```

[Senate Report 115-408]
[From the U.S. Government Publishing Office]

115th Congress 
 2d Session                      SENATE                          Report
                                                                115-408
_______________________________________________________________________

                                     

                                                       Calendar No. 666

         FEDERAL ACQUISITION SUPPLY CHAIN SECURITY ACT OF 2018

                               __________

                              R E P O R T

                                 of the

                   COMMITTEE ON HOMELAND SECURITY AND

                          GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE

                              to accompany

                                S. 3085

        TO ESTABLISH A FEDERAL ACQUISITION SECURITY COUNCIL AND
        TO PROVIDE EXECUTIVE AGENCIES WITH AUTHORITIES RELATING
         TO MITIGATING SUPPLY CHAIN RISKS IN THE PROCUREMENT OF
             INFORMATION TECHNOLOGY, AND FOR OTHER PURPOSES

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                December 4, 2018.--Ordered to be printed
        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                    RON JOHNSON, Wisconsin, Chairman
ROB PORTMAN, Ohio                    CLAIRE McCASKILL, Missouri
RAND PAUL, Kentucky                  THOMAS R. CARPER, Delaware
JAMES LANKFORD, Oklahoma             HEIDI HEITKAMP, North Dakota
MICHAEL B. ENZI, Wyoming             GARY C. PETERS, Michigan
JOHN HOEVEN, North Dakota            MAGGIE HASSAN, New Hampshire
STEVE DAINES, Montana                KAMALA D. HARRIS, California
JON KYL, Arizona                     DOUG JONES, Alabama

                  Christopher R. Hixon, Staff Director
                Gabrielle D'Adamo Singer, Chief Counsel
                       Elliott A. Walden, Counsel
               Margaret E. Daum, Minority Staff Director
       Charles A. Moskowitz, Minority Senior Legislative Counsel
           Julie G. Klein, Minority Professional Staff Member
                     Laura W. Kilbride, Chief Clerk

                                                       Calendar No. 666
115th Congress                                                   Report
                                 SENATE
 2d Session                                                     115-408

======================================================================

 
               FEDERAL ACQUISITION SUPPLY CHAIN SECURITY 
                              ACT OF 2018

                                _______
                                

                December 4, 2018.--Ordered to be printed

                                _______
                                

 Mr. Johnson, from the Committee on Homeland Security and Governmental 
                    Affairs, submitted the following

                              R E P O R T

                         [To accompany S. 3085]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Homeland Security and Governmental 
Affairs, to which was referred the bill (S. 3085) to establish 
a Federal Acquisition Security Council and to provide executive 
agencies with authorities relating to mitigating supply chain 
risks in the procurement of information technology, and for 
other purposes, having considered the same, reports favorably 
thereon with an amendment in the nature of a substitute and 
recommends that the bill, as amended, do pass.

                                CONTENTS

                                                                   Page
  I. Purpose and Summary..............................................1
 II. Background and Need for the Legislation..........................2
III. Legislative History..............................................9
 IV. Section-by-Section Analysis......................................9
  V. Evaluation of Regulatory Impact.................................15
 VI. Congressional Budget Office Cost Estimate.......................15
VII. Changes in Existing Law Made by the Bill, as Reported...........16

                         I. Purpose and Summary

    S. 3085, the Federal Acquisition Supply Chain Security Act 
of 2018, establishes a whole-of government approach to supply 
chain risk management by creating a council and providing 
executive agencies with the necessary authorities to 
effectively share information and mitigate supply chain risks 
when procuring information and communications technology (ICT). 
The bill establishes the Federal Acquisition Security Council 
(Council), an inter-agency body headed by the Office of 
Management and Budget (OMB). The Council is tasked with several 
functions related to supply chain risk management (SCRM), 
including the development of protocols for assessing risk, a 
government-wide strategy, and the authority to recommend 
exclusion or removal orders to executive agencies. The bill 
gives the Secretary of the Department of Homeland Security 
(DHS), the Secretary of the Department of Defense (DoD), and 
the Director of National Intelligence (ODNI) plenary authority 
to issue exclusion and removal orders based upon the Council's 
recommendations. The bill details a limited judicial review 
process available to an aggrieved company wishing to challenge 
the DHS, DoD, or ODNI determination.

              II. Background and the Need for Legislation

    Hostile nation states and other bad actors are attempting 
to gain unprecedented access to sensitive and classified 
information via the Federal ICT supply chains.\1\ Experts have 
noted that using the supply chain, ICT ``products could be 
modified to (1) perform below expectations or fail, (2) 
facilitate state or corporate espionage, of (3) otherwise 
compromise the confidentiality, integrity, or availability of a 
federal information technology system.''\2\ Many of the 
technologies the Federal Government relies on for vital, daily 
functions either could be or already have been targeted by bad 
actors or hostile nation states.\3\ The actors' motivations 
vary, but the effects are the same: a less secure America.\4\
---------------------------------------------------------------------------
    \1\See, e.g., Confirmation Hearing for William R. Evanina to be 
Director of the National Counterintelligence and Security Center: 
Hearing Before the S. Select Comm. on Intelligence, 115th Cong. (2018) 
(statement for the record by William Evanina, Director of the National 
Counterintelligence and Security Center, stating, ``The most critical 
CI threats cut across these threat actors: influence operations, 
critical infrastructure, supply chain, and traditional as well as 
economic espionage. . . . Advanced technology previously available 
mainly to leading nation-states is now increasingly available to a wide 
range of nation-state and non-state actors as well. For example, a 
growing set of threat actors are now capable of using cyber operations 
to remotely access traditional intelligence targets, as well as a 
broader set of U.S. targets including critical infrastructure and 
supply chain, often without attribution.''), available at https://
www.intelligence.senate.gov/sites/default/files/documents/os-revanina-
051518.PDF.
    \2\Supply Chain Vulnerabilities from China in U.S. Federal 
Information and Communications Technology (Apr. 2018), https://
www.uscc.gov/sites/default/files/Research/Interos_Supply% 
20Chain%20Vulnerabilities%20from%20China%20in%20U.S.%20Federal%20ICT 
_final.pdf.
    \3\See Current and Projected National Security Threats to the 
United States: Hearing Before the S. Select Comm. on Intelligence, 
112th Cong. (2012) (unclassified statement for the record by Director 
James Clapper, Director of National Intelligence, stating the ``highly 
complex vulnerabilities associated with the IT supply chain'' are one 
of the ``greatest strategic challenges regarding cyber threats.''), 
available at https://www.dni.gov/files/documents/Newsroom/Testimonies/
20120131_testimony_ata.pdf; Office of the U.S. Trade Representative, 
Executive Office of the President, Findings of the Investigation Into 
China's Acts, Policies, and Practices Related to Technology Transfer, 
Intellectual Property, and Innovation Under Section 301 of the Trade 
Act of 1974 (Mar. 22, 2018), available at https://ustr.gov/sites/
default/files/Section%20301%20FINAL.PDF.
    \4\H. Permanent Select Comm. on Intelligence, Chairman Mike Rogers 
and Ranking Member C.A. Dutch Ruppersberger, Investigative Report on 
the U.S. National Security Issues Posed by Chinese Telecommunications 
Companies Huawei and ZTE, 112th Cong. (Oct. 8, 2012), available at 
https://intelligence.house.gov/sites/intelligence.house.gov/files/
documents/huawei-zte% 20investigative%20report%20(final).pdf (stating, 
``Inserting malicious hardware or software implants into Chinese-
manufactured telecommunications components and systems headed for U.S. 
customers could allow Beijing to shut down or degrade critical national 
security systems in a time of crisis or war. Malicious implants in the 
components of critical infrastructure, such as power grids or financial 
networks, would also be a tremendous weapon in China's arsenal. 
Malicious Chinese hardware or software implants would also be a potent 
espionage tool for penetrating sensitive U.S. national security 
systems, as well as providing access to the closed American corporate 
networks that contain the sensitive trade secrets, advanced research 
and development data, and negotiating or litigation positions that 
China would find useful in obtaining an unfair diplomatic or commercial 
advantage over the United States. . . .'').
---------------------------------------------------------------------------
    This is not a new threat. The U.S. Intelligence Community 
(IC) and Congress have long warned that foreign governments may 
target the Federal ICT supply chain via certain products or 
services. This well-documented history includes:
     In 2011, the Office of National 
Counterintelligence Executive released a report stating, 
``Sensitive U.S. economic information and technology are 
targeted by the intelligence services, private sector 
companies, academic and research institutions, and citizens of 
dozens of countries.''\5\
---------------------------------------------------------------------------
    \5\Office of National Counterintelligence Executive, Foreign Spies 
Stealing U.S. Economic Secrets in Cyberspace: Report to Congress on 
Foreign Economic Collection & Industrial Espionage, 2009-2011 (Oct. 
2011), available at https://www.dni.gov/files/documents/Newsroom/
Reports%20and%20Pubs/20111103_report_fecie.pdf.
---------------------------------------------------------------------------
     In 2012, the U.S. House of Representatives' 
Permanent Select Committee on Intelligence (HPSCI) released a 
bipartisan report on the national security issues posed by 
Chinese telecommunications companies that stated in part, 
``[T]he U.S. government must pay particular attention to 
products produced by companies with ties to regimes that 
present the highest and most advanced espionage threats to the 
U.S., such as China.''\6\
---------------------------------------------------------------------------
    \6\H. Permanent Select Comm. on Intelligence, Chairman Mike Rogers 
and Ranking Member C.A. Dutch Ruppersberger, Investigative Report on 
the U.S. National Security Issues Posed by Chinese Telecommunications 
Companies Huawei and ZTE, 112th Cong. (Oct. 8, 2012), available at 
https://intelligence.house.gov/sites/intelligence.house.gov/files/
documents/huawei-zte%20
investigative%20report%20(final).pdf.
---------------------------------------------------------------------------
     In 2016, the U.S. Federal Bureau of Investigation 
(FBI) released a guide entitled, Best Practices in Supply Chain 
Risk Management for the U.S. Government, in which the FBI 
advises, among other things, to: ``Identify the location of a 
service provider. If in a foreign country, identify potential 
relationships between the foreign government and the provider 
(suppliers, vendors, etc.). Identify the foreign country's laws 
or policies which enable it to request sensitive business 
information from the provider. Request the names, addresses, 
and roles of foreign individuals associated with, or who have 
access to the provider. . . . Identify if the provider employs 
foreign nationals . . . .''\7\
---------------------------------------------------------------------------
    \7\U.S. Federal Bureau of Investigation, Best Practices in Supply 
Chain Risk Management for the U.S. Government (Feb. 2016), available at 
https://www.fbi.gov/file-repository/scrmbestpractices-1.pdf/view.
