[Federal Register Volume 83, Number 245 (Friday, December 21, 2018)]
[Rules and Regulations]
[Pages 66066-66075]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-27558]
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DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Parts 204, 212, 225, and 252
[Docket DARS-2018-0060]
RIN 0750-AJ82
Defense Federal Acquisition Regulation Supplement: Foreign
Commercial Satellite Services and Certain Items on the Commerce Control
List (DFARS Case 2018-D020)
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Interim rule.
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SUMMARY: DoD is amending the Defense Federal Acquisition Regulation
Supplement (DFARS) to implement sections of the National Defense
Authorization Act for Fiscal Years 2017 and 2018. One section imposes
additional prohibitions with regard to acquisition of certain foreign
commercial satellite services, such as cybersecurity risk and source of
satellites and launch vehicles used to provide the foreign commercial
satellite services, and expands the definition of ``covered foreign
country'' to include Russia. Another section prohibits purchase of
items from a Communist Chinese military company that meet the
definition of goods and services controlled as munitions items when
moved to the Commerce Control List of the Export Administration
Regulations of the Department of Commerce.
DATES: Effective Date: December 21, 2018.
Comment Date: Comments on the interim rule should be submitted in
writing to the address shown below on or before February 19, 2019, to
be considered in the formation of a final rule.
ADDRESSES: Submit comments identified by DFARS Case 2018-D020, using
any of the following methods:
[cir] Federal eRulemaking Portal: http://www.regulations.gov.
Search for ``DFARS Case 2018-D020.'' Select ``Comment Now'' and follow
the instructions provided to submit a comment. Please include ``DFARS
Case 2018-D020'' on any attached documents.
[cir] Email: [email protected]. Include DFARS Case 2018-D020 in
the subject line of the message.
[cir] Fax: 571-372-6094.
[cir] Mail: Defense Acquisition Regulations System, Attn: Ms. Amy
G. Williams, OUSD (A&S) DPC/DARS, Room 3B941, 3060 Defense Pentagon,
Washington, DC 20301-3060.
Comments received generally will be posted without change to http:/
/
[[Page 66067]]
www.regulations.gov, including any personal information provided. To
confirm receipt of your comment(s), please check www.regulations.gov,
approximately two to three days after submission to verify posting
(except allow 30 days for posting of comments submitted by mail).
FOR FURTHER INFORMATION CONTACT: Ms. Amy G. Williams, Defense
Acquisition Regulations System, OUSD (A&S) DPC/DARS, Room 3B855, 3060
Defense Pentagon, Washington, DC 20301-3060. Telephone 571-372-6106;
facsimile 571-372-6094.
SUPPLEMENTARY INFORMATION:
I. Background
DoD is amending the DFARS to implement sections of the National
Defense Authorization Act (NDAA) for Fiscal Year (FY) 2018 (Pub. L.
115-91) and the NDAA for FY 2017 (Pub. L. 114-328) as follows:
A. Section 1603 of the NDAA for FY 2018
Section 1603 amends 10 U.S.C. 2279 to impose additional
prohibitions with regard to acquisition of certain foreign commercial
satellite services. It addresses cybersecurity risks and the source of
satellites and launch vehicles used to provide the foreign satellite
services. The definition of ``covered foreign country'' is expanded to
include Russia, in addition to any country described in section
1261(c)(2) of the NDAA for FY 2013 (Pub. L. 112-239), which specifies
the People's Republic of China, North Korea, and any country that is a
state sponsor of terrorism (currently Iran, North Korea, Sudan, and
Syria). 10 U.S.C. 2327, entitled ``Contracts: consideration of national
security objectives,'' is the underlying statute that prohibits DoD
from entering into contracts with a firm or subsidiary of a firm, that
is owned or controlled by the government of a foreign country that has
been identified by the Secretary of State as a state sponsor of
terrorism under section 6(j)(1)(A) of the Export Administration Act of
1979 (50 U.S.C. App. 2405(j)(1)(A)). 50 U.S.C. App. 2405 was
subsequently reclassified and renumbered as 50 U.S.C. 4605, which has
now been repealed by section 1766(a) of the Export Control Reform Act
of 2018 (Title XVII, Subtitle B, of the NDAA for FY 2019, Pub. L. 115-
232). 50 U.S.C. 4605(j) has been replaced by section 1754(c) of the
Export Control Reform Act of 2018 (to be eventually codified at 50
U.S.C. 4813(c)).
B. Section 1296 of the NDAA for FY 2017
Section 1211 of the NDAA for FY 2006 (Pub. L. 109-163) established
the prohibition against purchase of items on the United States
Munitions List (USML) from a Communist Chinese military company.
Section 1296 of the NDAA for FY 2017 amends section 1211 to prohibit
purchase from any Communist Chinese military company, through a
contract or subcontract (at any tier), of goods and services controlled
as munitions items on the 600 series of the Commerce Control List (CCL)
of the Export Administration Regulations of the Department of Commerce.
Under the Export Control Reform Initiative, the International Traffic
in Arms Regulations (ITAR) and the USML have been amended so that they
control only those items that provide the United States with a critical
military or intelligence advantage or otherwise warrant such controls.
In parallel, the Export Administration Regulations (EAR) were amended
to transition some items from the USML to a series of new export
control classification numbers (the 600 series) on the CCL, providing
control for military items that do not warrant USML controls, because
they provide less than a critical military or intelligence capability,
but are not in normal commercial use. The 600 series is so identified
when the third character in the 5-character export control
classification number is the number ``6''.
However, an unintended consequence of this transition of some
munitions from the USML to the 600 series of the CCL was that the items
were no longer covered by the prohibition of section 1211 of the NDAA
for FY 2006, prohibiting purchase from Communist Chinese military
companies. Therefore, section 1296 of the NDAA for FY 2017 has extended
the prohibition to cover items listed in the 600 series of the CCL.
II. Discussion and Analysis
This rule amends the DFARS as follows:
A. Section 1603 of the NDAA for FY 2018
1. Definitions. This rule expands the definition of ``covered
foreign country'' to include Russia, as specified in the statute, and
adds the statutory definitions of ``cybersecurity risk'' and ``launch
vehicle'' at DFARS 225.772-1 and in the associated provision at DFARS
252.224-7049, Prohibition on Acquisition of Certain Foreign Commercial
Satellite Services--Representations, and the clause at DFARS 252.225-
7051, Prohibition on Acquisition of Certain Foreign Commercial
Satellite Services, as appropriate.
