66066 Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Rules and Regulations 

MATERIAL INSPECTION AND RECEIVING REPORT TABLE 1—STANDARD DISTRIBUTION

Standard distribution Number of 

copies 

With Shipment * ................................................................................................................................................................................... 2 

Consignee (via mail) ............................................................................................................................................................................ 1 

(For Navy procurement, include unit price.) 

(For foreign military sales, consignee copies are not required.) 

Contract Administration Office (CAO) ................................................................................................................................................. 1 

(Forward direct to address in Block 10 except when addressee is a Defense Contract Management Agency (DCMA) office 

and a certificate of conformance or the alternative release procedures (see F–301, Block 21) is involved, and acceptance 

is at origin; then, forward through the authorized Government representative.) 

Purchasing Office ................................................................................................................................................................................ 1 

Payment Office ** ................................................................................................................................................................................. 2 

(Forward direct to address in Block 12 except— 

(i) When address in Block 10 is a DCMA office and payment office in Block 12 is the Defense Finance and Accounting 

Service, Columbus Center, do not make distribution to the Block 12 addressee; 

(ii) When address in Block 12 is the Defense Finance and Accounting Service, Columbus Center/Albuquerque Office 

(DFAS–CO/ALQ), Kirtland AFB, NM, attach only one copy to the required number of copies of the contractor’s invoice; 

(iii) When acceptance is at destination and a Navy finance office will make payment, forward to destination; and 

(iv) When a certificate of conformance or the alternative release procedures (see F–301, Block 21) are involved and 

acceptance is at origin, forward the copies through the authorized Government representative.) 

ADP Point for CAO (applicable to Air Force only) .............................................................................................................................. 1 

(When DFAS–CO/ALQ is the payment office in Block 12, send one copy to DFAS–CO/ALQ immediately after signature. If 

submission of delivery data is made electronically, distribution of this hard copy need not be made to DFAS–CO/ALQ.) 

CAO of Contractor Receiving GFP ..................................................................................................................................................... 1 

(For items fabricated or acquired for the Government and shipped to a contractor as Government furnished property, send 

one copy directly to the CAO cognizant of the receiving contractor, ATTN: Property Administrator (see DoD 4105.59–H).) 

* Attach as follows: 

Type of shipment Location 

Carload or truckload ................................................................................. Affix to the shipment where it will be readily visible and available upon 

receipt. 

Less than carload or truckload ................................................................. Affix to container number one or container truckload bearing lowest 

number. 

Mail, including parcel post ........................................................................ Attach to outside or include in the package. Include a copy in each additional package of multi-package shipments. 

Pipeline, tank car, or railroad cars for coal movements .......................... Forward with consignee copies. 

** Payment by Defense Finance and Accounting Service, Columbus Center will be based on the source acceptance copies of DD Forms 250 

forwarded to the contract administration office. 

* * * * * 

[FR Doc. 2018–27555 Filed 12–20–18; 8:45 am] 

BILLING CODE 5001–06–P 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Parts 204, 212, 225, and 252 

[Docket DARS–2018–0060] 

RIN 0750–AJ82 

Defense Federal Acquisition 

Regulation Supplement: Foreign 

Commercial Satellite Services and 

Certain Items on the Commerce 

Control List (DFARS Case 2018–D020) 

AGENCY: Defense Acquisition 

Regulations System, Department of 

Defense (DoD). 

ACTION: Interim rule. 

SUMMARY: DoD is amending the Defense 

Federal Acquisition Regulation 

Supplement (DFARS) to implement 

sections of the National Defense 

Authorization Act for Fiscal Years 2017 

and 2018. One section imposes 

additional prohibitions with regard to 

acquisition of certain foreign 

commercial satellite services, such as 

cybersecurity risk and source of 

satellites and launch vehicles used to 

provide the foreign commercial satellite 

services, and expands the definition of 

‘‘covered foreign country’’ to include 

Russia. Another section prohibits 

purchase of items from a Communist 

Chinese military company that meet the 

definition of goods and services 

controlled as munitions items when 

moved to the Commerce Control List of 

the Export Administration Regulations 

of the Department of Commerce. 

DATES: Effective Date: December 21, 

2018. 

Comment Date: Comments on the 

interim rule should be submitted in 

writing to the address shown below on 

or before February 19, 2019, to be 

considered in the formation of a final 

rule. 

ADDRESSES: Submit comments 

identified by DFARS Case 2018–D020, 

using any of the following methods: 

Æ Federal eRulemaking Portal: http:// 

www.regulations.gov. Search for 

‘‘DFARS Case 2018–D020.’’ Select 

‘‘Comment Now’’ and follow the 

instructions provided to submit a 

comment. Please include ‘‘DFARS Case 

2018–D020’’ on any attached 

documents. 

Æ Email: osd.dfars@mail.mil. Include 

DFARS Case 2018–D020 in the subject 

line of the message. 

Æ Fax: 571–372–6094. 

Æ Mail: Defense Acquisition 

Regulations System, Attn: Ms. Amy G. 

Williams, OUSD (A&S) DPC/DARS, 

Room 3B941, 3060 Defense Pentagon, 

Washington, DC 20301–3060. 

Comments received generally will be 

posted without change to http:// 


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Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Rules and Regulations 66067 

www.regulations.gov, including any 

personal information provided. To 

confirm receipt of your comment(s), 

please check www.regulations.gov, 

approximately two to three days after 

submission to verify posting (except 

allow 30 days for posting of comments 

submitted by mail). 

FOR FURTHER INFORMATION CONTACT: Ms. 

Amy G. Williams, Defense Acquisition 

Regulations System, OUSD (A&S) DPC/ 

DARS, Room 3B855, 3060 Defense 

Pentagon, Washington, DC 20301–3060. 

Telephone 571–372–6106; facsimile 

571–372–6094. 

SUPPLEMENTARY INFORMATION: 

I. Background 

DoD is amending the DFARS to 

implement sections of the National 

Defense Authorization Act (NDAA) for 

Fiscal Year (FY) 2018 (Pub. L. 115–91) 

and the NDAA for FY 2017 (Pub. L. 

114–328) as follows: 

A. Section 1603 of the NDAA for FY 

2018 

Section 1603 amends 10 U.S.C. 2279 

to impose additional prohibitions with 

regard to acquisition of certain foreign 

commercial satellite services. It 

addresses cybersecurity risks and the 

source of satellites and launch vehicles 

used to provide the foreign satellite 

services. The definition of ‘‘covered 

foreign country’’ is expanded to include 

Russia, in addition to any country 

described in section 1261(c)(2) of the 

NDAA for FY 2013 (Pub. L. 112–239), 

which specifies the People’s Republic of 

China, North Korea, and any country 

that is a state sponsor of terrorism 

(currently Iran, North Korea, Sudan, and 

Syria). 10 U.S.C. 2327, entitled 

‘‘Contracts: consideration of national 

security objectives,’’ is the underlying 

statute that prohibits DoD from entering 

into contracts with a firm or subsidiary 

of a firm, that is owned or controlled by 

the government of a foreign country that 

has been identified by the Secretary of 

State as a state sponsor of terrorism 

under section 6(j)(1)(A) of the Export 

Administration Act of 1979 (50 U.S.C. 

App. 2405(j)(1)(A)). 50 U.S.C. App. 2405 

was subsequently reclassified and 

renumbered as 50 U.S.C. 4605, which 

has now been repealed by section 

1766(a) of the Export Control Reform 

Act of 2018 (Title XVII, Subtitle B, of 

the NDAA for FY 2019, Pub. L. 115– 

232). 50 U.S.C. 4605(j) has been 

replaced by section 1754(c) of the 

Export Control Reform Act of 2018 (to 

be eventually codified at 50 U.S.C. 

4813(c)). 

