CHAPTER 6

INDUSTRIAL SECURITY

Basic principles
Article 39
1
Industrial security is the application of measures to ensure the protection of EUCI
a
within the framework of classified contracts, by:
1. candidates or tenderers throughout the tendering and contracting procedure;
2. contractors or subcontractors throughout the life-cycle of classified contracts;
b
within the framework of classified grant agreements, by
1. applicants during grant award procedures;
2. beneficiaries throughout the life-cycle of classified grant agreements.
2
Such contracts or grant agreements shall not involve information classified TRES SECRET UE/EU TOP SECRET.
3
Unless stated otherwise, provisions in this Chapter referring to classified contracts or contractors shall be applicable also to classified subcontracts or subcontractors.

Definitions
Article 40
For the purpose of this Chapter, the following definitions shall apply:
1. ‘Classified contract’ means a framework contract or contract, as referred to in Council Regulation (EC, Euratom) No 1605/2002 , entered into by the Commission or one of its departments, with a contractor for the supply of movable or immovable assets, the execution of works or the provision of services, the performance of which requires or involves the creation, handling or storing of EUCI;
2. ‘Classified subcontract’ means a contract entered into by a contractor of the Commission or one of its departments, with another contractor (i.e. the subcontractor) for the supply of movable or immovable assets, the execution of works or the provision of services, the performance of which requires or involves the creation, handling or storing of EUCI;
3. ‘Classified grant agreement’ means an agreement whereby the Commission awards a grant, as referred to in Part I, Title VI, of Regulation (EC, Euratom) No 1605/2002, the performance of which requires or involves the creation, handling or storing of EUCI;
4. ‘Designated Security Authority’ (DSA) means an authority responsible to the National Security Authority (NSA) of a Member State which is responsible for communicating to industrial or other entities national policy on all matters of industrial security and for providing direction and assistance in its implementation. The function of DSA may be carried out by the NSA or by any other competent authority.

Procedure for classified contracts or grant agreements
Article 41
1
Each Commission department, as contracting authority, shall ensure that the minimum standards on industrial security set out in this Chapter, are referred to or incorporated in the contract, and complied with when awarding classified contracts or grant agreements.
2
For the purposes of paragraph 1, the competent services within the Commission shall seek the advice of the Directorate-General for Human Resources and Security, and in particular its Security Directorate, and shall ensure that model contracts and subcontracts and model grant agreements include provisions reflecting the basic principles and minimum standards for protecting EUCI to be complied with by contractors and subcontractors, and respectively beneficiaries of grant agreements.
3
The Commission shall closely cooperate with the NSA, the DSA or any other competent authority of the Member States concerned.
4
When a contracting authority, intends to launch a procedure aimed at concluding a classified contract or grant agreement, it shall seek the advice of the Commission Security Authority on issues regarding the classified nature and elements of the procedure, during all its stages.
5
Templates for and models of classified contracts and subcontracts, classified grant agreements, contract notices, guidance on the circumstances where Facility Security Clearances (FSCs) are required, Programme or Project Security Instructions (PSI), Security Aspects Letters (SALs), visits, transmission and carriage of EUCI under classified contracts or classified grant agreements shall be laid down in implementing rules on industrial security, after consulting the Commission Security Expert Group.
6
The Commission may conclude classified contracts or grant agreements which entrust tasks involving or entailing access to or the handling or storage of EUCI by economic operators registered in a Member State or in a third State with which an agreement or an administrative arrangement has been concluded in accordance with Chapter 7 of this Decision.

Security elements in a classified contract or grant agreement
Article 42
1
Classified contracts or grant agreements shall include the following security elements:

Programme or Project Security Instructions
1. ‘Programme or Project Security Instruction’ (PSI) means a list of security procedures which are applied to a specific programme or project in order to standardise security procedures. It may be revised throughout the programme or project.
2. The Directorate-General Human Resources and Security shall develop a generic PSI, the Commission departments responsible for programmes or projects involving handling or storage of EUCI may develop, where appropriate, specific PSIs, which shall be based upon the generic PSI.
3. A specific PSI shall be developed in particular for programmes and projects characterised by their considerable scope, scale or complexity, or by the multitude and/or the diversity of contractors, beneficiaries and other partners and stakeholders involved, for instance as regards their legal status. The specific PSI shall be developed by the Commission department(s) managing the programme or project, in close cooperation with the Directorate-General Human Resources and Security.
4. The Directorate-General Human Resources and Security shall submit both the generic and specific PSIs for advice to the Commission Security Expert Group.

