FAR 40.202-4—Exemptions.
Plain-English Summary
FAR 40.202-4 explains when the prohibitions in FAR 40.202 do not apply because an agency has a statutory exemption. This section covers four exemption categories: the Department of Homeland Security, Department of Defense, Department of State, and Department of Justice; the Department of Transportation; the National Transportation Safety Board; and NOAA. It also identifies the kinds of missions and procurements that can qualify, including research, evaluation, training, testing, analysis, counterterrorism, counterintelligence, protective missions, federal criminal or national security investigations, forensic examinations, safe and secure National Airspace System operations, public safety, safety investigations, and NOAA science, management, or operational missions. For the national-security agencies, the exemption is tied to a determination that the procurement or operation is required in the national interest of the United States and meets one of the listed mission categories. For some exemptions, consultation with the Secretary of Homeland Security is required, and for the UAS-related exemption the system must be unable to transfer data to or download data from an American Security Drone Act-covered foreign entity and must otherwise pose no national security cybersecurity risks as determined by the exempting official. In practice, this section matters because it tells contracting officers and program officials when otherwise applicable prohibitions can be waived, what findings must be made, and which agency officials have authority to approve the exemption.
Key Rules
National-security agency exemption
The Secretaries of Homeland Security, Defense, and State, and the Attorney General may exempt procurements or operations from the prohibitions in FAR 40.202 when the action is required in the national interest of the United States and fits one of the listed mission categories.
Covered mission categories
For DHS, DoD, State, and DOJ, the exemption applies only when the procurement or operation is for the sole purposes of research, evaluation, training, testing, or analysis for electronic warfare, information warfare operations, cybersecurity, or UAS/counter-UAS development; or for counterterrorism, counterintelligence, protective missions, or federal criminal or national security investigations, including forensic examinations.
UAS-specific national-security exemption
A UAS may be exempt if, as procured or modified before operational use, it can no longer transfer to or download data from an American Security Drone Act-covered foreign entity and otherwise poses no national security cybersecurity risks, as determined by the exempting official under agency procedures.
Transportation exemption
The Secretary of Transportation may exempt a procurement or operation if it is deemed to support the safe, secure, or efficient operation of the National Air Space System or the maintenance of public safety.
NTSB safety-investigation exemption
The National Transportation Safety Board, in consultation with the Secretary of Homeland Security, may exempt a procurement or operation when it is necessary solely to conduct safety investigations.
NOAA mission exemption
The NOAA Administrator, in consultation with the Secretary of Homeland Security, may exempt a procurement or operation when it is for NOAA’s science or management objectives or operational mission.
Consultation and determination requirements
Where the rule requires consultation or a specific determination, the exemption is not automatic. The responsible official must make the required finding and follow agency procedures before relying on the exemption.
Responsibilities
Secretary of Homeland Security
May approve exemptions from FAR 40.202 for DHS procurements or operations that meet the national-interest and mission-purpose criteria; must ensure the action fits the statutory exemption and agency procedures.
Secretary of Defense
May approve exemptions for DoD procurements or operations that meet the national-interest and mission-purpose criteria; must ensure the exemption is limited to the authorized purposes and documented under agency procedures.
Secretary of State
May approve exemptions for State Department procurements or operations that meet the national-interest and mission-purpose criteria; must confirm the action falls within the listed mission categories.
Attorney General
May approve exemptions for DOJ procurements or operations that meet the national-interest and mission-purpose criteria; must ensure the exemption is tied to the authorized investigative, protective, or security-related purposes.
Secretary of Transportation
May exempt procurements or operations that support safe, secure, or efficient National Airspace System operations or public safety; must make the support determination before the exemption is used.
National Transportation Safety Board
May rely on the exemption, in consultation with the Secretary of Homeland Security, when the procurement or operation is necessary solely for safety investigations.
NOAA Administrator
May rely on the exemption, in consultation with the Secretary of Homeland Security, when the procurement or operation is for NOAA science or management objectives or its operational mission.
Contracting Officer
Must verify that an exemption applies before proceeding under it, ensure the required official determination or consultation has occurred, and document the contract file consistent with agency procedures.
Program/Requirement Official
Must identify whether the procurement or operation fits one of the exempted mission categories and provide the factual basis for the exemption request.
Exempting Official
Must make the required national-interest, cybersecurity, or mission-support determination and ensure the item or operation satisfies the specific conditions for the exemption.
Practical Implications
This section is an exception rule, not a general permission slip: the exemption must match the exact agency, mission, and finding required by the text.
The phrase "sole purposes" is important and can be a common pitfall; if the procurement serves mixed purposes, the exemption may not apply.
For the UAS exemption, agencies need more than a general security comfort level; they must ensure the system cannot transfer or download data to a covered foreign entity and that no remaining national-security cybersecurity risks exist.
Consultation requirements matter operationally, especially for NTSB and NOAA, because skipping consultation can undermine the exemption even if the mission seems eligible.
Contracting officers should expect agency-specific procedures and documentation to control how the exemption is approved, recorded, and defended in the file.
Official Regulatory Text
The prohibitions in 40.202 do not apply to the following (see sections 1823, 1824, and 1825 of Pub. L. 118-31, 41 U.S.C. 3901 note prec.): (a) Department of Homeland Security, Department of Defense, Department of State, and the Department of Justice exemptions. The Secretary of Homeland Security, the Secretary of Defense, the Secretary of State, and the Attorney General are exempt from the prohibitions in 40.202 if the procurement or operation is required in the national interest of the United States and- (1) Is for the sole purposes of research, evaluation, training, testing, or analysis for electronic warfare, information warfare operations, cybersecurity, or development of unmanned aircraft system or counter-unmanned aircraft system technology; (2) Is for the sole purposes of conducting counterterrorism or counterintelligence activities, protective missions, or Federal criminal or national security investigations, including forensic examinations, or for electronic warfare, information warfare operations, cybersecurity, or development of an unmanned aircraft system or counter-unmanned aircraft system technology; or (3) Is an unmanned aircraft system that, as procured or as modified after procurement but before operational use, can no longer transfer to, or download data from, an American Security Drone Act-covered foreign entity and otherwise poses no national security cybersecurity risks as determined by the exempting official, as described in agency procedures. (b) Department of Transportation exemption. The Secretary of Transportation is exempt from the prohibitions in 40.202 if the operation or procurement is deemed to support the safe, secure, or efficient operation of the National Air Space System or maintenance of public safety. (c) National Transportation Safety Board exemption. The National Transportation Safety Board, in consultation with the Secretary of Homeland Security, is exempt from the prohibitions, in 40.202 if the operation or procurement is necessary for the sole purpose of conducting safety investigations. (d) National Oceanic and Atmospheric Administration (NOAA) exemption. The Administrator of NOAA, in consultation with the Secretary of Homeland Security, is exempt from the prohibitions of 40.202 , if the operation or procurement for the purposes of meeting NOAA’s science or management objectives or operational mission.