---------------------------------------------------------------------------
     In 2017, the DoD's Defense Science Board's Task 
Force on Cyber Supply Chain released a report stating that 
factors to consider when vetting a supplier could include 
ownership and control of the supplier.\8\
---------------------------------------------------------------------------
    \8\Department of Defense, Defense Science Board Task Force on Cyber 
Supply Chain, Final Report of the Defense Science Board Task Force on 
Cyber Supply Chain (Feb. 2017), available at https://www.acq.osd.mil/
dsb/reports/2010s/1028953.pdf.
---------------------------------------------------------------------------
     In 2018, during testimony before the U.S. Senate 
Select Committee on Intelligence (SSCI), FBI Director Wray 
publicly stated: ``I think probably the simplest way to put it 
in this setting would be that we're deeply concerned about the 
risks of allowing any company or entity that is beholden to 
foreign governments that don't share our values to gain 
positions of power inside our telecommunications networks. That 
provides the capacity to exert pressure or control over our 
telecommunications infrastructure. It provides the capacity to 
maliciously modify or steal information, and it provides the 
capacity to conduct undetected espionage. So, at a 100,000-foot 
level, at least in this setting, those are the kind of things 
that worry us.''\9\
---------------------------------------------------------------------------
    \9\Worldwide Threats: Hearing Before the S. Select Comm. on 
Intelligence, 115th Cong. (2018) (statement of Director Chris Wray, 
Director of the U.S. Federal Bureau of Investigation).
---------------------------------------------------------------------------
    For years, the United States security agencies have 
understood the threat to national security systems posed by ICT 
supply chains, while grappling with how to appropriately share 
classified information and address the risk for all government 
agencies. The need for this legislation is underscored by 
several recent examples of supply chain risks discovered within 
the Federal ICT system.

AO Kaspersky Lab

    AO Kaspersky Lab (``Kaspersky''), including its related 
entities such as Kaspersky Lab, Inc., is a cybersecurity and 
anti-virus software provider headquartered in Moscow, 
Russia.\10\ Anti-virus software, by its very nature, is 
designed to have access to all files on the system on which it 
is running. Although the exact nature of how Kaspersky software 
operates is outside the scope of this report, Kaspersky's 
potential capabilities and the impacts on U.S. national 
security have been widely reported by a variety of leading 
security specialists and scholars.\11\ In September 2017, DHS 
issued a Binding Operational Directive (BOD) ordering all 
Federal civilian executive agencies to identify and remove 
Kaspersky-branded products from Federal information 
systems.\12\ This was the first time since receiving the 
authority under the Federal Information Security Modernization 
Act of 2014 to issue BODs that DHS used the authority to remove 
a product from the Federal supply chain.
---------------------------------------------------------------------------
    \10\Contact Us, Kaspersky.com, https://usa.kaspersky.com/about/
contact (last visited Oct. 17, 2018).
    \11\See, e.g., Herb Lin, The Real Threat from Kaspersky Security 
Software, Lawfare (Oct. 12, 2017), https://www.lawfareblog.com/real-
threat-kaspersky-security-software (stating, ``Of more concern to me is 
the idea that Kaspersky software has the capability to inspect the 
media of any computer running it for interesting files and to forward 
such files to Russian intelligence.'') (emphasis in original); Nicholas 
Weaver, On Kaspersky, Lawfare (July 25, 2017), https://
www.lawfareblog.com/kaspersky (noting that there is a risk of a 
``government-mandated malicious update.''); see also Defendant's Motion 
to Dismiss, Kaspersky Lab, Inc.; and Kaspersky Labs Limited v. United 
States of America, D.D.C. (Mar. 26, 2018), Civ. No. 18-325 (CKK), 
available at https://www.nextgov.com/media/gbc/docs/pdfs_edit/
032718kaspersky1ng.pdf.
    \12\Department of Homeland Security, BOD-17-01: Removal of 
Kaspersky-Branded Products (Sept. 13, 2017), available at https://
cyber.dhs.gov/assets/report/bod-17-01.pdf. BOD-17-01 defines 
``Kaspersky-branded products'' as ``information security products, 
solutions, and services supplied, directly or indirectly, by AO 
Kaspersky Lab or any of its predecessors, successors, parents, 
subsidiaries, or affiliates, including Kaspersky Lab North America, 
Kaspersky Lab, Inc., and Kaspersky Government Security Solutions, Inc. 
. . .''
---------------------------------------------------------------------------
    Then-Acting Secretary of DHS Elaine Duke released the 
following statement contemporaneous with the BOD explaining why 
the Department acted. The statement said, in part:

          This action is based on the information security 
        risks presented by the use of Kaspersky products on 
        federal information systems. Kaspersky anti-virus 
        products and solutions provide broad access to files 
        and elevated privileges on the computers on which the 
        software is installed, which can be exploited by 
        malicious cyber actors to compromise those information 
        systems. The Department is concerned about the ties 
        between certain Kaspersky officials and Russian 
        intelligence and other government agencies, and 
        requirements under Russian law that allow Russian 
        intelligence agencies to request or compel assistance 
        from Kaspersky and to intercept communications 
        transiting Russian networks. The risk that the Russian 
        government, whether acting on its own or in 
        collaboration with Kaspersky, could capitalize on 
        access provided by Kaspersky products to compromise 
        federal information and information systems directly 
        implicates U.S. national security.\13\
---------------------------------------------------------------------------
    \13\Press Release, U.S. Department of Homeland Security, Acting 
Secretary Elaine Duke, DHS Statement on the Issuance of Binding 
Operational Directive 17-01 (Sept. 13, 2017), available at https://
www.dhs.gov/news/2017/09/13/dhs-statement-issuance-binding-operational-
directive-17-01.

    In making the decision to issue the BOD, DHS consulted with 
multiple interagency partners.\14\ Additionally, DHS offered 
Kaspersky the opportunity to submit a written response to 
address the Department's concerns and an opportunity to 
mitigate them.\15\
---------------------------------------------------------------------------
    \14\Id.
    \15\Id.
---------------------------------------------------------------------------
    Congressional interest in Kaspersky continued throughout 
2017.\16\ In December 2017, Congress passed and the President 
signed into law the Fiscal Year 2018 National Defense 
Authorization Act (NDAA), which contained a statutory ban on 
Kaspersky products.\17\ Unlike DHS' BOD, which applied only to 
Kaspersky branded products, the exclusion in the NDAA applied 
to ``any hardware, software, or services developed or provided, 
in whole or in part, by Kaspersky Lab (or any successor 
entity); and any entity that controls, is controlled by, or is 
under common control with Kaspersky Lab; or any entity of which 
Kaspersky Lab has majority ownership.''\18\ The NDAA ban is 
much broader than the BOD as it targeted any product with 
Kaspersky coded embedded in it. Furthermore, this exclusion 
applied Government-wide. This provision went into effect on 
October 1, 2018.\19\
---------------------------------------------------------------------------
    \16\See Disinformation: A Primer in Russian Active Measures and 
Influence Campaigns, Panel II: Hearing Before the S. Select Comm. on 
Intelligence, 115th Cong. (2017) https://www.gpo.gov/fdsys/pkg/CHRG-
115shrg25998/html/CHRG-115shrg25998.htm; Bolstering the Government's 
Cybersecurity: Assessing the Risks of Kaspersky Lab Products to the 
Federal Government: Hearing Before the H. Comm. on Science, Space, and 
Technology, 115th Cong. (2017), https://science.house.gov/legislation/
hearings/bolstering-government-s-cybersecurity-assessing-risk-
kaspersky-lab-products.
    \17\NDAA 2018 Sec. 1634.
    \18\Id.
    \19\Id.
---------------------------------------------------------------------------
    Kaspersky filed lawsuits challenging both the BOD and the 
NDAA exclusions.\20\ Regarding the BOD challenge, Kaspersky 
argued that the directive violated the Administrative 
Procedures Act and the Due Process Clause of the Fifth 
Amendment.\21\ The U.S. District Court for the District of 
Columbia found that Kaspersky lacked standing and granted the 
Government's motion to dismiss.\22\ Kaspersky filed a separate 
lawsuit against the NDAA exclusion, arguing that the language 
in the NDAA constituted an unconstitutional bill of 
attainder.\23\ The U.S. District Court for the District of 
Columbia held that the NDAA ``does not inflict `punishment' on 
Kaspersky Lab'' under the definition of bill of attainder, 
again dismissing the case.\24\ Kaspersky appealed the decision, 
and the appeal is still pending.\25\
---------------------------------------------------------------------------
    \20\Memorandum Opinion, Kaspersky Lab, Inc. et al., v. U.S. 
Department of Homeland Security, et al., and Kaspersky Lab, Inc. et 
al., v. United States of America, D.C.C. (May 30, 2018), available at 
https://cases.justia.com/federal/district-courts/district-of-columbia/
dcdce/1:2017cv02697/192070/26/0.pdf?ts=1527759017.
    \21\Id. at 3-5.
    \22\Id.
    \23\Id.
    \24\Id.
    \25\It is the policy of this Committee not to comment on matters 
currently before the courts. For details regarding the latest in 
litigation, see generally Joseph Marks, Kaspersky Faces Tough Questions 
at Appeals Court, Nextgov (Sept. 14, 2018), https://www.nextgov.com/
cybersecurity/2018/09/kaspersky-faces-tough-questions-appeals-court/
151282.
---------------------------------------------------------------------------

Huawei Technologies Company and ZTE Corporation

    Huawei Technologies Company (``Huawei'') and ZTE 
Corporation (``ZTE'') are telecommunications equipment 
manufacturers headquartered in Shenzhen, China, and represent a 
significant market share in the global telecommunications 
sector.\26\ The presence of their products and services 
worldwide is prolific, including in the United States.\27\ The 
United States Government has argued that Huawei and ZTE 
services and equipment may be used for nefarious or otherwise 
unauthorized purposes by the Chinese government.\28\ During a 
hearing before SSCI, the Director of National Intelligence, 
Director of the Central Intelligence Agency, Director of the 
National Security Agency (NSA), Director of the Defense 
Intelligence Agency, Director of the FBI, and Director of the 
National Geospatial-Intelligence Agency were each asked if they 
would use products or services from Huawei or ZTE; all answered 
in the negative.\29\
---------------------------------------------------------------------------
    \26\Company Profile: Huawei Technologies Co Ltd, Bloomberg, https:/
/www.bloomberg.com/profiles/companies/40978Z:CH-huawei-technologies-co-
ltd (last visited Oct. 17, 2018); Contact Us, ZTE.com, https://
www.zte.com.cn/global/about/contact-us (last visited Oct. 17, 2018).
