[Federal Register Volume 89, Number 218 (Tuesday, November 12, 2024)]
[Rules and Regulations]
[Pages 89464-89472]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-26061]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 4, 13, 39, 40, and 52

[FAC 2025-01, FAR Case 2024-002, Item I, Docket No. 2024-0002, Sequence 
No. 1]
RIN 9000-AO70


Federal Acquisition Regulation: Prohibition on Unmanned Aircraft 
Systems From Covered Foreign Entities

AGENCY: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

[[Page 89465]]


ACTION: Interim rule.

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SUMMARY: DoD, GSA, and NASA are issuing an interim rule amending the 
Federal Acquisition Regulation (FAR) to implement a prohibition on the 
procurement and operation of unmanned aircraft systems manufactured or 
assembled by an American Security Drone Act-covered foreign entity.

DATES: 
    Effective date: November 12, 2024.
    Applicability date: Contracting officers shall include the clause 
at FAR 52.240-1, Prohibition on Unmanned Aircraft Systems Manufactured 
or Assembled by American Security Drone Act-Covered Foreign Entities, 
in solicitations issued, and contracts awarded, on or after November 
12, 2024, in accordance with FAR 1.108(d); see also section II of this 
preamble.
    Comment date: Interested parties should submit written comments to 
the Regulatory Secretariat Division at the address shown below on or 
before January 13, 2025, to be considered in the formation of the final 
rule.

ADDRESSES: Submit comments in response to FAC 2025-01, FAR Case 2024-
002 to the Federal eRulemaking portal at https://www.regulations.gov by 
searching for ``FAR Case 2024-002''. Select the link ``Comment Now'' 
that corresponds with ``FAR Case 2024-002''. Follow the instructions 
provided on the ``Comment Now'' screen. Please include your name, 
company name (if any), and ``FAR Case 2024-002'' on your attached 
document. If your comment cannot be submitted using https://www.regulations.gov, call or email the points of contact in the FOR 
FURTHER INFORMATION CONTACT section of this document for alternate 
instructions.
    Instructions: Please submit comments only and cite ``FAR Case 2024-
002'' in all correspondence related to this case. Comments received 
generally will be posted without change to https://www.regulations.gov, 
including any personal and/or business confidential information 
provided. Public comments may be submitted as an individual, as an 
organization, or anonymously (see frequently asked questions at https://www.regulations.gov/faq). To confirm receipt of your comment(s), 
please check https://www.regulations.gov, approximately two-to-three 
days after submission to verify posting.

FOR FURTHER INFORMATION CONTACT: For clarification of content, contact 
Mr. Benjamin Collins, Procurement Analyst, at 850-826-0058 or by email 
at <a href="/cdn-cgi/l/email-protection#3c5e5952565d515552125f53505055524f7c5b4f5d125b534a"><span class="__cf_email__" data-cfemail="90f2f5fefaf1fdf9febef3fffcfcf9fee3d0f7e3f1bef7ffe6">[email protected]</span></a>. For information pertaining to status, 
publication schedules, or alternate instructions for submitting 
comments if https://www.regulations.gov cannot be used, contact the 
Regulatory Secretariat Division at 202-501-4755 or <a href="/cdn-cgi/l/email-protection#2a6d796b784f4d794f496a4d594b044d455c"><span class="__cf_email__" data-cfemail="45021604172022162026052236246b222a33">[email protected]</span></a>. 
Please cite FAC 2025-01, FAR Case 2024-002.

SUPPLEMENTARY INFORMATION:

I. Background

    This interim rule revises the FAR to implement the American 
Security Drone Act of 2023 (subtitle B, title XVIII, National Defense 
Authorization Act (NDAA) for Fiscal Year (FY) 2024, Public Law 118-31, 
41 U.S.C. 3901 note prec.) enacted December 22, 2023.
    The unmanned aircraft system (UAS), also referred to as a drone, 
market has grown substantially in the last decade. Federal agencies use 
UAS for land-use research, data collection, monitoring the border, and 
various other tasks. Reliance on UAS, however, complicates the ability 
of the Federal Government to protect the security of this data, in part 
because the majority of UAS are manufactured and assembled by foreign-
owned entities with affiliations that have divergent interests from 
those of the United States. Security is imperative when data is 
collected, stored, and transmitted by UAS for sensitive missions. Use 
of UAS, without adequate protection for security, increases 
adversaries' capabilities to disrupt U.S. Government operations. 
Compromises to cybersecurity and physical security controls may lead to 
potential physical effects such as sabotage of Federal property and 
assets.
    This interim rule is intended to respond to these threats by 
prohibiting the procurement, operation, or use of Federal funds on UAS 
prohibited by the Federal Acquisition Security Council (FASC).

II. Applicability Dates

    Contracting officers shall include the clause at FAR 52.240-1, 
Prohibition on Unmanned Aircraft Systems Manufactured or Assembled by 
American Security Drone Act-Covered Foreign Entities, in solicitations 
issued, and contracts awarded, on or after November 12, 2024.
    If exercising an option or modifying an existing contract to extend 
the period of performance, contracting officers shall include the 
clause at FAR 52.240-1. When exercising an option, agencies should 
consider modifying the existing contract to add the clause in a 
sufficient amount of time to both provide notice for exercising the 
option and provide contractors with adequate time to comply with the 
clause. Additionally, contracting officers shall modify existing 
indefinite-delivery contracts to include the clause at FAR 52.240-1 in 
sufficient amount of time to apply to future orders in accordance with 
FAR 1.108(d)(3).

    Note: Although FAR part 37, Service Contracting, is not 
addressed explicitly, the FAR changes are applicable to supply and 
service solicitations and contracts.

