GV.SC-05: Requirements to address cybersecurity risks in supply chains are established, prioritized, and integrated into contracts and other types of agreements with suppliers and other relevant third parties

GV.SC-05 requires you to define cybersecurity supply chain requirements, rank them by risk, and make them contractually binding for suppliers and other third parties. Operationalize it by building a tiered contract clause set, tying clause selection to third-party criticality, and proving execution through signed agreements, exceptions, and ongoing monitoring evidence. ¹

Key takeaways:

• Define a minimum cybersecurity “floor” for all third parties, plus stricter add-ons for higher-risk relationships. ¹
• Prioritization must drive contracting: your risk tier decides which clauses, SLAs, attestations, and audit rights are mandatory. ¹
• Keep evidence that requirements exist, were selected based on risk, and were integrated into contracts or documented as approved exceptions. ²

GV.SC-05 is a contract-and-procurement control as much as it is a security control. You can have strong third-party due diligence, but if security requirements never make it into the agreement, you have limited leverage after an incident: no audit rights, weak notice obligations, unclear responsibility for subcontractors, and no enforceable minimum controls. GV.SC-05 closes that gap by requiring you to establish cybersecurity supply chain requirements, prioritize them (so you apply the right rigor to the right third party), and integrate them into contracts and other agreements. ¹

For a Compliance Officer, CCO, or GRC lead, the fastest path is to treat GV.SC-05 as a repeatable contracting system: a policy-backed requirements standard, a risk-tiering decision, approved clause libraries, and a clear exception path. Then you prove operation with artifacts: executed templates, redlines, risk acceptances, and third-party performance evidence. This page gives requirement-level guidance you can implement quickly with Legal, Procurement, Security, and the business owners who sign vendor requests. ²

Regulatory text

Framework excerpt (GV.SC-05): “Requirements to address cybersecurity risks in supply chains are established, prioritized, and integrated into contracts and other types of agreements with suppliers and other relevant third parties.” ¹

What the operator must do:

1. Established: Create documented cybersecurity requirements for third parties that align to your risk profile (not ad hoc asks per deal). ¹
2. Prioritized: Define a method to rank which requirements apply to which third parties (for example, by criticality, data sensitivity, connectivity, or operational dependency). ²
3. Integrated into agreements: Ensure the requirements are actually included in the binding instrument (MSA, SOW, DPA, SLA, subcontractor flow-down terms, platform terms, partnership agreement), or recorded as an approved exception with compensating controls. ¹

This is not satisfied by “we send a security questionnaire.” GV.SC-05 expects you to turn risk requirements into enforceable obligations. ¹

Plain-English interpretation

You need a contract-ready set of cybersecurity requirements for third parties, and you must apply them consistently based on risk. Low-risk suppliers get baseline clauses. High-risk suppliers get stronger obligations like incident notification timeframes, security control commitments, breach cooperation, audit/assessment rights, and subcontractor flow-down. Then you must be able to prove those terms were accepted or consciously waived by an authorized approver. ¹

Who it applies to

Entity scope: Any organization running a cybersecurity program that relies on external parties for software, cloud services, managed services, data processing, logistics, manufacturing, professional services, or operational technology support. ¹

Operational context (where it shows up):

• Procurement / sourcing: New third-party onboarding and renewals.
• Legal / contracts: Template updates, clause negotiation, exception approvals.
• Security / IT: Minimum security requirements, evidence validation, continuous monitoring.
• Business owners: Defining service criticality and accepting residual risk. ²

If you have third parties with access to sensitive data, network connectivity, code in your product, or operational dependency, GV.SC-05 should be treated as mandatory operating discipline.

What you actually need to do (step-by-step)

1) Define your third-party cybersecurity requirements “standard”

Create a short, controlled document (policy standard or contractual requirements standard) that states:

• Minimum security baseline for any third party (confidentiality, access control, secure disposal/return, personnel screening if relevant, encryption expectations, vulnerability handling expectations).
• Add-on requirements for higher-risk tiers (incident notice, audit rights, penetration testing evidence, disaster recovery commitments, subcontractor controls, secure SDLC for software suppliers).
• Non-negotiables vs negotiables, and what requires escalation. ¹

Tip: Write the requirements in “contract language,” not just security principles. If Legal can’t paste it into a template, it won’t scale.

2) Build a prioritization model that drives clause selection

Define risk tiering criteria that your intake process can reliably capture. Common inputs:

• Data type and sensitivity the third party will handle
• Privileged access or connectivity into your environment
• Operational criticality (can you operate without them)
• Fourth-party/subcontractor reliance
• Software supply chain impact (code, libraries, updates) ¹

Deliverable: A simple decision rule: “If tier = High, include Clause Pack A + B + C; if Medium, include A + B; if Low, include A only.” The priority decision must be reproducible and auditable. ²

3) Translate requirements into clause packs and templates

Work with Legal to produce:

• Baseline clause pack (default for all third parties)
• High-risk addendum (security schedule / exhibit)
• Data processing addendum alignment where personal data is involved
• SLA language where availability and recovery obligations matter
• Flow-down language requiring subcontractors to meet equivalent requirements ¹

Keep clause packs version-controlled with an owner (often Legal or GRC) and a change log.

4) Embed GV.SC-05 into the intake-to-signature workflow

Your workflow should force three things before signature:

• Risk tier assigned (with documented rationale)
• Correct template and clause pack selected based on tier
• Security review completed for higher-risk tiers, with documented approval or exception ¹

This can be implemented in your procurement tool, contract lifecycle management system, or a ticketing workflow. Daydream commonly fits here as the control system of record: mapping GV.SC-05 to owners, procedures, and recurring evidence pulls so you can answer audits without hunting across inboxes. ²

5) Create an exceptions process that is formal and survivable

Some third parties will refuse terms. GV.SC-05 does not require perfect contracting outcomes; it requires governed outcomes. Your exception process should require:

• Clause(s) requested to be removed or changed
• Risk impact summary (what you lose: notice, audit rights, control commitments)
• Compensating controls (extra monitoring, technical restrictions, segmentation)
• Named approver with authority (security + business owner; Legal as needed)
• Expiration or revisit trigger (renewal, scope change) ¹

6) Operationalize post-signature obligations

Contracts create obligations; audits check whether you monitor them. Implement:

• A schedule for collecting evidence from high-risk third parties (attestations, reports, or other agreed artifacts)
• Tracking of incident notification performance and cooperation obligations if an incident occurs
• Review of subcontractor notifications/approvals where required by contract
• Renewal checks: confirm requirements still match current use case ¹

Required evidence and artifacts to retain

Keep artifacts that prove established, prioritized, integrated:

Established

• Third-party cybersecurity requirements standard (approved, versioned)
• Contract clause library / security schedule templates
• RACI or ownership matrix for contracting security requirements ²

Prioritized

• Third-party risk tiering methodology
• Completed intake forms / tiering outputs for sampled third parties
• Documented mapping from tier to clause pack selection (decision table) ¹

Integrated

• Executed agreements (MSA/SOW/addenda) showing included clauses
• Redlines and negotiation logs for high-risk engagements
• Exception approvals with compensating controls and sign-offs
• Renewal reviews showing re-tiering and clause refresh where needed ¹

Common exam/audit questions and hangups

Auditors and examiners tend to probe four areas:

1. “Show me the rule.” Where are the cybersecurity supply chain requirements documented and approved? ¹
2. “Show me prioritization.” How do you decide which suppliers get which requirements, and is it consistently applied? ²
3. “Show me the paper.” Provide executed contracts for a sample of high-risk third parties demonstrating required terms are included. ¹
4. “Show me governance.” What happens when a supplier won’t agree, and who accepts the residual risk? ¹

Hangups you should expect:

• Security requirements exist in policy but not in contracts.
• Tiering exists but doesn’t connect to templates.
• Exceptions exist informally (email) with no central log. ²

Frequent implementation mistakes and how to avoid them

1. Mistake: One-size-fits-all security addendum for every supplier.
   Fix: Use tiered clause packs so prioritization is real, not rhetorical. ¹

2. Mistake: Relying on questionnaires as the “requirement.”
   Fix: Treat questionnaires as assessment inputs; the requirement must be in the agreement or an approved exception. ¹

3. Mistake: High-risk suppliers signed on a “papered later” promise.
   Fix: Make security schedule completion a gating item for signature, or require a time-bound contract amendment with an exception memo. ¹

4. Mistake: No flow-down to subcontractors.
   Fix: Add explicit subcontractor requirements for high-risk tiers, including responsibility and notice obligations. ¹

5. Mistake: No evidence discipline.
   Fix: Map GV.SC-05 to a named owner, procedure, and recurring evidence collection calendar, then store artifacts centrally. ²

Enforcement context and risk implications

No public enforcement cases were provided in the source catalog for this requirement. Practically, the risk is straightforward: if a third party incident occurs, weak or missing contract terms reduce your ability to investigate, contain, obtain timely notice, and enforce remediation. That becomes a governance failure you may have to defend to customers, regulators, and auditors using your own records of prioritization and exception approvals. ¹

A practical 30/60/90-day execution plan

First 30 days (Immediate stabilization)

• Assign a control owner for GV.SC-05 across Security, Legal, and Procurement. ²
• Inventory current third-party templates and security addenda; identify what is actually used.
• Draft or refresh the cybersecurity supply chain requirements standard and define non-negotiables. ¹
• Stand up a central repository for executed agreements + exceptions (GRC system or controlled drive).

Days 31–60 (Prioritization + templates)

• Implement or refine risk tiering criteria and a decision table mapping tier to clause packs. ¹
• Finalize baseline and high-risk clause packs with Legal; add flow-down language. ¹
• Update procurement intake forms to capture tiering inputs and enforce Security review triggers.
• Create an exceptions template (one-page memo) and an approvals matrix.

Days 61–90 (Operationalization + audit readiness)

• Apply the new approach to all new engagements and renewals. ¹
• Backfill: prioritize top critical third parties and amend contracts where gaps exist (start with those handling sensitive data or with privileged access).
• Run an internal “audit sample” on a small set of third parties: verify tiering evidence, executed clauses, and exception records. ²
• Automate evidence collection where possible (for example, recurring pulls and reminders). Daydream can function as the control map and evidence system so your GV.SC-05 proof stays current without spreadsheet churn. ²

Frequently Asked Questions

Do we need GV.SC-05 clauses for every supplier, even low-risk ones?

Yes, keep a baseline set for all third parties, then scale up obligations based on risk tier. The key is that prioritization changes what you require, not whether you require anything. ¹

What counts as “other types of agreements” besides contracts?

Any binding or governing instrument for the relationship: SOWs, SLAs, DPAs, partner agreements, reseller agreements, or platform terms accepted during onboarding. If it governs service delivery or data handling, it can carry GV.SC-05 requirements. ¹

If a supplier refuses audit rights, are we automatically noncompliant?

Not automatically, but you need a documented exception with an authorized risk acceptance and compensating controls. Keep the redlines and the approval memo so you can prove governed decision-making. ¹

How do we prove “prioritized” to an auditor?

Show your tiering methodology, the tier result for sampled third parties, and the clause pack decision table. Then show the executed contracts match the tier. ²

Should we apply GV.SC-05 to subcontractors (fourth parties) we don’t contract with directly?

You typically enforce it indirectly by requiring your contracted third party to impose equivalent security obligations on its subcontractors and to remain accountable. Document that flow-down requirement in your high-risk clause pack. ¹

We have legacy contracts. What is the practical remediation approach?

Start with your highest-risk and most critical third parties, then address gaps at renewal or via targeted amendments. Track remediation status and exceptions centrally so you can explain sequencing and residual risk. ¹

Footnotes

1. NIST CSWP 29

2. NIST CSF 1.1 to 2.0 Core Transition Changes