(a)
(b)
(1) a foreign government owns or controls (whether directly or indirectly) a significant interest in such firm or subsidiary (or, in the case of a subsidiary, in the firm that owns the subsidiary); and
(2) such foreign government is the government of a country that the Secretary of State determines under section 6(j)(1)(A) 1 of the Export Administration Act of 1979 (50 U.S.C. 4605(j)(1)(A)) has repeatedly provided support for acts of international terrorism.
(c)
(B) The Secretary shall maintain records of each contract entered into by reason of subparagraph (A). Such records shall include the following:
(i) The identity of the foreign government concerned.
(ii) The nature of the contract.
(iii) The extent of ownership or control of the firm or subsidiary concerned (or, if appropriate in the case of a subsidiary, of the firm that owns the subsidiary) by the foreign government concerned or the agency or instrumentality of such foreign government.
(iv) The reasons for entering into the contract.
(2) Upon the request of the head of an agency, the Secretary of Defense shall determine whether entering into a contract with a firm or subsidiary described in subsection (b) is inconsistent with the national security objectives of the United States. In making such a determination, the Secretary of Defense shall consider the following:
(A) The relationship of the United States with the foreign government concerned.
(B) The obligations of the United States under international agreements.
(C) The extent of the ownership or control of the firm or subsidiary (or, if appropriate in the case of a subsidiary, of the firm that owns the subsidiary) by the foreign government or an agent or instrumentality of the foreign government.
(D) Whether payments made, or information made available, to the firm or subsidiary under the contract could be used for purposes hostile to the interests of the United States.
(d)
(2)
(A) A person may request the Secretary to include on the list maintained under paragraph (1) any firm or subsidiary of a firm that the person believes to be owned or controlled by a foreign government described in subsection (b)(2). Upon receipt of such a request, the Secretary shall determine whether the conditions in paragraphs (1) and (2) of subsection (b) exist in the case of that firm or subsidiary. If the Secretary determines that such conditions do exist, the Secretary shall include the firm or subsidiary on the list.
(B) A firm or subsidiary of a firm included on the list may request the Secretary to remove such firm or subsidiary from the list on the basis that it has been erroneously included on the list or its ownership circumstances have significantly changed. Upon receipt of such a request, the Secretary shall determine whether the conditions in paragraphs (1) and (2) of subsection (b) exist in the case of that firm or subsidiary. If the Secretary determines that such conditions do not exist, the Secretary shall remove the firm or subsidiary from the list.
(C) The Secretary shall establish procedures to carry out this paragraph.
(3) The head of an agency shall prohibit each firm or subsidiary of a firm awarded a contract by the agency from entering into a subcontract under that contract in an amount in excess of $25,000 with a firm or subsidiary included on the list maintained under paragraph (1) unless there is a compelling reason to do so. In the case of any subcontract requiring consent by the head of an agency, the head of the agency shall not consent to the award of the subcontract to a firm or subsidiary included on such list unless there is a compelling reason for such approval.
(e)
(f)
(2) This section does not apply to the Coast Guard or the National Aeronautics and Space Administration.
(g)
Editorial Notes
References in Text
Section 6(j)(1)(A) of the Export Administration Act of 1979 (50 U.S.C. 4605(j)(1)(A)), referred to in subsecs. (a) and (b)(2), was repealed by Pub. L. 115–232, div. A, title XVII, §1766(a), Aug. 13, 2018, 132 Stat. 2232. For similar provisions, see section 4813(c)(1)(A)(i) of Title 50, War and National Defense, as enacted by Pub. L. 115–232.
Codification
Pub. L. 116–283, §1870(d)(2), which had initially directed the transfer of section 2533c of this title to this section, was amended by Pub. L. 117–81, §1701(t)(2)(B), (C), and, after that amendment, such transfer was no longer directed. Instead, Pub. L. 116–283, as amended by Pub. L. 117–81, transferred section 2327 of this title to this section and section 2533c of this title to section 4872.
Pub. L. 99–591 is a corrected version of Pub. L. 99–500.
Pub. L. 99–500, Pub. L. 99–591, and Pub. L. 99–661 added identical sections.
Amendments
2021—Pub. L. 116–283, §1870(d)(2), as amended by Pub. L. 117–81, §1701(t)(2)(B), (C), renumbered section 2327 of this title as this section.
