Risk_Rating_and_Policy_Forms_SOO_09112017_(003).pdf

Federal Emergency Management Agency Risk Management Directorate

Statement of Objectives NFIP Risk Rating and Policy Forms

11 September 2017

Table of Contents

I DESCRIPTION AND PURPOSE

II FEMA STRATEGIC GOALS

III FIMA MISSION

IV ACQUISITION STRATEGY

V PROGRAM DESCRIPTION

VI OBJECTIVES

VII STAFF REQUIREMENTS

VIII KEY PERSONNEL

IX DELIVERABLES AND MILESTONE SCHEDULE

X GOVERNMENT FURNISHED EQUIPMENT

XI PERIOD OF PERFORMANCE

XII PLACE OF PERFORMANCE

XIII ASSUMPTIONS AND CONSTRAINTS

XIV Security

For Official Use Only

Standard Security

OPSEC Training

Privacy

I DESCRIPTION AND PURPOSE

The Federal Insurance and Mitigation Administration (FIMA) is a component of the Department of Homeland Security (DHS), Federal Emergency Management Agency (FEMA), which operates the Risk Management and Flood Insurance Directorates and the National Flood Insurance Program

(NFIP).

FEMA’s NFIP has been offering flood insurance coverage to homeowners, renters and businesses as protection against flood losses for over 40 years. In return, local governments provide commitment to sound floodplain management and related flood disaster mitigation efforts. In addition to offering flood insurance, the duties of the NFIP include identifying communities’ flood risks, mapping and publishing Flood Insurance Rate Maps of those risks, helping communities meet floodplain management requirements, and communicating the benefits of flood insurance protection so that more Americans are reimbursed for flood damage through the insurance mechanism, rather than through Federal disaster assistance funds.

Since the political and technological environments are continuing to evolve, this initiative will require the continuous review of existing systems and operations, and potential development of new standards or approaches in meeting the objectives outlined below. FEMA requires solutions that are in line with industry’s best practices, proven, efficient, easy to implement and effective.

The goal of this Contract is to improve the NFIP insurance product and policyholder experience, by accomplishing the following:

• Provide an insurance product that customers value

• Improve the ability of policyholders to understand their flood coverage, the key risk drivers of their flood insurance costs, and choices that affect coverage and cost.

• Enhance the ability of agents to explain the value proposition of flood coverage to their policyholders

• Allow the NFIP to more readily implement and oversee an efficient, timely, correct, and consistent claims adjusting process

• Expand the ability of the NFIP to engage a large number of trained, experienced independent claims adjusters for large-scale catastrophic events

• Allow agile delivery of solution to successive market subsets

The purpose of the acquisition is to procure risk rating and policy forms development services to support the establishment of the Risk Rating Redesign Program.

II FEMA STRATEGIC GOALS

The 2014-2018 FEMA Strategic Plan reflects objectives the Agency will accomplish to provide the best possible support to the American people before, during, and after disasters. It sets forth the strategies FEMA will employ to accomplish the objectives and also establishes measurable outcomes to achieve. This Strategic Plan was developed through the involvement of hundreds of https://www.fema.gov/media-library/assets/documents/96981

FEMA employees and many external stakeholders who contributed to generating our objectives, strategies, and outcomes, and who are now working to execute this Plan.

The Strategic Plan provides a strategic lens to focus FEMA's efforts and guide the allocation of resources over the next four years. The FEMA Strategic Plan also supports the Department of Homeland Security's Strategic Plan for Fiscal Years (FY) 2014-2018 Mission 5 of Strengthen national preparedness and resilience.

FEMA’s Five Strategic Priorities:

• Priority 1: Be survivor-centric in mission and program delivery

• Priority 2: Become an expeditionary organization

• Priority 3: Posture and build capability for catastrophic disasters

• Priority 4: Enable disaster risk reduction nationally

• Priority 5: Strengthen FEMA’s organizational foundation

FEMA's Two Strategic Imperatives:

• A whole community approach to emergency management

• Foster innovation and learning

III FIMA MISSION

The mission of FIMA is to create safer communities by reducing loss of life and property; enable individuals to recover more rapidly from floods and other disasters; and lessen the financial impact of disasters on the Nation. This is accomplished through three primary objectives:

• Analyze Risk – Determining the impact of natural hazards that lead to effective strategies for reducing risk.

• Reduce Risk – Reducing or eliminating long-term risk from hazards on the existing built environment and future construction.

• Insure for Flood Risk – Reducing the impact of floods on the Nation by providing flood insurance.

IV ACQUISITION STRATEGY

FIMA intends to award one firm-fixed price contract for this requirement.