B. Section 1296 of the NDAA for FY 

2017 

Section 1211 of the NDAA for FY 

2006 (Pub. L. 109–163) established the 

prohibition against purchase of items on 

the United States Munitions List 

(USML) from a Communist Chinese 

military company. Section 1296 of the 

NDAA for FY 2017 amends section 1211 

to prohibit purchase from any 

Communist Chinese military company, 

through a contract or subcontract (at any 

tier), of goods and services controlled as 

munitions items on the 600 series of the 

Commerce Control List (CCL) of the 

Export Administration Regulations of 

the Department of Commerce. Under the 

Export Control Reform Initiative, the 

International Traffic in Arms 

Regulations (ITAR) and the USML have 

been amended so that they control only 

those items that provide the United 

States with a critical military or 

intelligence advantage or otherwise 

warrant such controls. In parallel, the 

Export Administration Regulations 

(EAR) were amended to transition some 

items from the USML to a series of new 

export control classification numbers 

(the 600 series) on the CCL, providing 

control for military items that do not 

warrant USML controls, because they 

provide less than a critical military or 

intelligence capability, but are not in 

normal commercial use. The 600 series 

is so identified when the third character 

in the 5-character export control 

classification number is the number 

‘‘6’’. 

However, an unintended consequence 

of this transition of some munitions 

from the USML to the 600 series of the 

CCL was that the items were no longer 

covered by the prohibition of section 

1211 of the NDAA for FY 2006, 

prohibiting purchase from Communist 

Chinese military companies. Therefore, 

section 1296 of the NDAA for FY 2017 

has extended the prohibition to cover 

items listed in the 600 series of the CCL. 

II. Discussion and Analysis 

This rule amends the DFARS as 

follows: 

A. Section 1603 of the NDAA for FY 

2018 

1. Definitions. This rule expands the 

definition of ‘‘covered foreign country’’ 

to include Russia, as specified in the 

statute, and adds the statutory 

definitions of ‘‘cybersecurity risk’’ and 

‘‘launch vehicle’’ at DFARS 225.772–1 

and in the associated provision at 

DFARS 252.224–7049, Prohibition on 

Acquisition of Certain Foreign 

Commercial Satellite Services— 

Representations, and the clause at 

DFARS 252.225–7051, Prohibition on 

Acquisition of Certain Foreign 

Commercial Satellite Services, as 

appropriate. 

In addition, the statutory references to 

the Export Administration Act of 1979 

in the definitions of ‘‘state sponsor of 

terrorism’’ at DFARS 225.772–1 and in 

the clauses at 252.225–7051 and 

252.225–7050, Disclosure of Ownership 

or Control by the Government of a 

Country that is a State Sponsor of 

Terrorism, have been revised to refer to 

‘‘section 1754(c)(1)(A)(i) of the Export 

Control Reform Act of 2018 (Title XVII, 

Subtitle B, of the National Defense 

Authorization Act for Fiscal Year 2019, 

Pub. L. 115–232)’’. 

2. Cybersecurity Risk. The 

prohibitions at DFARS 225.772–2 and 

the provision at DFARS 252.225–7049, 

Prohibition on Acquisition of Certain 

Foreign Commercial Satellite Services— 

Representation, are expanded to include 

prohibition on award of a contract for 

commercial satellite services to a foreign 

entity if entering into such contract 

would create an unacceptable 

cybersecurity risk for DoD. The 

procedures at DFARS 225.772–3 further 

specify that unacceptable cybersecurity 

risk is to be determined by the Under 

Secretary of Defense for Acquisition and 

Sustainment or the Under Secretary of 

Defense for Policy, the two officials to 

whom the statute permits delegation of 

the authority to enter into a contract, 

subject to the prohibitions in paragraphs 

(a) and (b) of the statute. 

3. Satellites and Launch Vehicles. 

Restrictions are added at DFARS 

225.772–2 and the provision at DFARS 

252.225–7049 for contracts for 

commercial services awarded to any 

entity (whether or not foreign) with 

regard to the design or manufacture of 

the satellite to be used to provide the 

services, or the launch vehicle that will 

be used to launch the satellite outside 

the United States. These restrictions do 

not apply to a launch that occurs prior 

to December 31, 2022, or to a satellite 

service provider that has a contract or 

other agreement relating to launch 

service that, prior to June 10, 2018, was 

either fully paid for by the satellite 

service provider, or covered by a legally 

binding commitment of the satellite 

service provider to pay for such 

services. 

4. Representations and Disclosures. 

The representations are expanded to 

cover the new restrictions on satellites 

and launch vehicles, but these new 

restrictions will only be applicable with 

regard to commercial satellite services 

that will use satellites launched or after 

December 31, 2022. The restriction on 

launch vehicles does not apply to 


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66068 Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Rules and Regulations 

launches within the United States. For 

added clarity, the disclosures that relate 

to the representations are integrated into 

the representations. 

5. Clause. This rule creates a new 

clause to require compliance during 

contract performance with the 

representations in their offer with regard 

to the origin of the satellite services, 

satellites, and launch vehicles. 

B. Section 1296 of the NDAA for FY 

2017 

1. Definitions. This rule provides a 

definition of ‘‘600 series of the 

Commerce Control List’’ and adds the 

definition of ‘‘item’’ with crossreferences to the EAR at 15 CFR 772.1 

and ITAR at 22 CFR 120.6 and 22 CFR 

120.9. The definitions already contain 

cross-references to the USML at 22 CFR 

part 121. For increased ease of reading, 

the definitions of Communist Chinese 

military company and ‘‘United States 

Munitions List’’ are now repeated at 

DFARS 225.003, rather than just 

providing a cross-reference at 225.770– 

1 to the definitions in the clause at 

DFARS 252.225–7007. 

2. 600 series. This rule amends 

DFARS 225.770 and the clause at 

DFARS 252.225–7007 to extend the 

prohibition on acquisition of USML 

items from Communist Chinese military 

companies to apply to items in the 600 

series of the CCL. 

III. Applicability to Contracts at or 

Below the Simplified Acquisition 

Threshold and for Commercial Items, 

Including Commercially Available Offthe-Shelf Items 

This rule amends the applicability of 

existing DFARS solicitation provisions 

and contract clauses and adds a new 

clause as follows: 

• To implement section 1603 of the 

NDAA for FY 2018, this rule amends the 

provision at DFARS 252.225–7049, 

Prohibition on Acquisition of 

Commercial Satellite Services from 

Certain Foreign Entities— 

Representation, and adds a clause to 

enforce compliance with the 

representations in the associated 

provisions. This provision and clause 

will apply to acquisitions not greater 

than the Simplified Acquisition 

Threshold (SAT) and acquisitions of 

commercial items. 

• To implement section 1296 of the 

NDAA for FY 2017, this rule modifies 

the clause at DFARS 252.225–7007, 

Prohibition on Acquisition of United 

States Munitions List Items from 

Communist Chinese Military 

Companies, to prohibit contractors or 

subcontractors from acquiring items 

listed on the 600 series of the CCL that 

are to be delivered under the contract 

from any Communist Chinese military 

company. As a result of the Export 

Control Reform Initiative, certain items 

were transferred from the USML to a 

series of new export control 

classification numbers (the 600 series) 

in the CCL. In order to ensure continued 

prohibition against purchase of items 

listed in the 600 series of the CCL from 

a Communist Chinese military 

company, this rule requires use of the 

clause in solicitations and contracts 

involving the delivery of items listed in 

the 600 series of the CCL, but does not 

otherwise change the clause 

prescription. The rule continues to 

prescribe the use of this clause for use 

in solicitations and contracts for items 

valued at or below the SAT. The clause 

will also apply to the acquisition of 

commercial items, including 

Commercially Available Off-the-Shelf 

(COTS) items, if the items are 600 series 

items on the CCL, or USML items. 

Although most 600 series items are not 

commercial items, and USML items are 

even less likely to be commercial items, 

it is possible that some of these covered 

items will be commercial items and 

must not be purchased from a 

Communist Chinese military company. 