III. Discussion and Analysis

    DoD, GSA, and NASA are amending the FAR consistent with the 
American Security Drone Act of 2023 (the Act) to prohibit executive 
agencies from procuring a FASC-prohibited UAS and, on or after December 
22, 2025, operating FASC-prohibited UAS. Additionally, the FAR is 
amended consistent with the Act to prohibit Federal contractors from 
using Federal funds for the procurement or operation of a FASC-
prohibited UAS.
    Terminology used throughout this rule is described here to aid in 
readability. For the purposes of this rule, the term ``FASC-prohibited 
unmanned aircraft system (UAS)'' means a UAS manufactured or assembled 
by an American Security Drone Act-covered foreign entity. In accordance 
with section 1822 of the Act, the list of American Security Drone Act-
covered foreign entities is to be developed and maintained by the FASC 
and published in the System for Award Management (SAM) at https://www.sam.gov.
    Additionally, the FAR and other agency acquisition regulations 
include instances of similar terms to those used in the Act (``covered 
foreign country,'' ``covered entity,'' etc.) with definitions 
corresponding to other statutes (e.g., section 889 of the NDAA for FY 
2019, section 848 of the NDAA for FY 2020, section 1634 of the NDAA for 
FY 2018). These terms may be inadvertently confused with the specific 
prohibited sources addressed by the Act implemented in this rule. Thus, 
while this rule uses the term ``covered foreign entity'' in titles of 
sections and clauses for brevity and parallelism to the Act, it more 
specifically refers to ``American Security Drone Act-covered foreign 
entity'' in this preamble and FAR text for clarity.
    Finally, while the Act refers to ``covered'' UAS, the definition 
provided in the Act does not differentiate from that of a UAS. 
Accordingly, to aid in readability and clarity there is no reference to 
``covered'' UAS, but simply UAS.

A. Policy

    This rule amends FAR part 40, Information Security and Supply Chain

[[Page 89466]]

Security, by establishing subpart 40.2, currently reserved, as Security 
Prohibitions and Exclusions. In subpart 40.2, the rule adds new 
sections 40.200, Scope of subpart, 40.201, Definitions, and 40.202, 
Prohibition on the Procurement and Operation of Unmanned Aircraft 
Systems Manufactured or Assembled by American Security Drone Act-
Covered Foreign Entities, with a corresponding new contract clause at 
52.240-1, Prohibition on Unmanned Aircraft Systems Manufactured or 
Assembled by American Security Drone Act-Covered Foreign Entities. In 
accordance with section 1833 of Public Law 118-31, 41 U.S.C. 3901 note 
prec., the requirements of section 40.202 expire on December 22, 2028.
    The rule adds a cross-reference in part 39, Acquisition of 
Information Technology, to call the attention of contracting officers 
potentially utilizing UAS in broader information technology 
procurements to the new prohibition. This rule also adds a cross-
reference in part 13, Simplified Acquisition Procedures, for awareness 
of applicability to actions at or below the micro-purchase threshold. 
Finally, while this prohibition is established in subpart 40.2 as this 
is the intended primary location for security prohibitions and 
exclusions going forward, other security prohibitions and exclusions 
still reside in other areas of the FAR. Accordingly, a cross-reference 
is added in FAR part 4, Information and Information Matters, where many 
of the existing security prohibitions and exclusions reside.

B. Prohibition

    The prohibition at FAR 40.202-4 includes a phased implementation. 
Effective immediately, agencies are prohibited from procuring a FASC-
prohibited UAS, as published in SAM at https://www.sam.gov. Effective 
on or after December 22, 2025, agencies are also prohibited from 
procuring services for the operation of a FASC-prohibited UAS, and 
Federal contractors are prohibited from using Federal funds on FASC-
prohibited UAS (see 40.202-3). The prohibitions are implemented through 
contract clause 52.240-1, Prohibition on Unmanned Aircraft Systems 
Manufactured or Assembled by American Security Drone Act-Covered 
Foreign Entities.
    In the near-term, the phased prohibition permits the continued use 
of previously-acquired UAS that were subsequently identified as FASC-
prohibited, as well as contractor operation of UAS in services where 
the UAS is not a deliverable (e.g., a contractor flies a UAS for aerial 
surveillance on a security contract or a contractor uses a UAS for 
analyzing crop and soil conditions as part of services performed under 
an agriculture-related contract). This is consistent with the 
effectivity of the prohibition in sections 1823 and 1826 of Public Law 
118-31 (41 U.S.C. 3901 note prec.), with the enactment of the NDAA of 
FY 2024 (December 22, 2023) and the effectivity of sections 1824 and 
1825 deferred until two years later (December 22, 2025).

C. Statute Implementation Considerations

    The Act includes numerous sections pertaining to Federal 
acquisition. The sections include differing scope, timelines, and 
audiences. For example, both sections 1823 and 1826 immediately 
prohibit agencies from procuring FASC-prohibited UAS, whereas section 
1824 goes into effect in December 2025 and prohibits agencies from 
operating (or contracting for the operation of) FASC-prohibited UAS. 
Section 1825 also goes into effect December 2025 and prohibits the use 
of Federal funds for the procurement or operation of FASC-prohibited 
UAS.
    While piecemeal implementation of the various sections could be 
accommodated through numerous rulemaking undertakings, a consolidated 
and integrated rule for the implementation of the Act, as a whole, more 
efficiently fulfills the FAR's purpose of establishing uniform policies 
and procedures for acquisition by all executive agencies in accordance 
with FAR 1.101 (see 41 U.S.C. 1121(b)). For example, while the 
prohibition on operation of a FASC-prohibited UAS is not effective 
until December 2025, publishing and incorporating the rule into the FAR 
now better prepares agencies and contractors to more efficiently plan 
for, and comply with, the Act's prohibitions given typical acquisition 
and rulemaking timelines.
    This rule seeks to harmonize and simplify the disparate, but 
interrelated, sections of the Act pertinent to Federal contracting. 
Thus, while precise references are provided where appropriate, the rule 
often speaks more broadly to the Act versus a specific section of the 
Act. Additionally, a few conservative adjustments between statute and 
regulation were made where needed for more efficient administration. 
For example, the statute's frequently used ``in the connection with the 
operation of'' a FASC-prohibited UAS was implemented more simply as 
``operation of.'' While ``in connection with'' could conceivably 
capture an activity ancillary to operation (e.g., a contractor 
servicing the airfield where a FASC-prohibited UAS may fly out of), it 
is unclear how far that may extend. DoD, GSA, and NASA perceived the 
principal aim of this terminology to be the operation of a FASC-
prohibited UAS. This perception was based upon a plain reading of the 
statute as well as supporting documentation, such as the Committee on 
Homeland Security and Governmental Affairs United States Senate Report 
118-87 to accompany Senate bill 473, which more simply focused on the 
prohibition on the ``operation of'' the UAS versus the less defined 
``in connection with the operation of'' a UAS. This implementation was 
viewed as not only a readability improvement but also a streamlining of 
an otherwise unwieldy and open-ended phrase that may inhibit 
understanding and compliance by the acquisition community.

