Introduction

A breach of Controlled Unclassified Information (CUI) is a serious incident that can have significant consequences for any organization, especially those involved in government contracts. The importance of responding appropriately to such breaches cannot be overstated, as failure to do so can result in severe penalties, including the loss of contracts and even legal action. In a recent webinar, experts discussed the critical steps that organizations must take in the event of a CUI breach. This blog outlines these steps, drawing from the insights provided by the experts.

Table of Contents

• Introduction
• Understanding Regulatory Requirements
• Immediate Steps to Take After a Breach
  • Containing the Breach
  • Documenting the Incident
• Reporting the Breach
  • DEFARS 252.204-7012 Requirements
  • Communicating with the Department of Defense (DoD)
• Long-term Response and Compliance
  • Developing an Incident Response Plan
  • Potential Penalties for Non-Compliance
• Conclusion

Understanding Regulatory Requirements

The Defense Federal Acquisition Regulation Supplement (DFARS) 252.204-7012 is a crucial regulation that outlines the requirements for handling and reporting CUI breaches. This regulation is included in nearly every federal contract and mandates that all contractors and subcontractors within the Defense Industrial Base (DIB) protect CUI. One of the key provisions in DFARS 7012 is the requirement to report any CUI breaches to the Department of Defense (DoD) within 72 hours.

Key Insight: Compliance with DFARS 7012 is not optional; it is a contractual obligation. Failure to adhere to these requirements can result in severe penalties, including the loss of contracts and the ability to bid on future contracts.

Immediate Steps to Take After a Breach

• Containing the Breach
  The first step following the discovery of a CUI breach is to contain the incident to prevent further unauthorized access. This may involve isolating affected systems, disabling compromised accounts, and stopping any ongoing data exfiltration.
  Example: If a breach is detected within a subcontractor’s network, the prime contractor should work closely with the subcontractor to ensure that the breach is contained swiftly. This might include disconnecting certain systems from the network to prevent further spread.
• Documenting the Incident
  Once the breach has been contained, it is essential to document all details related to the incident. This includes the time of discovery, the nature of the breach, the affected systems, and the actions taken to contain the breach. Thorough documentation is crucial for the subsequent reporting process and any potential investigations.

   

Reporting the Breach

• DEFARS 252.204-7012 Requirements
  Under DFARS 7012, organizations are required to report CUI breaches to the DoD within 72 hours. This reporting must include a detailed account of the incident, including how the breach was discovered, the scope of the breach, and the actions taken to mitigate the impact.
• Communicating with the Department of Defense (DoD)
  The DoD uses the information provided in breach reports to assess the broader impact on national security and to identify potential coordinated attacks against the DIB. Therefore, accurate and prompt reporting is essential. The DoD may also use this information to alert other contractors about emerging threats.
  Example: During the webinar, it was highlighted that the DoD can aggregate data from multiple breaches to detect patterns and potentially prevent further attacks. This underscores the importance of detailed and accurate breach reports.
  
  

Long-term Response and Compliance

• Developing an Incident Response Plan
  Beyond immediate actions, organizations must have a comprehensive Incident Response Plan (IRP) in place. This plan should outline the steps to be taken in the event of a breach, including who to notify, how to contain the breach, and how to report it. Regular drills and simulations should be conducted to ensure that all team members understand their roles during a breach.
• Key Insight: As highlighted by Kelly Kendall during the webinar, CMMC requires organizations to not only have an IRP but to also regularly exercise it. This ensures that the organization is prepared and that all personnel know how to respond effectively to a breach.

   

  • Potential Penalties for Non-Compliance
    Failure to report a CUI breach within the required 72-hour window can result in significant penalties. These include:

• • Loss of Contracts: The government may terminate existing contracts and disqualify the contractor from bidding on future contracts.
  • Financial Penalties: The government can impose fines and other financial penalties for non-compliance.
  • Legal Action: Under the False Claims Act (also known as Lincoln’s Law), individuals and organizations that misrepresent their compliance with CUI requirements can face prosecution, which could result in fines, restitution, and even imprisonment.

Example: The webinar discussed how the False Claims Act could be applied if an executive knowingly fails to report a breach or falsifies compliance reports. This could lead to severe legal consequences, including potential prison time.

Conclusion

The secure handling of CUI is a critical responsibility for any organization involved in federal contracts, particularly within the defense sector. In the event of a breach, organizations must act swiftly to contain the incident, report it to the DoD, and take steps to prevent future breaches. Adhering to the requirements of DFARS 252.204-7012 and maintaining a robust Incident Response Plan are essential for compliance and for protecting national security.

Final Thought: The consequences of failing to respond appropriately to a CUI breach can be severe, including the loss of contracts, financial penalties, and legal action. Organizations must be proactive in their approach to CUI security and ensure that they are fully prepared to respond to any incidents.

Discover more in our full video. Click here to dive into the topic with comprehensive insights and analysis on identifying Controlled Unclassified Information (CUI) and safeguarding your organization’s data.