A. Applicability to Contracts at or Below 

the SAT 

41 U.S.C. 1905 governs the 

applicability of laws to contracts or 

subcontracts in amounts not greater 

than the SAT. It is intended to limit the 

applicability of laws to such contracts or 

subcontracts. 41 U.S.C. 1905 provides 

that if a provision of law contains 

criminal or civil penalties, or if the 

Federal Acquisition Regulation (FAR) 

Council makes a written determination 

that it is not in the best interest of the 

Federal Government to exempt contracts 

or subcontracts at or below the SAT, the 

law will apply to them. The Principal 

Director, Defense Pricing and 

Contracting (DPC), is the appropriate 

authority to make comparable 

determinations for regulations to be 

published in the DFARS, which is part 

of the FAR system of regulations. 

B. Applicability to Contracts for the 

Acquisition of Commercial Items, 

Including COTS Items 

41 U.S.C. 1906 governs the 

applicability of laws to contracts for the 

acquisition of commercial items and is 

intended to limit the applicability of 

laws to contracts for the acquisition of 

commercial items. 41 U.S.C. 1906 

provides that if a provision of law 

contains criminal or civil penalties, or if 

the FAR Council makes a written 

determination that it is not in the best 

interest of the Federal Government to 

exempt commercial item contracts, the 

provision of law will apply to contracts 

for the acquisition of commercial items. 

Likewise, 41 U.S.C. 1907 governs the 

applicability of laws to COTS items, 

with the Administrator for Federal 

Procurement Policy the decision 

authority to determine that it is in the 

best interest of the Government to apply 

a provision of law to acquisitions of 

COTS items in the FAR. The Principal 

Director, DPC, is the appropriate 

authority to make comparable 

determinations for regulations to be 

published in the DFARS, which is part 

of the FAR system of regulations. 

C. Determinations 

• Section 1603 of the NDAA for FY 

2018. A determination and finding was 

signed by the Director, Defense 

Procurement and Acquisition Policy, on 

June 23, 2014, that due to potential risk 

to national security it would not be in 

the best interest of the United States to 

exempt acquisitions not greater than the 

SAT and acquisitions of commercial 

items from the applicability of 10 U.S.C. 

2279. Therefore, a separate 

determination under 41 U.S.C. 1905– 

1907 is not required. 

• Section 1296 of the NDAA for FY 

2017. A determination under 41 U.S.C. 

1905 is not required to prescribe DFARS 

252.225–7012 for use in solicitations 

and contracts valued at or below the 

SAT, because this is consistent with the 

current applicability of the clause 

DFARS 252.225–7007, which prohibits 

acquisitions of items on the USML from 

Communist Chinese Military 

companies. Modifying the clause to also 

cover items listed in the 600 series of 

the CCL is reinstating the prohibition 

that applied to those items before the 

items were moved off the USML and 

into the 600 series of the CCL. However, 

in accordance with 41 U.S.C. 1906 and 

1907, the Principal Director, DPC, has 

determined that it is in the best interest 

of the Government to apply the 

requirements of section 1296 of the 

NDAA for FY 2017 to contracts for the 

acquisition of commercial items, 

including COTS. This rule prescribes 

the use of the clause at DFARS 252.225– 

7007 in contracts for the acquisition of 

commercial items, if they involve the 

acquisition of 600 series or USML items. 

These items are export-controlled, 

irrespective of the contracting vehicle, 

including commercial contracts. The 

broad prohibition would be consistent 

with the intent of the law, DoD policy, 

and our National Defense Strategy with 

respect to China. The concern is with 

the integrity of the DoD supply chain 

and to prevent insertion of malicious 


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Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Rules and Regulations 66069 

items from China into U.S. weapons 

platforms, information technology 

systems and other areas, presenting a 

threat to our warfighters and their 

ability to defend U.S. national security. 

Further, because the meaning of the 

term ‘‘commercial’’ is not aligned 

between contracting and export control 

regulations, the disconnect could be 

used as a loophole for suppliers to 

violate the prohibition. Therefore, 

exempting contracts for the acquisition 

of commercial items (including COTS 

items) from the statutory prohibition on 

the acquisition of 600 series and USML 

items would severely decrease the 

intended effect of the statutes and could 

jeopardize the integrity of the DoD 

supply chain. 

IV. Executive Orders 12866 and 13563 

Executive Orders (E.O.s) 12866 and 

13563 direct agencies to assess all costs 

and benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). E.O. 13563 emphasizes the 

importance of quantifying both costs 

and benefits, of reducing costs, of 

harmonizing rules, and of promoting 

flexibility. This is a significant 

regulatory action and, therefore, was 

subject to review under section 6(b) of 

E.O. 12866, Regulatory Planning and 

Review, dated September 30, 1993. This 

rule is not a major rule under 5 U.S.C. 

804. 

V. Executive Order 13771 

This rule is not subject to the 

requirements of E.O. 13771, because the 

rule is issued with respect to a national 

security function of the United States. 

VI. Regulatory Flexibility Act 

DoD does not expect this interim rule 

to have a significant economic impact 

on a substantial number of small entities 

within the meaning of the Regulatory 

Flexibility Act, 5 U.S.C. 601, et seq. 

However, an initial regulatory flexibility 

analysis has been performed and is 

summarized as follows: 

The reason for this rule is to 

implement section 1603 of the National 

Defense Authorization Act (NDAA) for 

Fiscal Year (FY) 2018 and section 1296 

of the NDAA for FY 2017. Section 1603 

of the NDAA for FY 2018 amends 10 

U.S.C. 2279, which prohibits acquisition 

of certain foreign commercial satellite 

services. Section 1296 of the NDAA for 

FY 2017 amends section 1211 of the 

NDAA for FY 2006 to prohibit purchase 

from any Communist Chinese military 

company, through a contract or 

subcontract (at any tier), of goods and 

services controlled as munitions items 

on the 600 series of the Commerce 

Control List (CCL) of the Export 

Administration Regulations of the 

Department of Commerce. 

The objectives of the rule are as 

follows: 

• Section 1603. To prohibit award of 

contracts for commercial satellite 

services to a foreign entity if entering 

into such contract would create an 

unacceptable cybersecurity risk. In 

addition, the definition of covered 

foreign country is expanded to include 

Russia (other covered foreign countries 

are China, North Korea, Iran, Sudan, 

and Syria). New restrictions are also 

added with regard to the satellites and 

launch vehicles to be used to provide 

the satellite services, but these 

restrictions do not apply to launches 

that occur prior to December 31, 2022. 

• Section 1296. To prohibit purchase 

from a Communist Chinese military 

company of items that meet the 

definition of goods and services 

controlled as munitions items when 

moved to the 600 series of the CCL of 

the Export Administration Regulations 

of the Department of Commerce. 

DoD estimates that this rule will 

apply small entities as follows: 

• Section 1603. This part of the rule 

will apply to less than 86 small entities. 

According to Federal Procurement Data 

System (FPDS) data for FY 2016, 86 

small entities were awarded contracts or 

orders for services under Product 

Service Code D304 (ADP 

Telecommunications and Transmission 

Services), of which commercial satellite 

services are a subset. Although the focus 

of the Regulatory Flexibility Act is 

protection of domestic small business 

entities that are eligible for assistance 

from the Small Business 

Administration, there may be domestic 

small business entities in the United 

States that offer the satellite services of 

a foreign entity that would be restricted 

by this rule. 

• Section 1296. This part of the rule 

will apply to any small entities that 

intend to provide items on the 600 

series of the Commerce Control List 

under a DoD contract or subcontract. 

The 600 series consists of items on the 

Commerce Control List that have an 

export control classification number of 

which the third character is a ‘‘6’’. 