D. Exemptions, Exceptions, and Waivers

    The Act includes exemptions, exceptions, and waivers. As shown at 
FAR 40.202-4(a), exemptions apply to the Department of Homeland 
Security, the Department of Defense, the Department of State, and the 
Department of Justice if the procurement or operation is determined to 
be in the national interest of the United States and meets specific 
criteria outlined in the statute.
    Exemptions also apply to the Department of Transportation for UAS 
in support of the safe, secure, or efficient operation of the National 
Airspace System and maintenance of public safety, among other 
activities. These exemptions are summarized in FAR 40.202-4(b).
    Similarly, an exemption applies to the National Transportation 
Safety Board (NTSB) for the purposes of conducting safety 
investigations. This exemption is summarized in FAR 40.204-4(c). It 
should be noted that while Congress authorized this NTSB safety 
investigation exemption for agency procurement and operation (sections 
1823 and 1824 of the Act), it did not provide a parallel NTSB safety 
investigation exemption for use of Federal funds (section 1825). Thus, 
for purposes of consistency in implementation, and to carry out the 
intent of Congress, the FAR Council has conformed the NTSB safety 
investigation exemption for not only agency procurement and operation, 
but also contractor use of Federal funds.
    Finally, an exemption is afforded to the National Oceanic and 
Atmospheric Administration for meeting science or

[[Page 89467]]

management objectives or operational mission. This exemption is 
summarized in FAR 40.202-4(d).
    In accordance with section 1832 of the Act, FAR 40.202-5 outlines 
exceptions for wildfire management operations, search and rescue 
operations, intelligence activities, and Tribal law enforcement. 
Additionally, FAR 40.202-6 authorizes heads of executive agencies 
waiver authority, on a case-by-case basis, with approval from the 
Director of the Office of Management and Budget, after consultation 
with the FASC, and upon notification to appropriate congressional 
committees.

E. Definitions

    Section 40.201 is created to define the terms ``American Security 
Drone Act-covered foreign entity,'' ``unmanned aircraft,'' and 
``unmanned aircraft system,'' which are derived from statute. A UAS is 
comprised of both an unmanned aircraft and the associated elements 
required for the operator to operate safely and efficiently in the 
national airspace system. Also of note, while the term ``drone'' is 
used in the title of the statute being implemented, it is not a defined 
term in the Act or this rule. Nevertheless, ``drone'' is referenced for 
plain language purposes in several instances and is considered roughly 
equivalent to ``unmanned aircraft'' (i.e., the air vehicle itself 
versus the more comprehensive system required to operate the drone). 
While the term ``unmanned aircraft'' is defined in statute and provided 
in section 40.201, the term ``associated elements'' is not.
    Section 1823 of the Act tasks the FASC, in coordination with the 
Secretary of Transportation, with developing and updating a list of 
associated elements. The FASC definition of associated elements was not 
available in time for the publication of this rule. However, the FAR 
Council does intend to incorporate the FASC's definition of associated 
elements in the final rule. Additionally, although the tasking to the 
FASC for defining associated elements is only referenced in section 
1823, the FAR Council anticipates it applying to the broader 
implementation of the Act (e.g., pertinent to sections 1824, 1825, 
1826, etc.).
    The term ``FASC-prohibited unmanned aircraft system'' is created to 
aid in the readability of the FAR text, provide better linkage to FASC-
maintained list on SAM.gov, and provide for more specificity than 
simply ``prohibited'' given other prohibitions that may be involved in 
a specific acquisition (e.g., debarred contractor, contractor with 
delinquent tax liabilities or felony convictions). This new term is 
defined as a UAS manufactured or assembled by an American Security 
Drone Act-covered foreign entity.
    It should also be noted that while the prohibition clearly applies 
to an American Security Drone Act-covered foreign entity that 
manufactures or assembles a UAS (i.e., an unmanned aircraft or 
associated element), it does not necessarily prevent an American 
Security Drone Act-covered foreign entity from supplying a part, for 
example, that may be used by another entity to assemble or manufacture 
the unmanned aircraft or associated element. Agencies are encouraged to 
consult agency-specific guidelines or procedures, as well as emerging 
Governmentwide policies for the procurement of UAS (see section 1829 of 
the Act), for more detail on security considerations at levels of 
assembly below that of a UAS (i.e., an unmanned aircraft or associated 
element).

F. Applicability to Actions at or Below the Micro-Purchase Threshold

    The rule also adds text in subpart 13.2, Actions at or Below the 
Micro-Purchase Threshold, to address the prohibition with regard to 
micro-purchases.

IV. Specific Questions for Comment

    DoD, GSA, and NASA considered implementation of various compliance 
elements when drafting this rule. Specifically, DoD, GSA, and NASA are 
considering adding requirements for offerors and contractors to 
disclose and report certain information to contracting officers.
    A contemplated disclosure requirement would provide offerors a 
mechanism for identifying the proposed or contemplated delivery or use 
of a FASC-prohibited UAS to the contracting officer, and why it may be 
appropriate (e.g., how a FASC-prohibited UAS is proposed to be modified 
to preclude transfer to, or download data from, an American Security 
Drone Act-covered foreign entity or otherwise pose no national security 
or cybersecurity risk).
    Finally, a contemplated reporting requirement would compel 
contractors in procurements with no exemption, exception, or waiver to 
maintain awareness of changes to the FASC-maintained list of American 
Security Drone Act-covered foreign entities and inform the contracting 
officer if a utilized UAS which was not prohibited at the time of 
solicitation or award was subsequently prohibited. Additionally, 
contemplated reporting requirements could compel contractors to report 
specific information to agency officials if a UAS (FASC-prohibited or 
otherwise) was compromised and information or operations made 
vulnerable.
    DOD, GSA, and NASA welcome input on the following considerations:
    <bullet> What challenges do you anticipate regarding compliance 
with the contemplated disclosure requirement?
    <bullet> What challenges do you anticipate regarding compliance 
with the contemplated reporting requirement?
    <bullet> Would more detail regarding ``Federal funds'' (e.g., text 
similar to FAR 52.203-12(b)) be helpful in complying with the 
prohibition on the use of Federal funds in the procurement or operation 
of FASC-prohibited UAS?
    <bullet> What other suggestions do you have to ensure Government 
customers are aware of, and can mitigate, risks posed by FASC-
prohibited UAS?

V. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold (SAT) and for Commercial Products (Including Commercially 
Available Off-the-Shelf (COTS) Items), or for Commercial Services

    This rule adds a new contract clause at FAR 52.240-1, Prohibition 
on Unmanned Aircraft Systems Manufactured or Assembled by American 
Security Drone Act-Covered Foreign Entities, to implement the 
requirements of the Act.

A. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold

    The statute at 41 U.S.C. 1905 governs the applicability of laws to 
acquisitions at or below the SAT. Section 1905 generally limits the 
applicability of new laws when agencies are making acquisitions at or 
below the SAT, but provides that such acquisitions will not be exempt 
from a provision of law under certain circumstances, including when the 
FAR Council makes a written determination and finding that it would not 
be in the best interest of the Federal Government to exempt contracts 
and subcontracts in amounts not greater than the SAT from the provision 
of law. The FAR Council made a determination to apply this statute to 
acquisitions at or below the SAT.

B. Applicability to Contracts for the Acquisition of Commercial 
Products (Including Commercially Available Off-The-Shelf (COTS) Items), 
or for Commercial Services

    The statute at 41 U.S.C. 1906 governs the applicability of laws to 
contracts for the acquisition of commercial products and commercial 
services and is intended to limit the applicability of

[[Page 89468]]

laws to contracts for the acquisition of commercial products and 
commercial services. Section 1906 provides that if the FAR Council 
makes a written determination that it is not in the best interest of 
the Federal Government to exempt commercial contracts, the provision of 
law will apply to contracts for the acquisition of commercial products 
and commercial services.
    The statute at 41 U.S.C. 1907 states that acquisitions of COTS 
items will be exempt from certain provisions of law unless the 
Administrator for Federal Procurement Policy makes a written 
determination and finds that it would not be in the best interest of 
the Federal Government to exempt contracts for the procurement of COTS 
items.
    The FAR Council made a determination to apply this statute to 
acquisitions for commercial products and commercial services. The 
Administrator for Federal Procurement Policy made a determination to 
apply this statute to acquisitions for COTS items.

C. Determinations

    The FAR Council has determined that it is in the best interest of 
the Government to apply the rule to contracts at or below the SAT and 
for the acquisition of commercial products and commercial services. The 
Administrator for Federal Procurement Policy has determined that it is 
in the best interest of the Government to apply this rule to contracts 
for the acquisition of COTS items.
    While the law does not specifically address acquisitions of 
commercial products and commercial services, including COTS items, 
there is an unacceptable level of risk for the Government in allowing 
the procurement, provision, or utilization of UAS manufactured or 
assembled by an American Security Drone Act-covered foreign entity, or 
products or services in connection with the operation of such UAS. This 
level of risk is not alleviated by the fact that the service or product 
being acquired has been sold or offered for sale to the general public, 
either in the same form or a modified form as sold to the Government 
(i.e., that it is a commercial product or COTS item), nor by the small 
size of the purchase (i.e., at or below the SAT). In fact, Senate 
Report 118-87 specifically highlights the commercial UAS market as an 
area of concern given market share dominance and potential 
cybersecurity risks posed by many of these COTS UAS. As a result, 
agencies may face increased risk of exposure if use of such UAS is 
allowed on a contract for commercial services or commercial products 
(including COTS items). The prohibitions on procuring, providing, or 
using such UAS in the performance of a Federal contract is a national 
security measure to protect sensitive Government information and 
operations.

VI. Severability

    While this rule is intended to be implemented in full, reasoned 
consideration has been given for potential partial implementation 
scenarios. If any portion (e.g., section, clause, sentence) of this 
rule is held to be invalid or unenforceable facially, or as applied to 
any entity or circumstance, it shall be severable from the remainder of 
this rule, and shall not affect the remainder thereof, or its 
application to entities not similarly situated or to other dissimilar 
circumstances. The various portions of this rule are independent and 
serve distinct purposes. Even if one aspect were rendered invalid, the 
other benefits of the rule would still be applicable. As an 
illustrative but not exhaustive example, were a court to stay or 
invalidate the prohibition on the operation of a FASC-prohibited UAS 
effective December 22, 2025, the agencies would intend the prohibition 
on the procurement of a FASC-prohibited UAS would remain effective.

VII. Expected Impact of the Rule

    This rule is not expected to have a significant economic impact on 
businesses. Federal expenditure in the sector is expected to remain 
largely unchanged. The Congressional Budget Office cost estimate for 
the Act estimated any net changes in spending would be less than 
$500,000 over the 2024 to 2033 period. While the prohibitions on 
procurement, operation, and use of funds may drive further change to 
the UAS supplier base for the Federal Government, that change is 
already underway across numerous agencies. Alternative suppliers exist 
and continue to emerge.
    Additionally, while the changes require Federal agencies and prime 
contractors engaged in the use of UAS to further scrutinize their 
sources of supply, the fundamental tools for supply chain awareness and 
security should be in place and largely unchanged.
    The overall benefit of this rule is to protect Government 
information and operations from vulnerabilities associated with FASC-
prohibited UAS.

VIII. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 (as amended by E.O. 14094) 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.

IX. Congressional Review Act

    Pursuant to the Congressional Review Act, DoD, GSA, and NASA will 
send this rule to each House of the Congress and to the Comptroller 
General of the United States. The Office of Information and Regulatory 
Affairs (OIRA) in the Office of Management and Budget has determined 
that this rule does not meet the definition in 5 U.S.C. 804(2).

