U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

1 

39–010 

" ! SENATE 113TH CONGRESS

2d Session 

REPORT

2014

113–216 

Calendar No. 485 

NEVER CONTRACT WITH THE ENEMY ACT 

R E P O R T 

OF THE

COMMITTEE ON HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

TO ACCOMPANY

S. 675 

TO PROHIBIT CONTRACTING WITH THE ENEMY 

JULY 23, 2014.—Ordered to be printed 


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(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

THOMAS R. CARPER, Delaware, Chairman 

CARL LEVIN, Michigan 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

MARK BEGICH, Alaska 

TAMMY BALDWIN, Wisconsin 

HEIDI HEITKAMP, North Dakota 

TOM COBURN, Oklahoma 

JOHN MCCAIN, Arizona 

RON JOHNSON, Wisconsin 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

MICHAEL B. ENZI, Wyoming 

KELLY AYOTTE, New Hampshire 

GABRIELLE A. BATKIN, Staff Director 

JOHN P. KILVINGTON, Deputy Staff Director 

MARY BETH SCHULTZ, Chief Counsel 

TROY H. CRIBB, Chief Counsel for Governmental Affairs 

KEITH B. ASHDOWN, Minority Staff Director 

CHRISTOPHER J. BARKLEY, Minority Deputy Staff Director 

ANDREW C. DOCKHAM, Minority Chief Counsel 

KATHRYN M. EDELMAN, Minority Senior Investigator 

LAURA W. KILBRIDE, Chief Clerk 


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(III) 

CONTENTS 

Page 

I. Purpose and Summary .................................................................................. 1 

II. Background .................................................................................................... 1 

III. Legislative History ......................................................................................... 4 

IV. Section-by-Section Analysis of the Bill, as Reported .................................. 5 

V. Estimated Cost of Legislation ....................................................................... 9 

VI. Evaluation of Regulatory Impact .................................................................. 10 

VII. Changes in Existing Law .............................................................................. 10 


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1For purposes of the discussion in this report, the term ‘‘contract’’ includes contracts, grants 

and cooperative agreements and the term ‘‘contractor’’ includes contractors, recipients of grants 

and cooperative agreements. 2The independent and bipartisan Commission was established by section 841 of the National 

Defense Authorization Act for Fiscal Year 2008, Public Law 110–181 (Jan. 28, 2008). 

Calendar No. 485 

113TH CONGRESS REPORT " ! SENATE 2d Session 113–216 

NEVER CONTRACT WITH THE ENEMY ACT 

JULY 23, 2014.—Ordered to be printed 

Mr. CARPER, from the Committee on Homeland Security and 

Governmental Affairs, submitted the following 

R E P O R T 

[To accompany S. 675] 

The Committee on Homeland Security and Governmental Affairs, 

to which was referred the bill (S. 675), to prohibit contracting with 

the enemy, having considered the same, reports favorably thereon 

with an amendment and recommends that the bill, as amended, do 

pass. 

I. PURPOSE AND SUMMARY

The Never Contract with the Enemy Act provides federal agencies with streamlined procedures for stopping money from federal 

contracts, grants and cooperative agreements from going to people 

and entities who actively oppose U.S. forces engaged in hostilities. 

II. BACKGROUND AND NEED FOR LEGISLATION

The U.S. government contracts with many individuals and companies around the world in order to support U.S. government activities and promote U.S. interests, especially in times of major deployments of U.S. forces.1

In 2008, Congress established the Commission on Wartime Contracting in Iraq and Afghanistan and tasked it with examining a 

range of issues related to wartime contracting, including the extent 

of waste, fraud, abuse and mismanagement of wartime contracts.2

The Commission identified diversion of U.S. government funds to 


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3 Commission on Wartime Contracting in Iraq and Afghanistan, Final Report to Congress 

(Aug. 31, 2011), p. 73. 4 Commission on Wartime Contracting in Iraq and Afghanistan, Second Interim Report to 

Congress (Feb. 24, 2011), p. 50. 5 CENTCOM is a unified command of the U.S. military whose geographic area of responsibility includes Afghanistan and Iraq. 6Section 841 of the National Defense Authorization Act for Fiscal Year 2012, Public Law 112– 

81 (Dec. 31, 2011). A ‘‘contingency operation’’ is defined under 10 U.S.C. 101(a)(13) as ‘‘a military operation that—(A) is designated by the Secretary of Defense as an operation in which 

members of the armed forces are or may become involved in military actions, operations or hostilities against an enemy of the United States or against an opposing military force; or (B) results in the call or order to, or retention on, active duty of members of the uniformed services 

under [other portions of this title], or any other provision of law during a war or during a national emergency declared by the President or Congress.’’ 7Section 831, National Defense Authorization Act for Fiscal Year 2014, Public Law 113–66 

(Dec. 26, 2013). 

insurgents in Afghanistan as a major concern. In their final report 

to Congress, the Commissioners recounted that experts they interviewed believed that extortion of funds from U.S. construction 

projects and transportation contracts was the second-largest funding source for the insurgents (the first being money from the drug 

trade).3

Another issue examined by the Commission was the use of suspension and debarment procedures in Iraq and Afghanistan to protect the government’s interest in doing business only with responsible contractors. Suspensions and debarments are administrative 

remedies that allow agencies to bar additional U.S. government 

business with particular contractors in order to protect the government from fraud, noncompliance with contractual terms or applicable laws, poor performance, or other behavior that puts taxpayer 

dollars at risk of misuse. In 2011, the Commission reported to Congress that agency officials cited the complexity of suspension and 

debarment procedures as a reason for not using those tools as often 

as they believed would be warranted in a wartime environment.4

In the context of these concerns, Congress, in the National Defense Authorization Act for Fiscal Year 2012, directed the Secretary 

of Defense to develop a process under which the Combatant Commander of the Central Command (CENTCOM) 5 would identify persons or entities actively supporting an insurgency or otherwise actively opposing U.S. or coalition forces in a contingency operation 

in the CENTCOM theater.6 Section 841 further authorized the 

head of a contracting activity (i.e., the person designated by the 

head of an agency to manage the agency’s contracting functions), 

pursuant to a request from the Combatant Commander, to restrict, 

terminate or void contracts that would provide funds directly or indirectly to such persons or entities. 

