225.7002-1 - Restrictions
(a) The following restrictions implement 10 U.S.C. 2533a (the “Berry Amendment”). Except as provided in subsection 225.7002-2 , do not acquire—
(1) Any of the following items, either as end products or components, unless the items have been grown, reprocessed, reused, or produced in the United States:
(i) Food.
(ii) Clothing and the materials and components thereof, other than sensors, electronics, or other items added to, and not normally associated with, clothing and the materials and components thereof. Clothing includes items such as outerwear, headwear, underwear, nightwear, footwear, hosiery, handwear, belts, badges, and insignia. For additional guidance and examples, see PGI 225.7002-1 (a)(1)(ii).
(iii)(A) Tents and the structural components of tents;
(B) Tarpaulins; or
(C) Covers.
(iv) Cotton and other natural fiber products.
(v) Woven silk or woven silk blends.
(vi) Spun silk yarn for cartridge cloth.
(vii) Synthetic fabric or coated synthetic fabric, including all textile fibers and yarns that are for use in such fabrics.
(viii) Canvas products.
(ix) Wool (whether in the form of fiber or yarn or contained in fabrics, materials, or manufactured articles).
(x) Any item of individual equipment (Product or Service Code (PSC) 8465) manufactured from or containing any of the fibers, yarns, fabrics, or materials listed in this paragraph (a)(1).
(2) Hand or measuring tools, unless the tools were produced in the United States. For additional guidance, see PGI 225.7002-1 (a)(2).
(b) In accordance with section 8123 of the Department of Defense Appropriations Act, 2014 (Pub. L. 113-76, division C, title VIII), and the same provision in subsequent Defense appropriations acts, except as provided in 225.7002-2 , do not acquire a flag of the United States (PSC 8345), unless such flag, including the materials and components thereof, is manufactured in the United States, consistent with the requirements at10 U.S.C. 2533a. This restriction does not apply to the acquisition of any end-items or components related to flying or displaying the flag (e.g., flag poles and accessories).

225.7002-3 - Contract clauses
Unless an exception at 225.7002-2 applies—
(a) Use the clause at 252.225-7012 , Preference for Certain Domestic Commodities, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items.
(b) Use the clause at 252.225-7015 , Restriction on Acquisition of Hand or Measuring Tools, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, that exceed the simplified acquisition threshold that require delivery of hand or measuring tools.
(c) Use the clause at 252.225-7006 , Acquisition of the American Flag, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, that are for the acquisition of the American flag, with an estimated value that exceeds the simplified acquisition threshold.

225.7003-1 - Definitions
As used in this section—
“Alloy” means a metal consisting of a mixture of a basic metallic element and one or more metallic, or non-metallic, alloying elements.
(1) For alloys named by a single metallic element (e.g., titanium alloy), it means that the alloy contains 50 percent or more of the named metal (by mass).
(2) If two metals are specified in the name (e.g., nickel-iron alloy), those metals are the two predominant elements in the alloy, and together they constitute 50 percent or more of the alloy (by mass).
“Automotive item”—
(1) Means a self-propelled military transport tactical vehicle, primarily intended for use by military personnel or for carrying cargo, such as—
(i) A high-mobility multipurpose wheeled vehicle;
(ii) An armored personnel carrier; or
(iii) A troop/cargo-carrying truckcar, truck, or van; and
(2) Does not include—
(i) A commercially available off-the-shelf vehicle; or
(ii) Construction equipment (such as bulldozers, excavators, lifts, or loaders) or other self-propelled equipment (such as cranes or aircraft ground support equipment).
“Commercial derivative military article” means an item acquired by the Department of Defense that is or will be produced using the same production facilities, a common supply chain, and the same or similar production processes that are used for the production of articles predominantly used by the general public or by nongovernmental entities for purposes other than governmental purposes.
“Electronic component” means an item that operates by controlling the flow of electrons or other electrically charged particles in circuits, using interconnections of electrical devices such as resistors, inductors, capacitors, diodes, switches, transistors, or integrated circuits. The term does not include structural or mechanical parts of an assembly containing an electronic component and does not include any high performance magnets that may be used in the electronic component.
“High performance magnet” means a permanent magnet that obtains a majority of its magnetic properties from rare earth metals (such as samarium).
“Produce” means—
(1) Atomization;
(2) Sputtering; or
(3) Final consolidation of non-melt derived metal powders.
“Specialty metal” means—
(1) Steel—
(i) With a maximum alloy content exceeding one or more of the following limits: manganese, 1.65 percent; silicon, 0.60 percent; or copper, 0.60 percent; or
(ii) Containing more than 0.25 percent of any of the following elements: aluminum, chromium, cobalt, molybdenum, nickel, niobium (columbium), titanium, tungsten, or vanadium;
(2) Metal alloys consisting of—
(i) Nickel or iron-nickel alloys that contain a total of alloying metals other than nickel and iron in excess of 10 percent; or
(ii) Cobalt alloys that contain a total of alloying metals other than cobalt and iron in excess of 10 percent;
(3) Titanium and titanium alloys; or
(4) Zirconium and zirconium alloys.
“Steel” means an iron alloy that includes between .02 and 2 percent carbon and may include other elements.

225.7003-2 - Restrictions
(a) The following restrictions implement 10 U.S.C. 2533b. Except as provided in 225.7003-3 —
(1) Do not acquire the following items, or any components of the following items, unless any specialty metals contained in the items or components are melted or produced in the United States (also see guidance at PGI 225.7003-2 (a)):
(i) Aircraft.
(ii) Missile or space systems.
(iii) Ships.
(iv) Tank or automotive items.
(v) Weapon systems.
(vi) Ammunition.
(2) Do not acquire a specialty metal (e.g., raw stock, including bar, billet, slab, wire, plate, and sheet; castings; and forgings) as an end item, unless the specialty metal is melted or produced in the United States. This restriction applies to specialty metal acquired by a contractor for delivery to DoD as an end item, in addition to specialty metal acquired by DoD directly from the entity that melted or produced the specialty metal.
(b) For more information on specialty metals restrictions and reporting of noncompliances, see http://www.acq.osd.mil/dpap/cpic/ic/restrictions_on_specialty_metals_10_usc_2533b.html.

