Federal agencies banned from purchasing equipment from Huawei, other Chinese groups

The Department of Defense, the General Services Administration and the NASA issued an interim rule Wednesday banning federal purchases of telecommunications equipment from Huawei and four other Chinese companies.

The interim rule will go into effect on Aug. 13 and was issued in response to passage of the 2019 National Defense Authorization Act, which banned federal agencies from using equipment or services from the five companies after that date. 

{mosads}Besides Huawei, the companies named in the interim rule were ZTE Corporation, Hytera Communications Corporation, Hangzou Hikvision Digital Technology Company and Dahua Technology Company. None of the companies immediately responded to request for comment on the rule. 

Specifically, the rule bans federal agencies from “procuring or obtaining, or extending or renewing a contract to procure or obtain, any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as a critical technology as part of any system.”

The heads of government agencies are allowed to issue one-time waivers to government entities to allow business with one of the companies until Aug. 13, 2021, if the entity in question can justify why they need more time to implement the ban. 

The Office of Management and Budget (OMB) is in charge of implementing the rule, with OMB spokesperson Jacob Wood telling The Hill in a statement, “The Administration has a strong commitment to defending our nation from foreign adversaries, and will fully comply with Congress on the implementation of the prohibition of Chinese telecom and video surveillance equipment companies, including Huawei.” 

In June, OMB acting Director Russell Vought asked Congress that the ban be enacted as part of the 2020 National Defense Authorization Act instead. Congress rejected this request. 

“The Administration believes, based on feedback from impacted stakeholders, that this additional preparatory work will better ensure the effective implementation of the prohibition without compromising desired security objectives,” Vought wrote in a letter sent to Vice President Pence in his capacity as president of the Senate.

The rule is being issued as part of a broader crackdown on Huawei and other Chinese telecommunications groups by the Trump administration. In May, President Trump signed an executive order that empowered him to block any foreign technology companies from doing business in the U.S. if deemed a national security threat. 

While the executive order did not name any companies, that same week the Department of Commerce announced that it would add Huawei to its “entity list,” which effectively blacklists any company add to it, as U.S. companies are banned from doing business with any group on the list. 

Huawei is due to be formally added to the list later this month following a 90-day extension that was issued to give companies time to adjust.

However, President Trump threw the blacklisting of Huawei into question in June when he announced that Group of 20 summit in Japan that U.S. companies would be allowed to sell equipment to Huawei in cases where there was no national security threat. 

This led to bipartisan backlash on Capitol Hill, where the company is seen as under the control of the Chinese government.