Tuesday Insight – November 10th, 2020

Nov 12, 2020

Government Reduces Representation Burdens for Supply Chain Rule Banning Some Chinese Equipment

A new provision easing some of the strain caused by a major supply chain rule banning use of some Chinese equipment took effect last week, but some in the contracting community say more clarity is still needed in order to make implementing the rule doable.

Section 889(a)(1)(b) of the 2019 National Defense Authorization Act prohibits contractors from using equipment from five Chinese companies including Huawei, ZTE and their subsidiaries or affiliates as part of their work for the federal government. Part B went into effect August 13, and October 26, an addendum to the rule went out changing representation requirements from an offer-by-offer basis to a once-annually recertification process in the System for Awards Management, or SAM.

But inconsistencies in language throughout the life of Section 889 may be adding confusion to what was already a difficult rollout. While there is broad consensus that the intent of 889 is the right move for the federal government, some in industry say the rule is effectively too big to implement.

Part B of Section 889 drops language that was included in the NDAA, according to comments submitted to the FAR Council by the industry group the Internet Association. While the NDAA language specified “use” meant as part of a “substantial or essential component” or as a “critical technology” in any system, Part B’s representation language doesn’t include these qualifiers. The second sequence of Part B that went into effect Monday does not fix this problem, but instead still lacks the qualifiers.

The annual representation language asks contractors to say whether they use equipment provided by the covered entities—or their subsidiaries or affiliates—regardless of import or how high in the supply chain the equipment sits. This also applies to any work a contractor performs, not just in products or services provided for the government.

“The way Section 889 is being implemented, especially with the representation that’s being required, it is not allowing for a risk-based approach,” Omid Ghaffari-Tabrizi, IA’s director of cloud policy, told Nextgov.

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