    \27\H. Permanent Select Comm. on Intelligence, Chairman Mike Rogers 
and Ranking Member C.A. Dutch Ruppersberger, Investigative Report on 
the U.S. National Security Issues Posed by Chinese Telecommunications 
Companies Huawei and ZTE, 112th Cong. (Oct. 8, 2012), available at 
https://intelligence.house.gov/sites/intelligence.house.gov/files/
documents/huawei-zte%20 investigative%20report%20(final).pdf.
    \28\See generally, id.; Office of the U.S. Trade Representative, 
Executive Office of the President, Findings of the Investigation Into 
China's Acts, Policies, and Practices Related to Technology Transfer, 
Intellectual Property, and Innovation Under Section 301 of the Trade 
Act of 1974 (Mar. 22, 2018), available at https://ustr.gov/sites/
default/files/Section%20301%20FINAL.PDF.
    \29\Worldwide Threats: Hearing Before the S. Select Comm. on 
Intelligence, 115th Cong. (2018) (questioning by Senator Tom Cotton: 
``All the witnesses, I'd like to address this question to you. Would 
you please raise your hand if you would use products or services from 
Huawei or ZTE? None of you would. You obviously lead intelligence 
services, so that's something of a biased question. Raise your hand if 
you would recommend that private American citizens use Huawei or ZTE 
products or services. None of you again are raising your hand, thank 
you for that. . . .).
---------------------------------------------------------------------------
    The John S. McCain NDAA for Fiscal Year 2019, signed into 
law in August 2018, contained a provision banning the use of 
Huawei and ZTE from a ``substantial or essential component of 
any system, or as critical technology as part of any system'' 
within the Federal ICT supply chain.\30\ The provision in the 
2019 NDAA followed years of concern over the use of Huawei and 
ZTE products that culminated with several Federal agencies 
independently taking action to reassess the use of Huawei and 
ZTE products.\31\
---------------------------------------------------------------------------
    \30\NDAA 2019 Sec. 889.
    \31\See Stu Woo & Gordon Lubold, Pentagon Orders Stores on Military 
Bases to Remove Huawei, ZTE Phones, The Wall Street Journal (May 2, 
2018), https://www.wsj.com/articles/pentagon-asking-military-bases-to-
remove-huawei-zte-phones-1525262076; see also Federal Communications 
Commission, Notice of Proposed Rulemaking: WC Docket No. 18-89, 
Protecting Against National Security Threats to the Communications 
Supply Chain Through FCC Programs (Mar. 27, 2018), https://
transition.fcc.gov/Daily_Releases/Daily_Business/2018/db0327/DOC-
349937A1.pdf.
---------------------------------------------------------------------------

S. 3085, the Federal Acquisition Supply Chain Security Act of 2018

    The Committee continues to investigate threats to the 
Federal ICT supply chain and methods of mitigating the risk. 
The Kaspersky case made clear the potential threat to civilian 
agencies' ICT purchases and systems. Since then, a number of 
disjointed efforts to address the supply chain risk from 
Government ICT purchases have emerged, but there is no cohesive 
framework for all agencies to follow. A whole of government 
approach is needed to give U.S. agencies the information and 
authorities they need to swiftly address ICT supply chain 
issues.
    S. 3085 establishes the Federal Acquisition Security 
Council, chaired by OMB. This Council, comprised of civilian, 
DoD, and IC agencies, is designed to develop a government-wide 
strategy for addressing supply chain risks from ICT purchases, 
to facilitate information sharing among government agencies and 
to be the central, government-wide authority for SCRM 
activities. The composition of the Council allows for agencies 
with a critical stake in Federal SCRM to have a voice in the 
Government's policy direction. Among its various SCRM-related 
functions, the Council is required to identify and recommend 
the development of SCRM standards for executive agencies to use 
when addressing supply chain risks. This will provide 
uniformity in how agencies assess and address such risk. The 
Council must also identify or develop criteria for sharing 
information related to supply chain risk management, including 
information pertaining to the exercise of authorities under 
sections 1326 and 4713. This criteria is to include, among 
other things, the content to be shared, when sharing is 
mandated or voluntary, and when it is appropriate for an 
executive agency to rely on shared information to exercise its 
authorities under this bill. This is designed to prevent one or 
two executive agencies from being aware of a present supply 
chain risk and failing to notify other agencies of that risk. 
As such, another responsibility of the Council includes 
designating an appropriate executive agency to act as a 
``central hub'' for receiving supply chain information 
submitted by other executive agencies. This will streamline the 
information-sharing process across the Federal Government.
    Another authority granted to the Council is the ability to 
recommend exclusion or removal orders for ``covered articles.'' 
Covered articles are items found in the ICT supply chain, 
including, but not limited to: IT, including cloud computing 
services; telecommunications equipment; hardware; and software. 
Once the Council issues a recommendation, the Secretary of DHS, 
the Defense Secretary, and the Director of National 
Intelligence are vested with plenary authority to act on those 
recommendations. Once one of those officials, or their 
delegates, have acted on the recommendation(s), the 
corresponding agencies and systems they are responsible for are 
required to abide by the order(s). In the event that the 
Secretary of DHS, Defense Secretary, and Director of National 
Intelligence all issue the same order(s), collectively 
resulting in a government-wide decision, the bill requires the 
Administrator of the General Services Administration (GSA) and 
officials at other agencies to effectuate the order(s) 
government-wide.
    In the event the Council makes a recommendation, the bill 
requires the Council to provide notice of the recommendation to 
any named source. The notice must advise the source that: a 
recommendation has been made; the criteria the Council relied 
upon in making the recommendation, to the extent consistent 
with national security and law enforcement interests; that the 
source has 30 days after receipt of the notice to submit 
information and arguments in opposition to the recommendation; 
of the procedures governing the review and possible issuance of 
an exclusion or removal order; and, if practicable and within 
the sole and unreviewable discretion of the Council, a 
description of any mitigation steps the source could take that 
may result in the Council rescinding its recommendation. If one 
of the authorized agency heads decides to act on the Council's 
recommendation and issues an exclusion or removal order, that 
official must notify any named source of the exclusion or 
removal order and of the information that formed the basis for 
the order, to the extent consistent with national security and 
law enforcement interests. These exclusion and removal orders 
require an annual review thereafter.
    This legislation also authorizes the head of an executive 
agency to carry out a ``covered procurement action'' and to 
limit the disclosure of information relating to the basis for 
doing so. A covered procurement action includes: the exclusion 
of a source that fails to meet certain qualification 
requirements; the exclusion of a source that fails to achieve 
an acceptable rating for supply chain risk when evaluating 
contract award proposals; the determination that a source is 
not a responsible source; and the decision to withhold consent 
for a contractor to subcontract with a particular source or to 
direct a contractor to exclude a particular source. Except when 
addressing an urgent national security interest, an agency head 
may only carry out a covered procurement action after receiving 
a joint recommendation from their chief acquisition officer and 
the chief information officer, or officials performing similar 
functions if the agency does not have such officials, and after 
providing notice of the joint recommendation to any source 
named in the recommendation. This notice must advise the named 
source of the following information: that a recommendation is 
being considered or has been made; of the information that 
formed the basis for the recommendation, to the extent 
consistent with national security and law enforcement 
interests; that the source has 30 days to submit information 
and argument in opposition to the recommendation; and of the 
procedures governing the consideration of the submission and 
the possible exercise of the agency's authority.
    Finally, this bill contains judicial review procedures that 
appropriately balance the need for aggrieved companies to 
receive due process with the need for the Federal Government to 
act swiftly to address threats, share sensitive and/or 
classified information, and ensure that information is 
protected from disclosure. Any action taken under section 1323 
or 4713 is not subject to existing administrative review or 
judicial review procedures for government purchases, including 
bid protests before the Government Accountability Office or in 
any Federal court. The bill provides for the filing of 
petitions for judicial review only in the U.S. Court of Appeals 
for the D.C. Circuit. A petition must be filed within sixty 
days after a party is notified of an exclusion or removal order 
under section 1323 or a covered procurement action under 
section 4713, claiming that the action is unlawful. The court 
will consider such an action unlawful only if it finds it to 
be: arbitrary, capricious, an abuse of discretion, or otherwise 
not in accordance with law; contrary to constitutional right, 
power, privilege, or immunity; in excess of statutory 
jurisdiction; lacking substantial support in the administration 
record taken as a whole or in classified information submitted 
to the court; or not in accord with procedures required by law. 
These constraints and the timeline of sixty days affords for an 
expeditious resolution. The U.S. Court of Appeals for the D.C. 
Circuit is granted exclusive jurisdiction over such claims, 
which is appropriate given its unique expertise with national 
security matters and handling of classified material.

                        III. Legislative History

    Ranking Member Claire McCaskill (D-MO) introduced S. 3085, 
the Federal Acquisition Supply Chain Security Act of 2018, on 
June 19, 2018, with Senator James Lankford (R-OK). The bill was 
referred to the Committee on Homeland Security and Governmental 
Affairs.
    The Committee considered S. 3085 at a business meeting on 
September 26, 2018. During the business meeting, Ranking Member 
McCaskill and Senator Lankford offered an amendment in the 
nature of a substitute that was twice modified to reflect 
discussions among Members of the Committee and feedback from 
relevant executive agencies. The bill, as amended by the 
McCaskill-Lankford Substitute Amendment as twice modified, was 
ordered reported favorably by voice vote en bloc. Senators 
present were Johnson, Portman, Lankford, Enzi, Hoeven, 
McCaskill, Carper, Heitkamp, Peters, Hassan, Harris, and Jones.

        IV. Section-by-Section Analysis of the Bill, as Reported

Section 1. Short title

    This section provides that the bill may be referred to as 
the ``Federal Acquisition Supply Chain Security Act of 2018.''

Sec. 2. Federal Acquisition Supply Chain Security.

    Section 2 of the bill amends chapter 13 of title 41, United 
States Code (U.S.C.), by adding the following new subchapter at 
the end:

Subchapter III--Federal Acquisition Supply Chain Security

            Sec. 1321. Definitions
    This section defines or provides references for the 
following terms in the subchapter: ``appropriate congressional 
committees and leadership;'' ``Council;'' ``covered article;'' 
``covered procurement action;'' ``information and 
communications technology;'' ``intelligence community;'' 
``national security system;'' and ``supply chain risk.''
            Sec. 1322. Federal Acquisition Security Council 
                    establishment and membership
    This section establishes the Council, whose membership is 
comprised of the following agencies: OMB; GSA; DHS; ODNI, 
including the National Counterintelligence and Security Center; 
Department of Justice, including the FBI; DoD, including the 
NSA; Department of Commerce, including the National Institute 
of Standards and Technology (NIST); and any other executive 
agencies the Chairperson designates. Within 90 days of the 
bill's enactment, each agency represented on the Council is 
required to designate a lead representative who is an expert in 
SCRM, acquisitions, or information and communications 
technology. Each agency's lead representative is tasked with 
ensuring that their agency leadership and subject matter 
experts are kept apprised of the Council's business. The 
Director of OMB is required to designate a senior-level OMB 
official to serve as the Council's Chairperson. The Chairperson 
is tasked with several functions, including developing a 
charter for the Council. The Council is required to meet within 
180 days after enactment and at least every quarter thereafter.
