FAR 25.701—Restrictions administered by the Department of the Treasury on acquisitions of supplies or services from prohibited sources.
Plain-English Summary
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.
Key Rules
No prohibited acquisitions
Agencies, contractors, and subcontractors must not acquire supplies or services if OFAC law or regulations would prohibit the transaction for a person subject to U.S. jurisdiction. This applies unless OFAC has authorized the transaction.
Country-based restrictions apply
Except as authorized by OFAC, most transactions involving Cuba, Iran, and Sudan are prohibited. The rule also identifies most imports from Burma or North Korea into the United States or its outlying areas as prohibited.
Sanctions lists matter
The OFAC SDN List and related sanctions lists identify entities and individuals subject to blocking or other restrictions. A party can be prohibited even if the transaction is not obviously tied to a sanctioned country.
OFAC authorization controls
If a transaction would otherwise be prohibited, the only way to proceed is if OFAC authorizes it through a license or other applicable authorization. Contracting personnel should not assume an acquisition exception exists without checking OFAC authority.
Use current OFAC sources
The operative restrictions are found in OFAC-administered laws, 31 CFR Chapter V, and OFAC website updates. Users must rely on current OFAC guidance because sanctions can change quickly.
Refer questions to OFAC
Questions about whether a transaction is restricted, or whether authorization is available, should be directed to OFAC. The FAR section specifically points users to OFAC as the source for official guidance.
Responsibilities
Contracting Officers
Ensure solicitations, awards, and contract actions do not result in prohibited acquisitions. They should screen for sanctions issues, coordinate with legal/compliance staff when needed, and refer uncertain cases to OFAC before proceeding.
Contractors
Avoid acquiring supplies or services from prohibited sources and ensure their own purchasing, subcontracting, and supply chain activities comply with OFAC restrictions. They must screen counterparties and stop or escalate transactions that may involve sanctioned countries, persons, or entities.
Subcontractors
Comply with the same OFAC restrictions when performing under federal contracts or when making lower-tier purchases. They must not source from prohibited parties and should pass sanctions concerns up the chain promptly.
Agencies
Implement procurement controls and oversight to prevent prohibited transactions, including training, screening processes, and contract administration practices. Agencies should ensure acquisition personnel know when to seek OFAC guidance.
Department of the Treasury, OFAC
Administer the sanctions programs, maintain the relevant regulations and sanctions lists, and issue licenses or other authorizations where permitted. OFAC also serves as the point of contact for questions about restrictions under this section.
Practical Implications
This section is a front-end compliance check, not a post-award formality: sanctions issues can block a purchase before award, shipment, or payment.
The biggest pitfall is assuming only direct dealings with a sanctioned country are covered; named persons, blocked entities, and indirect supply chain links can also trigger a violation.
Contractors should screen vendors, subcontractors, freight forwarders, and beneficial ownership where appropriate, because prohibited sources may appear several tiers down the chain.
Because OFAC rules change and sanctions lists are updated frequently, relying on outdated screening results or old country guidance is risky.
When a transaction may be restricted, the safe practice is to pause and seek OFAC guidance or authorization rather than trying to fit the transaction into a procurement exception.
Official Regulatory Text
(a) Except as authorized by OFAC, agencies and their contractors and subcontractors must not acquire any supplies or services if any proclamation, Executive order, or statute administered by OFAC, or if OFAC’s implementing regulations at 31 CFR Chapter V, would prohibit such a transaction by a person subject to the jurisdiction of the United States. (b) Except as authorized by OFAC, most transactions involving Cuba, Iran, and Sudan are prohibited, as are most imports from Burma or North Korea into the United States or its outlying areas. In addition, lists of entities and individuals subject to economic sanctions are included in OFAC’s List of Specially Designated Nationals and Blocked Persons at https://ofac.treasury.gov/specially-designated-nationals-and-blocked-persons-list-sdn-human-readable-lists . More information about these restrictions, as well as updates, is available in OFAC’s regulations at 31 CFR Chapter V and/or on OFAC’s website at https://ofac.treasury.gov/ . (c) Refer questions concerning the restrictions in paragraphs (a) or (b) of this section to the- Department of the Treasury Office of Foreign Assets Control Washington, DC 20220 (Telephone (202) 622-2490).