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A new interim rule (Interim Rule) implementing Congress’s ban on five Chinese telecommunications and surveillance equipment companies becomes effective on August 13, 2020. That rule prohibits federal agencies from issuing new contracts or extending or renewing existing contracts to contractors that use identified telecommunications or video surveillance equipment and services from five Chinese suppliers, including Huawei Technologies, ZTE, Hytera Communications, Hangzhou Hikvision Digital Technology, and Dahau Technology (covered telecommunications equipment and services).
For the past year, federal contractors have been subject to rules implementing the ban, but those rules—which implemented only one part of the Congressional ban—focused exclusively on the sale of banned products and services to the federal government. Now that the Interim Rule includes mere use by a federal contractor of the banned products and services (regardless of whether that use is for a government contract), many more contractors will feel the full impact of the ban. To continue doing business with the federal government, contractors will need to implement measures to identify banned items and services, conduct reviews of internal systems that might include covered telecommunications equipment and services, and ensure prohibited technologies are not otherwise supporting operations. Because the Interim Rule applies to all FAR prime contracts, including those below the simplified acquisition threshold and for the acquisition of commercial off-the-shelf (COTs) items, its impact will be substantial.
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