V PROGRAM DESCRIPTION

The National Flood Insurance Program (NFIP) was created in 1968 as a result of the continuing periodic flood disasters experienced by communities throughout the US that damaged or destroyed infrastructure, buildings, and homes, making it difficult for the communities and their residents to recover. The mission of the NFIP is to (1) identify the special flood hazard areas (SFHAs), (2) develop standards for effective floodplain management in those SFHAs and (3) provide flood insurance to building and home owners.

http://www.dhs.gov/sites/default/files/publications/FY14-18%20Strategic%20Plan.PDF http://www.dhs.gov/sites/default/files/publications/FY14-18%20Strategic%20Plan.PDF

In the wake of Hurricane Sandy, the Federal Insurance and Mitigation Administration (FIMA) conducted an assessment on the NFIP to ensure that the customer’s experience aligns with FIMA’s survivor-centric vision, mission and approach. Out of the customer-experience assessment, FIMA identified the following gaps within the NFIP policyholders: (1) did not understand their flood risk and (2) did not believe their flood insurance policy provided a good value for the price. Therefore, FIMA is redesigning and modernizing their current risk rating approach, to address these gaps and improve overall customer experience.

This modernization of risk rating requires wholesale rewriting of the NFIP rating and policy forms to support its new approach. The current policy forms are written in complicated, archaic language and the coverages do not align with what the insurance industry provides. The current risk rating approach is very outdated and not consistent with standard industry practices.

Prior to this Contract, FEMA will have developed a new Risk Rating and Classification Approach.

The new approach includes the methodology, techniques, tools and data sets FIMA should consider when implementing a new nation-wide risk rating and classification system. Prior to this Contract, the new approach will be tested on two geographical areas in order to evaluate its success.

FEMA is still developing the strategy for the delivery of the policy forms and rates being developed as part of this Contract. This strategy will be mostly developed prior to Contract award. This may require the Contractor to develop the policy forms and rates using an agile method, where certain policyholder groups would be prioritized and rolled-out in a phased approach.

VI OBJECTIVES

Objective 1: Conduct assessment of the NFIP’s current flood insurance policy forms and review the newly developed risk rating and classification approach

• The Contractor will evaluate the current policy forms coverage and compare them with standard industry practices.

• The Contractor will apply relevant legal regulations as well as business and technological developments in policy language to the policy form redesign process.

• The Contractor will review the newly developed risk rating and classification approach to:

o Understand the differences from the previous risk rating and classification approach o Understand the results of the testing of the risk rating and classification approach on one riverine community and one coastal community o Validate the newly developed risk rating and classification approach and provide recommendations for improvement o Develop a plan for expanding the new risk rating and classification approach to a national level

• Assist FEMA in upgrading the newly developed risk rating and classification approach based on the review of the risk rating and classification approach, as well as feedback from FEMA leadership.

• The Contractor will develop metrics to be able to measure the success of the redesigned policy form and rating method.

Objective 2: Scale the new risk rating and classification approach and develop a rating plan for national level delivery

• The Contractor will scale the NFIP’s newly developed risk rating and classification approach to the national level.

• The Contractor will perform all work in conjunction with FEMA actuarial staff. All work products and analyses should be developed so that FEMA staff can continue the work independently upon contract expiration.

• The Contractor will develop a rating plan that applies to all NFIP policies across the nation based on the newly developed risk rating and classification approach. The Contractor will need to determine how the base rates and factors will apply to all policies across the nation.

The Contractor will complete any technical analysis required to develop the rating plan.

• The Contractor will build upon previously completed data analyses (conducted prior to this Contract) in order to deliver the rating plan. The Contractor will need to apply the risk rating and classification approach to regions and policies with more limited data. The Government may determine the need to acquire new data sources and will request the Contractor to incorporate any newly acquired data into the risk rating and classification approach to deliver the rating plan.

• The Contractor will also produce documentation of all rate setting processes and protocols for the rating plan. This will allow FEMA to be transparent with the public, leadership, and other stakeholders and to enable FEMA to recreate the process moving forward. When developing the documentation, the Contractor shall consider prior approval filing practices, particularly any guidelines given by the National Association of Insurance Commissioners

(NAIC).

• To complete this Objective, the Contractor will need to assist FEMA in running the NFIP policyholder data through third party catastrophic flood models. The Contractor will be expected to analyze and incorporate results from no more than three catastrophic flood models. In addition, the Contractor may be required to analyze and incorporate the NFIP mapping data and historic claims data at the national level. Please see section XI.

Assumptions and Constraints for more information on the catastrophic models.

• FEMA is creating a Risk Rating Engine independent from this Contract. The Contractor will assist FEMA in developing the requirements and inputs for the Risk Rating Engine during development.

Objective 3: Iteratively draft NFIP policy forms and test against newly developed test rating plan to develop recommendations for policy form upgrades

• The Contractor will develop new policy forms for both the following existing flood insurance products and new flood insurance products, including but not limited to:

o HO-3: Owner occupied homes, including primary, seasonal, and secondary o DP-3: Tenant occupied homes o HO-4: Contents only policy for renters o HO-6: Owner and tenant occupied condominium units o CP 17: Owners or associations of condominium buildings or apartment buildings o CP 10: Owners of commercial non-residential buildings o Flood insurance endorsement for a homeowners policy

The Contractor will recommend other NFIP policy forms to develop, if necessary.

