Iran Sanctions Act
Offerors must certify they do not engage in sanctioned activities with Iran or its Revolutionary Guard Corps, or risk severe penalties including contract termination and debarment.
Overview
FAR 25.703-2 implements the Iran Sanctions Act by requiring offerors to certify that neither they nor any entity they own or control engage in activities subject to sanctions under section 5 of the Act, particularly those related to Iran's energy sector and military development. Additionally, offerors must certify they do not knowingly engage in significant transactions (over $15,000) with Iran's Revolutionary Guard Corps or its affiliates, as identified by the U.S. Treasury's SDN List. Exceptions apply if the acquisition is subject to trade agreements and all products are designated country end products or construction materials. If a false certification is discovered, the agency may terminate the contract, suspend, or debar the contractor for at least two years.
Key Rules
- Certification of Non-Engagement in Sanctioned Activities
- Offerors must certify they and their controlled entities do not engage in activities for which sanctions may be imposed under section 5 of the Iran Sanctions Act, unless an exception or waiver applies.
- Certification Regarding Transactions with Iran's Revolutionary Guard Corps
- Offerors must certify they do not knowingly engage in significant transactions (over $15,000) with the IRGC or its affiliates, unless an exception or waiver applies.
- Remedies for False Certification
- Agencies may terminate contracts, suspend, or debar contractors for false certifications.
- Exception for Trade Agreements
- Certification requirements do not apply if the acquisition is subject to trade agreements and all products are designated country end products or construction materials.
Responsibilities
- Contracting Officers: Must obtain certifications, verify compliance, and take action if false certifications are found.
- Contractors: Must provide accurate certifications regarding activities with Iran and the IRGC, and ensure compliance throughout contract performance.
- Agencies: Must enforce remedies for false certifications and ensure adherence to exceptions and waivers.
Practical Implications
- This section ensures U.S. government contracts do not support entities involved in Iran's sanctioned activities or the IRGC. Contractors must conduct due diligence on their own operations and affiliates. Failure to comply can result in severe penalties, including contract termination and debarment. Common pitfalls include inadequate vetting of affiliates and misunderstanding the scope of "significant transactions."