FAR 25.7—Subpart 25.7

Scope of subpart.

FAR 25.700 defines the scope of Subpart 25.7, which implements several U.S. sanctions- and Iran-related restrictions that affect federal contracting. Specifically, it covers: (1) economic sanctions administered by the Office of Foreign Assets Control (OFAC) in the Department of the Treasury that prohibit transactions involving certain countries, entities, and individuals; (2) the Sudan Accountability and Divestment Act of 2007; (3) the Iran Sanctions Act of 1996, as amended by the Iran Freedom Support Act, section 102 of the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010, and Titles II and III of the Iran Threat Reduction and Syria Human Rights Act of 2012; and (4) the prohibition on contracting with entities that export sensitive technologies to Iran. In practice, this section tells contractors and contracting officers that the subpart is not a general ethics rule but a targeted compliance framework tied to sanctions, divestment, and Iran-related restrictions. Its purpose is to prevent the federal procurement system from supporting prohibited transactions, sanctioned parties, or entities engaged in conduct Congress and the Executive Branch have determined to be contrary to U.S. foreign policy and national security interests. For contractors, the practical significance is that eligibility for award and continued performance may depend on screening ownership, affiliates, supply chains, and transaction counterparties against OFAC and statutory restrictions. For contracting officers, it means these issues must be considered during solicitation, responsibility determinations, award, and administration when the subpart applies.

Restrictions administered by the Department of the Treasury on acquisitions of supplies or services from prohibited sources.

FAR 25.701 tells agencies, contractors, and subcontractors that they may not buy supplies or services when a Treasury Department Office of Foreign Assets Control (OFAC) restriction would make the transaction unlawful for a U.S.-jurisdiction person, unless OFAC has specifically authorized it. The section points readers to the main sources of those restrictions: presidential proclamations, Executive orders, statutes administered by OFAC, and OFAC’s implementing regulations in 31 CFR Chapter V. It also highlights the most common country-based restrictions affecting federal procurement, including most transactions involving Cuba, Iran, and Sudan, and most imports from Burma or North Korea into the United States or its outlying areas. In addition, it flags OFAC’s sanctions lists, especially the Specially Designated Nationals and Blocked Persons (SDN) List, which can bar dealings with named entities and individuals even when a country itself is not the direct issue. The section exists to prevent federal procurement from being used to support sanctioned parties or prohibited trade, and in practice it requires screening, diligence, and escalation before award, subcontracting, shipment, or payment. It also directs users to OFAC for interpretive questions and authorization issues, making OFAC the controlling source for sanctions compliance questions under this rule.

Prohibition on contracting with entities that conduct restricted business operations in Sudan.

Prohibition on contracting with entities that engage in certain activities or transactions relating to Iran.