The FY 2025 National Defense Authorization Act (“NDAA”) sustains Congress’s continued focus on countering China’s expanding influence and enhancing U.S. resilience in an era of great power competition.  This year’s legislation reflects the practice of carrying the State Department and Intelligence Authorization Acts within the NDAA—marking the third consecutive year that these critical measures have been advanced in tandem.  The Foreign Relations and Intelligence Committees in both chambers of Congress have increasingly adopted the Armed Services Committees’ playbook, embedding China-focused legislation modeled on past defense measures in their respective authorizations.  This blog examines key provisions designed to address what Congress views as strategic challenges posed by China while closing loopholes that could confer military, economic, or technological advantages to Beijing.  We divide these provisions into the following five categories:  (1) provisions that address potential security risks linked to Chinese-origin technology; (2) provisions that limit the transfer of U.S. technology or data to China; (3) so-called “time to choose” provisions that curtail Department of Defense (“DoD”) engagement with third parties that engage with China; (4) provisions that tackle a range of broader geopolitical concerns; and (5) studies and reports to identify emerging issues and concerns.

Provisions addressing potential security risks linked to Chinese-origin technology: 

• Section 162, which builds on the American Drone Security Act set forth in the FY 2024 NDAA, mandates that DoD mitigate risks associated with small unmanned aerial systems (“sUAS” or “drones”) manufactured in “covered foreign countries,” including China.  It directs DoD to disassemble—at least once every three years—a drone made by Da Jiang Innovations (a leading Chinese manufacturer) or a similar commercial sUAS manufacturer, develop a strategy to transition to domestic or allied sources for critical drone components, and to determine if any of the foreign companies in the sUAS supply chain should be included on DoD’s “1260H list”—a list of companies with alleged ties to the Chinese military.  Inclusion of a Company on the 1260H list will soon have implications for DoD contractors, since Section 805 of the FY 2024 NDAA included a provision that, beginning in June 2026, prohibits the DoD from procuring items from entities on the list or entities “subject to the control of” 1260H listed entities, and beginning in June 2027, prohibits the DoD from procuring items that include in their supply chain products or components made by 1260H listed entities or entities “controlled” by 1260H listed entities.
• Under section 164, effective June 30, 2026, DoD is prohibited from operating, procuring, or using certain LiDAR (Light Detection and Ranging) technology that is manufactured, developed, or reliant on software, network connectivity, or data storage associated with China, Russia, Iran, or North Korea.  DoD’s use of any system that incorporates or interfaces with such LiDAR technology is also prohibited.  Section 164 expressly prohibits LiDAR developed by Hesai Technology, headquartered in Shanghai, China, a leading manufacturer of LiDAR sensors that are used in both commercial self-driving cars and Chinese autonomous warfighting systems.  The Secretary of Defense can provide a waiver, but it requires the Secretary to certify to Congress that the waiver is needed for the national interest of the United States.
• Section 1078 mandates a study and report to Congress on DoD’s use of unmanned ground vehicle systems manufactured by a “covered foreign country,” defined in this section as China, Iran, North Korea, or Russia.  It requires an assessment of cybersecurity and technological vulnerabilities, identification of manufacturers with ties to China’s military-civil fusion policy, and recommendations whether to prohibit DoD’s procurement or use of such systems from an entity that is domiciled in a covered foreign country or subject to influence or control by the government of such a country.  Section 1078 is unique in that if the DoD report recommends banning procurement of unmanned ground vehicle systems from a covered foreign country, the prohibition will automatically spring into effect one year later, requiring no further legislative action.
• Section 1546 requires DoD to develop a risk framework assessing the threat of data collection and misuse and exposure to disinformation posed by personal mobile devices and applications—particularly those tied to China and other adversarial nations—used by military members and DoD civilian employees, and a plan to educate the DoD workforce to counter these threats. 

The House Armed Services Committee (“HASC”) Report accompanying the NDAA for FY 2025 also includes several provisions in this category.  Although committee reports are not enacted in law, DoD’s policy is to comply with directive report language as a matter of comity with Congress:

• One provision targets routers, modems, and similar devices from Chinese manufacturers that pose security risks akin to Huawei and ZTE technologies banned under section 889 of the FY 2019 NDAA.  It directs DoD to assess the risk that these devices—whether on DoD networks or in the homes of DoD personnel—could be exploited by malware to compromise DoD systems, critical infrastructure, or sensitive information (HASC Report 118-529, pp. 254-55).
• A second provision focuses on countering risks posed by hardware-based encrypted data storage devices used in DoD, particularly those potentially compromised by Chinese control over encryption technologies.  DoD is directed to evaluate existing risk management tools and provide Congress a list of hardware-based encrypted data storage products that have been excluded from DoD procurement in the last 5 years (HASC Report 118-529, p. 337).  

