirements for Information 
Technology Resources, to ensure the requirement for a plan is 
understood by revising the title of the plan and its use, including in 
the clause at 852.239-73, Information System Hosting, Operation, 
Maintenance, or Use, both prescribed in VAAR part 839. The title of the 
required plan referenced in the clause at 852.239-70, Security 
Requirements for Information Technology Resources, is revised from 
``Information Technology Security Plan'' to ``Information System 
Security Plan'' to better reflect the underlying content submittal 
requirements. In the clause at 852.239-70, paragraph (c) states that, 
generally, the plan shall describe the processes and procedures that 
the Contractor will follow to ensure appropriate security of 
information technology resources developed, processed, or used under 
this contract. It should include implementation status, responsible 
entities, resources, and estimated completion dates. An ``Information 
system security plan'' means a formal document that provides an 
overview of the security requirements for an information system and 
describes the security controls in place or planned for meeting those 
requirements. Information system security plans may also include, but 
are not limited to, a compiled list of system characteristics or 
qualities required for system registration, and key security-related 
documents such as a risk assessment, Privacy Impact Assessment (PIA), 
system interconnection agreements, contingency plan, security 
configurations, configuration management plan, and incident response 
plan. The plan shall address the specific contract requirements 
regarding information system security and related support or services 
included in the contract, to include the performance work statement 
(PWS) or statement of work (SOW). The plan shall also comply with 
applicable Federal Laws that include, but are not limited to, 40 U.S.C. 
11331, the Federal Information Security Modernization Act (FISMA) of 
2014 and the E-Government Act of 2002. The plan shall meet information 
system security plan requirements (describing the security controls in 
place or planned for meeting those requirements) in accordance with 
Federal and VA policies and procedures, and as amended during the term 
of a contract, and include, but are not limited to the following:
    (1) Office of Management and Budget (OMB) Circular A-130, Managing 
Information as a Strategic Resource;
    (2) National Institute of Standards and Technology (NIST) 
Guidelines; and
    (3) VA Directive 6500, VA Cybersecurity Program, and the directives 
and handbooks in the VA 6500 series related to VA information 
(including VA sensitive information and sensitive personal information 
and information systems security and privacy), as well as those set 
forth in the contract specifications, statement of work, or performance 
work statement. These include, but are not limited to, VA Handbook 
6500.6, Contract Security; and VA Directive and Handbook 0710, 
Personnel Security and Suitability Program, which establishes VA's 
procedures, responsibilities, and processes for complying with current 
Federal law, Executive orders, policies, regulations, standards, and 
guidance for protecting VA information, information systems (see 
802.101) security and privacy, and adhering to personnel security 
requirements when accessing VA information or information systems.
    VA has updated the VAAR text prescribing the clause, and the clause 
at 852.239-70, Security Requirements for Information Technology 
Resources.
    The respondent asks VA with respect to the clause at 852.239-73, 
Information System Hosting, Operation, Maintenance, or Use, to provide 
more details on the VA systems control procedures as well as what might 
be expected to be included in the PIA.
    VA has considered the respondent's request to further elaborate on 
the requirement for a PIA. In order to provide clarity to the public, 
VA is incorporating non-substantive technical amendments to the clauses 
at 852.239-70, Security Requirements for Information Technology 
Resources, and 852.239-73, Information System Hosting, Operation, 
Maintenance, or Use, to clarify that when VA is referring to a 
``security plan'' the requirement is for an ``information system 
security plan.'' VA has made the corresponding revisions to the clauses 
and applicable VAAR text where that term is included to clarify this. 
VA is also clarifying for the public via the clause at 852.239-70, 
paragraph (e), Security accreditation, that VA is referring to non-VA 
owned systems.
    In the clause at 852.239-73, Information System Hosting, Operation, 
Maintenance, or Use, VA is also clarifying in paragraph (c), 
Collecting, processing, transmitting, and storing of VA sensitive 
information, that VA is referring to a broader category of VA sensitive 
information of which Personally Identifiable Information (PII) is a 
subset and has revised the clause at 852.239-73, Information System 
Hosting, Operation, Maintenance, or Use, to reflect ``VA sensitive 
information'' in lieu of ``PII'' in the paragraph to ensure clarity.
    And, in paragraph (g), Disposal or return of electronic storage 
media on non-VA leased or non-VA owned IT equipment, VA has added a key 
specific reference to the National Institute of Standards (NIST) 800-
88, Rev. 1, ``Guidelines for Media Sanitization,'' and VA Directive 
6500, VA Cybersecurity Program, paragraph 2(b)(5), Media Sanitization, 
to provide the public more information on what electronic media 
sanitization requirements apply.

[[Page 4742]]

    These technical revisions of the rule align the two clauses and 
ensures the public is aware that PII is considered a subset for VA 
sensitive information and the requirements for protecting and 
safeguarding the same are clearly identified and understood.
    The respondent asks a final question with respect to the proposed 
clause at 852.239-74, Security Controls Compliance Testing, and 
specifically if VA can provide more details on the items to be included 
in a security control assessment. The respondent noted that they have 
concerns that it may be difficult to complete the assessment depending 
on the timing of any advance notification.
    VA refers the public to more information on security control 
assessments that can be found in NIST SP 800-53A Rev. 5. The comments 
do not require the VA to make any revisions to the rule on the basis of 
the specific comment. However, VA is making one minor revision to the 
clause in the first sentence to provide clarity. The sentence is being 
revised from. . . . ``VA, including the Office of Inspector General, 
reserves the right to evaluate any or all of the security controls and 
privacy practices implemented by the Contractor . . .'' to ``VA, 
including the Office of Inspector General, reserves the right to 
evaluate any or all of the security and privacy controls implemented by 
the Contractor . . .''.

Summary of Revisions to the Rule

    Based on the review of public comments and to provide clarity as 
discussed above under the analysis of public comments, VA is 
summarizing the technical revisions to address the comments as follows:
    1. At section 839.106-70, the heading of the section is changed to 
``Information system security and privacy contract clauses,'' in lieu 
of ``Information technology security and privacy clauses.'' And in 
paragraph (a), the heading for the clause at 852.239-71 is revised from 
``Information Technology Security Plan and Accreditation'' to 
``Information System Security Plan and Accreditation.''
    2. In the clause at 852.239-70, Security Requirements for 
Information Technology Resources, the following clarifying edits were 
made:
    a. In paragraph (a), the definition for ``Security plan'' is 
revised slightly to now read ``Information system security plan'' and 
an unnecessary reference to ``or an information security program and'' 
is removed for clarity.
    b. In paragraph (b), in the first sentence the phrase ``information 
technology security'' is revised to read ``information system security 
. . .''.
    c. In paragraph (c), the heading of the paragraph is revised to 
read ``Information system security plan'' in lieu of ``Information 
technology security plan.'' Other conforming edits are made to revise 
the use from ``security plan'' to read ``information system security 
plan'', and to remove the term ``technology'' where not appropriate. 
The paragraph is also updated in the fifth sentence to remove the 
phrase ``or qualities required for system registration'' as 
unnecessary.
    d. In paragraph (d), the required number of calendar days for 
submittal of an Information System Security Plan is increased from ``30 
days after contract award'' to read ``90 days after contract award.'' 
This provides more time for contractors to accomplish the required 
submittal.
    e. In paragraph (e), dealing with security accreditation, the 
phrase ``information technology security accreditation'' is revised to 
read ``information system security accreditation'' in the first 
sentence. It is also clarified by adding the phrase ``for non-VA owned 
systems'' to make this clear. And the second to last and the last 
sentence are edited to improve the flow of information.
    f. In paragraph (f), the referenced ``IT Security Plan'' is revised 
to reflect the updated usage of ``Information System Security Plan'' as 
contained within the rest of the clause.
    g. In paragraph (j), dealing with Government access, the phrase 
``information technology inspection'' is revised to reflect 
``information system inspection'' to reflect the more accurate 
terminology. And the word ``technology'' is removed in the last 
sentence after the word ``information'' so that it now reads ``. . . 
information systems operated on behalf of VA), . . .''.
    3. In the clause at 852.239-73, Information System Hosting, 
Operation, Maintenance, or Use, the following editorial revisions are 
made for clarity and to incorporate the appropriate use of the term 
``information system security plan'' in lieu of ``security plan.''
    a. In paragraph (a), the definition for ``Security plan'' is 
revised slightly to now read ``Information system security plan'' and 
an unnecessary reference to ``or an information security program and'' 
is removed for clarity.
    b. In paragraph (c), dealing with collecting, processing, 
transmitting, and storing of PII, the heading is revised to reflect 
``VA sensitive information'' in lieu of PII as the more appropriate 
term to use that would encompass PII. The heading for this paragraph 
would now read ``Collecting, processing, transmitting, and storing of 
VA sensitive information.'' An unnecessary phrase ``as determined by 
the VA Privacy Service'' is removed. The phrase ``Privacy Impact 
Assessment'' is deleted, and the phrase ``Information System Security 
Plan'' is inserted in its place as the more accurate term. And the 
requirement that a Plan of Action and Milestones (POA&M) must be 
submitted and approved is expanded from just prior to ``collection of 
PII'' to prior to ``collecting, processing, transmitting, and storing 
of VA sensitive information'' to comply with requirements already 
described elsewhere in the rule.
    c. In paragraph (g), concerning disposal or return of electronic 
storage media on non-VA leased or non-VA owned IT equipment, VA is 
adding the required specific references to the existing language as 
follows: ``NIST 800-88, Rev. 1, ``Guidelines for Media Sanitization,'' 
and VA Directive 6500, VA Cybersecurity Program, paragraph 2(b)(5), 
Media Sanitization . . .''.
    4. In the clause at 852.239-74, Security Controls Compliance 
Testing, VA is making a minor edit to revise the phrase ``all of the 
security controls and privacy practices'' to ``all of the security and 
privacy controls'' in the first sentence.

Technical Non-Substantive Changes to the Rule

    This rule makes 12 non-substantive changes to the rule to provide 
clarity, eliminate confusion, and to ensure compliance with the FAR. 
Specifically, VA is revising the term ``commercial items'' to reflect 
either ``commercial products and commercial services'' or ``commercial 
products or commercial services'' in alignment with FAR final rule, 
Federal Acquisition Regulation: Revision of Definition of ``Commercial 
Item'', RIN 9000-AN76, effective December 6, 2021. There are 14 
mentions of the legacy term ``commercial items'' that were identified 
in this rule's amendatory language in the following VAAR parts, 
subparts, and sections, to include headings as well as the underlying 
text. The legacy term ``commercial items'' was also referenced in two 
FAR clause references where the FAR heading has also been revised 
because of the referenced FAR final rule. The respective VAAR part 812 
table of contents also has the legacy term ``Commercial Item'' and will 
also be updated with this final rule.
    Accordingly, VA is revising the final rule to reflect the updated 
terminology in accordance with the FAR final rule

[[Page 4743]]

and as reflected in the amendatory text as follows (items number 1-9 
below):
    1. At section 804.1902, Applicability, VA is revising the phrase in 
the section from ``acquisition of commercial items'' to ``acquisition 
of commercial products or commercial services.''
    2. At section 811.503-70, Contract clause, paragraph (b), VA is 
revising the phrase ``in commercial items'' to read ``for commercial 
products or commercial services . . .''.
    3. At section 811.503-70, Contract clause, paragraph (c), VA is 
revising the phrase ``commercial items'' to read ``commercial products 
or commercial services . . .''.
    4. Under part 812, Acquisition of Commercial Items, VA is revising 
the heading from ``Acquisition of Commercial Items'' to ``Acquisition 
of Commercial Products and Commercial Services''.
    5. At subpart 812.3, VA is revising the heading from ``Solicitation 
Provisions and Contract Clauses for the Acquisition of Commercial 
Items'' to read ``Solicitation Provisions and Contract Clauses for the 
Acquisition of Commercial Products and Commercial Services.''
    6. At section 812.301, VA is revising the heading from 
``Solicitation provisions and contract clauses for the acquisition of 
commercial items'' to read ``Solicitation provisions and contract 
clauses for the acquisition of commercial products and commercial 
services.''
    7. Under section 812.301, at paragraphs (f)(1) and (2), VA is 
revising the heading to the FAR provision at 52.212-1 to read 
``Instruction to Offerors--Commercial Products and Commercial 
Services,'' and the heading to the FAR provision at 52.212-2 to read 
``Evaluation--Commercial Products and Commercial Services.''
    8. At section 852.211-76, Liquidated Damages--Reimbursement for 
Data Breach Costs, the following revisions are made:
    a. In the Alternate I paragraph, the phrase, ``commercial items'' 
is revised to read ``commercial products or commercial services,'' and 
in paragraph (e) under Alternate I, the referenced heading for the FAR 
clause at 52.212-4 is revised to read ``Contract Terms and Conditions--
Commercial Products and Commercial Services.''
    b. In the Alternate II paragraph, the phrase, ``commercial items'' 
is revised to read ``commercial products or commercial services,'' and 
in paragraph (e) under Alternate II, the referenced heading for the FAR 
clause at 52.212-4 is revised to read ``Contract Terms and Conditions--
Simplified Acquisitions (Other Than Commercial Products and Commercial 
Services).''

Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
the costs and benefits of available regulatory alternatives and, when 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, and other advantages; distributive impacts; 
and equity). E.O. 13563 (Improving Regulation and Regulatory Review) 
emphasizes the importance of quantifying both costs and benefits, 
reducing costs, harmonizing rules, and promoting flexibility. The 
Office of Information and Regulatory Affairs has determined that this 
rule is a significant regulatory action under Executive Order 12866.
    The Regulatory Impact Analysis associated with this rulemaking can 
be found as a supporting document at www.regulations.gov.

Paperwork Reduction Act

    This final rule includes provisions constituting a new collection 
of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501-3521) that require approval by OMB. Accordingly, under 44 U.S.C. 
3507(d), VA has submitted a copy of this rulemaking action to OMB for 
review and approval, including all comments received on the proposed 
information collections and any changes made in response to comments. 
OMB has reviewed and assigned four new OMB Control Numbers, which are 
detailed below. In accordance with 5 CFR part 1320, the new OMB control 
numbers and the information collections are not approved at this time. 
OMB has up to 30 days to approve these information collections after 
the final rule publishes.
     OMB Control Number 2900-0895 for section 839.106-70, 
Information security and privacy clauses, and the VAAR clauses at 
852.239-70, Security Requirements for Information Technology Resources, 
852.239-72, Information System Design and Development, and 852.239-73, 
Information System Hosting, Operation, Maintenance or Use.
     OMB Control Number 2900-0900 for section 804.1970, 
Information security policy--contractor general responsibilities, and 
the VAAR clause at 852.204-71, Information and Information System 
Security.
     OMB Control Number 2900-0901 for section 811.503-70, 
Contract clause, and the VAAR clause at 852.211-76, Liquidated 
Damages--Reimbursement for Data Breach Costs.
     OMB Control Number 2900-0902 for section 812.301(f), 
Solicitation provisions and contract clauses for the acquisition of 
commercial products or commercial services, and the VAAR clauses at 
852.212-71, Gray Market and Counterfeit Items, and 852.212-72, Gray 
Market and Counterfeit Items--Information Technology Maintenance 
Allowing Other-than-New Parts.
    If OMB does not approve the collections of information as 
requested, VA will immediately remove the provisions containing a 
collection of information or take such other action as is directed by 
OMB.

Regulatory Flexibility Act

    The Secretary hereby certifies that this final rule will not have a 
significant economic impact on a substantial number of small entities 
as they are defined in the Regulatory Flexibility Act (5 U.S.C. 601-
612). The factual basis for this certification is based on the 
information set forth in this section. Therefore, pursuant to 5 U.S.C. 
605(b), the initial and final regulatory flexibility analysis 
requirements of 5 U.S.C. 603 and 604 do not apply.
    This rulemaking does not change VA's policy regarding small 
businesses and does not have a significant economic impact to 
individual businesses. The overall impact of the proposed rule would be 
of benefit to small businesses owned by Veterans or service-disabled 
Veterans as the VAAR is being updated to provide needed guidance to 
ensure VA's contractors properly protect and safeguard VA sensitive 
information, which includes Veteran's sensitive personal information. 
This rulemaking adds a new VAAR part concerning Acquisition of 
Information Technology that codifies information collection burdens. 
VA's requirement to collect the information is the result of existing 
requirements to ensure compliance across the Federal government and 
specifically when VA contractors, subcontractors, business associates 
and their employees require access to VA information (including VA 
sensitive information) or information systems. VA is merely adding 
existing and current regulatory requirements to the VAAR and placing 
guidance that is applicable only to VA's internal operation processes 
or procedures into a VA Acquisition Manual. VA estimates no substantial 
cost impact to individual businesses will result from these rule 
updates already required to be considered by both large and small 
businesses to receive an award from VA or another Federal agency. There 
are

[[Page 4744]]

costs associated with this rulemaking pertaining to the codification of 
an information collection request in order to comply with VA's 
responsibilities under the Federal Information Security Modernization 
Act of 2014. Each agency of the Federal Government must provide 
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. By statute, VA 
is required to ensure that its contractors, subcontractors, business 
associates, and their employees operating under contracts at VA shall 
be subject to the same Federal laws, regulations, policies or 
procedures as VA and VA personnel. While this requirement adds some 
burden in annual costs and hours to firms already awarded and 
performing contracts at VA, the overall cost is considered de minimis, 
for either large or small contractors, in relation to the potential 
impact and harm to Veterans and VA information and information systems 
should a contractor not comply. Properly setting forth the requirements 
will provide clarity to the public and ensure appropriate safeguards 
are in place to ensure protection of VA's information (in particular VA 
sensitive personal information) and information systems. In total, this 
rulemaking does not change VA's policy regarding small businesses, does 
not have a substantial economic impact to individual businesses, and 
does not significantly increase or decrease costs small business were 
already required to bear when performing contracts which required the 
access, maintenance, process, or utilization of VA sensitive 
information or information systems.

Unfunded Mandates

    The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 
1532, that agencies prepare an assessment of anticipated costs and 
benefits before issuing any rule that may result in the expenditure by 
State, local, and tribal Governments, in the aggregate, or by the 
private sector, of $100 million or more (adjusted annually for 
inflation) in any one year. This rule would have no such effect on 
State, local, and tribal Governments or on the private sector.

Congressional Review Act

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), 
the Office of Information and Regulatory Affairs designated this rule 
as not a major rule, as defined by 5 U.S.C. 804(2).

List of Subjects

48 CFR Parts 802, 804, 811, and 812

    Government procurement.

48 CFR Part 824

    Freedom of information, Government procurement, Privacy.

48 CFR Part 839

    Computer technology, Government procurement.

48 CFR Part 852

    Government procurement, Reporting and recordkeeping requirements.

Signing Authority

    Denis McDonough, Secretary of Veterans Affairs, approved this 
document on December 19, 2022, and authorized the undersigned to sign 
and submit the document to the Office of the Federal Register for 
publication electronically as an official document of the Department of 
Veterans Affairs.

Consuela Benjamin,
Regulation Development Coordinator, Office of Regulation Policy & 
Management, Office of General Counsel, Department of Veterans Affairs.

    For the reasons set forth in the preamble, VA amends 48 CFR chapter 
8 as follows:

PART 802--DEFINITIONS OF WORDS AND TERMS

0
1. The authority citation for part 802 continues to read as follows:

    Authority: 40 U.S.C. 121(c); 41 U.S.C. 1121(c)(3); 41 U.S.C. 
1702; and 48 CFR 1.301 through 1.304.

Subpart 802.1--Definitions

0
2. Section 802.101 is amended by adding definitions for ``Business 
associate'', ``Business Associate Agreement'', ``Gray market items'', 
``Information system'', ``Information technology'', ``Information 
technology-related contracts'', ``Privacy officer'', ``Security plan'', 
``Sensitive personal information'', ``VA Information Security Rules of 
Behavior for Organizational Users/VA National Rules of Behavior'', and 
``VA sensitive information'' in alphabetical order to read as follows:


802.101  Definitions.

* * * * *
    Business associate (or associate) means an entity, including an 
individual (other than a member of the workforce of a covered entity), 
company, organization, or another covered entity, as defined by the 
Health Insurance Portability and Accountability Act of 1996 (HIPAA) 
(Pub. L. 104-191) Privacy Rule (45 CFR part 160), that performs or 
assists in the performance of a function or activity on behalf of the 
Veterans Health Administration (VHA) that involves the creating, 
receiving, maintaining, transmitting of, or having access to, protected 
health information (PHI), or that provides to or for VHA, certain 
services as specified in the HIPAA Privacy Rule that involve the 
disclosure of PHI to a contractor by VHA. The term also includes a 
subcontractor of a business associate that creates, receives, 
maintains, or transmits PHI or that stores, generates, accesses, 
exchanges, processes, or utilizes such PHI on behalf of the business 
associate.
    Business Associate Agreement (BAA) means the agreement, as dictated 
by the HIPAA Privacy Rule (45 CFR part 160), between VHA and a business 
associate, which must be entered into in addition to the underlying 
contract for services and before any release of PHI can be made to the 
business associate, in order for the business associate to perform 
certain functions or activities on behalf of VHA.
* * * * *
    Gray market items means original equipment manufacturer goods 
intentionally or unintentionally sold outside an authorized sales 
territory or sold by non-authorized dealers in an authorized sales 
territory.
* * * * *
    Information system means, pursuant to 38 U.S.C. 5727, a discrete 
set of information resources organized for the collection, processing, 
maintenance, use, sharing, dissemination, or disposition of information 
whether automated or manual.
    Information technology (see FAR 2.101) also means Information and 
Communication Technology (ICT).
    Information technology-related contracts means those contracts 
which include services (including support services) and related 
resources for information technology as defined in this section.
* * * * *
    Privacy officer means the VA official with responsibility for 
implementing and oversight of privacy related policies and practices 
that impact a given VA acquisition.
* * * * *
    Security plan means a formal document that provides an overview of 
the security requirements for an information system or an information 
security program and describes the security controls in place or 
planned for meeting those requirements.

[[Page 4745]]

    Sensitive personal information means, with respect to an 
individual, any information about the individual maintained by VA, 
including but not limited to the following:
    (1) Education, financial transactions, medical history, and 
criminal or employment history.
    (2) Information that can be used to distinguish or trace the 
individual's identity, including but not limited to name, Social 
Security Number, date and place of birth, mother's maiden name, or 
biometric records.
* * * * *
    VA Information Security Rules of Behavior for Organizational Users/
VA National Rules of Behavior means a set of VA rules that describes 
the responsibilities and expected behavior of users of VA information 
or information systems.
* * * * *
    VA sensitive information means all VA data, on any storage media or 
in any form or format, which requires protection due to the risk of 
harm that could result from inadvertent or deliberate disclosure, 
alteration, or destruction of the information and includes sensitive 
personal information. The term includes information where improper use 
or disclosure could adversely affect the ability of VA to accomplish 
its mission, proprietary information, records about individuals 
requiring protection under various confidentiality provisions such as 
the Privacy Act and the HIPAA Privacy Rule, and information that can be 
withheld under the Freedom of Information Act. Examples of VA sensitive 
information include the following: individually-identifiable medical, 
benefits, and personnel information; financial, budgetary, research, 
quality assurance, confidential commercial, critical infrastructure, 
investigatory, and law enforcement information; information that is 
confidential and privileged in litigation such as information protected 
by the deliberative process privilege, attorney work-product privilege, 
and the attorney-client privilege; and other information which, if 
released, could result in violation of law or harm or unfairness to any 
individual or group, or could adversely affect the national interest or 
the conduct of Federal programs.
* * * * *

PART 804--ADMINISTRATIVE AND INFORMATION MATTERS

0
3. The authority citation for part 804 is revised to read as follows:

    Authority: 38 U.S.C. 5723-5724, 5725(a)-(c); 40 U.S.C. 121(c); 
41 U.S.C. 1702; and 48 CFR 1.301 through 1.304.


0
4. Subpart 804.19 is added to read as follows:
Subpart 804.19--Basic Safeguarding of Covered Contractor Information 
Systems
Sec.
804.1900-70 Scope of this subpart.
804.1902 Applicability.
804.1970 Information security policy--contractor general 
responsibilities.
804.1903 Contract clause.