Section 841 also required the Secretary of Defense to develop a 

contract clause requiring funding recipients to exercise due diligence to prevent funds from directly or indirectly flowing to persons or entities actively supporting an insurgency or otherwise actively opposing U.S. or coalition forces. Section 841 applies to Department of Defense contracts in excess of $100,000 that are to be 

performed in the CENTCOM theater. 

Congress revisited and expanded the section 841 authority in 

section 831 of the National Defense Authorization Act for Fiscal 

Year 2014.7 Section 831 requires the Secretary of Defense to establish programs in each combatant command to identify persons actively opposing U.S. or coalition forces involved in a contingency 

operation in which members of the armed forces are actively enVerDate Mar 15 2010 06:02 Jul 26, 2014 Jkt 039010 PO 00000 Frm 00006 Fmt 6659 Sfmt 6602 E:\HR\OC\SR216.XXX SR216

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8 Combatant Commands covered by section 831 are: the United States Central Command, the 

United States European Command, the United States Africa Command, the United States 

Southern Command, and the United States Pacific Command. 9 E-mail correspondence from the Office of Legislative Affairs, Office of the Secretary of Defense, to staff of Senator Ayotte (May 20, 2014). 10Special Inspector General for Afghanistan Reconstruction (‘‘SIGAR’’), SIGAR Audit 13–6 

(April 2013) and SIGAR Audit 13–14 (July 2013). 11The bill uses the term ‘‘covered person or entity’’ to refer to a person or entity that is actively opposing United States or coalition forces involved in a contingency operation in which 

members of the armed forces are actively engaged in hostilities. 

gaged in hostilities.8 Section 831 lays out a process similar to section 841 for restricting, terminating or voiding contracts, and it 

mandates a clause for Department of Defense contracts, requiring 

contractors to exercise due diligence to ensure that funds are not 

directly or indirectly given to enemies, as defined by the bill. The 

authorities and requirements of section 831 apply to contracts 

whose estimated value is in excess of $20,000. Section 831 also requires the establishment of a process allowing a recipient of funds 

to contest action taken under the section 831 authority within 30 

days of notice of the action. 

According to Department of Defense officials, as of May 2014, the 

Department has used the section 841 authority 12 times and has 

designated 29 entities as enemies, as defined by that section. As a 

result, ten subcontracts worth $31 million were terminated. In two 

instances, the Department made no contract or subcontract terminations because the entities identified as enemies did not have existing contracts. All 29 entities were added to the prohibited source 

list for future contracts. Additionally, the Department is processing 

11 additional actions under the authorities of sections 841 and 

831.9

The Special Inspector General for Afghanistan Reconstruction 

has pointed out several reasons that Congress may want to consider granting the Department of State and the U.S. Agency for 

International Development (USAID) similar authorities to those in 

place at the Department of Defense.10 The Department of State 

and USAID have numerous contracts in Afghanistan, and the two 

civilian agencies contract with many of the same contractors used 

by the Department of Defense. In addition, the Department of 

State and USAID will have an enduring presence in the country 

after the drawdown of U.S. military personnel. 

Building on the experience of the Department of Defense under 

sections 841 and 831, the Never Contract with the Enemy Act, S. 

675, provides an effective tool to the Departments of Defense and 

State, USAID, and other civilian agencies to quickly cut off funds 

flowing to enemies of the United States. The bill requires the Secretary of Defense, in conjunction with the Director of National Intelligence and in consultation with the Secretary of State, to establish a program to identify people and entities that provide funds 

under a contract directly or indirectly, to people and entities who 

actively oppose U.S. or coalition forces involved in a contingency 

operation in which members of the armed forces are actively engaged in hostilities.11 The Secretary will also identify those who 

fail to exercise due diligence to ensure that U.S. government funds 

do not flow to enemies. 

This information would then be shared with heads of executive 

agencies and the commanders of the combatant commands. S. 675 

then gives the heads of agencies and the combatant commanders 


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12Specifically, the bill requires amendment of (1) the Federal Acquisition Regulation, which 

is the government-wide regulatory framework for procurement and is overseen by the Federal 

Acquisition Regulatory Council, consisting of the Administrator for Federal Procurement Policy 

at the Office of Management and Budget, the Secretary of Defense, the Administrator of the 

General Services Administration, and the Administrator of NASA; (2) the Defense Federal Acquisition Regulation Supplement, which is maintained by the Department of Defense; and (3) 

the Uniform Administrative Requirements, Cost Principles, and Account Requirements, which 

is the government-wide guidance for grants issued by the Office of Management and Budget. 

the discretion to provide this information to the appropriate head 

of contracting activity (or other appropriate official in the case of 

grants and cooperative agreements). The bill provides those senior 

agency officials with an effective tool that will enable them to respond quickly and appropriately. Specifically, it authorizes those officials to restrict, terminate, or void contracts where funds would 

flow directly or indirectly to enemies, or where a contractor fails to 

exercise due diligence to ensure that funds do not flow directly or 

indirectly to enemies. 

