diff --git a/core/java/android/content/pm/ApplicationInfo.java b/core/java/android/content/pm/ApplicationInfo.java
index 02401dc..2250331 100644
--- a/core/java/android/content/pm/ApplicationInfo.java
+++ b/core/java/android/content/pm/ApplicationInfo.java
@@ -338,6 +338,14 @@
     public static final int FLAG_CANT_SAVE_STATE = 1<<28;
 
     /**
+     * Value for {@link #flags}: set to {@code true} if the application
+     * is permitted to hold privileged permissions.
+     *
+     * {@hide}
+     */
+    public static final int FLAG_PRIVILEGED = 1<<29;
+
+    /**
      * Flags associated with the application.  Any combination of
      * {@link #FLAG_SYSTEM}, {@link #FLAG_DEBUGGABLE}, {@link #FLAG_HAS_CODE},
      * {@link #FLAG_PERSISTENT}, {@link #FLAG_FACTORY_TEST}, and
diff --git a/core/java/android/content/pm/PackageParser.java b/core/java/android/content/pm/PackageParser.java
index a3bcfcb..883516e 100644
--- a/core/java/android/content/pm/PackageParser.java
+++ b/core/java/android/content/pm/PackageParser.java
@@ -476,6 +476,7 @@
     public final static int PARSE_FORWARD_LOCK = 1<<4;
     public final static int PARSE_ON_SDCARD = 1<<5;
     public final static int PARSE_IS_SYSTEM_DIR = 1<<6;
+    public final static int PARSE_IS_PRIVILEGED = 1<<7;
 
     public int getParseError() {
         return mParseError;
diff --git a/packages/BackupRestoreConfirmation/Android.mk b/packages/BackupRestoreConfirmation/Android.mk
index e775b44..b84c07f 100644
--- a/packages/BackupRestoreConfirmation/Android.mk
+++ b/packages/BackupRestoreConfirmation/Android.mk
@@ -23,6 +23,7 @@
 
 LOCAL_PACKAGE_NAME := BackupRestoreConfirmation
 LOCAL_CERTIFICATE := platform
+LOCAL_PRIVILEGED_MODULE := true
 
 include $(BUILD_PACKAGE)
 
diff --git a/packages/DefaultContainerService/Android.mk b/packages/DefaultContainerService/Android.mk
index 56b8005..9961168 100644
--- a/packages/DefaultContainerService/Android.mk
+++ b/packages/DefaultContainerService/Android.mk
@@ -11,6 +11,8 @@
 
 LOCAL_CERTIFICATE := platform
 
+LOCAL_PRIVILEGED_MODULE := true
+
 include $(BUILD_PACKAGE)
 
 include $(call all-makefiles-under,$(LOCAL_PATH))
diff --git a/packages/ExternalStorageProvider/Android.mk b/packages/ExternalStorageProvider/Android.mk
index 32752b8..db825ff 100644
--- a/packages/ExternalStorageProvider/Android.mk
+++ b/packages/ExternalStorageProvider/Android.mk
@@ -7,5 +7,6 @@
 
 LOCAL_PACKAGE_NAME := ExternalStorageProvider
 LOCAL_CERTIFICATE := platform
+LOCAL_PRIVILEGED_MODULE := true
 
 include $(BUILD_PACKAGE)
diff --git a/packages/FusedLocation/Android.mk b/packages/FusedLocation/Android.mk
index 318782f..7406eaf4 100644
--- a/packages/FusedLocation/Android.mk
+++ b/packages/FusedLocation/Android.mk
@@ -23,5 +23,6 @@
 
 LOCAL_PACKAGE_NAME := FusedLocation
 LOCAL_CERTIFICATE := platform
+LOCAL_PRIVILEGED_MODULE := true
 
 include $(BUILD_PACKAGE)
diff --git a/packages/InputDevices/Android.mk b/packages/InputDevices/Android.mk
index 37f2428..095655c 100644
--- a/packages/InputDevices/Android.mk
+++ b/packages/InputDevices/Android.mk
@@ -23,6 +23,7 @@
 
 LOCAL_PACKAGE_NAME := InputDevices
 LOCAL_CERTIFICATE := platform
+LOCAL_PRIVILEGED_MODULE := true
 
 include $(BUILD_PACKAGE)
 
diff --git a/packages/Keyguard/Android.mk b/packages/Keyguard/Android.mk
index bc86a44..f6f441d 100644
--- a/packages/Keyguard/Android.mk
+++ b/packages/Keyguard/Android.mk
@@ -24,6 +24,8 @@
 
