If you hold a GSA Contract, your company received a mass modification last month for Refresh 4 of the Multiple Award Schedule (MAS) Solicitation. The most significant change included in Refresh 4 is the implementation of Section 889 Part B of the Fiscal Year (FY) 2019 National Defense Authorization Act (NDAA). If you haven’t already done so, you should accept the Refresh 4 mass mod as soon as possible. Why? As of August 13, 2020, due to Section 889 Part B, GSA Contractors are not allowed to accept orders through their GSA Contract until they accept the mass mod.
If you hold any government contract, you’ll want to read on because the Section 889 legislation expands beyond GSA MAS Contracts and applies to all federal contracts.
What is Section 889 Part B?
Section 889 of the FY 2019 National Defense Authorization Act (NDAA) includes two prohibitions detailed in Part A and Part B. Here is a high-level overview of each:
- Section 889 Part A says that a contractor cannot sell or provide prohibited telecommunications (telecom) to federal agencies.
- Section 889 Part B says that a contractor cannot use prohibited telecom – period. That means if a company has or intends to pursue any federal contracts, they cannot use prohibited telecom whether it relates to the performance of a federal contract or not.
Last year we wrote about Part A of the prohibited telecom legislation which went into effect on August 13, 2019. Part B went into effect last month, on August 13, 2020.
Important Notes on Part B:
- Section 889 Part B only applies to prime contractors. This clause does not flow down to subcontractors.
- FAR clauses 52.204-24 and 52.204-25 were revised to implement Section 889 Part B. Indefinite Delivery Contracts, including GSA MAS Contracts, must be modified to include the revised FAR clauses before companies may accept future orders under those contracts. For GSA MAS Contracts, this is accomplished by accepting the Refresh 4 mass mod, A823.
What is Considered Prohibited Telecom?
Telecommunications or video surveillance equipment or services produced or provided by any of the five companies listed below are considered “Covered Telecommunications Equipment or Services”. Covered telecom equipment and services cannot be used as “a substantial or essential component of any system, or as critical technology as part of any system.”
- Dahua Technology Company
- Hangzhou Hikvision Digital Technology Company
- Huawei Technologies Company
- Hytera Communications Corporation
- ZTE Corporation
According to the Federal Acquisition Regulation (FAR), substantial or essential component is defined as “any component necessary for the proper function or performance of a piece of equipment, system, or service.” The FAR defines critical technology as any of the following:
- Defense articles or defense services included on the United States Munitions List set forth in the International Traffic in Arms Regulations under subchapter M of chapter I of title 22, Code of Federal Regulations;
- Items included on the Commerce Control List set forth in Supplement No. 1 to part 774 of the Export Administration Regulations under subchapter C of chapter VII of title 15, Code of Federal Regulations, and controlled-
- Pursuant to multilateral regimes, including for reasons relating to national security, chemical and biological weapons proliferation, nuclear nonproliferation, or missile technology; or
- For reasons relating to regional stability or surreptitious listening;
- Specially designed and prepared nuclear equipment, parts and components, materials, software, and technology covered by part 810 of title 10, Code of Federal Regulations (relating to assistance to foreign atomic energy activities);
- Nuclear facilities, equipment, and material covered by part 110 of title 10, Code of Federal Regulations (relating to export and import of nuclear equipment and material);
- Select agents and toxins covered by part 331 of title 7, Code of Federal Regulations, part 121 of title 9 of such Code, or part 73 of title 42 of such Code; or
- Emerging and foundational technologies controlled pursuant to section 1758 of the Export Control Reform Act of 2018 (50 U.S.C. 4817).
Are there Any Exceptions?
There are two exceptions that apply to 889 Part A and Part B. Companies are not prohibited from providing:
- A service that connects to the facilities of a third-party, such as backhaul, roaming, or interconnection arrangements; or
- 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.
Regarding exceptions, the FAR provides the following definitions:
- Backhaul means intermediate links between the core network, or backbone network, and the small subnetworks at the edge of the network (e.g., connecting cell phones/towers to the core telephone network). Backhaul can be wireless (e.g., microwave) or wired (e.g., fiber optic, coaxial cable, Ethernet).
- Interconnection arrangements means arrangements governing the physical connection of two or more networks to allow the use of another’s network to hand off traffic where it is ultimately delivered (e.g., connection of a customer of telephone provider A to a customer of telephone company B) or sharing data and other information resources.
- Roaming means cellular communications services (e.g., voice, video, data) received from a visited network when unable to connect to the facilities of the home network either because signal coverage is too weak or because traffic is too high.
Can Companies Apply for a Waiver?
The Director of National Intelligence (DNI) is the only person that can issue a true waiver, which must be based on national security interests. While the head of an executive agency may grant a one-time waiver on a case-by-case basis, these types of waivers are really just delayed implementations. The standards to obtain a waiver are high and the process to receive a waiver is lengthy. However, if a contractor is granted an agency waiver for Part A or Part B, it will allow the contractor to delay adhering to:
- Section 889 Part A through August 13, 2021
- Section 889 Part B through August 13, 2022
How Can You Determine if Your Company is in Compliance with 889 Part B?
Complying with Section 889 Part B will be no small feat and will be a particularly difficult undertaking for large businesses. Take the time to review all the information released by GSA, including the six-step process they outline here. In addition to GSA’s documentation, consider some of the following as you begin the compliance review process.
- Take the time to review and understand the rules and actions associated with Section 889.
- Conduct a reasonable inquiry to determine if your company uses covered telecom equipment or services. Keep in mind, a “reasonable inquiry” does not require you to conduct an internal or third-party audit. However, you are required to conduct a review of information that is already in your possession to determine if your company or any part of your company uses covered telecom.
- If you find your company uses prohibited equipment or services, evaluate the cost of removing these items/discontinuing services and pursuing a waiver while you implement a phase-out plan.
- Educate your employees, including purchasing/procurement and material management staff, on Section 889 and your company’s compliance plan, including the requirement to report if prohibited telecom is identified.
- As of August 13, 2020, when you respond to orders under your GSA MAS Contract, you are required to represent if your company does or does not use covered telecom solutions. The System for Award Management (SAM.gov) will eventually be updated to include the representation required by Section 889 Part B. Once this happens, companies can represent within SAM and those that do not use covered telecom will only need to re-represent annually.