S. 675 also requires the federal agencies responsible for rules 

governing contracts and grants to develop a clause to be included 

in contracts, requiring the recipient of the funding to exercise due 

diligence to prevent funds from directly or indirectly flowing to 

those who actively oppose U.S. or coalition forces involved in a contingency operation in which members of the armed forces are actively engaged in hostilities.12 The bill ensures that the process for 

promulgating regulations governing this clause will include an opportunity for the public to comment on the definition of the ‘‘due 

diligence’’ required by the bill. S. 675 also requires agencies to provide written notification to contractors of any action taken under 

the bill to restrict, terminate or void a contract, and to allow the 

contractor to challenge the action by requesting administrative review not later than 30 days after receipt of notice of the action. 

In order to help agencies get the information they need to avoid 

entering into contracts and other agreements with enemies (as defined by the bill), the bill requires the Secretary of Defense, in consultation with the Director of the Office of Management and Budget to carry out a program that will allow agencies to share information on funds that may be flowing to enemies. The program will be 

designed to facilitate and encourage the sharing of risk and threat 

information between agencies and combatant commands. Also, the 

bill ensures that actions taken to terminate or otherwise restrict 

contracts will be entered into the Federal Awardee Performance 

and Integrity Information System, which is a repository of information related to the business ethics and performance records of federal contractors. 

The bill provides for the repeal of the authorities granted under 

section 841 and section 831 upon implementation of the new authorities of S.675. The bill also includes a sunset date of December 

31, 2019 for both the process and authorities for restricting, terminating or voiding contracts. This sunset will allow Congress to assess the use, or non-use, of the authorities and consider reauthorization or amendment as appropriate. 

III. LEGISLATIVE HISTORY

On April 9, 2013, Senators Kelly Ayotte and Richard Blumenthal 

introduced S. 675. The bill was referred to the Committee on 

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13See footnote 12. 

sored by Senators Boozman, Burr, Chambliss, Manchin, Moran, 

Roberts, Shaheen, and Vitter. 

The Committee considered the bill at a business meeting on May 

21, 2014. Senator Ayotte offered a substitute amendment, which 

made a number of changes to the bill to align the proposed government-wide authorities with those already in place for the Department of Defense under section 841 of the National Defense Authorization Act for Fiscal Year 2012 and section 831 of the National Defense Authorization Act for Fiscal Year 2014. The substitute also 

incorporates some suggestions provided to Committee staff by officials of the Department of State and USAID, including a provision 

clarifying that the authorities in the bill shall be in addition to, 

and not the exclusion of, any other authorities available to agencies 

to implement policies similar to those set out in the bill. 

The Committee adopted the substitute amendment and then ordered S. 675 reported favorably, both by voice vote. Members 

present for both votes were: Carper, Pryor, Landrieu, McCaskill, 

Tester, Begich, Coburn, Johnson, Portman, and Enzi. 

IV. SECTION-BY-SECTION ANALYSIS OF THE BILL, AS REPORTED

Section 1. Short title 

Section 1 establishes the short title of the bill as the ‘‘Never Contract with the Enemy Act.’’ 

Section 2. Prohibition on providing funds to the enemy 

Subsection 2(a) requires the Secretary of Defense, in conjunction 

with the Director of National Intelligence and in consultation with 

the Secretary of State, to establish a program in each combatant 

command to identify people and entities that provide funds received under a contract, grant or cooperative agreement directly or 

indirectly to an enemy (defined as a ‘‘covered person or entity’’ in 

Section 4 below), or who fail to exercise due diligence to ensure 

that funds received under a contract, grant or cooperative agreement are not provided directly or indirectly to an enemy. 

Subsection 2(b) provides that upon identification of a person or 

entity, pursuant to subsection 2(a), the head of an executive agency 

or the commander of a covered combatant command shall be notified of the identification in writing. Upon receipt of the notification, 

the head of the executive agency or the commander of the combatant command may notify the heads of contracting activities, or 

other appropriate officials of the agency or command, in writing of 

such identification. 

Under subsection 2(c), not later than 270 days after enactment 

of the Act, the Federal Acquisition Regulation, the Defense Federal 

Acquisition Regulation Supplement, and the Uniform Administrative Requirements, Cost Principles, and Account Requirements for 

Federal Awards (referred to hereafter as ‘‘applicable regulations’’) 13

shall be revised to provide that certain actions may be taken upon 

written notice from the head of an executive agency or the commander of a combatant command to the head of contracting activity 

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tract functions). Specifically, subsection 2(c) provides that the head 

of contracting activity may: 

(1) restrict the award of contracts, grants, or cooperative 

agreements upon written determination that a contract, grant 

or cooperative agreement so awarded would provide funds received under such contract, grant or cooperative agreement directly or indirectly to an enemy; 

(2) terminate for default any contract, grant or cooperative 

agreement upon a written determination that the contractor, 

or the recipient of the grant or cooperative agreement, has 

failed to exercise due diligence to ensure that none of the funds 

received under the contract, grant or cooperative agreement 

are provided directly or indirectly to an enemy; or 

(3) void in whole or in part any contract, grant or cooperative 

agreement upon a written determination that the contract, 

grant or cooperative agreement provides funds directly or indirectly to an enemy. 

