Overview
FAR Subpart 24.1 implements the Privacy Act of 1974, ensuring that personal information handled by government contractors receives the same legal protections as information handled by federal agencies. It establishes that when a contractor is hired to design, develop, or operate a "system of records" on behalf of the government, the contractor and its employees are subject to the same criminal and civil liabilities as government employees.
Key Rules
- Applicability: These regulations apply specifically when a contractor is tasked with the design, development, or operation of a system of records to accomplish an agency function.
- Legal Equivalence: For the purposes of criminal penalties under the Privacy Act, contractor employees are legally considered "employees of the agency."
- Agency Ownership: Any system of records operated by a contractor under these terms is legally "deemed to be maintained by the agency," meaning the agency remains ultimately responsible for the data.
- Liability:
- Criminal: Individual contractor employees can be held criminally liable for unauthorized disclosure or failure to maintain records properly.
- Civil: Agencies may be civilly liable to individuals injured by a failure to comply with the Act, emphasizing the need for strict contractor oversight.
- Mandatory Clauses: If the subpart applies, the Contracting Officer must include FAR clauses 52.224-1 (Privacy Act Notification) and 52.224-2 (Privacy Act).
Responsibilities
- Contracting Officers (COs):
- Must review all requirements to determine if a system of records on individuals is involved.
- Must ensure the Statement of Work (SOW) or Performance Work Statement (PWS) specifically identifies the system of records and the specific tasks to be performed.
- Must provide the contractor with the specific agency rules and regulations that implement the Privacy Act.
- Program Managers/Requirements Owners:
- Responsible for identifying when a requirement involves PII that is retrieved by a unique identifier (name, SSN, etc.), triggering the "system of records" definition.
- Contractors:
- Must ensure all employees are aware of their responsibilities and the criminal penalties for non-compliance.
- Must operate the system in strict accordance with the agency’s privacy regulations.
Practical Implications
- Not All PII is Covered: It is a common misconception that any contract involving Personally Identifiable Information (PII) triggers this subpart. FAR 24.1 specifically targets the "Operation of a System of Records." If a contractor merely has incidental access to PII but is not maintaining or retrieving it via a specific identifier for an agency purpose, these specific clauses might not apply (though other data security clauses likely will).
- Significant Risk Profile: Because contractor employees face individual criminal liability, companies must implement robust training and access controls. This is not just a corporate "breach of contract" risk; it is a personal legal risk for the staff involved.
- Due Diligence in SOWs: Contractors should look for the inclusion of FAR 52.224-1 and 52.224-2 during the proposal phase. If the work involves a system of records but the clauses are missing, the contractor should submit a Request for Information (RFI), as operating without these guidelines can lead to unintended legal exposure.
- Regulatory Consistency: Contractors must follow the specific rules of the buying agency (e.g., DoD vs. HHS), as the FAR requires the CO to provide the contractor with the agency’s unique implementing regulations.