These items were transitioned from the 

United States Munitions List (USML) to 

the 600 series, because they have less 

than a critical military or intelligence 

capability than the items that remain on 

the USML, but they are not currently in 

normal commercial use. Data on the 

number of entities that can provide such 

items, and whether they are small or 

other than small entities, is not available 

in FPDS, because these items are not 

readily identifiable in FPDS and are 

often acquired through subcontracts. 

Projected reporting or recordkeeping 

requirements of this rule are as follows: 

• Section 1603. 

In addition to the current annual 

representations as to whether the offeror 

is, or is not, a foreign entity subject to 

the prohibitions of the statute; or is, or 

is not, offering commercial satellite 

services provided by such a foreign 

entity, this rule adds five more annual 

representations as to whether the 

offeror— 

Æ Is, or is not offering commercial 

satellite services using satellites, 

launched on or after December 31, 2022, 

that will be designed or manufactured 

in a covered foreign country; 

Æ Is, or is not offering commercial 

satellite services using satellites, 

launched on or after December 31, 2022, 

that will be designed or manufactured 

by an entity controlled in whole or in 

part by, or acting on behalf of, the 

government of a covered foreign 

country; 

Æ Is, or is not offering commercial 

satellite services using satellites, 

launched outside the United States on 

or after December 31, 2022, using a 

launch vehicle that is designed or 

manufactured in a covered foreign 

country; 

Æ Is, or is not offering commercial 

satellite services using satellites, 

launched outside the United States on 

or after December 31, 2022, using a 

launch vehicle that is provided by the 

government of a covered foreign 

country; and 

Æ Is, or is not offering commercial 

satellite services using satellites, 

launched outside the United States on 

or after December 31, 2022, using a 

launch vehicle that is provided by an 

entity controlled in whole or in part by, 

or acting on behalf of, the government 

of a covered foreign country. 

Further information is required if the 

offeror provides an affirmative response 

to any of the representations, but such 

affirmative response and further 

submission is expected to be extremely 

rare because of the statutory prohibition 

and the expected rarity of a waiver by 

the Under Secretary of Defense for 

Acquisition and Sustainment or for 

Policy. Furthermore, this prohibition is 

only applicable to launches on or after 

December 31, 2022. 

If the satellite service provider 

responded affirmatively to any of the 

new representations regarding launch 

vehicles, if such launches are covered in 


amozie on DSK3GDR082PROD with RULES5
66070 Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Rules and Regulations 

whole or in part by a contract or other 

agreement relating to launch services 

that, prior to June 10, 2018, was either 

fully paid by the satellite service 

provider or covered by a legally binding 

commitment of the satellite service 

provider to pay for such services, a de 

minimis amount of information is 

required with regard to such contract or 

agreement in order to establish an 

exception to the associated prohibitions. 

• Section 1296. There are no 

projected reporting or recordkeeping 

requirements relating to implementation 

of section 1296. The only compliance 

requirements are to not purchase 600 

series items from a Communist Chinese 

military company. 

The rule does not duplicate, overlap, 

or conflict with any other Federal rules. 

This rule will not have a significant 

economic impact on any small entities, 

unless they are offering commercial 

satellite services subject to the 

restrictions of this rule or providing 600 

series items from a Communist Chinese 

military company. DoD was not able to 

identify any alternatives that would 

reduce the burden on small entities and 

meet the objectives of the rule. 

DoD invites comments from small 

business concerns and other interested 

parties on the expected impact of this 

rule on small entities. 

DoD will also consider comments 

from small entities concerning the 

existing regulations in subparts affected 

by this rule in accordance with 5 U.S.C. 

610. Interested parties must submit such 

comments separately and should cite 5 

U.S.C. 610 (DFARS Case 2018–D020), in 

correspondence. 

VII. Paperwork Reduction Act 

This rule will affect the information 

collection requirements in the provision 

at DFARS 252.225–7049, currently 

approved through March 31, 2021, 

under OMB Control Number 0704–0525, 

entitled Prohibition on Acquisition of 

Commercial Satellite Services from 

Certain Foreign Entities, in accordance 

with the Paperwork Reduction Act (44 

U.S.C. chapter 35). The impact, 

however, is negligible at this time, 

because the prohibition on use of 

certain foreign satellites and launch 

vehicles only applies to launches 

outside the United States on or after 

December 31, 2022. The information 

collection will be updated to reflect 

these changes when renewed in two 

years. 

VIII. Determination To Issue an Interim 

Rule 

A determination has been made under 

the authority of the Secretary of Defense 

that urgent and compelling reasons exist 

to promulgate this interim rule without 

prior opportunity for public comment. It 

is critical that the DFARS is 

immediately revised to include the 

requirements of the law. 

A. Foreign Commercial Satellite 

Services 

DoD uses commercial satellite 

services to increase the availability and 

flexibility of military communications. 

Commercial satellite services may 

provide access to bandwidth and 

services that are unavailable through 

other means to support a variety of 

missions. Although these are 

commercial services, they are still being 

used to carry out military missions. Use 

of certain foreign commercial satellite 

services and foreign launches can pose 

an unacceptable risk to national 

security. 

Section 1603 of the NDAA for FY 

2018 amends 10 U.S.C. 2279 to impose 

additional prohibitions with regard to 

acquisition of certain foreign 

commercial satellite services, especially 

from certain ‘‘covered foreign 

countries.’’ Section 1603 expands the 

definition of ‘‘covered foreign country’’ 

from China, North Korea, and any 

country that is a state sponsor of 

terrorism (10 U.S.C. 2279) to include the 

Russian Federation. Section 1603 also 

defines ‘‘cybersecurity risk’’ and 

provides that DoD shall not enter into a 

contract for satellite services with a 

foreign entity if the Secretary of Defense 

reasonably believes that entering into 

such a contract would create an 

unacceptable cybersecurity risk for DoD. 

Congress enacted section 1603 in 

order to provide DoD, when contracting 

for commercial satellite services, with 

tools to reduce the perceived risk 

related to dealing with the Russian 

Federation. Indicating increasing 

distrust of Russia, there have been 

several other sections of the NDAAs in 

FY 2018 and FY 2019 placing 

prohibitions on buying critical items 

from Russia, such as rare earth magnets, 

tungsten, or telecommunications 

equipment or services to be used in the 

DoD nuclear deterrence mission or 

homeland defense mission. This rule 

also requires DoD not to enter into a 

contract for commercial satellite 

services with any foreign entity if the 

Secretary of Defense reasonably believes 

that such contract will present an 

unacceptable cybersecurity risk. 

Currently, there is no regulatory 

prohibition against contracting with a 

foreign entity in which the Government 

of Russia has an ownership interest that 

enables the government of Russia to 

affect satellite operations, or a foreign 

entity that plans to provide satellite 

services from Russia. There is also no 

mechanism in place that allows the 

Secretary of Defense to decide not to 

enter into a contract with a foreign 

entity based on the level or 

cybersecurity risk it would create; in 

such instances, DoD must either accept 

the risk and award the contract or 

cancel the solicitation. 

According to data available in the 

Federal Procurement Data System for 

fiscal year 2017, DoD awarded 3,715 

contracts and orders for commercial 

supplies or services under the product 

service code D304, IT and Telecom— 

Telecommunications and Transmission, 

to 256 unique entities. It is expected 

that a subset of these awards were for 

commercial satellite services. While the 

universe of contracts and entities 

affected by this rule is relatively small, 

a single contract award to one of the 

foreign entities excluded by this rule 

could damage our national security. 

Without this rule to implement the 

prohibitions and limitations provided 

by section 1603, there is no way for DoD 

contracting officers to exclude the 

Russian-controlled entities, or the other 

foreign entities that present and 

unacceptable cybersecurity risk, from 

competing for or being awarded 

contracts for covered commercial 

satellite services. This creates an 

opportunity for Russian interference 

with DoD satellite communications and 

increases the risk of cyberattacks by 

other foreign entities, which could 

jeopardize our military 

communications, the lives of our 

warfighters, and our national security. 

