The publication date of this article is January 14, 2020. Some of the amendments and rules discussed here are interim and subject to change in the near future.
Amid recent concerns regarding the involvement of foreign firms in corporate and political espionage, the U.S. Congress has created amendment 52.204‑24 to the Federal Acquisition Regulation, also known as FAR 52.204‑24*. Contractors and subcontractors of the federal government who provide services related to “public safety, security of government facilities, physical security surveillance of critical infrastructure, and other national security purposes” are now prohibited from using select telecommunications and video surveillance equipment that has been manufactured by specified Chinese firms and their subsidiaries. Organizations providing IT‑related products must be familiar with these restrictions and how to address them.
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Who and What are Affected?
In general terms, the “covered telecommunications equipment or services” are defined by FAR 52.204-24 as:
- Telecommunications equipment produced by Huawei Technologies Company or ZTE Corporation (or any subsidiary or affiliate)
- Video surveillance and telecommunications equipment produced by Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company or Dahua Technology Company (or any subsidiary or affiliate)
- Telecommunications or video surveillance equipment or services produced or provided by an entity that the Department of Defense deems to be controlled by the People’s Republic of China.
This includes “equipment or services as a substantial or essential component of any system, or as critical technology as part of any system.”
What Actions are Required?
FAR 52.204-24 requires those bidding for government contracts to register with the System for Award Management (“SAM” https://www.sam.gov/SAM/) to indicate whether they provide “covered” equipment.
Contractors indicating that they do provide “covered” telecommunications equipment or services, or have not yet made the annual representation in SAM, will need to make a contract-by-contract disclosure. Any contractor reporting that it will provide “covered” equipment must provide additional detailed disclosures about the equipment.
FAR 52.204-24 Exemptions
FAR 52.204-24 restrictions do not prohibit contractors from providing—
- (1) A service that connects to the facilities of a third-party, such as backhaul, roaming, or interconnection arrangements; or
- (2) Telecommunications equipment that cannot route or redirect user data traffic or permit visibility into any user data or packets that such equipment transmits or otherwise handles.
Don’t complicate or jeopardize deals by being uncertain about compliance. Researching corporate structures and supply chains to identify “subsidiaries or affiliates” of the above listed companies is a daunting task, as is determining if any of the components included in a purchase order are a “substantial” “essential” or “critical” part of a covered telecom or surveillance system.