On Aug. 25, 2022, the Department of Defense (DoD) published two new interim DFARS rules related to contractors with individuals performing work in the People's Republic of China. Both rules have immediate effect.
These two DFARS clauses, DFARS 252.225-7057 and 252.225-7058, implement Section 855 of the Fiscal Year 2022 National Defense Authorization Act. The former clause requires pre-award disclosure of any individuals working in China, while the latter requires post-award disclosure of the same. These clauses apply for all DoD prime and subcontracts valued at over $5 million, except for commercial products and commercial services contracts (a "covered contract").
In addition to the disclosure of any workforce or facilities located in China, the clauses also cover any business entity performing work on a covered contract in China, including by leasing or owning real property used in the performance of the contract in China.
Both disclosures require information about the total number of individual employees performing work on a covered contract funded by the DoD, and a description of the physical location where the work will be performed. In addition, the pre-award clause requires disclosure of the proposed use of one or more individuals in China.
The DoD may not award, extend, or exercise options on any covered contract unless the required disclosures are made.
Since these are interim rules, the DoD is still taking comments until Oct. 24, 2022. After this time, it will finalize the rules, either with or without changes from the public comment period.
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