Overview

Section 889 (a)(1)(B) of the National Defense Authorization Act (NDAA) became effective on August 13, 2020. This provision of the act prohibits federal contractors from selling or using end products as well as all products and services that incorporate telecommunications or surveillance equipment or services produced by (1) Huawei Technologies Company, ZTE Corporation, Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company, or Dahua Technology Company or any subsidiary or affiliate of those entities or (2) any entity owned or controlled by or connected to the government of the People's Republic of China (PRC).

Federal Contracts

Section 889 is implemented in Federal Acquisition Regulation (FAR) 52.204-24 and 52.204-25.

FAR 52.204-24 Representation Regarding Certain Telecommunications and Video Surveillance Services or Equipment- This requires federal contractors to submit a representation with their proposal identifying any covered telecommunications equipment or services that will be provided under the contract. If a contractor provides covered telecommunications equipment or services, the contractor must identify the equipment or services and describe the proposed use under the contract. The federal agency will then determine if the equipment or service is substantial or essential. In rare instances, if the hardware is essential, the government may receive a limited one-time waiver.

FAR 52.204-25 Prohibition on Contracting for Certain Telecommunications and Video Surveillance Services or Equipment- This disallows the federal government from contracting with entities that use "covered telecommunications equipment or services" as a substantial or essential component of any system or "covered telecommunications equipment or services" as "critical technology" as part of any system. This prohibition applies whether or not such equipment or services are used to perform the government's contract or as part of contractual deliverables provided to the government.

Federal Grants and Cooperative Agreements

The Office of Management and Budget (OMB) amended Title 2 to the Code of Federal Regulations (CFR) (Uniform Guidance) to align with Section 889 of the NDAA.

2 CFR § 200.216 Prohibition on certain telecommunications and video surveillance services or equipment was revised to prohibit contractors and subcontractors from using federal funds to enter into, extend or renew contracts for covered equipment, services, or systems that use covered telecommunications as a substantial or essential component of any system or critical technology as part of any system.  

2 CFR § 200.471 Termination costs was added to clarify that the cost for any covered equipment or service described in 2 CFR 200.216 is unallowable.

Compliance Actions Taken by the University

• University of Houston Information Technology, Property Management, and Vendor Services have performed the required review of the existing telecommunication systems, equipment inventory, and service providers. 

• General Accounting has implemented vendor restrictions to prevent payments to or contracts with covered entities.
  
  
• All persons with procurement authorization (including low-level purchases) will be notified of the prohibition to minimize or eliminate the purchase of prohibited equipment or services.
  
  
• Under both contracts and assistance awards, UH will flow down the requirements of FAR 52.204-24, FAR 52.204-25, 2 CFR 200.216 and 2 CFR 200.471, as applicable, in all relevant agreements.

Compliance Requirements for Colleges and Departments

• Research Deans must inform researchers and those with purchasing authority (regardless of the dollar level) about this restriction on the use of grant funds to buy equipment or services produced by the entities listed above.
  
  
• Report to the Division of Research, any inadvertent use of covered entity equipment, service, or systems for federal government's work deliverable.
  
  
• Ensure that researchers do not accept gifts or transfer equipment to the University without reviewing the acquisition source to ensure compliance with this rule.
  
  
• When appropriate, all equipment-transfers and use of outside telecommunication services must be routed or reported to Property Management and Information Technology for vetting and tagging.