On January 2, 2025, the U.S. Department of Defense (DoD) updated the 1260H List of entities identified as “Chinese military companies” (CMC) operating in the United States, as required by section 1260H of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2021 (Section 1260H), adding new entities and removing others. The updated 1260H List now includes 76 entities. Continue Reading New Year, Updated List: The U.S. Department of Defense Updates Its List of Chinese Military Companies with Ancillary Supply Chain and USG Contracting Impacts
CFIUS Finalizes Regulations to Increase Penalties, Expand Subpoena Authority, and Enhance Enforcement Authorities to Protect National Security
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
DDTC Publishes ITAR Amendments to Implement the AUKUS Exemption
On August 20, 2024, the Department of State’s Directorate of Defense Trade Controls (DDTC) published an interim final rule to streamline defense trade between and among Australia, the United Kingdom (UK), and the United States in furtherance of the trilateral security partnership (the “AUKUS” partnership). The interim final rule implements the proposed rule DDTC published on May 1, 2024 with changes and is effective September 1, 2024, though DDTC is seeking comments on or before November 18, 2024.Continue Reading DDTC Publishes ITAR Amendments to Implement the AUKUS Exemption
DDTC Publishes Proposed ITAR Amendments to Enhance AUKUS Defense Trade
On May 1, 2024, the Department of State’s Directorate of Defense Trade Controls (DDTC) published a proposed rule that, if implemented, would streamline defense trade between and among Australia, the United Kingdom (UK), and the United States in furtherance of the trilateral security partnership (the “AUKUS” partnership). DDTC issued the proposed rule pursuant to new authorities and requirements contained in Section 1343 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2024 which, in part, directs the Department of State to immediately implement an International Traffic in Arms Regulations (ITAR) exemption, subject to certain statutory limitations, for the UK and Australia if State determines and certifies that each has implemented (1) a system of export controls comparable to those of the United States and (2) a comparable exemption from its export controls for the United States. According to DDTC, the proposed rule “prepare[s] for a future exemption” and solicits public feedback “to shape a final rule following any positive certification.”Continue Reading DDTC Publishes Proposed ITAR Amendments to Enhance AUKUS Defense Trade
Who I(aa)S Your Foreign Customer? Department of Commerce Proposes Foreign Customer Identification Requirements For U.S. IaaS Providers
On January 29, 2024, the Department of Commerce released a proposed rule: Taking Additional Steps To Address the National Emergency With Respect to Significant Malicious Cyber-Enabled Activities, which solicits comments regarding a proposed new set of regulations that would introduce significant new requirements for U.S.-based Infrastructure as a Service (IaaS) providers. The proposed rule implements requirements from the January 2021 Executive Order Taking Additional Steps To Address the National Emergency With Respect to Significant Malicious Cyber-Enabled Activities and part of the October 2023 Executive Order Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence. If Commerce implements the regulations as proposed, IaaS providers would be required to create a Customer Identification Program (CIP), ensure any foreign resellers maintain a CIP, track all customer identities, verify the identities of foreign customers, and report certain transactions implicating large AI models that could be used for malicious cyber-enabled activities. The Department is soliciting comments on all aspects of the proposed rule by April 29, 2024.Continue Reading Who I(aa)S Your Foreign Customer? Department of Commerce Proposes Foreign Customer Identification Requirements For U.S. IaaS Providers
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
The FY 2024 National Defense Authorization Act: Key Provisions Government Contractors Should Know
The National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2024, signed into law on December 22, 2023, makes numerous changes to acquisition policy. Crowell & Moring’s Government Contracts Group discusses the most consequential changes for government contractors here. These include changes that impose a new conflict of interest regime for government contractors with a connection to China, impose new restrictions and requirements, require government reporting to Congress on acquisition authorities and programs, and alter other processes and procedures to which government contractors are subject. The FY 2024 NDAA also includes the Federal Data Center Enhancement Act, the American Security Drone Act, and the Intelligence Authorization Act for FY 2024.Continue Reading The FY 2024 National Defense Authorization Act: Key Provisions Government Contractors Should Know
Executive Order and Rulemaking on U.S. Outbound Investment
Proposed U.S. Outbound Investment Regulations
The Outbound Investment Program will be implemented through regulations issued by Treasury that will require notification for, or will otherwise prohibit U.S. persons from undertaking, certain transactions involving “covered national security products or technologies” and entities connected to a “country of concern.” Accordingly – concurrent with the Executive Order – Treasury released an Advance Notice of Proposed Rulemaking that provides some potential definitions of these terms, but the exact definitions and the details of the regulations will be developed through public notice and comment that concludes on September 28, 2023. Treasury also published a Fact Sheet that provides additional information on the proposed details and scope of the outbound investment prohibitions and notification requirements, which will likely not be finalized until 2024 sometime after Treasury has published draft regulations and gathered another round of public comments.Continue Reading Executive Order and Rulemaking on U.S. Outbound Investment
Proposed Rule Requires Certain Contractors to Provide Export Authorizations to DCMA
On March 22, 2023, the Department of Defense (DoD) issued a proposed rule that would amend the Defense Federal Acquisition Regulation Supplement (DFARS) to require certain contractors to provide export authorizations to the Defense Authorization Management Agency (DCMA).
DCMA performs quality assurance reviews for manufacturing operations to ensure contractors have the appropriate systems in place to meet quality and functionality standards along with contractual requirements regarding testing and validation. In some cases, DCMA will engage a foreign auditor to perform the quality assurance review. However, to do so DCMA needs insight into applicable export authorizations to see if engaging the foreign auditor is permissible.
The proposed rule would require contractors to provide export authorizations to DCMA when the contract requires (i) government quality assurance surveillance oversight and (ii) performance in or delivery to a government quality assurance country (Australia, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Israel, Italy, Republic of Korea, Netherlands, Norway, Poland, Romania, Slovakia, Spain, Sweden, Turkey, and the United Kingdom). Export authorizations include export licenses, exemptions, exceptions, and other approvals. The contractor must also provide the contact information for an empowered official or export point of contact. Continue Reading Proposed Rule Requires Certain Contractors to Provide Export Authorizations to DCMA
FY 2023 National Defense Authorization Act: Key Provisions Government Contractors Should Know
The National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2023, signed into law on December 23, 2022, makes numerous changes to acquisition policy. Crowell & Moring’s Government Contracts Group discusses the most consequential changes for government contractors here. These include changes that provide new opportunities for contractors to recover inflation-related costs, authorize new programs for small businesses, impose new clauses or reporting requirements on government contractors, require government reporting to Congress on acquisition authorities and programs, and alter other processes and procedures to which government contractors are subject. The FY 2023 NDAA also includes the Advancing American AI Act, the Intelligence Authorization Act for FY 2023, and the Water Resources Development Act of 2022, all of which include provisions relevant for government contractors. Continue Reading FY 2023 National Defense Authorization Act: Key Provisions Government Contractors Should Know