A GSA MAS Contract or Channel Partner, Which Path is Right for You? Section 889(a)(1)(A) went into effect on Aug. 13, 2019. The agencies must prioritize available funding and technical support to assist affected business, institutions and organizations . Specifically, Section 889 creates a general prohibition on telecommunications or video surveillance equipment or services produced or provided by the following companies (and associated subsidiaries or affiliates): It also prohibits equipment or services used specifically for national security purposes, such as public safety or security of government facilities, provided by the following companies (and associated subsidiaries or affiliates): Notably, the definition under the NDAA and the initial interim rule includes any subsidiary or affiliate of the five Chinese entities named, without naming the entities subsidiaries or affiliates, leaving the companies to identify who are subsidiaries or affiliated of the above identified entities. The definition of substantial or essential, explained above, is quite broad and annoyingly circular, making it almost impossible to determine whether something is substantial or essential. 42665 and 85 F.R. Sign up for our newsletter to receive updates about latest news in government contracting and GSA Schedule Contracts. What Does the Internet Of Things (IoT) Cybersecurity Improvement Act Mean For Government Contractors? Companies are not prohibited from providing: Regarding exceptions, the FAR provides the following definitions: The Director of National Intelligence (DNI) is the only person that can issue a true waiver, which must be based on national security interests. The second interim rule took effect immediately on Dec. 13, 2019, but comments were due by Feb. 11, 2020. At this point, it is unclear whether the use prohibition requirement will include any flow down requirements, but most of the commenters believe such requirement will still be included. As the leading government contracts consultant, FEDSched provides an unrivaled level of expertise and guidance businesses can trust to navigate the intricacies of the GSA Schedule Contract and stand out in the federal market space. This clause does, Hangzhou Hikvision Digital Technology Company. It applies to all kinds of federal contracts, from healthcare to information technology, from aerospace to automotive, from semiconductor to defense industry, and could implicate almost all companies that has any contractual relationship with the U.S. federal government, including global subsidiaries and service providers far away from the companys supply chain. The Uniform Guidance cost principles make it clear that the costs of procuring or obtaining covered telecommunications equipment or services are not allowable (2 C.F.R. There is no requirement that covered equipment connect to the internet. 2325 Dulles Corner Boulevard, Suite 410 Does your company use any GPS tracking devices? The U.S. Department of Defense (DoD), the U.S. General Services Administration (GSA) and the U.S. National Aeronautics and Space Administration (NASA) jointly hosted a public meeting to obtain views from experts and interested parties regarding implementation of Section 889 on July 19, 2019. While compliance with such a far-reaching rule may seem costly, and it will be, not complying with the rule will be even more so. 68314). The two clauses to be added to all MAS contracts are: MAS contractors will have 60 days from the date the modification is issued to accept the modification by incorporating the above clauses into their Schedule contracts and providing the representation required by GSAR 552.204-70. Although this leaves some ambiguity, a key feature is whether the equipment can transmit user data or be hacked to access user data. While the government may be inclined to give contractors, payers, and providers an adjustment period before opening intrusive audits and investigations, plaintiffs lawyers will not be so generous. If you havent already done so, you should accept the Refresh 4 mass mod as soon as possible. It contains no nexus requirement which would limit its application to uses in connection with a contract or subcontract. We make no warranties of any kind regarding the accuracy or completeness of any information on this blog, and we make no representations regarding whether such information is reliable, up-to-date, or applicable to any particular situation. Following that meeting, the Federal Acquisition Regulation (FAR) Council released an interim rule, Prohibition on Contracting for Certain Telecommunications and Video Surveillance Services or Equipment, on Aug. 13, 2019, implementing these restrictions in accordance with Section 889(a)(1)(A) of the NDAA. Law Firms: Be Strategic In Your COVID-19 Guidance [GUIDANCE] On COVID-19 and Business Continuity Plans. In addition, two U.S. senators, Marco Rubio (R-FL) and Ben Cardin (D-MD), have called on the OMB to ensure that federal regulation banning the governments use of Chinese telecommunications technology include explicit processes to help small businesses with compliance, and Sen. Rubio further urged the federal government to give small businesses more time to comply