Takeaways

Contractors may no longer furnish any energy sourced from inside the Russian Federation to certain military installations.
The class deviation creates two new contract clauses, one of which requires contractors to certify that they will not use any Russian-sourced energy.

On May 29, 2020, the Department of Defense (DoD) issued a class deviation (i.e., permission for organizations to deviate from acquisition regulations) that prohibits contractors from using energy sourced from inside the Russian Federation to power military installations in Europe. The military installations covered by the prohibition are those that DoD has identified as main operating bases. The prohibition applies to energy—furnished by contractors—in any form and for any purpose, including heating, cooling, and electricity. While the prohibition took effect immediately, it does not appear to apply to existing contracts, since the class deviation instructs contracting officers not to award contracts that use Russian-sourced energy. The class deviation implements section 2821 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2020.

The class deviation creates two clauses in the Defense Federal Acquisition Regulation Supplement (DFARS). The first clause, DFARS 252.225-7970, articulates the prohibition on energy sourced from inside the Russian Federation and requires contractors to flowdown the clause to their subcontracts. The second clause, DFARS 252.225-7971, requires contractors certify that they will not use any Russian-sourced energy in the performance of any contract—including subcontracts and other contractual instruments—that requires furnishing energy for applicable military installations. The DoD may waive the prohibition if it certifies to congressional defense committees that (1) the waiver is necessary to ensure an adequate supply of furnished energy, and (2) the official has balanced national security requirements against the potential risk associated with reliance upon the Russian Federation for furnished energy.

The NDAA for FY 2020 is not the first time Congress has required the DoD to reduce its dependence on Russian-sourced energy. Section 2880 of the NDAA for FY 2018 required the Secretary of Defense to “take appropriate measures, to the extent practicable, to reduce the dependency of all United States military installations in Europe on energy sourced inside Russia.” In a letter to then-Secretary James Mattis, several Senators highlighted the importance of ensuring that the “military’s operations are insulated from any possible Russian manipulation or disruption of the energy supply.”

Contractors operating on a covered military installation must immediately take steps to comply with this new requirement. Given the certification requirement, it is important that contractors carefully assess compliance with this new requirement and other recent DoD regulations, including restricting the U.S. government from purchasing telecommunications equipment from certain Chinese entities.

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