New Interim Rule Permits the Exclusion of Companies and Products that Represent a National Security Risk to the U.S. Government

New Interim Rule Permits the Exclusion of Companies and Products that Represent a National Security Risk to the U.S. Government

September 9, 2020, Covington Alert

On September 1, 2020, the Office of Management and Budget issued a highly-anticipated interim final rule (“Rule”) implementing the Federal Acquisition Supply Chain Security Act. Consistent with the U.S. Government's increasingly sharp focus on supply chain security, the Rule authorizes the Executive Branch to exclude indefinitely “covered articles” (products and services) and “sources” (contractors and suppliers) from procurements and to require removal of covered articles from federal information systems if the covered articles or sources represent a national security risk. An exclusion order may prohibit sources from participating in a procurement (at any level of the Government supply chain) and a covered article from being supplied by a source at any level. A removal order may require the removal of covered articles from federal information systems, including those operated by contractors on behalf of the Government. And either type of order would result in an automatic referral to the Interagency Suspension & Debarment Committee, raising the specter of further collateral consequences.