HR 938119th CongressIn Committee

No Contracts with Foreign Adversaries Act

Introduced: Feb 4, 2025

Standard Summary

Comprehensive overview in 1-2 paragraphs

No Contracts with Foreign Adversaries Act would add a new prohibition to the Higher Education Act of 1965. It bars colleges and universities from entering into contracts with foreign countries of concern or foreign entities of concern, and it creates a detailed waiver system if a institution wants to proceed despite the prohibition. The bill allows waivers for up to one year at a time, requires extensive disclosure and internal compliance controls, and authorizes civil action and fines for noncompliance. It also connects contract compliance to overall program eligibility, potentially blocking a school from federal higher education programs if it repeatedly violates the rule. The policy is aimed at protecting national security and US economic interests by limiting potentially risky foreign involvement in college contracts.

Key Points

1Prohibition with a waiver option
2- Institutions may not enter into contracts with foreign countries of concern or foreign entities of concern. A formal waiver may be requested to allow a contract for up to one year, with renewal possible for additional one-year periods if terms are unchanged.
3Strict waiver requirements
4- Waiver requests must be submitted at least 120 days before contract start.
5- Requests must include the full, unredacted contract text and an English translation by a non-affiliated translator.
6- The institution must certify under oath (via a designated compliance officer) that the contract benefits the institution’s mission and students and promotes U.S. security, stability, and economic vitality.
7- The Secretary, in consultation with multiple federal agencies (including FBI, DNI, CIA, State, Defense, Justice, Commerce, Homeland Security, Energy, NSF, and NIH), must approve waivers based on these criteria.
8Renewal and termination
9- If a contract exceeds the 1-year waiver period, the institution may seek a renewal for another year with the same terms; otherwise, the contract must terminate at the end of the waiver.
10Notice and transparency
11- The Secretary must notify the relevant House and Senate committees about a waiver decision at least 2 weeks before it is issued, including a justification.
12Designation changes during a contract
13- If a contract with a foreign source is later designated as a foreign country of concern or foreign entity of concern, the institution must terminate the contract within 60 days of notice.
14Pre-enactment contracts
15- For contracts entered into before enactment, institutions must submit a waiver request within 30 days after enactment, and the Secretary must issue a waiver that starts on the date issued and ends no later than one year after enactment or the contract’s termination date, whichever comes first. Renewal rules for these contracts apply similarly.
16Compliance and enforcement
17- Each institution must appoint a compliance officer responsible for certifying accurate compliance.
18- The Secretary may investigate possible violations; the Attorney General can file civil actions to enforce compliance.
19- Fines: first-time violations impose a penalty of 5% to 10% of the institution’s total federal funds received in the most recent fiscal year; subsequent violations can trigger fines of at least 20% of federal funds for each instance.
20- Repeated noncompliance can lead to loss of waiver eligibility for two additional calendar years after penalties.
21Definitions and scope
22- “Contract” covers purchases, leases, barters, affiliations, or other exchanges with a foreign source, with some exclusions (e.g., routine student-cost payments for attendance under certain conditions).
23- “Foreign country of concern” includes any “covered nation” under federal law or any country the Secretary deems detrimental to U.S. security or policy.
24- “Foreign entity of concern” aligns with specified defense and national security lists.
25- “Institution” means an institution of higher education, with certain exclusions defined in the statute.
26Program participation impact
27- Section 487(a) of the Higher Education Act would add a new requirement that institutions comply with 117A.
28- If an institution has three consecutive fiscal years of violations, it would become ineligible to participate in federal programs for at least two institutional fiscal years, and would need to demonstrate compliance for another two fiscal years to regain eligibility.

Impact Areas

Primary group/area affected- Institutions of higher education that receive federal funding and engage in contracts with foreign entities or countries of concern; compliance staff and general counsel at those institutions.Secondary group/area affected- Federal and state accountability offices, compliance and procurement offices within universities, and contractors/partners doing business with colleges (including research partners and vendors).Additional impacts- Potential changes to international research collaborations, vendor contracts, and grant-funded activities.- Increased administrative workload and costs related to contract review, translations, and compliance certification.- Possible chilling effect on international partnerships with entities listed as “concerned,” depending on how broadly the lists are defined and applied.- If violations occur, potential loss of access to federal programs for multiple years, affecting funding for scholarships, research, and student aid.

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