Federal Ban on Chinese Telecom Equipment Takes Effect

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Contracting officers will have new disclosure provisions to include in contracts issued after Aug. 13.

The interim rule that bans federal agencies from purchasing or obtaining telecommunications and video surveillance services, systems or products from five Chinese companies—including Huawei—officially went into effect Tuesday. 

The publication was published in the Federal Register website by the Federal Acquisition Regulatory Council, comprised of officials from the Defense Department, the General Services Administration and NASA. The ban implements the provisions of the 2019 National Defense Administration Act, which restricts federal funds from being used to do business with Chinese telecom firms and also prohibits government contractors and grant recipients from working directly with Chinese companies, or any other entities that institute their tech. 

The restrictions follow concerns raised by intelligence and security officials who warn China could tap the tech to spy on the United States.

“This interim rule is being implemented as a national security measure to protect government information, and government information and communication technology systems,” officials said in the Federal Register’s post. 

The prohibition imposes new requirements for federal contracting officers, including that they must include new FAR provisions and clauses in any solicitations published after Aug. 13 and the resulting contracts, as well as any solicitations issued before that Aug.13 if an award for the contract will come after that date. The provision requires offerors to state whether their offer includes “covered” telecommunications equipment or services. 

If so, they must supply “substantial details” about the basis of its use. 

The document defines covered telecommunications equipment or services as: 

  1. Telecommunications equipment produced by Huawei Technologies Company or ZTE Corporation, (or any subsidiary or affiliate of such entities);
  2. For the purpose of public safety, security of Government facilities, physical security surveillance of critical infrastructure, and other national security purposes, video surveillance and telecommunications equipment produced by Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company, or Dahua Technology Company (or any subsidiary or affiliate of such entities);
  3. Telecommunications or video surveillance services provided by such entities or using such equipment; or
  4. Telecommunications or video surveillance equipment or services produced or provided by an entity that the Secretary of Defense, in consultation with the Director of National Intelligence or the Director of the Federal Bureau of Investigation, reasonably believes to be an entity owned or controlled by, or otherwise connected to, the government of a covered foreign country.

And if contractors discover the use of covered equipment in the course of contract performance, the rule imposes one-day and 10-day reporting requirements by which they must notify the government.

Further, the agencies note that the new FAR additions—FAR 52.204-24 "Representation Regarding Certain Telecommunications and Video Surveillance Services or Equipment," and FAR 52.204-25 "Prohibition on Contracting for Certain Telecommunications and Video Surveillance Services or Equipment"—which will be included in various capacities depending on the timing of the solicitation, will apply to both contracts at or below the simplified acquisition threshold and commercially available off-the-shelf items. 

The FAR Council notes that though the law doesn’t specifically address acquisitions of commercial items, the government faces an “unacceptable level of risk” when buying that equipment.

“As a result, agencies may face increased exposure for violating the law and unknowingly acquiring covered telecommunication equipment or services absent coverage of these types of acquisitions by this rule,” the document said. 

Companies impacted by the new rule can file public comments to weigh in for 60 days following its release. 

The separate, sweeping provision of the NDAA—which bars agencies from entering into contracts with companies that implement covered telecommunications services as a critical technology or substantial component of their systems—will be issued separately by Aug. 13, 2020.