Provisions limiting the transfer of U.S. technology or data to China:

• Section 226 mandates annual review of DoD research grants to ensure compliance with DoD policies.  This rigorous oversight is intended to protect sensitive U.S. research and technology from exploitation and from indirectly supporting China’s military-civil fusion strategy.
• Section 238 restricts DoD from funding fundamental research collaborations between U.S. higher education institutions and certain foreign academic institutions, including those with ties to China.  This provision is aimed at countering China’s exploitation of academic partnerships to enable technology transfer or intellectual property theft that bolsters its military and technological capabilities.
• Section 839 amends section 855 of the NDAA for FY 2022 to expand required contractor and subcontractor disclosures about their employees who perform work in China on a DoD “covered contract.”  Under section 855 of the FY 2022 NDAA, the definition of a “covered contract” included any DoD contract or subcontract with a value in excess of $5 million and excluded contracts for commercial products or services.  Section 839 removes the $5 million threshold and expands the definition of a “covered contract” to include commercial contracts, but clarifies that covered contracts only include DoD contracts or subcontracts “for, or including, any information and communications technology, including contracts for commercial products or services.”  As amended, the law requires disclosures about contractor and subcontractor work performed on a covered contract for, or subject to the laws of China.   This could potentially include personnel outside of China who are nevertheless performing work for China or are subject to Chinese laws or control.  Finally, this section expands the disclosures for contractors providing software to DoD by requiring them to identify whether any Chinese government entity requires them to disclose any “cybersecurity vulnerabilities” or “software vulnerabilities.” 
• Section 1025 prohibits DoD from contracting with shipyards owned, controlled, or influenced by foreign adversary countries, including China, with a view to safeguarding U.S. naval technology and strengthening domestic and allied industrial bases.
• Section 1070 requires DoD to provide detailed annual briefings to Congress on attempts by foreign actors, including but not limited to individuals from adversarial nations like China, to gain unauthorized access to U.S. military installations. 
• Section 1641 expands existing prohibitions on sharing missile defense information and systems with Russia to include China. 
• Section 3112 prohibits citizens or agents of “covered foreign nations,” including China, from accessing sensitive areas of U.S. national security laboratories and nuclear weapons production facilities.
• Section 6432 requires enhanced screening of foreign visitors from “countries of risk,” including China, seeking access to U.S. national laboratories by the Department of Energy’s Office of Intelligence and Counterintelligence.
• The HASC Report accompanying the 2025 NDAA directs DoD to explore the feasibility of a pilot program to assess and mitigate the risks of foreign ownership, control, or influence—including by China—on entities across DoD research, development, testing, and evaluation programs and the Defense Industrial Base, including whether commercial tools can be leveraged for this purpose (HASC Report 118-529 pp. 214-15). 

“Time to Choose” provisions:

The FY 2025 NDAA adds new “Time to Choose” provisions, so named because they mirror the intent of section 812 of the NDAA for FY 2024, which required entities providing contracted consulting services to DoD either to certify that they do not hold consulting contracts with “covered foreign entities” like China or to establish an auditable Conflict of Interest Mitigation Plan that would ensure their employees did not provide services to covered foreign entities and DoD simultaneously.  Section 812 had the effect of forcing consulting companies to “choose” between working for DoD and working for China and other adversarial nations at any given point in time.

• Section 851 appears to prohibit DoD from contracting with any entity that also contracts with a lobbyist who provides services to Chinese military companies.  See Covington’s deep dive into section 851 here.
• Section 853 prohibits DoD from procuring semiconductors, semiconductor manufacturing equipment, and design tools from companies that knowingly supply such products to Huawei and establishes a certification process requiring suppliers to verify compliance. 
• DoD often collaborates with filmmakers, television producers, and other media professionals on movie and entertainment projects, to ensure accurate depictions of the military.  Section 1059 prohibits DoD from using appropriated funds to support entertainment projects that comply with censorship demands from the Chinese government or Chinese Communist Party.

