10 U.S.C. § 4871 — Contracts: consideration of national security objectives

(a) The head of an agency^* must require a firm or subsidiary bidding on a Defense solicitation to disclose any significant interest in the firm or subsidiary—or, for a subsidiary, in its owning firm—that is directly or indirectly owned or controlled by a foreign government or its agent or instrumentality, when the Secretary of State has determined under the cited Export Administration Act provision that the country repeatedly supported international terrorism.

(b) Unless (c) applies, an agency head may not contract with the firm or subsidiary if: (1) a foreign government directly or indirectly owns or controls a significant interest in it or, for a subsidiary, its owning firm; and (2) that government is the government of a country that the Secretary of State has determined made repeated international-terrorism support.

(c) (1)(A) If the Secretary of Defense decides under paragraph (2) that contracting with a firm or subsidiary described in (b) is not inconsistent with United States national-security objectives, an agency head may contract with it if doing so is in the Government’s best interests. (B) The Secretary must keep records of each such contract. The records must state: (i) the foreign government; (ii) the nature of the contract; (iii) the extent of that government’s, or its agent’s or instrumentality’s, ownership or control of the firm or subsidiary, or of the owning firm when appropriate; and (iv) the reasons for the contract. (2) When an agency head asks, the Secretary must decide whether contracting with the firm or subsidiary is inconsistent with United States national-security objectives. The Secretary must consider: (A) the United States relationship with the foreign government; (B) United States obligations under international agreements; (C) the extent of the foreign government’s or its agent’s or instrumentality’s ownership or control; and (D) whether contract payments or information given to the firm or subsidiary could be used for purposes hostile to United States interests.

(d) (1) The Secretary of Defense must create and maintain a list of all firms and subsidiaries identified as subject to (b). (2)(A) A person may ask the Secretary to add a firm or subsidiary that the person believes is owned or controlled by a foreign government described in (b)(2). After receiving the request, the Secretary must decide whether both conditions in (b) exist. If they do, the Secretary must add the firm or subsidiary. (B) A listed firm or subsidiary may ask to be removed because it was listed by mistake or its ownership circumstances significantly changed. The Secretary must decide whether the conditions in (b) still exist. If they do not, the Secretary must remove it. (C) The Secretary must establish procedures for carrying out this paragraph, including requests to add or remove firms or subsidiaries. (3) An agency head must prohibit a contractor from subcontracting more than $25,000 under the contract to a listed firm or subsidiary unless there is a compelling reason. If an agency head’s consent is required for the subcontract, the agency head may not consent unless there is a compelling reason.

(e) The Administrator of General Services must make the list available to Federal agencies and the public in the same way and to the same extent as the list of suspended and debarred contractors compiled under FAR subpart 9.4.

(f) (1) This section does not apply to a contract for less than $100,000. (2) It does not apply to the Coast Guard or the National Aeronautics and Space Administration.

(g) After consulting the Secretary of State, the Secretary of Defense must issue regulations carrying out this section. The regulations must define “significant interest”; this section does not define that term.