GSA Provides Some Clarity on Section 889 Implementation

The General Services Administration provided some clarity and furnished details regarding how the agency is implementing Section 889 of the 2019 National Defense Authorization Act at a Thursday webinar, but declined to address questions around the ambiguous terminology used in interim rules. 

The feedback session comes just under a month after Part B of Section 889—which impacts all federal contractors—went into effect as an interim rule August 13. That provision prohibits the federal government from contracting with any entity using telecommunications equipment from five Chinese companies, including Huawei and ZTE. 

Since then, an additional provision related to System for Award Management representation requirements was published August 27. This latest interim rule expands the scope of representation requirements to go beyond whether a contractor provides covered telecoms to add whether a contractor uses covered telecom. The more limited Part A of Section 889, which prohibits the federal government from obtaining any equipment, services or systems from the covered companies, went into effect Aug. 13, 2019. 

Thursday’s webinar explained some of Section 889’s nuances, and panelists emphasized the communications and outreach efforts they are undertaking to ensure contractors and agency customers are on the same page. 

Critically, the GSA webinar refrained from addressing questions surrounding definitions of ambiguous terms such as “use,” “subsidiaries,” or “affiliates” in the language of Federal Acquisition Regulation rules. Maria Swaby, GSA’s procurement ombudsman, said GSA could not answer all submitted questions, and added that the webinar would exclude those questions not focused on implementation. Questions about the language of Section 889 itself should be directed to Regulations.gov, where anyone can submit public comment on Part B of Section 889 through September 14. 

Clarifying the Rules

Still, Michael Thompson, senior policy adviser in GSA’s acquisition policy division, did put some of the technicalities in the rule surrounding what counts as “using” covered equipment or services into plainer language. Though Section 889 does not flow down the supply chain, contractors must be able to represent findings to the government regarding any equipment, services and systems they use in their operations—for government or non-government work—even if the company itself is not the owner of that equipment, service or system. 

“That's regardless of the geographic location of the equipment system or service, regardless of the geographical location of the use, and this may include equipment systems and services owned or provided by other companies, if they're used by the offeror itself,” Thompson said. “Those other companies might be affiliates, parents, subsidiaries, subcontractors or suppliers.”

Thus, contractors may need to look into whether products they use, but do not own, comply with the rule. Thompson added that this is necessary to comply with the representation clause. 

The additional rule expanding the representation clause means that contractors will not have to represent every time it submits an offer. 

“If an entity represents in SAM that it does not provide and does not use covered telecom, it will only need to represent annually via SAM,” Thompson said.

To comply with the reporting clause, contractors and subcontractors—meaning this specific requirement does flow down the supply chain—only need to identify whether any of the covered telecommunications services or equipment serves as a substantial or essential component or as a critical technology. The reporting clause requires contractors and their subcontractors to notify the government if they identify covered systems or equipment being used during contract performance. 

Contract Modification and Waivers

Thompson and Jack Tekus, an analyst with GSA’s Multiple Award Schedule program management office, also offered updates on contract modifications related to Section 889. Tekus said MAS modifications were sent to contractors August 14 in batches of around 3,000 per day over the following week. Those who did not accept MAS contract modifications were sent a reminder email August 31. Tekus reported those modifications were accepted at a rate of more than 80%. 

For certain non-MAS indefinite delivery vehicles, modifications were sent to contractors August 13 in one batch, and a follow-up email to those that had not yet accepted was also sent August 31. As of this morning, the acceptance percentage for this group of contractors was above 75%, Tekus said. Some other non-MAS indefinite delivery contracts are being modified manually.

How stakeholders are communicating with each other was a major topic of the panel. For contract modifications, Tekus said GSA has created a dashboard customer agencies can use to see whether contractors have accepted or declined modifications, whether their status is pending or whether they have received a waiver. 

On the topic of waivers, GSA largely squashed hopes that contractors and agencies will be able to delay implementation in any significant way. Waivers require a high bar of justification and should only be used as a last resort, Thompson said. 

“It may be educational for industry to look at that waiver process to really see all of the steps that are in place that have to go through before a waiver can even be granted,” Thompson said, “And it can really illuminate just how rare I believe that waivers are going to be granted.”

Two types of waivers can be granted under Section 889. Waivers can be granted either by the director of national intelligence or by agency heads on on a one-time basis. Thompson said agency head waivers more closely resemble a “delayed implementation, and not a true waiver.” 

Waivers have definite expiration dates under Section 889. Waivers for Part A have a hard deadline of Aug. 13, 2021 and Part B waivers expire a year after that. GSA asks waivers be pursued only as a last resort. 

Thus far, the Defense Department has already received a waiver from the director of national intelligence. The Pentagon’s waiver extends the compliance deadline for some equipment deemed low-risk until September 30. 

But DOD Undersecretary for Acquisition and Sustainment Ellen Lord, speaking Wednesday at the Defense News Conference, said the Pentagon is discussing a further extension of that waiver beyond September. 

“So what we did is we got a waiver from ODNI for noncritical weapons systems,” Lord said. “We continue to discuss an extension beyond September of that with them.” 

The Bottom Line

The bottom line for federal contractors regarding Section 889 compliance may simply mean continuous monitoring of supply chains. Len Fedoruk, purchase director for GSA Fleet, which provides vehicle solutions for federal agencies, said the advice he is giving suppliers is to “continuously review their supply chains in order to ensure compliance.” 

“The key here, though, is engagement,” Fedoruk said. “What we ask is that if there’s any questions or concerns of our supply base that they engage their contracting officer; they're the individual that’s on point to get that information so that we can come to a resolution and move forward.” 

But Kea Matory, legislative policy director with the National Defense Industrial Association, told Nextgov in an email GSA, as well as DOD, have made a clear effort to communicate with industry about complying with Section 889, but outreach events like Thursday’s webinar aren’t enough. 

“Unfortunately that doesn’t solve some of the underlying issues of the rule or help narrow the scope of the overly broad language causing concern for companies trying to ensure compliance,” Matory said. “We are looking for more communication regarding future plans for waivers, a timeline for an update to the interim rule and a listing of prohibited equipment to ensure companies trying to remove covered equipment don’t inadvertently replace it with a different prohibited item.”