B. Certain Items on the Commerce 

Control List 

Section 1211 of the NDAA for FY 

2006, prohibited purchase of items on 

the United States Munitions List 

(USML) from a Communist Chinese 

military company, in order to protect 

the integrity of the supply chain for 

military items. Section 1296 of the 

NDAA for FY 2017 extends that 

prohibition to cover items moved from 

the USML to the Commerce Control List 

(CCL) of the Export Administration 

Regulations of the Department of 

Commerce. As a result of the Export 

Control Reform Initiative, beginning in 

2013, certain items specially designed 

for military applications have been 

transferred from the USML to a new 

category on the CCL (the 600 series). 

The 600 series includes such items as 

F–16 wings, fins, panels, fuselages, 

cockpit structures, and landing gear, 

and analogous items from other 

categories on the USML. 

While helpful in facilitating 

cooperation with our allies and 


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partners, an unintended consequence of 

this export reform was that the 

prohibition imposed by section 1211 of 

the NDAA for FY 2006 no longer 

covered these items, since they were no 

longer on the USML. The Under 

Secretary of Defense for Policy, 

including the Defense Technology 

Security Administration, as well as the 

offices in the purview of the previous 

Under Secretary of Defense for 

Acquisition, Technology, and Logistics, 

the National Security staff, and others 

were very concerned about potential 

acquisition of military components from 

a Communist Chinese military 

company, due to potential adverse 

impact on the integrity of the supply 

chain for major U.S. weapons systems. 

These organizations, along with export 

control stakeholders in the Departments 

of Commerce and State, were also in 

favor of continuing the prohibition 

against purchase of military items, now 

controlled as 600 series items, from 

Communist Chinese military 

companies. After consultation with the 

DoD Office of General Counsel, DoD 

determined that the only solution was to 

seek legislative correction to this 

problem, resulting in enactment of 

section 1296 of the NDAA for FY 2017. 

600 series items are frequently used in 

DoD’s weapon systems and it is 

imperative that DoD ensure that the 

integrity of those weapon systems is 

maintained by immediately restricting 

the purchase of these items from 

Communist Chinese military 

companies. Until this rule is in effect, 

there is no basis on which to refuse to 

buy items with military applications 

listed in the 600 series of the CCL from 

a Communist Chinese military 

company. Purchase of such items from 

a Communist Chinese military company 

poses a serious risk to U.S. national 

security, the safety of military 

personnel, and the integrity of the U.S. 

defense supply chain, because 

according to DoD information, China is 

the top source of counterfeit U.S. 

military electronics. 

List of Subjects in 48 CFR Parts 204, 

212, 225, and 252 

Government procurement. 

Jennifer Lee Hawes, 

Regulatory Control Officer, Defense 

Acquisition Regulations System. 

Therefore, 48 CFR parts 204, 212, 225, 

and 252 are amended as follows: 

■ 1. The authority citation for 48 CFR 

parts 204, 212, 225, and 252 continues 

to read as follows: 

Authority: 41 U.S.C. 1303 and 48 CFR 

chapter 1. 

PART 204—ADMINISTRATIVE 

MATTERS 

■ 2. Amend section 204.1202 by 

revising paragraph (2)(ix) to read as 

follows: 

204.1202 Solicitation provision. 

* * * * * 

(2) * * * 

(ix) 252.225–7049, Prohibition on 

Acquisition of Certain Foreign 

Commercial Satellite Services— 

Representations. 

* * * * * 

PART 212—ACQUISITION OF 

COMMERCIAL ITEMS 

■ 3. Amend section 212.301 by— 

■ a. Redesignating paragraphs (f)(ix)(BB) 

and (CC) as paragraphs (f)(ix)(CC) and 

(DD), respectively; 

■ b. In the newly redesignated 

paragraph (f)(ix)(CC), removing 

‘‘Commercial Satellite Services from 

Certain Foreign Entities’’ and ‘‘at 

225.772–5’’ and adding ‘‘Certain Foreign 

Commercial Satellite Services’’ and ‘‘in 

225.772–5(a)’’, in their place, 

respectively; 

■ c. Redesignating paragraphs (f)(ix)(D) 

through (AA) as (f)(ix)(E) through (BB); 

and 

■ d. Adding new paragraph (f)(ix)(D) 

and paragraph (f)(ix)(EE). 

The additions read as follows: 

212.301 Solicitation provisions and 

contract clauses for the acquisition of 

commercial items. 

* * * * * 

(f) * * * 

(ix) * * * 

(D) Use the clause at 252.225–7007, 

Prohibition on Acquisition of Certain 

Items from Communist Chinese Military 

Companies, as prescribed in 

225.1103(4), to comply with section 

1211 of the National Defense 

Authorization Act (NDAA) for Fiscal 

Year (FY) 2006 (Pub. L. 109–163) as 

amended by the NDAAs for FY 2012 

and FY 2017. 

* * * * * 

(EE) Use the clause at 252.225–7051, 

Prohibition on Acquisition for Certain 

Foreign Commercial Satellite Services, 

as prescribed in 225.772–5(b), to comply 

with 10 U.S.C. 2279. 

* * * * * 

PART 225—FOREIGN ACQUISITION 

■ 4. Amend section 225.003 by— 

■ a. Removing paragraph designations 

(1) through (16); 

■ b. Adding, in alphabetical order, 

definitions for ‘‘600 series of the 

Commerce Control List’’ and 

‘‘Communist Chinese military 

company’’; 

■ c. In the definition for ‘‘Domestic 

concerns,’’ redesignating paragraphs (i) 

and (ii) as paragraphs (1) and (2); 

■ d. In the definition for ‘‘Eligible 

product,’’ redesignating paragraphs (i) 

introductory text and (i)(A) and (B) as 

paragraphs (1) and (1)(i) and (ii), 

respectively, and paragraphs (ii) and 

(iii) as paragraphs (2) through (3), 

respectively; 

■ e. In the definitions of ‘‘South 

Caucasus/Central and South Asian (SC/ 

CASA) state construction material’’ and 

‘‘South Caucasus/Central and South 

Asian (SC/CASA) state end product,’’ 

redesignating paragraphs (i) and (ii) as 

paragraphs (1) and (2); 

■ f. Adding, in alphabetical order, a 

definition for ‘‘United States Munitions 

List’’. 

The additions read as follows: 

225.003 Definitions. 

* * * * * 

600 series of the Commerce Control 

List means the series of 5-character 

export control classification numbers 

(ECCNs) of the Commerce Control List 

of the Export Administration 

Regulations in 15 CFR part 774, 

supplement no. 1, that have a ‘‘6’’ as the 

third character. The 600 series 

constitutes the munitions and 

munitions-related ECCNs within the 

larger Commerce Control List. (See 

definition of ‘‘600 series’’ in 15 CFR 

772.) 

* * * * * 

Communist Chinese military company 

means any entity, regardless of 

geographic location, that is— 

(1) A part of the commercial or 

defense industrial base of the People’s 

Republic of China (including a 

subsidiary or affiliate of such entity); or 

(2) Owned or controlled by, or 

affiliated with, an element of the 

Government or armed forces of the 

People’s Republic of China. 

* * * * * 

United States Munitions List means 

the munitions list of the International 

Traffic in Arms Regulation in 22 CFR 

part 121. 

■ 5. Revise section 225.770 to read as 

follows: 

225.770 Prohibition on acquisition of 

certain items from Communist Chinese 

military companies. 

This section implements section 1211 

of the National Defense Authorization 

Act for Fiscal Year 2006 (Pub. L. 109– 

163), section 1243 of the National 

Defense Authorization Act for Fiscal 

Year 2012 (Pub. L. 112–81), and section 

1296 of the National Defense 


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Authorization Act for Fiscal Year 2017 

(Pub. L. 114–328). See PGI 225.770 for 

additional information relating to this 

statute, the terms used in this section, 

the United States Munitions List 

(USML), and the 600 series of the 

Commerce Control List (CCL). 