Subsection 2(d) provides that within 270 days after the date of 

enactment, the applicable regulations shall be revised to require a 

clause to be included in each contract, grant, or cooperative agreement that will require the recipient of the funds to exercise due 

diligence to ensure that funds are not provided directly or indirectly to an enemy. The clause will also notify the recipient of the 

funds of the authority of the head of contracting authority (or other 

appropriate official in the case of grants or cooperative agreements) 

to terminate the contract, grant or cooperative agreement. This 

subsection also ensures that the process for amending regulations 

will include an opportunity for public comment on the standards of 

due diligence required by the Act. 

Subsection 2(e) requires, within 270 days of enactment, implementation of regulations to require that any head of contracting activity, or other official, taking action under subsection (c) to terminate or void a contract, grant or cooperative agreement notify in 

writing the recipient of the contract, grant or cooperative agreement of the action. This subsection also requires revision of the applicable regulations, so that the recipient of a contract, grant or cooperative agreement subject to such action has an opportunity to 

challenge the action by requesting administrative review not later 

than 30 days after receipt of the notice of the action. 

Under subsection 2(f), the Secretary of Defense, in conjunction 

with the Director of National Intelligence and in consultation with 

the Secretary of State, shall annually review the list of covered persons or entities previously covered by a notice under subsection (b) 

in order to determine whether those persons or entities continue to 

warrant identification pursuant to subsection (a). If it is determined that a person or entity no longer warrants identification, 

then the Secretary of Defense shall notify the head of an executive 

agency or commander, as the case may be, in writing of such a determination. Classified information relied upon to make an identification in accordance with subsection (a) may not be disclosed to 

the recipient of a contract, grant or cooperative agreement in the 

absence of a protective order issued by a court of jurisdiction established under Article I or Article III of the Constitution. 

Subsection 2(g) provides that the commander of a combatant 

command may delegate in writing the responsibilities granted by 


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this section to any deputy specified by the commander. The authority provided by subsection (c) to terminate, void or restrict grants 

may not be delegated below the level of head of contracting activity, or equivalent official in the case of grants or cooperative agreements. 

Subsection 2(h) requires the Secretary of Defense, in consultation 

with the Director of the Office of Management and Budget, to carry 

out a program through which agency components may provide information to heads of executive agencies and commanders of combatant commands relating to persons or entities who may be providing funds, directly or indirectly, to enemies. The program shall 

be designed to facilitate and encourage the sharing of risk and 

threat information between agencies and combatant commands. 

Upon an action taken under subsection (c), the head of contracting 

activity shall provide for the inclusion in the Federal Awardee Performance and Integrity Information System, or other formal system 

of records on contractors, a notice of such action. The head of contracting activity that receives a notice pursuant to subsection (b) 

shall submit to the head of the executive agency concerned or the 

appropriate combatant command a report on the action taken, if 

any, pursuant to subsection (c), including any determination not to 

take action. 

Pursuant to subsection 2(i), by March 1 of 2016, 2017, and 2018, 

the Director of the Office of Management and Budget shall submit 

to the appropriate committees of Congress a report on the use of 

the authorities in this section in the preceding calendar year, including instances in which an executive agency exercised authority 

to terminate, void, or restrict a contract, grant or cooperative 

agreement, or instances in which an agency did not exercise authority to take action pursuant to subsection (c). The reports required by this subsection may be submitted in unclassified form 

but with a classified annex, or in classified form. 

Subsection 2(j) provides that nothing in this section shall apply 

to the authorized intelligence or law enforcement activities of the 

U.S. government. 

Subsection 2(k) makes clear that, except as provided in subsection (l), the authorities in this section shall be in addition to, 

and not to the exclusion of, any other authorities available to executive agencies to implement similar policies and purposes. 

Subsection 2(l) provides that, 270 days after enactment, section 

841 of the National Defense Authorization Act for Fiscal Year 2012, 

and section 831 of the National Defense Authorization Act for Fiscal Year 2014 are repealed. The Secretary of Defense may use and 

modify the regulations and procedures established under those provisions for purposes of satisfying the requirements of this section. 

Under subsection 2(m), the provisions of this section cease to be 

effective on December 31, 2019. 

Section 3. Additional access to records 

Subsection 3(a) requires revision of applicable regulations, within 

270 days after enactment, to allow for inclusion in contracts, grants 

and cooperative agreements a clause that authorizes the head of 

the executive agency to examine any records of the recipient or 

sub-recipient upon a written determination that funds under the 

contract, grant or cooperative agreement may have been provided 


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14See footnote 6. 

directly or indirectly to a covered person or entity. A similar clause 

may be included in any subcontract or subgrant under a covered 

contract, grant or cooperative agreement with an estimated value 

in excess of $50,000. 

Under subsection 3(b), by March 1 of 2016, 2017, and 2018, the 

Director of the Office of Management and Budget shall submit to 

the appropriate committees of Congress a report on the use of authorities provided by this section. 

Subsection 3(c) provides that 270 days after the date of enactment, section 842 of the National Defense Authorization Act of Fiscal Year 2012, which provided similar authority to the Department 

of Defense, is repealed. The Secretary of Defense may use and modify the requirements and procedures established under section 842 

for purposes of satisfying the requirements of this section. 

Section 4. Definitions 

Section 4 provides that for purposes of this Act: 

(1) The term ‘‘appropriate committees of Congress’’ means: the 

Committee on Armed Services, the Committee on Homeland Security and Governmental Affairs, the Committee on Foreign Relations, and the Committee on Appropriations of the Senate; and the 

Committee on Armed Services, the Committee on Oversight and 

Government Reform, the Committee on Foreign Affairs, and the 

Committee on Appropriations of the House of Representatives. 

(2) The term ‘‘contingency operation’’ has the meaning given that 

term in section 101(a)(13) of title 10, United States Code.14

(3) The term ‘‘contract’’ includes a contract for commercial items 

but is not limited to a contract for commercial items. 