Subpart 804.19--Basic Safeguarding of Covered Contractor 
Information Systems


804.1900-70  Scope of this subpart.

    This subpart prescribes policies and procedures for information 
security and protection of VA information, information systems, and VA 
sensitive information, including sensitive personal information.


804.1902  Applicability.

    This subpart applies to all VA acquisitions, including acquisitions 
of commercial products or commercial services other than commercially 
available off-the-shelf items, when a contractor's information system 
may contain VA information.


804.1970   Information security policy--contractor general 
responsibilities.

    Contractors, subcontractors, business associates, and their 
employees who are users of VA information or information systems, or 
have access to VA information and VA sensitive information shall--
    (a) Comply with all VA information security and privacy program 
policies, procedures, practices, and related contract requirements, 
specifications, and clauses, this includes complying with VA privacy 
and confidentiality laws and implementing VA and Veterans Health 
Administration (VHA) regulations (see 38 U.S.C. 5701, 5705, 5721-5728, 
and 7332; 38 CFR 1.460 through 1.496, 1.500 through 1.527, and 17.500 
through 17.511), the Health Insurance Portability and Accountability 
Act of 1996 (HIPAA) (Pub. L. 104-191), and the Privacy Act of 1974 (as 
amended) (5 U.S.C. 522a);
    (b) Complete VA security awareness training on an annual basis;
    (c) Complete VHA's Privacy and HIPAA Training on an annual basis 
when access to protected health information (PHI) is required;
    (d) Report all actual or suspected security/privacy incidents and 
report the information to the contracting officer and contracting 
officer's representative (COR), as identified in the contract or as 
directed in the contract, within one hour of discovery or suspicion;
    (e) Comply with VA policy as it relates to personnel security and 
suitability program requirements for background screening of both 
employees and non-employees who have access to VA information systems 
and data;
    (f) Comply with directions that may be issued by the contracting 
officer or COR, or from the VA Assistant Secretary for Information and 
Technology or a designated representative through the contracting 
officer or COR, directing specific activities when a security/privacy 
incident occurs;
    (g) Sign an acknowledgment that they have read, understand, and 
agree to abide by the VA Information Security Rules of Behavior (VA 
National Rules of Behavior) as required by 38 U.S.C. 5723, FAR 39.105, 
and the clause at 852.204-71, Information and Information Systems 
Security, on an annual basis. The VA Information Security Rules of 
Behavior describe the responsibilities and expected behavior of 
contractors, subcontractors, business associates, and their employees 
who are users of VA information or information systems, information 
assets and resources, or have access to VA information;
    (h) Maintain records and compliance reports regarding HIPAA 
Security and Privacy Rules (see 45 CFR part 160) compliance in order to 
provide such information to VA upon request to ascertain whether the 
business associate is complying with all applicable provisions under 
both rules' regulatory requirements; and
    (i) Flow down requirements in all subcontracts and Business 
Associate Agreements (BAAs), at any level, as provided in the clause at 
852.204-71, Information and Information Systems Security.


804.1903   Contract clause.

    When the clause at FAR 52.204-21, Basic Safeguarding of Covered 
Contractor Information Systems is required to be included in accordance 
with FAR 4.1903, the contracting officer shall insert the clause at 
852.204-71, Information and Information Systems Security.

PART 811--DESCRIBING AGENCY NEEDS

0
5. The authority citation for part 811 is revised to read as follows:

    Authority: 38 U.S.C. 5723-5724, 5725(a)-(c); 40 U.S.C. 121(c); 
41 U.S.C. 1303, 1702; and 48 CFR 1.301 through 1.304.


[[Page 4746]]



0
6. Subpart 811.5 is added to read as follows:
Subpart 811.5--Liquidated Damages
Sec.
811.500 Scope.
811.501-70 Policy--statutory requirement.
811.503-70 Contract clause.

Subpart 811.5--Liquidated Damages


811.500   Scope.

    This subpart prescribes policies and procedures for using a 
liquidated damages clause in solicitations and contracts that involve 
VA sensitive personal information. This also pertains to any 
solicitations and contracts involving VA sensitive personal information 
issued by another agency for or on behalf of VA through an interagency 
acquisition in accordance with FAR subpart 17.5 and subpart 817.5.


811.501-70   Policy--statutory requirement.

    (a) Contracting officers are required to include a liquidated 
damages clause in contracts for the performance of any Department 
function which requires access to VA sensitive personal information 
(see the definition in 802.101), in accordance with 38 U.S.C. 5725(b). 
The liquidated damages are to be paid by the contractor to the 
Department of Veterans Affairs in the event of a data breach involving 
sensitive personal information maintained, processed, or utilized by 
contractors or any subcontractors.
    (b) The purpose of the liquidated damages to be paid for by the 
contractor in the event of a data breach of personal sensitive 
information is for VA to provide credit protection services to affected 
individuals pursuant to 38 U.S.C. 5724(a)-(b).


811.503-70   Contract clause.

    (a) Insert the clause at 852.211-76, Liquidated Damages--
Reimbursement for Data Breach Costs, in all solicitations, contracts, 
or orders, where VA requires access to sensitive personal information 
for the performance of a Department function where--
    (1) Sensitive personal information (see the definition in 802.101) 
will be created, received, maintained, or transmitted, or that will be 
stored, generated, accessed, or exchanged such as protected health 
information (PHI) or utilized by a contractor, subcontractor, business 
associate, or an employee of one of these entities; or,
    (2) When VA information systems will be designed or developed at 
non-VA facilities where such sensitive personal information is required 
to be created, received, maintained, or transmitted, or that will be 
stored, generated, accessed, exchanged, processed, or utilized.
    (b) Insert the clause at 852.211-76 with its Alternate I in all 
solicitations, contracts, or orders, for commercial products or 
commercial services acquisitions awarded under the procedures of FAR 
part 8 or 12.
    (c) Insert the clause at 852.211-76 with its Alternate II, in all 
solicitations, contracts, or orders, in simplified acquisitions 
exceeding the micro-purchase threshold that are for other than 
commercial products or commercial services awarded under the procedures 
of FAR part 13 (see FAR 13.302-5(d)(1) and the clause at FAR 52.213-4).

PART 812--ACQUISITION OF COMMERCIAL PRODUCTS AND COMMERCIAL 
SERVICES

0
7. The authority citation for part 812 continues to read as follows:

    Authority: 38 U.S.C. 8127-8128; 40 U.S.C. 121(c); 41 U.S.C. 1702 
and 48 CFR 1.301 through 1.304.


0
8. The heading for part 812 is revised to read as set forth above.

0
9. Subpart 812.3 is revised to read as follows:

Subpart 812.3--Solicitation Provisions and Contract Clauses for the 
Acquisition of Commercial Products and Commercial Services


812.301   Solicitation provisions and contract clauses for the 
acquisition of commercial products and commercial services.

    (f)(1) Contracting officers shall insert the clause at 852.212-71, 
Gray Market and Counterfeit Items, in solicitations and contracts for 
new medical supplies, new medical equipment, new information technology 
equipment, and maintenance of medical or information technology 
equipment that includes replacement parts if used, refurbished, or 
remanufactured parts are unacceptable, when the associated solicitation 
includes FAR 52.212-1, Instruction to Offerors--Commercial Products and 
Commercial Services, and 52.212-2, Evaluation--Commercial Products and 
Commercial Services.
    (2) Contracting officers shall insert the clause at 852.212-72, 
Gray Market and Counterfeit Items--Information Technology Maintenance 
Allowing Other-than-New Parts, in solicitations and contracts for the 
maintenance of information technology equipment that includes 
replacement parts, if used, refurbished, or remanufactured parts are 
acceptable, when the associated solicitation includes FAR 52.212-1, 
Instruction to Offerors--Commercial Products and Commercial Services, 
and 52.212-2, Evaluation--Commercial Products and Commercial Services.

PART 824--PROTECTION OF PRIVACY AND FREEDOM OF INFORMATION

0
10. The authority citation for part 824 is revised to read as follows:

    Authority: 5 U.S.C. 552a; 38 U.S.C. 5723-5724, 5725(a)-(c); 40 
U.S.C. 121(c); 41 U.S.C. 1121(c), 1702; 38 CFR 1.550 through 1.562 
and 1.575 through 1.584; and 48 CFR 1.301 through 1.304.

Subpart 824.1--Protection of Individual Privacy

0
11. Sections 824.103-70 and 824.103-71 are added to read as follows:


824.103-70   Protection of privacy--general requirements and procedures 
related to Business Associate Agreements.

    To ensure compliance with unique responsibilities to protect 
protected health information (PHI), contractors performing under VA 
contracts subject to unique PHI and the Health Insurance Portability 
and Accountability Act of 1996 (HIPAA) shall comply with requirements 
and the clause (852.204-71, Information and Information Systems 
Security) prescribed at 804.1903.
    (a) HIPAA Business Associate Agreement requirement. Under the HIPAA 
Privacy and Security Rules (see 45 CFR part 160), a covered entity 
(Veterans Health Administration (VHA)) must have a satisfactory 
assurance that its PHI will be safeguarded from misuse. To do so, a 
covered entity enters into a Business Associate Agreement (BAA) with a 
contractor (now the business associate), which obligates the business 
associate to only use the covered entity's PHI for the purposes for 
which it was engaged, provide the same protections and safeguards as is 
required from the covered entity, and agree to the same disclosure 
restrictions to PHI that is required of the covered entity in 
situations where a contractor--
    (1) Creates, receives, maintains, or transmits VHA PHI or that will 
store, generate, access, exchange, process, or utilize such PHI in 
order to perform certain health care operations activities or functions 
on behalf of the covered entity; or
    (2) Provides one or more of the services specified in the HIPAA 
Privacy Rule to or for the covered entity.
    (b) Veterans Health Administration (VHA)--a HIPAA covered entity. 
VHA is the only administration of the Department of Veterans Affairs 
that is a

[[Page 4747]]

HIPAA covered entity under the HIPAA Privacy Rule.
    (c) Contractors or entities required to execute BAAs for contracts 
and other agreements become VHA business associates. BAAs are issued by 
VHA or may be issued by other VA programs in support of VHA. The HIPAA 
Privacy Rule requires VHA to execute compliant BAAs with persons or 
entities that create, receive, maintain, or transmit VHA PHI or that 
will store, generate, access, exchange, process, or utilize such PHI in 
order to perform certain activities, functions or services to, for, or 
on behalf of VHA.
    (1) There may be other VA components or staff offices which also 
provide certain services and support to VHA and must receive PHI in 
order to do so. If these components award contracts or enter into other 
agreements, purchase/delivery orders, modifications, and issue 
Governmentwide purchase card transactions to help in the delivery of 
these services to VHA, they will also fall within the requirement to 
obtain a satisfactory assurance from these contractors by executing a 
BAA.
    (2) Contractors or other entities supporting VHA required to 
create, receive, maintain, or transmit VHA PHI shall be required to 
execute a BAA as mandated by the HIPAA Privacy Rule and requested by 
the contracting officer, the contracting officer's representative (COR) 
or the cognizant privacy officer--
    (i) Whether via a contract or agreement with VHA; or
    (ii) Whether provided from or through another VA administration or 
staff activity contract for supplies, services or support that involves 
performing a certain activity, function or service to, for, or on 
behalf of VHA (see VA Directive 6066, Protected Health Information 
(PHI) and Business Associate Agreements Management).
    (d) BAA requirement flow down to subcontractors. A prime contractor 
required to execute a BAA shall also obtain a satisfactory assurance, 
in the form of a BAA, that any of its subcontractors who will also 
create, receive, maintain, or transmit VHA PHI or that will store, 
generate, access, exchange, process, or utilize such PHI will comply 
with HIPAA requirements to the same degree as the contractor. A 
contractor employing a subcontractor who creates, receives, maintains, 
or transmits VHA PHI or that will store, generate, access, exchange, 
process, or utilize such VHA PHI under a contract or agreement is 
required to execute a BAA with each of its subcontractors which also 
obligates the subcontractor (i.e., also a business associate) to 
provide the same protections and safeguards and agree to the same 
disclosure restrictions to VHA's PHI that is required of the covered 
entity and the prime contractor.