 LOCAL_CERTIFICATE := platform
 
+LOCAL_PRIVILEGED_MODULE := true
+
 LOCAL_PROGUARD_FLAG_FILES := proguard.flags
 
 include $(BUILD_PACKAGE)
diff --git a/packages/Keyguard/test/Android.mk b/packages/Keyguard/test/Android.mk
index d011df4..15059c6 100644
--- a/packages/Keyguard/test/Android.mk
+++ b/packages/Keyguard/test/Android.mk
@@ -20,8 +20,9 @@
 
 LOCAL_PACKAGE_NAME := KeyguardTest
 
-# Remove this to verify permission checks are working correctly
+# Remove these to verify permission checks are working correctly
 LOCAL_CERTIFICATE := platform
+LOCAL_PRIVILEGED_MODULE := true
 
 # LOCAL_PROGUARD_FLAG_FILES := proguard.flags
 
diff --git a/packages/SettingsProvider/Android.mk b/packages/SettingsProvider/Android.mk
index a2ea554..da929ae 100644
--- a/packages/SettingsProvider/Android.mk
+++ b/packages/SettingsProvider/Android.mk
@@ -9,6 +9,7 @@
 
 LOCAL_PACKAGE_NAME := SettingsProvider
 LOCAL_CERTIFICATE := platform
+LOCAL_PRIVILEGED_MODULE := true
 
 include $(BUILD_PACKAGE)
 
diff --git a/packages/SharedStorageBackup/Android.mk b/packages/SharedStorageBackup/Android.mk
index 1d4f4da..a213965f 100644
--- a/packages/SharedStorageBackup/Android.mk
+++ b/packages/SharedStorageBackup/Android.mk
@@ -25,6 +25,7 @@
 
 LOCAL_PACKAGE_NAME := SharedStorageBackup
 LOCAL_CERTIFICATE := platform
+LOCAL_PRIVILEGED_MODULE := true
 
 include $(BUILD_PACKAGE)
 
diff --git a/packages/Shell/Android.mk b/packages/Shell/Android.mk
index fc4c0f5..5bd48c6 100644
--- a/packages/Shell/Android.mk
+++ b/packages/Shell/Android.mk
@@ -9,5 +9,6 @@
 
 LOCAL_PACKAGE_NAME := Shell
 LOCAL_CERTIFICATE := platform
+LOCAL_PRIVILEGED_MODULE := true
 
 include $(BUILD_PACKAGE)
diff --git a/packages/SystemUI/Android.mk b/packages/SystemUI/Android.mk
index 015c0cc..fc70f7a 100644
--- a/packages/SystemUI/Android.mk
+++ b/packages/SystemUI/Android.mk
@@ -10,6 +10,7 @@
 
 LOCAL_PACKAGE_NAME := SystemUI
 LOCAL_CERTIFICATE := platform
+LOCAL_PRIVILEGED_MODULE := true
 
 LOCAL_PROGUARD_FLAG_FILES := proguard.flags
 
diff --git a/packages/VpnDialogs/Android.mk b/packages/VpnDialogs/Android.mk
index ac84125..4c80a26 100644
--- a/packages/VpnDialogs/Android.mk
+++ b/packages/VpnDialogs/Android.mk
@@ -22,6 +22,8 @@
 
 LOCAL_CERTIFICATE := platform
 
+LOCAL_PRIVILEGED_MODULE := true
+
 LOCAL_SRC_FILES := $(call all-java-files-under, src)
 
 LOCAL_PACKAGE_NAME := VpnDialogs
diff --git a/services/java/com/android/server/accounts/AccountManagerService.java b/services/java/com/android/server/accounts/AccountManagerService.java
index c5242f0..2145b76 100644
--- a/services/java/com/android/server/accounts/AccountManagerService.java
+++ b/services/java/com/android/server/accounts/AccountManagerService.java
@@ -2540,7 +2540,7 @@
         return userId;
     }
 