(4) The term ‘‘covered combatant command’’ means the following: 

the United States Africa Command, the United States Central 

Command, the United States European Command, the United 

States Pacific Command, and the United States Southern Command. 

(5) The term ‘‘covered contract, grant or cooperative agreement’’ 

means a contract, grant or cooperative agreement with an estimated value in excess of $50,000 that is performed outside the 

United States, including its possessions and territories. 

(6) The term ‘‘covered person or entity’’ means a person or entity 

that is actively opposing United States or coalition forces in a contingency operation in which members of the armed forces are actively engaged in hostilities. 

(7) The term ‘‘executive agency’’ has the meaning given that term 

in section 133 of title 41, United States Code, which includes the 

major departments of the executive branch, the military departments, other government agencies (other than the United States 

Postal Service or the Postal Regulatory Commission) and wholly 

owned government corporations. 

(8) The term ‘‘head of contracting activity’’ has the meaning given 

that term in subpart 601 part 1 of the Federal Acquisition Regulation. The head of contracting activity is the person to whom an 

agency head delegates the authority to manage the contracting 

functions for the agency. 


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V. CONGRESSIONAL BUDGET OFFICE (CBO) COST ESTIMATE

JUNE 20, 2014. 

Hon. TOM CARPER, 

Chairman, Committee on Homeland Security and Governmental Affairs, U.S. Senate, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for S. 675, the Never Contract 

With the Enemy Act. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is David Newman. 

Sincerely, 

DOUGLAS W. ELMENDORF. 

Enclosure. 

S. 675—Never Contract With the Enemy Act 

S. 675 would require the Department of Defense (DoD) to identify entities that use resources received from the federal government to provide aid to a person or group that is actively opposing 

U.S. or allied armed forces in overseas contingency operations. The 

bill also would require DoD to identify entities that do not take sufficient care to ensure that government resources are not being used 

to support the enemy. 

The bill would require that contracts, grants, or cooperative 

agreements that are used or performed outside the United States 

and have a value of $50,000 or more include a clause giving federal 

agencies the right to examine the business records of the other 

party if the agency has reason to believe the recipient is supporting 

the enemy. 

S. 675 would require DoD to develop a program under which information on those entities found to be aiding the enemy may be 

provided to other federal agencies. The bill would authorize all federal agencies to cancel contractual agreements with such entities 

and to bar them from receiving additional contracts, grants, or cooperative agreements with the federal government. The bill also 

would require annual reports on the use of the authority during 

the 2016–2018 period. 

DoD currently conducts a similar program and notifies military 

commands engaged in overseas contingency operations of entities 

that have been identified as supporters of the enemy. Certain military commands are authorized under current law to cancel contracts with those identified. The department reports such cancelled 

contracts in the Federal Awardee Performance and Integrity Information System. DoD indicates that it would post the list of all entities identified as supporters of the enemy to that system where the 

information would be available to other federal agencies. 

CBO estimates that providing access to the list of enemy supporters and authorizing other federal agencies to cancel contracts 

and disbar contractors would have discretionary costs of less than 

$500,000 over the 2015–2019 period; any spending would be subject 

to the availability of appropriated funds. Pay-as-you-go procedures 

do not apply to this legislation because it would not affect direct 

spending or revenues. 


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15Subsection 1(l) of the bill provides that these changes are effective 270 days after the date 

of enactment of the Act. 

S. 675 contains no intergovernmental or private-sector mandates 

as defined in the Unfunded Mandates Reform Act and would not 

affect the budgets of state, local, or tribal governments. 

The CBO staff contact for this estimate is David Newman. The 

estimate was approved by Theresa Gullo, Deputy Assistant Director for Budget Analysis. 

VI. EVALUATION OF REGULATORY IMPACT

Pursuant to the requirements of paragraph 11(b) of rule XXVI of 

the Standing Rules of the Senate, the Committee has considered 

the regulatory impact of this bill. 

The Committee agrees with the Congressional Budget Office that 

the bill contains no intergovernmental or private-sector mandates 

as defined in the Unfunded Mandates Reform Act and would impose no costs on state, local, or tribal governments, or private entities. The enactment of this legislation would not have significant 

regulatory impact within the meaning of the rule. 

VII. CHANGES IN EXISTING STATUTE MADE BY THE BILL, AS

REPORTED

In compliance with paragraph 12 of rule XXVI of the Standing 

Rules of the Senate, changes in existing law made by S. 675 as reported are shown as follows (existing law proposed to be omitted 

is enclosed in brackets, new matter is printed in italic, and existing 

law in which no change is proposed is shown in roman): 15

NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL 

YEAR 2012 

(PUBLIC LAW 112–81) 

DIVISION A—DEPARTMENT OF DEFENSE 

AUTHORIZATIONS 

* * * * * * * 

TITLE VIII—ACQUISITION POLICY, ACQUISITION MANAGEMENT, AND RELATED MATTERS 

* * * * * * * 

Subtitle D—Provisions Relating to Contracts in 

Support of Contingency Operations in Iraq and 

Afghanistan 

* * * * * * * 

øSEC. 841. PROHIBITION ON CONTRACTING WITH THE ENEMY IN THE 

UNITED STATES CENTRAL COMMAND THEATER OF OPERATIONS. 

