Overview
FAR Subpart 4.21 implements Section 889 of the FY2019 National Defense Authorization Act (NDAA), which prohibits the federal government from procuring or contracting with entities that use specific Chinese-made telecommunications and video surveillance equipment or services. The subpart aims to mitigate national security risks by purging high-risk technology from the federal supply chain and the internal operations of federal contractors.
Key Rules
- The Two-Pronged Prohibition:
- Part A (Procurement): Agencies cannot purchase or obtain any equipment, system, or service that uses "covered telecommunications equipment or services" as a substantial or essential component.
- Part B (Contractual Relationship): Agencies cannot enter into, extend, or renew a contract with any entity that uses covered equipment or services, regardless of whether that equipment is used in performance of a federal contract.
- Covered Entities: The prohibition specifically targets equipment and services produced by:
- Huawei Technologies Company and ZTE Corporation.
- Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company, and Dahua Technology Company (primarily for video surveillance and public safety).
- Any subsidiary or affiliate of the above entities.
- Reasonable Inquiry Standard: Contractors are required to conduct a "reasonable inquiry" to determine if they use covered equipment. This is defined as an inquiry designed to uncover information in the entity’s possession; it does not mandate a formal third-party audit.
- Exceptions: The rules do not prohibit services that connect to third-party facilities (like backhaul or roaming) or equipment that cannot route/redirect data or provide visibility into user packets.
Responsibilities
- Contracting Officers (COs):
- Must insert required provisions (52.204-24, 52.204-26) and the mandatory clause (52.204-25) into all solicitations and contracts.
- May generally rely on an offeror’s "does not" representation unless they have a reason to question its accuracy.
- Must follow agency procedures if an offeror discloses the use of covered equipment.
- Offerors/Contractors:
- Must represent, after a reasonable inquiry, whether they provide (Part A) or use (Part B) covered telecommunications equipment or services.
- Must report to the CO within one business day if covered equipment or services are identified during contract performance.
- Executive Agency Heads:
- Authorized to grant one-time, time-limited waivers under strict conditions, including a compelling justification and a phase-out plan.
- Department of Defense (DoD):
- Responsible for recording prohibitions in the System for Award Management (SAM) for entities identified as owned or controlled by a covered foreign country.
Practical Implications
- Enterprise-Wide Compliance: The "Part B" prohibition is the most significant for industry, as it applies to a contractor’s entire corporate operations. A company using Hikvision cameras in its private warehouse—even if that warehouse has nothing to do with a government contract—is technically ineligible for federal awards.
- Supply Chain Transparency: Contractors must map their internal IT and security infrastructure. This includes checking not just brand-name hardware, but also white-labeled components or services that might rely on Huawei or ZTE backbones.
- Continuous Monitoring: Since the prohibition applies to contract extensions and renewals (like exercising an option year), compliance is not a "one and done" event; it requires ongoing vigilance and internal reporting mechanisms.
- SAM.gov Integration: Contractors can streamline the process by completing the annual representation in their SAM.gov profile, which COs check to verify eligibility quickly.