Security Aspects Letter
1. ‘Security Aspects Letter’ (SAL) means a set of special contractual conditions, issued by the contracting authority, which forms an integral part of any classified contract involving access to or the creation of EUCI, that identifies the security requirements and those elements of the contract requiring security protection.
2. The contract-specific security requirements shall be described in a SAL. The SAL shall, where appropriate, contain the Security Classification Guide (‘SCG’) and shall be an integral part of a classified contract or sub-contract, or grant agreement.
3. The SAL shall contain the provisions requiring the contractor or beneficiary to comply with the minimum standards laid down in this Decision. The contracting authority shall ensure the SAL indicates that non-compliance with these minimum standards may constitute sufficient grounds for the contract or the grant agreement to be terminated.
2
Both PSIs and SALs shall include a SCG as a mandatory security element:
a
‘Security Classification Guide’ (SCG) means a document which describes the elements of a programme, project, contract or grant agreement which are classified, specifying the applicable security classification levels. The SCG may be expanded throughout the life of the programme, project, contract or grant agreement and the elements of information may be re-classified or downgraded; where an SCG exists it shall be part of the SAL.
b
Prior to launching a call for tender or letting a classified contract, the Commission department, as contracting authority, shall determine the security classification of any information to be provided to candidates and tenderers or contractors, as well as the security classification of any information to be created by the contractor. For that purpose, it shall prepare an SCG to be used for the performance of the contract, in accordance with this Decision and its implementing rules, after consulting the Commission Security Authority.
c
In order to determine the security classification of the various elements of a classified contract, the following principles shall apply:
1. in preparing an SCG, the Commission department, as the contracting authority, shall take into account all relevant security aspects, including the security classification assigned to information provided and approved to be used for the contract by the originator of the information;
2. the overall level of classification of the contract may not be lower than the highest classification of any of its elements; and
3. where relevant, the contracting authority shall liaise, through the Commission Security Authority, with the Member States' NSAs, DSAs or any other competent security authority concerned in the event of any changes regarding the classification of information created by or provided to contractors in the performance of a contract and when making any subsequent changes to the SCG.

Access to EUCI for contractors' and beneficiaries' staff
Article 43
The contracting or granting authority, shall ensure that the classified contract or classified grant agreement includes provisions indicating that staff of a contractor, subcontractor or beneficiary who, for the performance of the classified contract, subcontract or grant agreement, require access to EUCI, shall be granted such access only if:
1. he has been security authorised to the relevant level or is otherwise duly authorised by their need-to-know has been determined;
2. they have been briefed on the applicable security rules for protecting EUCI, and have acknowledged their responsibilities with regard to protecting such information;
3. they have been security cleared at the relevant level for information classified CONFIDENTIEL UE/EU CONFIDENTIAL or SECRET UE/EU SECRET by the respective NSA, DSA or any other competent authority.

Facility security clearance
Article 44
1
‘Facility Security Clearance’ (FSC) means an administrative determination by a NSA, DSA or any other competent security authority that, from the security viewpoint, a facility can afford an adequate level of protection to EUCI to a specified security classification level.
2
A FSC granted by the NSA or DSA or any other competent security authority of a Member State to indicate, in accordance with national laws and regulations, that an economic operator can protect EUCI at the appropriate classification level (CONFIDENTIEL UE/EU CONFIDENTIAL or SECRET UE/EU SECRET) within its facilities, shall be presented to the Commission Security Authority, which will forward it to the Commission department acting as the contracting or granting authority, before a candidate, tenderer or contractor, or grant applicant or beneficiary may be provided with or granted access to EUCI.
3
Where relevant, the contracting authority shall notify, through the Commission Security Authority, the appropriate NSA, DSA or any other competent security authority that an FSC is required for performing the contract. A FSC or PSC shall be required where EUCI classified CONFIDENTIEL UE/EU CONFIDENTIAL or SECRET UE/EU SECRET has to be provided in the course of the procurement or grant award procedure.
4
The contracting or granting authority shall not award a classified contract or a grant agreement to a preferred bidder or participant before having received confirmation from the NSA, DSA or any other competent security authority of the Member State in which the contractor or subcontractor concerned is registered that, where required, an appropriate FSC has been issued.
5
When the Commission Security Authority has been notified by the NSA, DSA or any other competent security authority which has issued a FSC about changes affecting the FSC, it shall inform the Commission department, acting as contracting or granting authority. In the case of a sub-contract, the NSA, DSA or any other competent security authority shall be informed accordingly.
6
Withdrawal of a FSC by the relevant NSA, DSA or any other competent security authority shall constitute sufficient grounds for the contracting or granting authority, to terminate a classified contract or exclude a candidate, tenderer or applicant from the competition. A provision to that effect shall be included in the model contracts and grant agreements to be developed.