225.7003-3 - Exceptions
(a) Acquisitions in the following categories are not subject to the restrictions in 225.7003-2 :
(1) Acquisitions at or below the simplified acquisition threshold.
(2) Acquisitions outside the United States in support of combat operations.
(3) Acquisitions in support of contingency operations.
(4) Acquisitions for which the use of other than competitive procedures has been approved on the basis of unusual and compelling urgency in accordance with FAR 6.302-2.
(5) Acquisitions of items specifically for commissary resale.
(6) Acquisitions of items for test and evaluation under the foreign comparative testing program (10 U.S.C. 2350a(g)). However, this exception does not apply to any acquisitions under follow-on production contracts.
(b) One or more of the following exceptions may apply to an end item or component that includes any of the following, under a prime contract or subcontract at any tier. The restrictions in 225.7003-2 do not apply to the following:
(1) Electronic components, unless the Secretary of Defense, upon the recommendation of the Strategic Materials Protection Board pursuant to 10 U.S.C. 187, determines that the domestic availability of a particular electronic component is critical to national security.
(2)(i) Commercially available off-the-shelf (COTS) items containing specialty metals, except the restrictions do apply to contracts or subcontracts for the acquisition of—
(A) Specialty metal mill products, such as bar, billet, slab, wire, plate, and sheet, that have not been incorporated into end items, subsystems, assemblies, or components. Specialty metal supply contracts issued by COTS producers are not subcontracts for the purposes of this exception;
(B) Forgings or castings of specialty metals, unless the forgings or castings are incorporated into COTS end items, subsystems, or assemblies;
(C) Commercially available high performance magnets that contain specialty metal, unless such high performance magnets are incorporated into COTS end items or subsystems (see PGI 225.7003-3 (b)(6) for a table of applicability of specialty metals restrictions to magnets); and
(D) COTS fasteners, unless—
(1) The fasteners are incorporated into COTS end items, subsystems, or assemblies; or
(2) The fasteners qualify for the commercial item exception in paragraph (b)(3) of this subsection.
(ii) If this exception is used for an acquisition of COTS end items valued at $5 million or more per item, the acquiring department or agency shall submit an annual report to the Director, Defense Procurement and Acquisition Policy, in accordance with the procedures at PGI 225.7003-3 (b)(2).

(3) Fasteners that are commercial items and are acquired under a contract or subcontract with a manufacturer of such fasteners, if the manufacturer has certified that it will purchase, during the relevant calendar year, an amount of domestically melted or produced specialty metal, in the required form, for use in the production of fasteners for sale to DoD and other customers, that is not less than 50 percent of the total amount of the specialty metal that the manufacturer will purchase to carry out the production of such fasteners for all customers.
(4) Items listed in 225.7003-2 (a), manufactured in a qualifying country or containing specialty metals melted or produced in a qualifying country.
(5) Specialty metal in any of the items listed in 225.7003-2 if the USD(A&S), or an official authorized in accordance with paragraph (b)(5)(i) of this subsection, determines that specialty metal melted or produced in the United States cannot be acquired as and when needed at a fair and reasonable price in a satisfactory quality, a sufficient quantity, and the required form (i.e., a domestic nonavailability determination). In accordance with 10 U.S.C. 2533b(m)(4), the term “required form” in this section refers to the form of the mill product, such as bar, billet, wire, slab, plate, or sheet, in the grade appropriate for the production of a finished end item to be delivered to the Government under this contract; or a finished component assembled into an end item to be delivered to the Government under the contract. See guidance in PGI 225.7003-3 (b)(5).
(i) The Secretary of the military department concerned is authorized, without power of redelegation, to make a domestic nonavailability determination that applies to only one contract. The supporting documentation for the determination shall include—
(A) An analysis of alternatives that would not require a domestic nonavailability determination; and
(B) Written documentation by the requiring activity, with specificity, why such alternatives are unacceptable.
(ii) A domestic nonavailability determination that applies to more than one contract (i.e., a class domestic nonavailability determination), requires the approval of the USD(A&S).
(A) At least 30 days before making a domestic nonavailability determination that would apply to more than one contract, the USD(A&S) will, to the maximum extent practicable, and in a manner consistent with the protection of national security and confidential business information—
(1) Publish a notice on the Federal Business Opportunities website (www.FedBizOpps.gov or any successor site) of the intent to make the domestic nonavailability determination; and
(2) Solicit information relevant to such notice from interested parties, including producers of specialty metal mill products.
(B) The USD(A&S)—
(1) Will take into consideration all information submitted in response to the notice in making a class domestic nonavailability determination;
(2) May consider other relevant information that cannot be made part of the public record consistent with the protection of national security information and confidential business information; and
(3) Will ensure that any such domestic nonavailability determination and the rationale for the determination are made publicly available to the maximum extent consistent with the protection of national security and confidential business information.

(6) End items containing a minimal amount of otherwise noncompliant specialty metals (i.e., specialty metals not melted or produced in the United States that are not covered by another exception listed in this paragraph (b)), if the total weight of noncompliant specialty metal does not exceed 2 percent of the total weight of all specialty metal in the end item. This exception does not apply to high performance magnets containing specialty metals. See PGI 225.7003-3 (b)(6) for a table of applicability of specialty metals restrictions to magnets.
(c) Compliance for commercial derivative military articles. The restrictions at 225.7003-2 (a) do not apply to an item acquired under a prime contract if—
(1) The offeror has certified, and subsequently demonstrates, that the offeror and its subcontractor(s) will individually or collectively enter into a contractual agreement or agreements to purchase a sufficient quantity of domestically melted or produced specialty metal in accordance with the provision at 252.225-7010 ; and
(2) The USD(A&S), or the Secretary of the military department concerned, determines that the item is a commercial derivative military article (defense agencies see procedures at PGI 225.7003-3 (c)). The contracting officer shall submit the offeror’s certification and a request for a determination to the appropriate official, through agency channels, and shall notify the offeror when a decision has been made.
(d) National security waiver. The USD(A&S) may waive the restrictions at 225.7003-2 if the USD(A&S) determines in writing that acceptance of the item is necessary to the national security interests of the United States (see procedures at PGI 225.7003-3 (d)). This authority may not be delegated.
(1) The written determination of the USD(A&S)—
(i) Shall specify the quantity of end items to which the national security waiver applies;
(ii) Shall specify the time period over which the national security waiver applies; and
(iii) Shall be provided to the congressional defense committees before the determination is executed, except that in the case of an urgent national security requirement, the determination may be provided to the congressional defense committees up to 7 days after it is executed.
(2) After making such a determination, the USD(A&S) will—
(i) Ensure that the contractor or subcontractor responsible for the noncompliant specialty metal develops and implements an effective plan to ensure future compliance; and
(ii) Determine whether or not the noncompliance was knowing and willful. If the USD(A&S) determines that the noncompliance was knowing and willful, the appropriate debarring and suspending official shall consider suspending or debarring the contractor or subcontractor until such time as the contractor or subcontractor has effectively addressed the issues that led to the noncompliance.
(3) Because national security waivers will only be granted when the acquisition in question is necessary to the national security interests of the United States, the requirement for a plan will be applied as a condition subsequent, and not a condition precedent, to the granting of a waiver.

225.7003-4 - Reserved


225.7003-5 - Solicitation provision and contract clauses
(a) Unless the acquisition is wholly exempt from the specialty metals restrictions at 225.7003-2 because the acquisition is covered by an exception in 225.7003-3 (a) or (d) (but see paragraph (d) of this subsection)—
(1) Use the clause at 252.225-7008 , Restriction on Acquisition of Specialty Metals, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, that—
(i) Exceed the simplified acquisition threshold; and
(ii) Require the delivery of specialty metals as end items.
(2) Use the clause at 252.225-7009 , Restriction on Acquisition of Certain Articles Containing Specialty Metals, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, that—
(i) Exceed the simplified acquisition threshold; and
(ii) Require delivery of any of the following items, or components of the following items, if such items or components contain specialty metal:
(A) Aircraft.
(B) Missile or space systems.
(C) Ships.
(D) Tank or automotive items.
(E) Weapon systems.
(F) Ammunition.
(b) Use the provision at 252.225-7010 , Commercial Derivative Military Article—Specialty Metals Compliance Certificate, in solicitations, including solicitations using FAR part 12 procedures for the acquisition of commercial items,—
(1) That contain the clause at 252.225-7009 ; and
(2) For which the contracting officer anticipates that one or more offers of commercial derivative military articles may be received.
(c) If an agency cannot reasonably determine at time of acquisition whether some or all of the items will be used in support of combat operations or in support of contingency operations, the contracting officer should not rely on the exception at 225.7003-3 (a)(2) or (3), but should include the appropriate specialty metals clause or provision in the solicitation and contract.
(d) If the solicitation and contract require delivery of a variety of contract line items containing specialty metals, but only some of the items are subject to domestic specialty metals restrictions, identify in the Schedule those items that are subject to the restrictions.

