On Monday, November 18, 2024, the Committee on Foreign Investment in the United States (“CFIUS” or the “Committee”) announced that it had finalized the regulatory changes previewed in April that will enhance certain CFIUS procedures and sharpen its penalty and enforcement authorities.[1] The changes go into effect on December 26, 2024 and as described in more detail below: (a) expand the types of information that CFIUS can require transaction parties and other persons (i.e., third-parties) submit when engaging with them on transactions that were not filed with CFIUS; (b) broaden the instances in which CFIUS may use its subpoena authority, including when seeking to obtain information from third persons not party to a transaction notified to CFIUS and in connection with assessing national security risk associated with non-notified transactions; and (c) substantially increase monetary penalties for violations of CFIUS regulations from a maximum of U.S. $250,000 to U.S. $5 million per violation, or the value of the transaction, whichever is greater.Continue Reading CFIUS Finalizes Regulations to Increase Penalties, Expand Subpoena Authority, and Enhance Enforcement Authorities to Protect National Security
Six Years in the Making, DoD Releases Proposed Rule Requiring Disclosure of Foreign Review of Code for IT, Cybersecurity, Critical Infrastructure, and Weapons System Products and Services
On November 15, 2024, the Department of Defense (DoD) issued a Proposed Rule implementing Section 1655 of the John S. McCain National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2019 (P.L. 115-232), over six years after Congress enacted the requirement. Continue Reading Six Years in the Making, DoD Releases Proposed Rule Requiring Disclosure of Foreign Review of Code for IT, Cybersecurity, Critical Infrastructure, and Weapons System Products and Services
CMMC Final Rule Includes M&A Trigger for New Assessment
As Crowell covered in a recent alert, the Department of Defense (DoD) on October 11, 2024 released a final rule (the “Final Program Rule”) formalizing the requirements, assessment processes, and related governance for its Cyber Maturity Model Certification Program (CMMC).Continue Reading CMMC Final Rule Includes M&A Trigger for New Assessment
DoD Expands Restrictions on Supply Chain for Certain Magnets, Tantalum, and Tungsten
On May 30, 2024, the Department of Defense (DoD) issued a final rule implementing Section 844 of the Fiscal Year (FY) 2021 National Defense Authorization Act (NDAA) and Section 854 of the FY 2024 NDAA by amending DFARS 225.7018-2 and accompanying DFARS clause 252.225-7052, which restrict DoD from acquiring certain metals and magnets from “covered countries” of Iran, North Korea, Russia, and China, to prohibit even earlier inputs in the supply chain from occurring in these countries. Despite comments discussing the infancy of the domestic market for many “covered materials”—defined as samarium-cobalt magnets, tantalum metals and alloys, tungsten metal powder, and tungsten heavy alloy or any finished or semi-finished component containing tungsten heavy alloy—the final rule expands the restrictions on sourcing covered materials from covered countries. Currently, the rule requires that covered materials not be melted or produced in covered countries but, effective January 1, 2027, the updated rule prohibits covered materials being mined, refined, separated, melted or produced in one of the covered countries. The expansion of the focus of the prohibition all the way back to where these materials were mined is consistent with the U.S. government’s effort to develop the domestic industrial base for and encourage on-shoring of critical minerals, magnets, and metals. Continue Reading DoD Expands Restrictions on Supply Chain for Certain Magnets, Tantalum, and Tungsten
Why Should They Have All the Fun? DoD Instruction Expands DCSA’s FOCI Reach Beyond Cleared Contractors
On May 13, 2024, the Department of Defense (DoD) issued an instruction implementing policies and procedures that DoD will use to identify contractors (including uncleared contractors) requiring foreign ownership, control, and influence (FOCI) determinations, review related information, and address FOCI concerns. These policies and procedures were put in place pursuant to Section 847 of the 2020 National Defense Authorization Act[1] (Section 847). These FOCI requirements will, for the first time, subject many uncleared DoD contractors to rigorous disclosure requirements, scrutiny, and potential mitigation by the Defense Counterintelligence and Security Agency (DCSA). Continue Reading Why Should They Have All the Fun? DoD Instruction Expands DCSA’s FOCI Reach Beyond Cleared Contractors
“(Don’t) Let the Chips Fall Where They May”: FAR Council Previews Proposed Rule Implementing the Covered Semiconductor Prohibition
On May 3, 2024, the Federal Acquisition Regulation (FAR) Council issued an Advanced Notice of Proposed Rulemaking (ANPR) regarding the prohibition on semiconductors produced by certain Chinese manufacturers, enacted in Section 5949(a)(1) of the James M. Inhofe National Defense Authorization Act (NDAA) for Fiscal Year 2023 (Section 5949) expanding on the prohibition on covered telecommunications equipment and services produced by Huawei, ZTE, and others from Section 889 of the FY 2019 NDAA (Section 889). Continue Reading “(Don’t) Let the Chips Fall Where They May”: FAR Council Previews Proposed Rule Implementing the Covered Semiconductor Prohibition
GSA Clarifies Permissibility of Upfront Payments for Software-as-a-Service Offerings
On March 15, 2024, the General Services Administration (GSA) issued Acquisition Letter MV-2024-01 providing guidance to GSA contracting officers on the use of upfront payments for acquisitions of cloud-based Software-as-a-Service (SaaS). Specifically, this acquisition letter clarifies that despite statutory prohibitions against the use of “advance” payments outside of narrowly-prescribed circumstances, upfront payments for SaaS licenses do not constitute an “advance” payment subject to these restrictions when made under the following conditions:Continue Reading GSA Clarifies Permissibility of Upfront Payments for Software-as-a-Service Offerings
New FAR Part 40 to Address Supply Chain and Information Security Requirements
On April 1, 2024, the Department of Defense (DoD), General Services Administration (GSA), and the National Aeronautics and Space Administration (NASA) issued a final rule updating the Federal Acquisition Regulation (FAR) to add Part 40 on information security and supply chain security. This first action did not implement any new requirements; however, separate rulemakings will follow to relocate existing information security and supply chain security policies and procedures to the new Part 40. Additionally, new related regulations will be housed in Part 40. These actions suggest that the flow of information security and supply chain regulations is likely to continue unabated for at least the next few years.Continue Reading New FAR Part 40 to Address Supply Chain and Information Security Requirements
Crowell Talks Tax: The Inflation Reduction Act’s Domestic Content Bonus Credits (VIDEO)
Government Contracts and International Trade partner Addie Cliffe and Government Contracts counsel Liam O’Reilly discuss the Inflation Reduction Act’s Domestic Content Bonus Credits.Click to read more | Watch now on our YouTube channel
DoD is Making its List, and Checking it Twice: DoD Updates 1260H Chinese Military Companies List
On January 31, 2024, the Department of Defense (DoD) updated the 1260H List of entities identified as “Chinese military companies” operating in the United States, as it is required to do at least annually by Section 1260H of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2021. Section 1260H defines a “Chinese military company” as an entity that is:Continue Reading DoD is Making its List, and Checking it Twice: DoD Updates 1260H Chinese Military Companies List