Major Changes Coming for Defense Contractors and Lobbying Firms Under New Federal Law

In one of his last major acts in office, former President Biden signed into law a massive defense spending bill that could have significant implications both for companies that contract with the Department of Defense (DoD) and the lobbying firms that represent them. The National Defense Authorization Act for Fiscal Year 2025 (NDAA) is a behemoth piece of legislation that funds the DoD’s annual budget. Within the nearly 800-page bill is a brief section that codifies new prohibitions for federal defense contracts. Here’s what you need to know:

• The new law prohibits the DoD from awarding a contract to an entity that has retained a lobbyist who also engages in federal lobbying on behalf of a Chinese military company identified on a list maintained by the DoD. The NDAA for Fiscal Year 2021 required the Department to maintain and update this publicly available list for national security purposes.
• The prohibition appears to apply to parent entities and subsidiaries of the prospective contractor as well. However, the applicable section seems to include a drafting error where it describes affiliates of the contractor that fall within the scope of the prohibition. Congress will likely need to amend the statute to provide clarity to the DoD and government contractors.
• The law includes a safe harbor for contractors that, after a reasonable inquiry, determine that they do not have a contract with a lobbyist who is representing a Chinese military company.
• The Secretary of Defense is granted the authority to waive the prohibition. There are no statutory limits on the DoD’s waiver authority. The law only requires the Secretary to notify Congress of a waiver.
• The law will become effective on June 30, 2026.

Prior to the effective date, current and prospective defense contractors should carefully review their outside lobbyists’ activities to ensure compliance. Lobbying firms who simultaneously represent defense contractors and Chinese military companies should consider how their activities could impact other existing or future clients.

The Akin Political Law Team will continue to monitor these developments, including any DoD regulations that may be issued to implement the new law.