What the Section 1260H List Is — and Isn’t
Section 1260H of the FY2021 NDAA requires the Secretary of Defense to identify and publish, at least annually through December 31, 2030, a list of “Chinese military companies” operating directly or indirectly in the U.S.
A company qualifies for the list under one of two conditions. The first is structural: it is beneficially owned by, controlled by, or acting as an agent of the People's Liberation Army (PLA) or another organization subordinate to the Central Military Commission of the Chinese Communist Party (CCP). The second is functional: it is a "military-civil fusion contributor" that receives assistance, operational direction, or policy guidance from the Chinese government or CCP in support of the Chinese defense industrial base.
The Section 1260H list itself is not a sanctions list. Designation under 1260H does not, on its own, block a company’s assets or restrict U.S. persons from transacting with it. But these designations now trigger real contracting consequences, and the list is now just the starting point for compliance.
From Reputational List to Procurement Ban
Section 805 of the FY2024 NDAA (Pub. L. 118–31) converted the Section 1260H list into an enforceable contracting ban. Effective June 30, 2026, DoD may not enter into, renew, or extend a contract with (A) any entity identified on the Section 1260H list, or (B) “any entity subject to the control of an entity described in subparagraph (A).” The control clause means the prohibition reaches subsidiaries and controlled entities that may never appear on the list by name — a critical distinction for any contractor relying on name-only screening.
Section 805 defines “control” by reference to 31 C.F.R. § 800.208 — the Committee on Foreign Investment in the United States (CFIUS) control standard. That definition covers the power to determine, direct, or decide important matters affecting an entity through majority or “dominant minority” voting interest, board representation, proxy voting, a special share, contractual arrangements, or arrangements to act in concert — regardless of whether that power is actually exercised. For contractors, this means control could exist well below a 50% ownership line.
The FY2025 NDAA (Pub. L. 118–159, § 4663) added a related ban on lobbying: DoD may not contract with an entity that is itself party to a contract with a “covered lobbyist” — defined as anyone who lobbies on behalf of a Section 1260H-listed company.
A second compliance deadline follows on June 30, 2027, when DoD will also be barred from procuring goods or services produced or developed by a Section 1260H-listed company or a controlled entity, including when purchased indirectly through a third-party supplier. Contractors and subcontractors have a limited window to trace multi-tier supply chains before that deadline arrives.
The List’s Continued Expansion
DoD released its most recent update to the Section 1260H list on June 8, 2026, identifying 188 entities — up from 134 in the January 2025 update. The June 2026 update added dozens of companies, including robotics maker Unitree and networking equipment manufacturer TP-Link, and removed a number of previously listed entities, among them subsidiaries of COSCO and China Electronics Corporation. The full, current list is available from DoD and is also published in the Federal Register.
Companies on the Section 1260H list are not limited to just the aerospace and defense sector. The June 2026 update added companies with prominent global brands across e-commerce, electric vehicles, solar manufacturing, and biotechnology.
Specifically for the biotech industry, a company’s addition to the Section 1260H list carries potential future consequences beyond DoD's contracting ban. Under the BIOSECURE Act (Section 851 of the FY2026 NDAA), the Office of Management and Budget (OMB) must publish an initial list of "biotechnology companies of concern" by December 18, 2026. Once in effect, the Act will bar federal agencies from contracting with — or extending federal funds to — any company that uses biotechnology equipment or services from a listed entity. A Section 1260H designation is one path onto that list — yet not the only one, and not automatic even for listed biotech companies. OMB will only include a 1260H-listed entity as a biotechnology company of concern if it is also involved, to any extent, in manufacturing, distributing, providing, or procuring biotechnology equipment or services. Regardless, companies with biotech exposure should treat a 1260H listing as a strong signal of BIOSECURE Act risk.
Navigate Section 1260H with Kharon
Kharon provides the data organizations need to identify exposure to Section 1260H-listed companies and their controlled entities that carry the same restrictions, even when those entities don’t appear on the published list. Generated through AI-enabled research workflows with expert human validation, Kharon’s data helps defense contractors and their vendors build defensible, auditable Section 1260H compliance programs.
Listed companies and their controlled entities: Kharon’s NDAA Section 1260H dataset, available via GraphCast or an API integration, includes the restricted Chinese military companies with enhanced identifiers together with entities that may be owned 50% or more, or may be otherwise controlled, by them — capturing thousands of subsidiaries that are not named. Other ownership thresholds are also available upon request.
The reasoning behind the risk, not just the label: Kharon's research surfaces the military-civil fusion signals that underlie DoD's own 1260H determinations. That means compliance teams can see why a company carries military-related exposure, not just whether DoD has named it.
Proactive rather than reactive compliance: Kharon's coverage extends well past the entities that DoD has named so far — thousands of additional entities tied to China's defense industrial base carry the same types of connections that drive 1260H designations, helping compliance teams flag likely risk before an entity is ever added to the list. Users of ClearView can review this full breadth of relationships beyond ownership and control, including company leadership, key trade partners, government licenses and tenders, and other commercial ties.
Ongoing monitoring: Kharon’s Section 1260H data is updated as DoD revises the list and as ownership and control structures shift, so compliance teams can track new designations and changes as they happen.
Expand Screening to Meet Evolving Section 1260H Requirements
Impact on Supply Chains
Subcontractors, resellers, and vendors several tiers removed from a DoD contractor can fall within the scope of Section 1260H restrictions through ownership or control, even when they are never named on the published list.
Proactive Compliance
The June 2027 indirect-procurement ban gives contractors a limited window to map their supply chains now, rather than discover a Section 1260H connection after a contract is already at risk.
Unlock the Full Picture with Kharon
Kharon offers premier solutions for building and maintaining credible, defensible controls to address Section 1260H, keeping defense contractors and their supply chains compliant.
Stay Ahead of Section 1260H
Safeguard your organization’s defense contracts and federal procurement eligibility with Kharon’s risk intelligence. Request a Demo.
Frequently Asked Questions
What is the Section 1260H list?
It’s the DoD’s list of companies identified as “Chinese military companies” under Section 1260H of the FY2021 NDAA — a designation that has grown from a disclosure requirement into an enforceable contracting ban.
Is the Section 1260H list a sanctions list?
No. Designation on the Section 1260H list does not block a company’s assets or restrict U.S. persons from transacting with it the way an OFAC sanctions listing does. But it does bar DoD from entering into new contracts with the company — or with any entity it controls.
What changes on June 30, 2027?
The procurement ban widens to cover goods and services sourced indirectly from a listed or controlled company anywhere in the supply chain, not just direct contracts with the listed entity itself.