In addition, the statutory references to the Export Administration
Act of 1979 in the definitions of ``state sponsor of terrorism'' at
DFARS 225.772-1 and in the clauses at 252.225-7051 and 252.225-7050,
Disclosure of Ownership or Control by the Government of a Country that
is a State Sponsor of Terrorism, have been revised to refer to
``section 1754(c)(1)(A)(i) of the Export Control Reform Act of 2018
(Title XVII, Subtitle B, of the National Defense Authorization Act for
Fiscal Year 2019, Pub. L. 115-232)''.
2. Cybersecurity Risk. The prohibitions at DFARS 225.772-2 and the
provision at DFARS 252.225-7049, Prohibition on Acquisition of Certain
Foreign Commercial Satellite Services--Representation, are expanded to
include prohibition on award of a contract for commercial satellite
services to a foreign entity if entering into such contract would
create an unacceptable cybersecurity risk for DoD. The procedures at
DFARS 225.772-3 further specify that unacceptable cybersecurity risk is
to be determined by the Under Secretary of Defense for Acquisition and
Sustainment or the Under Secretary of Defense for Policy, the two
officials to whom the statute permits delegation of the authority to
enter into a contract, subject to the prohibitions in paragraphs (a)
and (b) of the statute.
3. Satellites and Launch Vehicles. Restrictions are added at DFARS
225.772-2 and the provision at DFARS 252.225-7049 for contracts for
commercial services awarded to any entity (whether or not foreign) with
regard to the design or manufacture of the satellite to be used to
provide the services, or the launch vehicle that will be used to launch
the satellite outside the United States. These restrictions do not
apply to a launch that occurs prior to December 31, 2022, or to a
satellite service provider that has a contract or other agreement
relating to launch service that, prior to June 10, 2018, was either
fully paid for by the satellite service provider, or covered by a
legally binding commitment of the satellite service provider to pay for
such services.
4. Representations and Disclosures. The representations are
expanded to cover the new restrictions on satellites and launch
vehicles, but these new restrictions will only be applicable with
regard to commercial satellite services that will use satellites
launched or after December 31, 2022. The restriction on launch vehicles
does not apply to
[[Page 66068]]
launches within the United States. For added clarity, the disclosures
that relate to the representations are integrated into the
representations.
5. Clause. This rule creates a new clause to require compliance
during contract performance with the representations in their offer
with regard to the origin of the satellite services, satellites, and
launch vehicles.
B. Section 1296 of the NDAA for FY 2017
1. Definitions. This rule provides a definition of ``600 series of
the Commerce Control List'' and adds the definition of ``item'' with
cross-references to the EAR at 15 CFR 772.1 and ITAR at 22 CFR 120.6
and 22 CFR 120.9. The definitions already contain cross-references to
the USML at 22 CFR part 121. For increased ease of reading, the
definitions of Communist Chinese military company and ``United States
Munitions List'' are now repeated at DFARS 225.003, rather than just
providing a cross-reference at 225.770-1 to the definitions in the
clause at DFARS 252.225-7007.
2. 600 series. This rule amends DFARS 225.770 and the clause at
DFARS 252.225-7007 to extend the prohibition on acquisition of USML
items from Communist Chinese military companies to apply to items in
the 600 series of the CCL.
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold and for Commercial Items, Including Commercially Available
Off-the-Shelf Items
This rule amends the applicability of existing DFARS solicitation
provisions and contract clauses and adds a new clause as follows:
To implement section 1603 of the NDAA for FY 2018, this
rule amends the provision at DFARS 252.225-7049, Prohibition on
Acquisition of Commercial Satellite Services from Certain Foreign
Entities--Representation, and adds a clause to enforce compliance with
the representations in the associated provisions. This provision and
clause will apply to acquisitions not greater than the Simplified
Acquisition Threshold (SAT) and acquisitions of commercial items.
To implement section 1296 of the NDAA for FY 2017, this
rule modifies the clause at DFARS 252.225-7007, Prohibition on
Acquisition of United States Munitions List Items from Communist
Chinese Military Companies, to prohibit contractors or subcontractors
from acquiring items listed on the 600 series of the CCL that are to be
delivered under the contract from any Communist Chinese military
company. As a result of the Export Control Reform Initiative, certain
items were transferred from the USML to a series of new export control
classification numbers (the 600 series) in the CCL. In order to ensure
continued prohibition against purchase of items listed in the 600
series of the CCL from a Communist Chinese military company, this rule
requires use of the clause in solicitations and contracts involving the
delivery of items listed in the 600 series of the CCL, but does not
otherwise change the clause prescription. The rule continues to
prescribe the use of this clause for use in solicitations and contracts
for items valued at or below the SAT. The clause will also apply to the
acquisition of commercial items, including Commercially Available Off-
the-Shelf (COTS) items, if the items are 600 series items on the CCL,
or USML items. Although most 600 series items are not commercial items,
and USML items are even less likely to be commercial items, it is
possible that some of these covered items will be commercial items and
must not be purchased from a Communist Chinese military company.
A. Applicability to Contracts at or Below the SAT
41 U.S.C. 1905 governs the applicability of laws to contracts or
subcontracts in amounts not greater than the SAT. It is intended to
limit the applicability of laws to such contracts or subcontracts. 41
U.S.C. 1905 provides that if a provision of law contains criminal or
civil penalties, or if the Federal Acquisition Regulation (FAR) Council
makes a written determination that it is not in the best interest of
the Federal Government to exempt contracts or subcontracts at or below
the SAT, the law will apply to them. The Principal Director, Defense
Pricing and Contracting (DPC), is the appropriate authority to make
comparable determinations for regulations to be published in the DFARS,
which is part of the FAR system of regulations.
B. Applicability to Contracts for the Acquisition of Commercial Items,
Including COTS Items
41 U.S.C. 1906 governs the applicability of laws to contracts for
the acquisition of commercial items and is intended to limit the
applicability of laws to contracts for the acquisition of commercial
items. 41 U.S.C. 1906 provides that if a provision of law contains
criminal or civil penalties, or if the FAR Council makes a written
determination that it is not in the best interest of the Federal
Government to exempt commercial item contracts, the provision of law
will apply to contracts for the acquisition of commercial items.
Likewise, 41 U.S.C. 1907 governs the applicability of laws to COTS
items, with the Administrator for Federal Procurement Policy the
decision authority to determine that it is in the best interest of the
Government to apply a provision of law to acquisitions of COTS items in
the FAR. The Principal Director, DPC, is the appropriate authority to
make comparable determinations for regulations to be published in the
DFARS, which is part of the FAR system of regulations.
C. Determinations
Section 1603 of the NDAA for FY 2018. A determination and
finding was signed by the Director, Defense Procurement and Acquisition
Policy, on June 23, 2014, that due to potential risk to national
security it would not be in the best interest of the United States to
exempt acquisitions not greater than the SAT and acquisitions of
commercial items from the applicability of 10 U.S.C. 2279. Therefore, a
separate determination under 41 U.S.C. 1905-1907 is not required.