2016—Subsecs. (a), (b)(2). Pub. L. 114–328 substituted "(50 U.S.C. 4605(j)(1)(A))" for "(50 U.S.C. App. 2405(j)(1)(A))".
2003—Subsec. (c)(1)(A). Pub. L. 108–136, §1031(a)(16)(A), substituted "if in the best interests of the Government" for "after the date on which such head of an agency submits to Congress a report on the contract".
Subsec. (c)(1)(B). Pub. L. 108–136, §1031(a)(16)(B), substituted "The Secretary shall maintain records of each contract entered into by reason of subparagraph (A). Such records" for "A report under subparagraph (A)".
Subsec. (c)(1)(C). Pub. L. 108–136, §1031(a)(16)(C), struck out subpar. (C) which read as follows: "After the head of an agency submits a report to Congress under subparagraph (A) with respect to a firm or a subsidiary, such head of an agency is not required to submit a report before entering into any subsequent contract with such firm or subsidiary unless the information required to be included in such report under subparagraph (B) has materially changed since the submission of the previous report."
1997—Subsecs. (d) to (g). Pub. L. 105–85 added subsecs. (d) and (e) and redesignated former subsecs. (d) and (e) as (f) and (g), respectively.
1987—Subsecs. (a), (b)(2). Pub. L. 100–224 substituted "50 U.S.C. App." for "50 U.S.C." in parenthetical after "Export Administration Act of 1979".
Subsec. (d)(1). Pub. L. 100–180 inserted par. (1) designation.
Statutory Notes and Related Subsidiaries
Effective Date of 2021 Amendment
Amendment by Pub. L. 117–81 applicable as if included in the enactment of title XVIII of Pub. L. 116–283 as enacted, see section 1701(a)(2) of Pub. L. 117–81, set out in a note preceding section 3001 of this title and note below.
Amendment by Pub. L. 116–283 effective Jan. 1, 2022, with additional provisions for delayed implementation and applicability of existing law, see section 1801(d) of Pub. L. 116–283, set out as a note preceding section 3001 of this title.
Effective Date
Pub. L. 99–500, §101(c) [title X, §951(c)], Oct. 18, 1986, 100 Stat. 1783–82, 1783-165, Pub. L. 99–591, §101(c) [title X, §951(c)], Oct. 30, 1986, 100 Stat. 3341–82, 3341-165, and Pub. L. 99–661, div. A, title IX, formerly title IV, §951(c), Nov. 14, 1986, 100 Stat. 3945, renumbered title IX, Pub. L. 100–26, §3(5), Apr. 21, 1987, 101 Stat. 273, provided that: "Section 2327 of title 10, United States Code [now 10 U.S.C. 4871] (as added by subsection (a)(1)), shall apply to contracts entered into by the Secretary of Defense after the end of the 90-day period beginning on the date of the enactment of this Act [Oct. 18, 1986]."
Transfer of Functions
For transfer of authorities, functions, personnel, and assets of the Coast Guard, including the authorities and functions of the Secretary of Transportation relating thereto, to the Department of Homeland Security, and for treatment of related references, see sections 468(b), 551(d), 552(d), and 557 of Title 6, Domestic Security, and the Department of Homeland Security Reorganization Plan of November 25, 2002, as modified, set out as a note under section 542 of Title 6.
Measures To Increase Supply Chain Resiliency for Small Unmanned Aerial Systems
Pub. L. 118–159, div. A, title I, §162, Dec. 23, 2024, 138 Stat. 1815, provided that:
"(a)
"(1) to identify risks in the supply chain for small unmanned aerial systems (referred to in this section as 'sUAS'); and
"(2) to increase the resiliency of such sUAS supply chain using parts supplied by domestic sources and from allies and partners of the United States.
"(b)
"(1)
"(A) create a taxonomy for each component that categorizes the component by function, level of risk, and such other criteria as the Secretary determines appropriate; and
"(B) help assess the risk of such components for the purposes of supply chain monitoring and visibility.
"(2)
"(A) assess the risk of each sUAS component to Department of Defense networks or operations;
"(B) for components that present a risk as determined under subparagraph (A), identify any manufacturers of such components are based in covered foreign countries and evaluate whether measures to mitigate the risk posed by such foreign-produced components are feasible or practical; and
"(C) determine if any of the foreign companies in the sUAS supply chain should be included on the list maintained by the Department of Defense in accordance with section 1260H of the National Defense Authorization Act for Fiscal Year 2021 (Public Law 116–283; 10 U.S.C. 113 note).
