On September 15, 2025, the Office of the Director of National Intelligence (“ODNI”) issued the first public exclusion and removal order (the “Order”) under the framework established by the Federal Acquisition Supply Chain Security Act of 2018 (“FASCSA”).  The Order applies to all products and services produced or provided by Acronis AG as well as all subordinate, subsidiary, or affiliated organizations doing business under various names in support of Acronis AG.  The exclusionary Order has two immediate impacts on the federal supply chain.  First, federal contractors entering into new contracts or following contractual modifications are prohibited from supplying products or services from Acronis to agencies that are either subject to the Order or that have otherwise adopted it (“Covered Agencies”).  Second, contractors are prohibited from using products or services from Acronis in the performance of new and modified contracts with Covered Agencies.  In addition, certain agencies must remove these products and services from particular information systems.

Although the prohibitions apply to new contract awards, all contractors to Covered Agencies that have the applicable FASCA FAR clause (FAR 52.204-30) in their agreements must conduct diligence to determine whether they have provided or used any prohibited products or services in the performance of their contracts.  Following this review, the clause requires contractors to report the use of prohibited products or services to Covered Agencies.

Additional detail on the FASCSA exclusionary process and this first public Order is provided below.

The Federal Acquisition Security Council

The process governing the activities of the Federal Acquisition Security Council (“FASC”) was established in September 2020 via an interim regulation (since finalized) that implemented FASCSA.  The FASC was created by Congress in 2018 to establish a centralized, deliberative process in the executive branch for determining whether particular federal suppliers, or the products and services that they offer for end-use to the Government, create a national security risk.  The FASC can receive referrals from both federal and non-federal sources that a particular product, service, or supplier may present a national security risk.  Once the FASC has reviewed available public and non-public information, it makes a recommendation for exclusion or removal that is considered by three agencies that have purview over exclusions for different parts of the executive branch.  DHS can issue exclusions for civilian agencies, DoD can issue exclusions for defense agencies, and ODNI can issue exclusions for U.S. Intelligence Community (“IC”) agencies.  Once an order is issued, the recourse provided under the FASC rules is limited to seeking relief directly from the U.S. Court of Appeals for the District of Columbia Circuit through a process similar to an Administrative Procedure Act review.  We provided more detail on the entire exclusionary/removal process in a client alert here.

The Order

There are two types of Orders that can be issued – exclusion and removal orders.  An exclusion order may prohibit sources from participating in a procurement (at any level of the Government supply chain) and a product or service from being supplied by a source at any level.  A removal order may require the removal of covered articles from federal information systems, including those operated by contractors on behalf of the Government.  This Order is both exclusion from procurements going forward and removal for IC agency systems and contracts involving sensitive compartmented information (SCI) systems.  As noted, the Order, which is available on SAM.gov here, is identified as being issued by ODNI and does not appear to be a government-wide order, rather it applies to both the IC and contracts involving sensitive compartmented information (“SCI”) systems.  With that said, GSA issued a notice on September 18 to GSA Schedule contract holders noting that the Order will be applicable to schedule contracts.  There is nothing in the rule that explicitly prohibits other agencies from adopting an Order.  Because GSA’s action has an impact across multiple agencies, this action also could provide insight as to how GSA may treat orders from the DoD and the IC, especially given the OneGov initiative and centralization of procurement in GSA.  It is possible that other non-IC agencies have, or will, follow suit.  As noted, contractors that receive new awards will be prohibited from providing prohibited products or services to Covered Agencies or using them in performance of a contract. 

Contractor Compliance

As noted, contractors with contracts that contain FAR 52.204-30 are obligated to monitor SAM.gov at least once every three months to identify new FASCSA orders.  If an order is issued, contractors must conduct a “reasonable inquiry” to identify whether products or services were sold to the Government or used during contract performance. 

Even if the contract was not subject to an Order at the time that the contract was issued, the contractor must still notify the agency if a prohibited product, service, or source was provided or used in performance of the contract.  The contract must still be modified to incorporate the requirement to exclude a particular source, so the report is informational in nature.  With this said, agencies reserve the right to terminate a contract if they deem appropriate, so contractors generally have significant incentives to comply with orders.

Implications for Contractors

The Order is significant not only because of its impact on the federal supply chain, but because it is the first public order that has been issued since the regulations governing the activities of the FASC and the process for issuing orders were established.  The Order not only will serve as a test case for contractor compliance with the FASCSA related requirements in the FAR, but it also indicates that the FASC is actively considering referrals as to products and services.  Contractors should expect to see additional orders from the FASC going forward, though the relative volume of orders remains uncertain.

