§ 159a.88 - Carve-Out” contracts.

(a) The Secretaries of the Military Departments and the DUSD(P), or their designees, shall ensure that, in those Special Access Programs involving contractors, special access controls are made applicable by legally binding instruments.

(b) To the extent necessary for DIS to execute its security responsibilities with respect to Special Access Programs under its security cognizance, DIS personnel shall have access to all information relating to the administration of these Programs.

(c) Excluding those Programs specified in § 159a.81(c), the use of “carve-out” contracts that relieve the DIS from inspection responsibility under the Defense Industrial Security Program is prohibited unless:

(1) Such contract supports a Special Access Program approved and administered under § 159a.81;

(2) Mere knowledge of the existence of a contract or of its affiliation with the Special Access Program is classified information; and

(3) Carve-out status is approved for each contract by the Secretary of a Military Department, the Director, NSA, the DUSD(P), or their designees.

(d) Approval to establish a “carve-out” contract must be requested from the Secretary of a Military Department, or designee(s), the Director, NSA, or designee(s), or in the case of other DoD Components, from the DUSD(P). Approved “carve-out” contracts shall be assured the support necessary for the requisite protection of the classified information involved. The support shall be specified through a system of controls that shall provide for:

(1) A written security plan, oral waivers of which are prohibited except in critical situations that must be documented as soon as possible after the fact.

Note:

The plan must identify that DD Forms 254 have been distributed to the Defense Investigative Service as outlined in DoD Directive 5205.7.

(2) Professional security personnel at the sponsoring DoD Component performing security inspections at each contractor's facility which shall be conducted, at a minimum, with the frequency prescribed by paragraph 4-103 of DoD 5220.22-R;

(3) “Carve-out” contracting procedures;

(4) A central office of record; and

(5) An official to be the single point of contact for security control and administration. DoD Components other than the Military Departments and NSA shall submit such appropriate rationale and security plan along with requests for approval to the DUSD(P).

(e) An annual inventory of carve-out contracts shall be conducted by each DoD Component which participates in Special Access Programs.

(f) This subsection relates back to the date of execution for each contract to which carve-out contracting techniques are applied. The carve-out status of any contract expires upon termination of the Special Access Program which it supports.