            Sec. 1323. Functions and authorities
    This section delineates the functions and authorities 
granted to the Council.
    New subsection (a) outlines that the Council is required to 
perform several functions, including but not limited to: (1) 
recommending NIST to develop SCRM standards and practices for 
executive agencies; (2) developing criteria for sharing 
information regarding supply chain risk; (3) identifying an 
executive agency to act as a ``clearing house'' for several 
functions, including receiving supply chain risk information 
submitted by other executive agencies and facilitating the 
sharing of that information to support supply chain risk 
analyses; (4) identifying executive agencies to provide shared 
services and common contract solutions to support SCRM; (5) 
issuing guidance on any other steps necessary to address supply 
chain risks that may arise when executive agencies provide 
shared services, common contract solutions, acquisitions 
vehicles, or assisted acquisitions; and (6) engaging with the 
private sector and other nongovernmental stakeholders on SCRM 
in the acquisition process, as appropriate.
    New subsection (b) states that, in its sole and 
unreviewable discretion, the Council may establish a program 
office and any other bodies it deems appropriate for the 
purpose of carrying out its functions.
    New subsection (c) details the authority the Council has to 
issue exclusion or removal orders. The Council is required to 
establish criteria and procedures for several actions, 
including for: (1) recommending orders for executive agencies 
requiring the exclusion of sources or covered articles from 
executive agencies procurement actions, also known as 
``exclusion orders;'' (2) recommending orders for executive 
agencies requiring the removal of covered articles from 
executive agency information systems, also known as ``removal 
orders;'' (3) requesting and approving exceptions to issued 
exclusion or removal orders; and (4) ensuring that any 
recommended orders do not conflict with standards issued under 
section 11331 of title 40 and that the Director of NIST is 
consulted with regarding any orders that would implement 
standards developed by NIST. Using these established criteria, 
the Council will make recommendations regarding the exclusion 
of sources or covered articles from any executive agency 
procurement action or the removal of covered articles from 
executive agency information systems. Recommendations must 
include several important components, including, but not 
limited to, information regarding the scope and applicability 
of the recommended exclusion or removal order and a summary of 
any risk assessment reviewed or made in support of the order.
    New subsection (c) also states that the Council is required 
to issue a notice of its recommendation to any source named in 
the recommendation. This is intended to provide notice to the 
source that a recommendation has been made; of the criteria the 
Council relied on in making the recommendation; and that the 
source has 30 days after receipt of the notice to submit 
information and argument in opposition of the recommendation.
    New subsection (c) also details how exclusion and removal 
order recommendations become operable. Exclusion and removal 
order recommendations issued by the Council will be reviewed by 
the Secretary of DHS, for orders applicable to civilian 
agencies, to the extent not covered by clause (ii) and (iii); 
by the Secretary of DoD, for orders applicable to the DoD and 
national security systems other than sensitive compartmented 
information systems; and the Director of National Intelligence, 
for orders applicable to the intelligence community and 
sensitive compartmented information. These officials have sole 
and unreviewable discretion to issue exclusion and removal 
orders based upon the Council's recommendations. If officials 
from DHS, DoD, and ODNI issue orders collectively resulting in 
a government-wide exclusion, the Administrator of GSA and 
officials at other agencies responsible for management of the 
Federal Supply Schedule and government-wide acquisition and 
multi-agency contracts must help facilitate implementation of 
the orders by removing the identified covered articles or 
sources from contracts. Exclusion and removal orders must be 
reviewed at least annually by the issuing officials. An 
authorized official from the relevant issuing agency may 
rescind exclusion and removal orders. Once such an order has 
been issued, the issuing official must provide notice to any 
source named in the order. The issuing official must also 
notify the appropriate congressional committees and the 
aforementioned agency selected to be the ``clearing house'' for 
such information. All executive agencies are required to comply 
with exclusion and removal orders.
    New subsection (d) states that the Council may request any 
information from executive agencies it deems necessary to carry 
out its functions.
    New subsection (e) states that the Council must consult and 
coordinate, as appropriate, with other relevant councils.
    New subsection (f) states that nothing in this section 
limits the authority of the Office of Federal Procurement 
Policy to carry out its responsibilities.
            Sec. 1324. Strategic plan
    This section requires the Council to create a strategic 
plan for addressing supply chain risks posed by the acquisition 
of covered articles within 180 days of enactment. The necessary 
components of this plan include, but are not limited to: (1) an 
identification and promulgation of best practices for executive 
agencies to assess and mitigate supply chain risks; (2) an 
evaluation of the effect of implanting new policies or 
procedures on existing contracts; and (3) a plan for the 
identification and mitigation of supply chain risks from 
existing and prospective information and communications 
technology made available to executive agencies by other 
executive agencies. This plan is due to Congress within seven 
days after completion.
            Sec. 1325. Annual report
    The Chairperson of the Council is required to submit an 
annual report to Congress on the Council's activities before 
December 31 of each year.
            Sec. 1326. Requirements for executive agencies
    This section outlines the responsibilities of each 
executive agency head for SCRM, which include, but are not 
limited to: (1) assessing the supply chain risk posed by the 
acquisition of covered articles and either avoiding, 
mitigating, accepting, or transferring that risk; and (2) 
prioritizing such assessments based on the criticality of the 
mission or asset. This section also includes clarifications for 
interagency acquisitions and assisted acquisitions. For 
interagencyacquisitions, in which one agency purchases supplies 
or services using another agency's contract, SCRM activities are the 
responsibility of the funding agency. For assisted acquisitions, in 
which an agency performs acquisition-related functions on behalf of 
another agency, it is required that the parties negotiate the 
assignment of responsibilities. The Secretary of DHS may assist 
executive agencies in conducting risk assessments and provide 
additional tools as necessary in support of such actions.
            Sec. 1327. Judicial review procedures
    This section outlines the judicial review procedures 
applicable to an action taken under Sec. 1323 or Sec. 4713 of 
this title. New subsection (a) clarifies that any action taken 
under either Sec. 1323 or Sec. 4713 is not reviewable, either 
by administrative review or judicial review, including bid 
protests before the Government Accountability Office or in any 
Federal court.
    New subsection (b) describes the process for petitioning 
exclusion or removal orders. After a party has been notified of 
an exclusion or removal order under Sec. 1323 or a covered 
procurement action under section Sec. 4713, the party has 60 
days to file a petition for judicial review in the United 
States Court of Appeals for the District of Columbia Circuit 
(``court''). The court will rule that a covered action taken 
under Sec. 1323 or Sec. 4713 is unlawful if it is: (1) 
arbitrary, capricious, and an abuse of discretion; (2) contrary 
to constitutional right, power, privilege, or immunity; (3) in 
excess of statutory jurisdiction, authority, or limitation, or 
short of statutory right; (4) lacking substantial support in 
the administrative record taken as a whole or in classified 
information submitted to the court; or (5) not in accordance 
with procedures required by law. The court has exclusive 
jurisdiction over claims arising under these sections against 
the U.S., any U.S. department or agency, or any component or 
official of any such department or agency, subject to review by 
the U.S. Supreme Court.
    New subsection (b) also describes the contents and 
procedures for the administrative record, which will apply to 
the review of a petition. The U.S. is required to file an 
administrative record with the court, which consists of the 
information that the appropriate official relied on when taking 
an action under Sec. 1323 or Sec. 4713. Information that is 
both unclassified and non-privileged in the administrative 
record will be provided to the petitioner, with appropriate 
protections for any information that is privileged or 
confidential. The following information may be included in the 
administrative record and will only be submitted to the court 
ex parte and in camera: (1) classified information; (2) 
sensitive security information; (3) privileged law enforcement 
information; (4) information obtained or derived from any 
activity authorized under the Foreign Intelligence Surveillance 
Act of 1978, with several exceptions; and (5) information 
subject to privilege or protections under any other provision 
of law. Any of the previously described information must remain 
under seal. The administrative record must be returned after 
the time to seek further review has ended or after further 
proceedings have concluded. Any determination made by the court 
under this subsection is the exclusive remedy. In this section, 
the term ``classified information'' not only has the meaning 
given the term in 1(a) of the Classified Information Procedures 
Act, but also includes any information that the government has 
determined to require protection for reasons of national 
security and any restricted data, as defined in section 11 of 
the Atomic Energy Act of 1954.
            Sec. 1327. Termination
    This section states that the subchapter terminates five 
years after the day of enactment. Amendments made by this 
section take effect 90 days after the day of enactment and 
apply to contracts that are awarded before, on, or after that 
date. The Federal Acquisition Security Council must prescribe 
an interim final rule to implement subchapter III of chapter 13 
of title 41, U.S.C. within one year of enactment, and the 
Council must issue a final rule no later than one year after 
prescribing that interim final rule. If the Council does not 
issue a final rule in that time frame, the Council will be 
required to submit a report to Congress explaining why they 
failed to do so.

Sec. 3. Authorities of Executive Agencies relating to mitigating supply 
        chain risks in the procurement of covered articles

    Section 3 of the bill amends chapter 47 of title 41, 
U.S.C., by adding the following new section to the end:
            Sec. 14713. Authorities relating to mitigating supply chain 
                    risks in the procurement of covered articles
    New subsection (a) establishes that heads of executive 
agencies have the authority to carry out a covered procurement 
action and to limit the disclosure of information relating to 
their basis for doing so.
    New subsection (b) provides that an agency head may carry 
out a covered procurement action, absent an urgent national 
security interest, only after (1) obtaining a joint 
recommendation from the agency's CIO and chief acquisition 
officer, or comparable officials; (2) providing notice of the 
joint recommendation to any source named in the joint 
recommendation; (3) making a written determination that the use 
of the authority is, among other things, necessary to protect 
national security by reducing supply chain risk; and (4) 
providing notice of the determination to Congress. Any named 
sources must be provided with a notice containing the following 
information: (1) that a recommendation is being considered or 
has been made; (2) what information formed the basis for the 
recommendation, to the extent consistent with national security 
interests; (3) that the source has 30 days after receipt to 
submit an argument against the recommendation; and (4) what 
procedures govern the consideration of that submission.
    New subsection (c) provides an exception for cases in which 
an agency head determines that an urgent national security 
interest necessitates the immediate exercise of the authority 
provided in new subsection (a). This exception allows agency 
heads to, among other things, temporarily delay sending notice 
to named sources; however, agency heads are required to comply 
with all of the requirements of new subsection (b) as soon as 
practicable after the urgency has passed.