Tags: Exclusion, fasc, fascsa, Supply Chain
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Photo of Susan B. Cassidy Susan B. Cassidy

Susan Cassidy co-chairs Covington’s Aerospace and Defense Industry Group, and has been advising government contractors for more than 35 years on the requirements imposed on companies contracting with the U.S. Government.

Susan’s practice focuses on the intersection of cybersecurity, national security, and supply…

Susan Cassidy co-chairs Covington’s Aerospace and Defense Industry Group, and has been advising government contractors for more than 35 years on the requirements imposed on companies contracting with the U.S. Government.

Susan’s practice focuses on the intersection of cybersecurity, national security, and supply chain risk management for companies that sell products and services to the U.S. Government. Susan advises contractors at all phases of the procurement cycle, and regularly:

advises clients on compliance obligations imposed by the FAR, DFARS, and other agency regulatory requirements;
leads internal and government False Claims Act (FCA) investigations addressing allegations of violations of government cybersecurity, national security, supply chain, quality, and MIL-SPEC requirements; and
advises clients who have suffered a cyber breach where U.S. government information may have been impacted.

In her work with global, national, and start-up contractors, Susan advises companies on all aspects of government supply chain issues including:

Government cybersecurity requirements, including the Cybersecurity Maturity Model Certification (CMMC), DFARS 252.204-7012, FedRAMP, controlled unclassified information (CUI), and NIST SP 800-171 requirements;
Evolving sourcing issues such as Section 889, counterfeit part requirements, Section 5949 semiconductor product and service restrictions, and limitations on sourcing a variety of products from China; and
Federal Acquisition Security Council (FASC) regulations and product exclusions.

 

Susan previously served as senior in-house counsel for two major defense contractors (Northrop Grumman Corporation and Motorola Incorporated) and is Chambers rated in both Government Contracts and Government Contracts Cybersecurity. Chambers USA has quoted sources stating that “Susan’s in-house experience coupled with her deep understanding of the regulatory requirements is the perfect balance to navigate legal and commercial matters.”

Susan is a former Public Contract Law Procurement Division Co-Chair, former Co-Chair and current Vice-Chair of the ABA PCL Cybersecurity, Privacy and Emerging Technology Committee.

Susan’s pro-bono work extends to assisting veterans in a variety of matters, as well as providing advice to elderly clients on their wills and other end-of-life planning documents.

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Photo of Ashden Fein Ashden Fein

Ashden Fein is a vice chair of the firm’s global Cybersecurity practice. He advises clients on cybersecurity and national security matters, including crisis management and incident response, risk management and governance, government and internal investigations, and regulatory compliance.

For cybersecurity matters, Ashden counsels…

Ashden Fein is a vice chair of the firm’s global Cybersecurity practice. He advises clients on cybersecurity and national security matters, including crisis management and incident response, risk management and governance, government and internal investigations, and regulatory compliance.

For cybersecurity matters, Ashden counsels clients on preparing for and responding to cyber-based attacks, assessing security controls and practices for the protection of data and systems, developing and implementing cybersecurity risk management and governance programs, and complying with federal and state regulatory requirements. Ashden frequently supports clients as the lead investigator and crisis manager for global cyber and data security incidents, including data breaches involving personal data, advanced persistent threats targeting intellectual property across industries, state-sponsored theft of sensitive U.S. government information, extortion and ransomware, and destructive attacks.

Additionally, Ashden assists clients from across industries with leading internal investigations and responding to government inquiries related to the U.S. national security and insider risks. He also advises aerospace, defense, and intelligence contractors on security compliance under U.S. national security laws and regulations including, among others, the National Industrial Security Program (NISPOM), U.S. government cybersecurity regulations, FedRAMP, and requirements related to supply chain security.

Before joining Covington, Ashden served on active duty in the U.S. Army as a Military Intelligence officer and prosecutor specializing in cybercrime and national security investigations and prosecutions — to include serving as the lead trial lawyer in the prosecution of Private Chelsea (Bradley) Manning for the unlawful disclosure of classified information to Wikileaks. Ashden is a retired U.S. Army officer.

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Photo of Michael Wagner Michael Wagner

Mike Wagner represents companies and individuals in complex compliance and enforcement matters arising in the public procurement context. Combining deep regulatory expertise and extensive investigations experience, Mike helps government contractors navigate detailed procurement rules and achieve the efficient resolution of government investigations and…

Mike Wagner represents companies and individuals in complex compliance and enforcement matters arising in the public procurement context. Combining deep regulatory expertise and extensive investigations experience, Mike helps government contractors navigate detailed procurement rules and achieve the efficient resolution of government investigations and enforcement actions.