225.7004-1 - Restriction
In accordance with 10 U.S.C. 2534, do not acquire a multipassenger motor vehicle (bus) unless it is manufactured in the United States, Australia, Canada, or the United Kingdom.

225.7004-2 - Applicability
Apply this restriction if the buses are purchased, leased, rented, or made available under contracts for transportation services.

225.7005-1 - Restriction.
In accordance with 10 U.S.C. 2534, do not acquire chemical weapons antidote contained in automatic injectors, or the components for such injectors, unless the chemical weapons antidote or component is manufactured in the United States or Canada by a company that—
(a) Has received all required regulatory approvals; and
(b) Has the plant, equipment, and personnel to perform the contract in the United States or Canada at the time of contract award.

225.7006-4 - Solicitation provision and contract clause
(a) Use the provision at 252.225-7037 , Evaluation of Offers for Air Circuit Breakers, in solicitations, including solicitations using FAR part 12 procedures for the acquisition of commercial items, that require air circuit breakers for naval vessels unless—
(1) An exception applies; or
(2) A waiver has been granted.
(b) Use the clause at 252.225-7038 , Restriction on Acquisition of Air Circuit Breakers, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, that require air circuit breakers for naval vessels unless—
(1) An exception at 225.7006-2 applies; or
(2) A waiver has been granted.

225.7007-2 - Waiver
(a) The Secretary of the department responsible for acquisition may waive the restriction in 225.7007-1 (a), on a case-by-case basis, if—
(1) Sufficient domestic suppliers are not available to meet DoD requirements on a timely basis; and
(2) The acquisition is necessary to acquire capability for national security purposes.
(b) Document the waiver in a written determination and findings containing—
(1) The factors supporting the waiver; and
(2) A certification that the acquisition must be made in order to acquire capability for national security purposes.
(c) Provide a copy of the determination and findings to the House and Senate Committees on Appropriations.

225.7008 - Waiver of restrictions of 10 U.S.C. 2534
When specifically authorized by reference elsewhere in this subpart, the restrictions on certain foreign purchases under 10 U.S.C. 2534(a) may be waived as follows:
(a) (1) The Under Secretary of Defense (Acquisition and Sustainment) (USD(A&S)), without power of delegation, may waive a restriction for a particular item for a particular foreign country upon determination that—
(i) United States producers of the item would not be jeopardized by competition from a foreign country, and that country does not discriminate against defense items produced in the United States to a greater degree than the United States discriminates against defense items produced in that country; or
(ii) Application of the restriction would impede cooperative programs entered into between DoD and a foreign country, or would impede the reciprocal procurement of defense items under a memorandum of understanding providing for reciprocal procurement of defense items under 225.872 , and that country does not discriminate against defense items produced in the United States to a greater degree than the United States discriminates against defense items produced in that country.
(2) A notice of the determination to exercise the waiver authority shall be published in the Federal Register and submitted to the congressional defense committees at least 15 days before the effective date of the waiver.
(3) The effective period of the waiver shall not exceed 1 year.
(4) For contracts entered into prior to the effective date of a waiver, provided adequate consideration is received to modify the contract, the waiver shall be applied as directed or authorized in the waiver to—
(i) Subcontracts entered into on or after the effective date of the waiver; and
(ii) Options for the procurement of items that are exercised after the effective date of the waiver, if the option prices are adjusted for any reason other than the application of the waiver.
(b) The head of the contracting activity may waive a restriction on a case-by-case basis upon execution of a determination and findings that any of the following applies:
(1) The restriction would cause unreasonable delays.
(2) Satisfactory quality items manufactured in the United States, Australia, or Canada, or the United Kingdom are not available.
(3) Application of the restriction would result in the existence of only one source for the item in the United States, Australia, or Canada, or the United Kingdom.
(4) Application of the restriction is not in the national security interests of the United States.
(5) Application of the restriction would adversely affect a U.S. company.
(c) A restriction is waived when it would cause unreasonable costs. The cost of an item of U.S., Australian, Canadian, or United Kingdom origin is unreasonable if it exceeds 150 percent of the offered price, inclusive of duty, of items that are not of U.S., Australian, Canadian, or United Kingdom origin.

225.7011-1 - Restriction
(a) In accordance with Section 8111 of the Fiscal Year 1992 DoD Appropriations Act (Pub. L. 102-172) and similar sections in subsequent DoD appropriations acts, do not acquire any of the following types of carbon, alloy, or armor steel plate for use in a Government-owned facility or a facility under the control of (e.g., leased by) DoD, unless it is melted and rolled in the United States or Canada:
(1) Carbon, alloy, or armor steel plate in Federal Supply Class 9515.
(2) Carbon, alloy, or armor steel plate described by specifications of the American Society for Testing Materials or the American Iron and Steel Institute.
(b) This restriction—
(1) Applies to the acquisition of carbon, alloy, or armor steel plate as a finished steel mill product that may be used “as is” or may be used as an intermediate material for the fabrication of an end product; and
(2) Does not apply to the acquisition of an end product (e.g., a machine tool), to be used in the facility, that contains carbon, alloy, or armor steel plate as a component.

225.7011-2 - Waiver
The Secretary of the department responsible for acquisition may waive this restriction, on a case-by-case basis, by certifying to the House and Senate Committees on Appropriations that—
(a) Adequate U.S. or Canadian supplies are not available to meet DoD requirements on a timely basis; and
(b) The acquisition must be made in order to acquire capability for national security purposes.

225.7011-3 - Contract clause
Unless a waiver has been granted, use the clause at 252.225-7030 , Restriction on Acquisition of Carbon, Alloy, and Armor Steel Plate, in solicitations and contracts that—
(a) Require the delivery to the Government of carbon, alloy, or armor steel plate that will be used in a Government-owned facility or a facility under the control of DoD; or
(b) Require contractors operating in a Government-owned facility or a facility under the control of DoD to purchase carbon, alloy, or armor steel plate.

225.7013 - Restrictions on construction or repair of vessels in foreign shipyards
In accordance with 10 U.S.C. 7309 and 7310—
(a) Do not award a contract to construct in a foreign shipyard—
(1) A vessel for any of the armed forces; or
(2) A major component of the hull or superstructure of a vessel for any of the armed forces; and
(b) Do not overhaul, repair, or maintain in a foreign shipyard, a naval vessel (or any other vessel under the jurisdiction of the Secretary of the Navy) homeported in the United States. This restriction does not apply to voyage repairs.