824.103-71   Liquidated damages--protection of information.

    (a) Purpose. As required by 38 U.S.C. 5725 any contracts where 
sensitive personal information such as PHI must be disclosed to the 
contractor for the contractor to perform certain functions or services 
on behalf of VHA shall include a liquidated damages clause as 
prescribed at 811.503-70.
    (b) Applicability to contracts requiring Business Associate 
Agreements. A liquidated damages clause is required (see 811.503-70) 
when performance under a contract requires a contractor to enter into a 
Business Associate Agreement with VHA because the contractor or its 
subcontractor is required to create, receive, maintain, or transmit VHA 
PHI or that will store, generate, access, exchange, process, or utilize 
such PHI, for certain services or functions, on behalf of VHA. The 
liquidated damages clause shall be added even in situations where the 
prime contractor never directly receives VA's sensitive personal 
information and the same flows directly to the prime contractor's 
subcontractor.

0
12. Part 839 is added to read as follows:

PART 839--ACQUISITION OF INFORMATION TECHNOLOGY

Sec.
839.000 Scope of part.
Subpart 839.1--General
839.101 Policy.
839.105 Privacy.
839.105-70 Business Associate Agreements, information technology-
related contracts and privacy.
839.105-71 Liquidated damages--protection of information in 
information technology related contracts.
839.106-70 Information security and privacy contract clauses.
Subpart 839.2--Information and Communication Technology
839.201 Scope of subpart.
839.203 Applicability.
839.203-70 Information and communication technology accessibility 
standards--contract clause and provision.

    Authority: 38 U.S.C. 5723-5724, 5725(a)-(c); 40 U.S.C. 121(c), 
11319(b)(1)(C); 41 U.S.C. 1121(c)(3), 1303 and 1702; and 48 CFR 
1.301 through 1.304.


839.000   Scope of part.

    This part prescribes acquisition policies and procedures for use in 
acquiring VA information technology and information technology-related 
contracts (see 802.101) and applies to both VA-procured information 
technology systems as well as interagency acquisitions defined in FAR 
part 17 and part 817.

Subpart 839.1--General


839.101   Policy.

    (a)(1) In acquiring information technology, including information 
technology-related contracts which may involve services (including 
support services), and related resources (see the definition at FAR 
2.101), contracting officers and requiring activities shall include in 
solicitations and contracts the requirement to comply with the 
following directives, policies, and procedures in order to protect VA 
information, information systems, and information technology--
    (i) VA Directive 6500, VA Cybersecurity Program, and the directives 
and handbooks in the VA 6500 series, to include, but not limited to, VA 
Handbook 6500.6, Contract Security, which establishes VA's procedures, 
responsibilities, and processes for complying with current Federal law, 
Executive orders, policies, regulations, standards, and guidance for 
protecting and controlling VA sensitive information and ensuring that 
security requirements are included in acquisitions, solicitations, 
contracts, purchase orders, and task or delivery orders.
    (ii) The VA directives, security requirements, procedures, and 
guidance in paragraph (a)(1)(i) of this section apply to all VA 
contracts and to contractors, subcontractors, and their employees in 
the performance of contractual obligations to VA for information 
technology products purchased from vendors, as well as for services 
acquired from contractors and subcontractors or business associates, 
through contracts and service agreements, in which access to VA 
information, VA sensitive information or sensitive personal information 
(including protected health information (PHI))--
    (A) That is created, received, maintained, or transmitted, or that 
will be stored, generated, accessed, exchanged, processed, or utilized 
by VA, a VA contractor, subcontractor, or third-party servicers or 
associates, or on behalf of any of these entities, in the performance 
of their contractual obligations to VA; and
    (B) By or on behalf of any of the entities identified in this 
section, regardless of--
    (1) Format; or

[[Page 4748]]

    (2) Whether it resides on a VA or a non-VA system, or with a 
contractor, subcontractor, or third-party system or electronic 
information system(s), including cloud services, operating for or on 
the VA's behalf or as required by contract.
    (c) Contractors, subcontractors, and third-party servicers or 
associates providing support to or on behalf of the entities identified 
in this section, shall employ adequate security controls and use 
appropriate common security configurations available from the National 
Institute of Standards and Technology (see FAR 39.101(c)) as 
appropriate in accordance with VA regulations in this chapter, 
directives, handbooks, and guidance, and established service level 
agreements and individual contracts, orders, and agreements. 
Contractors, subcontractors, and third-party servicers and associates 
will ensure that VA information or VA sensitive information that 
resides on a VA system or resides on a contractor/subcontractor/third-
party entities/associates information and communication technology 
(ICT) system(s), operating for or on VA's behalf, or as required by 
contract, regardless of form or format, whether electronic or manual, 
and information systems, are protected from unauthorized access, use, 
disclosure, modification, or destruction to ensure information security 
(see FAR 2.101) is provided in order to ensure the integrity, 
confidentiality, and availability of such information and information 
systems.


839.105   Privacy.


839.105-70   Business Associate Agreements, information technology-
related contracts and privacy.

    In accordance with 824.103-70, contracting officers and contracting 
officer representatives (CORs) shall ensure that contractors, their 
employees, subcontractors, and third-parties under the contract 
complete Business Associate Agreements for--
    (a) Information technology or information technology-related 
service contracts subject to the Health Insurance Portability and 
Accountability Act of 1996 (HIPAA) where HIPAA PHI is created, 
received, maintained, or transmitted, or that will be stored, 
generated, accessed, exchanged, processed, or utilized in order to 
perform certain health care operations activities or functions on 
behalf of the Veterans Health Administration (VHA) as a covered entity 
(see 802.101 for the definition of information technology-related 
contracts); or
    (b) Contractors supporting other VA organizations which support VHA 
in this regard and which would therefore require Business Associate 
Agreements in accordance with 824.103-70.


839.105-71   Liquidated damages--protection of information in 
information technology related contracts.

    Contracting officers shall insert in information technology related 
contracts the liquidated damages clause as prescribed at 811.503-70.


839.106-70   Information security and privacy contract clauses.

    (a) Contracting officers shall insert the clause at 852.239-70, 
Security Requirements for Information Technology Resources, and the 
clause at 852.239-71, Information System Security Plan and 
Accreditation, in all solicitations, contracts, and orders exceeding 
the micro-purchase threshold that include information technology 
services.
    (b) Contracting officers shall insert the clause at 852.239-72, 
Information System Design and Development, in solicitations, contracts, 
orders, and agreements where services to perform information system 
design and development are required.
    (c) Contracting officers shall insert the clause at 852.239-73, 
Information System Hosting, Operation, Maintenance or Use, in 
solicitations, contracts, orders, and agreements where services to 
perform information system hosting, operation, maintenance, or use are 
required.
    (d) Contracting officers shall insert the clause at 852.239-74, 
Security Controls Compliance Testing, in solicitations, contracts, 
orders, and agreements, when the clause at 852.239-72 or 852.239-73 is 
inserted.

Subpart 839.2--Information and Communication Technology


839.201   Scope of subpart.

    This subpart applies to the acquisition of Information and 
Communication Technology (ICT) supplies and services. It concerns the 
access to and use of information and data by both Federal employees 
with disabilities and members of the public with disabilities in 
accordance with FAR 39.201. This subpart implements VA policy on 
section 508 of the Rehabilitation Act of 1973 (29 U.S.C. 794d) and 36 
CFR parts 1193 and 1194 as it applies to contracts and acquisitions 
when developing, procuring, maintaining, or using ICT.


839.203   Applicability.

    (a) General. Solicitations for information technology (IT) (i.e., 
ICT) or IT-related supplies and services shall require the contractor 
to submit a VA Section 508 Checklist (see https://www.section508.va.gov/).


839.203-70   Information and communication technology accessibility 
standards--contract clause and provision.

    (a) The contracting officer shall insert the provision at 852.239-
75, Information and Communication Technology Accessibility Notice, in 
all solicitations.
    (b) The contracting officer shall insert the clause at 852.239-76, 
Information and Communication Technology Accessibility, in all 
contracts and orders.

PART 852--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
13. The authority citation for part 852 continues to read as follows:

    Authority: 38 U.S.C. 8127-8128 and 8151-8153; 40 U.S.C. 121(c); 
41 U.S.C. 1121(c)(3); 41 U.S.C. 1303; 41 U.S.C. 1702; and 48 CFR 
1.301 through 1.304.

Subpart 852.2--Texts of Provisions and Clauses

0
14. Section 852.204-71 is added to read as follows:


852.204-71   Information and Information Systems Security.

    As prescribed in 804.1903, insert the following clause:

Information and Information Systems Security (Feb 2023)

    (a) Definitions. As used in this clause--
    Business Associate means an entity, including an individual 
(other than a member of the workforce of a covered entity), company, 
organization or another covered entity, as defined by the Health 
Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy 
Rule, that performs or assists in the performance of a function or 
activity on behalf of the Veterans Health Administration (VHA) that 
involves the creating, receiving, maintaining, transmitting of, or 
having access to, protected health information (PHI). The term also 
includes a subcontractor of a business associate that creates, 
receives, maintains, or transmits PHI on behalf of the business 
associate.
    Business Associate Agreement (BAA) means the agreement, as 
dictated by the Privacy Rule, between VHA and a business associate, 
which must be entered into in addition to the underlying contract 
for services and before any release of PHI can be made to the 
business associate, in order for the business associate to perform 
certain functions or activities on behalf of VHA.
    Information system means a discrete set of information resources 
organized for the collection, processing, maintenance, use, sharing, 
dissemination, or disposition of information whether automated or 
manual.

[[Page 4749]]

