Any government contractor that procures products from the Xinjiang Uyghur Autonomous Region of the People's Republic of China is affected by a new ruling by the Department of Defense (DoD). This ruling takes effect October 30, 2023.
On October 25, 2023, the DoD amended the Defense Federal Acquisition Regulation Supplement (DFARS). The amendment implements “a section of the National Defense Authorization Act (NDAA) for Fiscal Year 2023 that prohibits the use of funds to knowingly procure any products mined, produced, or manufactured wholly or in part by forced labor from the Xinjiang Uyghur Autonomous Region of the People's Republic of China (source: Federal Register).
In addition, section 855 repeals section 848 of the NDAA for FY 2022 (Pub. L. 117-81), which required a certification from offerors that they had made a good faith effort to determine that forced labor from XUAR was not or will not be used in the performance of a DoD contract.
There will be no exceptions to this new requirement. The rule is also applicable to contracts for the acquisition of commercial services and commercial products (FAR Part 12), including commercially available off-the shelf (COTS) items as defined at FAR 2.101.
Specific Requirements of the New Rule
Section 855 of the NDAA requires offerors or awardees of DoD contracts to document that they have made a good faith effort to determine that forced labor from XUAR will not be used in the performance of a DoD contract. This prohibition extends to products and tools made with parts made with forced labor from XUAR.
“Product,” as defined at FAR 2.101, has the same meaning as “supplies.” The FAR definition of “supplies” means all property except land or interest in land. It includes, but is not limited to:
- Public works, buildings and facilities
- Ships, floating equipment and vessels of every character, type and description, together with parts and accessories
- Aircraft and aircraft parts, accessories and equipment
- Machine tools; and the alteration or installation of any of the foregoing
In accordance with the FAR definition of “product,” the scope of the prohibition will include any products mined, produced or manufactured wholly or in part by forced labor from XUAR or from any entity that has used labor from within or transferred from XUAR made with forced labor.
The provision at DFARS 252.225-7059 and the clause at DFARS 252.225-7060 also make this applicable to contracts that are valued at or below the simplified acquisition threshold (SAT) (FAR 2.101), which is currently $250,000.
What to Expect as a Result of the New Rule
This ruling will impact contractor supply chains. Processes will need to be added to require that suppliers make a good faith effort to establish that their products were not manufactured or contain materials manufactured in XUAR. Such suppliers will also need to flow down these requirements to their sub-suppliers in all current and future subcontract purchase orders.
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