Waivers for Banned Equipment

Although the purchase of Chinese produced telecommunications equipment is banned, the government is likely to see it in its supply chain for years to come. Since Section 889 law went into effect, contractors have requested waivers to keep their equipment in place and the Office of the Director of National Intelligence has issued them. Many waivers that expired last week (30 September) have been extended for an additional two years. (Federal News Network, October 2, 2020)

One such agency requesting an extension, the U.S. Agency for International Development, requested a waiver from 889 and has been given until the end of fiscal year 2022 to remove Chinese telecom equipment. The waiver states the following, “As of September 30, 2022, the Agency statutory waiver authority ends and the Agency will not enter into any contracts with contractors using covered technology. For contractors that wish to continue to do business with USAID, it is important to phase out the use of covered technology. Recipients should ensure they have alternate funding because costs for covered technology will become unallowable. In regard to assistance (grants/cooperative agreements), the Agency will be revising its policy to extend the period of the allowability of costs for internet and telephone services for new awards made during the duration of the waiver.” (USAID Telcom Waiver, September 30, 2020)

Would you like to know more about the upcoming contracts to trade out Chinese equipment? Give us a call.

What Brand is Your Telcom and Video?

Section 889 of the FY 2019 National Defense Authorization Act was passed to fight national security and intellectual property threats to the United States.  The legislation includes two prohibitions Part A and Part B. (GSA Section 889 Industry Focused Flyer, GSA.gov, July 16, 2020)

Part A, which became effective on August 13, 2019 bans telecommunications/video surveillance equipment made by the following companies:

  • Huawei Technologies Company
  • ZTE Corporation
  • Hytera Communications Corporation
  • Hangzhou Hikvision Digital Technology Company
  • Dahua Technology Company

Part A can be found in the Federal Acquisition Regulation (FAR) at FAR subpart 2.1.

Part B, effective 13 August 2020, prohibits the government from contracting with any organization that uses equipment or services of any of the companies listed under Part A. Part B applies, whether or not that usage is in performance of work under a Federal contract. In other words, if you use any of the banned companies in the fulfillment of a  non-government contract, you will be prohibited from working with the government. All contractors must verify whether they do or do not use prohibited telecommunications/video surveillance equipment or services. Part B has been added to the Federal Acquisition Regulation (FAR) at FAR subpart 4.21. (ibid)

GSA recommends companies to complete an in-depth review of all in-house technology to rule out using banned companies in Part A . If prohibited equipment or services are being used, companies that wish to continue doing business with the government must eliminate them. GSA does not take responsibility for changes contractors make, unless done so by a modification to a current contract.

However, two possible waiver procedures with extremely high standards are available. This is to ensure waivers are not used to get “around” the prohibitions.

GSA is modifying all solicitations, Indefinite Delivery Vehicles (IDVs), GWACs, and other IDIQ contracts, to include Section 889 Part B requirements immediately. These requirements will be added to GSA’s existing non-IDV contracts as those contracts have their periods of performance extended.

GSA is hosting the following events so that industry may obtain additional guidance:

  1. The GSA Office of Small Business Utilization webinar on Section 889, July 30, 2020, 2:00 p.m. EST, registration may be found here.
  2. GSA recorded virtual webinar August 12, 2020, at 1:00 p.m. EST, registration forthcoming. This webinar will include leaders from GSA’s business lines explaining how they are implementing Section 889 into their business lines and panelists will answer pre-collected questions. (Questions may be sent to gsaombudsman@gsa.gov to arrive by COB August 5, 2020.) (ibid)

GSA recommends that vendors study the tools and publications to aid their understanding and compliance, as provided in Acquisition.gov.

Not certain if your contract is affected by Section 889 Part B and if so, what you can do? Give us a call.

Time to Uncover Some Chinese Equipment

Recently, GSA sent a letter to contractors explaining the new FAR interim rule regarding supply chain security, which went into effect last month. The rule prohibits federal agencies from procuring, obtaining, extending, or renewing a contract to procure or obtain “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.” (Acquisition.gov)

Covered equipment encompasses telecommunications and video surveillance products and services by Hauwei Technologies Company, ZTE Corporation, Hytera Communications Corporation, Hikvision Digital Technology Company, or Hahua Technology Company, or any company that the head of a relevant federal agency reasonably believes is controlled by the government of the Peoples Republic of China.

The interim rule:

  • Prohibits contractors from providing covered telecommunications services/equipment unless an exception or waiver is granted
  • Mandates every offeror represent whether it will provide covered telecommunications equipment/services as part of its offer, and if that is the case, the offeror must provide details about the covered equipment or services
  • Requires contractors to report any covered equipment/services throughout the life of the contract. (ibid)

At the same time, the FAR interim rule went into effect, GSA issued a class deviation. This essentially takes a risk-based approach to the new FAR interim rule by limiting the representation requirement for GSA funded orders to the indefinite-delivery contract level. The deviation necessitates the following:

  • At all times requires an order-level representation for acquisition vehicles that carry a “high risk” of including covered telecommunications equipment or services.
  • Must have an order-level representation for all orders that could include information technology or communications technology under all GSA acquisitions.
  • The creation of a GSA Acquisition Regulation (GSAR) representation clause, requiring the GSAR and FAR reporting clauses in all new and ongoing GSA contracts.
  • Initiates GSA specific implementation targets for modification of existing contracts.
  • Simplifies the application of Section 889 of the NDAA to other GSA program areas. (ibid)

The interim rule affects ALL contractors. As a contractor, you are responsible for determining whether covered telecommunications equipment/services will be provided under both new and existing contracts and orders.

Below is some fundamental information to help you prepare as GSA puts into place the interim rule and class deviation:

  • FAS contracting activity will issue a mod requiring you to respond to incorporate FAR clause 52.204-25 and GSAR clause 552.204-70.
  • Your mod response must delineate if you will or will not provide covered telecommunications equipment/services in the performance of any contract, subcontract, order, or any other contractual instrument.
  • The substance of FAR clause 52.204-25 must be inserted into all subcontracts.
  • You must report any covered telecommunication equipment or services you discover during the course of contract performance.
  • For new GSA solicitations, you are required to represent at the contract level if you will or won’t provide covered telecommunications equipment/services to the Government in the performance of a contract or subcontract.
  • Contract level solicitations will include FAR provision 52.204-24, clause 52.204-25and GSAR clause 552.204-70.
  • In responses to solicitations and orders under indefinite-delivery contracts, representation of FAR 52.204-24 is required when there is a high risk of inclusion of covered telecommunications equipment/services. (ibid)

Wondering how all this might affect your current contract or upcoming bid? Give us a call.