    Information technology (see FAR 2.101) also means Information 
and Communication Technology (ICT).
    Information technology-related contracts means those contracts 
which include services (including support services), and related 
resources for information technology as defined in 802.101.
    Privacy officer means the VA official with responsibility for 
implementing and oversight of privacy related policies and practices 
that impact a given VA acquisition.
    Sensitive personal information means, with respect to an 
individual, any information about the individual maintained by VA, 
including but not limited to the following:
    (1) Education, financial transactions, medical history, and 
criminal or employment history.
    (2) Information that can be used to distinguish or trace the 
individual's identity, including but not limited to name, social 
security number, date and place of birth, mother's maiden name, or 
biometric records.
    Security plan means a formal document that provides an overview 
of the security requirements for an information system or an 
information security program and describes the security controls in 
place or planned for meeting those requirements.
    VA Information Security Rules of Behavior for Organizational 
Users (VA National Rules of Behavior) means a set of VA rules that 
describes the responsibilities and expected behavior of users of VA 
information or information systems.
    VA sensitive information means all VA data, on any storage media 
or in any form or format, which requires protection due to the risk 
of harm that could result from inadvertent or deliberate disclosure, 
alteration, or destruction of the information and includes sensitive 
personal information. The term includes information where improper 
use or disclosure could adversely affect the ability of VA to 
accomplish its mission, proprietary information, records about 
individuals requiring protection under various confidentiality 
provisions such as the Privacy Act and the HIPAA Privacy Rule, and 
information that can be withheld under the Freedom of Information 
Act. Examples of VA sensitive information include the following: 
individually-identifiable medical, benefits, and personnel 
information; financial, budgetary, research, quality assurance, 
confidential commercial, critical infrastructure, investigatory, and 
law enforcement information; information that is confidential and 
privileged in litigation such as information protected by the 
deliberative process privilege, attorney work-product privilege, and 
the attorney-client privilege; and other information which, if 
released, could result in violation of law or harm or unfairness to 
any individual or group, or could adversely affect the national 
interest or the conduct of Federal programs.
    (b) General. Contractors, subcontractors, their employees, 
third-parties, and business associates with access to VA 
information, information systems, or information technology (IT) or 
providing and accessing IT-related goods and services, shall adhere 
to VA Directive 6500, VA Cybersecurity Program, and the directives 
and handbooks in the VA 6500 series related to VA information 
(including VA sensitive information and sensitive personal 
information and information systems security and privacy), as well 
as those set forth in the contract specifications, statement of 
work, or performance work statement. These include, but are not 
limited to, VA Handbook 6500.6, Contract Security; and VA Directive 
and Handbook 0710, Personnel Security and Suitability Program, which 
establishes VA's procedures, responsibilities, and processes for 
complying with current Federal law, Executive Orders, policies, 
regulations, standards and guidance for protecting VA information, 
information systems (see 802.101, Definitions) security and privacy, 
and adhering to personnel security requirements when accessing VA 
information or information systems.
    (c) Access to VA information and VA information systems. (1) 
Contractors are limited in their request for logical or physical 
access to VA information or VA information systems for their 
employees, subcontractors, third parties and business associates to 
the extent necessary to perform the services or provide the goods as 
specified in the contracts, agreements, task, delivery or purchase 
orders.
    (2) All Contractors, subcontractors, third parties, and business 
associates working with VA information are subject to the same 
investigative requirements as those of VA appointees or employees 
who have access to the same types of information. The level and 
process of background security investigations for contractors to 
access VA information and VA information systems shall be in 
accordance with VA Directive and Handbook 0710, Personnel Security 
and Suitability Program.
    (3) Contractors, subcontractors, third parties, and business 
associates who require access to national security programs must 
have a valid security clearance.
    (4) HIPAA Business Associate Agreement requirement. Contractors 
shall enter into a Business Associate Agreement (BAA) with VHA, VA's 
Covered Entity, when contract requirements and access to protected 
health information is required and when requested by the Contracting 
Officer, or the Contracting Officer's Representative (COR) (see VAAR 
824.103-70). Under the HIPAA Privacy and Security Rules, a Covered 
Entity (VHA) must have a satisfactory assurance that its PHI will be 
safeguarded from misuse. To do so, a Covered Entity enters into a 
BAA with a contractor (now the business associate), which obligates 
the business associate to only use the Covered Entity's PHI for the 
purposes for which it was engaged, provide the same protections and 
safeguards as is required from the Covered Entity, and agree to the 
same disclosure restrictions to PHI that is required of the Covered 
Entity in situations where a contractor--
    (i) Creates, receives, maintains, or transmits VHA PHI or that 
will store, generate, access, exchange, process, or utilize such PHI 
in order to perform certain health care operations activities or 
functions on behalf of the Covered Entity; or
    (ii) Provides one or more of the services specified in the 
Privacy Rule to or for the Covered Entity.
    (A) Contractors or entities required to execute BAAs for 
contracts and other agreements become VHA business associates. BAAs 
are issued by VHA or may be issued by other VA programs in support 
of VHA. The HIPAA Privacy Rule requires VHA to execute compliant 
BAAs with persons or entities that create, receive, maintain, or 
transmit VHA PHI or that will store, generate, access, exchange, 
process, or utilize such PHI in order to perform certain activities, 
functions or services to, for, or on behalf of VHA. There may be 
other VA components or staff offices which also provide certain 
services and support to VHA and must receive PHI in order to do so. 
If these components award contracts or enter into other agreements, 
purchase/delivery orders, modifications and issue governmentwide 
purchase card transactions to help in the delivery of these services 
to VHA, they will also fall within the requirement to obtain a 
satisfactory assurance from these contractors by executing a BAA.
    (B) BAA requirement flow down to subcontractors. A prime 
Contractor required to execute a BAA shall also obtain a 
satisfactory assurance, in the form of a BAA, that any of its 
subcontractors who will also create, receive, maintain, or transmit 
VHA PHI or that will store, generate, access, exchange, process, or 
utilize such PHI will comply with HIPAA requirements to the same 
degree as the Contractor. Contractors employing a subcontractor who 
creates, receives, maintains, or transmits VHA PHI or that will 
store, generate, access, exchange, process, or utilize such VHA PHI 
under a contract or agreement is required to execute a BAA with each 
of its subcontractors which also obligates the subcontractor (i.e., 
also a business associate) to provide the same protections and 
safeguards and agree to the same disclosure restrictions to VHA's 
PHI that is required of the Covered Entity and the prime Contractor.
    (d) Contractor operations required to be in United States. 
Custom software development and outsourced operations must be 
located in the U.S. to the maximum extent practicable. If such 
services are proposed to be performed outside the continental United 
States, and are not otherwise disallowed by other Federal law, 
regulations or policy, or other VA policy or other mandates as 
stated in the contract, specifications, statement of work or 
performance work statement (including applicable Business Associate 
Agreements), the Contractor/subcontractor must state in its proposal 
where all non-U.S. services are provided. At a minimum, the 
Contractor/subcontractor must include a detailed Information 
Technology Security Plan, for review and approval by the Contracting 
Officer, specifically to address mitigation of the resulting 
problems of communication, control, and data protection.
    (e) Contractor/subcontractor employee reassignment and 
termination notification. Contractors and subcontractors shall 
provide written notification to the Contracting Officer and 
Contracting Officer's Representative (COR) immediately, and not 
later than four

[[Page 4750]]

(4) hours, when an employee working on a VA information system or 
with access to VA information is reassigned or leaves the Contractor 
or subcontractor's employment on the cognizant VA contract. The 
Contracting Officer and COR must also be notified immediately by the 
Contractor or subcontractor prior to an unfriendly termination.
    (f) VA information custodial requirements. (1) Release, 
publication, and use of data. Information made available to a 
Contractor or subcontractor by VA for the performance or 
administration of a contract or information developed by the 
Contractor/subcontractor in performance or administration of a 
contract shall be used only for the stated contract purpose and 
shall not be used in any other way without VA's prior written 
approval. This clause expressly limits the Contractor's/
subcontractor's rights to use data as described in Rights in Data--
General, FAR 52.227-14(d).
    (2) Media sanitization. VA information shall not be co-mingled 
with any other data on the Contractors/subcontractor's information 
systems or media storage systems in order to ensure federal and VA 
requirements related to data protection, information segregation, 
classification requirements, and media sanitization can be met (see 
VA Directive 6500, VA Cybersecurity Program). VA reserves the right 
to conduct scheduled or unscheduled on-site inspections, 
assessments, or audits of Contractor and subcontractor IT resources, 
information systems and assets to ensure data security and privacy 
controls, separation of data and job duties, and destruction/media 
sanitization procedures are in compliance with Federal and VA 
requirements. The Contractor and subcontractor will provide all 
necessary access and support to VA and/or GAO staff during periodic 
control assessments or audits.
    (3) Data retention, destruction, and contractor self-
certification. The Contactor and its subcontractors are responsible 
for collecting and destroying any VA data provided, created, or 
stored under the terms of this contract, to a point where VA data or 
materials are no longer readable or reconstructable to any degree, 
in accordance with VA Directive 6371, Destruction of Temporary Paper 
Records, or subsequent issue. Prior to termination or completion of 
this contract, the Contractor/subcontractor must provide its plan 
for destruction of all VA data in its possession according to VA 
Handbook 6500, and VA Cybersecurity Program, including compliance 
with National Institute of Standards and Technology (NIST) 800-88, 
Guidelines for Media Sanitization, for the purposes of media 
sanitization on all IT equipment. The Contractor must certify in 
writing to the Contracting Officer within 30 days of termination of 
the contract that the data destruction requirements in this 
paragraph have been met.
    (4) Return of VA data and information. When information, data, 
documentary material, records and/or equipment is no longer 
required, it shall be returned to the VA (as stipulated by the 
Contracting Officer or the COR) or the Contractor/subcontractor must 
hold it until otherwise directed. Items returned will be hand 
carried, securely mailed, emailed, or securely electronically 
transmitted to the Contracting Officer or to the address as provided 
in the contract or by the assigned COR, and/or accompanying BAA. 
Depending on the method of return, Contractor/subcontractor must 
store, transport, or transmit VA sensitive information, when 
permitted by the contract using VA-approved encryption tools that 
are, at a minimum, validated under Federal Information Processing 
Standards (FIPS) 140-3 (or its successor). If mailed, Contractor/
subcontractor must send via a trackable method (USPS, UPS, Federal 
Express, etc.) and immediately provide the Contracting Officer with 
the tracking information. No information, data, documentary 
material, records or equipment will be destroyed unless done in 
accordance with the terms of this contract and the VHA Records 
Control Schedule 10-1.
    (5) Use of VA data and information. The Contractor/subcontractor 
must receive, gather, store, back up, maintain, use, disclose and 
dispose of VA information only in compliance with the terms of the 
contract and applicable Federal and VA information confidentiality 
and security laws, regulations and policies. If Federal or VA 
information confidentiality and security laws, regulations and 
policies become applicable to the VA information or information 
systems after execution of the contract, or if the National NIST 
issues or updates applicable FIPS or Special Publications (SP) after 
execution of this contract, the parties agree to negotiate in good 
faith to implement the information confidentiality and security 
laws, regulations and policies for this contract as a result of any 
updates, if required.
    (6) Copying VA data or information. The Contractor/subcontractor 
shall not make copies of VA information except as authorized and 
necessary to perform the terms of the contract or to preserve 
electronic information stored on Contractor/subcontractor electronic 
storage media for restoration in case any electronic equipment or 
data used by the Contractor/subcontractor needs to be restored to an 
operating state. If copies are made for restoration purposes, after 
the restoration is complete, the copies must be appropriately 
destroyed.
    (7) Violation of information custodial requirements. If VA 
determines that the Contractor has violated any of VA's information 
confidentiality, privacy, or security provisions, it shall be 
sufficient grounds for VA to withhold payment to the Contractor or 
third-party or terminate the contract for default in accordance with 
FAR part 49 or terminate for cause in accordance with FAR 12.403.
    (8) Encryption. The Contractor/subcontractor must store, 
transport, or transmit VA sensitive information, when permitted by 
the contract, using cryptography, and VA-approved encryption tools 
that are, at a minimum, validated under FIPS 140-3 (or its 
successor).
    (9) Firewall and web services security controls. The Contractor/
subcontractor's firewall and web services security controls, if 
applicable, shall meet or exceed VA's minimum requirements. VA 
Configuration Guidelines are available upon request.
    (10) Disclosure of VA data and information. Except for uses and 
disclosures of VA information authorized in a cognizant contract for 
performance of the contract, the Contractor/subcontractor may use 
and disclose VA information only in two other situations: (i) 
subject to paragraph (f)(10) of this section, in response to a court 
order from a court of competent jurisdiction, or (ii) with VA's 
prior written approval. The Contractor/subcontractor must refer all 
requests for, demands for production of, or inquiries about, VA 
information and information systems to the Contracting Officer for 
response. If the Contractor/subcontractor is in receipt of a court 
order or other request or believes it has a legal requirement to 
disclose VA information, that Contractor/subcontractor shall 
immediately refer such court order or other request to the 
Contracting Officer for response. If the Contractor or subcontractor 
discloses information on behalf of VHA, the Contractor and/or 
subcontractor must maintain an accounting of disclosures. Accounting 
of Disclosures documentation maintained by the Contractor/
subcontractor will include the name of the individual to whom the 
information pertains, the date of each disclosure, the nature or 
description of the information disclosed, a brief statement of the 
purpose of each disclosure or, in lieu of such statement, a copy of 
a written request for a disclosure, and the name and address of the 
person or agency to whom the disclosure was made. The Contractor/
subcontractor will provide its Accounting of Disclosures upon 
request and within 15 calendar days to the assigned COR and Privacy 
Officer. Accounting of disclosures should be provided electronically 
via encrypted email to the COR and designated VA facility Privacy 
Officer as provided in the contract, BAA, or by the Contracting 
Officer. If providing the Accounting of Disclosures electronically 
cannot be done securely, the Contractor/subcontractor will provide 
copies via trackable methods (UPS, USPS, Federal Express, etc.) 
immediately, providing the designated COR and Privacy Officer with 
the tracking information.
    (11) Compliance with privacy statutes and applicable 
regulations. The Contractor/subcontractor shall not disclose VA 
information protected by any of VA's privacy statutes or applicable 
regulations including but not limited to: the Privacy Act of 1974, 
38 U.S.C. 5701, confidential nature of claims, 38 U.S.C. 5705, 
confidentiality of medical quality assurance records and/or 38 
U.S.C. 7332, confidentiality of certain health records pertaining to 
drug addiction, sickle cell anemia, alcoholism or alcohol abuse, or 
infection with human immunodeficiency virus or the HIPAA Privacy 
Rule. If the Contractor/subcontractor is in receipt of a court order 
or other requests for VA information or has questions if it can 
disclose information protected under the above-mentioned 
confidentiality statutes because it is required by law, that 
Contractor/subcontractor shall immediately refer such court order or 
other request to the Contracting Officer for response.