• The NFIP policy forms will:

o Align with current industry standards o Be consistent across policy forms o Be understandable to policyholders o Offer coverages at attractive price points to policyholders o Be compliant with statute and case law

• The Contractor will develop a test rating plan to develop general pricing levels for new policy forms and options. The test rating plan should be developed concurrently with draft policy forms. The test rating plan is to be developed as part of objective 2.

• The Contractor will identify statutory limitations and assist the Government in determining whether the new products are within statutory limitations. The Contractor will also identify required regulatory changes and assist the government in defining these regulatory changes.

The Contractor will provide advisory services if the Government chooses to pursue changing any statutes.

• The Contractor will have access to historical claims data in order to understand the impact of updating current products and potential impacts of new products. Please see section XI.

Assumptions and Constraints for more information on the need to secure FEMA data.

• The new policy forms will be tested against risk rating plan to determine whether pricing is reasonable in multiple regional areas. The policy forms and rating plan likely will need to be updated based on the testing. This process is expected to be iterative throughout the policy form development.

Final policy form products will be developed to be tested as part of Objective 4. This will be approved by Government leadership.

Objective 4: Evaluate the recommended policy forms and pricing against market’s appetite for coverage at certain price points

The extent of market testing done will be determined by FEMA and may be limited due to time constraints and the delivery strategy.

• The Contractor will assist FEMA in evaluating the policy forms and corresponding pricing using both qualitative and quantitative methods, including but not limited to testing user experience, conducting focus groups, and evaluating survey responses from representative policyholder samples. The Contractor will use the previously developed metrics (Objective

1) to quantify any successes and failures.

• FEMA will conduct any policyholder surveys independently. The Contractor may be asked to develop materials and evaluate results.

• The Contractor will update policy forms and pricing based on market testing.

Objective 5: Finalize NFIP policy forms and rating plan

• Based on the results of the market testing, the Contractor will develop final recommendations for NFIP policy forms and rating plan to be approved by FEMA leadership.

• The Contractor will debrief FEMA on the steps used to create the policy forms and rating plan. A successful briefing will result in the Government being able to replicate and maintain the processes and procedures moving forward.

VII STAFF REQUIREMENTS

The Contractor shall provide staff highly skilled to include, at a minimum, an expert in actuarial sciences and an expert in data model analysis.

The Lead Actuary must be a fellow of an American or International actuarial society and have significant experience developing, expanding, and updating risk rating and classification approaches for catastrophic perils.

The Lead Underwriter and the Lead Attorney should both have significant experience developing insurance policy forms. They both should have some experience developing policy forms for catastrophic perils.

The Data Modeling Expert must have experience with catastrophic flood models, such as AIR Touchstone, RMS RiskLink, CoreLogic, and/or Katrisk.

FEMA requires Contractor support personnel with significant experience assessing, evaluating, improving, and implementing risk rating and policy forms solutions.

Core work hours shall be Monday through Friday from 8:00AM to 5:00PM (EST), excluding Federal Holidays. The Government anticipates the place of performance shall primarily be remote or at FEMA Headquarters located at 400 C Street SW, 3rd Floor, Washington, DC, 20472.

VIII KEY PERSONNEL

Before replacing any individual designated as Key by the Government, the Contractor shall notify the Contracting Officer no less than fifteen (15) days in advance, submit written justification for replacement, and provide the name and qualification for any proposed substitute(s). All proposed substitutes shall possess qualification equal to or superior to those of the Key person being replaced. The Contractor shall not replace Key Contractor personnel without acknowledgment from the Contracting Officer. The following Contractor personnel are designated as Key for this requirement. Note: The Government may designate additional Contractor personnel as Key at the time of award.

Lead Actuary The Contractor shall provide a Senior Actuary that is responsible for all actuarial activity of the Risk Rating and Policy Forms Contract including but not limited to the review of the newly developed risk rating and classification approach, the scaling of the risk rating and classification approach, and the upgrading of the risk rating and classification approach based on development and testing of policy forms.

The Lead Actuary must be an Associate or Fellow of an American or International actuarial society, with significant relevant work experience (over 10 years) in developing risk rating and classification plans for property and casualty insurance companies.

Lead Underwriter The Contractor shall provide a Senior Underwriter that is responsible for all policy forms activity of the Risk Rating and Policy Forms Contract including but not limited to the assessment of the current policy forms, the development of new policy forms, and the testing of the new policy forms.

The Lead Underwriter must have significant relevant work experience (over 10 years) working with and developing policy forms.

Lead Reviewer The Contractor shall provide a Senior Reviewer that is responsible for all legal review of policy forms activity of the Risk Rating and Policy Forms Contract including but not limited to the assessment of the current policy forms, the development of new policy forms, and the testing of the new policy forms.

The Lead Reviewer must have significant relevant work experience (over 10 years) working with and developing policy forms.

Data Model Expert The Contractor shall provide a data model expert that is responsible for the data modelling analysis for the Risk Rating and Classification task order. The Data Model Expert must have relevant work experience (over 5 years) with catastrophic models (with a strong preference for catastrophic flood models) manipulating and analyzing data output from AIR, RMS, CoreLogic, and/or KatRisk.