X. Regulatory Flexibility Act

    DoD, GSA, and NASA do 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. 601-612. 
Nevertheless, an Initial Regulatory Flexibility Analysis (IRFA) has 
been performed and is summarized as follows:

    DoD, GSA, and NASA are amending the FAR to implement the 
prohibition on procuring, operating, or using Federal funds on, UAS 
that are manufactured or assembled by an American Security Drone 
Act-covered foreign entity.
    This interim rule is being implemented as a national security 
measure to protect sensitive Government information and operations. 
The legal basis for the rule is the American Security Drone Act of 
2023 (subtitle B, title XVIII of the NDAA for FY 2024, Pub. L. 118-
31, 41 U.S.C. 3901 note prec.), which prohibits procurement and 
operation of UAS manufactured or assembled by American Security 
Drone Act-covered foreign entities, as well as contractor use of 
Federal funds on such UAS. Promulgation of the FAR is authorized by 
40 U.S.C. 121(c); 10 U.S.C. chapter 4 and 10 U.S.C. chapter 137 
legacy provisions (see 10 U.S.C. 3016); and 51 U.S.C. 20113.
    This rule applies to entities, small and other than small 
entities, that provide to Government agencies UAS and on or after 
December 22, 2025, operation of a UAS. While drones may be used in 
many types of contracts, a specific Product and Service Code (PSC), 
1550--Unmanned Aircraft, is available for contracting officers to 
explicitly identify procurements for unmanned aircraft. PSC 1550 
applies to complete unmanned aircraft systems and subordinate air 
vehicles and includes unmanned aircraft systems and

[[Page 89469]]

drones specifically designed for uses such as targeting, training, 
surveillance, photographic reconnaissance, weapons delivery, 
communications relay/network gateway, electronic warfare, search and 
rescue, and various other operations. According to Federal 
Procurement Data System (FPDS) data for FY 2023, 100 unique entities 
were awarded Federal contracts under PSC 1550, with a total contract 
value of $2,411,790,985. Small entities accounted for less than 10 
percent of the contracted dollar value ($218 million of the $2.4 
billion) but constituted 68 percent of the unique entities. Based on 
this dataset, approximately 68 small entities would be impacted by 
this rule.
    The rule does not include any reporting or recordkeeping 
requirements. Other compliance requirements are not expected to 
carry significant burden. Small entities that do business with the 
Federal Government should be familiar with other similar 
prohibitions, including the Federal Acquisition Supply Chain 
Security Act Orders, which function in a comparable manner. Based 
upon FPDS data for PSC 1550 in FY 2023, all 68 small entities 
awarded contracts were incorporated in the United States and 65 of 
the 68 indicated the United States as the country of product or 
service origin and 64 of the 68 indicated the United States as the 
place of manufacture. While place of manufacture is not the sole 
factor in the FASC's determination of American Security Drone Act-
covered foreign entities, it is a significant factor. Accordingly, 
while small entities conducting drone-related business with the 
Federal Government will need to familiarize themselves with the new 
clause at 52.240-1, Prohibition on Unmanned Aircraft Systems 
Manufactured or Assembled by American Security Drone Act-Covered 
Foreign Entities, relatively limited impact is anticipated to the 
Federal contract small entity industrial base.
    The rule does not duplicate, overlap, or conflict with any other 
Federal rules.
    There are no available alternatives to the interim rule to 
accomplish the desired objective of the statute. Because of the 
nature of the prohibition enacted by the American Security Drone Act 
of 2023, it is not possible to exempt small entities from coverage 
of the rule.

    The Regulatory Secretariat Division has submitted a copy of the 
IRFA to the Chief Counsel for Advocacy of the Small Business 
Administration. A copy of the IRFA may be obtained from the Regulatory 
Secretariat Division. DoD, GSA, and NASA invite comments from small 
business concerns and other interested parties on the expected impact 
of this interim rule on small entities.
    DoD, GSA, and NASA will also consider comments from small entities 
concerning the existing regulations in subparts affected by the rule in 
accordance with 5 U.S.C. 610. Interested parties must submit such 
comments separately and should cite 5 U.S.C. 610 (FAR Case 2024-002), 
in correspondence.

XI. Paperwork Reduction Act

    This rule does not contain any information collection requirements 
that require the approval of the Office of Management and Budget under 
the Paperwork Reduction Act (44 U.S.C. 3501-3521).

XII. Determination To Issue an Immediately Effective Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense, the Administrator of General Services, and the 
Administrator of the National Aeronautics and Space Administration that 
urgent and compelling reasons exist to promulgate this interim rule 
effective immediately without prior opportunity for public comment, see 
41 U.S.C. 1707(d). This action is necessary to implement the 
prohibition in the American Security Drone Act of 2023 (the Act) on the 
procurement of unmanned aircraft systems (UAS) prohibited by the 
Federal Acquisition Security Council (FASC) that was effective with the 
enactment of the National Defense Authorization Act (NDAA) for Fiscal 
Year (FY) 2024 (Pub. L. 118-31, 41 U.S.C. 3901 note prec.) on December 
22, 2023, in accordance with sections 1823 and 1826.
    Sections 1824 and 1825 of the Act also require implementation 
through the FAR, although the associated prohibitions are not effective 
until two years after the enactment of the NDAA for FY 2024, or 
December 22, 2025. Section 1824 prohibits the operation of FASC-
prohibited UAS, and section 1825 prohibits the use of Federal funds on 
FASC-prohibited UAS. Despite the deferred effectivity, the Act requires 
the Federal Acquisition Regulatory Council to prescribe regulations or 
guidance necessary for implementation of section 1825 within 180 days 
of the enactment of the NDAA for FY 2024.
    This interim rule is being implemented as a national security 
measure to protect sensitive Government information and operations. 
Issuing an immediately effective interim rule facilitates uniformity 
and consistency across Government, limits the chance of incorrect 
implementation, prevents the need for contracting officers to relearn 
or change procedures if agency-specific guidance differs from the FAR 
implementation, and aids industry with compliance. However, pursuant to 
41 U.S.C. 1707 and FAR 1.501-3(b), the Department of Defense, General 
Services Administration, and National Aeronautics and Space 
Administration will consider public comments received in response to 
this interim rule in the formation of the final rule.