225.7017-4 - Solicitation provision and contract clause
(a)(1) Use the clause at 252.225-7017 , Photovoltaic Devices, in solicitations, including solicitations using FAR part 12 procedures for the acquisition of commercial items, for a contract expected to exceed the simplified acquisition threshold that may be a covered contract, i.e., an energy savings performance contract, a utility service contract, or a private housing contract awarded by DoD, if such contract will result in DoD ownership of photovoltaic devices, by means other than DoD purchase as end products.
(2) Use the clause in the resultant contract, including contracts using FAR part 12 procedures for the acquisition of commercial items, if it is a covered contract.
(b) Use the provision at 252.225-7018 , Photovoltaic Devices—Certificate, in solicitations, including solicitations using FAR part 12 procedures for the acquisition of commercial items, that contain the clause at 252.225-7017 .

225.7018-1 - Definitions
As used in this section—
“Covered country” means—
(1) The Democratic People’s Republic of North Korea;
(2) The People’s Republic of China;
(3) The Russian Federation; or
(4) The Islamic Republic of Iran.
“Covered material” means—
(1) Samarium-cobalt magnets;
(2) Neodymium-iron-boron magnets;
(3) Tungsten metal powder; and
(4) Tungsten heavy alloy or any finished or semi-finished component containing tungsten heavy alloy.
“Electronic device” means an item that operates by controlling the flow of electrons or other electrically charged particles in circuits, using interconnections such as resistors, inductors, capacitors, diodes, switches, transistors, or integrated circuits.
“Tungsten heavy alloy” means a tungsten base pseudo alloy that—
(1) Meets the specifications of ASTM B777 or SAE-AMS-T-21014 for a particular class of tungsten heavy alloy; or
(2) Contains at least 90 percent tungsten in a matrix of other metals (such as nickel-iron or nickel-copper) and has density of at least 16.5 g/cm3).

225.7100 - Scope of subpart
This subpart contains foreign product restrictions that are based on policies designed to protect the defense industrial base.

225.7101 - Definitions
“Component” and “domestic manufacture,” as used in this subpart, are defined in the clause at 252.225-7025 , Restriction on Acquisition of Forgings.

225.7102 - Forgings


225.7102-1 - Policy
When acquiring the following forging items, whether as end items or components, acquire items that are of domestic manufacture to the maximum extent practicable:

225.7102-2 - Exceptions
The policy in 225.7102-1 does not apply to acquisitions—
(a) Using simplified acquisition procedures, unless the restricted item is the end item being purchased;
(b) Overseas for overseas use; or
(c) When the quantity acquired exceeds the amount needed to maintain the U.S. defense mobilization base (provided the excess quantity is an economical purchase quantity). The requirement for domestic manufacture does not apply to the quantity above that required to maintain the base, in which case, qualifying country sources may compete.

225.7102-3 - Waiver
Upon request from a contractor, the contracting officer may waive the requirement for domestic manufacture of the items listed in 225.7102-1 .

225.7102-4 - Contract clause
Use the clause at 252.225-7025 , Restriction on Acquisition of Forgings, in solicitations and contracts, unless—
(a) The supplies being acquired do not contain any of the items listed in 225.7102-1 ; or
(b) An exception in 225.7102-2 applies. If an exception applies to only a portion of the acquisition, specify the excepted portion in the solicitation and contract.

225.7204 - Solicitation provision and contract clauses
Except for acquisitions described in 225.7202 —
(a) Use the provision at 252.225-7003 , Report of Intended Performance Outside the United States and Canada—Submission with Offer, in solicitations with a value exceeding $13.5 million; and
(b) Use the clause at 252.225-7004 , Report of Intended Performance Outside the United States and Canada—Submission after Award, in solicitations and contracts with a value exceeding $13.5 million.

225.7300 - Scope of subpart
(a) This subpart contains policies and procedures for acquisitions for foreign military sales (FMS) under the Arms Export Control Act (22 U.S.C. Chapter 39). Section 22 of the Arms Export Control Act (22 U.S.C. 2762) authorizes DoD to enter into contracts for resale to foreign countries or international organizations.
(b) This subpart does not apply to—
(1) FMS made from inventories or stocks;
(2) Acquisitions for replenishment of inventories or stocks; or
(3) Acquisitions made under DoD cooperative logistic supply support arrangements.

225.7301 - General
(a) The U.S. Government sells defense articles and services to foreign governments or international organizations through FMS agreements. The agreement is documented in a Letter of Offer and Acceptance (LOA) (see the Defense Security Cooperation Agency (DSCA) Security Assistance Management Manual (DSCA 5105.38-M)).
(b) Conduct FMS acquisitions under the same acquisition and contract management procedures used for other defense acquisitions.
(c) Follow the additional procedures at PGI 225.7301 (c) for preparation of solicitations and contracts that include FMS requirements.
(d) See 229.170 for policy on contracts financed under U.S. assistance programs that involve payment of foreign country value added taxes or customs duties.

225.7301-1 - Requirement to use firm-fixed-price contracts
(a) Requirement. In accordance with section 830 of the National Defense Authorization Act for Fiscal Year 2017 (Pub. L. 114-328), a firm-fixed-price contract shall be used for FMS, unless the foreign country that is the counterparty to FMS—
(1) Has established in writing a preference for a different contract type; or
(2) Requests in writing that a different contract type be used for a specific FMS. See PGI 217.202 (2) on the use of priced options for FMS requirements.
(b) Waiver. The requirement in paragraph (a) of this section may be waived, if the chief of the contracting office determines, on a case-by-case basis, that a different contract type is in the best interest of the United States and American taxpayers.

225.7301-2 - Solicitation approval for sole source contracts
The contracting officer shall coordinate through agency channels with the Principal Director, Defense Pricing and Contracting, prior to issuing a solicitation for a firm-fixed-price sole source contract type for U.S./FMS combined requirements for a major system that has an estimated contract value that exceeds $500 million. See also 201.170 and PGI 216.403-1 (1)(ii)(B) and (C).

225.7302 - Preparation of letter of offer and acceptance
For FMS programs that will require an acquisition, the contracting officer shall assist the DoD implementing agency responsible for preparing the Letter of Offer and Acceptance (LOA) by—
(1) Working with prospective contractors to—
(i) Identify, in advance of the LOA, any unusual provisions or deviations (such as those requirements for Pseudo LOAs identified at PGI 225.7301 );
(ii) Advise the contractor if the DoD implementing agency expands, modifies, or does not accept any key elements of the prospective contractor’s proposal;
(iii) Identify any logistics support necessary to perform the contract (such as those requirements identified at PGI 225.7301 ); and
(iv) For noncompetitive acquisitions over $10,000, ask the prospective contractor for information on price, delivery, and other relevant factors. The request for information shall identify the fact that the information is for a potential foreign military sale and shall identify the foreign customer; and
(2) Working with the DoD implementing agency responsible for preparing the LOA, as specified in PGI 225.7302 .

