DoD Finalizes 2010 Interim Rule on Iran Sanctions Procurement Certification, Etc.

(Section 102, which took effect September 29, 2010, requires certification that each offeror, and any person owned or controlled by the offeror, does not engage in any activity for which sanctions may be imposed under section 5 of the Iran Sanctions Act of 1996. Section 106, which took effect upon enactment of the CISADA on July 1, 2010, imposes a procurement prohibition relating to contracts with persons that export certain sensitive technology to Iran. DoD has issued a separate interim final rule which further implements Section 106. See ITT’s Online Archives 11110323 for summary.)

Certification of Iran Sanctions Compliance for Government Procurement

This rule adopts as final 48 CFR 25.703 (Prohibition on government contracting with entities that engage in certain activities relating to Iran) that was added by the interim final rule.

Highlights of section 25.703 include:

Certification required. Unless excepted or waived, each offeror must certify that the offeror, and any person owned or controlled by the offeror, does not engage in any activity for which sanctions may be imposed under section 5 of the Iran Sanctions Act (e.g. for selling or providing to Iran goods or services that could contribute to Iran’s ability to import refined petroleum products, to produce refined petroleum products, to acquire or develop certain weapons, etc.³)

Applicable to all acquisitions, contracts for commercial items, etc. DoD¹ has determined that it is in the best interest of the Federal Government to apply this requirement to: (i) all acquisitions including contracts at or below the simplified acquisition threshold, as defined at FAR 2.101; (ii) contracts for the acquisition of commercial items, as defined at FAR 2.101; and (iii) contracts for the acquisition of commercially available off-the-shelf items, as defined at FAR 2.101.

Sanctions for false certification. If the head of an executive agency determines that a person has submitted a false certification, the agency shall take one or more of the following actions:

• The contracting officer may terminate the contract.
• The suspending official may suspend the contractor in accordance with the procedures in FAR subpart 9.4.
• The debarring official may debar the contractor for a period not to exceed 3 years in accordance with the procedures in FAR subpart 9.4.

Exception for trade agreements. The certification requirements do not apply with respect to the procurement of eligible products as defined in 19 USC 2518(4), of any foreign country or instrumentality designated under 19 USC 2511(b).

Waiver of certification requirement. The final rule adopts as final the interim rule’s waiver procedure under which the President may waive the certification requirement on a case-by-case basis, if determined and certified in writing to the appropriate congressional committees that it is in the national interest to do so.

Other Regulations Amended to Reflect Iran Certification Requirement

The final rule adopts as final the interim rule’s amendments to the following regulations to reflect the new certification requirement:

• 48 CFR 25.1103 (Other Provisions and Clauses)
• 48 CFR 52.204-8 (Annual Representations and Certifications (SEP 2010)
• 48 CFR 52.212-3 (Offeror Representations and Certifications -- Commercial Items, and
• 48 CFR 52.225-25 (Prohibition on Engaging in Sanctioned Activities Relating to Iran -- Certification.

Ban on Procurements from Persons Exporting Sensitive Technology to Iran

The final rule adopts as final the interim final rule’s partial implementation of Section 106 under 48 CFR 25.703--3 under which agencies are prohibited from entering into or extending a contract for the procurement of goods or services with a person that exports certain sensitive technology to Iran, as determined by the President and listed on the General Services Administration’s Excluded Parties List System (EPLS).

(See ITT’s Online Archives 11110323 for summary of DoD’s concurrently issued interim final rule which expands on the Section 106 requirements by adding a "representation" requirement.)

¹DoD, the General Services Administration (GSA), and National Aeronautics and Space Administration (NASA) all issued the final rule.

²CISADA, which became Public Law 111-195 on July 1, 2010, amended the Iran Sanctions Act (ISA) to expand the sanctions imposed against Iran. (See ITT’s Online Archives 10063049, 10092013 and 11032913 for summaries of the major trade-related provisions of the CISADA.)

³In general, the following activities, which are described in detail in section 5 of the Iran Sanctions Act, are activities for which sanctions may be imposed on or after July 1, 2010:

• Knowingly making an investment of $20 million or more, or a combination of investments of $5 million or more that equal or exceed $20 million in a 12-month period, that directly and significantly contribute to the enhancement of Iran’s ability to develop petroleum resources.
• Knowingly selling, leasing or providing to Iran goods, services, technology, information, or support with a fair market value of $1 million or more, or during a 12-month period with an aggregate fair market value of $5 million or more, that could directly and significantly facilitate the maintenance or expansion of Iran’s domestic production of refined petroleum products, including any direct and significant assistance with respect to the construction, modernization, or repair of petroleum refineries.
• Knowingly selling or providing to Iran refined petroleum products with a fair market value of $1 million or more, or during a 12-month period with an aggregate fair market value of $5 million or more.
• Knowingly selling, leasing, or providing to Iran goods, services, technology, information, or support with a fair market value of $1 million or more, or during a 12-month period with an aggregate fair market value of $5 million or more, that could directly and significantly contribute to the enhancement of Iran’s ability to import refined petroleum products, including (i) Certain insurance or reinsurance, underwriting, financing, or brokering for the sale, lease, or provision of such items, or (ii) Providing ships or shipping services to deliver refined petroleum products to Iran.
• Exporting, transferring, or otherwise providing to Iran any goods, services, technology or other items knowing that it would contribute materially to the ability of Iran to acquire or develop chemical, biological, or nuclear weapons or related technologies, or acquire or develop destabilizing numbers and types of advanced conventional weapons.)

(See ITT’s Online Archives 10093024 for summary of the September 29, 2010 interim final rule.)

DoD contact -- Cecelia David (202) 219-0202

(FR Pub 11/02/11, FAC 2005--54; FAR Case 2010--012; Item IV; D/N 2010--0102, Sequence 1)