Justice cancels 7 IT procurements over China links

The Justice Department told Congress in late March that it had canceled seven federal IT procurements because of questionable vendor ties.

The cancellations arose from a provision in the fiscal 2013 continuing resolution that required a cybersecurity review of procurements by the departments of Justice and Commerce, NASA, and the National Science Foundation for vendors that had links to the Chinese government or military.

The provision, known as the Section 516 rule, was included in the 2013 funding bill at the urging of Rep. Frank Wolf (R-Va.), chairman of the appropriations subcommittee that funds the affected departments and agencies. The rule seeks to eliminate IT gear from firms known to be responsible for cyberattacks on U.S. companies or to have links to the Chinese military. The rule has provoked sustained protests by contractors concerned about its potentially wide-ranging impact on the IT supply chain.

"Although the [Obama] administration was not initially supportive of this effort to restrict purchases of questionable IT hardware, I appreciate that the department appears to be taking the new requirements seriously," Wolf said at the opening of an appropriations hearing on April 4.

Justice's March 27 report from Lee Lofthus, assistant attorney general for administration, provides a detailed look at how the administration has gone about implementing the measure. A risk assessment program inside the FBI examined 1,145 companies involved in IT procurements in fiscal 2013 "for the purpose of neutralizing foreign intelligence entities through the identification of supply chain threats and vulnerabilities [that] could result in cyber espionage or sabotage activities." Of those companies, the assessors found "questionable foreign ownership control or influence" and other potential red flags for six vendors across seven procurements. The vendors and procurements were not identified in the report.

In procurement guidance documents released in November 2013, Justice officials said the Section 516 assessment must be applied to all the department's national security systems and enterprise IT systems. NASA's Solutions for Enterprise-Wide Procurement contract vehicle included a public mention of the rule, but otherwise detail on the program has been hard to come by.

Wolf said Justice's report "demonstrates that the policy this committee directed was both necessary and constructive, and it will help bolster the department's cybersecurity."

The rule was changed slightly in the fiscal 2014 appropriations bill, where it appears, somewhat confusingly, in Section 515. The new rule applies to IT systems classified as moderate or high impact under federal security rules. But the language continues to identify China as a potential source of cybersecurity risk. Additionally, the committee report accompanying the legislation requires the Justice Department to provide quarterly updates to Congress on efforts made to uphold the policy.