Provisions tackling a range of broader geopolitical concerns:

• Section 214 extends the Global Research Watch Program by ten years, to September 30, 2035.  The program monitors and assesses global research and development efforts, focusing on areas of strategic importance to U.S. national security, including by tracking scientific and technological advancements in adversarial nations, like China.
• Section 228 establishes the National Defense Economic Competition Research Council to analyze, propose, and coordinate research on economic activities intended to undermine U.S. national security, particularly by nations like China.  Activities to be examined and mitigated include economic coercion, manipulation, and the use of adversarial capital to acquire U.S. technology or real estate, or to deny U.S. access to critical resources.  
• Section 1055 prohibits the use of DoD funds to support EcoHealth Alliance or the Wuhan Institute of Virology in China, directly or indirectly.  
• Section 1346 strengthens reporting requirements related to DoD’s 1260H list to enhance its ability to identify and counter China’s influence in critical industries.  To that end, section 1346 broadens criteria for including a company on the 1260H list, and mandates detailed justifications for adding or removing entities from the list, at least annual updates to the list, and publication of the list in English and Mandarin, ensuring transparency and broad accessibility.  As noted above, per section 805 of the NDAA for FY 2024, effective June 30, 2026, DoD will be precluded from contracting with 1260H-listed companies and effective June 30, 2027, DoD will be prohibited from procuring items that include in their supply chain products or components made by 1260H listed entities or entities “subject to the control of” 1260H listed entities. 
• Section 1347 directs DoD to develop a comprehensive strategy to identify and counter the malign activities of China’s People’s Liberation Army across regions, functions, and domains.  Although the statute does not define “malign activities,” they are generally considered to include: military aggression, espionage and cyberattacks, economic coercion, political influence and subversion through disinformation, and using military-civil fusion to acquire civilian technologies and infrastructure that can enhance military capabilities. 
• Section 5121 aims to enhance multilateral cooperation to strengthen Taiwan’s security, by calling for elements of the U.S. Departments of Treasury and State to consult with European counterparts to prepare sanctions against China if it takes hostile actions against Taiwan.  The provision emphasizes fostering political, economic, and defense ties with Taiwan, increasing its international participation, countering Chinese propaganda, and strengthening Taiwan’s cybersecurity, energy, and food security while facilitating arms and technology transfers.
• Section 7208 amplifies the Uyghur Forced Labor Prevention Act by prohibiting the Department of State from using Federal funds to procure solar energy products manufactured in the Xinjiang Uyghur Autonomous Region of China (“XUAR”) or which are known to be produced with forced labor in other regions in the country.  By targeting solar energy products—an industry heavily reliant on polysilicon sourced from XUAR—this measure aims both to counter China’s use of forced labor and reduce U.S. dependency on Chinese-manufactured solar components. 

Studies and Reports:

Many disregard NDAA provisions that mandate studies and reports to Congress.  We caution against this approach, however, because these directives signal matters Congress deems worthy of closer scrutiny and often serve as precursors to future legislation.  

• Section 3521 mandates an independent study to examine the business practices of the Shanghai Shipping Exchange (“SSE”), focusing on China’s influence on the exchange and SSE’s potential manipulation of global container freight markets to the detriment of U.S. consumers and businesses.  Located in Shanghai, the SSE is overseen by China’s Ministry of Transport and plays a central role in the global maritime shipping industry. 
• Section 6401 directs the Director of National Intelligence (“DNI”) to assess China’s biotechnology capabilities, focusing on how the Chinese government supports the sector through mechanisms like foreign investment, subsidies, and talent recruitment, with findings to be reported to Congress in mid-2025.
• Section 6404 mandates a report by the DNI to Congress on the Chinese government’s efforts to evade U.S. transparency and national security regulations, including trade restrictions, export controls, and sanctions.  It specifically intends to expose and address China’s attempts to bypass measures such as the Department of Commerce Entity List, Treasury’s Specially Designated Nationals list, export controls, forced labor import bans, and U.S. restrictions on outbound investment in certain national security technologies and products.   

The FY 2025 NDAA marks a further shift in how defense contractors, lobbying firms, and research institutions must operate to align with U.S. national security priorities.  Through stricter contracting restrictions, heightened supply chain oversight, tighter lobbying regulations, and enhanced limitations on adversarial access to sensitive U.S. technologies, the law underscores Congress’s determination to curb foreign influence, particularly from China.  Key provisions, including strengthened due diligence requirements, updated disclosure mandates, and bans on high-risk products, have created a rapidly shifting compliance landscape.  To remain eligible for federal contracts, businesses would be well-served to stay ahead of regulatory developments, reinforce internal controls, and align their operations with evolving national security objectives.

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This is the third blog in a series analyzing the FY 2025 NDAA signed into law on December 23, 2024.  Future posts will address NDAA provisions covering supply chain and stockpile security, and Congress’s effort to mature the Office of Strategic Capital and leverage private investment to accelerate the development of critical technologies and strengthen the defense industrial base.  Subscribe to our blog here.