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TITLE VIII--ACQUISITION POLICY, ACQUISITION MANAGEMENT, AND RELATED MATTERS

Subtitle E Department of Defense Contractor Matters

DHNDAA Section

 

SEC. 845. DEFENSE INDUSTRIAL SECURITY.

(a) Defense Industrial Security-

(1) IN GENERAL- Subchapter I of chapter 21 of title 10, United States Code, is amended by adding at the end the following new section:

`Sec. 438. Defense industrial security

`(a) Responsibility for Defense Industrial Security- The Secretary of Defense shall be responsible for the protection of classified information disclosed to contractors of the Department of Defense.

`(b) Consistency With Executive Orders and Directives- The Secretary shall carry out the responsibility assigned under subsection (a) in a manner consistent with Executive Order 12829 (or any successor order to such executive order) and consistent with policies relating to the National Industrial Security Program (or any successor to such program).

`(c) Performance of Industrial Security Functions for Other Agencies- The Secretary may perform industrial security functions for other agencies of the Federal government upon request or upon designation of the Department of Defense as executive agent for the National Industrial Security Program (or any successor to such program).

`(d) Regulations and Policy Guidance- The Secretary shall prescribe, and from time to time revise, such regulations and policy guidance as are necessary to ensure the protection of classified information disclosed to contractors of the Department of Defense.

`(e) Dedication of Resources- The Secretary shall ensure that sufficient resources are provided to staff, train, and support such personnel as are necessary to fully protect classified information disclosed to contractors of the Department of Defense.

`(f) Biennial Report- The Secretary shall report biennially to the congressional defense committees on expenditures and activities of the Department of Defense in carrying out the requirements of this section. The Secretary shall submit the report at or about the same time that the President's budget is submitted pursuant to section 1105(a) of title 31, United States Code, in odd numbered years. The report shall be in an unclassified form (with a classified annex if necessary) and shall cover the activities of the Department of Defense in the preceding two fiscal years, including the following:

`(1) The workforce responsible for carrying out the requirements of this section, including the number and experience of such workforce; training in the performance of industrial security functions; performance metrics; and resulting assessment of overall quality.

`(2) A description of funds authorized, appropriated, or reprogrammed to carry out the requirements of this section, the budget execution of such funds, and the adequacy of budgets provided for performing such purpose.

`(3) Statistics on the number of contractors handling classified information of the Department of Defense, and the percentage of such contractors who are subject to foreign ownership, control, or influence.

`(4) Statistics on the number of violations identified, enforcement actions taken, and the percentage of such violations occurring at facilities of contractors subject to foreign ownership, control, or influence.

`(5) An assessment of whether major contractors implementing the program have adequate enforcement programs and have trained their employees adequately in the requirements of the program.

`(6) Trend data on attempts to compromise classified information disclosed to contractors of the Department of Defense to the extent that such data are available.'.

(2) CLERICAL AMENDMENT- The table of sections at the beginning of subchapter I of chapter 21 of title 10, United States Code, is amended by adding at the end the following new item:

`438. Defense industrial security.'.

(b) Submission of First Biennial Report- Notwithstanding the deadline in subsection (f) of section 438 of title 10, United States Code, as added by this section, the first biennial report submitted after the date of the enactment of this Act pursuant to such subsection shall be submitted not later than September 1, 2009, and shall address the period from the date of the enactment of this Act to the issuance of such report.

(c) Report on Improving Industrial Security- Not later than March 1, 2009, the Secretary of Defense shall submit to the congressional defense committees a report on improving industrial security, including, at a minimum, the following:

(1) The actions taken or actions planned to implement the recommendations of the Comptroller General as embodied in the report entitled `Industrial Security: DOD Cannot Ensure Its Oversight of Contractors Under Foreign Influence Is Sufficient' (GAO-05-681; July 2005).

(2) Other actions taken or action planned to improve industrial security.

(3) An analysis of the impact of emerging financial arrangements such as sovereign wealth funds, hedge funds, and other new financial debt and credit arrangements on the Department's ability to identify and mitigate foreign ownership, control, or influence.

(4) Any recommendations of the Secretary for modifying regulations and policy guidance prescribed pursuant to section 438(d) of title 10, United States Code, or other regulations or policy guidance addressing industrial security, to extend best practices for industrial security across the broadest possible range of defense contractors, and to improve industrial security generally.

 

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