ø(a) PROHIBITION.— 


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ø(1) IN GENERAL.—Not later than 30 days after the date of 

the enactment of this Act, the Secretary of Defense shall revise 

the Department of Defense Supplement to the Federal Acquisition Regulation to authorize the head of a contracting activity, 

pursuant to a request from the Commander of the United 

States Central Command under subsection (c)(2)— 

ø(A) to restrict the award of Department of Defense contracts, grants, or cooperative agreements that the head of 

the contracting activity determines in writing would provide funding directly or indirectly to a person or entity 

that has been identified by the Commander of the United 

States Central Command as actively supporting an insurgency or otherwise actively opposing United States or coalition forces in a contingency operation in the United 

States Central Command theater of operations; 

ø(B) to terminate for default any Department contract, 

grant, or cooperative agreement upon a written determination by the head of the contracting activity that the contractor, or the recipient of the grant or cooperative agreement, has failed to exercise due diligence to ensure that 

none of the funds received under the contract, grant, or cooperative agreement are provided directly or indirectly to 

a person or entity who is actively supporting an insurgency or otherwise actively opposing United States or coalition forces in a contingency operation in the United 

States Central Command theater of operations; or 

ø(C) to void in whole or in part any Department contract, grant, or cooperative agreement upon a written determination by the head of the contracting activity that 

the contract, grant, or cooperative agreement provides 

funding directly or indirectly to a person or entity that has 

been identified by the Commander of the United States 

Central Command as actively supporting an insurgency or 

otherwise actively opposing United States or coalition 

forces in a contingency operation in the United States Central Command theater of operations. 

ø(2) TREATMENT AS VOID.—For purposes of this section: 

ø(A) A contract, grant, or cooperative agreement that is 

void is unenforceable as contrary to public policy. 

ø(B) A contract, grant, or cooperative agreement that is 

void in part is unenforceable as contrary to public policy 

with regard to a segregable task or effort under the contract, grant, or cooperative agreement. 

ø(b) CONTRACT CLAUSE.— 

ø(1) IN GENERAL.—Not later than 30 days after the date of 

the enactment of this Act, the Secretary shall revise the Department of Defense Supplement to the Federal Acquisition 

Regulation to require that— 

ø(A) the clause described in paragraph (2) shall be included in each covered contract, grant, and cooperative 

agreement of the Department that is awarded on or after 

the date of the enactment of this Act; and 

ø(B) to the maximum extent practicable, each covered 

contract, grant, and cooperative agreement of the Department that is awarded before the date of the enactment of 


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this Act shall be modified to include the clause described 

in paragraph (2). 

ø(2) CLAUSE DESCRIBED.—The clause described in this paragraph is a clause that— 

ø(A) requires the contractor, or the recipient of the grant 

or cooperative agreement, to exercise due diligence to ensure that none of the funds received under the contract, 

grant, or cooperative agreement are provided directly or 

indirectly to a person or entity who is actively supporting 

an insurgency or otherwise actively opposing United States 

or coalition forces in a contingency operation; and 

ø(B) notifies the contractor, or the recipient of the grant 

or cooperative agreement, of the authority of the head of 

the contracting activity to terminate or void the contract, 

grant, or cooperative agreement, in whole or in part, as 

provided in subsection (a). 

ø(3) COVERED CONTRACT, GRANT, OR COOPERATIVE AGREEMENT.—In this subsection, the term ‘‘covered contract, grant, 

or cooperative agreement’’ means a contract, grant, or cooperative agreement with an estimated value in excess of $100,000 

that will be performed in the United States Central Command 

theater of operations. 

ø(c) IDENTIFICATION OF CONTRACTS WITH SUPPORTERS OF THE

ENEMY.— 

ø(1) IN GENERAL.—Not later than 30 days after the date of 

the enactment of this Act, the Secretary, acting through the 

Commander of the United States Central Command, shall establish a program to use available intelligence to review persons and entities who receive United States funds through contracts, grants, and cooperative agreements performed in the 

United States Central Command theater of operations and 

identify any such persons and entities who are actively supporting an insurgency or otherwise actively opposing United 

States or coalition forces in a contingency operation. 

ø(2) NOTICE TO CONTRACTING ACTIVITIES.—If the Commander 

of the United States Central Command, acting pursuant to the 

program required by paragraph (1), identifies a person or entity as actively supporting an insurgency or otherwise actively 

opposing United States or coalition forces in a contingency operation, the Commander may notify the head of a contracting 

activity in writing of such identification and request that the 

head of the contracting activity exercise the authority provided 

in subsection (a) with regard to any contracts, grants, or cooperative agreements that provide funding directly or indirectly 

to the person or entity. 

ø(3) PROTECTION OF CLASSIFIED INFORMATION.—Classified information relied upon by the Commander of the United States 

Central Command to make an identification in accordance with 

this subsection may not be disclosed to a contractor or a recipient of a grant or cooperative agreement with respect to which 

an action is taken pursuant to the authority provided in subsection (a), or to their representatives, in the absence of a protective order issued by a court of competent jurisdiction established under Article III of the Constitution of the United States 


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that specifically addresses the conditions upon which such classified information may be so disclosed. 

ø(d) NONDELEGATION OF RESPONSIBILITIES.— ø(1) CONTRACT ACTIONS.—The authority provided by subsection (a) to restrict, terminate, or void contracts, grants, and 

cooperative agreements may not be delegated below the level 

of the head of a contracting activity. 

ø(2) IDENTIFICATION OF SUPPORT OF ENEMY.—The authority 

to make an identification under subsection (c)(1) may not be 

delegated below the level of the Commander of the United 

States Central Command. 