    New subsection (d) states that an agency head may not 
delegate these authorities to an official below the level one 
level below the Deputy Secretary or Principal Deputy Director, 
except that the Secretary of Defense may delegate authority for 
removal orders to the Commander of U.S. Cyber Command.
    New subsection (e) states that if an agency head has made 
the decision to limit the disclosure of information relating to 
their basis for carrying out a covered procurement action, that 
official must notify the aforementioned agency identified as a 
``clearing house'' for such SCRM-related information.
    New subsection (f) requires agency heads to annually review 
any covered procurement actions.
    New subsection (g) requires the Federal Acquisition 
Regulatory Council to prescribe any regulations necessary to 
implement this section.
    New subsection (h) requires the head of each agency to 
submit a report to Congress, at least annually, summarizing the 
actions taken under this section.
    New subsection (i) states that this section applies to the 
DoD, Coast Guard, and National Aeronautics and Space 
Administration, notwithstanding Sec. 3101(c)(1)(A) of this 
title.
    New subsection (j) provides that the authority provided 
under subsection (a) terminates in 5 years.
    New subsection (k) defines the terms ``appropriate 
congressional committees and leadership;'' ``covered article;'' 
``covered procurement;'' ``covered procurement action;'' 
``information and communications technology;'' and ``supply 
chain risk.''

Sec. 4. Federal Information Security Modernization Act

    New subsection (a) amends the Federal Information Security 
Modernization Act to provide references to several provisions 
in this bill and to add a new SCRM-related provision. That Act 
provides a government-wide framework for the oversight and 
security of non-national security Federal executive branch 
information security.
    New subsection (b) contains a rule of construction, 
clarifying that nothing in this bill alters or impedes any 
authority or responsibility under Sec. 3553 of title 44, 
U.S.C., which addresses the authorities and functions of the 
Director of OMB and Secretary of DHS under the Federal 
Information Security Modernization Act.

Sec. 5. Effective date

    Section 5 states that this bill will take effect 90 days 
after enactment.

                   V. Evaluation of Regulatory Impact

    Pursuant to the requirements of paragraph 11(b) of rule 
XXVI of the Standing Rules of the Senate, the Committee has 
considered the regulatory impact of this bill and determined 
that the bill will have no regulatory impact within the meaning 
of the rules. The Committee agrees with the Congressional 
Budget Office's statement that the bill contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act (UMRA) and would impose no costs 
on state, local, or tribal governments.

             VI. Congressional Budget Office Cost Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, November 28, 2018.
Hon. Ron Johnson, Chairman,
Committee on Homeland Security and Governmental Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 3085, the Federal 
Acquisition Supply Chain Security Act of 2018.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Matthew 
Pickford, who can be reached at 226-2860.
            Sincerely,
                                                Keith Hall,
                                                          Director.
    Enclosure,

S. 3085--Federal Acquisition Supply Chain Security Act of 2018

    S. 3085 would create the Federal Acquisition Security 
Council, which would work to mitigate security risks that may 
arise from information technology (IT), telecommunications 
services, and other goods and services procured by the federal 
government. The council would consist of representatives from 
at least 11 departments and agencies and a representative from 
the Office of Management and Budget (OMB) would serve as chair 
of the council.
    Under the bill, the council would look at the security of 
the entire supply chain for goods and services procured by the 
government including threats from terrorism, piracy, and theft 
in both the real world and cyber space. (The term supply chain 
refers to the total number of organizations, individuals, and 
processes involved in producing and selling something to a 
final user.) Primary responsibilities for the council would 
include:
           Developing criteria for assessing threats 
        and vulnerabilities to the supply chain, and
           Issuing guidance on risks to the supply 
        chain and how to address such risks.
    Using information from OMB and based on the scope of the 
council's responsibilities, CBO estimates that when fully 
implemented the council would spend about $2 million annually; 
most of that would be for the cost of about 10 employees. CBO 
estimates that implementing S. 3085 would cost $10 million over 
the 2019-2023 period; any spending would be subject to the 
availability of appropriated funds.
    S. 3085 also would allow agencies to change their 
procurement actions based on expected risks to the agency from 
different acquisitions. Those changes would involve preparing 
risk management plans and strategies to assess risks to the 
supply chain prior to purchasing and goods or services.
    CBO is unaware of any comprehensive information on the 
security of the government's supply chain. CBO aims to produce 
estimates that generally reflect the middle of a range of most 
likely outcomes that would result if the legislation was 
enacted. However, CBO cannot determine how agencies currently 
handle supply chain risks nor how many resources are devoted to 
those activities. In addition, what policies, procedures, or 
guidance the new council would provide to agencies is not 
clear. Finally, under existing authority initially provided by 
section 806 of Public Law 111-383 and recently reauthorized by 
section 881 of the 2019 National Defense Authorization Act 
(P.L. 115-232), the Department of Defense can currently perform 
many of the activities described in section 3 of S. 3085. 
However, CBO cannot determine whether those authorities have 
ever been used. Thus, CBO cannot estimate whether implementing 
that section would have costs or savings for government 
agencies.
    CBO expects that agencies would continue to procure goods 
and services at the lowest price available and that issues 
involving supply chain risk would not significantly increase or 
decrease the costs of goods and services procured by the 
government.
    Enacting S. 3085 could affect direct spending by agencies 
that are authorized to use receipts from the sale of goods, 
fees, and other collections to cover operating costs. 
Therefore, pay-as-you-go procedures apply. Because most 
agencies can adjust the amounts collected as operating costs 
change, CBO estimates that any net changes in direct spending 
by those agencies would be negligible. Enacting the bill would 
not affect revenues.
    CBO estimates that enacting S. 3085 would not increase net 
direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2029.
    S. 3085 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act.
    The CBO staff contacts for this estimate are Matthew 
Pickford and Ray Hall. The estimate was reviewed by H. Samuel 
Papenfuss, Deputy Assistant Director for Budget Analysis.

       VII. Changes in Existing Law Made by the Bill, as Reported

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill, as reported, are shown as follows: (existing law 
proposed to be omitted is enclosed in brackets, new matter is 
printed in italic, and existing law in which no change is 
proposed is shown in roman):

UNITED STATES CODE

           *       *       *       *       *       *       *

TITLE 41--PUBLIC CONTRACTS

           *       *       *       *       *       *       *

Subtitle I--Federal Procurement Policy

           *       *       *       *       *       *       *

DIVISION B--OFFICE OF FEDERAL PROCUREMENT POLICY

           *       *       *       *       *       *       *

                    CHAPTER 13--ACQUISITION COUNCILS

          Subchapter I--Federal Acquisition Regulatory Council

Sec.
1301. Definition.
1302. Establishment and membership.
1303. Functions and authority.
1304. Contract clauses and certifications.

            Subchapter II--Chief Acquisition Officers Council

Sec.
1311. Establishment and membership.
1312. Functions.

        Subchapter III--Federal Acquisition Supply Chain Security

Sec.
1321. Definitions.
1322. Federal Acquisitions Security Council establishment and 
          membership.
1323. Functions and authorities.
1324. Strategic plan.
1325. Annual report.
1326. Requirements for executive agencies.
1327. Judicial review procedures.
1328. Termination.

           *       *       *       *       *       *       *

Subchapter II--Chief Acquisition Officers Council

           *       *       *       *       *       *       *

       Subchapter III--Federal Acquisition Supply Chain Security

SEC. 1321. DEFINITIONS.

    In this subchapter:
          (1) Appropriate congressional committees and 
        leadership.--The term ``appropriate congressional 
        committees and leadership'' means--
                  (A) the Committee on Homeland Security and 
                Governmental Affairs, the Committee on the 
                Judiciary, the Committee on Armed Services, the 
                Committee on Appropriations, the Select 
                Committee on Intelligence, and the majority and 
                minority leader of the Senate; and
                  (B) the Committee on Oversight and Government 
                Reform, the Committee on the Judiciary, the 
                Committee on Armed Services, the Committee on 
                Appropriations, the Committee on Homeland 
                Security, the Permanent Select Committee on 
                Intelligence, and the Speaker and minority 
                leader of the House of Representatives.
          (2) Council.--The term ``Council'' means the Federal 
        Acquisition Security Council established under section 
        1322(a) of this title.
          (3) Covered article.--The term ``covered article'' 
        has the meaning given that term in section 4713 of this 
        title.
          (4) Covered procurement action.--The term ``covered 
        procurement action'' has the meaning given that term in 
        section 4713 of this title.
          (5) Information and communications technology.--The 
        term ``information and communications technology'' has 
        the meaning given that term in section 4713 of this 
        title.
          (6) Intelligence community.--The term ``intelligence 
        community'' has the meaning given that term in section 
        3(4) of the National Security Act of 1947 (50 U.S.C. 
        3003(4)).
          (7) National security system.--The term ``national 
        security system'' has the meaning given that term in 
        section 3552 of title 44.
          (8) Supply chain risk.--The term ``supply chain 
        risk'' has the meaning given that term in section 4713 
        of this title.

SEC. 1322. FEDERAL ACQUISITION SECURITY COUNCIL ESTABLISHMENT AND 
                    MEMBERSHIP.

    (a) Establishment.--There is established in the executive 
branch a Federal Acquisition Security Council.
    (b) Membership.--
          (1) In general.--The following agencies shall be 
        represented on the Council:
                  (A) The Office of Management and Budget.
                  (B) The General Services Administration.
                  (C) The Department of Homeland Security.
                  (D) The Office of the Director of National 
                Intelligence, including the National 
                Counterintelligence and Security Center.
                  (E) The Department of Justice, including the 
                Federal Bureau of Investigation.
                  (F) The Department of Defense, including the 
                National Security Agency.
                  (G) The Department of Commerce, including the 
                National Institute of Standards and Technology.
                  (H) Such other executive agencies as 
                determined by the Chairperson of the Council.
          (2) Lead representatives.--
                  (A) Designation.--
                          (i) In general.--Not later than 90 
                        days after the date of the enactment of 
                        the Federal Acquisition Supply Chain 
                        Security Act of 2018, the head of each 
                        agency represented on the Council shall 
                        designate a representative of that 
                        agency as the lead representative on 
                        the Council.
                          (ii) Requirements.--The 
                        representative of an agency designated 
                        under clause (i) shall have expertise 
                        in supply chain risk management, 
                        acquisitions, or information and 
                        communications technology.
                  (B) Functions.--The lead representative of an 
                agency designated under subparagraph (A) shall 
                ensure that appropriate personnel, including 
                leadership and subject matter experts of the 
                agency, are aware of the business of the 
                Council.
