--- title: "Supplier Risk Alert: The DoW Updates Its Chinese Military Companies List" description: The Dept of War updates its Chinese Military Companies List, adding 65 firms and triggering strict upcoming procurement bans for defense contractors. --- [Skip to content](https://newsletter.lesliefairclothconsulting.com/blog/dow-updates-chinese-companies-list#main-content) ![leslie-faircloth_logo-vertical-lightbackground-s](https://newsletter.lesliefairclothconsulting.com/hs-fs/hubfs/leslie-faircloth_logo-vertical-lightbackground-s-1.png?width=720&height=540&name=leslie-faircloth_logo-vertical-lightbackground-s-1.png)Homepage - [Home](https://lesliefairclothconsulting.com/) - [About](https://lesliefairclothconsulting.com/#about) - [Services](https://lesliefairclothconsulting.com/#services) - [Blog](https://lesliefairclothconsulting.com/index.php/category/the-defense-navigator/) - [Home](https://lesliefairclothconsulting.com/) - [About](https://lesliefairclothconsulting.com/#about) - [Services](https://lesliefairclothconsulting.com/#services) - [Blog](https://lesliefairclothconsulting.com/index.php/category/the-defense-navigator/) The Defense Acquisition Newsletter DoW # Supplier Risk Alert: The DoW Updates Its Chinese Military Companies List ![Leslie Faircloth](https://newsletter.lesliefairclothconsulting.com/hs-fs/hubfs/Leslie%20Faircloth%20Headshot%202025.jpg?width=48&height=48&name=Leslie%20Faircloth%20Headshot%202025.jpg) Leslie Faircloth August 31, 2026 ![2](https://newsletter.lesliefairclothconsulting.com/hs-fs/hubfs/2.jpg?width=768&height=403&name=2.jpg) ### **THE EXPANDING DRAGNET: WHAT NEW 1260H DESIGNATIONS MEAN FOR DEFENSE GOVCON** This summer, the U.S. Department of War (DOW) issued a major update to its Chinese Military Companies list, widely known as the **Section 1260H List**. This update added **65 entities**—comprising 17 parent companies and 48 subsidiaries—while removing 10 companies. This latest expansion comes at a critical juncture, landing just before major procurement bans take effect and signaling an aggressive enforcement posture toward "military-civil fusion" contributors in China’s defense industrial base. For small business government contractors, this is not merely a list of foreign corporations; it represents an immediate and expanding compliance minefield that reaches deep into your supply chains, hardware procurement, software tools, and even your professional services relationships. --- ### **THE TITANS TARGETED: KEY ADDITIONS AND REMOVALS** This update is notable for the sheer size and commercial ubiquity of the newly designated firms. The DOW targeted several key industrial and technological sectors: - **Technology & AI Giants**: **Alibaba Group Holding Limited** (Alibaba) and **Baidu, Inc.** (Baidu). The DOW indicated that both were designated due to indirect affiliations with China's State-owned Assets Supervision and Administration Commission (SASAC) and military-civil fusion contributions via projects with the Ministry of Industry and Information Technology (MIIT). - **Biotechnology**: **WuXi AppTec Co. Ltd.** (WuXi AppTec) and **Novogene Co. Ltd.**. WuXi AppTec was flagged for its indirect SASAC ownership and affiliations with both the State Administration for Science, Technology and Industry for National Defense (SASTIND) and the People's Liberation Army (PLA). - **EV, Batteries & Solar**: **BYD Company Limited** (BYD), **CALB Group**, **EVE Energy**, **NIO Inc.**, **JA Solar Technology**, and **Trina Solar**. - **Drones & Robotics**: **Autel Intelligent Technology**, **Unitree Robotics** (Hangzhou Yushu), and **Robosense Technology**. Conversely, the DOW **removed 10 companies** from the list, including entities associated with major conglomerates **CNOOC** (China National Offshore Oil Corp.) and **COSCO Shipping**, as well as tech players like **Taiji Computer Co.** and **GLARUN Technology**. --- ### **THE FIVE COMPLIANCE PILLARS: ASSESSING YOUR EXPOSURE** If your small business has any nexus to DOW contracting, you must immediately evaluate your exposure across five overlapping statutory restrictions tied directly to the Section 1260H List: #### **1. The Section 805 DOW Procurement Ban (FY 2024 NDAA)** - **Phase 1 (Effective June 30, 2026)**: The DOW is prohibited from entering into, renewing, or extending a contract for the procurement of goods, services, or technology directly with any entity on the Section 1260H List (or any entity they control). This applies to prime contracts and direct subcontracts. - **Phase 2 (Effective June 30, 2027)**: The restriction expands exponentially to cover the procurement of goods or services *that include* goods or services produced or developed by any 1260H entity. This reaches deep into your multi-tier supply chain. Supplying non-compliant items after these dates risks catastrophic liability under the **False Claims Act (FCA)**. #### **2. The DOW AI Ban (Section 1532, FY 2026 NDAA)** Effective **January 17, 2026**, contractors are prohibited from using artificial intelligence (AI) products developed by 1260H entities during the performance of any DOW contract without a formal waiver. The addition of **Alibaba** and **Baidu**—both major AI