New Requirements For DoD Consulting Contractors

Bottom Line Up Front

On October 24, 2025, the Department of Defense (DoD) DFARS Case 2024-D007 ("the final rule") goes into effect, which amends the Defense Federal Acquisition Regulation Supplement (DFARS) to address national security concerns that may arise when a company provides consulting services to both the DoD and a foreign adversary. Going forward, a company that is providing or seeking to provide management, scientific, and technical consulting services to the DoD must now certify that neither it, nor its affiliates or subsidiaries, are providing consulting services to covered foreign entities. If they cannot make this certification, the company will need to have an approved conflict-of-interest mitigation plan in order to be awarded a DoD contract. The final rule and the DFARS amendment are intended to ensure that contractors advising the DoD are not simultaneously involved in activities that could negatively impact U.S. national security interests.

Covered Foreign Entities

The final rule implements Section 812 of the Fiscal Year 2024 (FY 2024) National Defense Authorization Act (NDAA), which prohibits the DoD from awarding covered contracts to entities with existing consulting agreements with covered foreign entities. Section 812 was drafted to address the growing concern that sensitive U.S. defense and national security information could be accessed and compromised by foreign adversaries when companies and/or their affiliates are working for both the DoD and certain foreign adversaries. Section 812 defines a covered foreign entity as:

1. The People's Republic of China, the Chinese Communist Party, the People's Liberation Army, the Ministry of State Security, or other security service or intelligence agency of the People's Republic of China;
2. The Russian Federation or any entity sanctioned by the Secretary of the Treasury under Executive Order 13662, Blocking Property of Additional Persons Contributing to the Situation in Ukraine;
3. The government of any country if the Secretary of State determines that such government has repeatedly provided support for acts of international terrorism;
4. Any entity on one of the Department of Commerce's lists (e.g., the Entity List, the Denied Persons List, the Unverified List, etc.);
5. Companies identified by the Secretary of Defense as Communist Chinese Military Companies under section 1237(b) of the National Defense Authorization Act for Fiscal Year 1999; and
6. Any entity on the Non-Specially Designated Nationals Chinese Military-Industrial Complex Companies List maintained by the Office of Foreign Assets Control.

Notably, the list of covered foreign entities is likely to grow as the Secretaries of State and Defense have broad discretion to add to list.

Covered Contracts

Covered contracts are those awarded by the DoD involving consulting services. Consulting services are defined as advisory and assistance services. Notably consulting services do not include the provision of products or services related to compliance with legal, audit, accounting, tax, reporting, or other requirements of the laws and standards of countries. They also do not include services that involve participating in a judicial, legal, or equitable dispute resolution proceeding.

Covered contracts are those for the acquisition of commercial services but not for the acquisition of commercial products including COTS items. Also, covered contracts will be those awarded under the North American Industry Classification System (NAICS) code Industry Group 5416, which relates to providing advice and assistance to businesses and other organizations on management, environmental, scientific, and technical issues.

Conflict of Interest Mitigation Plan

A company that finds it cannot certify that it (and its affiliates and subsidiaries) is not providing consulting services to a covered foreign entity must develop a detailed Conflict of Interest Mitigation Plan. The Plan must be auditable to a "contract oversight entity" such as the contracting officer, Defense Contract Management Agency, Agency Office of Inspector General, or the Government Accountability Office. The Plan is required to contain the following:

1. A list of all consulting contracts with a covered foreign entity;
2. A written analysis, including a course of action for avoiding, neutralizing, or mitigating the actual or potential conflict of interest that is presented by the performance of consulting contracts with covered foreign entities;
3. The specific procedures implemented by the company designed to ensure that employees who will be performing a covered contract for the DoD will not also provide any consulting services to any covered foreign entity; and
4. The protocol for submitting to the DoD a notice of an unmitigated conflict of interest with respect to a covered contract within 15 days of determining that such a conflict has been identified.

A company should expect to work with the contracting officer concerned to develop the Plan and have it approved. Once the Plan is approved, it will be incorporated into the resulting contract.

Takeaways

Companies that are doing consulting work globally and with the DoD need to be aware of these new requirements and ensure that they are making accurate certifications or executing approved Conflict of Interest Mitigation Plans. Companies that are a part of a larger corporate family will need to conduct due diligence on consulting work being done by their affiliated companies to ensure compliance. Entities looking to invest in or acquire a company that is providing consulting services to the DoD, should diligence whether the target company has the required certification in place or has a Mitigation Plan in place, if it is providing consulting services to covered foreign entities.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.