    (c) Chairperson.--
          (1) Designation.--Not later than 90 days after the 
        date of the enactment of the Federal Acquisition Supply 
        Chain Security Act of 2018, the Director of the Office 
        of Management and Budget shall designate a senior-level 
        official from the Office of Management and Budget to 
        serve as the Chairperson of the Council.
          (2) Functions.--The Chairperson shall perform 
        functions that include--
                  (A) subject to subsection (d), developing a 
                schedule for meetings of the Council;
                  (B) designating executive agencies to be 
                represented on the Council under subsection 
                (b)(1)(H);
                  (C) in consultation with the lead 
                representative of each agency represented on 
                the Council, developing a charter for the 
                Council; and
                  (D) not later than 7 days after completion of 
                the charter, submitting the charter to the 
                appropriate congressional committees and 
                leadership.
    (d) Meetings.--The Council shall meet not later than 180 
days after the date of the enactment of the Federal Acquisition 
Supply Chain Security Act of 2018 and not less frequently than 
quarterly thereafter.

SEC. 1323. FUNCTIONS AND AUTHORITIES.

    (a) In General.--The Council shall perform functions that 
include the following:
          (1) Identifying and recommending by the National 
        Institute of Standards and Technology of supply chain 
        risk management standards, guidelines, and practices 
        for executive agencies to use when assessing and 
        developing mitigation strategies to address supply 
        chain risks, particularly in the acquisition and use of 
        covered articles under section 1326(a) of this title.
          (2) Identifying or developing criteria for sharing 
        information with respect to supply chain risk, 
        including information related to the exercise of 
        authorities provided under this section and sections 
        1326 and 4713 of this title. At a minimum, such 
        criteria shall address--
                  (A) the content to be shared;
                  (B) the circumstances under which sharing is 
                mandated or voluntary; and
                  (C) the circumstances under which it is 
                appropriate for an executive agency to rely on 
                information made available through such sharing 
                in exercising the responsibilities and 
                authorities provided under this section and 
                section 4713 of this title.
          (3) Identifying an appropriate executive agency to--
                  (A) accept information submitted by executive 
                agencies based on the criteria established 
                under paragraph (2);
                  (B) facilitate the sharing of information 
                received under subparagraph (A) to support 
                supply chain risk analyses under section 1326 
                of this title, recommendations under this 
                section, and covered procurement actions under 
                section 4713 of this title;
                  (C) share with the Council information 
                regarding covered procurement actions by 
                executive agencies taken under section 4713 of 
                this title; and
                  (D) inform the Council of orders issued under 
                this section.
          (4) Identifying, as appropriate, executive agencies 
        to provide--
                  (A) shared services, such as support for 
                making risk assessments, validation of products 
                that may be suitable for acquisition, and 
                mitigation activities; and
                  (B) common contract solutions to support 
                supply chain risk management activities, such 
                as subscription services or machine-learning-
                enhanced analysis applications to support 
                informed decision making.
          (5) Identifying and issuing guidance on additional 
        steps that may be necessary to address supply chain 
        risks arising in the course of executive agencies 
        providing shared services, common contract solutions, 
        acquisitions vehicles, or assisted acquisitions.
          (6) Engaging, as appropriate, with the private sector 
        and other nongovernmental stakeholders on issues 
        relating to the management of supply chain risks posed 
        by the acquisition of covered articles.
          (7) Carrying out such other actions, as determined by 
        the Council, that are necessary to reduce the supply 
        chain risks posed by acquisitions and use of covered 
        articles.
    (b) Program Office and Committees.--The Council may 
establish a program office and any committees, working groups, 
or other constituent bodies the Council deems appropriate, in 
its sole and unreviewable discretion, to carry out its 
functions.
    (c) Authority for Exclusion or Removal Orders.--
          (1) Criteria.--To reduce supply chain risk, the 
        Council shall establish criteria and procedures for--
                  (A) recommending orders applicable to 
                executive agencies requiring the exclusion of 
                sources or covered articles from executive 
                agency procurement actions (in this section 
                referred to as `exclusion orders');
                  (B) recommending orders applicable to 
                executive agencies requiring the removal of 
                covered articles from executive agency 
                information systems (in this section referred 
                to as removal orders');
                  (C) requesting and approving exceptions to an 
                issued exclusion or removal order when 
                warranted by circumstances, including 
                alternative mitigation actions; and
                  (D) ensuring that recommended orders do not 
                conflict with standards and guidelines issued 
                under section 11331 of title 40 and that the 
                Council consults with the Director of the 
                National Institute of Standards and Technology 
                regarding any recommended orders that would 
                implement standards and guidelines developed by 
                the National Institute of Standards and 
                Technology.
          (2) Recommendations.--The Council shall use the 
        criteria established under paragraph (1), information 
        made available under subsection (a)(3), and any other 
        information the Council determines appropriate to issue 
        recommendations, for application to executive agencies 
        or any subset thereof, regarding the exclusion of 
        sources or covered articles from any executive agency 
        procurement action, including source selection and 
        consent for a contractor to subcontract, or the removal 
        of covered articles from executive agency information 
        systems. Such recommendations shall include--
                  (A) information necessary to positively 
                identify the sources or covered articles 
                recommended for exclusion or removal;
                  (B) information regarding the scope and 
                applicability of the recommended exclusion or 
                removal order;
                  (C) a summary of any risk assessment reviewed 
                or conducted in support of the recommended 
                exclusion or removal order;
                  (D) a summary of the basis for the 
                recommendation, including a discussion of less 
                intrusive measures that were considered and why 
                such measures were not reasonably available to 
                reduce supply chain risk;
                  (E) a description of the actions necessary to 
                implement the recommended exclusion or removal 
                order; and
                  (F) where practicable, in the Council's sole 
                and unreviewable discretion, a description of 
                mitigation steps that could be taken by the 
                source that may result in the Council 
                rescinding a recommendation.
          (3) Notice of recommendation and review.--A notice of 
        the Council's recommendation under paragraph (2) shall 
        be issued to any source named in the recommendation 
        advising--
                  (A) that a recommendation has been made;
                  (B) of the criteria the Council relied upon 
                under paragraph (1) and, to the extent 
                consistent with national security and law 
                enforcement interests, of information that 
                forms the basis for the recommendation;
                  (C) that, within 30 days after receipt of 
                notice, the source may submit information and 
                argument in opposition to the recommendation;
                  (D) of the procedures governing the review 
                and possible issuance of an exclusion or 
                removal order pursuant to paragraph (4); and
                  (E) where practicable, in the Council's sole 
                and unreviewable discretion, a description of 
                mitigation steps that could be taken by the 
                source that may result in the Council 
                rescinding the recommendation.
          (4) Exclusion and removal orders.--
                  (A) Order issuance.--Recommendations of the 
                Council under paragraph (2), together with any 
                information submitted by a source under 
                paragraph (3) related to such a recommendation, 
                shall be reviewed by the following officials, 
                who in their sole and unreviewable discretion 
                may issue exclusion and removal orders based 
                upon such recommendations:
                          (i) The Secretary of Homeland 
                        Security, for exclusion and removal 
                        orders applicable to civilian agencies, 
                        to the extent not covered by clause 
                        (ii) or (iii).
                          (ii) The Secretary of Defense, for 
                        exclusion and removal orders applicable 
                        to the Department of Defense and 
                        national security systems other than 
                        sensitive compartmented information 
                        systems.
                          (iii) The Director of National 
                        Intelligence, for exclusion and removal 
                        orders applicable to the intelligence 
                        community and sensitive compartmented 
                        information systems, to the extent not 
                        covered by clause (ii).
                  (B) Delegation.--The officials identified in 
                subparagraph (A) may not delegate any authority 
                under this subparagraph to an official below 
                the level one level below the Deputy Secretary 
                or Principal Deputy Director, except that the 
                Secretary of Defense may delegate authority for 
                removal orders to the Commander of the United 
                States Cyber Command, who may not re-delegate 
                such authority to an official below the level 
                one level below the Deputy Commander.
                  (C) Facilitation of exclusion orders.--If 
                officials identified under this paragraph from 
                the Department of Homeland Security, the 
                Department of Defense, and the Office of the 
                Director of National Intelligence issue orders 
                collectively resulting in a governmentwide 
                exclusion, the Administrator for General 
                Services and officials at other executive 
                agencies responsible for management of the 
                Federal Supply Schedules, governmentwide 
                acquisition contracts and multi-agency 
                contracts shall help facilitate implementation 
                of such orders by removing the covered articles 
                or sources identified in the orders from such 
                contracts.
                  (D) Review of exclusion and removal orders.--
                The officials identified under this paragraph 
                shall review all exclusion and removal orders 
                issued under subparagraph (A) not less 
                frequently than annually pursuant to procedures 
                established by the Council.
                  (E) Rescission.--Orders issued pursuant to 
                subparagraph (A) may be rescinded by an 
                authorized official from the relevant issuing 
                agency.
          (5) Notifications.--Upon issuance of an exclusion or 
        removal order pursuant to paragraph (4)(A), the 
        official identified under that paragraph who issued the 
        order shall--
                  (A) notify any source named in the order of--
                          (i) the exclusion or removal order; 
                        and
                          (ii) to the extent consistent with 
                        national security and law enforcement 
                        interests, information that forms the 
                        basis for the order;
                  (B) provide classified or unclassified notice 
                of the exclusion or removal order to the 
                appropriate congressional committees and 
                leadership; and
                  (C) provide the exclusion or removal order to 
                the agency identified in subsection (a)(3).
          (6) Compliance.--Executive agencies shall comply with 
        exclusion and removal orders issued pursuant to 
        paragraph (4).
    (d) Authority to Request Information.--The Council may 
request such information from executive agencies as is 
necessary for the Council to carry out its functions.
    (e) Relationship to Other Councils.--The Council shall 
consult and coordinate, as appropriate, with other relevant 
councils, including the Chief Information Officers Council, the 
Chief Acquisition Officers Council, and the Federal Acquisition 
Regulatory Council, with respect to supply chain risks posed by 
the acquisition and use of covered articles.
    (f) Rule of Construction.--Nothing in this section shall 
limit the authority of the Office of Federal Procurement Policy 
to carry out the responsibilities of that Office under any 
other provision of law.

SEC. 1324. STRATEGIC PLAN.

