Government to Block Shady Semiconductors in Defense Contracts
Published Date: 2/17/2026
Proposed Rule
Summary
Starting December 23, 2027, federal agencies like the DoD, NASA, and others won’t be allowed to buy certain semiconductor products or services that don’t meet new rules. This change affects companies selling tech parts to the government and aims to boost national security. If you’re involved, get ready to adjust your contracts and plans before the deadline, and don’t forget to share your thoughts by April 20, 2026!
Analyzed Economic Effects
6 provisions identified: 2 benefits, 3 costs, 1 mixed.
Contractors must check and certify chips
If you sell electronic parts, products, or services to the federal government, you must perform a reasonable inquiry before you submit an offer and certify you will not provide covered semiconductor products or services. Offerors must also disclose any known covered semiconductors in their offers and prime contractors must flow the prohibition clause into subcontracts (FAR 52.240-XX and FAR 52.240-YY). These requirements apply to contractors and subcontractors and the certification requirement applies to both primes and subcontractors.
Broad prohibition affects many government suppliers
Beginning December 23, 2027, federal agencies are prohibited from procuring electronic products or services that include covered semiconductor products or services, and from acquiring electronic products for use in critical systems that use such covered semiconductors. The prohibition applies to all acquisitions, including micro-purchases and commercial IT and telecommunications services, with a limited exception for commercial products or services with no alternative until December 23, 2028.
Paperwork and compliance costs quantified
The rule adds a new information collection and the Regulatory Impact Analysis estimates total public costs of about $1,798 million (undiscounted) over 10 years and total public and Government net present value costs of about $1,859 million. Year 1 public costs are estimated at $530 million, with later years lower.
Fast 72-hour reporting and legal safe harbor
On or after December 23, 2027, contractors must report in writing within 72 hours if they identify or suspect a covered semiconductor product or service in items delivered to the Government. If a contractor or lower-tier supplier provides timely disclosure, they are protected from civil liability and will not automatically be found not responsible, provided they follow the rule's documentation and removal efforts.
Temporary waivers can allow continued sales
Agency heads may waive the prohibition for up to renewable two-year periods if, after consultation with the Secretary of Commerce and other national security officials, no compliant product is available at U.S. market prices or the waiver will not compromise critical national security interests. The Secretary of Defense and the Director of National Intelligence also have waiver authorities for critical national security interests.
Commerce lists and disclosures boost buyer visibility
The Department of Commerce will host a list of entities determined to be covered and may host a list of organizations that certify their products or services do not contain prohibited semiconductors; contractors may reasonably rely on those Commerce certifications. Contractors are also required to disclose inclusion of covered semiconductors to non‑Federal customers, which increases transparency for non‑Federal buyers.
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Key Dates
Department and Agencies
Related Federal Register Documents
2026-16680, Submission for OMB Review; Privacy Training
Under the provisions of the Paperwork Reduction Act, the Regulatory Secretariat Division has submitted to OMB a request to review and approve an extension of a previously approved information collection requirement regarding privacy training.
2026-16679, Submission for OMB Review; Architect-Engineer Qualifications (SF-330)
The government is asking to keep using a form called SF-330, which architects and engineers fill out to show they’re qualified for big projects over a certain dollar amount. This form helps officials pick the best team for the job. If you’re an architect-engineer firm, keep an eye out—comments on this must be sent by September 14, 2026, but there’s no new cost or big changes coming.
2026-16678, Submission for OMB Review; Contract Financing
The government is asking for approval to keep collecting info from contractors about how they want to get paid during contracts. This affects companies working with the government, who must share details about payment schedules and amounts. Comments are open until September 14, 2026, so now’s the time to speak up if you have thoughts!
2026-16681, Submission for OMB Review; Prohibition on Contracting With Entities Using Certain Telecommunications and Video Surveillance Services or Equipment
Under the provisions of the Paperwork Reduction Act, the Regulatory Secretariat Division has submitted to OMB a request to review and approve an extension of a previously approved information collection requirement regarding the prohibition on contracting with entities using certain telecommunications and video surveillance services.
2026-16677, Submission for OMB Review; Prospective Subcontractor Requests for Bonds
The government is asking to keep collecting info from subcontractors who want to see payment bonds before working on federal construction projects. This helps protect everyone by making sure payments are secure. If you’re a subcontractor or supplier, you might need to request these bonds soon, and comments on this process are open until September 14, 2026.
2026-16612, Regulatory Agenda
This agenda provides summary descriptions of regulations being developed by the Federal Acquisition Regulatory Council in compliance with Executive Order 12866 "Regulatory Planning and Review, as reaffirmed and amended in Executive Order 13563, "Improving Regulation and Regulatory Review." This agenda is being published to allow interested people an opportunity to participate in the rulemaking process. Additionally, members of the public can track the progress of any open and pending Federal Acquisition Regulation (FAR) rule via the "Open FAR Cases" report, which is publicly available at https://www.acq.osd.mil/dpap/ dars/farcasestatus.html. The Regulatory Secretariat Division has attempted to list all regulations pending at the time of publication, except for minor and routine or repetitive actions; however, unanticipated requirements may result in the issuance of regulations that are not included in this agenda. There is no legal significance to the omission of an item from this listing. Also, the dates shown for the steps of each action are estimated and are not commitments to act on or by the dates shown. Published proposed rules may be reviewed in their entirety at the Government's rulemaking website at https://www.regulations.gov.
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