New Rule Implementing NDAA Prohibition: U.S. Agencies Cannot Enter Contracts That Use Chinese Telecom Technology

The latest in a string of U.S. government (USG) actions restricting the use of Chinese technology in the U.S. supply chain is an interim rule issued by the Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA) implementing the first phase of Section 889 of the FY2019 National Defense Authorization Act (NDAA). This rule, which goes into effect on August 13, 2019, prohibits federal agencies from buying "covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system" from designated Chinese entities, including Huawei Technologies Company Ltd. (Huawei) and ZTE Corporation (ZTE), and several providers of video surveillance equipment and services. We detail this proscription below and summarize how the rule shifts the compliance burden to government contractors.