List of Subjects in 48 CFR Parts 4, 13, 39, 40, and 52

    Government procurement.

William F. Clark,
Director, Office of Government-wide Acquisition Policy, Office of 
Acquisition Policy, Office of Government-wide Policy.

    Therefore, DoD, GSA, and NASA amend 48 CFR parts 4, 13, 39, 40, and 
52 as set forth below:

0
1. The authority citation for 48 CFR parts 4, 13, 39, 40, and 52 
continues to read as follows:

    Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 4 and 10 U.S.C. 
chapter 137 legacy provisions (see 10 U.S.C. 3016); and 51 U.S.C. 
20113.

PART 4--ADMINISTRATIVE AND INFORMATION MATTERS

0
2. Revise section 4.000 to read as follows:


4.000   Scope of part.

    (a) This part prescribes policies and procedures relating to the 
administrative aspects of contract execution, contractor-submitted 
paper documents, distribution, reporting, retention, and files.
    (b) Additionally, this part includes policies and procedures to 
implement security prohibitions and exclusions that restrict Federal 
agencies from procuring, obtaining, or using certain products, 
services, or sources. Additional security prohibitions and exclusions 
are found at subparts 25.7 and 40.2.

PART 13--SIMPLIFIED ACQUISITION PROCEDURES

0
3. Amend section 13.201 by adding paragraph (m) to read as follows:


13.201   General.

* * * * *
    (m) The prohibitions on unmanned aircraft systems (e.g., drones) in 
40.202 apply to purchases at or below the micro-purchase threshold.

PART 39--ACQUISITION OF INFORMATION TECHNOLOGY

0
4. Amend section 39.101 by adding paragraph (i) to read as follows:


39.101   Policy.

* * * * *
    (i) Executive agencies must comply with the prohibitions on 
unmanned aircraft systems (e.g., drones) in accordance with 40.202.

[[Page 89470]]

PART 40--INFORMATION SECURITY AND SUPPLY CHAIN SECURITY

0
5. Add subpart 40.2 to read as follows:

Subpart 40.2--Security Prohibitions and Exclusions

Sec.
40.200 Scope of subpart.
40.201 Definitions.
40.202 Prohibition on the procurement and operation of unmanned 
aircraft systems manufactured or assembled by American Security 
Drone Act-covered foreign entities.
40.202-1 Scope.
40.202-2 Applicability.
40.202-3 Prohibition.
40.202-4 Exemptions.
40.202-5 Exceptions.
40.202-6 Waivers.
40.202-7 Procedures.
40.202-8 Contract clause.

Subpart 40.2--Security Prohibitions and Exclusions


40.200   Scope of subpart.

    (a) This subpart provides policies and procedures to implement 
security prohibitions and exclusions that restrict Federal agencies 
from procuring, obtaining, or using certain products, services, or 
sources.
    (b) The following prohibitions and exclusions are implemented in 
this subpart:
    (1) The American Security Drone Act of 2023, of the National 
Defense Authorization Act for Fiscal Year 2024 (Pub. L. 118-31, 41 
U.S.C. 3901 note prec.), which provides a prohibition on the 
procurement and operation of unmanned aircraft systems.
    (2) [Reserved]
    (c) Additional security prohibitions and exclusions are found at 
subparts 4.20 through 4.23 and 25.7.


40.201   Definitions.

    As used in this subpart--
    American Security Drone Act-covered foreign entity means an entity 
included on a list developed and maintained by the Federal Acquisition 
Security Council (FASC) and published in the System for Award 
Management (SAM) at https://www.sam.gov (section 1822 of Pub. L. 118-
31, 41 U.S.C. 3901 note prec.).
    FASC-prohibited unmanned aircraft system means an unmanned aircraft 
system manufactured or assembled by an American Security Drone Act-
covered foreign entity.
    Unmanned aircraft means an aircraft that is operated without the 
possibility of direct human intervention from within or on the aircraft 
(49 U.S.C. 44801(11)).
    Unmanned aircraft system means an unmanned aircraft and associated 
elements (including communication links and the components that control 
the unmanned aircraft) that are required for the operator to operate 
safely and efficiently in the national airspace system (49 U.S.C. 
44801(12)).


40.202   Prohibition on the procurement and operation of unmanned 
aircraft systems manufactured or assembled by American Security Drone 
Act-covered foreign entities.


40.202-1   Scope.

    (a) Section 40.202 prescribes policies and procedures regarding the 
procurement and operation of unmanned aircraft systems, which includes 
unmanned aircraft (i.e., drones) and associated elements.
    (b) The authorities in 40.202 expire on December 22, 2028 (section 
1833 of Pub. L. 118-31, 41 U.S.C. 3901 note prec.).


40.202-2   Applicability.

    Section 40.202 applies to all acquisitions, including contracts at 
or below the micro-purchase threshold and to contracts for commercial 
products or for commercial services.


40.202-3   Prohibition.

    Unless an exemption, exception, or waiver applies (see 40.202-4, 
40.202-5, and 40.202-6, respectively), executive agencies are 
prohibited from--
    (a) Procuring a FASC-prohibited unmanned aircraft system (section 
1823 and 1826 of Pub. L. 118-31, 41 U.S.C. 3901 note prec.). The 
prohibition includes extending or renewing a contract (e.g., exercising 
an option);
    (b) On or after December 22, 2025, procuring services for the 
operation of a FASC-prohibited unmanned aircraft system (section 1824 
of Pub. L. 118-31, 41 U.S.C. 3901 note prec.). The prohibition includes 
extending or renewing a contract (e.g., exercising an option); and
    (c) On or after December 22, 2025, using Federal funds for the 
procurement or operation of a FASC-prohibited unmanned aircraft system 
(section 1825 of Pub. L. 118-31, 41 U.S.C. 3901 note prec.).


40.202-4   Exemptions.

