On
The proposed rule seeks to implement a section of the James M. Inhofe National Defense Authorization Act for Fiscal Year 2023 and is slated to go into effect on
What Is In the ANPRM?
The ANPRM contemplates the clause will be broadly applicable to "all solicitations and contracts." This includes contracts valued at or below the simplified acquisition and micro-purchase thresholds, the acquisition of commercial products and services, and the acquisition of commercial off-the-shelf (COTS) items. The proposal would require a provision to be added to all solicitations mandating that offerors certify, after conducting a "reasonably inquiry," the non-use of covered semiconductor products or services.
In addition, the ANPRM plans to require contracting officers to insert a clause in contracts that would prohibit contractors from supplying government agencies with any electronic products or services that include covered semiconductor products or services or electronic parts or services that use electronic products that include covered semiconductor products or services, unless the electronic products are used in certain "critical systems." Contractors must also conduct a reasonable inquiry into their electronic products and electronic services to avoid the inclusion of covered semiconductor products and services.
"Covered semiconductor products and services" is defined in the ANPRM as "a semiconductor product, a product that incorporates a semiconductor product, or a service that is designed, produced, or provided by" certain specifically listed companies including
The ANPRM also establishes a reporting requirement for federal contractors and subcontractors. Contractors must disclose to direct customers any instances where these covered semiconductor products and services were included in supplied electronic products or services. Similarly, if ever a product which contains covered semiconductor products or services is delivered to a federal agency and is "to be used in a critical system purchased by the Federal Government, or purchased by a Federal Contractor or subcontractor for delivery to the Federal Government for any critical system," the contractor or subcontractor must notify the appropriate federal authorities within 60 days.
Those contractors who do notify the federal government within the required timeframe will not face civil liability nor be "determined to not be a presently responsible contractor" on the basis of that information "if the Federal contractor or Subcontractor makes a comprehensive and documentable effort to identify and remove the covered semiconductor products or services." Those contractors that fail to make a required disclosure "shall be responsible for any rework or corrective action that may be required to remedy the use or inclusion of such covered semiconductor product or service."
Prime contractors must incorporate all these requirements in subcontracts for the supply of electronic products.
Supply Chain Tracing
The ANPRM also provides that the
Interestingly, the ANPRM identifies the stringent provenance reporting requirements of the Uyghur Forced Labor Prevention Act (UFLPA) as informative in their rulemaking. In fact, the ANPRM suggests the rule may include the creation of a list, reminiscent of the UFLPA Entity List, "issued by the
Waivers
The plan is to have two avenues for contractors to obtain a waiver. First, the Secretary of Defense, Director of National Intelligence, Secretary of Commerce, and Secretary of Energy will have the authority to grant a waiver for any executive agency. Second, the head of each executive agency would have the authority to grant waiver.
Impact on Contractors
The
Going Forward
Semiconductors are viewed as essential to
In addition, the ANPRM lists 18 questions for commenters to address. These questions provide some insight into the direction the drafters may take when implementing the final regulations. Interested parties have until
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