Sponsors (7)
The bill strengthens DoD authority to block software suppliers with ties to covered countries to protect sensitive systems and reduce espionage risk, but it risks higher costs, reduced competition, harm to U.S. multinational operations, and legal uncertainty for bidders.
DoD, federal IT systems, and taxpayers: The bill lets the Department of Defense exclude software suppliers that have ownership, data centers, or AI R&D ties in covered countries, reducing the risk that foreign actors gain access to sensitive source code or classified systems.
Secretary of Defense and procurement officials: The bill permits targeted exceptions where national security requires, preserving flexibility for urgent or critical procurements rather than imposing absolute bans.
Government contractors and taxpayers: Companies with foreign ties could be barred from DoD software-source contracts for three years, shrinking the bidder pool and likely increasing procurement costs.
U.S. multinational tech firms, their employees, and small suppliers: The rule could sweep in U.S.-linked subsidiaries or affiliates that operate in covered countries, harming U.S. firms, workers, and domestic supply chains.
Government contractors and federal procurement officials: Vague standards (Secretary-determined terms like 'primary purpose' and 'material interest') create legal and compliance uncertainty, increasing litigation and administrative costs.
Based on analysis of 2 sections of legislative text.
Bars DoD source-code contracts with entities tied to covered countries’ AI facilities, data centers, or foreign access unless waived; applies for 3 years.
Prohibits the Secretary of Defense from entering into, renewing, or extending contracts that provide software source code with persons who have specified ties to a “covered country” (as defined in existing law), including ownership/operation of AI research facilities in such countries, allowing foreign access enabling reverse engineering, or operating data centers in those countries; the Secretary may waive the prohibition for national security reasons. The ban applies only to contracts entered, renewed, or extended within three years after enactment.
Official title: To prohibit the Secretary of Defense from entering into software source code contracts with entities with certain relationships with China, and for other purposes.
Introduced June 12, 2025 by Pat Fallon · Last progress June 12, 2025