Supply Chain

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.Continue Reading First Order Issued under the Federal Acquisition Supply Chain Security Act, Triggering Immediate Requirements on Contractors

The Defense Production Act (DPA) has long been viewed as the primary federal mechanism for managing and supporting defense production.  Since it was enacted in September 1950—just months after the Korean War began—the DPA has armed the President with wartime-style powers to prioritize contracts, allocate scarce materials, and finance surge defense production capacity.  These DPA industrial authorities are subject to periodic reauthorization, with the current sunset set for September 30, 2025.  While the reauthorization of the DPA remains pending, the Senate Armed Services Committee (SASC) has advanced a new NDAA provision that would convert the extant Industrial Base Fund (IBF) (10 U.S.C. section 4817) into a Pentagon-controlled toolkit that closely mirrors—but is not identical to—DPA’s Title III authorities.  The introduction of section 849A of the FY 2026 NDAA suggests that the SASC is no longer willing to entrust the re-armament of the Pentagon and revitalization of the Defense Industrial Base (DIB) solely to reauthorization of the DPA—a process that lives or dies in other committees’ jurisdictions. Continue Reading Forging a Modern Strategic Production Base:  Senate Proposes Stand-Alone Defense-Production Powers for the Pentagon

On July 23, the White House released its AI Action Plan, outlining the key priorities of the Trump Administration’s AI policy agenda.  In parallel, President Trump signed three AI executive orders directing the Executive Branch to implement the AI Action Plan’s policies on “Preventing Woke AI in…

Continue Reading Trump Administration Issues AI Action Plan and Series of AI Executive Orders

President Trump recently issued two separate Executive Orders (EOs) that will have implications for how federal agencies seek to promote the administration’s goal of attracting domestic and foreign investment to industrial projects in the United States, with particular implications for the semiconductor and critical minerals industries. 

  1. An EO on March 31st establishes an “Investment Accelerator” office within the Department of Commerce that will be responsible for overseeing the implementation of the CHIPS Program—including the negotiation of agreements under the CHIPS Act.  This office will also provide technical and regulatory support for investors, and seek to facilitate research collaborations between private industry and national labs. 
  2. An earlier EO issued on March 20th seeks to mobilize federal lending and leasing authorities at the Department of Defense (DoD), the U.S. International Development Finance Corporation (DFC), and other federal agencies to support the development of domestic critical mineral projects.  Per an accompanying fact sheet, the White House is taking a broad interpretation of covered minerals under this March 20th Order and will seek to include materials such as coal. 

Both EOs are notable efforts by the White House to align federal spending and financial assistance programs with the Trump Administration’s priorities, which have variously included calls to promote self-sufficiency in critical materials and promoting “energy independence” and “energy dominance.”  These efforts come against a backdrop under which the Administration is also pursuing the use of tariffs to promote U.S. manufacturing, and taking steps to review and in some cases modify or terminate infrastructure or energy-related grants from the Biden-era.  More details are provided below.  Continue Reading Trump Administration Issues Executive Orders that Seek to Shape CHIPS Program and Promote Domestic Mineral Production

The Office of Strategic Capital (“OSC”) within the Department of Defense (“DOD”) has launched a Credit Program, under which it will provide debt financing in critical technology areas that drive national and economic security.  As an initial step, OSC is soliciting applications for equipment loans, which may be submitted between…

Continue Reading DOD Office of Strategic Capital Begins Its Direct Lending Efforts to Secure U.S. Industrial Base

In the wake of the U.S. Supreme Court’s decision in Students for Fair Admissions, Inc. v. President & Fellows of Harvard College, there has been an increase in legal challenges to race and gender-based programs and initiatives in multiple contexts, including within government contracting.  While the holding of Students for Fair Admissions did not address public contracting or disturb existing case law that considers the validity of similar government contracts programs, the decision has informed and reshaped the landscape for strict scrutiny challenges to these programs, and there has been a significant uptick in challenges to diversity-focused government procurement regulations.

