Prohibition on Certain Telecommunications Equipment and Services for Federal Grant Awardees

Blog
June 22, 2021

Many federal award recipients are unaware that on August 13, 2020, 2 CFR § 200.216  Prohibition on certain telecommunications and video surveillance services or equipment went into effect. This prohibition covers all non-federal entities receiving federal grant awards, cooperative agreements, and loans or loan guarantees. Under § 200.216, non-federal entities are prohibited from spending or obligating federal award funds to procure or obtain covered telecommunications equipment or services from China. The equipment and services are thought to be compromised and not safe for use.  The prohibition is for the purpose of public safety, security of government facilities, physical security surveillance of critical infrastructure, and other national security purposes.

The language in § 200.216, states:

“Recipients and subrecipients are prohibited from obligating or expending loan or grant funds to:

  1. Procure or obtain;
  2. Extend or renew a contract to procure or obtain; or
  3. Enter into a contract (or extend or renew a contract) to procure or obtain equipment, services, or systems that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system.”

Covered Telecommunications Equipment and Services

  • Telecommunications equipment produced by Huawei Technologies Company or ZTE Corporation (or any subsidiary or affiliate of such entities). These companies produce mobile phones, laptops, tablets, and routers among other items.
  • For the purposes of public safety, security of government facilities, physical security surveillance of critical infrastructure, and other national security purposes, video surveillance and telecommunications equipment produced by
    • Hytera Communications Corporation [mobile phones, mobile hotspots, and network equipment];
    • