Federal Acquisition Regulation: Prohibition on Contracting for Certain Telecommunications and Video Surveillance Services or Equipment, 40216-40223 [2019-17201]

Agencies

• DEPARTMENT OF DEFENSE
• General Services Administration
• National Aeronautics and Space Administration

[Federal Register Volume 84, Number 156 (Tuesday, August 13, 2019)]
[Rules and Regulations]
[Pages 40216-40223]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-17201]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1, 4, 12, 13, 39, and 52

[FAC 2019-05; FAR Case 2018-017; Docket No. 2018-0017, Sequence No. 1]
RIN 9000-AN83


Federal Acquisition Regulation: Prohibition on Contracting for 
Certain Telecommunications and Video Surveillance Services or Equipment

AGENCY: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Interim rule.

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[[Page 40217]]

SUMMARY: DoD, GSA, and NASA are issuing an interim rule amending the 
Federal Acquisition Regulation (FAR) to implement section 889(a)(1)(A) 
of the John S. McCain National Defense Authorization Act (NDAA) for 
Fiscal Year (FY) 2019 (Pub. L. 115-232).

DATES: Effective Date: August 13, 2019.
    Applicability:
    Contracting officers shall include the provision at FAR 52.204-24, 
Representation Regarding Certain Telecommunications and Video 
Surveillance Services or Equipment and clause at FAR 52.204-25, 
Prohibition on Contracting for Certain Telecommunications and Video 
Surveillance Services or Equipment as prescribed--
     In solicitations issued on or after August 13, 2019, and 
resultant contracts; and
     In solicitations issued before August 13, 2019, provided 
award of the resulting contract(s) occurs on or after August 13, 2019.
    Contracting officers shall modify, in accordance with FAR 1.108(d), 
existing indefinite delivery contracts to include the FAR clause for 
future orders, prior to placing any future orders.
    If modifying an existing contract or task or delivery order to 
extend the period of performance, including exercising an option, 
contracting officers shall include the clause in accordance with 
1.108(d).
    The contracting officer shall include the provision at 52.204-24, 
Representation Regarding Certain Telecommunications and Video 
Surveillance Services or Equipment, in all solicitations for an order, 
or notices of intent to place an order, including those issued before 
August 13, 2019, where performance will occur on or after that date, 
under an existing indefinite delivery contract.
    Comment date: Interested parties should submit written comments to 
the Regulatory Secretariat Division at one of the addresses shown below 
on or before October 15, 2019 to be considered in the formation of the 
final rule.

ADDRESSES: Submit comments in response to FAR Case 2018-017 by any of 
the following methods:
     Regulations.gov: https://www.regulations.gov. Submit 
comments via the Federal eRulemaking portal by searching for ``FAR Case 
2018-017''. Select the link ``Comment Now'' that corresponds with ``FAR 
Case 2018-017''. Follow the instructions provided on the screen. Please 
include your name, company name (if any), and ``FAR Case 2018-017'' on 
your attached document.
     Mail: General Services Administration, Regulatory 
Secretariat Division (MVCB), 1800 F Street NW, 2nd Floor, Washington, 
DC 20405.
    Instructions: Please submit comments only and cite ``FAR Case 2018-
017'' in all correspondence related to this case. All comments received 
will be posted without change to https://;www.regulations.gov, including 
any personal and/or business confidential information provided.

FOR FURTHER INFORMATION CONTACT: [email protected] or call 202-969-
4075. Please cite FAR Case 2018-017.

SUPPLEMENTARY INFORMATION: 

I. Background

    This interim rule revises the FAR to implement section 889(a)(1)(A) 
of the NDAA for FY 2019 (Pub. L. 115-232). Section 889(a)(1)(A) 
prohibits agencies from procuring or obtaining, or extending or 
renewing a contract to procure or obtain, any equipment, system, or 
service that uses covered telecommunications equipment or services as a 
substantial or essential component of any system, or as a critical 
technology as part of any system, on or after August 13, 2019.
    ``Covered telecommunications equipment or services,'' as defined in 
the statute, means--
     Telecommunications equipment produced by Huawei 
Technologies Company or ZTE Corporation (or any subsidiary or affiliate 
of such entities);
     For the purpose 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);
     Telecommunications or video surveillance services provided 
by such entities or using such equipment; or
     Telecommunications or video surveillance equipment or 
services produced or provided by an entity that the Secretary of 
Defense, in consultation with the Director of National Intelligence or 
the Director of the Federal Bureau of Investigation, reasonably 
believes to be an entity owned or controlled by, or otherwise connected 
to, the government of a covered foreign country.
    The rule adopts the definition of critical technologies included in 
the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) 
(Section 1703 of Title XVII of the NDAA for FY 2019, Pub. L. 115-232, 
50 U.S.C. 4565(a)(6)(A)).
    ``Covered foreign country,'' as defined in section 889, means the 
People's Republic of China.
    Under certain circumstances, section 889 allows the head of an 
executive agency to grant a one-time waiver on a case-by-case basis for 
up to a two-year period; in other circumstances, waivers issued by the 
Director of National Intelligence are authorized.
    This rule requires submission of a representation with each offer 
that will require offerors to identify as part of their offer any 
covered telecommunications equipment or services that will be provided 
to the Government. DoD, GSA, and NASA recognize that some agencies may 
need to tailor the approach to the information collected based on the 
unique mission and supply chain risks for their agency.
    In order to reduce the information collection burden imposed on the 
public, DoD, GSA, and NASA are currently working on updates to the 
System for Award Management to allow offerors to represent annually 
whether they sell equipment, systems, or services that include covered 
telecommunications equipment or services. Only offerors that provide an 
affirmative response to the annual representation would be required to 
provide the offer-by-offer representation in their offers for contracts 
and for task or delivery orders under indefinite delivery contracts.
    The prohibition in section 889(a)(1)(B) is not effective until 
August 13, 2020, and will be implemented through separate rulemaking.

II. Discussion and Analysis

    This rule amends FAR part 4, adding a new subpart 4.21, Prohibition 
on Contracting for Certain Telecommunications and Video Surveillance 
Services or Equipment, with a corresponding new provision at 52.204-24, 
Representation Regarding Certain Telecommunications and Video 
Surveillance Services or Equipment, and contract clause at 52.204-25, 
Prohibition on Contracting for Certain Telecommunications and Video 
Surveillance Services or Equipment. The rule adds text in subpart 12.3, 
Acquisition of Commercial Items, and subpart 13.2, Actions at or Below 
the Micro-Purchase Threshold, to address section 889(a)(1)(A) with 
regard to commercial item representations and micro-purchases.
    The definition of ``critical technologies'' provided in FIRRMA has 
been adopted to address the prohibition in section 889(a)(1)(A) on 
providing

[[Page 40218]]

covered telecommunications equipment or services as ``critical 
technology as part of any system.'' As with section 889, FIRRMA is 
aimed at ensuring that the United States is protected from certain 
risks regarding foreign actors. In effectuating these protections, 
defining terms in a consistent manner, to facilitate consistent 
application, is crucial. While there are elements of this definition 
that may not raise concerns regarding covered telecommunications 
equipment or services (for example, the inclusions of select agents or 
toxins), the majority of identified categories in the FIRRMA definition 
of ``critical technologies'' include or could potentially include 
covered telecommunications equipment or services. Since the prohibition 
does not apply if no covered telecommunications equipment or services 
are present, a definition that includes categories that may be unlikely 
to include telecommunications equipment or services is overbroad in a 
way that incurs no additional cost, and ensures the benefits of 
consistency with other Government efforts.
    To implement section 889(a)(1)(A), the clause at 52.204-25 
prohibits contractors from providing any equipment, system, or service 
that uses covered telecommunications equipment or services as a 
substantial or essential component of any system, or as critical 
technology as part of any system, unless an exception or a waiver 
applies. The contractor must also report any such equipment, systems, 
or services discovered during contract performance; this requirement 
flows down to subcontractors.
    The provision at 52.204-24 is required in all solicitations, and 
includes a representation that will require offerors to identify as 
part of their offer any covered telecommunications equipment or 
services that will be provided to the Government. The additional 
information provided through this representation will assist the 
Government in appropriately assessing the presence of any covered 
telecommunications equipment or services that may be present in an 
offer, for example, to determine if the items in question will be used 
as a substantial or essential component, or to determine if a waiver 
request may be appropriate.
    This rule also adds cross-references in FAR parts 39, Acquisition 
of Information Technology, and 13, Simplified Acquisition Procedures, 
to the coverage of the section 889 prohibition at FAR subpart 4.21. In 
addition, the rule adds OMB Control Number 9000-0199 to the list at FAR 
1.106 of OMB approval under the Paperwork Reduction Act.

III. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold and for Commercial Items, Including Commercially Available 
Off-the-Shelf Items

    This rule adds a new provision at 52.204-24, Representation 
Regarding Certain Telecommunications and Video Surveillance Services or 
Equipment, and a new contract clause at 52.204-25, Prohibition on 
Contracting for Certain Telecommunications and Video Surveillance 
Services or Equipment, in order to implement section 889(a)(1)(A) of 
the NDAA for FY 2019, which prohibits the purchase of any equipment, 
system, or service that uses covered telecommunications equipment or 
services as a substantial or essential component of any system, or as 
critical technology as part of any system on or after August 13, 2019, 
unless an exception applies or a waiver has been granted.

A. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold

    41 U.S.C. 1905 governs the applicability of laws to acquisitions at 
or below the simplified acquisition threshold (SAT). Section 1905 
generally limits the applicability of new laws when agencies are making 
acquisitions at or below the SAT, but provides that such acquisitions 
will not be exempt from a provision of law under certain circumstances, 
including when the FAR Council makes a written determination and 
finding that it would not be in the best interest of the Federal 
Government to exempt contracts and subcontracts in amounts not greater 
than the SAT from the provision of law.

B. Applicability to Contracts for the Acquisition of Commercial Items, 
Including Commercially Available Off-the-Shelf Items

    41 U.S.C. 1906 governs the applicability of laws to contracts for 
the acquisition of commercial items, and is intended to limit the 
applicability of laws to contracts for the acquisition of commercial 
items. Section 1906 provides that if the FAR Council makes a written 
determination that it is not in the best interest of the Federal 
Government to exempt commercial item contracts, the provision of law 
will apply to contracts for the acquisition of commercial items.
    Finally, 41 U.S.C. 1907 states that acquisitions of commercially 
available off-the-shelf (COTS) items will be exempt from a provision of 
law unless certain circumstances apply, including if the Administrator 
for Federal Procurement Policy makes a written determination and 
finding that would not be in the best interest of the Federal 
Government to exempt contracts for the procurement of COTS items from 
the provision of law.

C. Determinations

    The FAR Council has determined that it is in the best interest of 
the Government to apply the rule to contracts at or below the SAT and 
for the acquisition of commercial items. The Administrator for Federal 
Procurement Policy has determined that it is in the best interest of 
the Government to apply this rule to contracts for the acquisition of 
COTS items.
    While the law does not specifically address acquisitions of 
commercial items, including COTS items, there is an unacceptable level 
of risk for the Government in buying equipment, systems, or services 
that use covered telecommunications equipment or services as a 
substantial or essential component of any system, or as critical 
technology as part of any system. This level of risk is not alleviated 
by the fact that the equipment or service being acquired has been sold 
or offered for sale to the general public, either in the same form or a 
modified form as sold to the Government (i.e., that it is a commercial 
item or COTS item), nor by the small size of the purchase (i.e., at or 
below the SAT). As a result, agencies may face increased exposure for 
violating the law and unknowingly acquiring covered telecommunication 
equipment or services absent coverage of these types of acquisitions by 
this rule.

IV. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This rule has been designated a ``significant regulatory action'' under 
E.O. 12866. Accordingly, the Office of Management and Budget (OMB) has 
reviewed this rule. This rule is not a major rule under 5 U.S.C. 804.

[[Page 40219]]

V. Executive Order 13771

    This rule is not subject to the requirements of E.O. 13771, because 
the rule is issued with respect to a national security function of the 
United States. As highlighted by sections III, VII, and VIII of this 
preamble, national security is a primary direct benefit of this rule. 
Also, though this rule is subject to the regulatory publication 
requirements of 41 U.S.C. 1707, application of the national security 
exemption under E.O. 13771 requires assessing the application of the 
``good cause'' exception under 5 U.S.C. 553. This rule meets the ``good 
cause'' exception as the one-year deadline Congress established to 
implement section 889(a)(1)(A) would not provide sufficient time for 
notice and comment in light of the complex nature of the rule and 
sensitive interagency process.

VI. Regulatory Flexibility Act

    DoD, GSA, and NASA expect that this rule may have a significant 
economic impact on a substantial number of small entities within the 
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. An 
Initial Regulatory Flexibility Analysis (IRFA) has been performed, and 
is summarized as follows:

    The reason for this interim rule is to implement section 
889(a)(1)(A) of the John S. McCain National Defense Authorization 
Act (NDAA) for Fiscal Year (FY) 2019 (Pub. L. 115-232).
    The objective of the rule is to prescribe appropriate policies 
and procedures to enable agencies to determine and ensure that they 
are not procuring or obtaining any equipment, system, or service 
that uses covered telecommunications equipment or services as a 
substantial or essential component of any system, or as critical 
technology as part of any system on or after August 13, 2019. The 
legal basis for the rule is section 889(a)(1)(A) of the NDAA for FY 
2019, which prohibits Government procurement of such equipment, 
systems, and services on or after that date, unless an exception 
applies or a waiver has been granted.
    This collection includes a burden for reporting during contract 
performance and a representation. A data set was generated from the 
Federal Procurement Data System (FPDS) for fiscal years (FY) 2016, 
2017, and 2018 for use in estimating the number of small entities 
affected by this rule.
    The representation requirement in FAR provision 52.204-24 and 
the reporting requirement in the clause at FAR 52.204-25 will be 
incorporated in all solicitations and contracts, including contracts 
with small entities. The FPDS data indicates that the Government 
awarded contracts to an average of 95,223 unique entities, of which 
69,865 (73 percent) were small entities. DoD, GSA, and NASA estimate 
that representations will be received from twice this number of 
entities, or 139,730 small entities. While representations will be 
submitted by all offerors, detailed additional information is only 
estimated to be required from approximately 10 percent of offerors, 
or 13,973 small entities. It is estimated that reports will be 
submitted by 5 percent of contractors, or 3,493 small entities.
    The provision at FAR 52.204-24 requires each offeror to 
represent whether it will provide covered telecommunications 
equipment or services. If the offeror responds affirmatively, the 
offeror is required to further disclose substantial detail regarding 
the basis for the affirmative representation. Representations will 
be submitted by all offerors, or 139,730 small entities; it is 
estimated that detailed representations following an affirmative 
response will be submitted by 10 percent of contractors, or 13,973 
small entities.
    The clause at FAR 52.204-25 requires contractors and 
subcontractors to report to the contracting officer, or for DoD 
through https://dibnet.dod.mil, any discovery of covered 
telecommunications equipment or services during the course of 
contract performance.
    The rule does not duplicate, overlap, or conflict with any other 
Federal rules.
    Because of the nature of the prohibition enacted by section 
889(a)(1)(A), it is not possible to establish different compliance 
or reporting requirements or timetables that take into account the 
resources available to small entities or to exempt small entities 
from coverage of the rule, or any part thereof. However, in order to 
reduce the information collection burden imposed on the public, DoD, 
GSA, and NASA are currently working on updates to the System for 
Award Management to allow offerors to represent annually whether 
they sell equipment, systems, or services that include covered 
telecommunications equipment or services. Only offerors that provide 
an affirmative response to the annual representation would be 
required to provide the offer-by-offer representation in their 
offers for contracts and for task or delivery orders under 
indefinite delivery contracts. DoD, GSA, and NASA were unable to 
identify any alternatives that would reduce the burden on small 
entities and still meet the objectives of section 889.

    The Regulatory Secretariat Division has submitted a copy of the 
IRFA to the Chief Counsel for Advocacy of the Small Business 
Administration. A copy of the IRFA may be obtained from the Regulatory 
Secretariat Division. DoD, GSA, and NASA invite comments from small 
business concerns and other interested parties on the expected impact 
of this rule on small entities.
    DoD, GSA, and NASA will also consider comments from small entities 
concerning the existing regulations in subparts affected by the rule in 
accordance with 5 U.S.C. 610. Interested parties must submit such 
comments separately and should cite 5 U.S.C. 610 (FAR Case 2018-017) in 
correspondence.

VII. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA) 
provides that an agency generally cannot conduct or sponsor a 
collection of information, and no person is required to respond to nor 
be subject to a penalty for failure to comply with a collection of 
information, unless that collection has obtained OMB approval and 
displays a currently valid OMB Control Number.
    DoD, GSA, and NASA requested, and OMB authorized, emergency 
processing of the collection of information involved in this rule, 
consistent with 5 CFR 1320.13. DoD, GSA, and NASA have determined the 
following conditions have been met:
    a. The collection of information is needed prior to the expiration 
of time periods normally associated with a routine submission for 
review under the provisions of the PRA, because the prohibition in 
section 889(a)(1)(A) goes into effect on August 13, 2019.
    b. The collection of information is essential to the mission of the 
agencies to ensure the Federal Government complies with section 
889(a)(1)(A) on the statute's effective date in order to protect the 
Government supply chain from risks posed by covered telecommunications 
equipment or services.
    c. Moreover, DoD, GSA, and NASA cannot comply with the normal 
clearance procedures because public harm is reasonably likely to result 
if current clearance procedures are followed. Authorizing collection of 
this information on the effective date will ensure that agencies do not 
procure or obtain, or extend or renew a contract to procure or obtain, 
equipment, systems, or services in violation of the prohibition in 
section 889(a)(1)(A). It will also avoid substantial additional costs 
that may be incurred from having to replace such equipment, systems, or 
services that are purchased in violation of section 889(a)(1)(A), as 
well as additional administrative costs for reprocurement.
    DoD, GSA, and NASA intend to provide a separate 60-day notice in 
the Federal Register requesting public comment on the information 
collections contained within this rule under OMB Control Number 9000-
0199.

    Agency: DoD, GSA, and NASA.
    Type of Information Collection: New Collection.
    Title of Collection: Representation Regarding Certain 
Telecommunications and Video Surveillance Services or Equipment.
    Affected Public: Private Sector--Business.
    Total Estimated Number of Respondents: 190,446.

[[Page 40220]]

    Average Responses per Respondents: 41.25.
    Total Estimated Number of Responses: 7,855,881.
    Average Time (for both positive and negative representations) 
per Response: 0.105 hour.
    Total Annual Time Burden: 821,274.
    Agency: DoD, GSA, and NASA.
    Type of Information Collection: New Collection.
    Title of Collection: Prohibition on Contracting for Certain 
Telecommunications and Video Surveillance Services or Equipment.
    Affected Public: Private Sector--Business.
    Total Estimated Number of Respondents: 4,761.
    Average Responses per Respondents: 5.
    Total Estimated Number of Responses: 23,805.
    Average Time per Response: 1.5 hour.
    Total Annual Time Burden: 35,708.

    The public reporting burden for this collection of information 
consists of a representation to identify whether an offeror will 
provide covered telecommunications equipment and services as required 
by 52.204-24 and reports of identified covered telecommunications 
equipment and services during contract performance as required by 
52.204-25. Representations are estimated to average 0.105 hour (the 
average of the time for both positive and negative representations) per 
response to review the prohibitions, research the source of the product 
or service, and either provide a negative response in the majority of 
cases or to complete the additional detailed disclosure, if applicable. 
Reports are estimated to average 1.5 hours per response, including the 
time for reviewing definitions, searching existing data sources, 
gathering and maintaining the data needed, and completing and reviewing 
the report.
    The subsequent 60-day notice to be published by DoD, GSA, and NASA 
will invite public comments.

VIII. Determination To Issue an Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense (DoD), Administrator of General Services (GSA), and the 
Administrator of the National Aeronautics and Space Administration 
(NASA) that urgent and compelling reasons exist to promulgate this 
interim rule without prior opportunity for public comment. It is 
critical that the FAR is immediately revised to include the 
requirements of the law, which prohibits the Federal Government from 
procuring or obtaining, or extending or renewing a contract to procure 
or obtain, any equipment, system, or service that uses covered 
telecommunication equipment or services as a substantial or essential 
component of any system, or as a critical technology as part of any 
system on or after August 13, 2019, unless an exception applies or a 
waiver is granted.
    Because section 889(a)(1)(A) takes effect on August 13, 2019, this 
rule must take effect immediately to ensure agencies and contractors 
are implementing the statutory prohibition.
    Pursuant to 41 U.S.C. 1707 and FAR 1.501-3(b), DoD, GSA, and NASA 
will consider public comments received in response to this interim rule 
in the formation of the final rule.

List of Subjects in 48 CFR Parts 1, 4, 12, 13, 39, and 52

    Government procurement.

Janet M. Fry,
Director, Federal Acquisition Policy Division, Office of Government-
wide Policy.

    Therefore, DoD, GSA, and NASA amend 48 CFR parts 1, 4, 12, 13, 39, 
and 52 as set forth below:

0
1. The authority citation for 48 CFR parts 1, 4, 12, 13, 39, and 52 
continues to read as follows:

    Authority:  40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 
U.S.C. 20113.

PART 1--FEDERAL ACQUISITION REGULATIONS SYSTEM

0
2. In section 1.106 amend the table by adding the entries ``4.21'', 
``52.204-24'' and ``52.204-25'' in numerical order to read as follows:

------------------------------------------------------------------------
                                                            OMB control
                       FAR segment                              No.
------------------------------------------------------------------------
 
                                * * * * *
4.21....................................................       9000-0199
 
                                * * * * *
52.204-24...............................................       9000-0199
52.204-25...............................................       9000-0199
 
                                * * * * *
------------------------------------------------------------------------


0
3. Revise the heading to Part 4 and add Subpart 4.21 to read as 
follows:

PART 4--ADMINISTRATIVE AND INFORMATION MATTERS

* * * * *

Subpart 4.21--Prohibition on Contracting for Certain 
Telecommunications and Video Surveillance Services or Equipment

Sec.
4.2100 Scope of subpart.
4.2101 Definitions.
4.2102 Prohibition.
4.2103 Procedures.
4.2104 Waivers.
4.2105 Solicitation provision and contract clause.


4.2100   Scope of subpart.

    This subpart implements paragraph (a)(1)(A) of section 889 of the 
John S. McCain National Defense Authorization Act for Fiscal Year 2019 
(Pub. L. 115-232).


4.2101   Definitions.

    As used in this subpart--
    Covered foreign country means The People's Republic of China.
    Covered telecommunications equipment or services means--
    (1) Telecommunications equipment produced by Huawei Technologies 
Company or ZTE Corporation, (or any subsidiary or affiliate of such 
entities);
    (2) For the purpose 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);
    (3) Telecommunications or video surveillance services provided by 
such entities or using such equipment; or
    (4) Telecommunications or video surveillance equipment or services 
produced or provided by an entity that the Secretary of Defense, in 
consultation with the Director of National Intelligence or the Director 
of the Federal Bureau of Investigation, reasonably believes to be an 
entity owned or controlled by, or otherwise connected to, the 
government of a covered foreign country.
    Critical technology means--
    (1) 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;
    (2) Items included on the Commerce Control List set forth in 
Supplement No. 1 to part 774 of the Export Administration Regulations 
under subchapter C of chapter VII of title 15, Code of Federal 
Regulations, and controlled--
    (i) Pursuant to multilateral regimes, including for reasons 
relating to national security, chemical and biological weapons 
proliferation, nuclear nonproliferation, or missile technology; or
    (ii) For reasons relating to regional stability or surreptitious 
listening;
    (3) Specially designed and prepared nuclear equipment, parts and

[[Page 40221]]

components, materials, software, and technology covered by part 810 of 
title 10, Code of Federal Regulations (relating to assistance to 
foreign atomic energy activities);
    (4) Nuclear facilities, equipment, and material covered by part 110 
of title 10, Code of Federal Regulations (relating to export and import 
of nuclear equipment and material);
    (5) Select agents and toxins covered by part 331 of title 7, Code 
of Federal Regulations, part 121 of title 9 of such Code, or part 73 of 
title 42 of such Code; or
    (6) Emerging and foundational technologies controlled pursuant to 
section 1758 of the Export Control Reform Act of 2018 (50 U.S.C. 4817).
    Substantial or essential component means any component necessary 
for the proper function or performance of a piece of equipment, system, 
or service.


4.2102   Prohibition.

    (a) Prohibited equipment, systems, or services. On or after August 
13, 2019, agencies are prohibited from procuring or obtaining, or 
extending or renewing a contract to procure or obtain, any equipment, 
system, or service that uses covered telecommunications equipment or 
services as a substantial or essential component of any system, or as 
critical technology as part of any system, unless an exception at 
paragraph (b) of this section applies or the covered telecommunications 
equipment or services are covered by a waiver described in 4.2104.
    (b) Exceptions. This subpart does not prohibit agencies from 
procuring or contractors from providing--
    (1) A service that connects to the facilities of a third-party, 
such as backhaul, roaming, or interconnection arrangements; or
    (2) Telecommunications equipment that cannot route or redirect user 
data traffic or permit visibility into any user data or packets that 
such equipment transmits or otherwise handles.
    (c) Contracting Officers. Contracting officers shall not procure or 
obtain, or extend or renew a contract (e.g., exercise an option) to 
procure or obtain, any equipment, system, or service that uses covered 
telecommunications equipment or services as a substantial or essential 
component of any system, or as critical technology as part of any 
system, unless an exception at paragraph (b) of this section applies or 
the covered telecommunications equipment or services are covered by a 
waiver described in 4.2104.


4.2103   Procedures.

    (a) Representations. If an offeror provides an affirmative response 
to the representations or discloses information in accordance with 
paragraphs (c) and (d) of the provision at 52.204-24, follow agency 
procedures.
    (b) Reporting. If a contractor provides a report pursuant to 
paragraph (d) of the clause at 52.204-25, Prohibition on Contracting 
for Certain Telecommunications and Video Surveillance Services or 
Equipment, follow agency procedures.


4.2104   Waivers.

    (a) Executive agencies. The head of an executive agency may, on a 
one-time basis, waive the prohibition at 4.2102(a) with respect to a 
Government entity (e.g., requirements office, contracting office) that 
requests such a waiver.
    (1) The waiver may be provided, for a period not to extend beyond 
August 13, 2021, if the Government entity seeking the waiver submits to 
the head of the executive agency--
    (i) A compelling justification for the additional time to implement 
the requirements under 4.2102(a), as determined by the head of the 
executive agency; and
    (ii) A full and complete laydown or description of the presences of 
covered telecommunications or video surveillance equipment or services 
in the relevant supply chain and a phase-out plan to eliminate such 
covered telecommunications or video surveillance equipment or services 
from the relevant systems.
    (2) The head of the executive agency shall, not later than 30 days 
after approval, submit to the appropriate congressional committees the 
full and complete laydown or description of the presences of covered 
telecommunications or video surveillance equipment or services in the 
relevant supply chain and the phase-out plan to eliminate such covered 
telecommunications or video surveillance equipment or services from the 
relevant systems.
    (b) Director of National Intelligence. The Director of National 
Intelligence may provide a waiver if the Director determines the waiver 
is in the national security interests of the United States.


4.2105   Solicitation provision and contract clause.

    (a) The contracting officer shall insert the provision at 52.204-
24, Representation Regarding Certain Telecommunications and Video 
Surveillance Services or Equipment--
    (1) In all solicitations for contracts; and
    (2) Under indefinite delivery contracts, in all notices of intent 
to place an order, or solicitations for an order (i.e., subpart 8.4 and 
16.505).
    (b) The contracting officer shall insert the clause at 52.204-25, 
Prohibition on Contracting for Certain Telecommunications and Video 
Surveillance Services or Equipment, in all solicitations and contracts.

PART 12--ACQUISITION OF COMMERCIAL ITEMS

0
4. Amend section 12.301 by redesignating paragraphs (d)(6) through 
(d)(11) as (d)(7) through (d)(12), respectively, and adding a new 
paragraph (d)(6) to read as follows:


12.301   Solicitation provisions and contract clauses for acquisition 
of commercial items.

* * * * *
    (d) * * *
    (6) Insert the provision at 52.204-24, Representation Regarding 
Certain Telecommunications and Video Surveillance Services or 
Equipment, as prescribed in 4.2105(a).
* * * * *

PART 13--SIMPLIFIED ACQUISITION PROCEDURES

0
5. Amend section 13.201 by revising the section heading and adding 
paragraphs (a) and (j) to read as follows:


13.201   General.

    (a) Agency heads are encouraged to delegate micro-purchase 
authority (see 1.603-3).
* * * * *
    (j) On or after August 13, 2019, do not procure or obtain, or 
extend or renew a contract to procure or obtain, any equipment, system, 
or service that uses covered telecommunications equipment or services 
as a substantial or essential component of any system, or as critical 
technology as part of any system, unless an exception applies or a 
waiver is granted. (See subpart 4.21.)

PART 39--ACQUISITION OF INFORMATION TECHNOLOGY

0
6. Amend section 39.101 by adding paragraph (f) to read as follows:


39.101   Policy.

* * * * *
    (f) On or after August 13, 2019, contracting officers shall not 
procure or obtain, or extend or renew a contract to procure or obtain, 
any equipment, system, or service that uses covered telecommunications 
equipment or services as a substantial or essential

[[Page 40222]]

component of any system, or as critical technology as part of any 
system on or after August 13, 2019, unless an exception applies or a 
waiver is granted. (See subpart 4.21.)

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
7. Add sections 52.204-24 and 52.204-25 to read as follows:


52.204-24   Representation Regarding Certain Telecommunications and 
Video Surveillance Services or Equipment.

    As prescribed in 4.2105(a), insert the following provision:

Representation Regarding Certain Telecommunications and Video 
Surveillance Services or Equipment (AUG 2019)

