US Finalizing Federal Contract Ban for Companies That Use Huawei
The Trump administration plans to finalize regulations this
week that will bar the U.S. government from buying goods or services from any
company that uses products from five Chinese companies including Huawei,
Hikvision, and Dahua, a U.S. official said.
The rule, which was prompted by a 2019 law, could have
far-ranging implications for companies that sell goods and services to the U.S.
government since they will now need to certify they do not use products from
Dahua or Hikvision, even though both are among the top sellers of surveillance equipment
and cameras worldwide.
The same goes for two-way radios from Hytera Communications
Corp and telecommunications equipment or mobile devices like smartphones from
Huawei Technologies or ZTE Corp.
Any company that uses equipment or services in their
day-to-day operations from these five companies will no longer be able to sell
to the U.S. government without obtaining a U.S. government waiver.
The White House action comes amid increasing U.S.-China
tension over the handling of the novel coronavirus, China’s actions in the
former British colony of Hong Kong, and a nearly two-year trade war.
“The danger our nation faces from foreign adversaries like
China looking to infiltrate our systems is great,” said Russ Vought, acting
director of the White House Office of Management and Budget in a statement to
Reuters.
“The Trump Administration is keeping our government strong
against nefarious networks like Huawei by fully implementing the ban on Federal
procurement.”
Huawei did not have an immediate comment. Dahua, ZTE,
Hikvision, and Hytera could not immediately be reached for comment.
The U.S. government annually awards more than $500 billion
in contracts, according to the Government Accountability Office.
The rule from the Federal Acquisition Regulatory Council
will take effect on Aug. 13.
While there was previous uncertainty in the contracting
community surrounding the implementation and enforcement of the rule, given its
potential impact on contractors, the White House is making clear it will not be
delayed and waivers could be difficult to get.
While it is unclear if this will have an impact on current
contracts, it could complicate future contracts.
Amazon.com Inc, for example, received 1,500 cameras to take
temperatures of workers during the coronavirus pandemic from Zhejiang Dahua
Technology Co Ltd in April.
Amazon’s cloud unit is a major contractor with the U.S.
intelligence community, and it has been battling Microsoft Corp for an up to
$10 billion cloud computing deal with the Pentagon.
The official said the administration will require agencies to
conduct a national security analysis before they grant any waivers, something
Congress did not expressly require in the statute.
The official added that the rule is aimed at more than just
barring government agencies from using products from Huawei and other named
Chinese firms, but it is a bid to limit their influence, saying it essentially
gives companies a choice: do business with the U.S. government or with the
Chinese firms.
It is the latest effort by Washington to isolate the Chinese
firms.
Last year, the United States placed Huawei, Hikvision, and
other firms on its economic blacklist, barring the firms from buying components
from U.S. companies without U.S. government approval.
On June 30, the Federal Communications Commission formally
designated Huawei and ZTE Corp as posing threats to U.S. national security, a
declaration that bars U.S. firms from tapping an $8.3 billion government fund
to purchase equipment from the companies.
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