IX DELIVERABLES AND MILESTONE SCHEDULE

DESCRIPTION FREQUENCY DUE DATES

Monthly Technical Progress Narrative

Monthly Fifteenth (15th) of every month

Development of Project Plan Once Fifteen (15) days from contract award

Assessment of Policy Forms and Risk Rating Approach

Once Thirty (30) days from EOD for key personnel

Risk Rating & Policy Forms Metrics Once Forty-five (45) days from EOD for key personnel

Initial Policy Form Once or per policy form

Three (3) months from contract award or As requested by COR (phased solution approach)

Test Rating Plan Once or per policy form

Three (3) months from contract award or As requested by COR (phased solution approach)

Draft risk rating technical analysis and protocols

Once or per policy form

Nine (9) months from contract award or As requested by COR (phased solution approach)

Draft policy forms and corresponding pricing

Nine (9) months from contract award or As requested by COR (phased solution approach)

Evaluation of Market Testing

Twelve (12) months from contract award or As requested by COR (phased solution approach)

Market tested policy forms and corresponding prices

Thirty (30) days from contract expiration or As requested by COR (phased solution approach)

Debrief presentation and all data associated with and resulting from this work effort

Once

Thirty (30) days from contract expiration

Note: Deliverables will be delivered to the COR by the due date listed. The COR then has twenty

(20) business days to review the deliverable and request corrections from the Contractor before the document is accepted by the Government. Some of these deliverables could be shared with other FEMA stakeholders. Deliverables may be delivered in electronic format using Microsoft products.

X GOVERNMENT FURNISHED EQUIPMENT

• Portable laptops to conduct work behind the FEMA firewall o All contractor personnel performing work using or reviewing FEMA data and non-public information will require a laptop

• A minimal amount of work space for the Contractor at FEMA facilities

• Access to appropriate personnel to complete all Objectives of the SOO

XI PERIOD OF PERFORMANCE

The performance period of the contract will be up to two and one-half (2.5) years consisting of one twelve (12) month base and three six (6) month options.

XII PLACE OF PERFORMANCE

Due to the collaborative nature of the work, the Government anticipates frequent teleconferences and videoconferences and requires one representative from the Contractor’s team to be present at FEMA Headquarters located in Washington, DC on a biweekly basis and for the Lead Actuary to be present at least once a month. As determined by the Government, the Contractor is allowed limited access to the FEMA Headquarters located in Washington, DC.

XIII ASSUMPTIONS AND CONSTRAINTS

• The Government may choose to roll-out delivery of solutions to successive market subsets in a phased approach. The development of rates and policy forms should be flexible enough to support this approach.

• The Government plans to procure the catastrophic flood licenses for those models independently. The Government cannot release which models will be used at this time as they are currently in the acquisition process.

• The new risk rating and classification approach has not yet been developed, so details on exactly what it encompasses are unavailable at this time. However, the Government expects that the new approach will use NFIP maps, catastrophic modeling results, and historic data to develop the new classification and rating system.

• Due to IT security and privacy concerns, NFIP data is required to stay behind the FEMA firewall. Contractors will be badged and provided laptops in order to be able to access data.

All modeling will be performed within the Reinsurance Broker System by either FEMA or a third party vendor. The Contractor will not be able to run the NFIP data through their own software or equipment.

• Short project timeframe results in a limited amount of time available to analyze and assess the current NFIP approach.

• This is a high visibility project with an aggressive timeline which requires a fast-paced, collaborative work style with limited time and resources for Contractor ramp-up.

• A new risk rating tool and delivery system will be developed as a separate effort. The Contractor should bring expertise on common IT constraints or considerations when developing the approach, so that it is easily implementable.

• The data resulting from this work effort will be for the sole use of FEMA and cannot be used by anyone other than FEMA for any other reason or purpose. Additionally, all data resulting from this effort must be returned to FEMA.

• The Contractor shall adhere to the procedures defined in Management Directive 11042.1 for Safeguarding Sensitive but Unclassified (For Official Use Only) Information.

XIV Security

For Official Use Only In accordance with DHS Management Directive 11042.1 contractors, consultants and others to whom access is granted will abide by 11042.1; DHS policy regarding the identification and safeguarding of sensitive but unclassified information originated within DHS. It also applies to other sensitive but unclassified information received by DHS from other government and non-governmental activities. The contractor will:

1. Be aware of and comply with the safeguarding requirements for “For Official Use Only” (FOUO) information as outlined in this directive.

2. Participate in formal classroom or computer based training sessions presented to communicate the requirements for safeguarding FOUO and other sensitive but unclassified information.

3. Be aware that divulging information without proper authority could result in administrative or disciplinary action.

Contractors and Consultants shall:

Execute a DHS Form 11000-6, Sensitive but Unclassified Information Non Disclosure Agreement (NDA), as a condition of access to such information. Other individuals not assigned to or contractually obligated to DHS, but to whom access to information will be granted, may be requested to execute an N DA as determined by the applicable program manager. Execution of the N DA shall be effective upon publication of this directive and not applied retroactively.

