As discussed in our January 2025 alert, the National Defense Authorization Act for Fiscal Year 2025 (FY25 NDAA)¹  prohibits the Department of Defense (DoD), also referred to as the Department of War (DoW), from entering into a contract with a company—including its parent companies and subsidiaries—that is a party to a contract with an entity that engages in lobbying activities on behalf of Chinese military companies on the DoD’s 1260H List. This prohibition takes effect on June 30.

Scope and Application of the New Law

While the FY25 NDAA included this prohibition, the National Defense Authorization Act for Fiscal Year 2026 corrected an apparent drafting error in the original statute by clarifying that the prohibition extends to parent companies and subsidiaries of contracting entities. As a result, the DoD is generally prohibited from executing a contract with a company if any entity in its corporate chain is a party to a contract, whether oral or written, with a third party that lobbies for a Chinese military company.

Notably, the law applies to consultants and other third parties that engage in any amount of federal “lobbying activities,” as defined by the Lobbying Disclosure Act of 1995, not only those formally registered as lobbyists for a Chinese military company.

Although the prohibition’s effective date is quickly approaching, the DoD has not issued implementing regulations to incorporate the new restriction into the Defense Federal Acquisition Regulation. Nor has the DoD issued guidance or a standardized certification of compliance. Until regulations or guidance are issued, federal contractors should anticipate varying and potentially inconsistent requests from the DoD to confirm compliance in advance of contract award or execution.

To prepare, current and prospective defense contractors should begin requesting information from their outside consultants regarding any activities performed on behalf of companies listed on the 1260H List.

Safe Harbor for Reasonable Inquiries

The law includes a safe harbor for contractors that make “reasonable inquiries” to confirm that none of their outside consultants, law firms or other third parties engage in lobbying activities for companies on the 1260H List. To qualify for this safe harbor, defense contractors should:

• Identify current outside lobbying firms, consultants, law firms and other third parties that provide government affairs services to the company and its affiliates.
• Require any such third party under a current contract with the company or its affiliates to provide a written certification affirming that it does not and will not perform lobbying activities for any entity on the 1260H List.
• For future engagements, require a similar certification during the bidding process and/or incorporate representations and warranties regarding lobbying activities into consulting agreements.
• Monitor DoD regulatory developments and implementation mechanisms, as well as annual updates to the 1260H List.

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. Please do not hesitate to contact us with any questions.

^{1  Pub. L. 118-159, div. A, title VIII, § 851(a), Dec. 23, 2024, 138 Stat. 1995.}