03.12.05: Information Exchange

To meet the 03.12.05: information exchange requirement, you must control and document how CUI-bearing information is shared across system boundaries (people, systems, and third parties), using defined exchange methods, approvals, and security protections. Operationalize it by inventorying exchange paths, setting minimum secure transfer standards, and retaining repeatable evidence that exchanges follow your rules. ¹

Key takeaways:

• Treat “information exchange” as a governed workflow: approved methods, protected channels, and accountable owners.
• Scope includes third-party sharing, integrations, and human-to-human transfers, not just network connections.
• Evidence wins audits: exchange inventory, standards, approvals, and technical logs that show protections are in place. ¹

03.12.05 lands in the part of NIST SP 800-171 Rev. 3 that examiners read as “show me you control where sensitive data goes.” For most contractors, the risk is not a sophisticated exploit; it’s routine operational sharing: emailing files, granting portal access, syncing to SaaS tools, sending data to a supplier, or wiring up an API integration that quietly becomes a data egress path.

A practical implementation hinges on three moves. First, define what counts as an “information exchange” in your environment, including exchanges with third parties and between enclaves. Second, standardize the allowed exchange mechanisms (for example: secure file transfer, managed collaboration, controlled APIs) with clear minimum security requirements. Third, make the process auditable by capturing approvals, configurations, and logs that prove the standard was followed.

If you run a CUI enclave, this requirement often becomes the “gate” control: it forces you to show that CUI does not drift into uncontrolled tools or unmanaged partners. The guidance below is written to help a Compliance Officer, CCO, or GRC lead assign ownership, implement the control quickly, and stand up durable evidence collection mapped to 03.12.05. ¹

Regulatory text

Requirement: “NIST SP 800-171 Rev. 3 requirement 03.12.05 (Information Exchange).” ¹

Operator interpretation (what you must do): establish rules and protections for exchanging information across boundaries, then run exchanges through those rules consistently. Your implementation should show (1) you know your exchange pathways, (2) you restrict exchanges to approved methods, and (3) you protect exchanged information with appropriate security controls and maintain evidence that the protections operated as intended. ¹

Plain-English interpretation

“Information exchange” is any transfer, sharing, synchronization, or access grant that moves CUI (or system data that includes CUI) from one trust boundary to another. That includes:

• Person-to-person: sending CUI to another employee, a program partner, or a third party.
• System-to-system: APIs, SFTP, ETL jobs, integration middleware, shared drives, collaboration platforms, EDI.
• Boundary-to-boundary: CUI enclave to corporate network, corporate network to cloud tenant, cloud tenant to a supplier environment.

Your job is to make those exchanges intentional and controlled: approved channels, least-necessary data, protected in transit (and often protected at rest in the receiving system), with auditable records of what was approved and what actually occurred. ¹

Who it applies to

Entities: federal contractors and any nonfederal organization operating systems that handle CUI under contract obligations aligned to NIST SP 800-171 Rev. 3. ¹

Operational context (where this shows up):

• Programs with multiple subcontractors exchanging drawings, specifications, test data, or incident reports.
• Teams using SaaS collaboration plus an enclave strategy where CUI is supposed to stay in specific tools.
• Environments with integrations between ERP/PLM, ticketing, SIEM, and storage platforms.
• Managed service providers, consultants, or labs that require data handoffs.

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

1) Define scope: what counts as an exchange

Create a short scoping statement for your policy and SSP:

• What data types are in scope (CUI and any derived/packaged datasets).
• What boundaries matter (enclave vs. corporate, tenant-to-tenant, third party environments).
• What constitutes “exchange” (send, share link, grant access, sync, export, API). ¹

Deliverable: “Information Exchange Scope” paragraph in policy + SSP section.

2) Build an information exchange inventory (the control’s backbone)

Stand up a living register of exchange pathways that includes:

• Source system / boundary
• Destination system / boundary (including third party)
• Exchange mechanism (email, SFTP, API, portal, collaboration link)
• Data categories (CUI types or projects)
• Owner (business + technical)
• Approval status (approved / exception / prohibited)
• Required protections (see Step 3)
• Logging location and retention approach

Tip from practice: if you can’t enumerate your exchange paths, you will fail the “show me” portion of an assessment even if your tools are strong. ¹

3) Set “approved methods” with minimum security requirements

Write a standard that says: “CUI may be exchanged only via approved methods.” Then define method-specific requirements such as:

• Managed file transfer (SFTP/secure portal): authenticated access, least privilege, encryption in transit, server hardening, logging.
• Email: allow only if your controls meet your CUI handling rules (common approach is to prohibit CUI over standard email and require a secure portal or encrypted email workflow).
• Collaboration tools: tenant controls, sharing restrictions, external sharing governance, access reviews.
• APIs/integrations: strong authentication, scoped authorization, encryption in transit, secrets management, monitoring, and change control.

Keep it enforceable. If a method cannot meet the minimum bar, mark it “prohibited for CUI.” ¹

4) Put approvals and change control in the path

Operationalize “approved exchanges” with a workflow:

• Requestor submits an exchange request (new third party, new integration, new external sharing pattern).
• Security/GRC reviews required protections and receiving environment readiness.
• Legal/Contracts confirms flowdown needs where the destination is a third party.
• IT implements configuration, logging, and access controls.
• Approver signs off; register updated.

This can run in your ticketing system. What matters is traceability from request to decision to implementation. ¹

5) Enforce technically where possible

Policy without enforcement becomes exception culture. Add guardrails:

• DLP rules or endpoint controls to reduce uncontrolled uploads.
• Conditional access and external sharing restrictions in collaboration platforms.
• Firewall/proxy egress controls for enclave boundaries.
• Approved integration patterns (for example, API gateway, managed secrets).

