Title 38, Veterans' BenefitsRelease 119-110

§5725 Contracts for Data Processing or Maintenance

Title 38 › PART IV — GENERAL ADMINISTRATIVE PROVISIONS › CHAPTER 57 — RECORDS AND INVESTIGATIONS › SUBCHAPTER III — INFORMATION SECURITY › § 5725

Last updated Sep 22, 2026|Official source

Summary

When the Secretary hires a contractor to do Department work that needs access to sensitive personal information, the contract must require the contractor to keep that information private except when a lawful, contract-approved disclosure is allowed. The contractor and any subcontractor must quickly tell the Secretary about any data breach involving that information. Contracts must also include a set penalty the contractor must pay if such a breach happens. Money collected goes back to the same Department account used to pay the contractor and stays available without fiscal-year limit only to pay for credit protection services under section 5724(b).

Full Legal Text

Title 38, §5725

Veterans' Benefits, Source: USLM XML via OLRC

(a)Contract Requirements.—

If the Secretary enters into a contract for the performance of any Department function that requires access to sensitive personal information, the Secretary shall require as a condition of the contract that—

(1)the contractor shall not, directly or through an affiliate of the contractor, disclose such information to any other person unless the disclosure is lawful and is expressly permitted under the contract;

(2)the contractor, or any subcontractor for a subcontract of the contract, shall promptly notify the Secretary of any data breach that occurs with respect to such information.

(b)Liquidated Damages.—

Each contract subject to the requirements of subsection (a) shall provide for liquidated damages to be paid by the contractor to the Secretary in the event of a data breach with respect to any sensitive personal information processed or maintained by the contractor or any subcontractor under that contract.

(c)Provision of Credit Protection Services.—

Any amount collected by the Secretary under subsection (b) shall be deposited in or credited to the Department account from which the contractor was paid and shall remain available for obligation without fiscal year limitation exclusively for the purpose of providing credit protection services pursuant to section 5724(b) of this title.

Reference

Citations & Metadata

Citation

38 U.S.C. § 5725

Title 38, Veterans' Benefits

Last Updated

Sep 22, 2026

Release point: 119-110