The FAR Council issued an interim rule, effective December 4, 2023, which implements the requirements of the Federal Acquisition Supply Chain Security Act (FASCSA). This included three new FAR clauses which prohibit the delivery or use of “covered articles” subject to a FASCSA order in the performance of a government contract.
What Does This Mean to Contractors/Subcontractors?
First, since this is an interim rule, it is effective immediately.
So, let’s understand a couple of the definitions.
FASCSA Order – An order issued under the Federal Acquisition Supply Chain Security Act (FASCSA) which requires the removal of covered articles from executive agency information systems or the exclusion of one or more named sources or covered articles from executive agency procurement actions.
Covered Article - This is defined in FAR 4.2301 and 41 U.S.C. 4713(k) as:
- Information technology including cloud computing services of all types;
- Telecommunications equipment or telecommunications service;
- The processing of information on a Federal or non-Federal information system subject to the requirement of the Controlled Unclassified Information program; and
- Hardware, systems, devices, software, or services that include embedded or incidental information technology.
We believe the FASCSA order will provide the detail of the product or service falling into one of the categories of a covered article. Until an actual order is issued within SAM.gov or a solicitation, we cannot provide much insight.
SAM.gov website has added a button on the home page called “View FASCSA Orders” however as of the date of this article, the FASCSA orders have not been populated in the system. In addition, you do not need a SAM.gov account or need to login to SAM to access the list of orders.
What are the Requirements in the Provisions/Clauses?
The new FAR clauses will be incorporated into all solicitations, contracts, and modifications issued after December 4, 2023. The FAR clauses will apply to all contracts including contracts below the simplified acquisition threshold, contracts for commercial products or services including commercial off-the-shelf items (COTS), and orders under indefinite delivery, indefinite quantity vehicles. Yes – no Government contract has been left out no matter the dollar value.
FAR 52.204-29 Federal Acquisition Supply Chain Security Act Orders – Representation and Disclosures
FAR 52.204-29 provides that by submission of an offer, the contractor represents that it has conducted a reasonable inquiry, and that the contractor does not propose to provide or use any covered article, or any products or services produced or provided by a source, if the covered article or the source is prohibited by an applicable FASCSA order or is requesting a waiver.
Contractors will need to:
- Search System for Award Management (SAM) for the phrase “FASCSA order” prior to submitting an offer;
- Review the solicitation for any FASCSA orders not in SAM but apply to solicitation and resultant contract;
- Ensure a reasonable inquiry has been conducted and that the offeror does not propose to provide or use any covered articles prior to the offer; or
- Submit a disclosure to the Government to request a waiver if unable to comply with removal of covered articles.
What is a “reasonable inquiry?” According to the definition in the clause it is an inquiry to uncover any information in your possession about the identity of any covered articles or products or services produced or provided by a source. A reasonable inquiry is not an internal or third-party audit. Contractors will need to document how this inquiry was completed. In addition, we recommend contractors add a certification to its Reps and Certs for subcontractors to address disclosure, monitoring, and the reporting requirements under this clause.
FAR 52.204-30 Federal Acquisition Supply Chain Security Act Orders – Prohibition
FAR 52.204-30 prohibits contractors from using any covered article, or any product or services covered by a FASCSA order in the performance of the contract unless a waiver has been issued. Contractors are required to perform the following monitoring and reporting requirements after contract award:
- Review SAM at least once every three months to determine if new FASCSA orders apply to supply chain.
- Conduct a reasonable inquiry to determine whether its supply chain is affected.
- Provide notice and report to the government if the supply chain includes covered articles under a new FASCSA order (or it is discovered that the supply chain or deliveries to the government have included covered articles under preexisting FASCSA orders.
If you find that a FASCSA order applies to a product in your supply chain and is going to be or has been provided to the Government or used during contract performance, you must:
- Report within three business days basic information on the product or service and information on mitigation to the contracting officer; and
- Update the report within 10 business days on mitigation actions taken and actions to prevent future submission or use of covered articles.
This clause is a required flowed down to subcontracts. Subcontractors are required to provide the same reporting requirements to the prime who will notify the contracting officer. Implementing a written policy and procedure on monitoring, reasonable inquiry, and reporting requirements is a must. Adding this language in the reps and certs to a subcontractor will be a best practice as these requirements flow down to COTS items as well – yes COTS items.
FAR 52.204-28 Federal Acquisition Supply Chain Security Act Orders – Federal Supply Schedules, Governmentwide Acquisition Contracts, and Multi-Agency Contracts.
FAR 52.204-28 requires contractors to comply with FASCSA orders and remove any covered articles, products or services subject a FASCSA order upon notification from the Contracting Officer. It is required in solicitations and contracts under all Federal Supply Schedules, Governmentwide Acquisition Contracts and multi-agency contracts when orders are made at the task or delivery-order level.
Takeaways
We believe this is a high visibility area and will be added as an area of review by the DCMA Contractor Purchasing System Review team. Redstone GCI recommends contractors establish a written policy immediately that addresses a designated person/position to address:
- The monitoring of SAM every three months for new FASCSA orders; and how it will be documented.
- The process for conducting a “reasonable inquiry” to determine whether a covered article has been produced or provided to the government or used during contract performance.
- The reporting requirements to notify the Contracting Officer in three business days with basic information and a report in ten business days with an update including mitigation efforts should be addressed.
- The documentation requirements.
Because of the importance of this area, we strongly recommend contractors train their procurement personnel on these new requirements and documentation required.
While SAM.gov has added a button with FASCSA orders, you will still need to review your solicitations and determine whether you have any covered articles that need to be excluded.
Since this is a required flow down, we recommend contractors add these monitoring and reporting requirements in their representations and certifications to subcontractors. Contractors that have subcontracts will also need to have a procedure to report to the higher tier prime contractor if they identify a covered article provided/used during contract performance.
Redstone GCI is available to assist in developing a policy and procedure, adding language to your representation and certifications, or review and assess your current policy for any gaps.