Standard Security

BACKGROUND INVESTIGATIONS

All contractor personnel who require access to DHS or FEMA information systems, routine access to DHS or FEMA facilities, or access to sensitive information, including but not limited to Personally Identifiable Information (PII), shall be subject to a full background investigation commensurate with the level of the risk associated with the job function or work being performed.

FEMA’s Personnel Security Division (PSD) will determine the risk designation for each contractor position by comparing the functions and duties of the position against those of a same or similar federal position, applying the same standard for evaluating the associated potential for impact on the integrity and efficiency of federal service.

Low Risk without Information System Access Contractor personnel occupying positions or performing functions with a Low Risk designation and who do not require access to DHS or FEMA information systems may undergo a Tier 1 investigation with a credit check and must receive a favorable adjudication thereof from FEMA PSD prior to performing work under this contract. (also reference Facility Access).

Low Risk with Information System Access Contractor personnel occupying positions or performing functions with a Low Risk designation and who require access to DHS or FEMA information systems shall undergo a Tier 2 Suitability Background Investigation (T2) and must receive a favorable adjudication thereof from FEMA PSD prior to performing work under this contract.

Moderate Risk Contractor personnel occupying positions or performing functions with a Moderate Risk designation shall undergo a Tier 2 Suitability Background Investigation (T2) and must receive a favorable adjudication thereof from FEMA PSD prior to performing work under this contract.

High Risk Contractor personnel occupying positions or performing functions with a High Risk designation shall undergo a Tier 4 Suitability Background Investigation (T4) and must receive a favorable adjudication thereof from FEMA PSD prior to performing work under this contract.

Background Investigation Process To initiate the request to process contractor personnel, the Contractor shall provide the FEMA Contracting Officer’s Representative (COR) with all required information and comply with all necessary instructions to complete Section II of the FEMA Form 121-3-1-6, “Contract Fitness/Security Screening Request.” The FEMA COR shall ensure that all other applicable sections of the FEMA Form 121-3-1-6 are complete prior to submitting the form to FEMA PSD for processing. The Contractor shall also provide the FEMA COR with completed OF 306, “Declaration for Federal Employment,” forms for all contractor personnel.

Contractor personnel who already have a favorably adjudicated background investigation, may be eligible to perform work under this contract without further processing by FEMA PSD if:

• the investigation was completed within the last five years,

• it meets or exceeds the minimum requirement for the position they will occupy or functions they will perform on this contract,

• the contractor personnel have not had a break in employment since the prior favorable adjudication, and,

• FEMA PSD has verified the investigation and confirmed that no new derogatory information has been disclosed which may require a reinvestigation.

FEMA PSD will notify the COR of the names of the contractor personnel eligible to work based on prior, favorable adjudication. The COR will, in turn, notify the Contractor of the names of the favorably adjudicated contractor personnel, at which time the favorably adjudicated contractor personnel will be eligible to begin work under this contract.

For those contractor personnel who do not have an acceptable, prior, favorable adjudication or who otherwise require reinvestigation, FEMA PSD will issue an electronic notification via email directly to the contractor applicant/personnel that contains the following documents, which are incorporated into this contract by reference, along with a link to the Office of Personnel Management’s (OPM) Electronic Questionnaires for Investigation Processing (e-QIP) system and instructions for submitting the necessary information:

• Standard Form 85P, “Questionnaire for Public Trust Positions”

• Optional Form 306, “Declaration for Federal Employment”

• SF 87, “Fingerprint Card” (2 copies)

• DHS Form 11000-6, “Non-Disclosure Agreement”

• DHS Form 11000-9, “Disclosure and Authorization Pertaining to Consumer Reports

Pursuant to the Fair Credit Reporting Act”

FEMA PSD will only accept complete packages consisting of all of the above document and Standard Form 85P, which must be completed electronically through the Office of Personnel Management’s e-QIP system. The Contractor is responsible for ensuring that all contractor personnel timely and properly submit all required background information.

Once contractor personnel have properly submitted the complete package of all required background information, FEMA’s Personnel Security Division, at its sole discretion, may grant contractor personnel temporary eligibility to perform work under this contract prior to completion of the full background investigation if the Personnel Security Division’s initial review of the contractor personnel’s background information reveals no issues of concern. In such cases, FEMA’s Personnel Security Division will provide notice of such temporary eligibility to the COR who will then notify the Prime Contractor, at which time the identified contractor personnel will be temporarily eligible to begin work under this contract. Neither the Prime Contractor nor the contractor personnel has any right to such a grant of temporary eligibility. The grant of such temporary eligibility shall not be considered as assurance that the contactor personnel will remain eligible to perform work under this contract upon completion of and final adjudication of the full background investigation.

Upon favorable adjudication of the full background investigation, FEMA’s Personnel Security Division will update the contractor personnel’s security file and take no further action. In any instance where the final adjudication results in an unfavorable determination FEMA’s Personnel Security Division will notify the contractor personnel directly, in writing, of the decision and will provide the COR with the name(s) of the contractor personnel whose adjudication was unfavorable.