    (a) Definitions. As used in this provision--
    Covered telecommunications equipment or services, Critical 
technology, and Substantial or essential component have the meanings 
provided in clause 52.204-25, Prohibition on Contracting for Certain 
Telecommunications and Video Surveillance Services or Equipment.
    (b) Prohibition. Section 889(a)(1)(A) of the John S. McCain 
National Defense Authorization Act for Fiscal Year 2019 (Pub. L. 
115-232) prohibits the head of an executive agency on or after 
August 13, 2019, from procuring or obtaining, or extending or 
renewing a contract to procure or obtain, any equipment, system, or 
service that uses covered telecommunications equipment or services 
as a substantial or essential component of any system, or as 
critical technology as part of any system. Contractors are not 
prohibited from providing--
    (1) A service that connects to the facilities of a third-party, 
such as backhaul, roaming, or interconnection arrangements; or
    (2) Telecommunications equipment that cannot route or redirect 
user data traffic or permit visibility into any user data or packets 
that such equipment transmits or otherwise handles.
    (c) Representation. The Offeror represents that--
    It [ ] will, [ ] will not provide covered telecommunications 
equipment or services to the Government in the performance of any 
contract, subcontract or other contractual instrument resulting from 
this solicitation.
    (d) Disclosures. If the Offeror has responded affirmatively to 
the representation in paragraph (c) of this provision, the Offeror 
shall provide the following information as part of the offer--
    (1) All covered telecommunications equipment and services 
offered (include brand; model number, such as original equipment 
manufacturer (OEM) number, manufacturer part number, or wholesaler 
number; and item description, as applicable);
    (2) Explanation of the proposed use of covered 
telecommunications equipment and services and any factors relevant 
to determining if such use would be permissible under the 
prohibition in paragraph (b) of this provision;
    (3) For services, the entity providing the covered 
telecommunications services (include entity name, unique entity 
identifier, and Commercial and Government Entity (CAGE) code, if 
known); and
    (4) For equipment, the entity that produced the covered 
telecommunications equipment (include entity name, unique entity 
identifier, CAGE code, and whether the entity was the OEM or a 
distributor, if known).


(End of provision)


52.204-25   Prohibition on Contracting for Certain Telecommunications 
and Video Surveillance Services or Equipment.

    As prescribed in 4.2105(b), insert the following clause:

Prohibition on Contracting for Certain Telecommunications and Video 
Surveillance Services or Equipment (AUG 2019)

    (a) Definitions. As used in this clause--
    Covered foreign country means The People's Republic of China.
    Covered telecommunications equipment or services means--
    (1) Telecommunications equipment produced by Huawei Technologies 
Company or ZTE Corporation (or any subsidiary or affiliate of such 
entities);
    (2) For the purpose 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);
    (3) Telecommunications or video surveillance services provided 
by such entities or using such equipment; or
    (4) Telecommunications or video surveillance equipment or 
services produced or provided by an entity that the Secretary of 
Defense, in consultation with the Director of National Intelligence 
or the Director of the Federal Bureau of Investigation, reasonably 
believes to be an entity owned or controlled by, or otherwise 
connected to, the government of a covered foreign country.
    Critical technology means--
    (1) 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;
    (2) Items included on the Commerce Control List set forth in 
Supplement No. 1 to part 774 of the Export Administration 
Regulations under subchapter C of chapter VII of title 15, Code of 
Federal Regulations, and controlled--
    (i) Pursuant to multilateral regimes, including for reasons 
relating to national security, chemical and biological weapons 
proliferation, nuclear nonproliferation, or missile technology; or
    (ii) For reasons relating to regional stability or surreptitious 
listening;
    (3) Specially designed and prepared nuclear equipment, parts and 
components, materials, software, and technology covered by part 810 
of title 10, Code of Federal Regulations (relating to assistance to 
foreign atomic energy activities);
    (4) Nuclear facilities, equipment, and material covered by part 
110 of title 10, Code of Federal Regulations (relating to export and 
import of nuclear equipment and material);
    (5) Select agents and toxins covered by part 331 of title 7, 
Code of Federal Regulations, part 121 of title 9 of such Code, or 
part 73 of title 42 of such Code; or
    (6) Emerging and foundational technologies controlled pursuant 
to section 1758 of the Export Control Reform Act of 2018 (50 U.S.C. 
4817).
    Substantial or essential component means any component necessary 
for the proper function or performance of a piece of equipment, 
system, or service.
    (b) Prohibition. Section 889(a)(1)(A) of the John S. McCain 
National Defense Authorization Act for Fiscal Year 2019 (Pub. L. 
115-232) prohibits the head of an executive agency on or after 
August 13, 2019, from procuring or obtaining, or extending or 
renewing a contract to procure or obtain, any equipment, system, or 
service that uses covered telecommunications equipment or services 
as a substantial or essential component of any system, or as 
critical technology as part of any system. The Contractor is 
prohibited from providing to the Government any equipment, system, 
or service that uses covered telecommunications equipment or 
services as a substantial or essential component of any system, or 
as critical technology as part of any system, unless an exception at 
paragraph (c) of this clause applies or the covered 
telecommunication equipment or services are covered by a waiver 
described in Federal Acquisition Regulation 4.2104.
    (c) Exceptions. This clause does not prohibit contractors from 
providing--
    (1) A service that connects to the facilities of a third-party, 
such as backhaul, roaming, or interconnection arrangements; or
    (2) Telecommunications equipment that cannot route or redirect 
user data traffic or permit visibility into any user data or packets 
that such equipment transmits or otherwise handles.
    (d) Reporting requirement. (1) In the event the Contractor 
identifies covered telecommunications equipment or services used as 
a substantial or essential component of any system, or as critical 
technology as part of any system, during contract performance, or 
the Contractor is notified of such by a subcontractor at any tier or 
by any other source, the Contractor shall report the information in 
paragraph (d)(2) of this clause to the Contracting Officer, unless 
elsewhere in this contract are established procedures for reporting 
the information; in the case of the Department of Defense, the 
Contractor shall report to the website at https://dibnet.dod.mil. 
For indefinite delivery contracts, the Contractor shall report to 
the Contracting Officer for the indefinite delivery contract and the 
Contracting Officer(s) for any affected order or, in the case of the 
Department of Defense, identify both the indefinite delivery 
contract and any affected orders in the report provided at https://dibnet.dod.mil.
    (2) The Contractor shall report the following information 
pursuant to paragraph (d)(1) of this clause:

