What is Section 889?

Section 889 of the 2019 National Defense Authorization Act prohibits the federal government, government contractors, and grant and loan recipients from procuring or using certain “covered telecommunication equipment or services” that are produced by Huawei, ZTE, Hytera, Hikvision, and Dahua and their subsidiaries as a “substantial or essential component of any system, or as critical technology as part of any system.”

Specifically, Sec. 889 has two specific phases of prohibition:

Sec. 889(a)(1)(A) required the federal government, as of August 13, 2019, to not “procure or obtain or extend or renew a contract to procure or obtain any equipment, system, or service that uses covered telecommunication equipment or services as a substantial or essential component of any system, or as critical technology as part of any system.”

Sec. 889(a)(1)(B), which is slated to go into effect on August 13, 2020, will prohibit the federal government from entering into or extending or renewing contracts with any entity that “uses any equipment, system, or service that uses covered telecommunication equipment or services as a substantial or essential component of any system, or as critical technology as part of any system.”

How will Sec. 889 impact NDIA’s members?

Section 889(a)(1)(A), which is already in effect has required that NDIA members providing “covered telecommunication equipment or services” to the federal government reconfigure their supply chains to exclude Huwaei/ZTE components in the final products or services. This regulation was put into place via an interim rule that was updated in early 2020. Contractors are required to represent to the government annually whether the supplies or services they offer include covered telecommunications equipment or services. They are also required to report to the government when covered telecommunications equipment or services are used during contract performance.

Section 889(a)(1)(A) Interim Rule 1

Section 889(a)(1)(A) Interim Rule 2

Section 889(a)(1)(B) will have much broader impact on NDIA members. The language used in the statute is very broad and requires significant interpretation from regulatory authorities to be implemented. Definitions of the term “use” could imply the government would be prohibited from doing business with a government contractor that has an internet service provider (ISP) that uses Huawei/ZTE equipment in providing internet service. An even more extreme example has been raised for those contractors that use security cameras (even if only used in non-US locations) that contain Huawei/ZTE components.

When will Sec. 889(a)(1)(B) be rolled out?

We expect a proposed rule implementing Sec. 889(a)(1)(B) to be released soon. At that time NDIA will be soliciting inputs on an official comment on the proposed rule. The comment period will likely be 60 days from the date of publish.

Sec. 889(a)(1)(B) is required to go into effect by August 13, 2020.

How will Sec. 889(a)(1)(B) impact subcontractors?

The full extent of the impact that Sec. 889(a)(1)(B) will have on subcontractors is currently unknown but we assume that the prohibition will be interpreted to preclude prime contractors from doing business with subcontractors that use Huawei/ZTE equipment.

NDIA Resources on Section 889

NDIA Contact

Mr. Chris Sax
Associate Director, Strategy
Phone: (703) 247-2571
E-mail: csax@NDIA.org

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