The interim rule from the General Services Administration, the Department of Defense and NASA was published on August 7, 2019 and becomes effective today, August 13, 2019. As a requirement of NDAA 2019, the rule prohibits federal agencies from purchasing telecommunications and video surveillance equipment, along with any “substantial or essential component of any system, or as critical technology as part of any system” from several Chinese tech firms or their affiliates. These firms are:
- Huawei Technologies Co., Ltd.
- ZTE Company
- Hytera Communications Corporation
- Hangzhou Hikvision Digital Technology Company
- Dahua Technology Company
- Any subsidiary or affiliate of such entities 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.
Readers may remember some of these firms, as they were highlighted in a previous blog “Ever Heard of China’s National Intelligence Law? Perhaps Indirectly” as being likely subjects for additional restrictions.
This ruling will reach down to the level of commercial and commercial-off-the-shelf (“COTS”) items. The regulation language will apply to all new contracts and procurements as well as existing indefinite delivery contracts, as well as options picked up for existing contracts.
Also worth noting, in the proposed NDAA 2020, there is an even more comprehensive provision which bans an executive agency from “entering into a contract with an entity that uses any equipment, system or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system.” If this provision remains within NDAA 2020, the implementing regulations must be issued prior to August 13, 2020.
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Jim McShane is a Sr. Consultant, Trade Compliance for Export Solutions -- a full-service consulting firm specializing in ITAR and EAR regulations.