Mike regularly represents contractors in federal and state compliance and enforcement matters relating to a range of procurement laws and regulations. He has particular experience handling investigations and litigation brought under the civil False Claims Act, and he routinely counsels government contractors on mandatory and voluntary disclosure considerations under the FAR, DFARS, and related regulatory regimes. He also represents contractors in high-stakes suspension and debarment matters at the federal and state levels, and he has served as Co-Chair of the ABA Suspension & Debarment Committee and is principal editor of the American Bar Association’s Practitioner’s Guide to Suspension & Debarment (4th ed.) (2018).

Mike also has extensive experience representing companies pursuing and negotiating grants, cooperative agreements, and Other Transaction Authority agreements (OTAs). In this regard, he has particular familiarity with the semiconductor and clean energy industries, and he has devoted substantial time in recent years to advising clients on strategic considerations for pursuing opportunities under the CHIPS Act, Inflation Reduction Act, and Bipartisan Infrastructure Law.

In his counseling practice, Mike regularly advises government contractors and suppliers on best practices for managing the rapidly-evolving array of cybersecurity and supply chain security rules and requirements. In particular, he helps companies assess and navigate domestic preference and country-of-origin requirements under the Buy American Act (BAA), Trade Agreements Act (TAA), Berry Amendment, and DOD Specialty Metals regulation. He also assists clients in managing product and information security considerations related to overseas manufacture and development of Information and Communication Technologies & Services (ICTS).

Mike serves on Covington’s Hiring Committee and is Co-Chair of the firm’s Summer Associate Program. He is a frequent writer and speaker on issues relating to procurement fraud and contractor responsibility, and he has served as an adjunct professor at the George Washington University Law School.

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Photo of Ryan Burnette Ryan Burnette

Ryan Burnette is a government contracts and technology-focused lawyer that advises on federal contracting compliance requirements and on government and internal investigations that stem from these obligations. Ryan has particular experience with defense and intelligence contracting, as well as with cybersecurity, supply chain…

Ryan Burnette is a government contracts and technology-focused lawyer that advises on federal contracting compliance requirements and on government and internal investigations that stem from these obligations. Ryan has particular experience with defense and intelligence contracting, as well as with cybersecurity, supply chain, artificial intelligence, and software development requirements.

Ryan also advises on Federal Acquisition Regulation (FAR) and Defense Federal Acquisition Regulation Supplement (DFARS) compliance, public policy matters, agency disputes, and government cost accounting, drawing on his prior experience in providing overall direction for the federal contracting system to offer insight on the practical implications of regulations. He has assisted industry clients with the resolution of complex civil and criminal investigations by the Department of Justice, and he regularly speaks and writes on government contracts, cybersecurity, national security, and emerging technology topics.

Ryan is especially experienced with:

Government cybersecurity standards, including the Federal Risk and Authorization Management Program (FedRAMP); DFARS 252.204-7012, DFARS 252.204-7020, and other agency cybersecurity requirements; National Institute of Standards and Technology (NIST) publications, such as NIST SP 800-171; and the Cybersecurity Maturity Model Certification (CMMC) program.
Software and artificial intelligence (AI) requirements, including federal secure software development frameworks and software security attestations; software bill of materials requirements; and current and forthcoming AI data disclosure, validation, and configuration requirements, including unique requirements that are applicable to the use of large language models (LLMs) and dual use foundation models.
Supply chain requirements, including Section 889 of the FY19 National Defense Authorization Act; restrictions on covered semiconductors and printed circuit boards; Information and Communications Technology and Services (ICTS) restrictions; and federal exclusionary authorities, such as matters relating to the Federal Acquisition Security Council (FASC).
Information handling, marking, and dissemination requirements, including those relating to Covered Defense Information (CDI) and Controlled Unclassified Information (CUI).
Federal Cost Accounting Standards and FAR Part 31 allocation and reimbursement requirements.

Prior to joining Covington, Ryan served in the Office of Federal Procurement Policy in the Executive Office of the President, where he focused on the development and implementation of government-wide contracting regulations and administrative actions affecting more than $400 billion dollars’ worth of goods and services each year.  While in government, Ryan helped develop several contracting-related Executive Orders, and worked with White House and agency officials on regulatory and policy matters affecting contractor disclosure and agency responsibility determinations, labor and employment issues, IT contracting, commercial item acquisitions, performance contracting, schedule contracting and interagency acquisitions, competition requirements, and suspension and debarment, among others.  Additionally, Ryan was selected to serve on a core team that led reform of security processes affecting federal background investigations for cleared federal employees and contractors in the wake of significant issues affecting the program.  These efforts resulted in the establishment of a semi-autonomous U.S. Government agency to conduct and manage background investigations.

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