On September 3, 2026 the Department of War (DoW) issued Revision 3 to its Class Deviation and associated Procedures, Guidance and Information (PGI) that implements a new Part 240 (consistent with the Revolutionary FAR Overhaul of Part 40, which we reported on in July). Like the proposed FAR Rule, this DFARS Class Deviation addresses supply chain and information security issues but is focused on requirements that are unique for DoW contracts.
The revised class deviation is intended as direction for procurement officials relating to several contractual requirements. The deviation also revises certain requirements that were included in Revision 2. The deviation includes the following requirements and changes:
- Revision 3 retains the instructions included in Revision 2 implementing the DoW Chief Information Officer’s memorandum temporarily suspending the November 2026 transition to Phase 2 of the Cybersecurity Maturity Model Certification (CMMC) program, including requirements for third party assessments. Contracting officers are directed to remove or revise requirements for third party assessments in new and existing contracts and solicitations. The suspension does not affect the underlying requirements to comply with NIST SP 800-171 Revision 2.
- Section 853 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2025, which prohibits DoW from entering into or renewing a contract for the procurement of any covered semiconductor products and services with any entity that knowingly provides covered semiconductor products and services (semiconductors, equipment for manufacturing semiconductors and tools for designing semiconductors) to Huawei, its subsidiaries and affiliates, and any entity directly or indirectly controlled by Huawei.
- Section 803 of the NDAA for FY 2024 and section 836 of the NDAA for FY 2025 (which codified the requirements into Title 10), which prohibit contractors from selling, licensing, or otherwise transferring covered individually identifiable DoW employee data (i.e., covered personally identifiable information) to any individual or entity other than the Federal Government, except— (1) to the extent required to perform the contract; (2) when authorized by a waiver; or (3) in circumstances in which the transfer of such data would otherwise be authorized by law. The implementing clause applies to personally identifiable information of DoW employees, including members of the Armed Forces, obtained by a contractor, and must be flowed down to subcontracts and other contractual instruments.
- Section 817 of the NDAA for FY 2023 and Section 848 of the NDAA for FY 2020, which prohibit the use and procurement of certain unmanned aircraft systems and certain systems for the detection and identification of unmanned aircraft systems. Section 848 contained the core ban on DoW procuring or operating any covered uncrewed aircraft systems (UAS). The 2020 provision contained the core prohibition but was focused on China. Section 817 expanded the covered foreign countries to include Russia, Iran, or North Korea, added counter-UAS and drone systems, and clarified the prohibitions on contractors from using these in performance of a DoW contract.
- In addition to new provisions, the deviation modifies the definitions of “covered lobbyist” and “Chinese military company” to entities that are designated under section 1260H. This list is a DoW roster identifying Chinese military companies operating in the United stated. An entity qualifies for designation if it (1) is engaged in providing commercial services, manufacturing, producing, or exporting, and operates directly or indirectly in the United States; and (2) either has sufficient connections to the People’s Liberation Army or any other organization subordinate to the Central Military Commission of the Chinese Communist Party, or is identified as a military-civil fusion contributor to the Chinese defense industrial base. It originated in Section 1260H of the FY 2021 NDAA. Section 1260H requires the Secretary of War to identify and publish this list annually through December 31, 2030, and to make additions or deletions no less frequently than annually. For example, in 2026, more than twenty new parent-level designations were added to the list. Revision 2 broadly defined a Chinese military company to include entities on several U.S. Government lists and certain related entities. Revision 3 corrected Revision 2 by limiting the defined term to entities currently identified on the Section 1260H list in line with statutory requirements.
- Finally, the deviation implements temporary relief ordered by the U.S. District Court for the Northern District of California in Alibaba’s challenge to its Section 1260H designation. While that relief remains in effect, DoW may not rely on Alibaba’s designation to apply the covered-lobbyist prohibition in 10 U.S.C. § 4663. The relief does not affect Alibaba’s treatment as a Chinese military company for other purposes.
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