United States: Senate Bill Demonstrates Continued Interest In The Federal Acquisition Supply Chain

Last Updated: January 11 2019
Article by Damien C. Specht and Locke Bell

For years, United States security agencies have recognized a threat to government information technology systems posed by contractor supply chains. The Government has struggled, however, to balance national security assessments of a contractor's supply chain (which may include classified or otherwise sensitive information) against policies that favor transparency and competition. In many cases, a potential supplier may be excluded from a procurement for a risk based only on an agency official's cursory research and with little warning. The excluded bidder may seek relief through a bid protest, but federal agencies receive significant deference in deciding matters of national security, as was displayed in Iron Bow Technologies, LLC v. United States, 136 Fed. Cl. 519 (2018), in which the U.S. Court of Federal Claims upheld the Social Security Administration's exclusion of desktop printers manufactured by Lexmark based solely on the company's Chinese ownership and connections to the Chinese government.

The Senate showed continued interest in this topic last year by unanimously passing the Federal Acquisition Supply Chain Security Act of 2018 (S. 3085), a bill that would have stood up a Federal Acquisition Security Council and established procedures for federal agencies to exclude from competitive procurements certain items or offerors that pose a supply chain risk.

The bill would have allowed an agency, for a single procurement or a class of procurements, to exclude a source from competition or deem a source unacceptable or not responsible on the basis of a perceived supply-chain risk upon determining (1) exclusion is necessary to protect national security, and (2) less intrusive measures are not reasonably available. Under the bill, a source could be excluded either based on explicit solicitation criteria (i.e., failing to meet qualification requirements or not achieving an acceptable rating under an evaluation factor) or as part of the source-selection authority's overall responsibility determination. However, the authority to make an exclusion determination could not be delegated further than one level below the Deputy Secretary or Principal Deputy Director; would require the joint recommendation of the agency's chief acquisition officer and chief information officer; and would require the agency to provide notice to Congress. The bill does not describe the sources of information on which an agency official may rely in reaching the conclusions underlying exclusion — including, apparently, unsubstantiated internet research. The proposed statute would, however, address some of the transparency and accountability issues that have dogged this area of procurement review, as before exercising this authority, the agency would be required to notify the source of its potential exclusion and allow it 30 days to respond, unless there are "urgent national security interests," in which case the notice to the excluded source and notice to Congress could be delayed.

Under the bill as written, an excluded source would be limited to seeking judicial relief directly in the U.S. Court of Appeals for the District of Columbia Circuit, which would adopt a standard of review similar to that in the Administrative Procedure Act, with the exception that a contractor may also seek remedies under the Contract Disputes Act (CDA), 41 U.S.C. §§ 7101 et seq., to the extent they are available. This would preclude traditional bid protest remedies and cases like Iron Bow.

The bill also would have established procedures for sources to be excluded more broadly by the Department of Homeland Security, Department of Defense, and the Director of National Intelligence from procurements by civilian, defense, or intelligence agencies, respectively, upon recommendation by the Federal Acquisition Security Council established by the bill. This Council — which would be chaired by a representative from the Office of Management and Budget (OMB) and would also include representatives from the General Services Administration (GSA), Department of Homeland Security (DHS), the Office of the Director of National Intelligence (ODNI), Department of Justice (DOJ), Department of Defense (DOD), and the National Institute of Standards and Technology (NIST) — would be charged with establishing criteria and procedures for such exclusions and exceptions to them.

Additionally, the Council would be responsible for identifying and recommending supply chain risk management standards, guidelines, and practices for executive agencies (which NIST would develop), as well as establishing requirements for non-federal entities to share information about supply chain risk with federal agencies and identifying the best federal agencies to lead and facilitate this sharing.

All in all, this bill, which may or may not be reintroduced in the new Congress, with its procedure for review and challenge prior to exclusion and its requirements for Congressional notifications, is a step in the right direction. But there still is room for improvement, particularly in establishing meaningful administrative oversight and standards for thorough and reliable research to guide agencies, who otherwise may cloak a careless decision under the veil of national security. Federal contractors will want to monitor these initiatives and the ongoing balance of national security with procurement transparency, as well as reviewing companies in their own supply chain for possible concerns.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions