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February 24, 2021

Stroock Client Alert

By: Chris Griner, Shannon Reaves, Gregory Jaeger, Christopher R. Brewster, Jonathan A. Labib, Erin Bruce Iacobucci

On December 21, 2020, the National Industrial Security Program Operating Manual (“NISPOM”) was published as a final rule in the Federal Register.  A revision to the NISPOM has been expected for a number of years, and is effective today, February 24, 2021.  A number of changes were made to this iteration of the NISPOM, but most of the changes merely formalize current U.S. government policies that were not previously described in the manual.  In any case, companies who currently possess, are in process for, or are seeking a facility security clearance should review how the NISPOM changes apply to their specific circumstances and goals going forward. 

Among the notable changes are:

  • Revisions to the National Interest Determination (“NID”) process based on Section 842 of the 2019 National Defense Authorization Act (“Section 842”), exempting certain Special Security Agreement (“SSA”) companies[1] from the NID requirement. See 32 CFR 117.11(d)(2)(iii)(A).
  • The creation of two forms of limited facility security clearances: (1) the limited entity eligibility determination due to foreign ownership, control or influence (“FOCI”) and (2) the limited entity eligibility determination (non-FOCI).  Both are similar to the former “limited facility security clearance” in that they allow entities to access classified information for a singular purpose or contract, when the entities do not or cannot fully implement the requirements of the National Industrial Security Program.  32 CFR 117.9(m) and 32 CFR 117.11(e).
  • More clear definition of the Senior Management Official (“SMO”) role at a facility holding a security clearance, including a description of the range of SMO obligations that exist under the NISPOM.  32 CFR 117.7(b)(2). 
  • The incorporation of procedures respecting Security Executive Agent Directive 3 (“SEAD 3”), which identifies certain obligations of individuals holding personnel security clearances and those in positions designated as sensitive, most notably, the requirement to obtain advance agency approval before conducting unofficial foreign travel.  See 32 CFR 117.8.

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If you would like a copy of the final rule or wish to discuss the impact of the regulation on your organization, please contact:

Chris Griner

Shannon Reaves

Gregory Jaeger

Christopher R. Brewster

Jonathan A. Labib

Erin Bruce Iacobucci

[1] Section 842 applies to SSA companies whose parent entities are organized in National Technology and Industrial Base countries (i.e., United Kingdom, Canada, Australia).

This Stroock publication offers general information and should not be taken or used as legal advice for specific situations, which depend on the evaluation of precise factual circumstances. Please note that Stroock does not undertake to update its publications after their publication date to reflect subsequent developments. This Stroock publication may contain attorney advertising. Prior results do not guarantee a similar outcome.

 

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