25.703-2 Iran Sanctions Act
Source: FAR 25.703-2 on acquisition.gov
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."
(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 (http://uscode.house.gov/view.xhtml?req=(title:50%20section:1701%20edition:prelim)%20OR%20(granuleid:USC-prelim-title50-section1701)&f=treesort&edition=prelim&num=0&jumpTo=true" target="_blank">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 (http://uscode.house.gov/view.xhtml?req=(title:50%20section:1701%20edition:prelim)%20OR%20(granuleid:USC-prelim-title50-section1701)&f=treesort&edition=prelim&num=0&jumpTo=true" target="_blank">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 (http://uscode.house.gov/view.xhtml?req=(title:50%20section:1701%20edition:prelim)%20OR%20(granuleid:USC-prelim-title50-section1701)&f=treesort&edition=prelim&num=0&jumpTo=true" target="_blank">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" target="_blank">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).