Effective August 25, 2022, the Department of Defense (“DoD”) issued an interim rule requiring DoD contractors and subcontractors to disclose whether they have one or more individuals performing work in the People’s Republic of China (“PRC”). The rule implements a requirement of the FY 2022 National Defense Authorization Act. The DoD determined that “urgent and compelling reasons” exist to issue this disclosure requirement without public comment in order to “mitigate the risk associated with performance of DoD contracts and subcontracts at facilities located in the [PRC].” Performance of DoD contracts and subcontracts in the PRC “may provide opportunities for that nation to gather sensitive information,” which is a matter of national security. Therefore, DoD contractors and subcontractors must disclose and make the DoD aware of “the entities, contracts, and subcontracts that are exposed to such risks, so that mitigation strategies can be implemented.”
However, this rule would seem to have a limited effect on the defense industrial base; the rule notes that procurement data from the Federal Procurement Data System showed that during the past three years, no awards met the covered contract criteria, excluding commercial items described below.
The interim rule implements this requirement through the addition of contract clauses in the Defense Federal Acquisition Regulation Supplement (“DFARS”): DFARS 252.225-7057, “Preaward Disclosure of Employment of Individuals Who Work in...
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