-    private boolean inSystemImage(int callingUid) {
+    private boolean isPrivileged(int callingUid) {
         final int callingUserId = UserHandle.getUserId(callingUid);
 
         final PackageManager userPackageManager;
@@ -2556,7 +2556,7 @@
             try {
                 PackageInfo packageInfo = userPackageManager.getPackageInfo(name, 0 /* flags */);
                 if (packageInfo != null
-                        && (packageInfo.applicationInfo.flags & ApplicationInfo.FLAG_SYSTEM) != 0) {
+                        && (packageInfo.applicationInfo.flags & ApplicationInfo.FLAG_PRIVILEGED) != 0) {
                     return true;
                 }
             } catch (PackageManager.NameNotFoundException e) {
@@ -2567,7 +2567,7 @@
     }
 
     private boolean permissionIsGranted(Account account, String authTokenType, int callerUid) {
-        final boolean inSystemImage = inSystemImage(callerUid);
+        final boolean isPrivileged = isPrivileged(callerUid);
         final boolean fromAuthenticator = account != null
                 && hasAuthenticatorUid(account.type, callerUid);
         final boolean hasExplicitGrants = account != null
@@ -2578,7 +2578,7 @@
                     + ": is authenticator? " + fromAuthenticator
                     + ", has explicit permission? " + hasExplicitGrants);
         }
-        return fromAuthenticator || hasExplicitGrants || inSystemImage;
+        return fromAuthenticator || hasExplicitGrants || isPrivileged;
     }
 
     private boolean hasAuthenticatorUid(String accountType, int callingUid) {
diff --git a/services/java/com/android/server/pm/PackageManagerService.java b/services/java/com/android/server/pm/PackageManagerService.java
index 5e6e055..9ea4262 100644
--- a/services/java/com/android/server/pm/PackageManagerService.java
+++ b/services/java/com/android/server/pm/PackageManagerService.java
@@ -71,7 +71,6 @@
 import android.content.pm.IPackageMoveObserver;
 import android.content.pm.IPackageStatsObserver;
 import android.content.pm.InstrumentationInfo;
-import android.content.pm.KeySet;
 import android.content.pm.PackageCleanItem;
 import android.content.pm.PackageInfo;
 import android.content.pm.PackageInfoLite;
@@ -114,15 +113,12 @@
 import android.os.UserHandle;
 import android.os.Environment.UserEnvironment;
 import android.os.UserManager;
-import android.provider.Settings.Secure;
 import android.security.KeyStore;
 import android.security.SystemKeyStore;
-import android.util.Base64;
 import android.util.DisplayMetrics;
 import android.util.EventLog;
 import android.util.Log;
 import android.util.LogPrinter;
-import android.util.LongSparseArray;
 import android.util.Slog;
 import android.util.SparseArray;
 import android.util.Xml;
@@ -280,6 +276,9 @@
     // This is the object monitoring the system app dir.
     final FileObserver mSystemInstallObserver;
 
+    // This is the object monitoring the privileged system app dir.
+    final FileObserver mPrivilegedInstallObserver;
+
     // This is the object monitoring the system app dir.
     final FileObserver mVendorInstallObserver;
 
@@ -295,6 +294,7 @@
 
     final File mFrameworkDir;
     final File mSystemAppDir;
+    final File mPrivilegedAppDir;
     final File mVendorAppDir;
     final File mAppInstallDir;
     final File mDalvikCacheDir;
@@ -1058,13 +1058,18 @@
         mNoDexOpt = "eng".equals(SystemProperties.get("ro.build.type"));
         mMetrics = new DisplayMetrics();
         mSettings = new Settings(context);
-        mSettings.addSharedUserLPw("android.uid.system",
-                Process.SYSTEM_UID, ApplicationInfo.FLAG_SYSTEM);
-        mSettings.addSharedUserLPw("android.uid.phone", RADIO_UID, ApplicationInfo.FLAG_SYSTEM);
-        mSettings.addSharedUserLPw("android.uid.log", LOG_UID, ApplicationInfo.FLAG_SYSTEM);
-        mSettings.addSharedUserLPw("android.uid.nfc", NFC_UID, ApplicationInfo.FLAG_SYSTEM);
-        mSettings.addSharedUserLPw("android.uid.bluetooth", BLUETOOTH_UID, ApplicationInfo.FLAG_SYSTEM);
-        mSettings.addSharedUserLPw("android.uid.shell", SHELL_UID, ApplicationInfo.FLAG_SYSTEM);
+        mSettings.addSharedUserLPw("android.uid.system", Process.SYSTEM_UID,
+                ApplicationInfo.FLAG_SYSTEM|ApplicationInfo.FLAG_PRIVILEGED);
+        mSettings.addSharedUserLPw("android.uid.phone", RADIO_UID,
+                ApplicationInfo.FLAG_SYSTEM|ApplicationInfo.FLAG_PRIVILEGED);
+        mSettings.addSharedUserLPw("android.uid.log", LOG_UID,
+                ApplicationInfo.FLAG_SYSTEM|ApplicationInfo.FLAG_PRIVILEGED);
+        mSettings.addSharedUserLPw("android.uid.nfc", NFC_UID,
+                ApplicationInfo.FLAG_SYSTEM|ApplicationInfo.FLAG_PRIVILEGED);
+        mSettings.addSharedUserLPw("android.uid.bluetooth", BLUETOOTH_UID,
+                ApplicationInfo.FLAG_SYSTEM|ApplicationInfo.FLAG_PRIVILEGED);
+        mSettings.addSharedUserLPw("android.uid.shell", SHELL_UID,
+                ApplicationInfo.FLAG_SYSTEM|ApplicationInfo.FLAG_PRIVILEGED);
 