Section 1296 of the NDAA for FY 2017. A determination
under 41 U.S.C. 1905 is not required to prescribe DFARS 252.225-7012
for use in solicitations and contracts valued at or below the SAT,
because this is consistent with the current applicability of the clause
DFARS 252.225-7007, which prohibits acquisitions of items on the USML
from Communist Chinese Military companies. Modifying the clause to also
cover items listed in the 600 series of the CCL is reinstating the
prohibition that applied to those items before the items were moved off
the USML and into the 600 series of the CCL. However, in accordance
with 41 U.S.C. 1906 and 1907, the Principal Director, DPC, has
determined that it is in the best interest of the Government to apply
the requirements of section 1296 of the NDAA for FY 2017 to contracts
for the acquisition of commercial items, including COTS. This rule
prescribes the use of the clause at DFARS 252.225-7007 in contracts for
the acquisition of commercial items, if they involve the acquisition of
600 series or USML items. These items are export-controlled,
irrespective of the contracting vehicle, including commercial
contracts. The broad prohibition would be consistent with the intent of
the law, DoD policy, and our National Defense Strategy with respect to
China. The concern is with the integrity of the DoD supply chain and to
prevent insertion of malicious
[[Page 66069]]
items from China into U.S. weapons platforms, information technology
systems and other areas, presenting a threat to our warfighters and
their ability to defend U.S. national security. Further, because the
meaning of the term ``commercial'' is not aligned between contracting
and export control regulations, the disconnect could be used as a
loophole for suppliers to violate the prohibition. Therefore, exempting
contracts for the acquisition of commercial items (including COTS
items) from the statutory prohibition on the acquisition of 600 series
and USML items would severely decrease the intended effect of the
statutes and could jeopardize the integrity of the DoD supply chain.
IV. Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess
all costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). E.O.
13563 emphasizes the importance of quantifying both costs and benefits,
of reducing costs, of harmonizing rules, and of promoting flexibility.
This is a significant regulatory action and, therefore, was subject to
review under section 6(b) of E.O. 12866, Regulatory Planning and
Review, dated September 30, 1993. This rule is not a major rule under 5
U.S.C. 804.
V. Executive Order 13771
This rule is not subject to the requirements of E.O. 13771, because
the rule is issued with respect to a national security function of the
United States.
VI. Regulatory Flexibility Act
DoD does not expect this interim rule to have a significant
economic impact on a substantial number of small entities within the
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq.
However, an initial regulatory flexibility analysis has been performed
and is summarized as follows:
The reason for this rule is to implement section 1603 of the
National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2018 and
section 1296 of the NDAA for FY 2017. Section 1603 of the NDAA for FY
2018 amends 10 U.S.C. 2279, which prohibits acquisition of certain
foreign commercial satellite services. Section 1296 of the NDAA for FY
2017 amends section 1211 of the NDAA for FY 2006 to prohibit purchase
from any Communist Chinese military company, through a contract or
subcontract (at any tier), of goods and services controlled as
munitions items on the 600 series of the Commerce Control List (CCL) of
the Export Administration Regulations of the Department of Commerce.
The objectives of the rule are as follows:
Section 1603. To prohibit award of contracts for
commercial satellite services to a foreign entity if entering into such
contract would create an unacceptable cybersecurity risk. In addition,
the definition of covered foreign country is expanded to include Russia
(other covered foreign countries are China, North Korea, Iran, Sudan,
and Syria). New restrictions are also added with regard to the
satellites and launch vehicles to be used to provide the satellite
services, but these restrictions do not apply to launches that occur
prior to December 31, 2022.
Section 1296. To prohibit purchase from a Communist
Chinese military company of items that meet the definition of goods and
services controlled as munitions items when moved to the 600 series of
the CCL of the Export Administration Regulations of the Department of
Commerce.
DoD estimates that this rule will apply small entities as follows:
Section 1603. This part of the rule will apply to less
than 86 small entities. According to Federal Procurement Data System
(FPDS) data for FY 2016, 86 small entities were awarded contracts or
orders for services under Product Service Code D304 (ADP
Telecommunications and Transmission Services), of which commercial
satellite services are a subset. Although the focus of the Regulatory
Flexibility Act is protection of domestic small business entities that
are eligible for assistance from the Small Business Administration,
there may be domestic small business entities in the United States that
offer the satellite services of a foreign entity that would be
restricted by this rule.
Section 1296. This part of the rule will apply to any
small entities that intend to provide items on the 600 series of the
Commerce Control List under a DoD contract or subcontract. The 600
series consists of items on the Commerce Control List that have an
export control classification number of which the third character is a
``6''. These items were transitioned from the United States Munitions
List (USML) to the 600 series, because they have less than a critical
military or intelligence capability than the items that remain on the
USML, but they are not currently in normal commercial use. Data on the
number of entities that can provide such items, and whether they are
small or other than small entities, is not available in FPDS, because
these items are not readily identifiable in FPDS and are often acquired
through subcontracts.
Projected reporting or recordkeeping requirements of this rule are
as follows:
Section 1603.
In addition to the current annual representations as to whether the
offeror is, or is not, a foreign entity subject to the prohibitions of
the statute; or is, or is not, offering commercial satellite services
provided by such a foreign entity, this rule adds five more annual
representations as to whether the offeror--
[cir] Is, or is not offering commercial satellite services using
satellites, launched on or after December 31, 2022, that will be
designed or manufactured in a covered foreign country;
[cir] Is, or is not offering commercial satellite services using
satellites, launched on or after December 31, 2022, that will be
designed or manufactured by an entity controlled in whole or in part
by, or acting on behalf of, the government of a covered foreign
country;
[cir] Is, or is not offering commercial satellite services using
satellites, launched outside the United States on or after December 31,
2022, using a launch vehicle that is designed or manufactured in a
covered foreign country;
[cir] Is, or is not offering commercial satellite services using
satellites, launched outside the United States on or after December 31,
2022, using a launch vehicle that is provided by the government of a
covered foreign country; and
[cir] Is, or is not offering commercial satellite services using
satellites, launched outside the United States on or after December 31,
2022, using a launch vehicle that is provided by an entity controlled
in whole or in part by, or acting on behalf of, the government of a
covered foreign country.
Further information is required if the offeror provides an
affirmative response to any of the representations, but such
affirmative response and further submission is expected to be extremely
rare because of the statutory prohibition and the expected rarity of a
waiver by the Under Secretary of Defense for Acquisition and
Sustainment or for Policy. Furthermore, this prohibition is only
applicable to launches on or after December 31, 2022.
