By: Lindsay Simmons
Section 889 of the National Defense Authorization Act (NDAA) for FY 2019 contains two prohibitions related to Federal contracting:
First, as set forth in section 889(a)(1)(A) (Part A), effective August 13, 2019, the US Government (USG) is prohibited from procuring or obtaining, or extending or renewing a contract to procure or obtain, any equipment, system or service that uses telecommunication equipment or services produced by Huawei, ZTE, Hytera, Hikvision, and Dahua and their subsidiaries as a substantial or essential component of any system, or as critical technology as part of any system, on or after August 13, 2019, unless an exception applies or a waiver has been granted.
Second, as set forth in section 889(a)(1)(B) (Part B), effective August 13, 2020, the US Government is prohibited from contracting with any entity that uses any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system.
Part A focuses on the products and services sold to the USG (directly or indirectly through a prime contractor), and flows down to subcontractors, whereas Part B focuses on an entity’s use of the covered products or services – whether or not such use is in connection with its performance of a USG contract – and currently does not flow down to subcontractors.
Part A prohibits the USG from purchasing products incorporating and services using the five name Chinese companies. Part B prohibits the USG from contracting with an entity that uses products or services that incorporate or use such covered technology, without regard to whether the covered products or services are used in the context of a federal contract.
Part A requires entities providing products or services to the USG:
To represent, prospectively, whether or not they will provide covered equipment or services as part of their offering and, if so, to furnish additional detail about the covered equipment or services; and
To report (within one business day) any covered equipment or services discovered during the course of contract performance.
Part B requires offerors, after conducting a reasonable inquiry, to represent whether or not they use covered telecommunications equipment or services. The language of Part B is extremely broad and results in what many have termed “onerous” and “confusing” internal compliance requirements without the benefit of any clear guidance from the USG.
Section 889 applies across the board to offerors and contractors and all contracts, task orders and delivery orders, including orders against basic ordering agreements and blanket purchase agreements and to the acquisition of commercial items, including COTS items, and to purchases at or below the simplified acquisition threshold.
Part B is currently implemented through an interim rule. Watch for changes in the final rule and any further guidance the FAR Council provides on these very challenging requirements.
Lindsay Simmons is responsible for the contents of this article @jacksonkelly.com