FAR 25.703-2—Iran Sanctions Act.
Plain-English Summary
FAR 25.703-2 implements the Iran Sanctions Act certification requirement for federal procurements. It covers two separate certifications: one about whether the offeror or any person owned or controlled by the offeror engages in activities that may be sanctioned under section 5 of the Iran Sanctions Act, and another about whether the offeror or any person owned or controlled by the offeror knowingly engages in significant transactions with Iran’s Revolutionary Guard Corps or its officials, agents, or affiliates. The section also explains the consequences of a false certification, including termination, suspension, and debarment, and it provides an exception for acquisitions subject to trade agreements when the offeror certifies that all offered products or construction material are designated country end products or designated country construction material. In practice, this rule requires contractors to screen their corporate relationships and business activities for Iran-related sanctions risk before submitting an offer, and it requires contracting officials to treat a false certification as a serious compliance issue with potential contract and responsibility consequences. The section is designed to support U.S. sanctions policy by preventing federal contracting with entities that are engaged in prohibited Iran-related conduct or significant dealings with blocked Revolutionary Guard Corps entities.
Key Rules
Two separate certifications
Each offeror must certify both that it does not engage in sanctionable activities under section 5 of the Iran Sanctions Act and that it does not knowingly engage in significant transactions with Iran’s Revolutionary Guard Corps or its blocked officials, agents, or affiliates. The certification applies to the offeror and any person owned or controlled by the offeror.
Covered conduct under section 5
The first certification addresses activities described in section 5 of the Iran Sanctions Act, which focus on Iran’s energy sector and Iran’s development of weapons of mass destruction or other military capabilities. Offerors must ensure neither they nor owned or controlled persons are involved in such sanctionable conduct unless an exception or waiver applies.
Significant transactions with IRGC
The second certification prohibits knowingly engaging in any significant transaction with the Revolutionary Guard Corps or its blocked officials, agents, or affiliates. The rule defines a significant transaction here as one exceeding $15,000 and ties the blocked-party concept to OFAC’s sanctions lists under the International Emergency Economic Powers Act.
Exceptions and waivers
The certification requirement does not apply if an exception in paragraph (c) applies or if a waiver is granted under FAR 25.703-4. The trade-agreements exception applies when the acquisition is subject to trade agreements and the offeror certifies that all offered products are designated country end products or designated country construction material.
False certification remedies
If the agency determines a certification was false, it may terminate the contract, suspend the contractor, or debar the contractor for at least two years. These remedies are separate enforcement tools and may be used depending on the facts and the agency’s actions.
Responsibilities
Offeror
Before submitting an offer, certify truthfully whether it and any person owned or controlled by it engage in sanctionable Iran-related activities or significant transactions with the IRGC or its blocked affiliates. The offeror must also determine whether a trade-agreements exception applies and ensure the certification is accurate.
Contractor
Maintain ongoing compliance with the certification made at offer stage and avoid conduct that would make the certification false. If a false certification is discovered, the contractor may face termination, suspension, or debarment.
Contracting Officer
Include and rely on the required certification in the acquisition process, and if a false certification is determined, initiate appropriate contract remedies such as termination in accordance with FAR part 49 or 12.403 for commercial items and services.
Suspending and Debarring Official
Take suspension or debarment action when warranted by a false certification, following subpart 9.4 procedures. The official may suspend the contractor or debar the contractor for at least two years.
Agency
Enforce the certification requirement and select among the available remedies when a false certification is determined. The agency must also recognize when the trade-agreements exception removes the certification requirement.
Practical Implications
Contractors should screen not only their own activities but also those of subsidiaries, affiliates, and other persons they own or control, because the certification reaches beyond the named offeror.
A common pitfall is assuming only direct dealings with Iran matter; the rule also covers significant transactions with the IRGC and its blocked officials, agents, or affiliates.
The $15,000 threshold applies to the IRGC transaction concept in this section, so even relatively small transactions can become disqualifying if they exceed that amount and are knowing and significant.
If the acquisition is subject to trade agreements, offerors should verify whether all offered products or construction material qualify as designated country items before relying on the exception.
A false certification can trigger both contract remedies and administrative sanctions, so contractors should treat the certification as a serious compliance representation, not a routine checkbox.
Official Regulatory Text
(a) Certification . (1) Certification relating to activities described in section 5 of the Iran Sanctions Act. As required by section 6(b)(1)(A) of the Iran Sanctions Act ( 50 U.S.C. 1701 note), unless an exception applies in accordance with paragraph (c) of this subsection, or a waiver is granted in accordance with 25.703-4 , each offeror must certify that the offeror, and any person owned or controlled by the offeror, does not engage in any activity for which sanctions may be imposed under section 5 of the Iran Sanctions Act. Such activities, which are described in detail in section 5 of the Iran Sanctions Act, relate to the energy sector of Iran and development by Iran of weapons of mass destruction or other military capabilities. (2) Certification relating to transactions with Iran's Revolutionary Guard Corps. As required by section 6(b)(1)(B) of the Iran Sanctions Act ( 50 U.S.C. 1701 note), unless an exception applies in accordance with paragraph (c) of this subsection, or a waiver is granted in accordance with 25.703-4 , each offeror must certify that the offeror, and any person owned or controlled by the offeror, does not knowingly engage in any significant transaction ( i.e. , a transaction that exceeds $15,000, with Iran's Revolutionary Guard Corps or any of its officials, agents, or affiliates, the property and interests in property of which are blocked pursuant to the International Emergency Economic Powers Act ( 50 U.S.C. 1701 et seq .)(see OFAC’s Specially Designated Nationals and Blocked Persons List at https://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx ). (b) Remedies . Upon the determination of a false certification under paragraph (a) of this section, the agency shall take one or more of the following actions: (1) The contracting officer terminates the contract in accordance with procedures in part 49 , or for commercial products and commercial services, see 12.403 . (2) The suspending and debarring official suspends the contractor in accordance with the procedures in subpart 9.4 . (3) The suspending and debarring official debars the contractor for a period of at least two years in accordance with the procedures in subpart 9.4 . (c) Exception for trade agreements . The certification requirements of paragraph (a) of this subsection do not apply if the acquisition is subject to trade agreements and the offeror certifies that all the offered products are designated country end products or designated country construction material (see subpart 25.4 ).