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UDC Paper · October 2026

Navigating Section 805: The 1260H Chinese Military Companies Procurement Prohibition and Waiver Path

The Section 805 entity prohibition has been in DOW solicitations and contracts since 30 June 2026, and a goods-and-services prohibition follows on 30 June 2027. Read too broadly, it looks like a ban on all Chinese content; read too narrowly, it misses control relationships, the USML screen and the drone rules, and a firm with unresolved exposure faces serious sales risk for that offering.

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11 pages · PDF · Current to Class Deviation 2026-O0025, Revision 3, as of October 7, 2026

Cover of the UDC paper Navigating Section 805: The 1260H Chinese Military Companies Procurement Prohibition and Waiver Path

A moving list, two phases and three neighboring screens

Section 805 turns a Section 1260H listing into a procurement prohibition in two steps one year apart. The list now reaches prominent technology, battery, sensor and unmanned-systems firms, it changes at every update, and designations are being litigated. The FY2026 NDAA broadens the designation criteria from 18 December 2026 and adds a bar on grants, loans and loan guarantees from 30 June 2027.

The rule sits beside regimes that look similar and are not: the class deviation's broader USML restriction, the covered-lobbyist rule at 10 U.S.C. 4663, Section 889 and the component-level drone statutes. In UDC's experience, re-sourcing and re-qualifying defense electronics can take many months, and for qualified items often longer than a year, so a firm that starts at the 2027 date is already late.

What the paper answers

  • What does each phase of Section 805 prohibit, and whom does it reach?
  • How does the components exception at 41 U.S.C. 105 limit the 2027 prohibition?
  • What does Class Deviation 2026-O0025, Revision 3, implement, and what does it leave reserved?
  • How does the separate USML restriction differ from the Section 805 screen?
  • Why does the components exception not protect a DJI-componented drone?
  • What goes into a complete waiver request, and how long can a waiver last?

A look inside

One of two tables in the paper. It keeps the related covered-lobbyist rule visibly separate from Section 805.

PhaseEffectiveWhat it prohibitsWho it reaches
Entity prohibition30 Jun 2026DOW may not enter into, renew, or extend a contract to procure goods, services, or technology with a 1260H-listed entity or an entity subject to its control (subject to the earlier-contract and other statutory exceptions)Listed entities and entities controlled by listed entities
Goods/services prohibition30 Jun 2027DOW may not contract for goods or services that include goods or services produced or developed by a 1260H-listed or controlled entity (subject to the components, earlier-contract, and other statutory exceptions)Offerors whose covered goods/services were produced or developed by listed/controlled entities; final scope to be set by the DFARS rule
Related but SEPARATE: covered-lobbyist rule (FY2025 NDAA Sec. 851, 10 U.S.C. 4663, not Sec. 805)30 Jun 2026DOW may not contract with a company, parent, or subsidiary that retains a covered lobbyist (one lobbying for a 1260H entity); a reasonable-inquiry safe harbor appliesContractors retaining covered lobbyists; screen separately from Section 805

Table 1 from the paper. Section 805 phased prohibition (and a related, separate screen).

What's inside

  • Legal scope guardrails setting out what is prohibited, the statutory limits and the relief, with pinpoint citations.
  • The component versus end-item decision point, and how to document each determination.
  • The layered drone authorities affecting DJI: Section 848, Section 805, the American Security Drone Act and the FCC Covered List.
  • A seven-step 1260H screening workflow and seven recommendations.
  • Safe proposal language to use in place of an unsupported compliance claim.

The waiver package

The paper lists what the Industrial Base Policy office requires in a complete request:

  • The waiver request form
  • A cover letter
  • A Compelling Justification Narrative and Market Analysis
  • A Detailed Entity Phase-Out Plan
  • Optional supplemental documentation such as charts, technical specifications and supplier data

Who it's for

  • Firms that build or integrate defense hardware with Chinese-sourced content.
  • Suppliers in unmanned systems, batteries, electro-optical sensors, telecommunications modules and microelectronics.
  • Contracts and compliance staff completing the class deviation's representation.
  • Proposal writers who need supply-chain language that will stand up to scrutiny.

About the author

Chris A. Grable is founder and CEO of Up Doppler Consulting LLC, a Veteran-Owned Small Business in Leonardtown, Maryland. A Navy veteran with more than 45 years in DOW operations and acquisition, he retired from federal service as Senior Experiment Designer at the Naval Air Warfare Center Aircraft Division. UDC helps technology companies find, shape and win DOW work.

Public sources

These public references support the paper. Some repositories require navigation or an account to reach the specific document.

  1. National Defense Authorization Act for Fiscal Year 2024, Pub. L. 118-31, Section 805
  2. 41 U.S.C. 105, Component (definition)
  3. Federal Register notice of June 10, 2026, 91 FR 35189, Section 1260H list of Chinese military companies (June 2026 update)
  4. DFARS Class Deviation 2026-O0025, Revision 3, Revolutionary FAR Overhaul Part 40, DFARS Part 240, deviation memorandum
  5. Defense Acquisition Regulations System, Open DFARS Cases report, as of October 2, 2026 (DFARS Case 2024-D012)
  6. Office of the Assistant Secretary of War for Industrial Base Policy, NDAA Section 805 waiver request page
  7. National Defense Authorization Act for Fiscal Year 2020, Pub. L. 116-92, Section 848, as amended by Pub. L. 117-263, Section 817 (statutory note to 10 U.S.C. chapter 385)
  8. National Defense Authorization Act for Fiscal Year 2026, Pub. L. 119-60, Sections 1262 and 845

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Questions

Is Section 805 a ban on all Chinese parts?
No. It reaches only listed companies and the entities they control, it excludes components as defined at 41 U.S.C. 105, and it does not apply to contracts entered into before each prohibition date. Origin-based rules on chips, boards and magnets are covered in the companion paper, The 2027 China Supply-Chain Cliff.
Is the DJI ban the same thing as Section 805?
No. DJI is on the 1260H list, so Section 805 applies to it, but Section 848 of the FY2020 NDAA governs DOW drones at the component level with no components exception.
Is this legal advice?
No. Determinations should be confirmed against the statute, the class deviation, the final DFARS clause when issued, and counsel on the specific facts.
I already subscribe to Closing Rate. Do I need to buy it?
No. Paid Closing Rate subscribers get the full PDF with the Closing Rate article.
Can I talk to someone about a specific opportunity?
Yes. Contact Up Doppler Consulting.