[Code of Federal Regulations]
[Title 32, Volume 1, Parts 1 to 190]
[Revised as of July 1, 1998]
From the U.S. Government Printing Office via GPO Access
[CITE: 32CFR159a.88]

[Page 860]
 
                       TITLE 32--NATIONAL DEFENSE
 
              CHAPTER I--OFFICE OF THE SECRETARY OF DEFENSE
 
PART 159a--INFORMATION SECURITY PROGRAM REGULATION--Table of Contents
 
                   Subpart M--Special Access Programs
 
Sec. 159a.88  ``Carve-Out'' contracts.

    (a) The Secretaries of the Military Departments and the DUSD(P), or 
their designees, shall ensure that, in those Special Access Programs 
involving contractors, special access controls are made applicable by 
legally binding instruments.
    (b) To the extent necessary for DIS to execute its security 
responsibilities with respect to Special Access Programs under its 
security cognizance, DIS personnel shall have access to all information 
relating to the administration of these Programs.
    (c) Excluding those Programs specified in Sec. 159a.81(c), the use 
of ``carve-out'' contracts that relieve the DIS from inspection 
responsibility under the Defense Industrial Security Program is 
prohibited unless:
    (1) Such contract supports a Special Access Program approved and 
administered under Sec. 159a.81;
    (2) Mere knowledge of the existence of a contract or of its 
affiliation with the Special Access Program is classified information; 
and
    (3) Carve-out status is approved for each contract by the Secretary 
of a Military Department, the Director, NSA, the DUSD(P), or their 
designees.
    (d) Approval to establish a ``carve-out'' contract must be requested 
from the Secretary of a Military Department, or designee(s), the 
Director, NSA, or designee(s), or in the case of other DoD Components, 
from the DUSD(P). Approved ``carve-out'' contracts shall be assured the 
support necessary for the requisite protection of the classified 
information involved. The support shall be specified through a system of 
controls that shall provide for:
    (1) A written security plan, oral waivers of which are prohibited 
except in critical situations that must be documented as soon as 
possible after the fact.

    Note: The plan must identify that DD Forms 254 have been distributed 
to the Defense Investigative Service as outlined in DoD Directive 
5205.7.

    (2) Professional security personnel at the sponsoring DoD Component 
performing security inspections at each contractor's facility which 
shall be conducted, at a minimum, with the frequency prescribed by 
paragraph 4-103 of DoD 5220.22-R;
    (3) ``Carve-out'' contracting procedures;
    (4) A central office of record; and
    (5) An official to be the single point of contact for security 
control and administration. DoD Components other than the Military 
Departments and NSA shall submit such appropriate rationale and security 
plan along with requests for approval to the DUSD(P).
    (e) An annual inventory of carve-out contracts shall be conducted by 
each DoD Component which participates in Special Access Programs.
    (f) This subsection relates back to the date of execution for each 
contract to which carve-out contracting techniques are applied. The 
carve-out status of any contract expires upon termination of the Special 
Access Program which it supports.