"(3)
"(A) identification of sources of supply for sUAS components outside of a covered foreign country assessed to present a risk under paragraph (2)(A) and the total manufacturing capacity of such suppliers;
"(B) an assessment of the total requirement for sUASs of the Department of Defense;
"(C) a plan to increase the manufacturing capacity of alternative sources of supply that can meet the requirement specified in subparagraph (B), including estimated funding needs; and
"(D) a description of how existing initiatives and programs of the Department of Defense may be used to create alternative sUAS sources of supply outside of a covered foreign country, including recommendations for—
"(i) using authorities available to the Department of Defense, such as Defense Production Act authorities, the Industrial Base Analysis and Sustainment program, loan guarantees, or other programs; and
"(ii) incentivizing private sector investment to grow or foster domestic or allied sourcing for components for sUASs.
"(c)
"(1) a list of each component identified under subsection (b)(1), including a description of any security vulnerabilities associated with such component;
"(2) a description of the supply chain risk framework developed under subsection (b)(2);
"(3) any recommendations for the inclusion of companies on the list described in subsection (b)(2)(C); and
"(4) the full strategy developed under subsection (b)(3).
"(d)
"(e)
Prohibition on Operation or Procurement of Foreign-Made Unmanned Aircraft Systems
Pub. L. 116–92, div. A, title VIII, §848, Dec. 20, 2019, 133 Stat. 1508, as amended by Pub. L. 117–263, div. A, title VIII, §817(a), Dec. 23, 2022, 136 Stat. 2707, provided that:
"(a)
"(1) a covered unmanned aircraft system that—
"(A) is manufactured in a covered foreign country or by an entity domiciled in a covered foreign country;
"(B) uses flight controllers, radios, data transmission devices, cameras, or gimbals manufactured in a covered foreign country or by an entity domiciled in a covered foreign country;
"(C) uses a ground control system or operating software developed in a covered foreign country or by an entity domiciled in a covered foreign country; or
"(D) uses network connectivity or data storage located in or administered by an entity domiciled in a covered foreign country; or
"(2) a system manufactured in a covered foreign country or by an entity domiciled in a covered foreign country for the detection or identification of covered unmanned aircraft systems.
"(b)
"(c)
"(1) Counter-UAS surrogate testing and training; or
"(2) intelligence, electronic warfare, and information warfare operations, testing, analysis, and training.
"(d)
"(e)
"(1)
"(A) the People's Republic of China.
"(B) The Russian Federation.
"(C) The Islamic Republic of Iran.
"(D) The Democratic People's Republic of Korea.
"(2)
"(3)
"(A) Da-Jiang Innovations (or any subsidiary or affiliate of Da-Jiang Innovations).
"(B) Any entity that produces or provides unmanned aircraft systems and is included on Consolidated Screening List maintained by the International Trade Administration of the Department of Commerce.
"(C) Any entity that produces or provides unmanned aircraft systems and—
"(i) is domiciled in a covered foreign country; or
"(ii) is subject to unmitigated foreign ownership, control or influence by a covered foreign country, as determined by the Secretary of Defense unmitigated foreign ownership, control or influence in accordance with the National Industrial Security Program (or any successor to such program)."
[Pub. L. 117–263, div. A, title VIII, §817(b), Dec. 23, 2022, 136 Stat. 2708, provided that: "Not later than 180 days after the date of the enactment of this Act [Dec. 23, 2022], the Secretary of Defense shall issue policy to—
["(1) implement the requirements of section 848 of the National Defense Authorization Act for Fiscal Year 2020 (Public Law 116–92; 10 U.S.C. 4871 note), as amended by this section, including by establishing a due diligence process for the Department of Defense to make determinations required by subsection (b) of such section 848 (as amended by this section); and
["(2) establish an appeal process for any offerors or awardees with which the Secretary has not entered into a contract or has not extended or renewed a contract pursuant to subsection (b) of such section 848 (as amended by this section)."]
Elimination of Unreliable Sources of Defense Items and Components
Pub. L. 108–136, div. A, title VIII, §821, Nov. 24, 2003, 117 Stat. 1546, provided that:
"(a)
"(b)
"(c)
"(d)
"(2) With respect to contracts in existence on the date of the enactment of this Act, the Secretary of Defense shall take such action as is necessary to ensure that such contracts are in compliance with subsection (b) not later than 24 months after such date."
1 See References in Text note below.