New FAR Flowdown Clauses Effective December 4, 2023 – ARE YOU READY?

A new interim rule issued by the Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA) goes into effect December 4, 2023. This interim rule will amend the Federal Acquisition Regulation (FAR) as well as add three (3) NEW FAR clauses to implement supply chain risk information sharing and exclusion removal orders.

The changes apply to contracts below the simplified acquisition threshold (SAT) and contracts for commercial products and services (including Commercially Available Off-the-Shelf (COTS)).

New FAR Clauses

These new clauses are as follows:

FAR 52.204-28, Federal Acquisition Supply Chain Security Act (FASCSA) Orders-Federal Supply Schedules (FSS), Governmentwide Acquisition Contracts (GWAC), and Multi-Agency Contracts (MAC) provides contractors with notice that FASCSA orders will be identified in a RFQ or in a notice of intent to place an order. Contractors will be required to comply with removal or exclusion orders during the period of performance of a contract.

What you need to do to comply:

- - During contract performance, contractors “shall promptly” make necessary changes to remove anything subject to a FASCSA order.

FAR 52.204-29, Federal Acquisition Supply Chain Security Act Orders-Representation and Disclosures prohibits contractors from providing or using any “any covered article, or any products or services produced or provided by a source, including contractor use of covered articles or sources, if the covered article or source is subject to an applicable FASCSA [Federal Acquisition Supply Chain Security Act] order which is identified in FAR 52.204-30(b)(1).

What you need to do to comply:

- - Contractors will be required to search for FASCSA orders in System for Award Management (SAM) as well as review the solicitation for any FASCSA orders that are not in SAM, but which apply to the solicitation.
  - By submitting an offer, the contractor represents that a reasonable inquiry has been conducted and that a covered article is not being provided.
  - If a contractor cannot represent compliance with any FASCSA order, the contractor is required to submit a disclosure to the contracting officer to determine if a waiver may be sought.

FAR 52.204-30, Federal Acquisition Supply Chain Security Act Orders-Prohibition prohibits contractors from providing or using, as part of their performance, any covered article, including any products or services produced or provided by a source, if the covered article or source is prohibited by an applicable FASCSA order.

What you need to do to comply:

- - Pursuant to FAR 52.204-30(c)(1), the Contractor shall review SAM.gov at least once every three months, or as advised by the contracting officer, to check for covered articles, and/or products or services by a source, subject to FASCSA orders not currently identified under (b) of the clause.
  - For each covered article or product/service produced or provided by a source subject to FASCSA, Contractors shall submit a report within 3 business days from the date of identification/notification and within 10 days of the initial report, submit any mitigation actions undertaken or recommended.
  - The substance of FAR 52.204-30 is required to be flowed down in all subcontracts.

Take-Aways

DoD, GSA, and NASA expect there will be significant economic impact to small entities. The interim rule will require entities to:

1. 1. Become familiar with the new regulatory requirements;
  2. Regularly review SAM for FASCSA orders;
  3. Submit disclosures;
  4. Review existing supply chain for covered articles or sources prohibited by FASCSA orders;
  5. Submit reports if a prohibited article or source was delivered to the USG in performance of a contract; and
  6. Update company policies & procedures.

Comments on the Interim Rule can be submitted prior to December 4, 2023, using the Federal eRulemaking portal at https://www.regulations.gov and searching for “FAR Case 2020-011”.

SpendLogic encourages industry to develop and implement any new policies and procedures as a result of this interim rule as well as notify and train personnel on these new requirements.

Check out SpendLogic for more information on SpendLogic’s tools as well as additional procurement related articles and training videos.

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