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Temporary Waiver Granted for the Federal Acquisition Regulation

Yesterday, Dox Electronics sent out an electronic newsletter explaining that the Federal Acquisition Regulation (FAR) had gone into effect last Thursday, Aug. 13, 2020. The FAR banned contractors and subcontractors with Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA) contracts from utilizing telecommunications and surveillance equipment and services produced by the Huawei company and several other Chinese companies. These firms were identified as being an espionage threat under Section 889 of the 2019 National Defense Authorization Act, FAR 52.204-24.

On Friday, Aug. 14, 2020, the Pentagon secured a brief waiver of the regulation from the Trump administration through Sept. 30, 2020. This waiver means DoD, GSA, and NASA contractors have a few more weeks to achieve the FAR requirements implementing the government-wide ban on Chinese-produced telecommunications and surveillance equipment, according to Defense News.

The original deadline to meet the requirements of the FAR was set to take effect last week on Aug. 13, 2020. An online article by GovConWire states with the waiver in place, contractors supplying telecommunications and surveillance goods and services now have until Sept. 30, 2020, to meet the regulatory requirements of FAR by adjusting their supply chain.

Director of National Intelligence John Ratcliffe granted the temporary waiver citing national security interests for the United States as well as the fact many businesses are still recovering from the economic impact of the COVID-19 pandemic. Ratcliffe issued the waiver in a memo last Friday to Ellen Lord, Under Secretary of Defense for Acquisition and Sustainment. Lord had requested the temporary waiver so the DoD could continue to execute procurement actions in order to meet the security needs of the U.S. including equipping and feeding our nation’s troops.

The FAR 52.204-25 regulation outlines that equipment, components, or services produced or provided by the following Chinese companies are strictly prohibited by U.S. contractors and subcontractors:

• Huawei Technologies Company or ZTE Corporation (or any subsidiary or affiliate)
• Hytera Communications Corporation
• Hangzhou Hikvision Digital Technology Company
• Dahua Technology Company (or any subsidiary or affiliate)
• “Any entity owned or controlled by, or otherwise connected to, the government of a covered foreign country” which is defined as the “People’s Republic of China.”

According to the Defense News article from last Friday, Lord had warned lawmakers in May that contractors needed more time to comply with the FAR requirements. She told them without an extension, it could throw the defense industrial base into complete disarray.

“The thought that somebody six or seven levels down in the supply chain could have one camera in a parking lot that would invalidate one of our major primes being able to do business with us gives us a bit of pause,” Lord said at a House Armed Services Committee hearing. “So, we are very supportive of it (a waiver), but I believe we need to extend it in terms of the time for compliance so that we don’t have unintended consequences.”

During this waiver period, a broader waiver request by the DoD will also be reviewed by the Office of the Director of National Intelligence, according to the Federal News Network. The temporary waiver also provides a win for many trade associations and firms who had lobbied against the ban, according to a piece by GizmoChina.

If you have any questions about the temporary waiver for the Federal Acquisition Regulation or how the new regulation impacts your business, please feel free to contact Dox Electronics today. The initial consultation is free.

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