■ 6. Revise section 225.770–1 to read as 

follows: 

225.770–1 Definitions. 

As used in this section— 

Component means an item that is 

useful only when used in conjunction 

with an end item (15 CFR 772.1 and 22 

CFR 120.45(b)). 

Item means— 

(1) A USML defense article, as 

defined at 22 CFR 120.6; 

(2) A USML defense service, as 

defined at 22 CFR 120.9; or 

(3) A 600 series item, as defined at 15 

CFR 772.1. 

Part means any single unassembled 

element of a major or minor component, 

accessory, or attachment, that is not 

normally subject to disassembly without 

the destruction or impairment of 

designed use (15 CFR 772.1 and 22 CFR 

120.45(d)). 

■ 7. Revise section 225.770–2 to read as 

follows: 

225.770–2 Prohibition. 

Do not acquire items covered by the 

USML or the 600 series of the CCL, 

through a contract or subcontract at any 

tier, from any Communist Chinese 

military company. This prohibition does 

not apply to components and parts of 

covered items unless the components 

and parts are themselves covered by the 

USML or the 600 series of the CCL. 

225.770–3 [Amended] 

■ 8. Amend section 225.770–3, in the 

introductory text, by removing 

‘‘supplies or services’’ and adding 

‘‘items’’ in its place. 

■ 9. Revise section 225.770–4 to read as 

follows: 

225.770–4 Identifying items covered by the 

USML or the 600 series of the CCL. 

(a) Before issuance of a solicitation, 

the requiring activity will notify the 

contracting officer in writing whether 

the items to be acquired are covered by 

the USML or the 600 series of the CCL. 

The notification will identify any 

covered item(s) and will provide the 

pertinent USML reference(s) from 22 

CFR part 121 or the 600 series of the 

CCL references from 15 CFR part 774, 

supplement no. 1. 

(b) The USML includes defense 

articles and defense services that fall 

into 21 categories. The CCL includes ten 

categories and five product groups in 

each category, many of which contain 

600 series items. Since not all items 

covered by the USML or 600 series of 

the CCL are themselves munitions (e.g., 

protective personnel equipment, 

military training equipment), the 

requiring activity should consult the 

USML and the 600 series of the CCL 

before concluding that an item is or is 

not covered. See PGI 225.770–4. 

225.770–5 [Amended] 

■ 10. Amend section 225.770–5, in 

paragraph (b)(1), by removing 

‘‘Acquisition, Technology, and 

Logistics’’ and adding ‘‘Acquisition and 

Sustainment’’ in its place. 

■ 11. Revise section 225.772 heading to 

read as follows: 

225.772 Prohibition on acquisition of 

certain foreign commercial satellite 

services. 

■ 12. Revise section 225.772–1 to read 

as follows: 

225.772–1 Definitions. 

As used in this section— 

Covered foreign country means— 

(1) The People’s Republic of China; 

(2) North Korea; 

(3) The Russian Federation; or 

(4) Any country that is a state sponsor 

of terrorism. (10 U.S.C. 2279) 

Cybersecurity risk means threats to 

and vulnerabilities of information or 

information systems and any related 

consequences caused by or resulting 

from unauthorized access, use, 

disclosure, degradation, disruption, 

modification, or destruction of such 

information or information systems, 

including such related consequences 

caused by an act of terrorism. (10 U.S.C. 

2279) 

Foreign entity means— 

(1) Any branch, partnership, group or 

sub-group, association, estate, trust, 

corporation or division of a corporation, 

or organization organized under the 

laws of a foreign state if either its 

principal place of business is outside 

the United States or its equity securities 

are primarily traded on one or more 

foreign exchanges. 

(2) Notwithstanding paragraph (1) of 

this definition, any branch, partnership, 

group or sub-group, association, estate, 

trust, corporation or division of a 

corporation, or organization that 

demonstrates that a majority of the 

equity interest in such entity is 

ultimately owned by U.S. nationals is 

not a foreign entity. (31 CFR 800.212) 

Government of a covered foreign 

country includes the state and the 

government of a covered foreign 

country, as well as any political 

subdivision, agency, or instrumentality 

thereof. 

Launch vehicle means a fully 

integrated space launch vehicle. (10 

U.S.C. 2279) 

Satellite services means 

communications capabilities that utilize 

an on-orbit satellite for transmitting the 

signal from one location to another. 

State sponsor of terrorism means a 

country determined by the Secretary of 

State, under section 1754(c)(1)(A)(i) of 

the Export Control Reform Act of 2018 

(Title XVII, Subtitle B, of the National 

Defense Authorization Act for Fiscal 

Year 2019, Pub. L. 115–232), to be a 

country the government of which has 

repeatedly provided support for acts of 

international terrorism. As of December 

21, 2018, state sponsors of terrorism 

include: Iran, North Korea, Sudan, and 

Syria. (10 U.S.C. 2327) 

■ 13. Revise section 225.772–2 to read 

as follows: 

225.772–2 Prohibitions. 

Except as provided in 225.772–4, the 

contracting officer shall not award a 

contract for commercial satellite 

services to— 

(a)(1) A foreign entity if the Under 

Secretary of Defense for Acquisition and 

Sustainment or the Under Secretary of 

Defense for Policy reasonably believes 

that— 

(i) The foreign entity is an entity in 

which the government of a covered 

foreign country has an ownership 

interest that enables the government to 

affect satellite operations; 

(ii) The foreign entity plans to or is 

expected to provide satellite services 

under the contract from a covered 

foreign country; or 

(iii) Entering into such contract would 

create an unacceptable cybersecurity 

risk for DoD, as determined by the 

Under Secretary of Defense for 

Acquisition and Sustainment or the 

Under Secretary of Defense for Policy; 

or 

(2) An offeror that is offering 

commercial satellite services provided 

by a foreign entity as described in 

paragraph (a) of this section; or 

(b)(1) Any entity, except as provided 

in paragraph (b)(2) of this section, for a 

launch that occurs on or after December 

31, 2022, if the Under Secretary of 

Defense for Acquisition and 

Sustainment or the Under Secretary of 

Defense for Policy reasonably believes 

that such satellite services will be 

provided using satellites that will be— 

(i) Designed or manufactured— 

(A) In a covered foreign country; or 

(B) By an entity controlled in whole 

or in part by, or acting on behalf of, the 

government of a covered foreign 

country; or 


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(ii) Launched outside the United 

States using a launch vehicle that is— 

(A) Designed or manufactured in a 

covered foreign country; or 

(B) Provided by— 

(1) The government of a covered 

foreign country; or 

(2) An entity controlled in whole or 

in part by, or acting on behalf of, the 

government of a covered foreign 

country. 

(2) The prohibition in paragraph (b)(1) 

of this section does not apply with 

respect to launch services for which a 

satellite service provider has a contract 

or other agreement that, prior to June 10, 

2018, was either fully paid for by the 

satellite service provider or covered by 

a legally binding commitment of the 

satellite service provider to pay for such 

services. 

■ 14. Amend section 225.772–3 by— 

■ a. Redesignating paragraphs (a) and 

(b) as paragraphs (b) and (c), 

respectively; 

■ b. In the newly redesignated 

paragraph (b) introductory text, 

removing ‘‘paragraph (d)’’ and 

‘‘Commercial Satellite Services from 

Certain Foreign Entities’’ and adding 

‘‘paragraph (c)’’ and ‘‘Certain Foreign 

Commercial Satellite Services’’ in their 

place, respectively; and 

■ c. Adding a new paragraph (a). 

The addition reads as follows: 

225.772–3 Procedures. 

(a)(1) The contracting officer shall not 

award to any source that is a foreign 

satellite service provider or is offering 

satellite services provided by a foreign 

entity if such award presents an 

unacceptable cybersecurity risk, as 

determined by the Under Secretary of 

Defense for Acquisition and 

Sustainment or the Under Secretary of 

Defense for Policy. 