[[Page 40223]]

    (i) Within one business day from the date of such identification 
or notification: The contract number; the order number(s), if 
applicable; supplier name; supplier unique entity identifier (if 
known); supplier Commercial and Government Entity (CAGE) code (if 
known); brand; model number (original equipment manufacturer number, 
manufacturer part number, or wholesaler number); item description; 
and any readily available information about mitigation actions 
undertaken or recommended.
    (ii) Within 10 business days of submitting the information in 
paragraph (d)(2)(i) of this clause: Any further available 
information about mitigation actions undertaken or recommended. In 
addition, the Contractor shall describe the efforts it undertook to 
prevent use or submission of covered telecommunications equipment or 
services, and any additional efforts that will be incorporated to 
prevent future use or submission of covered telecommunications 
equipment or services.
    (e) Subcontracts. The Contractor shall insert the substance of 
this clause, including this paragraph (e), in all subcontracts and 
other contractual instruments, including subcontracts for the 
acquisition of commercial items.


(End of clause)

0
8. Amend section 52.212-5 by--
0
a. Revising the date of the clause;
0
b. Redesignating paragraphs (a)(3) through (a)(5) as paragraphs (a)(4) 
through (a)(6) and adding a new paragraph (a)(3);
0
 c. Redesignating paragraphs (e)(1)(iv) through (e)(1)(xxii) as 
(e)(1)(v) through (e)(1)(xxiii), and adding a new paragraph (e)(1)(iv);
0
d. Revising the date of Alternate II; and
0
e. In Alternate II, redesignating paragraphs (e)(1)(ii)(D) through 
(e)(1)(ii)(T) as (e)(1)(ii)(E) through (e)(1)(ii)(U), and adding a new 
paragraph (e)(1)(ii)(D).
    The revisions and additions read as follows:


52.212-5   Contract Terms and Conditions Required To Implement Statutes 
or Executive Orders--Commercial Items.

* * * * *

Contract Terms and Conditions Required To Implement Statutes or 
Executive Orders--Commercial Items (AUG 2019)

    (a) * * *
    (3) 52.204-25, Prohibition on Contracting for Certain 
Telecommunications and Video Surveillance Services or Equipment. 
(AUG 2019) (Section 889(a)(1)(A) of Pub. L. 115-232).
* * * * *
    (e)(1) * * *
    (iv) 52.204-25, Prohibition on Contracting for Certain 
Telecommunications and Video Surveillance Services or Equipment. 
(AUG 2019) (Section 889(a)(1)(A) of Pub. L. 115-232).
* * * * *
    Alternate II (AUG 2019).
* * * * *
    (e)(1) * * *
    (ii) * * *
    (D) 52.204-25, Prohibition on Contracting for Certain 
Telecommunications and Video Surveillance Services or Equipment. 
(AUG 2019) (Section 889(a)(1)(A) of Pub. L. 115-232).
* * * * *

0
9. Amend section 52.213-4 by--
0
a. Revising the date of the clause;
0
 b. Redesignating paragraphs (a)(1)(iii) through (a)(1)(viii) as 
(a)(1)(iv) through (a)(1)(ix), and adding a new paragraph (a)(1)(iii); 
and
0
 c. In paragraph (a)(2)(viii) removing ``(JAN 2019)'' and adding ``(AUG 
2019)'' in its place.
    The revision and addition read as follows:


52.213-4   Terms and Conditions--Simplified Acquisitions (Other Than 
Commercial Items).

* * * * *

Terms and Conditions--Simplified Acquisitions (Other Than Commercial 
Items) (AUG 2019)

    (a) * * *
    (1) * * *
    (iii) 52.204-25, Prohibition on Contracting for Certain 
Telecommunications and Video Surveillance Services or Equipment. 
(AUG 2019) (Section 889(a)(1)(A) of Pub. L. 115-232).
* * * * *

0
10. Amend section 52.244-6 by--
0
a. Revising the date of the clause; and
0
b. Redesignating paragraphs (c)(1)(vi) through (c)(1)(xix) as 
(c)(1)(vii) through (c)(1)(xx), and adding a new paragraph (c)(1)(vi).
    The revision and addition reads as follows:


52.244-6   Subcontracts for Commercial Items.

* * * * *

Subcontracts for Commercial Items (AUG 2019)

* * * * *
    (c)(1) * * *
    (vi) 52.204-25, Prohibition on Contracting for Certain 
Telecommunications and Video Surveillance Services or Equipment. 
(AUG 2019) (Section 889(a)(1)(A) of Pub. L. 115-232).
* * * * *
[FR Doc. 2019-17201 Filed 8-12-19; 8:45 am]
 BILLING CODE 6820-EP-P