The Chinese military company covered lobbyist prohibition enacted by Section 851 of the National Defense Authorization Act (“NDAA”) for Fiscal Year (“FY”) 2025, codified at 10 U.S.C. § 4663, took effect on June 30, 2026. Just before that date, the Department of Defense took steps to implement the prohibition in the Defense Federal Acquisition Regulation Supplement (“DFARS”) with a class deviation issued as part of the ongoing Revolutionary FAR Overhaul (“RFO”). Unfortunately, the class deviation does not contain many details related to the covered lobbyist prohibition beyond the legislative text, leaving defense contractors with open questions as they work to ensure compliance with the prohibition.
Last month, we issued a client alert concerning the Section 851 covered lobbyist prohibition, recommending defense contractors undertake precautionary due diligence in anticipation of the prohibition taking effect on June 30. In that alert, we explained the Department of Defense had initiated a DFARS case (No. 2025-D0007) to implement the new prohibition in Part 225 of the DFARS, but that rulemaking had been delayed multiple times, most recently to mid-July.
In a reversal of course, the Department’s July 10, 2026 Open DFARS Cases Report indicated that the Department is no longer proceeding with a formal rulemaking implementing the prohibition in Part 225, instead addressing the prohibition as part of the RFO. Accordingly, the prohibition has been implemented, at least for the time being, through a class deviation. The class deviation, which was issued on June 29, 2026 and further revised on July 16, 2026, simultaneously implements multiple restrictions on defense contractors related to various supply chain security requirements, including the Section 851 lobbying prohibition. As explained in this alert, this approach has created some ambiguity regarding applicable definitions, and it does not provide any guidance on a key safe harbor provision.