[[Page 4751]]

    (g) Report of known or suspected security/privacy incident. The 
Contractor, subcontractor, third-party affiliate or business 
associate, and its employees shall notify VA immediately via the 
Contracting Officer and the COR or within one (1) hour of an 
incident which is an occurrence (including the discovery or 
disclosure of successful exploits of system vulnerability) that (A) 
actually or imminently jeopardizes, without lawful authority, the 
integrity, confidentiality, or the availability of its data and 
operations, or of its information or information system(s); or (B) 
constitutes a violation or imminent threat of violation of law, 
security policies, security procedures, or acceptable use policies. 
The initial notification may first be made verbally but must be 
followed up in writing within one (1) hour. See VA Data Breach 
Response Service at https://www.oprm.va.gov/dbrs/about_dbrs.aspx. 
Report all actual or suspected security/privacy incidents and report 
the information to the Contracting Officer and the COR as identified 
in the contract or as directed in the contract, within one hour of 
discovery or suspicion.
    (1) Such issues shall be remediated as quickly as is practical, 
but in no event longer than __ days [Fill in: Contracting Officer 
fills in the number of days]. The Contractor shall notify the 
Contracting Officer in writing.
    (2) When the security fixes involve installing third party 
patched (e.g., Microsoft OS patches or Adobe Acrobat), the 
Contractor will provide written notice to VA that the patch has been 
validated as not affecting the systems within 10 working days. When 
the Contractor is responsible for operations or maintenance of the 
systems, they shall apply the security fixes within __ [Fill in: 
Contracting Officer fills in the number of days in consultation with 
requiring activity].
    (3) All other vulnerabilities shall be remediated in a timely 
manner based on risk, but within 60 days of discovery or disclosure. 
Contractors shall notify the Contracting Officer, and COR within 2 
business days after remediation of the identified vulnerability. 
Exceptions to this paragraph (e.g., for the convenience of VA) must 
be requested by the Contractor through the COR and shall only be 
granted with approval of the Contracting Officer and the VA 
Assistant Secretary for Office of Information and Technology. These 
exceptions will be tracked by the Contractor in concert with the 
Government in accordance with VA Directive 6500.6 and related VA 
Handbooks.
    (h) Security and privacy incident investigation. (1) The term 
``privacy incident'' means the unauthorized disclosure or use of VA 
information protected under a confidentiality statute or regulation.
    (2) The term ``security incident'' means an occurrence that (A) 
actually or imminently jeopardizes, without lawful authority, the 
integrity, confidentiality, or availability of information systems; 
or (B) constitutes a violation or imminent threat of violation of 
law, security policies, security procedures, or acceptable policies. 
The Contractor/subcontractor shall immediately notify the 
Contracting Officer and COR for the contract of any known or 
suspected security or privacy incident, or any other unauthorized 
disclosure of sensitive information, including that contained in 
system(s) to which the Contractor/subcontractor has access.
    (3) To the extent known by the Contractor/subcontractor, the 
Contractor/subcontractor's notice to VA shall identify the 
information involved, the circumstances surrounding the incident 
(including to whom, how, when, and where the VA information or 
assets were placed at risk or compromised), and any other 
information that the Contractor/subcontractor considers relevant.
    (4) With respect to unsecured PHI, the Business Associate is 
deemed to have discovered a security incident as defined above when 
the Business Associate either knew, or by exercising reasonable 
diligence should have been known to an employee of the Business 
Associate. Upon discovery, the Business Associate must notify VHA of 
the security incident immediately within one hour of discovery or 
suspicion as agreed to in the BAA.
    (5) In instances of theft or break-in or other criminal 
activity, the Contractor/subcontractor must concurrently report the 
incident to the appropriate law enforcement entity (or entities) of 
jurisdiction, including the VA OIG and the VA Office of Security and 
Law Enforcement. The Contractor, its employees, and its 
subcontractors and their employees shall cooperate with VA and any 
law enforcement authority responsible for the investigation and 
prosecution of any possible criminal law violation(s) associated 
with any incident. The Contractor/subcontractor shall cooperate with 
VA in any civil litigation to recover VA information, obtain 
monetary or other compensation from a third party for damages 
arising from any incident, or obtain injunctive relief against any 
third party arising from, or related to, the incident.
    (i) Data breach notification requirements. (1) This contract may 
require access to sensitive personal information. If so, the 
Contractor is liable to VA for liquidated damages in the event of a 
data breach involving any VA sensitive personal information the 
Contractor/Subcontractor processes or maintains under the contract 
as set forth in clause 852.211-76, Liquidated Damages--Reimbursement 
for Data Breach Costs.
    (2) The Contractor/subcontractor shall provide notice to VA of a 
privacy or security incident as set forth in the Security and 
Privacy Incident Investigation section of this clause. The term 
'data breach' means the loss, theft, or other unauthorized access, 
or any access other than that incidental to the scope of employment, 
to data containing sensitive personal information, in electronic or 
printed form, that results in the potential compromise of the 
confidentiality or integrity of the data. The Contractor shall fully 
cooperate with VA or third-party entity performing an independent 
risk analysis on behalf of VA. Failure to cooperate may be deemed a 
material breach and grounds for contract termination.
    (3) The Contractor/subcontractor shall fully cooperate with VA 
or any Government agency conducting an analysis regarding any notice 
of a data breach or potential data breach or security incident which 
may require the Contractor to provide information to the Government 
or third-party performing a risk analysis for VA, and shall address 
all relevant information concerning the data breach, including the 
following:
    (i) Nature of the event (loss, theft, unauthorized access).
    (ii) Description of the event, including--
    (A) Date of occurrence;
    (B) Date of incident detection;
    (C) Data elements involved, including any PII, such as full 
name, social security number, date of birth, home address, account 
number, disability code.
    (D) Number of individuals affected or potentially affected.
    (E) Names of individuals or groups affected or potentially 
affected.
    (F) Ease of logical data access to the lost, stolen or 
improperly accessed data in light of the degree of protection for 
the data, e.g., unencrypted, plain text.
    (G) Amount of time the data has been out of VA control.
    (H) The likelihood that the sensitive personal information will 
or has been compromised (made accessible to and usable by 
unauthorized persons).
    (I) Known misuses of data containing sensitive personal 
information, if any.
    (J) Assessment of the potential harm to the affected 
individuals.
    (K) Data breach analysis as outlined in 6500.2 Handbook, 
Management of Breaches Involving Sensitive Personal Information, as 
appropriate.
    (L) Whether credit protection services may assist record 
subjects in avoiding or mitigating the results of identity theft 
based on the sensitive personal information that may have been 
compromised.
    (M) Steps taken in response to mitigate or prevent a repetition 
of the incident.
    (j) Training. (1) All Contractor employees and subcontractor 
employees requiring access to VA information or VA information 
systems shall complete the following before being granted access to 
VA information and its systems:
    (i) On an annual basis, successfully complete the VA Privacy and 
Information Security Awareness and VA Information Security Rules of 
Behavior training.
    (ii) On an annual basis, sign and acknowledge (either manually 
or electronically) understanding of and responsibilities for 
compliance with the VA Information Security Rules of Behavior for 
Organizational Users, relating to access to VA information and 
information systems.
    (iii) Successfully complete any additional cyber security or 
privacy training, as required for VA personnel with equivalent 
information system access.
    (2) The Contractor shall provide to the Contracting Officer and/
or the COR a copy of the training certificates and affirmation that 
VA Information Security Rules of Behavior for Organizational Users 
signed by each applicable employee have been completed and submitted 
within five (5) days of the initiation of the contract and annually 
thereafter, as required.
    (3) Failure to complete the mandatory annual training and 
acknowledgement of the VA Information Security Rules of Behavior,

[[Page 4752]]

within the timeframe required, is grounds for suspension or 
termination of all physical or electronic access privileges and 
removal from work on the contract until such time as the training 
and documents are complete.
    (k) Subcontract flow down. The Contractor shall include the 
substance of this clause, including this paragraph (k), in 
subcontracts, third-party agreements, and BAAs, of any amount and in 
which subcontractor employees, third-party servicers/employees, and 
business associates will perform functions where they will have 
access to VA information (including VA sensitive information, i.e., 
sensitive personal information and protected health information), 
information systems, information technology (IT) or providing and 
accessing information technology-related contract services, support 
services, and related resources (see VAAR 802.101 definition of 
information technology-related contracts).
(End of clause)

0
15. Section 852.211-76 is added to read as follows:


852.211-76   Liquidated Damages--Reimbursement for Data Breach Costs.

    As prescribed in 811.503-70, insert the following clause:

Liquidated Damages--Reimbursement for Data Breach Costs (Feb 2023)

    (a) Definition. As used in this clause, ``contract'' means any 
contract, agreement, order or other instrument and encompasses the 
definition set forth in FAR 2.101.
    (b) Non-disclosure requirements. As a condition of performance 
under a contract, order, agreement, or other instrument that 
requires access to sensitive personal information as defined in VAAR 
802.101, the following is expressly required--
    (1) The Contractor, subcontractor, their employees or business 
associates shall not, directly or through an affiliate or employee 
of the Contractor, subcontractor, or business associate, disclose 
sensitive personal information to any other person unless the 
disclosure is lawful and is expressly permitted under the contract; 
and
    (2) The Contractor, subcontractor, their employees or business 
associates shall immediately notify the Contracting Officer and the 
Contracting Officer's Representative (COR) of any security incident 
that occurs involving sensitive personal information.
    (c) Liquidated damages. If the Contractor or any of its agents 
fails to protect VA sensitive personal information or otherwise 
engages in conduct which results in a data breach, the Contractor 
shall, in place of actual damages, pay to the Government liquidated 
damages of __ [Contracting Officer insert amount] per affected 
individual in order to cover costs related to the notification, data 
breach analysis and credit monitoring. In the event the Contractor 
provides payment of actual damages in an amount determined to be 
adequate by the Contracting Officer, the Contracting Officer may 
forgo collection of liquidated damages.
    (d) Purpose of liquidated damages. Based on the results from 
VA's determination that there was a data breach caused by 
Contractor's or any of its agents' failure to protect or otherwise 
engaging in conduct to cause a data breach of VA sensitive personal 
information, and as directed by the Contracting Officer, the 
Contractor shall be responsible for paying to the VA liquidated 
damages in the amount of __ [Contracting Officer insert amount] per 
affected individual to cover the cost of the following:
    (1) Notification related costs.
    (2) Credit monitoring reports.
    (3) Data breach analysis and impact.
    (4) Fraud alerts.
    (5) Identity theft insurance.
    (e) Relationship to termination clause, if applicable. If the 
Government terminates this contract, purchase order, or agreement, 
in whole or in part under clause 52.249-8, Default--Fixed-Price 
Supply and Service, or any other related FAR or VAAR clause included 
in the contract, in addition to the required liquidated damages for 
data breach-related expenses specified in paragraph (c) above, the 
Contractor is liable for excess costs for those supplies and 
services for repurchase as may be required under the Termination 
clause.
(End of clause)
    Alternate I (FEB 2023). In commercial products or commercial 
services acquisitions awarded under the procedures of FAR part 8 or 12, 
substitute this paragraph (e) in lieu of paragraph (e) in the basic 
clause:
    (e) Relationship to termination clause, if applicable. If the 
Government terminates this contract in whole or in part under the 
Termination for cause paragraph, FAR 52.212-4(m), Contract Terms and 
Conditions--Commercial Products and Commercial Services, the Contractor 
is liable for damages accruing until the Government reasonably obtains 
delivery or performance of similar supplies or services. These damages 
are in addition to costs of repurchase as may be required under the 
Termination clause.
    Alternate II (FEB 2023). In simplified acquisitions exceeding the 
micro-purchase threshold that are for other than commercial products or 
commercial services awarded under the procedures of FAR part 13 (see 
FAR 13.302-5(d)(1) and the clause at FAR 52.213-4), substitute this 
paragraph (e) in lieu of paragraph (e) in the basic clause:
    (e) Relationship to termination clause, if applicable. If the 
Government terminates this contract in whole or in part under the 
Termination for cause paragraph, FAR 52.213-4(g), Terms and 
Conditions--Simplified Acquisitions (Other Than Commercial Products and 
Commercial Services), or any other applicable FAR or VAAR clause, the 
Contractor is liable for damages accruing until the Government 
reasonably obtains delivery or performance of similar supplies or 
services. These damages are in addition to costs of repurchase as may 
be required under the Termination clause.