225.7303 - Pricing acquisitions for FMS
(a) Price FMS contracts using the same principles used in pricing other defense contracts. However, application of the pricing principles in FAR Parts 15 and 31 to an FMS contract may result in prices that differ from other defense contract prices for the same item due to the considerations in this section.
(b) If the foreign government has conducted a competition resulting in adequate price competition (see FAR 15.403-1(b)(1)), the contracting officer shall not require the submission of certified cost or pricing data. The contracting officer should consult with the foreign government through security assistance personnel to determine if adequate price competition has occurred.

225.7303-1 - Contractor sales to other foreign customers
If the contractor has made sales of the item required for the foreign military sale to foreign customers under comparable conditions, including quantity and delivery, price the FMS contract in accordance with FAR Part 15.

225.7303-2 - Cost of doing business with a foreign government or an international organization
(a) In pricing FMS contracts where non-U.S. Government prices as described in 225.7303-1 do not exist, except as provided in 225.7303-5, recognize the reasonable and allocable costs of doing business with a foreign government or international organization, even though such costs might not be recognized in the same amounts in pricing other defense contracts. Examples of such costs include, but are not limited to, the following:
(1) Selling expenses (not otherwise limited by FAR Part 31), such as -
(i) Maintaining international sales and service organizations;
(ii) Sales commissions and fees in accordance with FAR Subpart 3.4;
(iii) Sales promotions, demonstrations, and related travel for sales to foreign governments. Section 126.8 of the International Traffic in Arms Regulations (22 CFR 126.8) may require Government approval for these costs to be allowable, in which case the appropriate Government approval shall be obtained; and
(iv) Configuration studies and related technical services undertaken as a direct selling effort to a foreign country.
(2) Product support and post-delivery service expenses, such as -
(i) Operations or maintenance training, training or tactics films, manuals, or other related data; and
(ii) Technical field services provided in a foreign country related to accident investigations, weapon system problems, or operations/tactics enhancement, and related travel to foreign countries.
(3) Offsets. For additional information see 225.7306.
(i) An offset agreement is the contractual arrangement between the FMS customer and the U.S. defense contractor that identifies the offset obligation imposed by the FMS customer that has been accepted by the U.S. defense contractor as a condition of the FMS customer's purchase. These agreements are distinct and independent of the LOA and the FMS contract. Further information about offsets and LOAs may be found in the Defense Security Cooperation Agency (DSCA) Security Assistance Management Manual (DSCA 5105.38-M), chapter 6, paragraph 6.3.9. (http://samm.dsca.mil/chapter/chapter-6).
(ii) A U.S. defense contractor may recover all costs incurred for offset agreements with a foreign government or international organization if the LOA is financed wholly with foreign government or international organization customer cash or repayable foreign military finance credits.
(iii) The U.S. Government assumes no obligation to satisfy or administer the offset agreement or to bear any of the associated costs.
(iv) Indirect offset costs are deemed reasonable for purposes of FAR parts 15 and 31 with no further analysis necessary on the part of the contracting officer, provided that the U.S. defense contractor submits to the contracting officer a signed offset agreement or other documentation showing that the FMS customer has made the provision of an indirect offset a condition of the FMS acquisition. FMS customers are placed on notice through the LOA that indirect offset costs are deemed reasonable without any further analysis by the contracting officer.
(4) Costs that are the subject of advance agreement under the appropriate provisions of FAR part 31; or where the advance understanding places a limit on the amounts of cost that will be recognized as allowable in defense contract pricing, and the agreement contemplated that it will apply only to DoD contracts for the U.S. Government's own requirement (as distinguished from contracts for FMS).
(b) Costs not allowable under FAR Part 31 are not allowable in pricing FMS contracts, except as noted in paragraphs (c) and (e) of this subsection.
(c) The limitations for major contractors on independent research and development and bid and proposal (IR&D/B&P) costs for projects that are of potential interest to DoD, in 231.205-18(c)(iii), do not apply to FMS contracts, except as provided in 225.7303-5. The allowability of IR&D/B&P costs on contracts for FMS not wholly paid for from funds made available on a nonrepayable basis is limited to the contract's allocable share of the contractor's total IR&D/B&P expenditures. In pricing contracts for such FMS -
(1) Use the best estimate of reasonable costs in forward pricing; and
(2) Use actual expenditures, to the extent that they are reasonable, in determining final cost.
(d) Under paragraph (e)(1)(A) of Section 21 of the Arms Export Control Act (22 U.S.C. 2761), the United States must charge for administrative services to recover the estimated cost of administration of sales made under the Army Export Control Act.
(e) The limitations in 231.205-1 on allowability of costs associated with leasing Government equipment do not apply to FMS contracts.

225.7303-3 - Government-to-government agreements
If a government-to-government agreement between the United States and a foreign government for the sale, coproduction, or cooperative logistic support of a specifically defined weapon system, major end item, or support item, contains language in conflict with the provisions of this section, the language of the government-to-government agreement prevails.

225.7303-4 - Contingent fees
(a) Except as provided in paragraph (b) of this subsection, contingent fees are generally allowable under DoD contracts, provided—
(1) The fees are paid to a bona fide employee or a bona fide established commercial or selling agency maintained by the prospective contractor for the purpose of securing business (see FAR Part 31 and FAR Subpart 3.4); and
(2) The contracting officer determines that the fees are fair and reasonable.
(b)(1) Under DoD 5105.38-M, LOAs for requirements for the governments of Australia, Taiwan, Egypt, Greece, Israel, Japan, Jordan, Republic of Korea, Kuwait, Pakistan, Philippines, Saudi Arabia, Turkey, Thailand, or Venezuela (Air Force) shall provide that all U.S. Government contracts resulting from the LOAs prohibit the reimbursement of contingent fees as an allowable cost under the contract, unless the contractor identifies the payments and the foreign customer approves the payments in writing before contract award (see 225.7307 (a)).
(2) For FMS to countries not listed in paragraph (b)(1) of this subsection, contingent fees exceeding $50,000 per FMS case are unallowable under DoD contracts, unless the contractor identifies the payment and the foreign customer approves the payment in writing before contract award.

225.7303-5 - Acquisitions wholly paid for from nonrepayable funds
(a) In accordance with 22 U.S.C. 2762(d), price FMS wholly paid for from funds made available on a nonrepayable basis on the same costing basis with regard to profit, overhead, IR&D/B&P, and other costing elements as is applicable to acquisitions of like items purchased by DoD for its own use.
(b) Direct costs associated with meeting a foreign customer’s additional or unique requirements are allowable under such contracts. Indirect burden rates applicable to such direct costs are permitted at the same rates applicable to acquisitions of like items purchased by DoD for its own use.
(c) A U.S. defense contractor may not recover costs incurred for offset agreements with a foreign government or international organization if the LOA is financed with funds made available on a nonrepayable basis.

