ABRO security requirements for public contracts: 5 things you need to know

The new ABRO requirements are established based on current legislation, technological developments, and the current threat landscape. They apply to all companies that carry out assignments for the government that involve risks to national security (Special Assignments), which may be the case if the contractor has access to sensitive information, systems or objects ('Interests to be Protected', IBP). The government client itself assesses whether such risks exist, and if so, the contractor must first obtain an ABRO declaration from the National Bureau for Industrial Safety (NBIV) before the Special Assignment can commence.

The severity and impact of the requirements to be met by the contractor to obtain the declaration will depend on the level of IBP that is to be handled by the contractor. As the ABRO form an integral part of the contract between the government client and the contractor, failure to comply with the ABRO requirements will be considered a breach of contract, which may lead to the suspension or withdrawal of the ABRO declaration and potentially result in the termination of the contract.

Pursuant to the ABRO requirements in paragraph 1.3, any proposed change in ownership, control (including directors) or corporate structure of the company must be submitted to the NBIV for approval, which also applies to proposed split-offs, strategic partnerships, outsourcing and insourcing, mergers, changes in 'significant influence' and imminent partial or complete takeovers (including binding and non-binding offers). Whilst the ABRO do not explicitly state timelines or consequences of disapproval, the current ABDO specifically provide that the Director of the Military Intelligence and Security Service (MIVD) will inform the contractor in writing within four weeks whether there are any objections on security grounds to the proposed change.

Depending on the potential security risks, the Director of MIVD may decide to suspend or withdraw the granted ABDO authorisation. It stands to reason that the NBIV will apply a similar approach under the ABRO. Companies subject to ABRO requirements should factor this approval requirement into their transaction planning and timelines.

The ABRO underscore the importance of having a clear overview of all suppliers and subcontractors involved in the Special Assignment, noting that even the delivery of seemingly "innocent" components or services can influence the assignment. Paragraph 1.5 of the ABRO therefore contains a number of requirements with regard to the contractor's supply chain, including providing the NBIV with an overview of the entire chain of subcontractors and suppliers and the countries in which they are established for all business activities that apply to the Special Assignment(s) and activities that affect an IBP.

Prior approval from the NBIV is required for any proposed outsourcing of activities in the context of the Special Assignment, and contractors must stipulate the ABRO in their contracts with any subcontractors that also come into contact with an IBP and are held responsible for their subcontractors’ compliance.

The government organisations involved have two years to implement the ABRO, which means that the effective date may vary from one organisation to another. For example, according to the scheduled planning, the Dutch police have started implementing the ABRO at the beginning of this year, but the Ministry of Defence will not do so until Q2. As for current defence contracts, the ABDO will continue to apply, and ongoing contracts need not be updated to align with the ABRO.

The Dutch government desires that other government organisations and companies start using the ABRO as well (e.g. autonomous administrative authorities (zbo's), provinces, municipalities, water boards and energy companies), so we expect to encounter the ABRO more frequently when advising clients that carry out Special Assignments for the government or the police.

Since an ABRO declaration is issued only for an individual Special Assignment, it expires when the relevant contract ends and a new ABRO declaration from the NBIV is required for each new contract. According to the Q&A ABRO published by the government, whilst there are no costs associated with an investigation by the NBIV required for obtaining the ABRO declaration, the investments required to comply with the ABRO are to be borne by the contractor itself. Companies that are already used to operating under the ABDO should review the ABRO to identify any new obligations that may apply to them, as well as any existing requirements that may have been tightened.

For companies that are not yet familiar with the screening process under the ABDO, but do have the ambition to win government contracts, it is important to timely start with mapping out the compliance process and setting up the expected compliance structure, as such a process can take several months and can prove to be very costly, so companies would be wise to consider factoring in these costs into their business case.