52.204-2 Security Requirements
Source: FAR 52.204-2 on acquisition.gov
FAR 52.204-2 requires strict compliance with federal security protocols for contracts involving classified information, including flowdown to subcontractors and procedures for handling changes in security requirements.
Overview
FAR 52.204-2, Security Requirements, mandates that contractors and their subcontractors comply with federal security protocols when a contract involves access to classified information (Confidential, Secret, or Top Secret). The clause requires adherence to the Security Agreement (DD Form 441) and the National Industrial Security Program Operating Manual (NISPOM), including any updates. If the government changes security requirements or classification levels during contract performance, contractors may seek equitable adjustments for cost or other impacts. Contractors must flow down similar requirements to all subcontractors with access to classified information. Alternate versions of the clause address additional requirements for research and development contracts with educational institutions (e.g., procedures for handling impracticable security changes and possible contract termination) and for construction or architect-engineer contracts (e.g., employee identification and fingerprinting requirements).
Key Rules
- Compliance with Security Protocols
- Contractors must follow the Security Agreement (DD Form 441) and NISPOM (32 CFR part 117), including any revisions.
- Equitable Adjustments for Security Changes
- Contractors may request equitable adjustments if government-directed security changes affect contract terms or costs.
- Subcontractor Flowdown
- Contractors must include substantially similar security requirements in all subcontracts involving classified information.
- Alternate I (R&D/Educational Institutions)
- Outlines procedures for handling impracticable security changes and allows for contract termination if issues cannot be resolved.
- Alternate II (Construction/AE Contracts)
- Requires employee identification, delivery of IDs upon release, and fingerprinting as directed by the Contracting Officer.
Responsibilities
- Contracting Officers: Ensure inclusion of the clause, manage security changes, and oversee compliance and notifications.
- Contractors: Comply with all security requirements, flow down clauses to subs, notify of impracticable changes, and manage employee identification as required.
- Agencies: Provide updates to security manuals, process equitable adjustments, and oversee contract terminations if necessary.
Practical Implications
- This clause ensures the protection of classified information in federal contracts.
- Contractors must have robust security compliance programs and be prepared for changes in requirements.
- Failure to comply can result in contract termination or loss of access to classified work.
As prescribed in 4.404(a), insert the following clause:
Security Requirements (Mar 2021)
(a) This clause applies to the extent that this contract involves access to information classified "Confidential," "Secret," or "Top Secret."
(b) The Contractor shall comply with-
(1) The Security Agreement http://uscode.house.gov/browse.xhtml;jsessionid=114A3287C7B3359E597506A31FC855B3" target="_blank"> DD Form441), including the National Industrial Security Program Operating Manual (32 CFR part 117); and
(2) Any revisions to that manual, notice of which has been furnished to the Contractor.
(c) If, subsequent to the date of this contract, the security classification or security requirements under this contract are changed by the Government and if the changes cause an increase or decrease in security costs or otherwise affect any other term or condition of this contract, the contract shall be subject to an equitable adjustment as if the changes were directed under the Changes clause of this contract.
(d) The Contractor agrees to insert terms that conform substantially to the language of this clause, including this paragraph (d) but excluding any reference to the Changes clause of this contract, in all subcontracts under this contract that involve access to classified information.
(End of clause)
Alternate I (Apr 1984). If a cost contract for research and development with an educational institution is contemplated, add the following paragraphs (e), (f), and (g) to the basic clause:
(e) If a change in security requirements, as provided in paragraphs (b) and (c), results (1)in a change in the security classification of this contract or any of its elements from an unclassified status or a lower classification to a higher classification, or (2)in more restrictive area controls than previously required, the Contractor shall exert every reasonable effort compatible with the Contractor’s established policies to continue the performance of work under the contract in compliance with the change in security classification or requirements. If, despite reasonable efforts, the Contractor determines that the continuation of work under this contract is not practicable because of the change in security classification or requirements, the Contractor shall notify the Contracting Officer in writing. Until resolution of the problem is made by the Contracting Officer, the Contractor shall continue safeguarding all classified material as required by this contract.
(f) After receiving the written notification, the Contracting Officer shall explore the circumstances surrounding the proposed change in security classification or requirements, and shall endeavor to work out a mutually satisfactory method whereby the Contractor can continue performance of the work under this contract.
(g) If, 15 days after receipt by the Contracting Officer of the notification of the Contractor’s stated inability to proceed, (1) the application to this contract of the change in security classification or requirements has not been withdrawn, or (2)a mutually satisfactory method for continuing performance of work under this contract has not been agreed upon, the Contractor may request the Contracting Officer to terminate the contract in whole or in part. The Contracting Officer shall terminate the contract in whole or in part, as may be appropriate, and the termination shall be deemed a termination under the terms of the Termination for the Convenience of the Government clause.
Alternate II (Apr 1984). If employee identification is required for security or other reasons in a construction contract or architect-engineer contract, add the following paragraph (e) to the basic clause:
(e) The Contractor shall be responsible for furnishing to each employee and for requiring each employee engaged on the work to display such identification as may be approved and directed by the Contracting Officer. All prescribed identification shall immediately be delivered to the Contracting Officer, for cancellation upon the release of any employee. When required by the Contracting Officer, the Contractor shall obtain and submit fingerprints of all persons employed or to be employed on the project.