225.7304 - FMS customer involvement
(a) FMS customers may request that a defense article or defense service be obtained from a particular contractor. In such cases, FAR 6.302-4 provides authority to contract without full and open competition. The FMS customer may also request that a subcontract be placed with a particular firm. The contracting officer shall honor such requests from the FMS customer only if the LOA or other written direction sufficiently fulfills the requirements of FAR Subpart 6.3.
(b) FMS customers should be encouraged to participate with U.S. Government acquisition personnel in discussions with industry to—
(1) Develop technical specifications;
(2) Establish delivery schedules;
(3) Identify any special warranty provisions or other requirements unique to the FMS customer; and
(4) Review prices of varying alternatives, quantities, and options needed to make price-performance tradeoffs.
(c) Do not disclose to the FMS customer any data, including certified cost or pricing data, that is contractor proprietary unless the contractor authorizes its release.
(d) Except as provided in paragraph (e)(3) of this section, the degree of FMS customer participation in contract negotiations is left to the discretion of the contracting officer after consultation with the contractor. The contracting officer shall provide an explanation to the FMS customer if its participation in negotiations will be limited. Factors that may limit FMS customer participation include situations where—
(1) The contract includes requirements for more than one FMS customer;
(2) The contract includes unique U.S. requirements; or
(3) Contractor proprietary data is a subject of negotiations.
(e) Do not allow representatives of the FMS customer to—
(1) Direct the exclusion of certain firms from the solicitation process (they may suggest the inclusion of certain firms);
(2) Interfere with a contractor's placement of subcontracts; or
(3) Observe or participate in negotiations between the U.S. Government and the contractor involving certified cost or pricing data, unless a deviation is granted in accordance with subpart 201.4.
(f) Do not accept directions from the FMS customer on source selection decisions or contract terms (except that, upon timely notice, the contracting officer may attempt to obtain any special contract provisions, warranties, or other unique requirements requested by the FMS customer).
(g) Do not honor any requests by the FMS customer to reject any bid or proposal.
(h) If an FMS customer requests additional data concerning FMS contract prices, the contracting officer shall, after consultation with the contractor, provide sufficient data to demonstrate the reasonableness of the price and reasonable responses to relevant questions concerning contract price. This data—
(1) May include tailored responses, top-level pricing summaries, historical prices, or an explanation of any significant differences between the actual contract price and the estimated contract price included in the initial LOA; and
(2) May be provided orally, in writing, or by any other method acceptable to the contracting officer.

225.7305 - Limitation of liability
Advise the contractor when the foreign customer will assume the risk for loss or damage under the appropriate limitation of liability clause(s) (see FAR Subpart 46.8). Consider the costs of necessary insurance, if any, obtained by the contractor to cover the risk of loss or damage in establishing the FMS contract price.

225.7306 - Offset arrangements
In accordance with the Presidential policy statement of April 16, 1990, DoD does not encourage, enter into, or commit U.S. firms to FMS offset arrangements. The decision whether to engage in offsets, and the responsibility for negotiating and implementing offset arrangements, resides with the companies involved. (Also see 225.7303-2 (a)(3).)

225.7307 - Contract clauses
(a) Use the clause at 252.225-7027 , Restriction on Contingent Fees for Foreign Military Sales, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, that are for FMS. Insert in paragraph (b)(1) of the clause the name(s) of any foreign country customer(s) listed in 225.7303-4 (b).
(b) Use the clause at 252.225-7028 , Exclusionary Policies and Practices of Foreign Governments, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, that are for the purchase of supplies and services for international military education training and FMS.

225.7500 - Scope of subpart
This subpart provides policies and procedures implementing the Balance of Payments Program. It applies to contracts for the acquisition of—
(a) Supplies for use outside the United States; and
(b) Construction to be performed outside the United States.

225.7502 - Procedures
If the Balance of Payments Program applies to the acquisition, follow the procedures at PGI 225.7502 .

225.7503 - Contract clauses
Unless the entire acquisition is exempt from the Balance of Payments Program—
(a) Use the basic or an alternate of the clause at 252.225-7044 , Balance of Payments Program—Construction Material, in solicitations and contracts for construction to be performed outside the United States, including acquisitions of commercial items or components, with an estimated value greater than the simplified acquisition threshold but less than $7,008,000.
(1) Use the basic clause unless the acquisition is in support of operations in Afghanistan.
(2) Use the alternate I clause if the acquisition is in support of operations in Afghanistan.
(b) Use the basic or an alternate of the clause at 252.225-7045 , Balance of Payments Program—Construction Material Under Trade Agreements, in solicitations and contracts for construction to be performed outside the United States with an estimated value of $7,008,000 or more, including acquisitions of commercial items or components.
(1) Use the basic clause in solicitations and contracts with an estimated value of $10,802,884 or more, unless the acquisition is in support of operations in Afghanistan.
(2) Use the alternate I clause in solicitations and contracts with an estimated value of $7,008,000 or more, but less than $10,802,884 unless the acquisition is in support of operations in Afghanistan.
(3) Use the alternate II clause in solicitations and contracts with an estimated value of $10,802,884 or more and is in support of operations in Afghanistan.
(4) Use the alternate III clause in solicitations and contracts with an estimated value of $7,008,000 or more, but less than $10,802,884, and is in support of operations in Afghanistan.

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 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).

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)).

225.770-3 - Exceptions
The prohibition in 225.770-2 does not apply to items acquired—
(a) In connection with a visit to the People’s Republic of China by a vessel or an aircraft of the U.S. armed forces;
(b) For testing purposes; or
(c) For the purpose of gathering intelligence.

225.770-5 - Waiver of prohibition
(a) The prohibition in 225.770-2 may be waived, on a case-by-case basis, if an official identified in paragraph (b) of this subsection determines that a waiver is necessary for national security purposes.
(b) The following officials are authorized, without power of delegation, to make the determination specified in paragraph (a) of this subsection:
(1) The Under Secretary of Defense (Acquisition and Sustainment).
(2) The Secretaries of the military departments.
(3) The Component Acquisition Executive of the Defense Logistics Agency.
(c)(1) The official granting a waiver shall submit a report to the congressional defense committees, with a copy to the Director of Defense Procurement and Acquisition Policy (see PGI 225.770-5 ), not less than 15 days before issuing the waiver.
(2) In the report, the official shall—
(i) Identify the specific reasons for the waiver; and
(ii) Include recommendations as to what actions may be taken to develop alternative sourcing capabilities in the future.

225.7700 - Scope
This subpart implements—
(a) Section 892 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181);
(b) Section 886 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181), as amended by section 842 of the National Defense Authorization Act for Fiscal Year 2013 (Pub. L. 112-239);
(c) Section 826 of the National Defense Authorization Act for Fiscal Year 2013 (Pub. L. 112-239); and
(d) The determinations by the Deputy Secretary of Defense regarding participation of the countries of the South Caucasus or Central and South Asia in acquisitions in support of operations in Afghanistan.
(e) Section 216 of the National Defense Authorization Act for Fiscal Year 2017 (Pub. L. 114-328).