The COR will then forward that information to the Contractor. Contractor personnel who receive an unfavorable adjudication shall be ineligible to perform work under this contract. Unfavorable adjudications are final and not subject to review or appeal.

Continued Eligibility and Reinvestigation Eligibility determinations based on a Low Risk T1, Moderate Risk T2S or High Risk T4 are valid for five years from the date that the investigation was completed and closed. Contractor personnel required to undergo a background investigation to perform work under this contract shall be ineligible to perform work under this contract upon the expiration the background investigation unless and until the contractor personnel have undergone a reinvestigation and FEMA’s Personnel Security Division has renewed their eligibility to perform work under this contract.

Exclusion by Contracting Officer The Contracting Officer, independent of FEMA’s Personnel Security Division, may direct the Contractor be excluded from working on this contract. Any contractor found or deemed to be unfit or whose continued employment on the contract is deemed contrary to the public interest or inconsistent with the best interest of the agency may be removed.

FACILITY ACCESS

The Contractor shall comply with FEMA Directive 121-1 “FEMA Personal Identity Verification Guidance,” FEMA Directive 121-3 “Facility Access,” and FEMA Manual 121-3-1 “FEMA Credentialing Access Manual,” to arrange for contractor personnel’s access to FEMA facilities, which includes, but is not limited to, arrangements to obtain any necessary identity badges for contractor personnel.

Contractor personnel working within any FEMA facility who do not require access to DHS or FEMA IT systems and do not qualify for a PIV Card may be issued a Facility Access Card (FAC).

FACs cannot exceed 180 days; all contractors requiring access greater than 180 days will need to qualify for and receive a PIV card before being allowed facility access beyond 180 days.

Contractor personnel shall not receive a FAC until they have submitted a SF 87, “Fingerprint Card,” and receive approval from FEMA PSD. Contractor personnel using a FAC for access to FEMA facilities must be escorted in Critical Infrastructure areas (i.e., server rooms, weapons rooms, mechanical rooms, etc.) at all times.

FEMA may deny facility access to any contractor personnel whom FEMA’s Office of the Chief Security Officer has determined to be a potential security threat.

The Contractor shall notify the FEMA COR of all terminations/resignations within five calendar days of occurrence. The Contractor must account for all forms of Government-provided identification issued to contractor employees under a contract (i.e., the PIV cards or other similar badges) must return such identification to FEMA as soon as any of the following occurs:

• When no longer needed for contract performance.

• Upon completion of a contractor employee’s employment.

• Upon contract completion or termination.

If an identification card or building pass is not available to be returned, the Contractor shall submit a report to the FEMA COR, referencing the pass or card number, name of the individual to whom it was issued, and the last known location and disposition of the pass or card.

The Contractor or contractor personnel’s failure to return all DHS- or FEMA-issued identification cards and building passes upon expiration, upon the contractor personnel’s removal from the contract, or upon demand by DHS or FEMA may subject the contractor personnel and the Contractor to civil and criminal liability.

OPSEC Training Contractors and Subcontractors who are working on this contract shall receive the OPSEC Awareness Brief.

Access to the briefing can be obtained at http://cdsetrain.dtic.mil/opsec Send the certificate of completion to the FEMA Contracting Officer Representative no later than 30 calendar days after awarded contract. New employees entering the contract must receive the briefing within ten (10) business days of joining the contract.

http://cdsetrain.dtic.mil/opsec

Privacy

SAFEGUARDING OF SENSITIVE INFORMATION (MAR 2015)

(a) Applicability. This clause applies to the Contractor, its subcontractors, and Contractor employees (hereafter referred to collectively as “Contractor”). The Contractor shall insert the substance of this clause in all subcontracts.

(b) Definitions. As used in this clause—

“Personally Identifiable Information (PII)” means information that can be used to distinguish or trace an individual's identity, such as name, social security number, or biometric records, either alone, or when combined with other personal or identifying information that is linked or linkable to a specific individual, such as date and place of birth, or mother’s maiden name. The definition of PII is not anchored to any single category of information or technology. Rather, it requires a case-by-case assessment of the specific risk that an individual can be identified. In performing this assessment, it is important for an agency to recognize that non-personally identifiable information can become personally identifiable information whenever additional information is made publicly available—in any medium and from any source—that, combined with other available information, could be used to identify an individual.

PII is a subset of sensitive information. Examples of PII include, but are not limited to: name, date of birth, mailing address, telephone number, Social Security number (SSN), email address, zip code, account numbers, certificate/license numbers, vehicle identifiers including license plates, uniform resource locators (URLs), static Internet protocol addresses, biometric identifiers such as fingerprint, voiceprint, iris scan, photographic facial images, or any other unique identifying number or characteristic, and any information where it is reasonably foreseeable that the information will be linked with other information to identify the individual.