    (a) In General.--Not later than 180 days after the date of 
the enactment of the Federal Acquisition Supply Chain Security 
Act of 2018, the Council shall develop a strategic plan for 
addressing supply chain risks posed by the acquisition of 
covered articles and for managing such risks that includes--
          (1) the criteria and processes required under section 
        1323(a) of this title, including a threshold and 
        requirements for sharing relevant information about 
        such risks with all executive agencies;
          (2) an identification of existing authorities for 
        addressing such risks;
          (3) an identification and promulgation of best 
        practices and procedures and available resources for 
        executive agencies to assess and mitigate such risks;
          (4) recommendations for any legislative, regulatory, 
        or other policy changes to improve efforts to address 
        such risks;
          (5) an evaluation of the effect of implementing new 
        policies or procedures on existing contracts and the 
        procurement process;
          (6) a plan for engaging with executive agencies, the 
        private sector, and other nongovernmental stakeholders 
        to address such risks;
          (7) a plan for identification, assessment, 
        mitigation, and vetting of supply chain risks from 
        existing and prospective information and communications 
        technology made available by executive agencies to 
        other executive agencies through common contract 
        solutions, shared services, acquisition vehicles, or 
        other assisted acquisition services; and
          (8) plans to strengthen the capacity of all executive 
        agencies to conduct assessments of--
                  (A) the supply chain risk posed by the 
                acquisition of covered articles; and
                  (B) compliance with the requirements of this 
                subchapter.
    (b) Submission to Congress.--Not later than 7 calendar days 
after completion of the strategic plan required by subsection 
(a), the Chairperson of the Council shall submit the plan to 
the appropriate congressional committees and leadership.

SEC. 1325. ANNUAL REPORT.

    Not later than December 31 of each year, the Chairperson of 
the Council shall submit to the appropriate congressional 
committees and leadership a report on the activities of the 
Council during the preceding 12-month period.

SEC. 1326. REQUIREMENTS FOR EXECUTIVE AGENCIES.

    (a) In General.--The head of each executive agency shall be 
responsible for--
          (1) assessing the supply chain risk posed by the 
        acquisition and use of covered articles and avoiding, 
        mitigating, accepting, or transferring that risk, as 
        appropriate and consistent with the standards, 
        guidelines, and practices identified by the Council 
        under section 1323(a)(1); and
          (2) prioritizing supply chain risk assessments 
        conducted under paragraph (1) based on the criticality 
        of the mission, system, component, service, or asset.
    (b) Inclusions.--The responsibility for assessing supply 
chain risk described in subsection (a) includes--
          (1) developing an overall supply chain risk 
        management strategy and implementation plan and 
        policies and processes to guide and govern supply chain 
        risk management activities;
          (2) integrating supply chain risk management 
        practices throughout the life cycle of the system, 
        component, service, or asset;
          (3) limiting, avoiding, mitigating, accepting, or 
        transferring any identified risk;
          (4) sharing relevant information with other executive 
        agencies as determined appropriate by the Council in a 
        manner consistent with section 1323(a) of this title;
          (5) reporting on progress and effectiveness of the 
        agency's supply chain risk management consistent with 
        guidance issued by the Office of Management and Budget 
        and the Council; and
          (6) ensuring that all relevant information, including 
        classified information, with respect to acquisitions of 
        covered articles that may pose a supply chain risk, 
        consistent with section 1323(a) of this title, is 
        incorporated into existing processes of the agency for 
        conducting assessments described in subsection (a) and 
        ongoing management of acquisition programs, including 
        any identification, investigation, mitigation, or 
        remediation needs.
    (c) Interagency Acquisitions.--
          (1) In general.--Except as provided in paragraph (2), 
        in the case of an interagency acquisition, subsection 
        (a) shall be carried out by the head of the executive 
        agency whose funds are being used to procure the 
        covered article.
          (2) Assisted acquisitions.--In an assisted 
        acquisition, the parties to the acquisition shall 
        determine, as part of the interagency agreement 
        governing the acquisition, which agency is responsible 
        for carrying out subsection (a).
          (3) Definitions.--In this subsection, the terms 
        `assisted acquisition' and `interagency acquisition' 
        have the meanings given those terms in section 2.101 of 
        title 48, Code of Federal Regulations (or any 
        corresponding similar regulation or ruling).
    (d) Assistance.--The Secretary of Homeland Security may--
          (1) assist executive agencies in conducting risk 
        assessments described in subsection (a) and 
        implementing mitigation requirements for information 
        and communications technology; and
          (2) provide such additional guidance or tools as are 
        necessary to support actions taken by executive 
        agencies.

SEC. 1327. JUDICIAL REVIEW PROCEDURES.

    (a) In General.--Except as provided in subsection (b) and 
chapter 71 of this title, and notwithstanding any other 
provision of law, an action taken under section 1323 or 4713 of 
this title, or any action taken by an executive agency to 
implement such an action, shall not be subject to 
administrative review or judicial review, including bid 
protests before the Government Accountability Office or in any 
Federal court.
    (b) Petitions.--
          (1) In general.--Not later than 60 days after a party 
        is notified of an exclusion or removal order under 
        section 1323(c)(5) of this title or a covered 
        procurement action under section 4713 of this title, 
        the party may file a petition for judicial review in 
        the United States Court of Appeals for the District of 
        Columbia Circuit claiming that the issuance of an 
        exclusion or removal order or covered procurement 
        action is unlawful.
          (2) Standard of review.--The Court shall hold 
        unlawful a covered procurement action taken under 
        sections 1323 or 4713 of this title, in response to a 
        petition that the court finds to be--
                  (A) arbitrary, capricious, an abuse of 
                discretion, or otherwise not in accordance with 
                law;
                  (B) contrary to constitutional right, power, 
                privilege, or immunity;
                  (C) in excess of statutory jurisdiction, 
                authority, or limitation, or short of statutory 
                right;
                  (D) lacking substantial support in the 
                administrative record taken as a whole or in 
                classified information submitted to the court 
                under paragraph (3); or
                  (E) not in accord with procedures required by 
                law.
          (3) Exclusive jurisdiction.--The United States Court 
        of Appeals for the District of Columbia Circuit shall 
        have exclusive jurisdiction over claims arising under 
        sections 1323(c)(4) or 4713 of this title against the 
        United States, any United States department or agency, 
        or any component or official of any such department or 
        agency, subject to review by the Supreme Court of the 
        United States under section 1254 of title 28.
          (4) Administrative record and procedures.--
                  (A) In general.--The procedures described in 
                this paragraph shall apply to the review of a 
                petition under this section.
                  (B) Administrative record.--
                          (i) Filing of record.--The United 
                        States shall file with the court an 
                        administrative record, which shall 
                        consist of the information that the 
                        appropriate official relied upon in 
                        issuing an exclusion or removal order 
                        under section 1323(c)(4) or a covered 
                        procurement action under section 4713 
                        of this title.
                          (ii) Unclassified, nonprivileged 
                        information.--All unclassified 
                        information contained in the 
                        administrative record that is not 
                        otherwise privileged or subject to 
                        statutory protections shall be provided 
                        to the petitioner with appropriate 
                        protections for any privileged or 
                        confidential trade secrets and 
                        commercial or financial information.
                          (iii) In camera and ex parte.--The 
                        following information may be included 
                        in the administrative record and shall 
                        be submitted only to the court ex parte 
                        and in camera:
                                  (I) Classified information.
                                  (II) Sensitive security 
                                information, as defined by 
                                section 1520.5 of title 49, 
                                Code of Federal Regulations.
                                  (III) Privileged law 
                                enforcement information.
                                  (IV) Information obtained or 
                                derived from any activity 
                                authorized under the Foreign 
                                Intelligence Surveillance Act 
                                of 1978 (50 U.S.C. 1801 et 
                                seq.), except that, with 
                                respect to such information, 
                                subsections (c), (e), (f), (g), 
                                and (h) of section 106 (50 
                                U.S.C. 1806), subsections (d), 
                                (f), (g), (h), and (i) of 
                                section 305 (50 U.S.C. 1825), 
                                subsections (c), (e), (f), (g), 
                                and (h) of section 405 (50 
                                U.S.C. 1845), and section 706 
                                (50 U.S.C. 1881e) of that Act 
                                shall not apply.
                                  (V) Information subject to 
                                privilege or protections under 
                                any other provision of law.
                          (iv) Under seal.--Any information 
                        that is part of the administrative 
                        record filed ex parte and in camera 
                        under clause (iii), or cited by the 
                        court in any decision, shall be treated 
                        by the court consistent with the 
                        provisions of this subparagraph and 
                        shall remain under seal and preserved 
                        in the records of the court to be made 
                        available consistent with the above 
                        provisions in the event of further 
                        proceedings. In no event shall such 
                        information be released to the 
                        petitioner or as part of the public 
                        record.
                          (v) Return.--After the expiration of 
                        the time to seek further review, or the 
                        conclusion of further proceedings, the 
                        court shall return the administrative 
                        record, including any and all copies, 
                        to the United States.
                  (C) Exclusive remedy.--A determination by the 
                court under this subsection shall be the 
                exclusive judicial remedy for any claim 
                described in this section against the United 
                States, any United States department or agency, 
                or any component or official of any such 
                department or agency.
                  (D) Rule of construction.--Nothing in this 
                section shall be construed as limiting, 
                superseding, or preventing the invocation of, 
                any privileges or defenses that are otherwise 
                available at law or in equity to protect 
                against the disclosure of information.
    (c) Definition.--In this section, the term ``classified 
information''--
          (1) has the meaning given that term in section 1(a) 
        of the Classified Information Procedures Act (18 U.S.C. 
        App.); and
          (2) includes--
                  (A) any information or material that has been 
                determined by the United States Government 
                pursuant to an Executive order, statute, or 
                regulation to require protection against 
                unauthorized disclosure for reasons of national 
                security; and
                  (B) any restricted data, as defined in 
                section 11 of the Atomic Energy Act of 1954 (42 
                U.S.C. 2014).

SEC. 1328. TERMINATION.

    This subchapter shall terminate on the date that is 5 years 
after the date of the enactment of the Federal Acquisition 
Supply Chain Security Act of 2018.

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DIVISION C--PROCUREMENT

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                       CHAPTER 47--MISCELLANEOUS

Sec.
4701. Determinations and decisions.
     * * * * * * *
4712. Enhancement of contractor protection from reprisal for disclosure 
          of certain information.
4713. Authorities relating to mitigating supply chain risks in the 
          procurement of covered articles.

           *       *       *       *       *       *       *

SEC. 4712. ENHANCEMENT OF CONTRACTOR PROTECTION FROM REPRISAL FOR 
                    DISCLOSURE OF CERTAIN INFORMATION.

           *       *       *       *       *       *       *

SEC. 4713. AUTHORITIES RELATING TO MITIGATING SUPPLY CHAIN RISKS IN THE 
                    PROCUREMENT OF COVERED ARTICLES.

    (a) Authority.--Subject to subsection (b), the head of an 
executive agency--
          (1) carry out a covered procurement action; and
          (2) limit, notwithstanding any other provision of 
        law, in whole or in part, the disclosure of information 
        relating to the basis for carrying out a covered 
        procurement action.