If the satellite service provider responded affirmatively to any of
the new representations regarding launch vehicles, if such launches are
covered in
[[Page 66070]]
whole or in part by a contract or other agreement relating to launch
services that, prior to June 10, 2018, was either fully paid by the
satellite service provider or covered by a legally binding commitment
of the satellite service provider to pay for such services, a de
minimis amount of information is required with regard to such contract
or agreement in order to establish an exception to the associated
prohibitions.
Section 1296. There are no projected reporting or
recordkeeping requirements relating to implementation of section 1296.
The only compliance requirements are to not purchase 600 series items
from a Communist Chinese military company.
The rule does not duplicate, overlap, or conflict with any other
Federal rules.
This rule will not have a significant economic impact on any small
entities, unless they are offering commercial satellite services
subject to the restrictions of this rule or providing 600 series items
from a Communist Chinese military company. DoD was not able to identify
any alternatives that would reduce the burden on small entities and
meet the objectives of the rule.
DoD invites comments from small business concerns and other
interested parties on the expected impact of this rule on small
entities.
DoD will also consider comments from small entities concerning the
existing regulations in subparts affected by this rule in accordance
with 5 U.S.C. 610. Interested parties must submit such comments
separately and should cite 5 U.S.C. 610 (DFARS Case 2018-D020), in
correspondence.
VII. Paperwork Reduction Act
This rule will affect the information collection requirements in
the provision at DFARS 252.225-7049, currently approved through March
31, 2021, under OMB Control Number 0704-0525, entitled Prohibition on
Acquisition of Commercial Satellite Services from Certain Foreign
Entities, in accordance with the Paperwork Reduction Act (44 U.S.C.
chapter 35). The impact, however, is negligible at this time, because
the prohibition on use of certain foreign satellites and launch
vehicles only applies to launches outside the United States on or after
December 31, 2022. The information collection will be updated to
reflect these changes when renewed in two years.
VIII. Determination To Issue an Interim Rule
A determination has been made under the authority of the Secretary
of Defense that urgent and compelling reasons exist to promulgate this
interim rule without prior opportunity for public comment. It is
critical that the DFARS is immediately revised to include the
requirements of the law.
A. Foreign Commercial Satellite Services
DoD uses commercial satellite services to increase the availability
and flexibility of military communications. Commercial satellite
services may provide access to bandwidth and services that are
unavailable through other means to support a variety of missions.
Although these are commercial services, they are still being used to
carry out military missions. Use of certain foreign commercial
satellite services and foreign launches can pose an unacceptable risk
to national security.
Section 1603 of the NDAA for FY 2018 amends 10 U.S.C. 2279 to
impose additional prohibitions with regard to acquisition of certain
foreign commercial satellite services, especially from certain
``covered foreign countries.'' Section 1603 expands the definition of
``covered foreign country'' from China, North Korea, and any country
that is a state sponsor of terrorism (10 U.S.C. 2279) to include the
Russian Federation. Section 1603 also defines ``cybersecurity risk''
and provides that DoD shall not enter into a contract for satellite
services with a foreign entity if the Secretary of Defense reasonably
believes that entering into such a contract would create an
unacceptable cybersecurity risk for DoD.
Congress enacted section 1603 in order to provide DoD, when
contracting for commercial satellite services, with tools to reduce the
perceived risk related to dealing with the Russian Federation.
Indicating increasing distrust of Russia, there have been several other
sections of the NDAAs in FY 2018 and FY 2019 placing prohibitions on
buying critical items from Russia, such as rare earth magnets,
tungsten, or telecommunications equipment or services to be used in the
DoD nuclear deterrence mission or homeland defense mission. This rule
also requires DoD not to enter into a contract for commercial satellite
services with any foreign entity if the Secretary of Defense reasonably
believes that such contract will present an unacceptable cybersecurity
risk.
Currently, there is no regulatory prohibition against contracting
with a foreign entity in which the Government of Russia has an
ownership interest that enables the government of Russia to affect
satellite operations, or a foreign entity that plans to provide
satellite services from Russia. There is also no mechanism in place
that allows the Secretary of Defense to decide not to enter into a
contract with a foreign entity based on the level or cybersecurity risk
it would create; in such instances, DoD must either accept the risk and
award the contract or cancel the solicitation.
According to data available in the Federal Procurement Data System
for fiscal year 2017, DoD awarded 3,715 contracts and orders for
commercial supplies or services under the product service code D304, IT
and Telecom--Telecommunications and Transmission, to 256 unique
entities. It is expected that a subset of these awards were for
commercial satellite services. While the universe of contracts and
entities affected by this rule is relatively small, a single contract
award to one of the foreign entities excluded by this rule could damage
our national security.
Without this rule to implement the prohibitions and limitations
provided by section 1603, there is no way for DoD contracting officers
to exclude the Russian-controlled entities, or the other foreign
entities that present and unacceptable cybersecurity risk, from
competing for or being awarded contracts for covered commercial
satellite services. This creates an opportunity for Russian
interference with DoD satellite communications and increases the risk
of cyberattacks by other foreign entities, which could jeopardize our
military communications, the lives of our warfighters, and our national
security.
B. Certain Items on the Commerce Control List
Section 1211 of the NDAA for FY 2006, prohibited purchase of items
on the United States Munitions List (USML) from a Communist Chinese
military company, in order to protect the integrity of the supply chain
for military items. Section 1296 of the NDAA for FY 2017 extends that
prohibition to cover items moved from the USML to the Commerce Control
List (CCL) of the Export Administration Regulations of the Department
of Commerce. As a result of the Export Control Reform Initiative,
beginning in 2013, certain items specially designed for military
applications have been transferred from the USML to a new category on
the CCL (the 600 series). The 600 series includes such items as F-16
wings, fins, panels, fuselages, cockpit structures, and landing gear,
and analogous items from other categories on the USML.
While helpful in facilitating cooperation with our allies and
[[Page 66071]]
partners, an unintended consequence of this export reform was that the
prohibition imposed by section 1211 of the NDAA for FY 2006 no longer
covered these items, since they were no longer on the USML. The Under
Secretary of Defense for Policy, including the Defense Technology
Security Administration, as well as the offices in the purview of the
previous Under Secretary of Defense for Acquisition, Technology, and
Logistics, the National Security staff, and others were very concerned
about potential acquisition of military components from a Communist
Chinese military company, due to potential adverse impact on the
integrity of the supply chain for major U.S. weapons systems. These
organizations, along with export control stakeholders in the
Departments of Commerce and State, were also in favor of continuing the
prohibition against purchase of military items, now controlled as 600
series items, from Communist Chinese military companies. After
consultation with the DoD Office of General Counsel, DoD determined
that the only solution was to seek legislative correction to this
problem, resulting in enactment of section 1296 of the NDAA for FY
2017.