ø(e) REPORTS.—Not later than March 1 of each of 2013, 2014, 

and 2015, the Secretary shall submit to the congressional defense 

committees a report on the use of the authority provided by this 

section in the preceding calendar year. Each report shall identify, 

for the calendar year covered by such report, each instance in 

which the Department of Defense exercised the authority to restrict, terminate, or void contracts, grants, and cooperative agreements pursuant to subsection (a) and explain the basis for the action taken. Any report under this subsection may be submitted in 

classified form. 

ø(f) OTHER DEFINITION.—In this section, the term ‘‘contingency 

operation’’ has the meaning given that term in section 101(a)(13) 

of title 10, United States Code. 

ø(g) SUNSET.—The authority to restrict, terminate, or void contracts, grants, and cooperative agreements pursuant to subsection 

(a) shall cease to be effective on the date that is three years after 

the date of the enactment of this Act.¿ 

NATIONAL DEFENSE AUTHORIZATION ACT FOR FISCAL 

YEAR 2014 

(Public Law 113–66) 

DIVISION A—DEPARTMENT OF DEFENSE 

AUTHORIZATIONS 

* * * * * * * 

TITLE VIII—ACQUISITION POLICY, ACQUISITION MANAGEMENT, AND RELATED MATTERS 

* * * * * * * 

Subtitle D—Provisions Relating to Contracts in 

Support of Contingency Operations in Iraq and 

Afghanistan 

* * * * * * * 

øSEC. 831. PROHIBITION ON CONTRACTING WITH THE ENEMY. 

ø(a) AUTHORITY TO TERMINATE OR VOID CONTRACTS, GRANTS, 

AND COOPERATIVE AGREEMENTS AND TO RESTRICT FUTURE

AWARD.— 


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ø(1) IDENTIFICATION OF PERSONS AND ENTITIES.—The Secretary of Defense shall establish in each covered combatant 

command a program to identify persons or entities, within the 

area of responsibility of such covered combatant command, 

that— 

ø(A) provide funds received under a contract, grant, or 

cooperative agreement of the Department of Defense directly or indirectly to a covered person or entity; or 

ø(B) fail to exercise due diligence to ensure that none of 

the funds received under a contract, grant, or cooperative 

agreement of the Department of Defense are provided directly or indirectly to a covered person or entity. 

ø(2) NOTICE OF PERSONS OR ENTITIES IDENTIFIED.—Upon the 

identification of a person or entity as meeting subparagraph 

(A) or (B) of paragraph (1), the commander of the combatant 

command concerned, and any deputies of the commander specified by the commander for purposes of this section, shall be notified in writing of such identification of such person or entity. 

ø(3) RESPONSIVE ACTIONS.—Upon receipt of a notice under 

paragraph (2), the commander of the combatant command concerned may, in consultation with the Under Secretary of Defense for Policy, the Under Secretary of Defense for Acquisition, Technology, and Logistics, and the appropriate Chief of 

Mission, notify the heads of appropriate contracting activities, 

in writing, of such identification and request that the heads of 

such contracting activities exercise the authorities provided 

pursuant to paragraph (4) and the Department of Defense Supplement to the Federal Acquisition Regulation, as revised, with 

respect to any contract, grant, or cooperative agreement that 

provides funding directly or indirectly to the person or entity 

covered by the notice. 

ø(4) AUTHORITIES. Not later than 30 days after the date of 

the enactment of this Act, the Secretary of Defense shall revise 

the Department of Defense Supplement to the Federal Acquisition Regulation to authorize the head of a contracting activity 

in each covered combatant command, pursuant to a request 

from the commander of a covered combatant command under 

paragraph (3)— 

ø(A) to prohibit, limit, or otherwise place restrictions on 

the award of any Department of Defense contract, grant, 

or cooperative agreement to a person or entity identified 

pursuant to paragraph (1)(A); 

ø(B) to terminate for default any Department contract, 

grant, or cooperative agreement awarded to a person or 

entity identified pursuant to paragraph (1)(B); or 

ø(C) to void in whole or in part any Department contract, grant, or cooperative agreement awarded to a person 

or entity identified pursuant to paragraph (1)(A). 

ø(b) CONTRACT CLAUSE.— ø(1) IN GENERAL.—Not later than 30 days after the date of 

the enactment of this Act, the Department of Defense Supplement to the Federal Acquisition Regulation shall be revised to 

require that— 

ø(A) the clause described in paragraph (2) shall be included in each covered contract, grant, and cooperative 


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agreement of the Department of Defense that is awarded 

on or after the date of the enactment of this Act; and 

ø(B) to the maximum extent practicable, each covered 

contract, grant, and cooperative agreement of the Department of Defense that is awarded before the date of the enactment of this Act shall be modified to include the clause 

described in paragraph (2). 

ø(2) CLAUSE DESCRIBED.—The clause described in this paragraph is a clause that— 

ø(A) requires the contractor, or the recipient of the grant 

or cooperative agreement, to exercise due diligence to ensure that none of the funds received under the contract, 

grant, or cooperative agreement are provided directly or 

indirectly to a covered person or entity; and 

ø(B) notifies the contractor, or the recipient of the grant 

or cooperative agreement, of the authority of the head of 

the contracting activity to terminate or void the contract, 

grant, or cooperative agreement, in whole or in part. 

ø(3) COVERED CONTRACT, GRANT, OR COOPERATIVE AGREEMENT.—In this subsection, the term ‘‘covered contract, grant, 

or cooperative agreement’’ means a contract, grant, or cooperative agreement with an estimated value in excess of $50,000. 

ø(4) TREATMENT AS VOID.—For purposes of subsection (a)(4) 

and the exercise under subsection (a)(3) of the authorities in 

the Department of Defense Supplement to the Federal Acquisition Regulation pursuant to this subsection: 

ø(A) A contract, grant, or cooperative agreement that is 

void is unenforceable as contrary to public policy. 