    (b) Determination and Notification.--Except as authorized 
by subsection (c) to address an urgent national security 
interest, the head of an executive agency may exercise the 
authority provided in subsection (a) only after--
          (1) obtaining a joint recommendation, in unclassified 
        or classified form, from the chief acquisition officer 
        and the chief information officer of the agency, or 
        officials performing similar functions in the case of 
        executive agencies that do not have such officials, 
        which includes a review of any risk assessment made 
        available by the executive agency identified under 
        section 1323(a)(3) of this title, that there is a 
        significant supply chain risk in a covered procurement;
          (2) providing notice of the joint recommendation 
        described in paragraph (1) to any source named in the 
        joint recommendation advising--
                  (A) that a recommendation is being considered 
                or has been obtained;
                  (B) to the extent consistent with the 
                national security and law enforcement 
                interests, of information that forms the basis 
                for the recommendation;
                  (C) that, within 30 days after receipt of the 
                notice, the source may submit information and 
                argument in opposition to the recommendation; 
                and
                  (D) of the procedures governing the 
                consideration of the submission and the 
                possible exercise of the authority provided in 
                subsection (a);
          (3) making a determination in writing, in 
        unclassified or classified form, after considering any 
        information submitted by a source under paragraph (2) 
        and in consultation with the chief information security 
        officer of the agency, that--
                  (A) use of the authority under subsection 
                (a)(1) is necessary to protect national 
                security by reducing supply chain risk;
                  (B) less intrusive measures are not 
                reasonably available to reduce such supply 
                chain risk;
                  (C) a decision to limit disclosure of 
                information under subsection (a)(2) is 
                necessary to protect an urgent national 
                security interest; and
                  (D) the use of such authorities will apply to 
                a single covered procurement or a class of 
                covered procurements, and otherwise specifies 
                the scope of the determination; and
          (4) providing a classified or unclassified notice of 
        the determination made under paragraph (3) to the 
        appropriate congressional committees and leadership 
        that includes--
                  (A) the joint recommendation described in 
                paragraph (1);
                  (B) a summary of any risk assessment reviewed 
                in support of the joint recommendation required 
                by paragraph (1); and
                  (C) a summary of the basis for the 
                determination, including a discussion of less 
                intrusive measures that were considered and why 
                such measures were not reasonably available to 
                reduce supply chain risk.
    (c) Procedures To Address Urgent National Security 
Interests.--In any case in which the head of an executive 
agency determines that an urgent national security interest 
requires the immediate exercise of the authority provided in 
subsection (a), the head of the agency--
          (1) may, to the extent necessary to address such 
        national security interest, and subject to the 
        conditions in paragraph (2)--
                  (A) temporarily delay the notice required by 
                subsection (b)(2);
                  (B) make the determination required by 
                subsection (b)(3), regardless of whether the 
                notice required by subsection (b)(2) has been 
                provided or whether the notified source has 
                submitted any information in response to such 
                notice;
                  (C) temporarily delay the notice required by 
                subsection (b)(4); and
                  (D) exercise the authority provided in 
                subsection (a) in accordance with such 
                determination within 60 calendar days after the 
                day the determination is made; and
          (2) shall take actions necessary to comply with all 
        requirements of subsection (b) as soon as practicable 
        after addressing the urgent national security interest, 
        including--
                  (A) providing the notice required by 
                subsection (b)(2);
                  (B) promptly considering any information 
                submitted by the source in response to such 
                notice, and making any appropriate 
                modifications to the determination based on 
                such information;
                  (C) providing the notice required by 
                subsection (b)(4), including a description of 
                the urgent national security interest, and any 
                modifications to the determination made in 
                accordance with subparagraph (B); and
                  (D) providing notice to the appropriate 
                congressional committees and leadership within 
                7 calendar days of the covered procurement 
                actions taken under this section.
    (d) Delegation.--The head of an executive agency may not 
delegate the authority provided in subsection (a) or the 
responsibility identified in subsection (f) to an official 
below the level one level below the Deputy Secretary or 
Principal Deputy Director.
    (e) Limitation on Disclosure.--If the head of an executive 
agency has exercised the authority provided in subsection 
(a)(2) to limit disclosure of information, the agency head or a 
designee identified by the agency head shall--
          (1) provide the executive agency identified by the 
        Council under paragraph (3) of section 1323(a) of this 
        title information identified by the criteria under 
        paragraph (2) of that section, in a manner and to the 
        extent consistent with the requirements of national 
        security and law enforcement interests; and
          (2) take steps to maintain the confidentiality of any 
        such notifications.
      (f) Annual Review of Determinations.--The head of an 
executive agency shall conduct an annual review of all 
determinations made by such head under subsection (b) and 
promptly amend any covered procurement action as appropriate.
      (g) Regulations.--The Federal Acquisition Regulatory 
Council shall prescribe such regulations as may be necessary to 
carry out this section.
      (h) Reports Required.--Not less frequently than annually, 
the head of each executive agency that exercised the authority 
provided in subsection (a) or (c) during the preceding 12-month 
period shall submit to the appropriate congressional committees 
and leadership a report summarizing the actions taken by the 
agency under this section during that 12-month period.
      (i) Applicability.--Notwithstanding section 3101(c)(1)(A) 
of this title, this section applies to the Department of 
Defense, the Coast Guard, and the National Aeronautics and 
Space Administration.
      (j) Termination.--The authority provided under subsection 
(a) shall terminate on the date that is 5 years after the date 
of the enactment of the Federal Acquisition Supply Chain 
Security Act of 2018.
      (k) Definitions.--In this section:
          (1) Appropriate congressional committees and 
        leadership.--The term ``appropriate congressional 
        committees and leadership'' means--
                  (A) the Committee on Homeland Security and 
                Governmental Affairs, the Committee on the 
                Judiciary, the Committee on Appropriations, the 
                Select Committee on Intelligence, and the 
                majority and minority leader of the Senate; and
                  (B) the Committee on Oversight and Government 
                Reform, the Committee on the Judiciary, the 
                Committee on Appropriations, the Committee on 
                Homeland Security, the Permanent Select 
                Committee on Intelligence, and the Speaker and 
                minority leader of the House of 
                Representatives.
          (2) Covered article.--The term covered article 
        means--
                  (A) information technology, as defined in 
                section 11101 of title 40, including cloud 
                computing services of all types;
                  (B) telecommunications equipment or 
                telecommunications service, as those terms are 
                defined in section 3 of the Communications Act 
                of 1934 (47 U.S.C. 153);
                  (C) the processing of information of a 
                Federal or non-Federal information system, 
                subject to the requirements of the Controlled 
                Unclassified Information program; or
                  (D) hardware, systems, devices, software, or 
                services that include embedded or incidental 
                information technology.
          (3) Covered procurement.--The term ``covered 
        procurement'' means--
                  (A) a source selection for a covered article 
                involving either a performance specification, 
                as provided in subsection (a)(3)(B) of section 
                3306 of this title, or an evaluation factor, as 
                provided in subsection (b)(1)(A) of such 
                section, relating to a supply chain risk, or 
                where supply chain risk considerations are 
                included in the agency's determination of 
                whether a source is a responsible source as 
                defined in section 113 of this title;
                  (B) the consideration of proposals for and 
                issuance of a task or delivery order for a 
                covered article, as provided in section 
                4106(d)(3) of this title, where the task or 
                delivery order contract includes a contract 
                clause establishing a requirement relating to a 
                supply chain risk;
                  (C) any contract action involving a contract 
                for a covered article where the contract 
                includes a clause establishing requirements 
                relating to a supply chain risk; or
                  (D) any other procurement in a category of 
                procurements determined appropriate by the 
                Federal Acquisition Regulatory Council, with 
                the advice of the Federal Acquisition Security 
                Council.
          (4) Covered procurement action.--The term ``covered 
        procurement action'' means any of the following 
        actions, if the action takes place in the course of 
        conducting a covered procurement:
                  (A) The exclusion of a source that fails to 
                meet qualification requirements established 
                under section 3311 of this title for the 
                purpose of reducing supply chain risk in the 
                acquisition or use of covered articles.
                  (B) The exclusion of a source that fails to 
                achieve an acceptable rating with regard to an 
                evaluation factor providing for the 
                consideration of supply chain risk in the 
                evaluation of proposals for the award of a 
                contract or the issuance of a task or delivery 
                order.
                  (C) The determination that a source is not a 
                responsible source as defined in section 113 of 
                this title based on consideration of supply 
                chain risk.
                  (D) The decision to withhold consent for a 
                contractor to subcontract with a particular 
                source or to direct a contractor to exclude a 
                particular source from consideration for a 
                subcontract under the contract.
          (5) Information and communications technology.--The 
        term ``information and communications technology'' 
        means--
                  (A) information technology, as defined in 
                section 11101 of title 40;
                  (B) information systems, as defined in 
                section 3502 of title 44; and
                  (C) telecommunications equipment and 
                telecommunications services, as those terms are 
                defined in section 3 of the Communications Act 
                of 1934 (47 U.S.C. 153).
          (6) Supply chain risk.--The term ``supply chain 
        risk'' means the risk that any person may sabotage, 
        maliciously introduce unwanted function, extract data, 
        or otherwise manipulate the design, integrity, 
        manufacturing, production, distribution, installation, 
        operation, maintenance, disposition, or retirement of 
        covered articles so as to surveil, deny, disrupt, or 
        otherwise manipulate the function, use, or operation of 
        the covered articles or information stored or 
        transmitted on the covered articles.

           *       *       *       *       *       *       *

TITLE 44--PUBLIC PRINTING AND DOCUMENTS

           *       *       *       *       *       *       *

CHAPTER 35--COORDINATION OF FEDERAL INFORMATION POLICY

           *       *       *       *       *       *       *

Subchapter II--Information Security

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SEC. 3553. AUTHORITIES AND FUNCTIONS OF THE DIRECTOR AND SECRETARY.

    (a) * * *
          (1) * * *

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          (5) overseeing agency compliance with the 
        requirements of this subchapter and section 1326 of 
        title 41, including through any authorized action under 
        section 11303 of title 40, to enforce accountability 
        for compliance with such requirements; and

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SEC. 3554. FEDERAL AGENCY RESPONSIBILITIES.

    (a) * * *
          (1) * * *
                  (A) * * *
                  (B) complying with the requirements of this 
                subchapter, subchapter III of chapter 13 of 
                title 41, and related policies, procedures, 
                standards, and guidelines, including--
                          (i) * * *
                          (ii) * * *
                          (iii) * * *
                          (iv) information security standards 
                        and guidelines for national security 
                        systems issued in accordance with law 
                        and as directed by the President[; 
                        and];
                          (v) * * *
                          (vi) responsibilities relating to 
                        assessing and avoiding, mitigating, 
                        transferring, or accepting supply chain 
                        risks under section 1326 of title 41, 
                        and complying with exclusion and 
                        removal orders issued under section 
                        1323 of such title; and

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