852.212-70  [Removed and Reserved]

0
16. Section 852.212-70 is removed and reserved.

0
17. Section 852.212-71 is revised to read as follows:


852.212-71   Gray Market and Counterfeit Items.

    As prescribed in 812.301(f), insert the following clause:

Gray Market and Counterfeit Items (Feb 2023)

    (a) No used, refurbished, or remanufactured supplies or 
equipment/parts shall be provided. This procurement is for new 
Original Equipment Manufacturer (OEM) items only. No gray market 
items shall be provided. Gray market items are OEM goods 
intentionally or unintentionally sold outside an authorized sales 
territory or sold by non-authorized dealers in an authorized sales 
territory.
    (b) No counterfeit supplies or equipment/parts shall be 
provided. Counterfeit items include unlawful or unauthorized 
reproductions, substitutions, or alterations that have been 
mismarked, misidentified, or otherwise misrepresented to be an 
authentic, unmodified item from the original manufacturer, or a 
source with the express written authority of the original 
manufacturer or current design activity, including an authorized 
aftermarket manufacturer. Unlawful or unauthorized substitutions 
include used items represented as new, or the false identification 
of grade, serial number, lot number, date code, or performance 
characteristics.
    (c) Vendor shall be an OEM, authorized dealer, authorized 
distributor, or authorized reseller for the proposed equipment/
system, verified by an authorization letter or other documents from 
the OEM. All software licensing, warranty and service associated 
with the equipment/system shall be in accordance with the OEM terms 
and conditions.
(End of clause)

0
18. Section 852.212-72 is added to read as follows:


852.212-72   Gray Market and Counterfeit Items--Information Technology 
Maintenance Allowing Other-than-New Parts.

    As prescribed in 812.301(f), insert the following clause:

Gray Market and Counterfeit Items--Information Technology Maintenance 
Allowing Other-Than-New Parts (Feb 2023)

    (a) Used, refurbished, or remanufactured parts may be provided. 
No gray market supplies or equipment shall be provided. Gray market 
items are Original Equipment Manufacturer (OEM) goods intentionally 
or unintentionally sold outside an authorized

[[Page 4753]]

sales territory or sold by non-authorized dealers in an authorized 
sales territory.
    (b) No counterfeit supplies or equipment shall be provided. 
Counterfeit items include unlawful or unauthorized reproductions, 
substitutions, or alterations that have been mismarked, 
misidentified, or otherwise misrepresented to be an authentic, 
unmodified item from the original manufacturer, or a source with the 
express written authority of the original manufacturer or current 
design activity, including an authorized aftermarket manufacturer. 
Unlawful or unauthorized substitutions include used items 
represented as new, or the false identification of grade, serial 
number, lot number, date code, or performance characteristics.
    (c) Vendor shall be an OEM, authorized dealer, authorized 
distributor or authorized reseller for the proposed equipment/
system, verified by an authorization letter or other documents from 
the OEM. All software licensing, warranty and service associated 
with the equipment/system shall be in accordance with the OEM terms 
and conditions.
(End of clause)

0
19. Section 852.239-70 is added to read as follows:


852.239-70   Security Requirements for Information Technology 
Resources.

    As prescribed in 839.106-70, insert the following clause:

Security Requirements for Information Technology Resources (Feb 2023)

    (a) Definitions. As used in this clause--
    Information technology has the same meaning in FAR 2.101 and 
also means Information and Communication Technology (ICT).
    Information system security plan means a formal document that 
provides an overview of the security equirements for an information 
system and describes the security controls in place or planned for 
meeting those requirements.
    (b) Responsibilities. The Contractor shall be responsible for 
information system security for all systems connected to a 
Department of Veterans Affairs (VA) network or operated by the 
Contractor for VA, regardless of location. This clause is applicable 
to all or any part of the contract that includes information 
technology resources or services in which the Contractor has 
physical or other system access to VA information that directly 
supports the mission of VA. Examples of tasks that require security 
provisions include--
    (1) Hosting of VA e-Government sites or other information 
technology operations;
    (2) Acquisition, transmission, or analysis of data owned by VA 
with significant replacement cost should the contractor's copy be 
corrupted; and
    (3) Access to VA general support systems/major applications at a 
level beyond that granted the general public, e.g., bypassing a 
firewall.
    (c) Information system security plan. The Contractor shall 
develop, provide, implement, and maintain an Information System 
Security Plan. VA information systems must have an information 
system security plan that provides an overview of the security 
requirements for the system and describes the security controls in 
place or the plan for meeting those requirements. This plan shall 
describe the processes and procedures that the Contractor will 
follow to ensure appropriate security of information system 
resources developed, processed, or used under this contract. The 
information system security plan should include implementation 
status, responsible entities, resources, and estimated completion 
dates. Information system security plans may also include, but are 
not limited to, a compiled list of system characteristics, and key 
security-related documents such as a risk assessment, PIA, system 
interconnection agreements, contingency plan, security 
configurations, configuration management plan, and incident response 
plan. The plan shall address the specific contract requirements 
regarding information systems related support or services included 
in the contract, to include the performance work statement (PWS) or 
statement of work (SOW). The Contractor's Information System 
Security Plan shall comply with applicable Federal Laws that 
include, but are not limited to, 40 U.S.C. 11331, the Federal 
Information Security Modernization Act (FISMA) of 2014 and the E-
Government Act of 2002. The plan shall meet information system 
security requirements in accordance with Federal and VA policies and 
procedures, and as amended during the term of this contract, and 
include, but are not limited to the following.
    (1) OMB Circular A-130, Managing Information as a Strategic 
Resource;
    (2) National Institute of Standards and Technology (NIST) 
Guidelines; and
    (3) VA Directive 6500, VA Cybersecurity Program, and the 
directives and handbooks in the VA 6500 series related to VA 
information (including VA sensitive information and sensitive 
personal information and information systems security and privacy), 
as well as those set forth in the contract specifications, statement 
of work, or performance work statement. These include, but are not 
limited to, VA Handbook 6500.6, Contract Security; and VA Directive 
and Handbook 0710, Personnel Security and Suitability Program, which 
establishes VA's procedures, responsibilities, and processes for 
complying with current Federal law, Executive Orders, policies, 
regulations, standards and guidance for protecting VA information, 
information systems (see 802.101, Definitions) security and privacy, 
and adhering to personnel security requirements when accessing VA 
information or information systems.
    (d) Submittal of plan. Within 90 days after contract award, the 
Contractor shall submit the Information System Security Plan to the 
Contracting Officer for review and approval.
    (e) Security accreditation. As required by current VA policy, 
the Contractor shall submit written proof of information system 
security accreditation to the Contracting Officer for non-VA owned 
systems. Such written proof may be furnished either by the 
Contractor or by a third party. Accreditation shall be in accordance 
with VA policy available from the Contracting Officer upon request. 
The Contractor shall submit for acceptance by the Contracting 
Officer along with this accreditation a final information system 
security plan, such as a risk assessment, security test and 
evaluation, and disaster recovery plan/continuity of operations 
plan. The accreditation and the final information system security 
plan and the accompanying documents, such as a risk assessment, 
security test and evaluation, and disaster recovery/continuity of 
operations plan.
    (f) Annual validation. On an annual basis, the Contractor shall 
verify in writing to the Contracting Officer that the Information 
System Security Plan remains valid.
    (g) Banners. The Contractor shall ensure that the official VA 
banners are displayed on all VA systems (both public and private) 
operated by the Contractor that contain Privacy Act information 
before allowing anyone access to the system. The Office of 
Information Technology will make official VA banners available to 
the Contractor.
    (h) Screening and access. The Contractor shall screen all 
personnel requiring privileged access or limited privileged access 
to systems operated by the Contractor for VA or interconnected to a 
VA network in accordance with VA Directives and Handbooks referenced 
in paragraph (c) of this clause.
    (i) Training. The Contractor shall ensure that its employees 
performing services under this contract complete VA security 
awareness training on an annual basis. This includes signing an 
acknowledgment that they have read, understand, and agree to abide 
by the VA Information Security Rules of Behavior (VA National Rules 
of Behavior) as required by 38 U.S.C. 5723; FAR 39.105, Privacy; 
clause 852.204-71, Information and Information Systems Security, and 
this clause on an annual basis.
    (j) Government access. The Contractor shall provide the 
Government access to the Contractor's and subcontractors' 
facilities, installations, operations, documentation, databases, and 
personnel used in performance of the contract. The Contractor shall 
provide access to enable a program of information system inspection 
(to include vulnerability testing), investigation and audit (to 
safeguard against threats and hazards to the integrity, availability 
and confidentiality of VA data or to the function of information 
systems operated on behalf of VA), and to preserve evidence of 
computer crime.
    (k) Notification of termination of employees. The Contractor 
shall immediately notify the Contracting Officer when an employee 
who has access to VA information systems or data terminates 
employment.
    (l) Subcontractor flow down requirement. The Contractor shall 
incorporate and flow down the substance of this clause to all 
subcontracts that meet the conditions in paragraph (a) of this 
clause.
(End of clause)

0
20. Section 852.239-71 is added to read as follows:

[[Page 4754]]

852.239-71  Information System Security Plan and Accreditation.

    As prescribed in 839.106-70, insert the following provision:

Information System Security Plan and Accreditation (Feb 2023)

    All offers submitted in response to this solicitation or request 
for quotation shall address the approach for completing the security 
plan and accreditation requirements in clause 852.239-70, Security 
Requirements for Information Technology Resources.
(End of provision)

0
21. Section 852.239-72 is added to read as follows:


852.239-72   Information System Design and Development.

    As prescribed in 839.106-70, insert the following clause:

Information System Design and Development (Feb 2023)

    (a) Design or development at non-VA facilities. Information 
systems that are designed or developed for or on behalf of VA at 
non-VA facilities shall comply with all VA directives developed in 
accordance with the Federal Information Security Modernization Act 
(FISMA), Health Insurance Portability and Accountability Act (HIPAA) 
regulations, NIST, and related VA security and privacy control 
requirements for Federal information systems. This includes 
standards for the protection of electronic protected health 
information (PHI), outlined in 45 CFR part 164, subpart C, 
information and system security categorization level designations in 
accordance with FIPS 199 and FIPS 200 with implementation of all 
baseline security controls commensurate with the FIPS 199 system 
security categorization and the Trusted Internet Connections (TIC) 
Reference Architecture).
    (b) Privacy Impact Assessment. During the development cycle a 
Privacy Impact Assessment (PIA) must be completed, provided to the 
COR, and approved by the VA Privacy Service in accordance with VA 
Directive 6508, Implementation of Privacy Threshold Analysis and 
Privacy Impact Assessment.
    (c) Security of procured or developed systems and technologies. 
The Contractor shall ensure the security of all procured or 
developed systems and technologies, including their subcomponents 
(hereinafter referred to as ``Systems''), throughout the life of the 
contract and any extension, warranty, or maintenance periods. This 
includes, but is not limited to, workarounds, patches, hotfixes, 
upgrades, and any physical components (hereafter referred to as 
Security Fixes) which may be necessary to fix all security 
vulnerabilities published or known to the Contractor anywhere in the 
Systems, including Operating Systems and firmware. The Contractor 
shall ensure that Security Fixes shall not negatively impact the 
Systems.
    (d) Subcontract flow down requirements. The Contractor shall 
include the clause at 52.224-1, Privacy Act Notification, in every 
solicitation and/or subcontract awarded by the Contractor when the 
clause FAR 52.224-1 is included in its contract.
(End of clause)

0
22. Section 852.239-73 is added to read as follows:


852.239-73  Information System Hosting, Operation, Maintenance, or Use.

