The Federal Acquisition Regulatory Council has proposed an amendment to the Federal Acquisition Regulation that would prohibit executive agencies from purchasing select semiconductor products or services tied to foreign adversaries, such as China, Russia, Iran and North Korea.
In a notice in the Federal Register, the FAR Council proposed the implementation of a key restriction in the James M. Inhofe National Defense Authorization Act for Fiscal Year 2023 that bars agencies from obtaining certain electronic products and services. Interested parties may submit their comments about the proposed rule until April 20.
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What Would the Proposed FAR Semiconductor Rule Do?
Under the proposed amendment, the head of an executive agency would be barred from entering into or renewing a contract for the procurement of electronic products that include covered semiconductors. The prohibition would also apply to electronic products used in critical systems that incorporate covered semiconductors.
If enacted, the restriction would take effect on Dec. 23, 2027.
Executive agencies would not be required to remove or replace products or services already embedded in equipment, systems, or services prior to the rule implementation date. Agencies also would not be required to prohibit or limit the use of covered semiconductor products or services throughout the lifecycle of existing equipment acquired before that date, including replacement components, spare parts or support services.
Why Is FAR Undergoing Reforms?
The semiconductor proposal comes as the FAR Council and the Department of War continue broader acquisition reform efforts under the Revolutionary FAR Overhaul, or RFO, initiative.
Launched in May 2025, the RFO aims to modernize the acquisition framework by reducing unnecessary regulatory requirements and increasing flexibility for program execution. The initiative focuses on accelerating capability delivery, strengthening industrial readiness and eliminating outdated or nonstatutory FAR and Defense FAR Supplement provisions.
For Phase 1 of the overhaul, the principal director for defense pricing, contracting and acquisition policy issued class deviations to streamline compliance requirements ahead of the formal rulemaking. For Phase 2, DOW is seeking comments and suggestions from the defense industrial base and acquisition stakeholders on how to reduce regulatory burden and accelerate procurement.
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