“Sensitive Information” is defined in HSAR clause 3052.204-71, Contractor Employee Access, as any information, which if lost, misused, disclosed, or, without authorization is accessed, or modified, could adversely affect the national or homeland security interest, the conduct of Federal programs, or the privacy to which individuals are entitled under section 552a of Title 5, United States Code (the Privacy Act), but which has not been specifically authorized under criteria established by an Executive Order or an Act of Congress to be kept secret in the interest of national defense, homeland security or foreign policy. This definition includes the following categories of information:

(1) Protected Critical Infrastructure Information (PCII) as set out in the Critical Infrastructure Information Act of 2002 (Title II, Subtitle B, of the Homeland Security Act, Public Law 107- 296, 196 Stat. 2135), as amended, the implementing regulations thereto (Title 6, Code of Federal Regulations, Part 29) as amended, the applicable PCII Procedures Manual, as amended, and any supplementary guidance officially communicated by an authorized official of the Department of Homeland Security (including the PCII Program Manager or his/her designee);

Sensitive Security Information (SSI), as defined in Title 49, Code of Federal Regulations, Part 1520, as amended, “Policies and Procedures of Safeguarding and Control of SSI,” as amended, and any supplementary guidance officially communicated by an authorized official of the

Department of Homeland Security (including the Assistant Secretary for the Transportation Security Administration or his/her designee);

(2) Information designated as “For Official Use Only,” which is unclassified information of a sensitive nature and the unauthorized disclosure of which could adversely impact a person’s privacy or welfare, the conduct of Federal programs, or other programs or operations essential to the national or homeland security interest; and

(3) Any information that is designated “sensitive” or subject to other controls, safeguards or protections in accordance with subsequently adopted homeland security information handling procedures.

“Sensitive Information Incident” is an incident that includes the known, potential, or suspected exposure, loss of control, compromise, unauthorized disclosure, unauthorized acquisition, or unauthorized access or attempted access of any Government system, Contractor system, or sensitive information.

“Sensitive Personally Identifiable Information (SPII)” is a subset of PII, which if lost, compromised or disclosed without authorization, could result in substantial harm, embarrassment, inconvenience, or unfairness to an individual. Some forms of PII are sensitive as stand-alone elements. Examples of such PII include: Social Security numbers (SSN), driver’s license or state identification number, Alien Registration Numbers (A-number), financial account number, and biometric identifiers such as fingerprint, voiceprint, or iris scan. Additional examples include any groupings of information that contain an individual’s name or other unique identifier plus one or more of the following elements:

(1) Truncated SSN (such as last 4 digits)

(2) Date of birth (month, day, and year)

(3) Citizenship or immigration status

(4) Ethnic or religious affiliation

(5) Sexual orientation

(6) Criminal History

(7) Medical Information

(8) System authentication information such as mother’s maiden name, account passwords or personal identification numbers (PIN)

Other PII may be “sensitive” depending on its context, such as a list of employees and their performance ratings or an unlisted home address or phone number. In contrast, a business card or public telephone directory of agency employees contains PII but is not sensitive.

(c) Authorities. The Contractor shall follow all current versions of Government policies and guidance accessible at http://www.dhs.gov/dhs-security-and-training-requirements-contractors, or available upon request from the Contracting Officer, including but not limited to:

(1) DHS Management Directive 11042.1 Safeguarding Sensitive But Unclassified (for Official Use Only) Information

(2) DHS Sensitive Systems Policy Directive 4300A

(3) DHS 4300A Sensitive Systems Handbook and Attachments

(4) DHS Security Authorization Process Guide http://www.dhs.gov/dhs-security-and-training-requirements-contractors

(5) DHS Handbook for Safeguarding Sensitive Personally Identifiable Information

(6) DHS Instruction Handbook 121-01-007 Department of Homeland Security Personnel Suitability and Security Program

(7) DHS Information Security Performance Plan (current fiscal year)

(8) DHS Privacy Incident Handling Guidance

(9) Federal Information Processing Standard (FIPS) 140-2 Security Requirements for Cryptographic Modules accessible at http://csrc.nist.gov/groups/STM/cmvp/standards.html

(10) National Institute of Standards and Technology (NIST) Special Publication 800-53 Security and Privacy Controls for Federal Information Systems and Organizations accessible at http://csrc.nist.gov/publications/PubsSPs.html

(11) NIST Special Publication 800-88 Guidelines for Media Sanitization accessible at http://csrc.nist.gov/publications/PubsSPs.html

(d) Handling of Sensitive Information. Contractor compliance with this clause, as well as the policies and procedures described below, is required.

(1) Department of Homeland Security (DHS) policies and procedures on Contractor personnel security requirements are set forth in various Management Directives (MDs), Directives, and Instructions. MD 11042.1, Safeguarding Sensitive But Unclassified (For Official Use Only) Information describes how Contractors must handle sensitive but unclassified information. DHS uses the term “FOR OFFICIAL USE ONLY” to identify sensitive but unclassified information that is not otherwise categorized by statute or regulation. Examples of sensitive information that are categorized by statute or regulation are PCII, SSI, etc. The DHS Sensitive Systems Policy Directive 4300A and the DHS 4300A Sensitive Systems Handbook provide the policies and procedures on security for Information Technology (IT) resources. The DHS Handbook for Safeguarding Sensitive Personally Identifiable Information provides guidelines to help safeguard SPII in both paper and electronic form. DHS Instruction Handbook 121-01-007 Department of Homeland Security Personnel Suitability and Security Program establishes procedures, program responsibilities, minimum standards, and reporting protocols for the DHS Personnel Suitability and Security Program.