    As prescribed in 839.106-70, insert the following clause:

Information System Hosting, Operation, Maintenance, or Use (Feb 2023)

    (a) Definitions. As used in this clause--
    Assessment and Authorization (A&A) means the process used to 
ensure information systems including Major Applications and General 
Support Systems have effective security safeguards which have been 
implemented, planned for, and documented in an Information 
Technology Security Plan. The A&A process per applicable VA policies 
and procedures is the mechanism by which VA provides an 
Authorization to Operate (ATO), the official management decision 
given by the VA to authorize operation of an information system (see 
VA Handbook 6500 for additional details).
    Information system security plan means a formal document that 
provides an overview of the security requirements for an information 
system and describes the security controls in place or planned for 
meeting those requirements.
    (b) Hosting, operation, maintenance, or use at non-VA 
facilities. For information systems that are hosted, operated, 
maintained, or used on behalf of VA at non-VA facilities, 
Contractors/subcontractors are fully responsible and accountable for 
ensuring compliance with the applicable Health Insurance Portability 
and Accountability (HIPAA) Act of 1996 (HIPAA) Privacy and Security 
Rules, the Privacy Act and other required VA confidentiality 
statutes included in VA's mandatory yearly training and privacy 
handbooks, Federal Information Security Modernization Act (FISMA), 
National Institute of Standards and Technology (NIST), Federal 
Information Processing Standards (FIPS), and VA security and privacy 
directives and handbooks. This includes conducting compliant risk 
assessments, routine vulnerability scanning, system patching and 
change management procedures, and the completion of an acceptable 
contingency plan for each system. The Contractor's security control 
procedures must be equivalent to or exceed, those procedures used to 
secure VA systems. A Privacy Impact Assessment (PIA) must also be 
provided to the COR and approved by VA Privacy Service prior to 
approval to operate. All external internet connections to VA's 
network involving VA information must be in accordance with the 
Trusted internet Connections (TIC) Reference Architecture and 
reviewed and approved by VA prior to implementation. For Cloud 
Services hosting, the Contractor shall also ensure compliance with 
the Federal Risk and Authorization Management Program (FedRAMP).
    (c) Collecting, processing, transmitting, and storing of VA 
sensitive information. Adequate security controls for collecting, 
processing, transmitting, and storing of VA sensitive information, 
must be in place, tested, and approved by VA prior to hosting, 
operation, maintenance, or use of the information system, or systems 
by or on behalf of VA. These security controls are to be assessed 
and stated within the Information System Security Plan and if these 
controls are determined not to be in place, or inadequate, a Plan of 
Action and Milestones (POA&M) must be submitted and approved prior 
to the collection, processing, transmitting, and storing of VA 
sensitive information.
    (d) Annual FISMA security controls assessment. The Contractor/
subcontractor's system must adhere to all FISMA, FIPS, and NIST 
standards related to the annual FISMA security controls assessment 
and review and update the Privacy Impact Assessment. Any 
deficiencies noted during this assessment must be provided to the 
Contracting Officer for entry into VA's POA&M management process. 
The Contractor/subcontractor must use VA's POA&M process to document 
planned remedial actions to address any deficiencies in information 
security policies, procedures, and practices, and the completion of 
those activities. Security deficiencies must be corrected within the 
timeframes specified by the VA in the performance work statement 
(PWS) or statement of work (SOW), or in the approved remediation 
plan through the VA POA&M process. Contractor/subcontractor 
procedures are subject to periodic, unannounced assessments by VA 
officials, including the VA Office of Inspector General. The 
physical security aspects associated with Contractor/subcontractor 
activities must also be subject to such assessments. The results of 
an annual review or a major change in the cybersecurity posture at 
any time may indicate the need for reassessment and reauthorization 
of the system. If major changes to the system occur that may affect 
the privacy or security of the data or the system, the A&A of the 
system may need to be reviewed, retested and re-authorized per VA 
Handbook 6500. This may require reviewing and updating all of the 
documentation as described in VA Handbook 6500.6 (e.g., System 
Security Plan, Contingency Plan). See VA Handbook 6500.6 for a list 
of documentation. The VA Information System Risk Management (ISRM) 
office can provide guidance on whether a new A&A would be necessary.
    (e) Annual self-assessment. The Contractor/subcontractor must 
conduct an annual self-assessment on all systems and outsourced 
services as required. Both hard copy and electronic copies of the 
assessment must be provided to the COR. VA reserves the right to 
conduct such an assessment using government personnel or another 
Contractor/subcontractor. The Contractor/subcontractor must take 
appropriate and timely action, as may be specifically addressed in 
the contract, to correct or mitigate any weaknesses discovered 
during such testing, at no additional cost to the Government to 
correct Contractor/subcontractor systems and outsourced services.

[[Page 4755]]

    (f) Prohibition of installation and use of personally-owned or 
Contractor-owned equipment or software on VA networks. VA prohibits 
the installation and use of personally-owned or Contractor/
subcontractor-owned equipment or software on VA networks. If non-VA 
owned equipment must be used to fulfill the requirements of a 
contract, it must be stated in the service agreement, PWS, SOW or 
contract. All of the security controls required for government 
furnished equipment (GFE) must also be utilized in approved other 
equipment (OE) at the Contractor's expense. All remote systems must 
be equipped with, and use, a VA-approved antivirus (AV) software and 
a personal (host-based or enclave based) firewall that is configured 
with a VA-approved configuration. Software must be kept current, 
including all critical updates and patches. Owners of approved OE 
are responsible for providing and maintaining the anti-viral 
software and the firewall on the non-VA owned OE.
    (g) Disposal or return of electronic storage media on non-VA 
leased or non-VA owned IT equipment. All electronic storage media 
used on non-VA leased or non-VA owned IT equipment that is used to 
store, process, or access VA information must be handled in 
adherence with NIST 800-88, Rev. 1, ``Guidelines for Media 
Sanitization,'' and VA Directive 6500, VA Cybersecurity Program, 
paragraph 2(b)(5), Media Sanitization including upon--
    (1) Completion or termination of the contract; or
    (2) Disposal or return of the IT equipment by the Contractor/
subcontractor or any person acting on behalf of the Contractor/
subcontractor, whichever is earlier. Media (e.g., hard drives, 
optical disks, CDs, back-up tapes) used by the Contractors/
subcontractors that contain VA information must be returned to the 
VA for sanitization or destruction or the Contractor/subcontractor 
must self-certify that the media has been disposed of per VA 
Handbook 6500.1 requirements. This must be completed within 30 days 
of termination of the contract.
    (h) Bio-Medical devices and other equipment or systems. Bio-
Medical devices and other equipment or systems containing media 
(e.g., hard drives, optical disks) with VA sensitive information 
will not be returned to the Contractor at the end of lease, for 
trade-in, or other purposes. For purposes of these devices and 
protection of VA sensitive information the devices may be provided 
back to the Contractor under one of three scenarios--
    (1) The Contractor must accept the system without the drive;
    (2) A spare drive must be installed in place of the original 
drive at time of turn-in if VA's initial medical device purchase 
included a spare drive; or
    (3) The Contractor may request reimbursement for the drive at a 
reasonable open market replacement cost to be separately negotiated 
by the Contracting Officer and the Contractor at time of contract 
closeout.
(End of clause)

0
23. Section 852.239-74 is added to read as follows:


852.239-74   Security Controls Compliance Testing.

    As prescribed in 839.106-70(d), insert the following clause:

Security Controls Compliance Testing (Feb 2023)

    On a periodic basis, VA, including the Office of Inspector 
General, reserves the right to evaluate any or all of the security 
and privacy controls implemented by the Contractor under the clauses 
contained within the contract. With 10 working-days' notice, at the 
request of the government, the Contractor must fully cooperate and 
assist in a government-sponsored security controls assessment at 
each location wherein VA information is processed or stored, or 
information systems are developed, operated, maintained, or used on 
behalf of VA, including those initiated by the Office of Inspector 
General. The government may conduct a security control assessment on 
shorter notice, to include unannounced assessments, as determined by 
VA in the event of a security incident or at any other time.
(End of clause)

0
24. Section 852.239-75 is added to read as follows:


852.239-75   Information and Communication Technology Accessibility 
Notice.

    As prescribed in 839.203-70(a), insert the following provision:

Information and Communication Technology Accessibility Notice (Feb 
2023)

    (a) Any offeror responding to this solicitation must comply with 
established VA Information and Communication Technology (ICT) 
(formerly Electronic and Information (EIT)) accessibility standards. 
Information about Section 508 is available at https://www.section508.va.gov/.
    (b) The Section 508 accessibility standards applicable to this 
solicitation are stated in the clause at 852.239-75, Information and 
Communication Technology Accessibility. In order to facilitate the 
Government's determination whether proposed ICT supplies meet 
applicable Section 508 accessibility standards, offerors must submit 
appropriate VA Section 508 Checklists, in accordance with the 
checklist completion instructions. The purpose of the checklists is 
to assist VA acquisition and program officials in determining 
whether proposed ICT supplies, or information, documentation and 
services conform to applicable Section 508 accessibility standards. 
The checklists allow offerors or developers to self-evaluate their 
supplies and document--in detail--whether they conform to a specific 
Section 508 accessibility standard, and any underway remediation 
efforts addressing conformance issues.
    (c) Respondents to this solicitation must identify any exception 
to Section 508 requirements. If an offeror claims its supplies or 
services meet applicable Section 508 accessibility standards, and it 
is later determined by the Government, i.e., after award of a 
contract or order, that supplies or services delivered do not 
conform to the described accessibility standards, remediation of the 
supplies or services to the level of conformance specified in the 
contract will be the responsibility of the Contractor at its 
expense.
(End of provision)

0
25. Section 852.239-76 is added to read as follows:


852.239-76   Information and Communication Technology Accessibility.

    As prescribed in 839.203-70(b), insert the following clause:

Information and Communication Technology Accessibility (Feb 2023)

    (a) All information and communication technology (ICT) (formerly 
referred to as electronic and information technology (EIT)) 
supplies, information, documentation and services support developed, 
acquired, maintained or delivered under this contract or order must 
comply with the ``Architectural and Transportation Barriers 
Compliance Board Electronic and Information Technology (EIT) 
Accessibility Standards'' (see 36 CFR part 1194). Information about 
Section 508 is available at https://www.section508.va.gov/.
    (b) The Section 508 accessibility standards applicable to this 
contract or order are identified in the specification, statement of 
work, or performance work statement. If it is determined by the 
Government that ICT supplies and services provided by the Contractor 
do not conform to the described accessibility standards in the 
contract, remediation of the supplies or services to the level of 
conformance specified in the contract will be the responsibility of 
the Contractor at its own expense.
    (c) The Section 508 accessibility standards applicable to this 
contract are: __ [Contracting Officer: insert the applicable Section 
508 accessibility standards].
    (d) In the event of a modification(s) to this contract or order, 
which adds new EIT supplies or services or revises the type of, or 
specifications for, supplies or services, the Contracting Officer 
may require that the Contractor submit a completed VA Section 508 
Checklist and any other additional information necessary to assist 
the Government in determining that the ICT supplies or services 
conform to Section 508 accessibility standards. If it is determined 
by the Government that ICT supplies and services provided by the 
Contractor do not conform to the described accessibility standards 
in the contract, remediation of the supplies or services to the 
level of conformance specified in the contract will be the 
responsibility of the Contractor at its own expense.
    (e) If this is an Indefinite-Delivery type contract, a Blanket 
Purchase Agreement or a Basic Ordering Agreement, the task/delivery 
order requests that include ICT supplies or services will define the 
specifications and

[[Page 4756]]

accessibility standards for the order. In those cases, the 
Contractor may be required to provide a completed VA Section 508 
Checklist and any other additional information necessary to assist 
the Government in determining that the ICT supplies or services 
conform to Section 508 accessibility standards. If it is determined 
by the Government that ICT supplies and services provided by the 
Contractor do not conform to the described accessibility standards 
in the provided documentation, remediation of the supplies or 
services to the level of conformance specified in the contract will 
be the responsibility of the Contractor at its own expense.
(End of clause)
[FR Doc. 2023-00586 Filed 1-24-23; 8:45 am]
BILLING CODE 8320-01-P