(2) When procuring commercial 

satellite services from a foreign entity, 

the contracting officer shall review the 

exclusion records in the System for 

Award Management (SAM) database as 

required at FAR 9.405, to ensure that an 

entity identified in, or otherwise known 

to be involved in, the otherwise 

successful offer is not listed as ineligible 

in the SAM database (see FAR 9.405). 

* * * * * 

■ 15. Amend section 225.772–4 by— 

■ a. Revising paragraph (a) introductory 

text; and 

■ b. In paragraph (a)(1), by removing 

‘‘Acquisition, Technology, and 

Logistics’’ and adding ‘‘Acquisition and 

Sustainment’’ in its place. 

225.772–4 Exception. 

(a) The prohibitions in 225.772–2(a) 

and (b) do not apply if— 

* * * * * 

■ 16. Revise section 225.772–5 to read 

as follows: 

225.772–5 Solicitation provision and 

contract clauses. 

(a) Use the provision at 252.225–7049, 

Prohibition on Acquisition of Certain 

Foreign Commercial Satellite Services— 

Representations, in solicitations that 

include the clause at 252.225–7051, 

Prohibition on Acquisition of Certain 

Foreign Commercial Satellite Services. 

If the solicitation includes the provision 

at FAR 52.204–7, do not separately list 

the provision 252.225–7049 in the 

solicitation. 

(b) Use the clause at 252.225–7051, 

Prohibition on Acquisition of Certain 

Foreign Commercial Satellite Services, 

in solicitations and contracts for the 

acquisition of commercial satellite 

services, including solicitation and 

contracts using FAR part 12 procedures 

for the acquisition of commercial items. 

(c) Use the clause at 252.239–7018, 

Supply Chain Risk, as prescribed at 

239.7306(b), when applicable. 

■ 17. Amend section 225.1103 by 

revising paragraph (4) to read as follows: 

225.1103 Other provisions and clauses. 

* * * * * 

(4) Unless an exception in 225.770–3 

applies, use the clause at 252.225–7007, 

Prohibition on Acquisition of Certain 

Items from Communist Chinese Military 

Companies, in solicitations and 

contracts involving the delivery of items 

covered by the United States Munitions 

List or the 600 series of the Commerce 

Control List. 

PART 252—SOLICITATION 

PROVISIONS AND CONTRACT 

CLAUSES 

252.204–7007 [Amended] 

■ 18. Amend section 252.204–7007 by— 

■ a. Removing clause date ‘‘(JAN 2015)’’ 

and add ‘‘(DEC 2018)’’; and 

■ b. In paragraph (d)(1)(v), by removing 

‘‘Commercial Satellite Services from 

Certain Foreign Entities’’ and adding 

‘‘Certain Foreign Commercial Satellite 

Services’’ in its place. 

■ 19. Revise section 252.225–7007 to 

read as follows: 

252.225–7007 Prohibition on Acquisition 

of Certain Items from Communist Chinese 

Military Companies. 

As prescribed in 225.1103(4), use the 

following clause: 

Prohibition on Acquisition of Certain Items 

From Communist Chinese Military 

Companies (Dec 2018) 

(a) Definitions. As used in this clause— 

600 series of the Commerce Control List 

means the series of 5-character export control 

classification numbers (ECCNs) of the 

Commerce Control List of the Export 

Administration Regulations in 15 CFR part 

774, supplement no. 1, that have a ‘‘6’’ as the 

third character. The 600 series constitutes the 

munitions and munitions-related ECCNs 

within the larger Commerce Control List. 

(See definition of ‘‘600 series’’ in 15 CFR 

772.) 

Communist Chinese military company 

means any entity, regardless of geographic 

location, that is— 

(1) A part of the commercial or defense 

industrial base of the People’s Republic of 

China (including a subsidiary or affiliate of 

such entity); or 

(2) Owned or controlled by, or affiliated 

with, an element of the Government or armed 

forces of the People’s Republic of China. 

Item means— 

(1) A USML defense article, as defined at 

22 CFR 120.6; 

(2) A USML defense service, as defined at 

22 CFR 120.9; or 

(3) A 600 series item, as defined at 15 CFR 

772.1. 

United States Munitions List means the 

munitions list of the International Traffic in 

Arms Regulation in 22 CFR part 121. 

(b) Any items covered by the United States 

Munitions List or the 600 series of the 

Commerce Control List that are delivered 

under this contract may not be acquired, 

directly or indirectly, from a Communist 

Chinese military company. 

(c) The Contractor shall insert the 

substance of this clause, including this 

paragraph (c), in all subcontracts for items 

covered by the United States Munitions List 

or the 600 series of the Commerce Control 

List. 

(End of clause) 

■ 20. Revise section 252.225–7049 to 

read as follows: 

252.225–7049 Prohibition on Acquisition 

of Certain Foreign Commercial Satellite 

Services—Representations. 

As prescribed in 225.772–5(a), use the 

following provision: 

Prohibition on Acquisition of Certain 

Foreign Commercial Satellite Services— 

Representations (Dec 2018) 

(a) Definitions. As used in this provision— 

Covered foreign country, foreign entity, 

government of a covered foreign country, 

launch vehicle, satellite services, and state 

sponsor of terrorism are defined in the clause 

at Defense Federal Acquisition Regulation 

Supplement (DFARS) 252.225–7051, 

Prohibition on Acquisition of Certain 

Commercial Satellite Services. 

Cybersecurity risk means threats to and 

vulnerabilities of information or information 

systems and any related consequences 

caused by or resulting from unauthorized 

access, use, disclosure, degradation, 


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66074 Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Rules and Regulations 

disruption, modification, or destruction of 

such information or information systems, 

including such related consequences caused 

by an act of terrorism. (10 U.S.C. 2279)] 

(b) Prohibition on award. In accordance 

with 10 U.S.C. 2279, unless an exception is 

determined to apply in accordance with 

DFARS 225.772–4, no contract for 

commercial satellite services may be awarded 

to— 

(1)(i) A foreign entity if the Under 

Secretary of Defense for Acquisition and 

Sustainment or the Under Secretary of 

Defense for Policy reasonably believes that— 

(A) The foreign entity is an entity in which 

the government of a covered foreign country 

has an ownership interest that enables the 

government to affect satellite operations; 

(B) The foreign entity plans to, or is 

expected to, provide satellite services under 

the contract from a covered foreign country; 

or 

(C) Entering into such contract would 

create an unacceptable cybersecurity risk for 

DoD; or 

(ii) An offeror that is offering to provide the 

commercial satellite services of a foreign 

entity as described in paragraph (b)(1) of this 

provision; or 

(2)(i) Any entity, except as provided in 

paragraph (b)(2)(ii) of this provision, for a 

launch that occurs on or after December 31, 

2022, if the Under Secretary of Defense for 

Acquisition and Sustainment or the Under 

Secretary of Defense for Policy reasonably 

believes that such satellite service will be 

provided using satellites that will be— 

(A) Designed or manufactured— 

(1) In a covered foreign country; or 

(2) By an entity controlled in whole or in 

part by, or acting on behalf of, the 

government of a covered foreign country; or 

(B) Launched outside the United States 

using a launch vehicle that is— 

(1) Designed or manufactured in a covered 

foreign country; or 

(2) Provided by— 

(i) The government of a covered foreign 

country; or 

(ii) An entity controlled in whole or in part 

by, or acting on behalf of, the government of 

a covered foreign country. 

(ii) The prohibition in paragraph 

(b)(2)(i)(B) of this provision does not apply 

with respect to launch vehicles for which the 

satellite service provider has a contract or 

other agreement relating to launch services 

that, prior to June 10, 2018, was either fully 

paid for by the satellite service provider or 

covered by a legally binding commitment of 

the satellite service provider to pay for such 

services. 

