Important Update on New FAR Rule on Supply Chain

In 2018, as part of the NDAA, Congress passed section 889, which required federal agencies to remove certain covered telecommunications equipment and services from the supply chain.  This process was disruptive for federal contractors as they had to conduct diligence on their operations and make affirmative representations on SAM.gov.  Many of the terms in the implementing FAR clauses were undefined, leading to uncertainty within the industry.  Now, as Congress attempts to further secure the government’s supply channels, the process repeats itself.

Congress was concerned about the ability of certain foreign entities to exploit vulnerabilities in information and communications equipment sold by federal contractors to the US Government. To address these concerns, it passed the Federal Acquisition Supply Chain Security Act (FASCSA).  As of December 4, 2023, there are three new FAR clauses implementing FASCSA.

Here is the quick read summary:

• FAR 52.204-28 – Applicable to Federal Supply Schedules, Governmentwide Acquisition Contracts and Multiagency Contracts   This clause requires contractors to comply with removal or exclusion orders during contract performance or remove any products or services that, upon notification from a contracting officer, are the subject of a governmentwide exclusion order. This applies to all task or delivery orders too.
• FAR 52.204-29 – Representations and Certifications – It requires contractors to review SAM for any prohibited product and service prior to the submission of an offer and that by submitting an offer, a contractor implicitly represents that it has conducted a “reasonable inquiry” and does not plan to use or offer a prohibited product or service. If a contractor wants to provide or use a prohibited product or service, it must make a disclosure in its proposal and request a waiver by the Contracting Officer.
• FAR 52.204-30 – Applicable to all Contracts – It prohibits the use of a product or service on the excluded list, requires contractors to search for exclusion orders in SAM and requires contractors to disclose if they intend to use or provide excluded products or services. Contractors are required to review SAM once every three months during contract performance to determine whether a new exclusion order has been issued and, if so, make reasonable inquiries to determine whether that exclusion order impacts existing contracts. If a contractor discovers that an item that is used on a contract is subject to a new exclusion order, it must notify the contracting officer within 3 business days. DOD contractors must disclose this in the Defense Industrial Base Cybersecurity Portal. This FAR clause must be flowed down to all subcontractors except for the requirement to monitor SAM.

Action Items:

1. Accept the GSA Schedule modification incorporating FAR 52.204-28.
2. Modify all existing subcontracts to add the applicable FAR clause.
3. Designate a point person to review SAM exclusion orders and provide an update to management at least every three months.

We will be writing more on these clauses as things develop.  If you have any questions, reach out to our experienced GSA Schedule attorneys.

Want to learn more about this topic? Sign up for our FREE WEBINAR, November 30th @ 4-5PM, EST. We will cover the following:

Three new FAR clauses covering supply chain due diligence for federal contractors are effective in December.  We will discuss all 3 of those clauses, what is required, what steps contractors should take proactively and how to monitor excluded products and more.  We will have time for a Q&A period so bring your questions.