On August 13, a federal prohibition on the use of certain telecommunications components took effect. The new (IFR), often referred to as 鈥淪ection 889 Part B,鈥 prohibits federal agencies from entering into, extending, or renewing a contract with a contractor that uses any equipment, system, or service that utilizes certain Chinese companies鈥 telecommunications equipment or services as a component or critical technology of any system, unless an exception applies or a waiver is granted. The Department of Defense issued a memo on this measure, explaining that federal contractors should expect change orders or other required affirmations of a contractor鈥檚 compliance with this prohibition. On July 1 and July 15, 乌鸦传媒, along with a coalition of stakeholders, called on Congress to extend the date of implementation and to make key changes to the rule.
In brief, Section 889 Part B prohibits contractors from using certain telecommunications equipment 鈥 mainly from Chinese companies 鈥 such as Huawei or ZTE. The language in the IFR is sweepingly broad and will be difficult for federal prime contractors to know if they, subcontractors on the project, and suppliers are in full compliance. The IFR states that the prohibited 鈥渦se鈥 of the covered technology applies 鈥渞egardless of whether the usage is in performance of work under a federal contract.鈥 The IFR is certain to expand the scope of this prohibition to apply to affiliates, parents, and subsidiaries of the prime contractors. 乌鸦传媒 has communicated the difficulty many contractors have had implementing these new requirements and the challenges that the rule brings.
For more information, contact jordan.howard@agc.org or (703) 837-5368.