600 series items are frequently used in DoD's weapon systems and it
is imperative that DoD ensure that the integrity of those weapon
systems is maintained by immediately restricting the purchase of these
items from Communist Chinese military companies. Until this rule is in
effect, there is no basis on which to refuse to buy items with military
applications listed in the 600 series of the CCL from a Communist
Chinese military company. Purchase of such items from a Communist
Chinese military company poses a serious risk to U.S. national
security, the safety of military personnel, and the integrity of the
U.S. defense supply chain, because according to DoD information, China
is the top source of counterfeit U.S. military electronics.
List of Subjects in 48 CFR Parts 204, 212, 225, and 252
Government procurement.
Jennifer Lee Hawes,
Regulatory Control Officer, Defense Acquisition Regulations System.
Therefore, 48 CFR parts 204, 212, 225, and 252 are amended as
follows:
0
1. The authority citation for 48 CFR parts 204, 212, 225, and 252
continues to read as follows:
Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.
PART 204--ADMINISTRATIVE MATTERS
0
2. Amend section 204.1202 by revising paragraph (2)(ix) to read as
follows:
204.1202 Solicitation provision.
* * * * *
(2) * * *
(ix) 252.225-7049, Prohibition on Acquisition of Certain Foreign
Commercial Satellite Services--Representations.
* * * * *
PART 212--ACQUISITION OF COMMERCIAL ITEMS
0
3. Amend section 212.301 by--
0
a. Redesignating paragraphs (f)(ix)(BB) and (CC) as paragraphs
(f)(ix)(CC) and (DD), respectively;
0
b. In the newly redesignated paragraph (f)(ix)(CC), removing
``Commercial Satellite Services from Certain Foreign Entities'' and
``at 225.772-5'' and adding ``Certain Foreign Commercial Satellite
Services'' and ``in 225.772-5(a)'', in their place, respectively;
0
c. Redesignating paragraphs (f)(ix)(D) through (AA) as (f)(ix)(E)
through (BB); and
0
d. Adding new paragraph (f)(ix)(D) and paragraph (f)(ix)(EE).
The additions read as follows:
212.301 Solicitation provisions and contract clauses for the
acquisition of commercial items.
* * * * *
(f) * * *
(ix) * * *
(D) Use the clause at 252.225-7007, Prohibition on Acquisition of
Certain Items from Communist Chinese Military Companies, as prescribed
in 225.1103(4), to comply with section 1211 of the National Defense
Authorization Act (NDAA) for Fiscal Year (FY) 2006 (Pub. L. 109-163) as
amended by the NDAAs for FY 2012 and FY 2017.
* * * * *
(EE) Use the clause at 252.225-7051, Prohibition on Acquisition for
Certain Foreign Commercial Satellite Services, as prescribed in
225.772-5(b), to comply with 10 U.S.C. 2279.
* * * * *
PART 225--FOREIGN ACQUISITION
0
4. Amend section 225.003 by--
0
a. Removing paragraph designations (1) through (16);
0
b. Adding, in alphabetical order, definitions for ``600 series of the
Commerce Control List'' and ``Communist Chinese military company'';
0
c. In the definition for ``Domestic concerns,'' redesignating
paragraphs (i) and (ii) as paragraphs (1) and (2);
0
d. In the definition for ``Eligible product,'' redesignating paragraphs
(i) introductory text and (i)(A) and (B) as paragraphs (1) and (1)(i)
and (ii), respectively, and paragraphs (ii) and (iii) as paragraphs (2)
through (3), respectively;
0
e. In the definitions of ``South Caucasus/Central and South Asian (SC/
CASA) state construction material'' and ``South Caucasus/Central and
South Asian (SC/CASA) state end product,'' redesignating paragraphs (i)
and (ii) as paragraphs (1) and (2);
0
f. Adding, in alphabetical order, a definition for ``United States
Munitions List''.
The additions read as follows:
225.003 Definitions.
* * * * *
600 series of the Commerce Control List means the series of 5-
character export control classification numbers (ECCNs) of the Commerce
Control List of the Export Administration Regulations in 15 CFR part
774, supplement no. 1, that have a ``6'' as the third character. The
600 series constitutes the munitions and munitions-related ECCNs within
the larger Commerce Control List. (See definition of ``600 series'' in
15 CFR 772.)
* * * * *
Communist Chinese military company means any entity, regardless of
geographic location, that is--
(1) A part of the commercial or defense industrial base of the
People's Republic of China (including a subsidiary or affiliate of such
entity); or
(2) Owned or controlled by, or affiliated with, an element of the
Government or armed forces of the People's Republic of China.
* * * * *
United States Munitions List means the munitions list of the
International Traffic in Arms Regulation in 22 CFR part 121.
0
5. Revise section 225.770 to read as follows:
225.770 Prohibition on acquisition of certain items from Communist
Chinese military companies.
This section implements section 1211 of the National Defense
Authorization Act for Fiscal Year 2006 (Pub. L. 109-163), section 1243
of the National Defense Authorization Act for Fiscal Year 2012 (Pub. L.
112-81), and section 1296 of the National Defense
[[Page 66072]]
Authorization Act for Fiscal Year 2017 (Pub. L. 114-328). See PGI
225.770 for additional information relating to this statute, the terms
used in this section, the United States Munitions List (USML), and the
600 series of the Commerce Control List (CCL).
0
6. Revise section 225.770-1 to read as follows:
225.770-1 Definitions.
As used in this section--
Component means an item that is useful only when used in
conjunction with an end item (15 CFR 772.1 and 22 CFR 120.45(b)).
Item means--
(1) A USML defense article, as defined at 22 CFR 120.6;
(2) A USML defense service, as defined at 22 CFR 120.9; or
(3) A 600 series item, as defined at 15 CFR 772.1.
Part means any single unassembled element of a major or minor
component, accessory, or attachment, that is not normally subject to
disassembly without the destruction or impairment of designed use (15
CFR 772.1 and 22 CFR 120.45(d)).
0
7. Revise section 225.770-2 to read as follows:
225.770-2 Prohibition.
Do not acquire items covered by the USML or the 600 series of the
CCL, through a contract or subcontract at any tier, from any Communist
Chinese military company. This prohibition does not apply to components
and parts of covered items unless the components and parts are
themselves covered by the USML or the 600 series of the CCL.
225.770-3 [Amended]
0
8. Amend section 225.770-3, in the introductory text, by removing
``supplies or services'' and adding ``items'' in its place.
