OFAC compliance
Defense and government contractors face OFAC compliance obligations that go well beyond standard sanctions screening, with the Office of Foreign Assets Control and the Defense Contract Audit Agency both scrutinizing vendor networks, foreign subcontractor relationships, and beneficial ownership disclosures at the contract level. A 2023 OFAC enforcement pattern targeting defense-adjacent firms for third-party exposure through foreign national distributors put the sector on notice that indirect dealings count. Compliance teams are now mapping subcontractor chains against the SDN List and reviewing foreign military sales agreements for prohibited-party exposure before contract renewals land.
Watch
- OFAC 50 Percent Rule: beneficial ownership screening for foreign subcontractors
- DCAA audits increasingly flagging SDN-adjacent vendor payments in contract reviews
- FAR 52.225-26 compliance gaps in contractor-supplied foreign national labor arrangements
- Proposed expansion of sectoral sanctions to defense-adjacent technology supply chains
- Russia/Belarus prohibitions: active enforcement against indirect procurement pathways
Recent material activity in Defense & Government Contracting
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UK Ministry of Defence awards up to £400 million drone contract to Tekever, replacing Watchkeeper with AR5 systems by 2029
The UK Ministry of Defence has selected Tekever's AR5 surveillance drone to replace the Watchkeeper system under a contract worth up to £400 million over ten years. An initial order of six AR5 units will scale to up to 2…
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ASPI analysis flags absence of federal regulatory framework governing data collection by Chinese-manufactured drones in Australian airspace
Australia has no binding domestic regulation governing data collected by Chinese-manufactured drones operating on Australian soil. The Australian Strategic Policy Institute identified this gap in analysis published on Ju…
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State Department imposes ITAR statutory debarment on persons convicted of Arms Export Control Act violations
The Department of State's Bureau of Political-Military Affairs published a notice on July 24, 2026 imposing statutory debarment under the International Traffic in Arms Regulations on persons convicted of violating, or co…
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ASPI strategic commentary frames Australian sovereign defence-industrial and autonomous-systems capability as a near-term procurement and policy priority
The Australian Strategic Policy Institute published commentary on July 24, 2026 drawing on Defence Minister Richard Marles's remarks at the May 2026 Shangri-La Dialogue. The piece identifies subsea cable security, autono…
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UK Ministry of Defence publishes FCAS Digital Strategy setting nine strategic ends for next-generation combat air digital architecture
The UK Ministry of Defence published the Future Combat Air System Digital Strategy on July 23, 2026. The document establishes nine strategic ends governing digital engineering, data architecture, interoperability, and th…
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NATO North Atlantic Council approves 2027–2031 Common Funding Resource Plan and Fuel Supply Chain Plan
On July 22, 2026, the North Atlantic Council approved NATO's 2027–2031 Common Funding Resource Plan, setting Alliance investment priorities for the next five years. The Council also approved a Fuel Supply Chain Plan, com…
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ASPI strategic analysis calls for northern Australia data centre dispersal on national security grounds
The Australian Strategic Policy Institute published analysis on July 23, 2026 arguing that AI data centre infrastructure constitutes a critical national security asset and should be geographically dispersed. The analysis…
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Australia publicly commits strategic support and funding to the Philippines amid South China Sea tensions
Australian Foreign Minister Penny Wong issued a public statement on July 22, 2026 affirming Australia's strategic, financial, and capability support for the Philippines amid sustained Chinese maritime pressure. The state…
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MOD awards £20 million contract to Lockheed Martin UK for hypersonic target development under Project Bowline
The Ministry of Defence awarded a £20 million contract to Lockheed Martin UK on July 22, 2026 to deliver Project Bowline, a hypersonic target programme supporting missile defence testing. The contract marks the MOD's ret…
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UK Ministry of Defence awards BAE Systems a £708 million contract extension for Future Combat Air System technology development
The UK Ministry of Defence has extended its contract with BAE Systems and Team Tempest partners by £708 million to accelerate Future Combat Air System technology development. Announced on 22 July 2026 at Farnborough Inte…
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