(2) The Contractor shall not use or redistribute any sensitive information processed, stored, and/or transmitted by the Contractor except as specified in the contract.

(3) All Contractor employees with access to sensitive information shall execute DHS Form 11000-6, Department of Homeland Security Non-Disclosure Agreement (NDA), as a condition of access to such information. The Contractor shall maintain signed copies of the NDA for all employees as a record of compliance. The Contractor shall provide copies of the signed NDA to the Contracting Officer’s Representative (COR) no later than two (2) days after execution of the form.

(4) The Contractor’s invoicing, billing, and other recordkeeping systems maintained to support financial or other administrative functions shall not maintain SPII. It is acceptable to maintain in these systems the names, titles and contact information for the COR or other Government personnel associated with the administration of the contract, as needed.

(e) Authority to Operate. The Contractor shall not input, store, process, output, and/or transmit sensitive information within a Contractor IT system without an Authority to Operate (ATO) signed by the Headquarters or Component CIO, or designee, in consultation with the Headquarters or Component Privacy Officer. Unless otherwise specified in the ATO letter, the http://csrc.nist.gov/groups/STM/cmvp/standards.html

ATO is valid for three (3) years. The Contractor shall adhere to current Government policies, procedures, and guidance for the Security Authorization (SA) process as defined below.

(1) Complete the Security Authorization process. The SA process shall proceed according to the DHS Sensitive Systems Policy Directive 4300A (Version 11.0, April 30, 2014), or any successor publication, DHS 4300A Sensitive Systems Handbook (Version 9.1, July 24, 2012), or any successor publication, and the Security Authorization Process Guide including templates.

(i) Security Authorization Process Documentation. SA documentation shall be developed using the Government provided Requirements Traceability Matrix and Government security documentation templates. SA documentation consists of the following: Security Plan, Contingency Plan, Contingency Plan Test Results, Configuration Management Plan, Security Assessment Plan, Security Assessment Report, and Authorization to Operate Letter.

Additional documents that may be required include a Plan(s) of Action and Milestones and Interconnection Security Agreement(s). During the development of SA documentation, the Contractor shall submit a signed SA package, validated by an independent third party, to the COR for acceptance by the Headquarters or Component CIO, or designee, at least thirty (30) days prior to the date of operation of the IT system. The Government is the final authority on the compliance of the SA package and may limit the number of resubmissions of a modified SA package. Once the ATO has been accepted by the Headquarters or Component CIO, or designee, the Contracting Officer shall incorporate the ATO into the contract as a compliance document. The Government’s acceptance of the ATO does not alleviate the Contractor’s responsibility to ensure the IT system controls are implemented and operating effectively.

(ii) Independent Assessment. Contractors shall have an independent third party validate the security and privacy controls in place for the system(s). The independent third party shall review and analyze the SA package, and report on technical, operational, and management level deficiencies as outlined in NIST Special Publication 800-53 Security and Privacy Controls for Federal Information Systems and Organizations. The Contractor shall address all deficiencies before submitting the SA package to the Government for acceptance.

Support the completion of the Privacy Threshold Analysis (PTA) as needed. As part of the SA process, the Contractor may be required to support the Government in the completion of the PTA. The requirement to complete a PTA is triggered by the creation, use, modification, upgrade, or disposition of a Contractor IT system that will store, maintain and use PII, and must be renewed at least every three (3) years. Upon review of the PTA, the DHS Privacy Office determines whether a Privacy Impact Assessment (PIA) and/or Privacy Act System of Records Notice (SORN), or modifications thereto, are required. The Contractor shall provide all support necessary to assist the Department in completing the PIA in a timely manner and shall ensure that project management plans and schedules include time for the completion of the PTA, PIA, and SORN (to the extent required) as milestones. Support in this context includes responding timely to requests for information from the Government about the use, access, storage, and maintenance of PII on the Contractor’s system, and providing timely review of relevant compliance documents for factual accuracy. Information on the DHS privacy compliance process, including PTAs, PIAs, and SORNs, is accessible at http://www.dhs.gov/privacy-compliance.

(2) Renewal of ATO. Unless otherwise specified in the ATO letter, the ATO shall be renewed every three (3) years. The Contractor is required to update its SA package as part of the ATO renewal process. The Contractor shall update its SA package by one of the following methods:

http://www.dhs.gov/privacy-compliance

(1) Updating the SA documentation in the DHS automated information assurance tool for acceptance by the Headquarters or Component CIO, or designee, at least 90 days before the ATO expiration date for review and verification of security controls; or (2) Submitting an updated SA package directly to the COR for approval by the Headquarters or Component CIO, or designee, at least 90 days before the ATO expiration date for review and verification of security controls. The 90 day review process is independent of the system production date and therefore it is important that the Contractor build the review into project schedules.