In our January 2025 and May 2026 alerts, we discussed a provision of the National Defense Authorization Act for Fiscal Year 2025 (FY25 NDAA) that prohibits the award of defense contracts to companies (covered entities) that are party to a contract with entities (covered lobbyists) engaged in lobbying activity on behalf of Chinese military companies.  This provision took effect on June 30, 2026.

As of our most recent alert, the Department of Defense (DoD)—also referred to as the Department of War (DoW)—had not yet issued regulations implementing this prohibition.  However, on June 29, 2026, the DoD issued “Class Deviation 2026-O0051 – Implementation of Vendor Threat Mitigation Support Authorities.”  These regulations and contract clauses, in part, implement the covered lobbyist contracting prohibition and appear to clarify its scope and operation.¹

^{Effect of a Class Deviation}

A class deviation is a mechanism allowing the DoD to implement interim statutory contracting requirements until a formal Defense Federal Acquisition Regulation Supplement (DFARS) provision is finalized.  While requirements set out in a class deviation are technically temporary, they will have the same practical effect as permanent regulations for defense contractors until such time as they are rescinded or incorporated into the DFARS.  The terms contained in a class deviation will immediately go into all DoD Requests for Proposals and be standard clauses for all new DoD contracts.

Which Chinese Military Companies Are Covered Lobbyists?

The class deviation defines “covered lobbyist” as “an entity that engages in lobbying activities for any entity determined to be a Chinese military company listed in accordance with section 1260H of the NDAA for FY 2021.”  While the regulations also set out a broad definition of “Chinese military company” that extends beyond 1260H List entities, it appears to do so to maintain a consistent definition of that term throughout DoD regulations.  However, the definition of covered lobbyist that triggers the contracting prohibition at issue appears to be narrower and limited to only the 1260H List, consistent with the FY25 NDAA’s language.  This suggests that current and prospective defense contractors may only need to focus on contracts with entities lobbying on behalf of 1260H List companies.  For similar reasons, being party to a contract with an entity lobbying for a parent company or subsidiary of a 1260H List entity—so long as that parent or subsidiary is not on the 1260H List itself—appears not to trigger the contract prohibition.

Representation by Submission

The class deviation clarifies how defense contractors will certify that they are in compliance with the covered lobbyist contracting prohibition.  The regulations provide that “by submission of its offer,” the contractor represents that it is not an entity (or parent or subsidiary of such entity) that is party to a contract with a covered lobbyist. 

Lingering Questions on Contracts Triggering the Prohibition

In light of the class deviation, current and prospective defense contractors continue to face critical compliance questions on key issues.  For example, it appears that a 1260H List entity engaged in lobbying activities on its own behalf may meet the definition of covered lobbyist.  This likely means that defense contractors should request information to ensure not only that their retained outside consultants and legal counsel are not engaged in disqualifying lobbying activities but that any 1260H List company with which it contracts (for any reason, including routine commercial agreements) is not engaged in disqualifying lobbying activities.

Moreover, it remains unclear what constitutes a “contract” with a covered lobbyist.  The regulations, like the statute itself, do not prescribe standards for a contract that would disqualify a company for defense contracts.  Accordingly, contractors should consider whether to presume all agreements could trigger the prohibition and undertake review of their existing agreements to identify 1260H List companies and those lobbying on those companies’ behalf.

The Akin Political Law and Government Contracts practices continue to closely monitor these developments and are available to provide legal counsel and advise clients on necessary compliance protocols and their implementation.  Please do not hesitate to contact us with any questions.

1 See § 252.240-7995 Prohibition on Contract Awards with Entities That Contract with Lobbyists for Chinese Military Companies—Representation, Attachment A1, DARS Tracking Number: 2026-O0025, Rev. 1, FAR Overhaul Pt. 40, DFARS Pt. 240 (Jun. 29, 2026).