FAR Council Proposes Rule Restricting Covered Semiconductor Products

JD Supra Trade Law

Published February 17th, 2026

Detected March 13th, 2026

Summary

The FAR Council has proposed a rule to implement Section 5949 of the FY 2023 NDAA, restricting federal agencies from procuring products or services containing certain covered semiconductor products from designated entities. The proposal includes requirements for contractor inquiry, certification, and potential reporting.

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What changed

The FAR Council has published a proposed rule on February 17, 2026, to implement statutory prohibitions against federal agencies procuring products or services that include covered semiconductor products from specific entities, including SMIC, CXMT, and YMTC, as well as any future designated entities. This rule aims to codify these restrictions within the Federal Acquisition Regulation, impacting electronic products and services, including COTS items and purchases below the micro-purchase threshold. Contractors will be required to conduct reasonable inquiries into their supply chains, certify compliance, and potentially report any identified covered semiconductor products, with safe harbor provisions available for timely and accurate disclosures.

Federal contractors involved in supplying electronic products or services to the U.S. government must prepare for significant supply chain scrutiny. Key actions include mapping semiconductor supply chains, establishing verification protocols, and preparing for pre-award certification and disclosure obligations. The statutory compliance deadline is December 23, 2027, but the comment period for this proposed rule ends on April 20, 2026, necessitating prompt review and potential feedback from affected parties. Failure to comply could result in non-compliance with federal contracts.

What to do next

Review proposed rule for impact on supply chains and products.
Develop and implement reasonable inquiry and certification protocols for semiconductor content.
Submit comments on the proposed rule by April 20, 2026.

Source document (simplified)

March 12, 2026

FAR Council Proposes Rule Restricting Certain Semiconductor Products and Services

Gabrielle Long, Ronald Sullivan, Bret Wacker, J. Chris White Clark Hill PLC + Follow Contact LinkedIn Facebook X Send Embed The Federal Acquisition Regulatory (FAR) Council published a proposed rule on Feb. 17, 2026, to implement Section 5949 of the FY 2023 National Defense Authorization Act (NDAA). The proposal would amend the FAR to prohibit federal agencies from procuring products or services that include certain covered semiconductor products or services sourced from entities identified by statute or subsequently designated by the U.S. Government.

Background

Section 5949 of the NDAA prohibits federal agencies from acquiring products or services containing “covered semiconductor products” provided by specific entities connected to a foreign country of concern. The FAR Council’s proposal codifies these statutory prohibitions and clarifies contractor obligations for compliance in federal procurement.

Key Entities Covered

The statute specifically identifies the following entities, including their subsidiaries, affiliates, and successors, as suppliers of covered semiconductor products:

Semiconductors Manufacturing International Corporation (SMIC)
ChangXin Memory Technologies (CXMT)
Yangtze Memory Technologies Corporation (YMTC) The FAR rule also allows for additional entities to be added in the future if designated by the U.S. Government as connected to a foreign country of concern.

Key Provisions of the Proposed Rule

Covered Items: Applies to electronic products or services that include covered semiconductor products from the above entities or any future designated entities.
Scope: Prohibitions apply broadly, including commercially available off-the-shelf (COTS) items and purchases below the micro-purchase threshold.
Certification and Reasonable Inquiry: Contractors must conduct a reasonable inquiry into their products and supply chains to identify covered semiconductor content and certify compliance or disclose any inclusion of covered semiconductors.
Reporting Requirements: Contractors may be required to report any covered semiconductor products identified during contract performance, potentially within 72 hours of discovery.
Safe Harbor: Safe harbor provisions are available for contractors that make timely and accurate disclosures.

Timelines

Proposed Rule Publication: Feb. 17, 2026 (Federal Register, FR Doc. 2026-03065)
Comment Period Ends: April 20, 2026
Statutory Compliance Deadline: Dec. 23, 2027

Implications for Contractors

The proposed FAR rule signals heightened scrutiny of federal contractors’ supply chains, particularly those providing electronic products or services. Contractors may need to:

Map semiconductor supply chains and identify third-party components.
Establish protocols for reasonable inquiry and supplier verification.
Prepare for certification and disclosure obligations pre-award.
Consider strategic sourcing alternatives to avoid covered semiconductor products. Send Print Report ### Related Posts

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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