225.7702 - Acquisitions not subject to the enhanced authority to acquire products or services from Afghanistan


225.7702-1 - Acquisition of small arms
(a) Except as provided in paragraph (b) of this section, when acquiring small arms for assistance to the Army of Afghanistan, the Afghani Police Forces, or other Afghani security organizations—
(1) Use full and open competition to the maximum extent practicable, consistent with the provisions of 10 U.S.C. 2304;
(2) If use of other than full and open competition is justified in accordance with FAR Subpart 6.3, ensure that—
(i) No responsible U.S. manufacturer is excluded from competing for the acquisition; and
(ii) Products manufactured in the United States are not excluded from the competition; and
(3) If the exception at FAR 6.302-2 (unusual and compelling urgency) applies, do not exclude responsible U.S. manufacturers or products manufactured in the United States from the competition for the purpose of administrative expediency. However, such an offer may be rejected if it does not meet delivery schedule requirements.
(b) Paragraph (a)(2) of this section does not apply when—
(1) The exception at FAR 6.302-1 (only one or a limited number of responsible sources) applies, and the only responsible source or sources are not U.S. manufacturers or are not offering products manufactured in the United States; or
(2) The exception at FAR 6.302-4 (international agreement) applies, and United States manufacturers or products manufactured in the United States are not the source(s) specified in the written directions of the foreign government reimbursing the agency for the cost of the acquisition of the property or services for such government.

225.7702-2 - Acquisition of uniform components for the Afghan military or the Afghan police
Any textile components supplied by DoD to the Afghan National Army or the Afghan National Police for purpose of production of uniforms shall be produced in the United States.

225.7703 - Enhanced authority to acquire products or services from Afghanistan


225.7703-1 - Acquisition procedures
(a) Subject to the requirements of 225.7703-2, except as provided in 225.7702, a product or service (including construction), in support of operations in Afghanistan, may be acquired by—
(1) Providing a preference for products or services from Afghanistan in accordance with the evaluation procedures at 225.7703-3 ;
(2) Limiting competition to products or services from Afghanistan; or
(3) Using procedures other than competitive procedures to award a contract to a particular source or sources from Afghanistan. When other than competitive procedures are used, the contracting officer shall document the contract file with the rationale for selecting the particular source(s).
(b) For acquisitions conducted using a procedure specified in paragraph (a) of this subsection, the justification and approval addressed in FAR Subpart 6.3 is not required.
(c) When issuing solicitations and contracts for performance in Afghanistan, follow the procedures at PGI 225.7703-1 (c).

225.7703-3 - Evaluating offers
Evaluate offers submitted in response to solicitations that include the provision at 252.225-7023 , Preference for Products or Services from Afghanistan, as follows:
(a) If the low offer is an offer of a product or service from Afghanistan, award on that offer.
(b) If there are no offers of a product or service from Afghanistan, award on the low offer.
(c) Otherwise, apply the evaluation factor specified in the solicitation to the low offer.
(1) If the price of the low offer of a product or service from Afghanistan is less than the evaluated price of the low offer, award on the low offer of a product or service from Afghanistan.
(2) If the evaluated price of the low offer remains less than the low offer of a product or service from Afghanistan, award on the low offer.

225.7704-3 - Solicitation provisions and contract clauses
Appropriate solicitation provisions and contract clauses are prescribed as alternates to the Buy American-Trade Agreements-Balance of Payments Program solicitation provisions and contract clauses prescribed at 225.1101 and 225.7503 .

225.7705 - Prohibition on use of funds for contracts of certain programs and projects in Afghanistan that cannot be safely accessed
This section implements section 1216 of the National Defense Authorization Act for Fiscal Year 2017 (Pub. L. 114-328).

225.7705-2 - Waiver of prohibition
(a) The prohibition in 225.7705-1 may be waived upon issuance of a determination, approved in accordance with paragraph (b) of this section, that—
(1) The program or project clearly contributes to United States national interests or strategic objectives;
(2) The Government of Afghanistan has requested or expressed a need for the program or project;
(3) The program or project has been coordinated with the Government of Afghanistan, and with any other implementing agencies or international donors;
(4) Security conditions permit effective implementation and oversight of the program or project;
(5) Safeguards to detect, deter, and mitigate corruption and waste, fraud, and abuse of funds are in place;
(6) Adequate arrangements have been made for the sustainment of the program or project following its completion, including arrangements with respect to funding and technical capacity for sustainment; and
(7) Meaningful metrics have been established to measure the progress and effectiveness of the program or project in meeting its objectives.
(b) The following officials are authorized to approve the determination described in paragraph (a) of this section:
(1) In the case of a program or project with an estimated lifecycle cost of less than $1 million, by the contracting officer.
(2) In the case of a program or project with an estimated lifecycle cost of $1 million or more, but less than $20 million, by the senior U.S. officer in the Combined Security Transition Command-Afghanistan.
(3) In the case of a program or project with an estimated lifecycle cost of $20 million or more, but less than $40 million, by the Commander of United States Forces-Afghanistan.
(4) In the case of a program or project with an estimated lifecycle cost of $40 million or more, by the Secretary of Defense.
(c) Congressional notification is required within 15 days of issuance of a determination to waive the prohibition for programs or projects valued at $40 million or more in accordance with paragraph (b)(4) of this section.

225.7705-3 - Procedures
(a) The contracting officer shall not obligate or expend funds for contracts for a construction or other infrastructure program or project in Afghanistan, awarded after December 23, 2016, unless the requiring activity provides the following documentation:
(1) Written affirmation that military or civilian personnel of the United States Government or their representatives, with authority to conduct oversight of such program or project, can safely access such program or project; or
(2)(i) For programs or projects valued at less than $1 million, sufficient information upon which to base the determination described in 225.7705-2 (a); or
(ii)(A) For programs or projects valued at $1 million or more, a copy of the approved determination described in 225.7705-2 (a) and (b); and
(B) For programs or projects valued at $40 million or more, a copy of the Congressional notification described in 225.7705-2 (c).
(b) After contract award, the contracting officer shall review the requiring activity’s progress reports (e.g., contracting officer’s representative reports) that addresses whether access continues to be safe or security conditions continue to permit effective implementation and oversight of the contract. If the requiring activity does not affirm continued safe access or, if a determination to waive the prohibition has been approved, that security conditions continue to permit effective implementation and oversight of the contract, then the contracting officer shall consult with the requiring activity to take any appropriate actions.

225.771-0 - Scope
This section implements 10 U.S.C. 2327(b).

225.771-2 - Prohibition
(a) The contracting officer shall not award a contract of $150,000 or more to a firm when a foreign government that is a state sponsor of terrorism owns or controls, either directly or indirectly, a significant interest in—
(i) The firm;
(ii) A subsidiary of the firm; or
(iii) Any other firm that owns or controls the firm.
(b) For restrictions on subcontracting with a firm, or a subsidiary of a firm, that is identified by the Secretary of Defense as being owned or controlled by the government of a country that is a state sponsor of terrorism, see 209.405-2 .

225.771-4 - Waiver of prohibition
The prohibition in 225.771-2 may be waived if the Secretary of Defense determines that a waiver is not inconsistent with the national security objectives of the United States in accordance with 10 U.S.C. 2327(c).

225.772 - Prohibition on acquisition of certain foreign commercial satellite services


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
(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.