Provisions for classified contracts and grant agreements
Article 45
1
Where EUCI is provided to a candidate, tenderer or applicant during the procurement procedure, the call for tender or call for proposal shall contain a provision obliging the candidate, tenderer or applicant failing to submit a tender or proposal or who is not selected, to return all classified documents within a specified period of time.
2
The contracting or granting authority, shall notify, through the Commission Security Authority, the competent NSA, DSA or any other competent security authority of the fact that a classified contract or grant agreement has been awarded, and of the relevant data, such as the name of the contractor(s) or beneficiaries, the duration of the contract and the maximum level of classification.
3
When such contracts or grant agreements are terminated, the contracting or granting authority, shall promptly notify, through the Commission Security Authority, the NSA, DSA or any other competent security authority of the Member State in which the contractor or grant beneficiary is registered.
4
As a general rule, the contractor or grant beneficiary shall be required to return to the contracting or granting authority, upon termination of the classified contract or the grant agreement, or of the participation of a grant beneficiary, any EUCI held by it.
5
Specific provisions for the disposal of EUCI during the performance of the classified contract or the classified grant agreement or upon its termination shall be laid down in the SAL.
6
Where the contractor or grant beneficiary is authorised to retain EUCI after termination of a classified contract or grant agreement, the minimum standards contained in this Decision shall continue to be complied with and the confidentiality of EUCI shall be protected by the contractor or the grant beneficiary.

Specific provisions for classified contracts
Article 46
1
The conditions relevant for the protection of EUCI under which the contractor may subcontract shall be defined in the call for tender and in the classified contract.
2
A contractor shall obtain permission from the contracting authority, before sub-contracting any parts of a classified contract. No subcontract involving access to EUCI may be awarded to subcontractors registered in a third country, unless there is a regulatory framework for the security of information as provided for in Chapter 7.
3
The contractor shall be responsible for ensuring that all sub-contracting activities are undertaken in accordance with the minimum standards laid down in this Decision and shall not provide EUCI to a subcontractor without the prior written consent of the contracting authority.
4
With regard to EUCI created or handled by the contractor, the Commission shall be considered to be the originator, and the rights incumbent on the originator shall be exercised by the contracting authority.

Visits in connection with classified contracts
Article 47
1
Where a Commission staff member or contractors' or grant beneficiaries' personnel require access to information classified CONFIDENTIEL UE/EU CONFIDENTIAL or SECRET UE/EU SECRET in each other's premises for the performance of a classified contract or grant agreement, visits shall be arranged in liaison with the NSAs, DSAs or any other competent security authority concerned. The Commission Security Authority shall be informed of such visits. However, in the context of specific programmes or projects, the NSAs, DSAs or any other competent security authority may also agree on a procedure whereby such visits can be arranged directly.
2
All visitors shall hold an appropriate security clearance and have a ‘need-to-know’ for access to the EUCI related to the classified contract.
3
Visitors shall be given access only to EUCI related to the purpose of the visit.
4
More detailed provisions shall be set out in implementing rules.
5
Compliance with the provisions regarding visits in connection with classified contracts, set out in this Decision and in the implementing rules referred to in paragraph 4, shall be mandatory.

Transmission and carriage of EUCI in connection with classified contracts or classified grant agreements
Article 48
1
With regard to the transmission of EUCI by electronic means, the relevant provisions of Chapter 5 of this Decision shall apply.
2
With regard to the carriage of EUCI, the relevant provisions of Chapter 4 of this Decision and its implementing rules shall apply, in accordance with national laws and regulations.
3
For the transport of classified material as freight, the following principles shall be applied when determining security arrangements:
a
security shall be assured at all stages during transportation from the point of origin to the final destination;
b
the degree of protection afforded to a consignment shall be determined by the highest classification level of material contained within it;
c
prior to any cross-border movement of material classified CONFIDENTIEL UE/EU CONFIDENTIAL or SECRET UE/EU SECRET, a transportation plan shall be drawn up by the consignor and approved by the NSA, DSA or any other competent security authority concerned;
d
journeys shall be point to point to the extent possible, and shall be completed as quickly as circumstances permit;
e
whenever possible, routes should be only through Member States. Routes through States other than Member States should only be undertaken when authorised by the NSA, DSA or any other competent security authority of the States of both the consignor and the consignee.

Transfer of EUCI to contractors or grant beneficiaries located in third states
Article 49
EUCI shall be transferred to contractors or grant beneficiaries located in third States in accordance with security measures agreed between the Commission Security Authority, the Commission department, as the contracting or granting authority, and the NSA, DSA or other competent security authority of the concerned third country where the contractor or grant beneficiary is registered.

Handling of information classified RESTREINT UE/EU RESTRICTED in the context of classified contracts or classified grant agreements
Article 50
1
Protection of information classified RESTREINT UE/EU RESTRICTED handled or stored under classified contracts or grant agreements shall be based on the principles of proportionality and cost-effectiveness.
2
No FSC or PSC shall be required in the context of classified contracts or classified grant agreements involving the handling of information classified at the level of RESTREINT UE/EU RESTRICTED.
3
Where a contract or grant agreement involves handling of information classified RESTREINT UE/EU RESTRICTED in a CIS operated by a contractor or grant beneficiary, the contracting or granting authority shall ensure, after consulting the Commission Security Authority, that the contract or grant agreement specifies the necessary technical and administrative requirements regarding accreditation or approval of the CIS commensurate with the assessed risk, taking account of all relevant factors. The scope of accreditation or approval of such CIS shall be agreed between the Commission Security Authority and the relevant NSA or DSA.
Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities (OJ L 248, 16.9.2002, p. 1).