US inches closer to federal contract ban for firms that use Huawei, others
- Any company that uses products from the five Chinese firms will no longer be able to sell to the US government without getting a federal waiver
- The move comes amid increasing US-China tension over the handling of the coronavirus and a nearly two-year trade war
The rule, which was prompted by a 2019 law, could have far-ranging implications for companies that sell goods and services to the US 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.
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 US government without getting a federal waiver.
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“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.
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The American government annually awards more than US$500 billion in contracts, according to the Government Accountability Office.
The rule from the Federal Acquisition Regulatory Council will take effect on August 13.
While there was previously 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’s cloud unit is a major contractor with the US intelligence community, and it has been battling Microsoft for an up to US$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.
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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 is a bid to limit their influence, saying it essentially gives companies a choice: do business with the US government or with the Chinese firms.
It is the latest effort by Washington to isolate the Chinese firms.
On June 30, the Federal Communications Commission formally designated Huawei and ZTE as posing threats to US national security, a declaration that bars American firms from tapping an US$8.3 billion government fund to purchase equipment from the companies.