with a regulation restricting the use of certain Chinese telecommunication equipment. The clause is required to be included in all contracts and solicitations and must be flowed down and incorporated into all subcontracts and other contractual instruments, including subcontracts for the acquisition of commercial items. So even if a company does not directly contract with the government, they may be subject to the prohibitions if they have a contractual instrument with a prime contractor or subcontractor that does hold a government contract. Much of this analysis is based on interim rulemakings at 85 F.R. FAR 52.204-26. Unless we establish an attorney-client relationship with you with regard to the particular matter, we will not treat any information that you may send to us, or submit as a comment to a blog article or entry, as confidential or privileged, and any unsolicited communications may be disclosed to other persons without regard to confidentiality considerations. Contractors (and subcontractors at any tier) that use telecommunications or video surveillance equipment or services obtained from Huawei, ZTE, Hytera, Hangzhou Hikvision, Dahua or another company connected with the Chinese government may be subject to Section 889. It means any component necessary for the proper function or performance of a piece of equipment, system, or service. In other words, if the product or system will not work without the telecommunications equipment or service provided by a prohibited entity, then it may fall within the Section 889 prohibitions. Hangzhou Hikvision Digital Technology Company; or. Use prohibition requirement under Section 889(a)(1)(B) of the NDAA and FAR 52.204-25 (Prohibition on Contracting for Certain Telecommunications and Video Surveillance Services or Equipment) (part B). Yes. If you hold a GSA Contract, your company received a mass modification last month for Refresh 4 of the Multiple Award Schedule (MAS) Solicitation. Section 889 of the FY 2019 National Defense Authorization Act (NDAA) includes two prohibitions detailed in Part A and Part B. But the deviation leaves in place the contract-level representation. Take the time to review and understand the rules and actions associated with Section 889. There is no separate definition or list for what type of equipment or service falls within the telecommunications category. . As noted earlier, the representation is NOT limited to situations where the technology is substantial or essential, and instead captures all products or services incorporating covered products or services. Once this happens, companies can represent within SAM and those that do not use covered telecom will only need to re-represent annually. Porter Wright Morris & Arthur LLP offers this blog for general informational purposes only. The content of this blog is not intended as legal advice for any purpose, and you should not consider it as such advice or as a legal opinion on any matters. Section 889(a)(1)(B) is statutorily required to be implemented by Aug. 13, 2020. There is also a disclosure requirement if you do not provide or use covered telecommunications equipment or services at the time you submit an offer, but you later discover otherwise. Naples | Pittsburgh | Washington, D.C. However, if a contractor is granted an agency waiver for Part A or Part B, it will allow the contractor to delay adhering to: Complying with Section 889 Part B will be no small feat and will be a particularly difficult undertaking for large businesses. Several trade associations gave feedback, and raised five major concerns: Unfortunately, DoD did not indicate when an interim rule might be issued. While the head of an executive agency may grant a one-time waiver on a case-by-case basis, these types of waivers are really just delayed implementations. The second interim rule also sets forth procedures at FAR 4.2103 for contracting officers to follow. The reasonable inquiry requirement ensures that contractors do some investigation to verify whether they use covered telecommunications. It permits covered telecommunications equipment that are unable to route or redirect user data traffic or permit visibility into any user data or packets it might handle, meaning a contractor may still be able to provide services to the government so long as any covered equipment provided is unable to interact or access the data it handles. Huawei: mobile phones, laptops, tablets, routers, and switches, ZTE Corporation: mobile phones, mobile hotspots, and network equipment, including routers and switches, Hytera Communications Corporation: radio transceivers and radio systems, Dahua Technology Company and Hangzhou Hikvision Digital Technology: video surveillance products and services (which may be part of a companys security system). . The portion of the initial interim rule memorialized in FAR 52.204-24 that required a new certification in every offer was apparently found to be unduly burdensome. Companies are further encouraged to reach out to their representatives or industries to seek an extension if they might be impacted by the implementing of part B, particularly given the disruptive impact of COVID-19. It primarily requires reviewing documentation and