Last month, in Mid-America Milling Company, LLC, et al., v. U.S. Department of Transportation, the U.S. District Court for the Eastern District of Kentucky temporarily enjoined the Department of Transportation (“DOT”) from mandating the use of race- and gender-based presumptions for DOT contracts impacted by Disadvantaged Business Enterprise (“DBE”) goals.  The court found, among other things, that while DOT’s DBE program intends to combat historical discrimination and its lingering effects on the ability of disadvantaged businesses to equally compete for government contracts, the plaintiff was likely to prevail on the merits of its argument that the program’s “race and gender classifications” violate the Equal Protection clause.

Although the preliminary injunction currently remains geographically constrained to Kentucky and Indiana, the case is an important development for government contractors that are impacted by DBE related contracts.  We summarize the key takeaways from the court’s holding, as well as its implications for government contractors, below.Continue Reading Federal Court Enjoins DOT Disadvantaged Business Enterprise Program On Equal Protection Grounds

The U.S. Department of Labor (“DOL”) recently announced its annual update to the hourly minimum wage for federal contract workers.  Beginning January 1, 2025, the minimum wage for employees performing work on or in connection with covered contracts will increase from $17.20 to $17.75 per hour.  The increase applies to tipped and non-tipped employees, as well as employees with disabilities.

The DOL announcement follows President Biden’s Executive Order 14026, issued in April 2021, to “promote economy and efficiency in procurement by contracting with sources that adequately compensate their workers.”  We discuss the types of federal contracts and workers subject to the wage rate increase, and its implications for contractors, below.Continue Reading Bigger Pay Days Are Coming for Some Federal Contract Workers in 2025

This is part of an ongoing series of Covington blogs on implementation of Executive Order 14028, “Improving the Nation’s Cybersecurity,” issued by President Biden on May 12, 2021 (the “Cyber EO”).  The first blog summarized the Cyber EO’s key provisions and timelines, and subsequent blogs described the actions taken by various government agencies to implement the Cyber EO from June 2021 through May 2024.  This blog describes key actions taken to implement the Cyber EO, as well as the U.S. National Cybersecurity Strategy, during June 2024.  It also describes key actions taken during May 2024 to implement President Biden’s Executive Order on Artificial Intelligence (the “AI EO”), particularly its provisions that impact cybersecurity, national security, and software supply chain security.Continue Reading June 2024 Developments Under President Biden’s Cybersecurity Executive Order, National Cybersecurity Strategy, and AI Executive Order

On May 16, 2024, the Internal Revenue Service (“IRS”) and Department of Treasury (“Treasury”) published Notice 2024-41 (the “2024 Guidance”), which provides new guidance for securing the domestic content bonus credit established by the Inflation Reduction Act (“IRA”).  As described in more detail below, the 2024 Guidance builds on the existing framework contained in Notice 2023-38 (the “2023 Guidance”), which was released last May.  Most notably, the 2024 Guidance expands the range of applicable projects subject to the safe harbor in the 2023 Guidance and adds a “New Elective Safe Harbor” to determine cost percentages for the domestic content calculation in solar, onshore wind, and battery storage projects.Continue Reading Treasury and IRS Release New Guidance on Inflation Reduction Act Domestic Content Bonus Credit

Today, the Federal Acquisition Regulatory Council (“FAR Council”) released an Advance Notice of Proposed Rulemaking (the “ANPRM”) describing the agencies’ plan to implement Section 5949 of the National Defense Authorization Act (“NDAA”) for FY 23 (Pub. L. 117-263).

Section 5949 prohibits the Federal Government from procuring certain semiconductor parts, products, or services traceable to named Chinese companies and potentially other foreign countries of concern.  To that end, the ANPRM invites public comment on the proposed contents of an implementing FAR clause, to take effect December 23, 2027.

As discussed below, the FAR Council proposed applying the regulations broadly to all solicitations and contracts, including commercial item and commercially available off-the-shelf (“COTS”) contracts, subject only to a limited waiver.  Although not set out in the statute, the clause would require contractors to conduct a “reasonable inquiry” into their supply chain to detect potential violations.  It would also require both disclosure and the taking of corrective action in the event that nonconforming products or services are discovered. 

More details are below, and our previous coverage of Section 5949 is available here.Continue Reading Chips on the Table: FAR Council Releases Advance Notice of Proposed Rulemaking to Implement Prohibition on Purchase and Use of Certain Semiconductors