Title 38 — Veterans' BenefitsRelease 119-73not60

§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 Apr 5, 2026|Official source

Summary

When the Secretary hires a contractor who accesses sensitive personal information, the contract must bar the contractor or its affiliates from sharing it unless the sharing is lawful and allowed by the contract. Contractors and subcontractors must promptly tell the Secretary about breaches and pay penalties to the Secretary. Penalties go to the Department account used to pay contractor and remain available without fiscal year limits only for credit protection under section 5724(b).

Full Legal Text

Title 38, §5725

Veterans' Benefits — Source: USLM XML via OLRC

(a)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)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)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

Apr 5, 2026

Release point: 119-73not60