DoD Issues Rules Covering Inflation Adjustments, Confucius Institutes, Consulting Conflicts and Research Contract Funding Disclosures

     In this GovCon Bulletin,™ we discuss four rules under the Defense Federal Acquisition Regulation Supplement (DFARS) that were published earlier today by the Department of Defense (DoD), highlighting aspects of the rules that may be of most interest to government contractors, particularly small businesses.  In light of the current regulatory bottleneck, the publication, in and of itself, of any final or proposed regulation may seem noteworthy.  Indeed, given the administration’s self-imposed ten-for-one mandate, with each final rule some may wonder which ten regulations have or will pay the price to make room for the new one, which presumably reflects an administration priority.  Speculation aside, below is our brief summary of the four substantive DoD rules that were issued today.

Final Rule Adjusting DoD Thresholds For Inflation

     Under federal law, DoD is required to adjust acquisition-related thresholds for inflation every five years.  Consequently, today, August 25, 2025, DoD published a Final Rule that becomes effective on October 1 and that adjusts monetary thresholds found in DFARS.  Although DoD applies an assortment of affected thresholds in various parts of the DFARS, below are the ones that may have the most impact on government contractors, particularly small businesses:

• The contract value that triggers mandatory post-award debriefings (DFARS 215.506(b) - raised from $10 million to $15 million)
• The contract value that triggers mandatory disclosure of source selection information in a debriefing, including disclosures to small businesses (DFARS 215.506(d) - for small businesses raised from $10 million to $15 million )
• The contract value that triggers mandatory postaward debriefings for task and delivery orders (DFARS 216.505(b)(6) - raised from $10 million to $15 million)
• The contract value that triggers certain mandatory small business set-asides (DFARS 219-502-2 - construction, including maintenance & repairs (raised from $3 million to $3.5 million) and dredging (raised from $1.5 million to $2 million))
• The contract value that triggers the phase-two offeror limit under two-phase design-build procedures (DFARS 236.303-1 - raised from $4.5 million to $5.5 million)

Final Rule Prohibiting Consulting Services To Covered Foreign Entities

     Another Final Rule issued by DoD today that becomes effective October 24, 2025, prohibits a contracting officer from awarding certain contracts to government contractors that provide consulting services to certain foreign entities, including the governments of China and Russia. 

     Specifically, the rule states that a contracting officer cannot award a government contract with a North American Industry Classification System (NAICS) code beginning with 5416 (e.g., management, scientific, and technical consulting services) to any contractor that both (i) cannot certify that neither the contractor nor its subsidiaries or affiliates hold a contract or subcontract involving consulting services with a covered foreign entity; and (ii) does not have an auditable conflict-of-interest mitigation plan approved by the contracting officer.  A prospective contractor that indicates in a solicitation response that it provides consulting services to a covered foreign entity can try to obtain a waiver from the contracting officer.  Covered foreign entities include the government, security service, and intelligence service of the People’s Republic of China, the government of the Russian Federation, entities sanctioned by the Department of Treasury because of their connection with the Russian Federation's economy, and other restricted and embargoed governments and entities including governments that support acts of international terrorism.

Proposed Rule Requiring Funding Disclosures In Technical Papers

     In the only Proposed Rule issued today, DoD requires research and development contractors to specify the amount of funds received from DoD in public documents exceeding 280 characters when those public documents result from research and development activities funded in whole or in part by DoD.  This disclosure requirement may be waived by the contracting officer.

     Currently, the DFARS clause required to be inserted into contracts for research and development requires contractors to include an acknowledgment of the government's support in the publication of any material based on or developed under the contracts but does not require disclosure of the amount of the funding.

     Comments to the Proposed Rule are due October 24, 2025.

Final Rule Bars Contracts To Confucius Institute Higher Ed

     Lastly, another DoD Final Rule published today, August 25, 2025, and effective immediately bars DoD from awarding a contract to any institution of higher education that hosts a Confucius Institute, unless the institution receives a waiver.  A Confucius Institute, for purposes of the regulation, is (i) any program that receives funding or support from the Chinese International Education Foundation or the Center for Language Exchange Cooperation of the Ministry of Education of the People's Republic of China, or (ii) any cultural institute directly or indirectly funded by the government of the People's Republic of China.

     According to DoD's preamble explanation of the Final Rule, DoD is not aware of any activity that currently actually constitutes a Confucius Institute so the impact of the Final Rule may be limited.

     The Amadeo Law Firm will continue to cover any pertinent DoD regulations as they are issued in upcoming articles, webinars or video blogs.