Overview
This section defines the critical terms used in the implementation of the prohibition on certain telecommunications and video surveillance services or equipment (Section 889 of the FY2019 NDAA). It establishes the scope of prohibited entities, primarily focusing on specific Chinese technology companies, and defines the standards for compliance and technical network arrangements.
Key Rules
- Covered Entities: Specifically identifies Huawei Technologies Company, ZTE Corporation, Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company, and Dahua Technology Company (including any subsidiaries or affiliates) as prohibited sources.
- Reasonable Inquiry Standard: Defines the level of due diligence required by contractors as an internal review of information in the entity’s possession, explicitly stating that a formal third-party or internal audit is not required.
- Broad Functional Scope: Defines "substantial or essential component" as any part necessary for the proper function or performance of a system, ensuring the prohibition covers more than just the primary device.
- Critical Technology Links: Ties the definitions to existing regulatory frameworks, including the U.S. Munitions List (ITAR), the Commerce Control List (EAR), and regulations governing nuclear and biological agents.
- Network Infrastructure: Provides technical definitions for "Backhaul," "Roaming," and "Interconnection arrangements" to clarify which types of network traffic and physical connections fall under the regulatory umbrella.
Practical Implications
- Supply Chain Diligence: Contractors must verify that no "substantial or essential" parts of their offerings originate from the named Chinese entities, requiring a clear understanding of their sub-tier suppliers.
- Compliance Threshold: The "reasonable inquiry" definition provides a baseline for compliance, allowing contractors to rely on existing internal records and vendor representations rather than expensive, exhaustive forensic audits.
- National Security Alignment: Because the Secretary of Defense can expand the list of covered entities in consultation with intelligence agencies, contractors must stay updated on new designations of entities "owned or controlled by" a covered foreign country.