U.S. Finalizes Rule Banning Kaspersky Products From Government Contracts

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The final rule will go into effect Tuesday, replacing an interim rule in place for over a year.

As of Tuesday, government agencies—civilian and defense—have an official, final rule prohibiting them from using cybersecurity products provided by or using software made by Russia-based Kaspersky Lab.

The federal agencies that lead the Federal Acquisition Regulation Council—the Defense Department, General Services Administration and NASA—will publish a final rule Tuesday to the Federal Register outlining how agencies should abide by a provision in the 2018 National Defense Authorization Act restricting the use of Kaspersky products.

Legislators enacted the law in response to concerns from the U.S. intelligence community that Kaspersky executives—some of whom are former Russian intelligence officers—have close ties to Russian government officials. U.S. officials also expressed concern that Russian law would compel the company to share sensitive cybersecurity information on U.S. agencies gleaned through their platform with the Russian government.

Agencies were already under mandate from the Homeland Security Department to remove all Kaspersky products from their systems by October 2017, but the acquisition rule extends that to contractors providing services to federal agencies.

The rule restricts any federal agency from purchasing or otherwise “contracting for hardware, software and services developed or provided by Kaspersky Lab or its related entities, or using any such hardware, software or services in the development of data or deliverables first produced in the performance of the contract,” as stated in the contract clause added to the Federal Acquisition Regulation. The rule notes this includes subcontractors at all levels.

The ban goes so far as to restrict the use of Kaspersky products on any IT system that touches government work, even so far down as payroll systems for a contractor with a federal practice, according to Alan Chvotkin, executive vice president and counsel for the Professional Services Council, a trade group representing federal contractors. While a vendor’s commercial practice would be exempt from the rule, the government’s intentions are unambiguous, he said.

“The clear message from the U.S. government—and the smarter action for companies is—don’t even risk trying to segment or segregate, just get it out of your systems,” he told Nextgov.

The final rule also reasserts that the prohibition extends to purchases below the simplified acquisition threshold, designed to exempt small purchases whenever possible. The rule adds another layer, as well, extending the prohibition to all commercial off-the-shelf products.

“While the law does not specifically address acquisitions of commercial items, including COTS items, there is an unacceptable level of risk for the government in buying hardware, software or services developed or provided in whole or in part by Kaspersky Lab,” the rule states, citing a determination by the Office of Federal Procurement Policy. “This level of risk is not alleviated by the fact that the item being acquired has been sold or offered for sale to the general public, either in the same form or a modified form as sold to the government, nor by the small size of the purchase.”

Publishing of the final rule represents the final word in the years-long effort to remove Kaspersky from federal systems, at least for agencies and the contracting community, Chvotkin said.

Kaspersky maintains the rule is illegal, claiming it targets a single company and is therefore unconstitutional.

“Kaspersky maintains that the statutory provisions underlying the now final rule, Sections 1634 (a) and (b) of the National Defense Authorization Act for Fiscal Year 2018, were unconstitutional, were based on unsubstantiated allegations, and lacked any public evidence of wrongdoing by the company,” the company said in a statement Monday to Nextgov. “Through its Global Transparency Initiative, Kaspersky continues to demonstrate its ongoing commitment to assuring the integrity and trustworthiness of its products and the protection of its users’ data.”

The council published an interim rule in June 2018 to meet the law’s Oct. 1, 2018, deadline. Since that time, the group has taken in some additional comments but opted to finalize the interim rule without changes.

The council received three comments after publishing the interim rule, “one of which was outside the scope of the rule,” according to the notice set to publish Tuesday.

One commenter suggested the government develop a specific list of companies and products that have been prohibited, as well as a methodology for how such a list would be built and amended.

The council noted the idea had been brought up before, including in the preamble to the interim rule, which asked for public comments on how “a list might be developed and maintained.” However, “no public input was offered,” the notice states.

“Due to the continually evolving nature of technological product and service offerings, including third-party products that may either add or eliminate inclusion of elements such as Kaspersky Lab software, and the lack of suggestions for how this challenge might be managed, DoD, GSA and NASA have concluded that providing a definitive list of hardware, software, or services subject to the definition of ‘covered article’ is impractical, particularly in regulation,” the notice states.

Another comment suggested the process for finalizing the rule should have been faster, given the urgency of the problem. The council responded that the interim rule was in full effect before the Oct. 1, 2018, deadline and was meant to be “one tool to help agencies in their implementation … but the rule did not impact or impair any other planned or ongoing efforts agencies undertook to address the presence of covered articles.”