    The prohibitions in 40.202 do not apply to the following (see 
sections 1823, 1824, and 1825 of Pub. L. 118-31, 41 U.S.C. 3901 note 
prec.):
    (a) Department of Homeland Security, Department of Defense, 
Department of State, and the Department of Justice exemptions. The 
Secretary of Homeland Security, the Secretary of Defense, the Secretary 
of State, and the Attorney General are exempt from the prohibitions in 
40.202 if the procurement or operation is required in the national 
interest of the United States and--
    (1) Is for the sole purposes of research, evaluation, training, 
testing, or analysis for electronic warfare, information warfare 
operations, cybersecurity, or development of unmanned aircraft system 
or counter-unmanned aircraft system technology;
    (2) Is for the sole purposes of conducting counterterrorism or 
counterintelligence activities, protective missions, or Federal 
criminal or national security investigations, including forensic 
examinations, or for electronic warfare, information warfare 
operations, cybersecurity, or development of an unmanned aircraft 
system or counter-unmanned aircraft system technology; or
    (3) Is an unmanned aircraft system that, as procured or as modified 
after procurement but before operational use, can no longer transfer 
to, or download data from, an American Security Drone Act-covered 
foreign entity and otherwise poses no national security cybersecurity 
risks as determined by the exempting official, as described in agency 
procedures.
    (b) Department of Transportation exemption. The Secretary of 
Transportation is exempt from the prohibitions in 40.202 if the 
operation or procurement is deemed to support the safe, secure, or 
efficient operation of the National Air Space System or maintenance of 
public safety.
    (c) National Transportation Safety Board exemption. The National 
Transportation Safety Board, in consultation with the Secretary of 
Homeland Security, is exempt from the prohibitions in 40.202 if the 
operation or procurement is necessary for the sole purpose of 
conducting safety investigations.
    (d) National Oceanic and Atmospheric Administration (NOAA) 
exemption. The Administrator of NOAA, in consultation with the 
Secretary of Homeland Security, is exempt from the prohibitions of 
40.202 if the operation or procurement for the purposes of meeting 
NOAA's science or management objectives or operational mission.


40.202-5   Exceptions.

    The prohibitions in this section do not apply to the following 
(section 1832 of Pub. L. 118-31, 41 U.S.C. 3901 note prec.):
    (a) Wildfire management operations and search and rescue operations 
exception. The prohibitions in 40.202

[[Page 89471]]

do not apply to an appropriate Federal agency to the extent that an 
authorized official at the agency, in consultation with the Secretary 
of Homeland Security, determines that the procurement or operation is 
necessary for the purposes of supporting the full range of wildfire 
management operations or search and rescue operations.
    (b) Intelligence activities exception. The prohibitions of 40.202 
do not apply to any activity subject to the reporting requirements 
under title V of the National Security Act of 1947 (50 U.S.C. 3091 et 
seq.), any authorized intelligence activities of the United States, or 
any activity or procurement that supports an authorized intelligence 
activity.
    (c) Tribal law enforcement or emergency service agency exception. 
The prohibitions in 40.202 do not apply to Tribal law enforcement or 
Tribal emergency service agencies to the extent that an authorized 
official at the agency, in consultation with the Secretary of Homeland 
Security, determines that the procurement or operation is necessary for 
the purposes of supporting the full range of law enforcement operations 
or search and rescue operations on Indian lands.


40.202-6   Waivers.

    The head of the agency may waive the prohibitions under 40.202 on a 
case-by-case basis in accordance with agency procedures and based on 
the statutory waiver provisions (sections 1823, 1824, and 1825 of Pub. 
L. 118-31, 41 U.S.C. 3901 note prec.)--
    (a) With the approval of the Director of the Office of Management 
and Budget, after consultation with the FASC; and
    (b) Upon notification to--
    (1) The Committee on Homeland Security and Governmental Affairs of 
the Senate;
    (2) The Committee on Oversight and Accountability in the House of 
Representatives; and
    (3) Other appropriate congressional committees of jurisdiction.


40.202-7   Procedures.

    (a) Documenting exemptions, exceptions, or waivers. The contracting 
officer shall document the file with any exemption, exception, or 
waiver provided by the program office or requiring activity. 
Additionally, the contracting officer shall work with the program 
office or requiring activity to ensure the presence and scoping of any 
such exemptions, exceptions, or waivers are identified in the 
solicitation and resultant contract.
    (b) Assessment of unmanned aircraft systems. Except where an 
exemption, exception, or waiver applies, the contracting officer shall 
work with the program office or requiring activity to review proposals 
to ensure they are not proposing delivery of a FASC-prohibited unmanned 
aircraft system. On or after December 22, 2025, this assessment shall 
expand to include review for not only proposed delivery, but also 
operation, of a FASC-prohibited unmanned aircraft system.


40.202-8   Contract clause.

    Insert the clause at 52.240-1, Prohibition on Unmanned Aircraft 
Systems Manufactured or Assembled by American Security Drone Act--
Covered Foreign Entities, in all solicitations and contracts.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
6. Amend section 52.212-5 by--
0
a. Revising the date of the clause;
0
b. Redesignating paragraphs (b)(63) and (64) as paragraphs (b)(64) and 
(65) and adding a new paragraph (b)(63);
0
c. Redesignating paragraph (e)(1)(xxvi) as paragraph (e)(1)(xxvii) and 
adding a new paragraph (e)(1)(xxvi); and
0
d. In alternate II:
0
i. Revising the date of the alternate; and
0
ii. Redesignating paragraph (e)(1)(ii)(Y) as paragraph (e)(1)(ii)(Z) 
and adding a new paragraph (e)(1)(ii)(Y).
    The additions and revisions read as follows:


52.212-5   Contract Terms and Conditions Required To Implement Statutes 
or Executive Orders--Commercial Products and Commercial Services.