0
9. Revise section 225.770-4 to read as follows:
225.770-4 Identifying items covered by the USML or the 600 series of
the CCL.
(a) Before issuance of a solicitation, the requiring activity will
notify the contracting officer in writing whether the items to be
acquired are covered by the USML or the 600 series of the CCL. The
notification will identify any covered item(s) and will provide the
pertinent USML reference(s) from 22 CFR part 121 or the 600 series of
the CCL references from 15 CFR part 774, supplement no. 1.
(b) The USML includes defense articles and defense services that
fall into 21 categories. The CCL includes ten categories and five
product groups in each category, many of which contain 600 series
items. Since not all items covered by the USML or 600 series of the CCL
are themselves munitions (e.g., protective personnel equipment,
military training equipment), the requiring activity should consult the
USML and the 600 series of the CCL before concluding that an item is or
is not covered. See PGI 225.770-4.
225.770-5 [Amended]
0
10. Amend section 225.770-5, in paragraph (b)(1), by removing
``Acquisition, Technology, and Logistics'' and adding ``Acquisition and
Sustainment'' in its place.
0
11. Revise section 225.772 heading to read as follows:
225.772 Prohibition on acquisition of certain foreign commercial
satellite services.
0
12. Revise section 225.772-1 to read as follows:
225.772-1 Definitions.
As used in this section--
Covered foreign country means--
(1) The People's Republic of China;
(2) North Korea;
(3) The Russian Federation; or
(4) Any country that is a state sponsor of terrorism. (10 U.S.C.
2279)
Cybersecurity risk means threats to and vulnerabilities of
information or information systems and any related consequences caused
by or resulting from unauthorized access, use, disclosure, degradation,
disruption, modification, or destruction of such information or
information systems, including such related consequences caused by an
act of terrorism. (10 U.S.C. 2279)
Foreign entity means--
(1) Any branch, partnership, group or sub-group, association,
estate, trust, corporation or division of a corporation, or
organization organized under the laws of a foreign state if either its
principal place of business is outside the United States or its equity
securities are primarily traded on one or more foreign exchanges.
(2) Notwithstanding paragraph (1) of this definition, any branch,
partnership, group or sub-group, association, estate, trust,
corporation or division of a corporation, or organization that
demonstrates that a majority of the equity interest in such entity is
ultimately owned by U.S. nationals is not a foreign entity. (31 CFR
800.212)
Government of a covered foreign country includes the state and the
government of a covered foreign country, as well as any political
subdivision, agency, or instrumentality thereof.
Launch vehicle means a fully integrated space launch vehicle. (10
U.S.C. 2279)
Satellite services means communications capabilities that utilize
an on-orbit satellite for transmitting the signal from one location to
another.
State sponsor of terrorism means a country determined by the
Secretary of State, under section 1754(c)(1)(A)(i) of the Export
Control Reform Act of 2018 (Title XVII, Subtitle B, of the National
Defense Authorization Act for Fiscal Year 2019, Pub. L. 115-232), to be
a country the government of which has repeatedly provided support for
acts of international terrorism. As of December 21, 2018, state
sponsors of terrorism include: Iran, North Korea, Sudan, and Syria. (10
U.S.C. 2327)
0
13. Revise section 225.772-2 to read as follows:
225.772-2 Prohibitions.
Except as provided in 225.772-4, the contracting officer shall not
award a contract for commercial satellite services to--
(a)(1) A foreign entity if the Under Secretary of Defense for
Acquisition and Sustainment or the Under Secretary of Defense for
Policy reasonably believes that--
(i) The foreign entity is an entity in which the government of a
covered foreign country has an ownership interest that enables the
government to affect satellite operations;
(ii) The foreign entity plans to or is expected to provide
satellite services under the contract from a covered foreign country;
or
(iii) Entering into such contract would create an unacceptable
cybersecurity risk for DoD, as determined by the Under Secretary of
Defense for Acquisition and Sustainment or the Under Secretary of
Defense for Policy; or
(2) An offeror that is offering commercial satellite services
provided by a foreign entity as described in paragraph (a) of this
section; or
(b)(1) Any entity, except as provided in paragraph (b)(2) of this
section, for a launch that occurs on or after December 31, 2022, if the
Under Secretary of Defense for Acquisition and Sustainment or the Under
Secretary of Defense for Policy reasonably believes that such satellite
services will be provided using satellites that will be--
(i) Designed or manufactured--
(A) In a covered foreign country; or
(B) By an entity controlled in whole or in part by, or acting on
behalf of, the government of a covered foreign country; or
[[Page 66073]]
(ii) Launched outside the United States using a launch vehicle that
is--
(A) Designed or manufactured in a covered foreign country; or
(B) Provided by--
(1) The government of a covered foreign country; or
(2) An entity controlled in whole or in part by, or acting on
behalf of, the government of a covered foreign country.
(2) The prohibition in paragraph (b)(1) of this section does not
apply with respect to launch services for which a satellite service
provider has a contract or other agreement that, prior to June 10,
2018, was either fully paid for by the satellite service provider or
covered by a legally binding commitment of the satellite service
provider to pay for such services.
0
14. Amend section 225.772-3 by--
0
a. Redesignating paragraphs (a) and (b) as paragraphs (b) and (c),
respectively;
0
b. In the newly redesignated paragraph (b) introductory text, removing
``paragraph (d)'' and ``Commercial Satellite Services from Certain
Foreign Entities'' and adding ``paragraph (c)'' and ``Certain Foreign
Commercial Satellite Services'' in their place, respectively; and
0
c. Adding a new paragraph (a).
The addition reads as follows:
225.772-3 Procedures.
(a)(1) The contracting officer shall not award to any source that
is a foreign satellite service provider or is offering satellite
services provided by a foreign entity if such award presents an
unacceptable cybersecurity risk, as determined by the Under Secretary
of Defense for Acquisition and Sustainment or the Under Secretary of
Defense for Policy.
(2) When procuring commercial satellite services from a foreign
entity, the contracting officer shall review the exclusion records in
the System for Award Management (SAM) database as required at FAR
9.405, to ensure that an entity identified in, or otherwise known to be
involved in, the otherwise successful offer is not listed as ineligible
in the SAM database (see FAR 9.405).
* * * * *
0
15. Amend section 225.772-4 by--
0
a. Revising paragraph (a) introductory text; and
0
b. In paragraph (a)(1), by removing ``Acquisition, Technology, and
Logistics'' and adding ``Acquisition and Sustainment'' in its place.
225.772-4 Exception.
(a) The prohibitions in 225.772-2(a) and (b) do not apply if--
* * * * *
0
16. Revise section 225.772-5 to read as follows:
225.772-5 Solicitation provision and contract clauses.