ø(B) A contract, grant, or cooperative agreement that is 

void in part is unenforceable as contrary to public policy 

with regard to a segregable task or effort under the contract, grant, or cooperative agreement. 

ø(c) REQUIREMENTS FOLLOWING CONTRACT ACTIONS.—Not later 

than 30 days after the date of the enactment of this Act, the Department of Defense Supplement to the Federal Acquisition Regulation shall be revised as follows: 

ø(1) To require that any head of contracting activity taking 

an action pursuant to subsection (a)(3) or (a)(4) to terminate, 

void, or restrict a contract, grant, or cooperative agreement notify in writing the contractor or recipient of the grant or cooperative agreement, as applicable, of the action. 

ø(2) To permit, in such manner as the Department of Defense Supplement to the Federal Acquisition Regulation as so 

revised shall provide, the contractor or recipient of a grant or 

cooperative agreement subject to an action taken pursuant to 

subsection (a)(3) or (a)(4) to terminate or void the contract, 

grant, or cooperative agreement, as the case may be, an opportunity to challenge the action by requesting administrative review within 30 days after receipt of notice of the action. 

ø(d) ANNUAL REVIEW.—The commanders of the covered combatant commands shall, on an annual basis, review the lists of persons 

and entities previously identified pursuant to subsection (a)(1) in 

order to determine whether or not such persons and entities continue to warrant identification pursuant to that subsection. If a 

commander determines pursuant to such a review that a person or 


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entity no longer warrants identification pursuant to subsection 

(a)(1), the commander shall notify the heads of contracting activities of the Department of Defense in writing of such determination. 

ø(e) PROTECTION OF CLASSIFIED INFORMATION.—Classified information relied upon to make an identification pursuant to subsection (a)(1) may not be disclosed to a contractor or a recipient of 

a grant or cooperative agreement with respect to which an action 

is taken pursuant to subsection (a)(3) or (a)(4) or to their representatives, in the absence of a protective order issued by a court of competent jurisdiction established under Article I or Article III of the 

Constitution of the United States that specifically addresses the 

conditions upon which such classified information may be so disclosed. 

ø(f) DELEGATION.— 

ø(1) RESPONSIBILITIES RELATING TO IDENTIFICATION AND REVIEW.—The commander of a covered combatant command may 

delegate the responsibilities in subsection (a)(3) to any deputies 

of the commander specified by the commander pursuant to 

that subsection. The commander may delegate any responsibilities under subsection (d) to the deputy commander of the combatant command. Any delegation of responsibilities under this 

paragraph shall be made in writing. 

ø(2) NONDELEGATION OF RESPONSIBILITY FOR CONTRACT ACTIONS.—The authority provided by subsections (a)(3) and (a)(4) 

to terminate, void, or restrict contracts, grants, and cooperative 

agreements may not be delegated below the level of head of 

contracting activity. 

ø(g) INCLUSION OF INFORMATION ON CONTRACT ACTIONS IN

FAPIIS.—Upon the termination, voiding, or restriction of a contract, grant, or cooperative agreement pursuant to subsection (a)(3) 

or (a)(4), the head of contracting activity concerned shall provide 

for the inclusion in the Federal Awardee Performance and Integrity 

Information System (FAPIIS), or other formal system of records on 

contractors or entities, of appropriate information on the termination, voiding, or restriction of the contract, grant, or cooperative 

agreement. 

ø(1) IN GENERAL.—Not later than March 1 each year through 

2019, the Secretary of Defense shall submit to the congressional defense committees a report on the use of the authorities in this section in the preceding calendar year, including 

the following: 

ø(A) For each instance in which a contract, grant, or cooperative agreement was terminated or voided, or entry 

into contracts, grants, and cooperative agreements was restricted, pursuant to subsection (a)(3) or (a)(4), the following: 

ø(i) An explanation of the basis for the action taken. 

ø(ii) The value of the contract, grant, or cooperative 

agreement terminated or voided. 

ø(iii) The value of all contracts, grants, or cooperative agreements of the Department of Defense in force 

with the person or entity concerned at the time the 

contract, grant, or cooperative agreement was terminated or voided. 


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ø(iv) Information on how the goods or services covered by the terminated or voided contract, grant, or cooperative agreement were otherwise obtained by the 

commander of the combatant command concerned. 

ø(B) For each instance in which a contract, grant, or cooperative agreement of a person or entity identified pursuant to subsection (a)(1) was not terminated or voided pursuant to subsection (a)(3) or (a)(4), or the future award of 

contracts, grants, and cooperative agreements to such person or entity was not restricted pursuant to subsection 

(a)(3) or (a)(4), an explanation why such action was not 

taken. 

ø(2) FORM.—Any report under this subsection may be submitted in classified form. 

ø(i) OTHER DEFINITIONS.—In this section: 

ø(1) The term ‘‘covered combatant command’’ means United 

States Central Command, United States European Command, 

United States Africa Command, United States Southern Command, or United States Pacific Command. 

ø(2) The term ‘‘head of contracting activity’’ has the meaning 

given that term in subpart 601 of part 1 of the Federal Acquisition Regulation. 

ø(3) The term ‘‘covered person or entity’’ means a person or 

entity that is actively opposing United States or coalition forces 

involved in a contingency operation in which members of the 

armed forces are actively engaged in hostilities. 

ø(j) SUNSET.—The provisions of this section shall cease to be effective on December 31, 2018.¿ 

Æ 


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