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).
(b) If an offeror discloses information in accordance with paragraph (c) of the provision 252.225-7049 , Prohibition on Acquisition of Certain Foreign Commercial Satellite Services—Representations, the contracting officer—
(1) Shall forward the information regarding the offeror through agency channels to the address at PGI 225.772-3 ; and
(2) Shall not award to that offeror, unless an exception is determined to apply in accordance with 225.772-4 .
(c)(1) If the otherwise successful offeror provides negative responses to all representations in the provision at 252.225-7049 , the contracting officer may rely on the representations, unless the contracting officer has an independent reason to question the representations.
(2) If the contracting officer has an independent reason to question a negative representation of the otherwise successful offeror, the contracting officer shall consult with the office specified in PGI 225.772-3 , prior to deciding whether to award to that offeror.

225.772-4 - Exception
(a) The prohibitions in 225.772-2 (a) and (b) do not apply if–
(1) The Under Secretary of Defense for Acquisition and Sustainment, or the Under Secretary of Defense for Policy, without power of redelegation, determines that it is in the national security interest of the United States to enter into such contract; and
(2) Not later than seven days before entering into such contract, the Under Secretary of Defense making the determination in paragraph (a)(1) of this section, in consultation with the Director of National Intelligence, submits to the congressional defense committees a national security assessment, in accordance with 10 U.S.C. 2279.
(b) If requesting an exception pursuant to paragraph (a) of this section, the contracting officer shall forward the request through agency channels to the address at PGI 225.772-3 , providing any available information necessary for the Under Secretary of Defense making the determination in paragraph (a)(1) of this section to evaluate the request and perform a national security assessment, in accordance with 10 U.S.C. 2279.

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.

225.7799 - Authority to acquire products and services (including construction) from Afghanistan or from countries along a major route of supply to Afghanistan
See Class Deviation 2016-O0004, dated December 29, 2015, implementing section 801 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2010, as most recently amended by sections 886 and 1214 of the NDAA for FY 2016 (Pub. L. 114-92) and section 886 of the NDAA for FY 2008, most recently amended by section 886 of the NDAA for FY 2016. Contracting officers are authorized to limit competition to, or provide a preference for products mined, produced, or manufactured in, or services from the Central Asian states, Pakistan, the South Caucasus, or Afghanistan, unless the products are in the AbilityOne Procurement Catalog and are available from a qualified nonprofit agency in a timely fashion to support mission requirements.

225.7801 - Policy
For guidance on procurement support of the geographic combatant command’s theater security cooperation efforts, see PGI 225.78 .

225.7900 - Scope of subpart
This subpart implements –
(a) Section 890(a) of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181); and
(b) The requirements regarding export control of Title I of the Security Cooperation Act of 2010 (Pub. L. 111-266); the Treaty Between the Government of the United States of America and the Government of Australia Concerning Defense Trade Cooperation (the U.S.-Australia DTC Treaty); and the Treaty Between the Government of the United States of America and the Government the United Kingdom of Great Britain and Northern Ireland Concerning Defense Trade Cooperation (the U.S.-U.K. DTC Treaty). See PGI 225.7902 for additional information.

225.7901-1 - Definitions
“Export-controlled items,” as used in this section, is defined in the clause at 252.225-7048 .

225.7901-2 - General
Certain types of items are subject to export controls in accordance with the Arms Export Control Act (22 U.S.C. 2751, et seq.), the International Traffic in Arms Regulations (22 CFR Parts 120-130), the Export Administration Act of 1979, as amended (50 U.S.C. App. 2401 et seq.), and the Export Administration Regulations (15 CFR Parts 730-774). See PGI 225.7901-2 for additional information.

225.7901-3 - Policy.
(a) It is in the interest of both the Government and the contractor to be aware of export controls as they apply to the performance of DoD contracts.
(b) It is the contractor’s responsibility to comply with all applicable laws and regulations regarding export-controlled items. This responsibility exists independent of, and is not established or limited by, this section.

225.7901-4 - Contract clauses
Use the clause at 252.225-7048 , Export-Controlled Items, in all solicitations and contracts.

225.7902 - Defense Trade Cooperation Treaties
This section implements the Defense Trade Cooperation (DTC) Treaties with Australia and the United Kingdom and the associated Implementing Arrangements for DoD solicitations and contracts that authorize prospective contractors and contractors to use the DTC Treaties to respond to DoD solicitations and in the performance of DoD contracts.

225.7902-1 - Definitions
"Approved community," “defense articles," “Defense Trade Cooperation (DTC) Treaty”, "export," “Implementing Arrangement," “qualifying defense articles,” "transfer," and "U.S. DoD Treaty-eligible requirements" are defined in contract clause DFARS 252.225-7047 , Exports by Approved Community Members in Performance of the Contract.

225.7902-2 - Purpose.
The DTC Treaties permits the export of certain U.S. defense articles, technical data, and defense services, without U.S. export licenses or other written authorization under the International Traffic in Arms Regulation (ITAR) into and within the Approved Community, as long as the exports are in support of purposes specified in the DTC Treaties. All persons must continue to comply with statutory and regulatory requirements outside of DFARS and ITAR concerning the import of defense articles and defense services or the possession or transfer of defense articles, including, but not limited to, regulations issued by the Bureau of Alcohol, Tobacco, Firearms and Explosives found at 27 CFR Parts 447, 478, and 479, which are unaffected by the DTC Treaties. The Approved Community consists of U.S. entities that are registered with the Department of State and are eligible exporters, the U.S. Government, and certain governmental and commercial facilities in Australia and the United Kingdom that are approved and listed by the U.S. Government. See PGI 225.7902-2 for additional information.

225.7902-3 - Policy.
DoD will facilitate maximum use of the DTC Treaties by prospective contractors responding to DoD solicitations and by contractors eligible to export qualifying defense articles under DoD contracts in accordance with 22 CFR 126.16(g) and 22 CFR 126.17(g).

225.7902-4 - Procedures
(a) For all solicitations and contracts that may be eligible for DTC Treaty coverage (see PGI 225.7902-4 (1)), the program manager shall identify in writing and submit to the contracting officer prior to issuance of a solicitation and prior to award of a contract—
(1) The qualifying DTC Treaty Scope paragraph (Article 3(1)(a), 3(1)(b), or 3(1)(d) of the U.S.-Australia DTC Treaty or Article (3)(1)(a), (3(1)(b), or 3(1)(d) of the U.S.-U.K. DTC Treaty); and
(2) The qualifying defense article(s) using the categories described in 22 CFR 126.16(g) and 22 CFR 126.17(g).
(b) If applicable, the program manager shall also identify in writing and submit to the contracting officer any specific Part C, DTC Treaty-exempted technology list items, terms and conditions for applicable contract line item numbers (See PGI 225.7902-4 (2)).

225.7902-5 - Solicitation provision and contract clause
(a) Use the provision at 252.225-7046 , Exports by Approved Community Members in Response to the Solicitation, in solicitations containing the clause at 252.225-7047 .
(b)(1) Use the clause at 252.225-7047 , Exports by Approved Community Members in Performance of the Contract, in solicitations and contracts when—
(i) Export-controlled items are expected to be involved in the performance of the contract and the clause at 252.225-7048 is used; and
(ii) At least one contract line item is intended to satisfy a U.S. DoD Treaty-eligible requirement.
(2) The contracting officer shall complete paragraph (b) of the clause using information the program manager provided as required by 225.7902-4 (a).