Defense Authorization Bill Repeals NID Requirement

In apparent response to these concerns, the FY 2019 defense authorization bill repeals the NID requirement outright: “Effective October 1, 2020, a covered NTIB entity operating under a special security agreement pursuant to the National Industrial Security Program shall not be required to obtain a national interest determination as a condition for access to Proscribed Information.” (Pub. L. No. 115-232, Section 842(a)). Pending repeal, the Secretary of Defense, in consultation with the Director of the Information Security Oversight Office, may waive the NID requirement to obtain a national interest determination for a “covered NTIB entity” operating under an SSA that has (1) a demonstrated successful record of compliance with the National Industrial Security Program; and (2) previously been approved for access to Proscribed Information.

The repeal is limited to “a person that is a subsidiary located in the United States— (A) for which the ultimate parent company and any intermediate parent companies of such subsidiary are located in a country that is part of the national technology and industrial base (as defined in section 2500 of title 10, United States Code); and (B) that is subject to the foreign ownership, control, or influence requirements of the National Industrial Security Program. The term “Proscribed Information” means information that is—(A) classified at the level of top secret; (B) communications security information (excluding controlled cryptographic items when un-keyed or utilized with unclassified keys); (C) restricted data (as defined in section 11 of the Atomic Energy Act of 1954 (42 U.S.C. 2014)); (D) special access program information under section 4.3 of Executive Order No. 13526 (75 Fed. Reg. 707; 50 U.S.C. 3161 note) or successor order; or (E) designated as sensitive compartmented information. The criteria for discretionary waiver would presumably cover most established Canadian, Australian, and UK-controlled companies operating under SSAs. These firms are well-positioned to seek waivers now.