SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Cyber Supply Chain Management and 
Transparency Act of 2014''.

SEC. 2. SOFTWARE, FIRMWARE, OR PRODUCT WITH KNOWN SECURITY 
              VULNERABILITIES OR DEFECTS.

    (a) OMB Guidelines Required.--
            (1) Clauses required in software, firmware, or product 
        contracts for software, firmware, or product created with a 
        binary component.--Not later than 180 days after the date of 
        the enactment of this Act, the Director of the Office of 
        Management and Budget, in consultation with the Secretary of 
        Defense, the Secretary of Homeland Security, and any other 
        intelligence or national security agency the Director 
        determines to be necessary, shall issue guidelines for each 
        agency that require including the following clauses in any 
        contract for the acquisition of software, firmware, or product 
        that contains a binary component:
                    (A) Component list.--A clause that requires the 
                inclusion of a comprehensive and confidentially 
                supplied list, or a bill of materials, of each binary 
                component of the software, firmware, or product that is 
                used in the software, firmware, or product.
                    (B) Verification required.--A clause that requires 
                the contractor providing the software, firmware, or 
                product--
                            (i) to verify that the software, firmware, 
                        or product does not contain any known security 
                        vulnerabilities or defects that are listed in 
                        the National Institute of Standards and 
                        Technology National Vulnerability Database and 
                        any additional database selected by the 
                        Director of the Office of Management and Budget 
                        (that is credible and similar to the National 
                        Vulnerability Database) that tracks security 
                        vulnerabilities and defects in a binary 
                        component, and that is necessary to capture a 
                        wider list of binary components (with known 
                        security vulnerabilities or defects and for 
                        which a less vulnerable alternative is 
                        available); and
                            (ii) to notify the purchasing agency of any 
                        known security vulnerabilities or defects 
                        discovered through the verification required 
                        under clause (i).
                    (C) Waiver.--A clause that requires--
                            (i) a contractor to submit a written 
                        application, and obtain a waiver, for each 
                        binary component that is known to be vulnerable 
                        from the head of the purchasing agency; and
                            (ii) if the head of the purchasing agency 
                        approves the waiver, such head shall provide 
                        the contractor with a written statement that 
                        the agency accepts all of the risk associated 
                        with the use of such binary component.
                    (D) Updates.--A clause that requires such software, 
                firmware, or product to be written or designed in a 
                manner that allows for any future security 
                vulnerability or defect in any part of the software, 
                firmware, or product to be easily patched, updated, or 
                replaced to fix the vulnerability or defect in the 
                software, firmware, or product.
                    (E) Timely repair.--A clause that requires the 
                contractor to provide a repair in a timely manner with 
                regard to any new security vulnerability discovered 
                through any of the databases described in subparagraph 
                (B).
            (2) Disclosure of security vulnerability or defect.--Not 
        later than 180 days after the date of the enactment of this 
        Act, the Director of the Office of Management and Budget shall 
        issue guidelines for each agency with respect to any software, 
        firmware, or product in use by the United States Government 
        that contains a binary component that requires each agency to 
        have a process--
                    (A) to replace any currently known vulnerable 
                binary component; and
                    (B) to remove and repair any new vulnerable binary 
                component after such component becomes known pursuant 
                to paragraph (1)(B).
            (3) Agency guidelines.--
                    (A) Software, firmware, or product that can not be 
                fixed or patched.--Not later than 220 days after the 
                date of the enactment of this Act, the Director of the 
                Office of Management and Budget shall issue guidelines 
                for each agency with respect to any software, firmware, 
                or product that contains a known vulnerable binary 
                component--
                            (i) that can not be fixed, patched, or 
                        updated; and
                            (ii) that requires such component, to 
                        migrate to patchable, repairable, and fixable 
                        products.
                    (B) Inventory of existing software, firmware, or 
                product with a known vulnerable binary component.--Not 
                later than 20 months after the date of the enactment of 
                this Act, the Director of the Office of Budget of 
                Management shall instruct each agency to provide the 
                relevant office in the Department of Homeland Security 
                with a list of each known vulnerable binary in any 
                software, firmware or product in use by each agency.
                    (C) Analysis of project integrity and annual 
                report.--Not later than twelve months after all lists 
                described in subparagraph (B) are provided to the 
                Department of Homeland Security, the Secretary of 
                Homeland Security shall issue an annual confidential 
                report describing the security vulnerabilities of the 
                projects that created any known vulnerable binary 
                component in any list described in subparagraph (B) and 
                through the verification required under paragraph 
                (1)(B). The report shall assess the integrity of binary 
                component suppliers for the incidence of security 
                vulnerabilities, the severity, the mean time to 
                remediate such vulnerabilities that can be applied to 
                assess the security of binary projects and suppliers, 
                for use by other agencies.
    (b) Report on Removal of Binary Component With Known Security 
Vulnerability or Defect.--Not later than 30 months after the date of 
the enactment of this Act, the head of each agency shall submit to each 
relevant Committee of jurisdiction in the House of Representatives and 
the Senate a report on the completion of the removal of each binary 
component with known security vulnerabilities or defects in the agency 
and shall include a classified version of this report for the Permanent 
Select Committee on Intelligence and the Committees on Armed Services, 
Foreign Affairs, and Homeland Security of the House of Representatives 
and the Select Committee on Intelligence and the Committees on Armed 
Services, Foreign Affairs, and Homeland Security and Governmental 
Affairs of the Senate. The report shall also detail the policies, 
procedures, and processes by which a newly discovered vulnerable binary 
component is replaced in software, firmware, and products in use by the 
United States Government.
    (c) Other Entities of the United States Government.--Any other 
entity of the United States Government--
            (1) shall replace any vulnerable binary component with 
        another less vulnerable alternative in any software, firmware, 
        or product in use by the entity; and
            (2) shall begin such replacement process with critical 
        systems.
    (d) Definitions.--In this section:
            (1) Agency.--The term ``agency'' has the meaning given that 
        term in section 551(1) of title 5, United States Code.
            (2) Binary component.--The term ``binary component'' means 
        a third party or open source component.
Cyber Supply Chain Management and Transparency Act of 2014 - Requires the Office of Management and Budget (OMB) to issue guidelines for agencies that contract to acquire software, firmware, or products containing a third party or open source binary component. Requires binary component contracts to include clauses requiring:  a confidentially supplied list, or a bill of materials, of each binary component that is used in the software, firmware, or product; the contractor to verify that products do not contain known security vulnerabilities and to notify the purchasing agency of any known vulnerabilities or defects;  the contractor to obtain a waiver from the purchasing agency for components known to be vulnerable; an agency approving a vulnerability waiver to accept all risk associated with component use; product designs to allow fixes with patches, updates, or replacements; and  the contractor to provide timely repairs for discovered vulnerabilities.  Directs the OMB to issue guidance requiring agencies: (1) to replace components with currently known vulnerabilities and to remove or repair any new vulnerable components that become known; and (2) to migrate to patchable, repairable, and fixable products. Requires agencies to provide the Department of Homeland Security (DHS) with a list of each known vulnerable component in any product in use by the agencies. Directs DHS to issue an annual confidential report describing the security vulnerabilities of projects that created any known vulnerable component. Requires the report to assess the integrity of component suppliers for the incidence of security vulnerabilities for use by other agencies. Requires agencies, within 30 months after enactment of this Act, to report to Congress regarding the completion of the removal of each known vulnerable or defective component. Directs other entities of the U.S. government to replace vulnerable components with less vulnerable alternatives.
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