On
In its current form, the proposed rule will bar the purchase of semiconductors, semiconductor products, products that incorporate a semiconductor product, and/or a service that utilizes such a product made by companies designated as being owned or controlled by the Chinese, Russian, North Korean, or Iranian governments. The proposed rule also specifically prohibits purchasing new products or services that use semiconductor chips made by the Chinese companies
Under the proposed rule, a contractor will be required to notify the contracting agency within 60 days of the date that they become aware, or have reason to suspect, that any product to be used in a critical system purchased by the federal government, or purchased by a contractor or subcontractor for delivery to the federal government for any critical system, contains covered semiconductor products or services. There is a safe harbor from civil liability for contractors that make these disclosures if the contractor documents its efforts to identify and remove covered products or services. However, the rule would impose liability on entities found to violate the rule, including requiring the entity to be responsible for any rework or corrective action if it fails to disclose a covered semiconductor product.
The proposed rule would also require federal contract bidders to utilize an extensive certification process in which they would have to conduct a "reasonable inquiry" into the components of the products they offer to try to detect and avoid use of prohibited semiconductor products or services in the electronic products or electronic services they sell to the federal government. The proposed reasonable inquiry would permit contractors to reasonably rely on appropriate certifications of compliance from subcontractors and other entities, but may require them to include other mechanisms of affirmative diligence review. Contractors would also be required to disclose whether their products include any covered semiconductors or services. The proposed rule contemplates that agencies may grant waivers if deemed necessary in certain circumstances, such as when any alternative product is deemed unreasonably expensive or if the proposed semiconductor product or service is not considered a security risk.
-
How to further clarify the scope of the prohibition
- How to define the "reasonable inquiry" that an entity must make
- Whether an entity has sufficient visibility into its supply chain to determine whether the supply chain uses covered semiconductor products or services
- What impact this rule may have on an entity
- Whether an entity anticipates needing a waiver when the prohibition goes into effect in
December 2027 and, if so, how long the entity anticipates it will take to find alternative semiconductors to be compliant - Whether the
Department of Commerce should establish a public list to identify electronic products with prohibited semiconductors
Any industry stakeholder may submit a public comment about this proposed rule. A commenter may attach files (maximum of 20 files up to 10 MB each), and choose whether to identify itself as an individual or an organization or submit anonymously. Information entered on the web form may be viewable publicly. Note the comment period ends at
Additionally, due to the complexity of changes that may be required for contractors to comply with this rule by the
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.
IL 60601
Tel: 3125585600
Fax: 3125585700
E-mail: awisinski@winston.com
URL: www.winston.com
© Mondaq Ltd, 2024 - Tel. +44 (0)20 8544 8300 - http://www.mondaq.com, source