Reed Smith Client Alerts

The General Services Administration (GSA) has issued its first consolidated schedule solicitation and will be issuing mass modifications to all multiple award schedule (MAS) contractors that prohibits the sale of certain telecommunications and video surveillance services and equipment in its implementation of a congressional mandate to address national security concerns associated with the integration of Peoples Republic of China (PRC) telecommunications and video surveillance technology in the U.S. supply chain. The modification will add provisions that target covered telecommunications services and equipment produced by Huawei Technologies Company and ZTE Corporation; certain video surveillance and telecommunications equipment and services produced by Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company, or Dahua Technology Company; services generally provided by, or that use equipment from, these corporations; and telecommunications and surveillance equipment or services made by corporations that are owned, controlled by, or otherwise connected to PRC. This client alert is intended to help our clients familiarize themselves with these regulations as well as provide considerations for action related to the planned changes.

Authors: William T. Kirkwood Liza V. Craig Holly A. Roth

Background

The John S. McCain Fiscal Year 2019 National Defense Authorization Act (NDAA) (H.R. 5515) (the 2019 NDAA) was signed into law on August 13, 2018. Although the 2019 NDAA, section 889 (Prohibition on Certain Telecommunications and Video Surveillance Services or Equipment) set forth a number of prohibitions, this alert is focused specifically on section 889 (a)(1)(A), which prohibits federal agencies from procuring, obtaining, extending, or renewing a contract to procure or obtain equipment, systems, or services that use covered telecommunications equipment or services as substantial or essential components of any system, or as critical technology as part of any system. The 2019 NDAA defined covered telecommunications equipment or services to include those produced by Huawei Technologies Company, ZTE Corporation, or any affiliates or subsidiaries of these companies. The 2019 NDAA further included - for purposes of public safety, security of government facilities, physical security surveillance of critical infrastructure, and other national security purposes – video surveillance and telecommunications equipment produced by Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company, or Dahua Technology Company (or any subsidiary or affiliate of such entities) as covered telecommunications equipment or services. Finally, the 2019 NDAA's definition of covered telecommunications equipment or services broadly prohibits the U.S. Government's acquisition of any products or services from corporations owned or controlled by the PRC. The 2019 NDAA required the prohibition to take effect exactly one year after enactment.