(c) Representations. The Offeror represents 

that— 

(1) It [ ] is, [ ] is not a foreign entity in 

which the government of a covered foreign 

country has an ownership interest that 

enables the government to affect satellite 

operations. If affirmative, identify the 

covered foreign country: llll; 

(2) It [ ] is, [ ] is not a foreign entity that 

plans to provide satellite services under the 

contract from a covered foreign country. If 

affirmative, identify the covered foreign 

country: llll; 

(3) It [ ] is, [ ] is not offering commercial 

satellite services provided by a foreign entity 

in which the government of a covered foreign 

country has an ownership interest that 

enables the government to affect satellite 

operations. If affirmative, identify the foreign 

entity and the covered foreign country: 

llll; 

(4) It [ ] is, [ ] is not offering commercial 

satellite services provided by a foreign entity 

that plans to or is expected to provide 

satellite services under the contract from a 

covered foreign country. If affirmative, 

identify the foreign entity and the covered 

foreign country: llll; 

(5) It [ ] is, [ ] is not offering commercial 

satellite services that will use satellites, 

launched on or after December 31, 2022, that 

will be designed or manufactured in a 

covered foreign country. If affirmative, 

identify the covered foreign country: 

llll; 

(6) It [ ] is, [ ] is not offering commercial 

satellite services that will use satellites, 

launched on or after December 31, 2022, that 

will be designed or manufactured by an 

entity controlled in whole or in part by, or 

acting on behalf of, the government of a 

covered foreign country. If affirmative, 

identify the entity, the covered foreign 

country, and the relationship of the entity to 

the government of the covered foreign 

country: llll; 

(7) It [ ] is, [ ] is not offering commercial 

satellite services that will use satellites, 

launched outside the United States on or 

after December 31, 2022, using a launch 

vehicle that is designed or manufactured in 

a covered foreign country. If affirmative, 

identify the covered foreign country: 

llll; 

(8) It [ ] is, [ ] is not offering commercial 

satellite services that will use satellites, 

launched outside the United States on or 

after December 31, 2022, using a launch 

vehicle that is provided by the government 

of a covered foreign country. If affirmative, 

identify the covered foreign country: 

llll; and 

(9) It [ ] is, [ ] is not offering commercial 

satellite services that will use satellites, 

launched outside the United States on or 

after December 31, 2022, using a launch 

vehicle that is provided by an entity 

controlled in whole or in part by, or acting 

on behalf of, the government of a covered 

foreign country. If affirmative, identify the 

entity, the covered foreign country, and the 

relationship of the entity to the government 

of the covered foreign country: llll; 

(d) If the Offeror has responded 

affirmatively to any representation in 

paragraphs (c)(7) through (9) of this 

provision, and if such launches are covered 

in whole or in part by a contract or other 

agreement relating to launch services that, 

prior to June 10, 2018, was either fully paid 

for by the satellite service provider or 

covered by a legally binding commitment of 

the satellite service provider to pay for such 

services, provide the following information: 

(1) The entity awarded the contract or 

other agreement: llll. 

(2) The date the contract or other 

agreement was awarded: llll. 

(3) The period of performance for the 

contract or other agreement: llll. 

(e) The representations in paragraph (c) of 

this provision are a material representation of 

fact upon which reliance will be placed 

when making award. If it is later determined 

that the Offeror knowingly rendered an 

erroneous representation, in addition to other 

remedies available to the Government, the 

Contracting Officer may terminate the 

contract resulting from this solicitation for 

default. 

(End of provision) 

■ 21. Amend section 252.225–7050 by— 

■ a. Removing clause date ‘‘(JAN 2018)’’ 

and adding ‘‘(DEC 2018)’’ in its place; 

and 

■ b. In paragraph (a), revising the 

definition of ‘‘State sponsor of 

terrorism’’. 

The revision reads as follows: 

252.225–7050 Disclosure of Ownership or 

Control by the Government of a Country 

that is a State Sponsor of Terrorism. 

* * * * * 

(a) * * * 

State sponsor of terrorism means a 

country determined by the Secretary of 

State, under section 1754(c)(1)(A)(i) of 

the Export Control Reform Act of 2018 

(Title XVII, Subtitle B, of the National 

Defense Authorization Act for Fiscal 

Year 2019, Pub. L. 115–232), to be a 

country the government of which has 

repeatedly provided support for acts of 

international terrorism. As of the date of 

this provision, state sponsors of 

terrorism include: Iran, North Korea, 

Sudan, and Syria. 

* * * * * 

■ 22. Add section 252.225–7051 to read 

as follows: 

252.225–7051 Prohibition on Acquisition 

of Certain Foreign Commercial Satellite 

Services. 

As prescribed in 225.772–5, use the 

following clause: 

Prohibition on Acquisition of Certain 

Foreign Commercial Satellite Services (DEC 

2018) 

(a) Definitions. As used in this clause— 

Covered foreign country means— 

(i) The People’s Republic of China; 

(ii) North Korea; 

(iii) The Russian Federation; or 

(iv) Any country that is a state sponsor of 

terrorism. (10 U.S.C. 2279) 

Foreign entity means— 

(i) Any branch, partnership, group or subgroup, association, estate, trust, corporation 

or division of a corporation, or organization 

organized under the laws of a foreign state if 

either its principal place of business is 

outside the United States or its equity 

securities are primarily traded on one or 

more foreign exchanges. 

(ii) Notwithstanding paragraph (i) of this 

definition, any branch, partnership, group or 

sub-group, association, estate, trust, 

corporation or division of a corporation, or 

organization that demonstrates that a 

majority of the equity interest in such entity 


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Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Rules and Regulations 66075 

is ultimately owned by U.S. nationals is not 

a foreign entity. (31 CFR 800.212) 

Government of a covered foreign country 

includes the state and the government of a 

covered foreign country, as well as any 

political subdivision, agency, or 

instrumentality thereof. 

Launch vehicle means a fully integrated 

space launch vehicle. (10 U.S.C. 2279) 

Satellite services means communications 

capabilities that utilize an on-orbit satellite 

for transmitting the signal from one location 

to another. 

State sponsor of terrorism means a country 

determined by the Secretary of State, under 

section 1754(c)(1)(A)(i) of the Export Control 

Reform Act of 2018 (Title XVII, Subtitle B, of 

the National Defense Authorization Act for 

Fiscal Year 2019, Pub. L. 115–232), to be a 

country the government of which has 

repeatedly provided support for acts of 

international terrorism. As of the date of this 

provision, state sponsors of terrorism 

include: Iran, North Korea, Sudan, and Syria. 

(10 U.S.C. 2327) 

(b) Limitation. Unless specified in its offer, 

the Contractor shall not provide satellite 

services under this contract that— 

(1) Are from a covered foreign country; or 

(2) Except as provided in paragraph (c) of 

this provision, use satellites that will be— 

(i) Designed or manufactured— 

(A) In a covered foreign country; or 

(B) By an entity controlled in whole or in 

part by, or acting on behalf of, the 

government of a covered foreign country; or 

(ii) Launched outside the United States 

using a launch vehicle that is designed or 

manufactured— 

(A) In a covered foreign country; or 

(B) Provided by— 

(1) The government of a covered foreign 

country; 

(2) An entity controlled in whole or in part 

by, or acting on behalf of, the government of 

a covered foreign country. 

(c) Exception. The limitation in paragraph 

(b)(2) of this provision shall not apply with 

respect to— 

(1) A launch that occurs prior to December 

31, 2022; or 

(2) A satellite service provider that has a 

contract or other agreement relating to launch 

services that, prior to June 10, 2018, was 

either fully paid for by the satellite service 

provider or covered by a legally binding 

commitment of the satellite service provider 

to pay for such services. 

(End of clause) 

[FR Doc. 2018–27558 Filed 12–20–18; 8:45 am] 

BILLING CODE 5001–06–P 


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