(a) Use the provision at 252.225-7049, Prohibition on Acquisition
of Certain Foreign Commercial Satellite Services--Representations, in
solicitations that include the clause at 252.225-7051, Prohibition on
Acquisition of Certain Foreign Commercial Satellite Services. If the
solicitation includes the provision at FAR 52.204-7, do not separately
list the provision 252.225-7049 in the solicitation.
(b) Use the clause at 252.225-7051, Prohibition on Acquisition of
Certain Foreign Commercial Satellite Services, in solicitations and
contracts for the acquisition of commercial satellite services,
including solicitation and contracts using FAR part 12 procedures for
the acquisition of commercial items.
(c) Use the clause at 252.239-7018, Supply Chain Risk, as
prescribed at 239.7306(b), when applicable.
0
17. Amend section 225.1103 by revising paragraph (4) to read as
follows:
225.1103 Other provisions and clauses.
* * * * *
(4) Unless an exception in 225.770-3 applies, use the clause at
252.225-7007, Prohibition on Acquisition of Certain Items from
Communist Chinese Military Companies, in solicitations and contracts
involving the delivery of items covered by the United States Munitions
List or the 600 series of the Commerce Control List.
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
252.204-7007 [Amended]
0
18. Amend section 252.204-7007 by--
0
a. Removing clause date ``(JAN 2015)'' and add ``(DEC 2018)''; and
0
b. In paragraph (d)(1)(v), by removing ``Commercial Satellite Services
from Certain Foreign Entities'' and adding ``Certain Foreign Commercial
Satellite Services'' in its place.
0
19. Revise section 252.225-7007 to read as follows:
252.225-7007 Prohibition on Acquisition of Certain Items from
Communist Chinese Military Companies.
As prescribed in 225.1103(4), use the following clause:
Prohibition on Acquisition of Certain Items From Communist Chinese
Military Companies (Dec 2018)
(a) Definitions. As used in this clause--
600 series of the Commerce Control List means the series of 5-
character export control classification numbers (ECCNs) of the
Commerce Control List of the Export Administration Regulations in 15
CFR part 774, supplement no. 1, that have a ``6'' as the third
character. The 600 series constitutes the munitions and munitions-
related ECCNs within the larger Commerce Control List. (See
definition of ``600 series'' in 15 CFR 772.)
Communist Chinese military company means any entity, regardless
of geographic location, that is--
(1) A part of the commercial or defense industrial base of the
People's Republic of China (including a subsidiary or affiliate of
such entity); or
(2) Owned or controlled by, or affiliated with, an element of
the Government or armed forces of the People's Republic of China.
Item means--
(1) A USML defense article, as defined at 22 CFR 120.6;
(2) A USML defense service, as defined at 22 CFR 120.9; or
(3) A 600 series item, as defined at 15 CFR 772.1.
United States Munitions List means the munitions list of the
International Traffic in Arms Regulation in 22 CFR part 121.
(b) Any items covered by the United States Munitions List or the
600 series of the Commerce Control List that are delivered under
this contract may not be acquired, directly or indirectly, from a
Communist Chinese military company.
(c) The Contractor shall insert the substance of this clause,
including this paragraph (c), in all subcontracts for items covered
by the United States Munitions List or the 600 series of the
Commerce Control List.
(End of clause)
0
20. Revise section 252.225-7049 to read as follows:
252.225-7049 Prohibition on Acquisition of Certain Foreign Commercial
Satellite Services--Representations.
As prescribed in 225.772-5(a), use the following provision:
Prohibition on Acquisition of Certain Foreign Commercial Satellite
Services--Representations (Dec 2018)
(a) Definitions. As used in this provision--
Covered foreign country, foreign entity, government of a covered
foreign country, launch vehicle, satellite services, and state
sponsor of terrorism are defined in the clause at Defense Federal
Acquisition Regulation Supplement (DFARS) 252.225-7051, Prohibition
on Acquisition of Certain Commercial Satellite Services.
Cybersecurity risk means threats to and vulnerabilities of
information or information systems and any related consequences
caused by or resulting from unauthorized access, use, disclosure,
degradation,
[[Page 66074]]
disruption, modification, or destruction of such information or
information systems, including such related consequences caused by
an act of terrorism. (10 U.S.C. 2279)]
(b) Prohibition on award. In accordance with 10 U.S.C. 2279,
unless an exception is determined to apply in accordance with DFARS
225.772-4, no contract for commercial satellite services may be
awarded to--
(1)(i) A foreign entity if the Under Secretary of Defense for
Acquisition and Sustainment or the Under Secretary of Defense for
Policy reasonably believes that--
(A) The foreign entity is an entity in which the government of a
covered foreign country has an ownership interest that enables the
government to affect satellite operations;
(B) The foreign entity plans to, or is expected to, provide
satellite services under the contract from a covered foreign
country; or
(C) Entering into such contract would create an unacceptable
cybersecurity risk for DoD; or
(ii) An offeror that is offering to provide the commercial
satellite services of a foreign entity as described in paragraph
(b)(1) of this provision; or
(2)(i) Any entity, except as provided in paragraph (b)(2)(ii) of
this provision, for a launch that occurs on or after December 31,
2022, if the Under Secretary of Defense for Acquisition and
Sustainment or the Under Secretary of Defense for Policy reasonably
believes that such satellite service will be provided using
satellites that will be--
(A) Designed or manufactured--
(1) In a covered foreign country; or
(2) By an entity controlled in whole or in part by, or acting on
behalf of, the government of a covered foreign country; or
(B) Launched outside the United States using a launch vehicle
that is--
(1) Designed or manufactured in a covered foreign country; or
(2) Provided by--
(i) The government of a covered foreign country; or
(ii) An entity controlled in whole or in part by, or acting on
behalf of, the government of a covered foreign country.
(ii) The prohibition in paragraph (b)(2)(i)(B) of this provision
does not apply with respect to launch vehicles for which the
satellite service provider has a contract or other agreement
relating to launch services that, prior to June 10, 2018, was either
fully paid for by the satellite service provider or covered by a
legally binding commitment of the satellite service provider to pay
for such services.