having discussions with the vendors in your supply chain to identify which companies provide telecommunications equipment and services: Reasonable inquiry means an inquiry designed to uncover any information in the entitys possessionprimarily documentation or other recordsabout the identity of the producer or provider of covered telecommunications equipment or services used by the entity. Part A requirements took effect on Aug. 13, 2019, and Part B will take effect on Aug. 13, 2020. Questions to think about as part of a reasonable inquiry include: You likely will need to disclose it. This liability can reach even those providers and subcontractors not directly covered by Section 889 if, by using the prohibited technology themselves, they cause prime contractors to submit false claims for payment to the government. Which company provides video surveillance services at your locations? Section 889 applies broadly to prime contractors, subcontractors, and other contractual arrangements connected with a government contract. The last two elements of the definition are much broader. On Jan. 22, 2020, the U.S. Office of Management and Budget (OMB) issued a proposed rule to its grants and agreements regulations at Title 2, Part 200 of the Code of Federal Regulations, Subtitle A-OMB Guidance for Grants and Agreements, to implement Section 889 of the National Defense Authorization Act for 2019. Home > Section 889 > What you need to know about Section 889 compliance as we move closer to the August 2020 implementation deadline. The reasonable inquiry definition is below. Who made those? In the 2019 NDAA, Congress determined that there are increased privacy, security, and espionage risks from using telecommunications equipment and services provided by certain companies (i.e., companies that are connected to, owned by, or controlled by the Chinese government). The prohibitions were implemented in two phases: Section 889(a)(1)(A) prohibits agencies from purchasing covered telecommunications equipment, system, or service. The first representation (i.e., the product prohibition) asks whether the offeror provides covered telecommunications as part of its offered products in connection with a Federal contract. Section 889(b) extends to grants and provides that grant funding may not be used to procure or obtain covered telecommunications equipment or services. Technically, while the regulation applies only if the covered equipment or services amount to substantial or essential part, such limitation is not particularly helpful in practice. Reports are to be made within one business day from the date of discovery. To embed, copy and paste the code into your website or blog: Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra: [HOT] Read Latest COVID-19 Guidance, All Aspects [SCHEDULE] Upcoming COVID-19 Webinars & Online Programs, [GUIDANCE] COVID-19 and Force Majeure Considerations, [GUIDANCE] COVID-19 and Employer Liability Issues. Also consider whether any telecommunications technology from approved vendors may nevertheless contain Huawei or other banned components (e.g., camera system containing a Hytera circuit board). All Rights Reserved. Defense articles or defense services included on the United States Munitions List set forth in the International Traffic in Arms Regulations under subchapter M of chapter I of title 22, Code of Federal Regulations; Items included on the Commerce Control List set forth in Supplement No. The use prohibition went into effect on August 13, 2020 and is much broader. A major portion of the sweeping John S. McCain National Defense Authorization Act for Fiscal Year 2019 (NDAA) that impacts federal contracts will take effect in August 2020. This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. Instead, the second interim rule aims to reduce the burden on the contracting community by allowing an offeror to represent annually through the System for Award Management (SAM), via SAM.gov, whether it provides covered telecommunications equipment or services. The second interim rule permits an offeror to represent annually, via SAM.gov, whether it provides covered telecommunications equipment or services as part of its offered products or services to the government in the performance of any contract, subcontract, or other contractual instrument, instead of respond to every offer. Section 889 further includes a continuing reporting requirement in the event the contractor discovers use of covered equipment or services during performance. Clickhere to read more about how we use cookies. The same is true if you just use covered telecommunications equipment or services at the time you submit an offer to the Government. If you find your company uses prohibited equipment or services, evaluate the cost of removing these items/discontinuing services and pursuing a waiver while you implement a phase-out plan. Telecommunications or video surveillance equipment or services produced or provided by an entity that the Secretary of Defense . It is possible that the interim rule on part B will include more guidance, but the government did not leave companies much time to build its compliance program.

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