U.S. Tells Contractors to “Determine Through Reasonable Inquiry” If They Use Chinese Telecom Equipment

The U.S. government has crafted an amusing new guide to help federal agencies and contractors comply with the ban on Chinese telecommunications and surveillance equipment. The rule was issued last year to combat national security and intellectual property threats against the United States and details were published in August 2019 in the Federal Register. Officials from the Department of Defense (DOD), General Services Administration (GSA) and the National Aeronautics and Space Administration (NASA) helped design the measure, which covers a portion of the 2019 National Defense Administration Act that restricts the use of federal funds to do business with Chinese telecommunications firms and forbids government contractors and recipients of government grants from working with Chinese companies or those that utilize their technology.

This month, the GSA, the huge syndicate that helps manage federal agencies, released a colorful two-page guide to assist them in navigating the new rule. With around 12,000 employees, the GSA provides centralized procurement for the federal government and manages billions of dollars in products, services and facilities. The bloated agency has an extensive history of mismanagement and waste, though it touts itself as an innovation engine that helps the government cut costs. In 2010 the GSA was embroiled in a big scandal for hosting a lavish Las Vegas event for employees featuring luxury accommodations for staff and their loved ones, fine cuisine, wild parties and expensive gifts. Dozens of agency workers were awarded cash bonuses for arranging the outlandish Sin City celebration and a senior GSA executive got criminally charged for submitting fraudulent reimbursement claims and making false statements in connection with the costly shindig. In 2013 Judicial Watch uncovered more GSA extravagance by obtaining several embarrassing videos showing senior GSA officials and staff participating in costumed playacting and parodies.

That background is relevant in introducing the GSA’s colorful—and seemingly pointless—pamphlet on the Chinese telecom ban, which includes advice for government contractors and other information associated with implementing the new measure. The flyer is titled “Section 889” after the portion of the 2019 Defense Authorization bill that covers the ban on equipment from Chinese firms. It specifically names Huawei, ZTE, Hytera, Hikvision, and Dahua and their subsidiaries as banned companies and mandates that contractors immediately report any covered equipment or services “if discovered during the course of contract performance.” Various agencies, including the DOD, NASA and the GSA have hosted meetings to help federal agencies and government contractors navigate the implementation of the Chinese telecom ban, which officially takes effect in August for businesses hired by the feds.

The GSA brochure encourages government contractors to read and understand the rules and “determine through reasonable inquiry” whether they use the “covered telecommunications equipment or services.” Contractors are also directed to educate their purchasing and materials management professionals to assure they are familiar with the compliance plan and alert the government if use of banned Chinese equipment is discovered during contract performance. Those that replace prohibited Chinese telecom equipment or services must “ensure” the new equipment is “compliant,” the GSA writes, stating the obvious; do not exchange banned Chinese materials with banned Chinese materials. Firms doing business with the government are also encouraged to develop a phase-out plan with the complete laydown of equipment and services banned under the new law.

A section that explains why the changes are important reveals that U.S. foreign adversaries are using increasingly sophisticated methods such as supply chain and cyber operations to gain access to critical infrastructure and steal sensitive information. Additionally, the GSA flyer says, the increasing reliance on foreign owned or controlled telecommunications equipment creates vulnerabilities in U.S. supply chains. “China is increasingly asserting itself by stealing U.S. technology and intellectual property to erode U.S. economic and military superiority,” the GSA pamphlet states. A section on waivers says every federal agency must designate a senior official for Supply Chain Risk Management and every waiver must include a compelling justification for additional time needed, full laydown of banned equipment and phase-out plan.