Defense Department Details Expectations for Chinese Tech Prohibition

Starting August 13, a new Federal Acquisition Regulation (FAR) Council rule will ban Federal agencies from buying products or utilizing services from China-based tech companies such as Huawei and ZTE. A July 23 memo from the Department of Defense (DoD) outlines contracting responsibilities as agencies adjust to the transition.

The rule, published in mid-July, prohibits agencies from entering in, extending, or renewing contracts with entities that used any equipment, systems, or services that use covered telecommunications equipment or services unless an agency secretary issues a contract waiver. The new memo from DoD explains considerations for contracting officers and procedural information for implementing the new rule.

The memo describes a six-step compliance plan, as recommended by the FAR Council, for agency consideration: regulatory familiarization; corporate enterprise tracking; education; cost of removal; cost to complete the representation; and cost to develop a phase-out plan and submit waiver information.

“In order to reduce the information collection burden imposed on offerors subject to the rule, DoD, GSA, and NASA are currently working on updates to the System for Award Management to allow offerors to represent annually after conducting a reasonable inquiry,” the memo states.

Enforcement of the new rule is estimated to cost $11 billion to implement and $2 billion each subsequent year to maintain.

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