Section 889

Overview of Section 889 in the Fiscal Year 2019 National Defense Authorization Act

Critical infrastructure, national defense, and the daily lives of Americans rely on computer-driven and interconnected information technologies, introducing new vulnerabilities and emerging threats.

Over the past year, major defense, aerospace, and tech companies, as well as trade associations, have lobbied the House and Senate Armed Services Committee to get an extension of up to a year on the implementation of Section 889 (a)(1)(B) due to the ambiguity of the term “use” and the impact of having to certify its companies global supply chain in order to do business with the Federal Government.

Prior to the implementation of Section (a)(1)(B) on August 13th, DOD applied with DNI for a waiver and was granted the day of the implementation. It has been recently reported that DHS, State, and USAID have been granted waivers. We could see other Federal agencies follow suit. The current waiver is until September 30th, 2020.

The House and Senate Armed Services Committees are currently negotiating the Fiscal Year 2021 National Defense Authorization Act. Many Congressional Members have stated any change to this legislation would be a signal of being “soft” on China policy which makes a legislative fix challenging. It is unclear if the DNI will continue extending the waivers beyond September 30th. At this point, there does not seem to be a path forward on this matter. We will provide continual updates on this critically important matter.

Background

On August 13, 2018, the John S. McCain National Defense Authorization Act for Fiscal Year 2019 (NDAA or the Act) (H.R. 5515) was signed into law. The Act establishes a more aggressive stance on U.S. cybersecurity policy, stating that “all instruments of national power” will be used to defend, deter, and respond to significant cyber threats.

The Act included Section 889 which has a significant impact on the United States Department of Defense and other Federal Government agencies in the procurement and deployment of telecommunications equipment and services and video surveillance equipment and services.

In August 2019, Section 889 (a)(1) (A) went into effect. It prohibits Federal Government agencies from the procurement of “covered telecommunications equipment or services” which is defined to include telecommunications equipment produced by Huawei Technologies Company and ZTE Corporation and video surveillance and telecommunications equipment produced by Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company, or Dahua Technology Company (or any subsidiary or affiliate of such entities), as well as telecommunications or video surveillance services provided by such entities or using such equipment.

On August 13, 2020, Section 889 (a)(1)(B) went into effect. It prohibits Federal Government agencies from entering into or extending or renewing, a contract with an entity that uses any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system. The statute covers certain telecommunications equipment and services produced or provided by Huawei Technologies Company or ZTE Corporation (or any subsidiary or affiliate of those entities) and certain video surveillance products or telecommunications equipment and services produced or provided by Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company, or Dahua Technology Company (or any subsidiary or affiliate of those entities).

The statute applies to any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system. It is not limited to end products produced by the five above named companies.

Meanwhile, the U.S. General Services Administration (GSA) has published two documents related to the implementation of Sec. 889 Part B: Acquisition Letter MV-20-10 and an addendum to a previous class deviation (CD-2019-11) that amended Sec. 889's direct contracting prohibition (Sec. 889 Part A) to relax representation requirements depending on the procurement's level of risk. The original class deviation has been temporarily suspended since its provisions are now outdated, as the interim rule for Part B allows for annual representation.