         String separateProcesses = SystemProperties.get("debug.separate_processes");
         if (separateProcesses != null && separateProcesses.length() > 0) {
@@ -1246,7 +1251,16 @@
                     | PackageParser.PARSE_IS_SYSTEM_DIR,
                     scanMode | SCAN_NO_DEX, 0);
 
-            // Collect all system packages.
+            // Collected privileged system packages.
+            mPrivilegedAppDir = new File(Environment.getRootDirectory(), "priv-app");
+            mPrivilegedInstallObserver = new AppDirObserver(
+                    mPrivilegedAppDir.getPath(), OBSERVER_EVENTS, true);
+            mPrivilegedInstallObserver.startWatching();
+                scanDirLI(mPrivilegedAppDir, PackageParser.PARSE_IS_SYSTEM
+                        | PackageParser.PARSE_IS_SYSTEM_DIR
+                        | PackageParser.PARSE_IS_PRIVILEGED, scanMode, 0);
+
+            // Collect ordinary system packages.
             mSystemAppDir = new File(Environment.getRootDirectory(), "app");
             mSystemInstallObserver = new AppDirObserver(
                 mSystemAppDir.getPath(), OBSERVER_EVENTS, true);
@@ -3240,7 +3254,6 @@
     public List<ProviderInfo> queryContentProviders(String processName,
             int uid, int flags) {
         ArrayList<ProviderInfo> finalList = null;
-
         // reader
         synchronized (mPackages) {
             final Iterator<PackageParser.Provider> i = mProvidersByComponent.values().iterator();
@@ -3316,7 +3329,8 @@
         }
 
         if (DEBUG_PACKAGE_SCANNING) {
-            Log.d(TAG, "Scanning app dir " + dir);
+            Log.d(TAG, "Scanning app dir " + dir + " scanMode=" + scanMode
+                    + " flags=0x" + Integer.toHexString(flags));
         }
 
         int i;
@@ -3972,6 +3986,10 @@
             pkg.applicationInfo.flags |= ApplicationInfo.FLAG_SYSTEM;
         }
 
+        if ((parseFlags&PackageParser.PARSE_IS_PRIVILEGED) != 0) {
+            pkg.applicationInfo.flags |= ApplicationInfo.FLAG_PRIVILEGED;
+        }
+
         if (pkg.packageName.equals("android")) {
             synchronized (mPackages) {
                 if (mAndroidApplication != null) {
@@ -5363,7 +5381,7 @@
                         == PackageManager.SIGNATURE_MATCH);
         if (!allowed && (bp.protectionLevel
                 & PermissionInfo.PROTECTION_FLAG_SYSTEM) != 0) {
-            if (isSystemApp(pkg)) {
+            if (isPrivilegedApp(pkg)) {
                 // For updated system applications, a system permission
                 // is granted only if it had been defined by the original application.
                 if (isUpdatedSystemApp(pkg)) {
@@ -8566,6 +8584,10 @@
         return (pkg.applicationInfo.flags & ApplicationInfo.FLAG_SYSTEM) != 0;
     }
 
+    private static boolean isPrivilegedApp(PackageParser.Package pkg) {
+        return (pkg.applicationInfo.flags & ApplicationInfo.FLAG_PRIVILEGED) != 0;
+    }
+
     private static boolean isSystemApp(ApplicationInfo info) {
         return (info.flags & ApplicationInfo.FLAG_SYSTEM) != 0;
     }