* * * * *
Contract Terms and Conditions Required To Implement Statutes or 
Executive Orders--Commercial Products and Commercial Services (Nov 
2024)
* * * * *
    (b) * * *
    __(63) 52.240-1, Prohibition on Unmanned Aircraft Systems 
Manufactured or Assembled by American Security Drone Act--Covered 
Foreign Entities (Nov 2024) (Sections 1821-1826, Pub. L. 118-31, 41 
U.S.C. 3901 note prec.).
* * * * *
    (e)(1) * * *
    (xxvi) 52.240-1, Prohibition on Unmanned Aircraft Systems 
Manufactured or Assembled by American Security Drone Act--Covered 
Foreign Entities (Nov 2024) (Sections 1821-1826, Pub. L. 118-31, 41 
U.S.C. 3901 note prec.).
* * * * *
    Alternate II (Nov 2024).* * *
    (e)(1) * * *
    (ii) * * *
    (Y) 52.240-1, Prohibition on Unmanned Aircraft Systems Manufactured 
or Assembled by American Security Drone Act--Covered Foreign Entities 
(Nov 2024) (Sections 1821-1826, Pub. L. 118-31, 41 U.S.C. 3901 note 
prec.).
* * * * *

0
7. Amend section 52.213-4 by--
0
a. Revising the date of the clause and paragraph (a)(2)(vii); and
0
b. Redesignating paragraph (b)(1)(xxii) as paragraph (b)(1)(xxiii) and 
adding a new paragraph (b)(1)(xxii).
    The revisions and addition read as follows:


52.213-4  Terms and Conditions--Simplified Acquisitions (Other Than 
Commercial Products and Commercial Services).

* * * * *
Terms and Conditions--Simplified Acquisitions (Other Than Commercial 
Products and Commercial Services) (Nov 2024)
    (a) * * *
    (2) * * *
    (vii) 52.244-6, Subcontracts for Commercial Products and Commercial 
Services (Nov 2024).
* * * * *
    (b) * * *
    (1) * * *
    (xxii) 52.240-1, Prohibition on Unmanned Aircraft Systems 
Manufactured or Assembled by American Security Drone Act--Covered 
Foreign Entities (Nov 2024). (Sections 1821-1826, Pub. L. 118-31, 41 
U.S.C. 3901 note prec.).
* * * * *

0
8. Add section 52.240-1 to read as follows:


52.240-1   Prohibition on Unmanned Aircraft Systems Manufactured or 
Assembled by American Security Drone Act--Covered Foreign Entities.

    As prescribed in 40.202-8, insert the following clause:
Prohibition on Unmanned Aircraft Systems Manufactured or Assembled by 
American Security Drone Act--Covered Foreign Entities (Nov 2024)
    (a) Definitions. As used in this clause--
    American Security Drone Act--covered foreign entity means an entity 
included on a list developed and maintained by the Federal Acquisition

[[Page 89472]]

Security Council (FASC) and published in the System for Award 
Management (SAM) at https://www.sam.gov (section 1822 of the National 
Defense Authorization Act for Fiscal Year 2024, Pub. L. 118-31, 41 
U.S.C. 3901 note prec.).
    FASC-prohibited unmanned aircraft system means an unmanned aircraft 
system manufactured or assembled by an American Security Drone Act--
covered foreign entity.
    Unmanned aircraft means an aircraft that is operated without the 
possibility of direct human intervention from within or on the aircraft 
(49 U.S.C. 44801(11)).
    Unmanned aircraft system means an unmanned aircraft and associated 
elements (including communication links and the components that control 
the unmanned aircraft) that are required for the operator to operate 
safely and efficiently in the national airspace system (49 U.S.C. 
44801(12)).
    (b) Prohibition. The Contractor is prohibited from--
    (1) Delivering any FASC-prohibited unmanned aircraft system, which 
includes unmanned aircraft (i.e., drones) and associated elements 
(sections 1823 and 1826 of Pub. L. 118-31, 41 U.S.C. 3901 note prec.);
    (2) On or after December 22, 2025, operating a FASC-prohibited 
unmanned aircraft system in the performance of the contract (section 
1824 of Pub. L. 118-31, 41 U.S.C. 3901 note prec.); and
    (3) On or after December 22, 2025, using Federal funds for the 
procurement or operation of a FASC-prohibited unmanned aircraft system 
(section 1825 of Pub. L. 118-31, 41 U.S.C. 3901 note prec.).
    (c) Procedures. The Contractor shall search SAM at https://www.sam.gov for the FASC-maintained list of American Security Drone 
Act--covered foreign entities prior to proposing, or using in 
performance of the contract, any unmanned aircraft system. 
Additionally, the Contractor shall ensure any effort or expenditure 
associated with a FASC-prohibited unmanned aircraft system is 
consistent with a corresponding exemption, exception, or waiver 
determination expressly stated in the contract.
    (d) Exemptions, exceptions, and waivers. The prohibitions in this 
clause do not apply where the agency has determined an exemption, 
exception, or waiver applies and the contract indicates that such a 
determination has been made. See sections 1823 through 1825 and 1832 of 
Public Law 118-31 (41 U.S.C. 3901 note prec.) for statutory 
requirements pertaining to exemptions, exceptions, and waivers.
    (e) Subcontracts. The Contractor shall insert the substance of this 
clause, including this paragraph (e), in all subcontracts and other 
contractual instruments, including subcontracts for the acquisition of 
commercial products or commercial services.


(End of clause)

0
9. Amend section 52.244-6 by--
0
a. Revising the date of the clause; and
0
b. Redesignating paragraph (c)(1)(xxiii) as paragraph (c)(1)(xxiv) and 
adding a new paragraph (c)(1)(xxiii).
    The revision and addition read as follows:


52.244-6   Subcontracts for Commercial Products and Commercial 
Services.

* * * * *
    Subcontracts for Commercial Products and Commercial Services (Nov 
2024)
* * * * *
    (c)(1) * * *
    (xxiii) 52.240-1, Prohibition on Unmanned Aircraft Systems 
Manufactured or Assembled by American Security Drone Act--Covered 
Foreign Entities (Nov 2024) (Sections 1821-1826, Pub. L. 118-31, 41 
U.S.C. 3901 note prec.).
* * * * *
[FR Doc. 2024-26061 Filed 11-8-24; 8:45 am]
BILLING CODE 6820-EP-P


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