Prohibition on software source code contracts with entities with certain relationships with China

(a) In general The Secretary of Defense may not enter into, renew, or extend a contract for the provision of software source code with a person described in subsection (b). (b) Person described A person described in this subsection is a person that— (1) owns, operates, substantially funds, or has a material interest in a facility located in covered country, if such facility has a primary purpose (as determined by the Secretary) of researching or developing artificial intelligence; (2) has allowed a covered country to access to the software, or the source code relating to such software, that is the subject of the contract, where such access could allow the covered country to reverse engineer such software source code; or (3) operates a data center (as such term is defined in section 453 of the Energy Independence and Security Act of 2007 (42 U.S.C. 17112)) in a covered country with respect to such software source code, including a data center operated— (A) by a parent, subsidiary, or affiliate of an entity seeking to enter into, renew, or extend a contract with the Secretary; or (B) on behalf of such an entity by a covered country. (c) Waiver authority The Secretary may waive the prohibition under this section if the Secretary determines such a waiver is in the national security interests of the United States. (d) Applicability This section shall apply only with respect to contracts entered into, renewed, or extended within three years after the date of the enactment of such section. (e) Definitions In this Act: (1) The term covered country has the meaning given the term covered foreign entity in section 812 of the National Defense AuthorizationAct for Fiscal Year 2024 (Public Law 118–31; 10 U.S.C. 4501 note prec.). (2) The term material interest means a financial or other interest that the Secretary determines is significant enough to influence a decision or action of an individual.