developers— increases the compliance burden. If your team leverages commercial AI tools or APIs connected to these developers, you must audit your systems immediately. #### **3. The BIOSECURE Act Procurement Ban (Section 851, FY 2026 NDAA)** Under this provision, all U.S. executive agencies will soon be barred from procuring or awarding grants related to biotech products or services from "biotechnology companies of concern," which includes 1260H entities. **WuXi AppTec's** addition is a massive disruptor for life sciences and pharma contractors who routinely partner with them; compliance must be established before the expected June 2027 implementation. #### **4. Specialized Hardware & IT Bans (Sections 849 & 850, FY 2026 NDAA)** - **3D Printers**: Effective **December 18, 2026**, the DOW cannot procure additive manufacturing machines (3D printers) produced by 1260H entities. - **Computers & Printers**: The DOW is phasing out the procurement of computers and printers produced by 1260H entities and their subsidiaries, graduating from a 90% allowance in Year 1 down to **zero percent by 2029**. #### **5. The Section 851 Lobbyist Ban (FY 2025 NDAA)** Implemented via **Class Deviation 2026-O0025** (and the new contract clause **DFARS 252.240-7995**), this rule prohibits the DOW from contracting with any company that retains or contracts with a lobbying firm that represents a 1260H entity. It applies broadly to parents, subsidiaries, and affiliates of both the contractor and the lobbying firm. --- ### **STRATEGIC ACTION PLAN FOR YOUR BUSINESS** 1. **Conduct a Multi-Tier Supply Chain Audit**: Do not stop at your Tier 1 suppliers. Work backward through Tier 2 and Tier 3 vendors to map any hardware, software, or components manufactured or developed by Section 1260H entities (such as BYD batteries, JA Solar panels, or Alibaba-linked software). You have until June 2027 to source compliant alternatives. 2. **Screen Your Professional Services**: Review your lobbying firms, government relations consultants, and public affairs advisors. Incorporate strict representations and certifications into your engagement agreements with these firms to ensure they (and their affiliates) do not represent any entity on the 1260H List, preventing inadvertent disqualification from DOW contract awards. 3. **Update Flow-Down Clauses & Questionnaires**: Immediately revise your subcontractor questionnaires and procurement agreements. Embed mandatory flow-down clauses requiring lower-tier subcontractors to certify they are not providing goods, services, or technology produced by Section 1260H List entities. 4. **Enforce Restricted Party Screening**: Ensure your internal compliance leads integrate the updated 1260H List into your routine restricted party screening processes. Establish a regular cadence for monitoring DOW list updates to maintain compliance. 5. **Address Export Administration Regulations (EAR) Risks**: Remember that while the 1260H designation is not an automatic designation as a "military end user" (MEU) under the EAR, it serves as an immediate **red flag**. If you transfer items subject to the EAR to these entities (including specifications for custom-made parts), you must perform rigorous due diligence to ensure compliance. --- ***Credits & Further Reading****: This supplier risk alert incorporates detailed legal and policy analysis from* ***Tim Kobes, Tahlia Townsend, Matt Rosenbaum, Charles E. Borden, Samuel Brown, Anne M. Delmare, John McAdams, Molly B. O'Casey, Tanner N. Slaughter, and Ben R. Smith*** *(Government Contracts and International Trade Groups at Holland & Knight LLP).* - - - *Read the full legal alert at Holland & Knight:*[Department of War Updates Section 1260H Chinese Military Companies List](https://www.hklaw.com/en/insights/publications/2026/07/department-of-war-updates-section-1260h) - *Track the official docket and updates:*[DOW Section 1260H Chinese Military Companies List](https://media.defense.gov/2026/Jun/08/2003945537/-1/-1/1/ENTITIES-IDENTIFIED-AS-CHINESE-MILITARY-COMPANIES-OPERATING-IN-THE-UNITED-STATES-IN-ACCORDANCE-WITH-SECTION-1260H.PDF) ## Share this post [mailto:https%3A%2F%2Fnewsletter.lesliefairclothconsulting.com%2Fblog%2Fdow-updates-chinese-companies-list](mailto:https%3A%2F%2Fnewsletter.lesliefairclothconsulting.com%2Fblog%2Fdow-updates-chinese-companies-list) ## Keep reading ### [The Defense Acquisition Newsletter Prime Contracting Can a Federal Prime Contractor Terminate Its Subcontractor for Convenience?](https://newsletter.lesliefairclothconsulting.com/blog/subcontractor-convenience-terminations) ### [The Defense Acquisition Newsletter Army Social media Army Offices Exit Social Media: The New Communication Barrier](https://newsletter.lesliefairclothconsulting.com/blog/army-social-media-exit) [![leslie-faircloth_logo-horizontal-white-s-1](https://newsletter.lesliefairclothconsulting.com/hs-fs/hubfs/leslie-faircloth_logo-horizontal-white-s-1.png?width=1512&height=360&name=leslie-faircloth_logo-horizontal-white-s-1.png "leslie-faircloth_logo-horizontal-white-s-1")](https://newsletter.lesliefairclothconsulting.com/) --- Privacy Policy · Legal · © 2026. 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