Restrictions administered by the Department of the Treasury on acquisitions of supplies or services from prohibited sources
Contractors and agencies must not acquire supplies or services from OFAC-prohibited sources, including certain countries and individuals, unless specifically authorized by OFAC.
Overview
FAR 25.701 establishes restrictions on the acquisition of supplies or services from sources that are prohibited under regulations administered by the Department of the Treasury’s Office of Foreign Assets Control (OFAC). This section prohibits agencies, contractors, and subcontractors from engaging in transactions with entities or individuals subject to U.S. economic sanctions, unless specifically authorized by OFAC. The regulation highlights that most transactions involving Cuba, Iran, Sudan, Burma, and North Korea are prohibited, and references the OFAC List of Specially Designated Nationals and Blocked Persons (SDN List) as a key resource for identifying sanctioned parties. Questions regarding these restrictions should be directed to OFAC for clarification.
Key Rules
- OFAC-Administered Restrictions
- Agencies and contractors must not acquire supplies or services from sources prohibited by OFAC regulations, Executive orders, or statutes, unless OFAC authorizes the transaction.
- Prohibited Countries and Entities
- Most transactions with Cuba, Iran, Sudan, Burma, and North Korea are banned, and contractors must consult the SDN List to avoid dealing with sanctioned entities or individuals.
- OFAC as the Point of Contact
- All questions about these restrictions should be referred to OFAC for authoritative guidance.
Responsibilities
- Contracting Officers: Ensure acquisitions do not involve prohibited sources and verify against the SDN List; consult OFAC as needed.
- Contractors: Avoid transactions with sanctioned countries, entities, or individuals; check the SDN List and comply with OFAC regulations.
- Agencies: Oversee compliance and direct inquiries to OFAC.
Practical Implications
- This section exists to enforce U.S. economic sanctions and prevent government funds from supporting prohibited or sanctioned entities.
- Contractors must implement due diligence processes to screen suppliers and subcontractors against OFAC lists.
- Failure to comply can result in contract termination, penalties, or legal action.