Never Contract With the Enemy Act

Never Contract With the Enemy Act - (Sec. 2) Directs the Secretary of Defense, in conjunction with the Director of National Intelligence and in consultation with the Secretary of State, to establish in each covered combatant command (i.e., the U.S. Africa Command, Central Command, European Command, Pacific Command, and Southern Command) a program to identify persons and entities within the area of responsibility of such command that: (1) provide funds, including goods and services, received under a contract, grant, or cooperative agreement of an executive agency to a person or entity that is actively opposing U.S. or coalition forces involved in a contingency operation in which members of the Armed Forces are actively engaged in hostilities (covered person or entity); or (2) fail to exercise due diligence to ensure that none of such funds are provided to a covered person or entity. Requires written notification of the identification of a covered person or entity to the head of an executive agency or the commander of a covered command, who shall then notify the heads of contracting activities or other appropriate officials.

Requires the revision of applicable procurement regulations to: (1) authorize the head of contracting activity of an executive agency, upon receiving notice of a covered person or entity, to restrict, terminate, or void the award of contracts, grants, or cooperative agreements that would provide funds to such covered person or entity; (2) require the inclusion of a clause in each covered contract, grant, or cooperative agreement requiring the recipient of funds to exercise due diligence to ensure that funds are not provided to a covered person or entity; and (3) require written notification to a contractor or recipient of a grant or cooperative agreement of an action to restrict, terminate, or void a grant, contract, or cooperative agreement and permit such contractor or recipient to challenge such action by requesting an administrative review. Defines "covered contract, grant, or cooperative agreement" as a contract, grant, or cooperative agreement with an estimated value in excess of $50,000 that is performed outside the United States.

Requires the Secretary of Defense to review annually the lists of previously identified covered persons and entities to determine whether such persons or entities warrant further identification as such.

Requires the Director of the Office of Management and Budget (OMB), not later than March 1 of 2016, 2017, and 2018, to submit to specified congressional committees a report on the use of authority under this Act to identify covered persons or entities.

Provides that nothing in this Act shall apply to the authorized intelligence or law enforcement activities of the U.S. government.

Terminates the provisions of this section on December 31, 2019.

(Sec. 3) Requires the revision of applicable procurement regulations to allow for inclusion of a clause in each covered contract, grant, and cooperative agreement authorizing an executive agency head to examine any records of the recipient upon a written determination that funds under the contract, grant, or cooperative agreement have been provided to a covered person or entity.

Requires the OMB Director, not later than March 1 of 2016, 2017, and 2018, to submit a report on the use of such authority to examine records in the preceding calendar year.