(c) Representations. The Offeror represents that--
(1) It [ ] is, [ ] is not a foreign entity in which the
government of a covered foreign country has an ownership interest
that enables the government to affect satellite operations. If
affirmative, identify the covered foreign country: ____;
(2) It [ ] is, [ ] is not a foreign entity that plans to provide
satellite services under the contract from a covered foreign
country. If affirmative, identify the covered foreign country: ____;
(3) It [ ] is, [ ] is not offering commercial satellite services
provided by a foreign entity in which the government of a covered
foreign country has an ownership interest that enables the
government to affect satellite operations. If affirmative, identify
the foreign entity and the covered foreign country: ____;
(4) It [ ] is, [ ] is not offering commercial satellite services
provided by a foreign entity that plans to or is expected to provide
satellite services under the contract from a covered foreign
country. If affirmative, identify the foreign entity and the covered
foreign country: ____;
(5) It [ ] is, [ ] is not offering commercial satellite services
that will use satellites, launched on or after December 31, 2022,
that will be designed or manufactured in a covered foreign country.
If affirmative, identify the covered foreign country: ____;
(6) It [ ] is, [ ] is not offering commercial satellite services
that will use satellites, launched on or after December 31, 2022,
that will be designed or manufactured by an entity controlled in
whole or in part by, or acting on behalf of, the government of a
covered foreign country. If affirmative, identify the entity, the
covered foreign country, and the relationship of the entity to the
government of the covered foreign country: ____;
(7) It [ ] is, [ ] is not offering commercial satellite services
that will use satellites, launched outside the United States on or
after December 31, 2022, using a launch vehicle that is designed or
manufactured in a covered foreign country. If affirmative, identify
the covered foreign country: ____;
(8) It [ ] is, [ ] is not offering commercial satellite services
that will use satellites, launched outside the United States on or
after December 31, 2022, using a launch vehicle that is provided by
the government of a covered foreign country. If affirmative,
identify the covered foreign country: ____; and
(9) It [ ] is, [ ] is not offering commercial satellite services
that will use satellites, launched outside the United States on or
after December 31, 2022, using a launch vehicle that is provided by
an entity controlled in whole or in part by, or acting on behalf of,
the government of a covered foreign country. If affirmative,
identify the entity, the covered foreign country, and the
relationship of the entity to the government of the covered foreign
country: ____;
(d) If the Offeror has responded affirmatively to any
representation in paragraphs (c)(7) through (9) of this provision,
and if such launches are covered in whole or in part by a contract
or other agreement relating to launch services that, prior to June
10, 2018, was either fully paid for by the satellite service
provider or covered by a legally binding commitment of the satellite
service provider to pay for such services, provide the following
information:
(1) The entity awarded the contract or other agreement: ____.
(2) The date the contract or other agreement was awarded: ____.
(3) The period of performance for the contract or other
agreement: ____.
(e) The representations in paragraph (c) of this provision are a
material representation of fact upon which reliance will be placed
when making award. If it is later determined that the Offeror
knowingly rendered an erroneous representation, in addition to other
remedies available to the Government, the Contracting Officer may
terminate the contract resulting from this solicitation for default.
(End of provision)
0
21. Amend section 252.225-7050 by--
0
a. Removing clause date ``(JAN 2018)'' and adding ``(DEC 2018)'' in its
place; and
0
b. In paragraph (a), revising the definition of ``State sponsor of
terrorism''.
The revision reads as follows:
252.225-7050 Disclosure of Ownership or Control by the Government of
a Country that is a State Sponsor of Terrorism.
* * * * *
(a) * * *
State sponsor of terrorism means a country determined by the
Secretary of State, under section 1754(c)(1)(A)(i) of the Export
Control Reform Act of 2018 (Title XVII, Subtitle B, of the National
Defense Authorization Act for Fiscal Year 2019, Pub. L. 115-232), to be
a country the government of which has repeatedly provided support for
acts of international terrorism. As of the date of this provision,
state sponsors of terrorism include: Iran, North Korea, Sudan, and
Syria.
* * * * *
0
22. Add section 252.225-7051 to read as follows:
252.225-7051 Prohibition on Acquisition of Certain Foreign Commercial
Satellite Services.
As prescribed in 225.772-5, use the following clause:
Prohibition on Acquisition of Certain Foreign Commercial Satellite
Services (DEC 2018)
(a) Definitions. As used in this clause--
Covered foreign country means--
(i) The People's Republic of China;
(ii) North Korea;
(iii) The Russian Federation; or
(iv) Any country that is a state sponsor of terrorism. (10
U.S.C. 2279)
Foreign entity means--
(i) Any branch, partnership, group or sub-group, association,
estate, trust, corporation or division of a corporation, or
organization organized under the laws of a foreign state if either
its principal place of business is outside the United States or its
equity securities are primarily traded on one or more foreign
exchanges.
(ii) Notwithstanding paragraph (i) of this definition, any
branch, partnership, group or sub-group, association, estate, trust,
corporation or division of a corporation, or organization that
demonstrates that a majority of the equity interest in such entity
[[Page 66075]]
is ultimately owned by U.S. nationals is not a foreign entity. (31
CFR 800.212)
Government of a covered foreign country includes the state and
the government of a covered foreign country, as well as any
political subdivision, agency, or instrumentality thereof.
Launch vehicle means a fully integrated space launch vehicle.
(10 U.S.C. 2279)
Satellite services means communications capabilities that
utilize an on-orbit satellite for transmitting the signal from one
location to another.
State sponsor of terrorism means a country determined by the
Secretary of State, under section 1754(c)(1)(A)(i) of the Export
Control Reform Act of 2018 (Title XVII, Subtitle B, of the National
Defense Authorization Act for Fiscal Year 2019, Pub. L. 115-232), to
be a country the government of which has repeatedly provided support
for acts of international terrorism. As of the date of this
provision, state sponsors of terrorism include: Iran, North Korea,
Sudan, and Syria. (10 U.S.C. 2327)
(b) Limitation. Unless specified in its offer, the Contractor
shall not provide satellite services under this contract that--
(1) Are from a covered foreign country; or
(2) Except as provided in paragraph (c) of this provision, use
satellites that will be--
(i) Designed or manufactured--
(A) In a covered foreign country; or
(B) By an entity controlled in whole or in part by, or acting on
behalf of, the government of a covered foreign country; or
(ii) Launched outside the United States using a launch vehicle
that is designed or manufactured--
(A) In a covered foreign country; or
(B) Provided by--
(1) The government of a covered foreign country;
(2) An entity controlled in whole or in part by, or acting on
behalf of, the government of a covered foreign country.
(c) Exception. The limitation in paragraph (b)(2) of this
provision shall not apply with respect to--
(1) A launch that occurs prior to December 31, 2022; or
(2) A satellite service provider that has a contract or other
agreement relating to launch services that, prior to June 10, 2018,
was either fully paid for by the satellite service provider or
covered by a legally binding commitment of the satellite service
provider to pay for such services.
(End of clause)
[FR Doc. 2018-27558 Filed 12-20-18; 8:45 am]
BILLING CODE 5001-06-P