25.701 Restrictions administered by the Department of the Treasury on acquisitions of supplies or services from prohibited sources
Source: FAR 25.701 on acquisition.gov
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.
(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" target="_blank">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/" target="_blank">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).