Pick controls that match your architecture; auditors accept different implementations, but they look for consistency and evidence. ¹

6) Monitor and review exchange activity

Define:

• What logs prove exchange controls operated (file transfer logs, audit logs, access logs, API logs).
• Who reviews them and what “bad” looks like (new external domains, unusual volume, disabled encryption, new tokens/scopes).
• How exceptions are handled (incident or corrective action, depending on impact).

Tie the monitoring to your incident response and corrective action processes so the control stays alive after the initial rollout. ¹

Required evidence and artifacts to retain

Keep artifacts in an assessor-ready package mapped to 03.12.05:

• Information Exchange Policy/Standard (approved methods, prohibited methods, minimum requirements). ¹
• Information Exchange Inventory/Register with owners and approval status. ¹
• Workflow evidence: tickets/records showing review and approval for new exchanges and significant changes. ¹
• Technical configurations: screenshots/exports of collaboration sharing settings, API gateway policies, SFTP configuration, conditional access policies (as applicable). ¹
• Logs and monitoring outputs: sample audit logs, alerts, and review notes tied to exchange mechanisms. ¹
• Third party documentation relevant to exchange pathways: contract clauses/flowdowns and security requirements for receiving systems (retain what you can disclose). ¹
• SSP mapping: where 03.12.05 is implemented, by whom, and which systems and tools enforce it. ¹

Common exam/audit questions and hangups

Assessors and auditors tend to push on these points:

• “Show me all the ways CUI can leave the enclave.” Bring the exchange inventory and demonstrate enforcement points. ¹
• “How do you prevent ad hoc sharing through unapproved tools?” Point to technical restrictions plus an exception process. ¹
• “How do you approve a new third party data share?” Walk through the ticket + review + contract flowdown + implementation evidence. ¹
• “Prove this is operating.” Provide recent logs, review records, and a couple of real exchange approvals. ¹

Frequent implementation mistakes (and how to avoid them)

Mistake	Why it fails	Fix
Treating the requirement as “we have TLS”	Encryption in transit does not equal governed exchange	Add approved-method standards, approvals, and inventory. 1
Ignoring third-party exchanges	Most CUI exchange risk sits in subcontractors and MSPs	Include third parties in the register and approval workflow. Use “third party” as an explicit destination type. 1
No proof of operation	Audits fail on missing evidence, not missing intent	Automate evidence capture: ticket templates, scheduled log exports, periodic reviews. 1
“Everything is allowed with manager approval”	Creates uncontrolled sprawl	Define a small set of approved methods and require security review for anything else. 1
Exceptions never close	Temporary sharing becomes permanent exposure	Put expirations and re-approval into the exception workflow. 1

Enforcement context and risk implications

No public enforcement cases were provided in the source catalog for this requirement, so this page does not list case examples.

Risk still maps cleanly to contract performance and audit outcomes: weak information exchange controls can result in CUI exiting controlled environments, increased breach exposure, and inability to substantiate compliance during an assessment against NIST SP 800-171 Rev. 3. ¹

Practical execution plan (30/60/90-day)

Use this as a pragmatic rollout sequence; adjust to your system boundaries and current maturity.

First 30 days (stabilize and scope)

• Name an owner for 03.12.05 (usually Security/GRC) and define RACI across IT, program teams, and Contracts. ¹
• Draft the “approved methods” standard and a short exception rule.
• Start the exchange inventory with known pathways: collaboration tools, SFTP/portals, common third parties, and key integrations.
• Build a ticket template for new exchanges and changes.

Days 31–60 (implement guardrails and prove operation)

• Configure technical restrictions aligned to your standard (external sharing rules, conditional access, egress controls, integration patterns).
• Run at least a few real exchange requests through the workflow and capture evidence.
• Define logging sources for each approved method; set up a review cadence and document who reviews and what they check. ¹

Days 61–90 (tighten and make it repeatable)

• Close gaps found during initial monitoring (unapproved tools, shadow integrations, unmanaged third party sharing).
• Formalize SSP mappings for 03.12.05: where exchanges occur, enforcement mechanisms, and evidence locations. ¹
• Operationalize recurring evidence collection. Tools like Daydream can help you map 03.12.05 to your policy, control implementation, and recurring evidence tasks so audits become a packaging exercise instead of a fire drill. ¹

Frequently Asked Questions

Does 03.12.05 apply to internal transfers between teams?

Yes if the transfer crosses a meaningful boundary, such as moving CUI from a controlled enclave to corporate systems, or granting new access in a different platform. Treat “new access” and “new tool” as exchange triggers. ¹

What is the minimum set of exchange methods you should approve?

Approve only what you can enforce and evidence. Most programs start with a secure file transfer/portal method, a controlled collaboration method, and a governed API/integration pattern. ¹

How do we handle subcontractors who insist on using their portal?

Put the portal on the exchange register, require an approval ticket, and document the required protections and contract flowdowns before any CUI is shared. If you can’t validate basic protections, treat it as an exception or prohibit it for CUI. ¹

Is logging really required for information exchange?

The requirement expects you to control exchanges and demonstrate operation. Logs, access records, and workflow approvals are the most defensible evidence that exchanges occurred through approved methods. ¹

We already have a data classification policy. Is that enough?

Classification helps scope what needs protection, but 03.12.05 also expects governed exchange pathways and proof that people and systems followed those pathways. Add an exchange standard, approvals, and monitoring. ¹

What evidence should we show an assessor first?

Start with the exchange inventory, then pick one high-risk path (for example, external collaboration or a third party handoff) and show the end-to-end chain: standard, configuration, approval record, and logs. ¹

Footnotes

1. NIST SP 800-171 Rev. 3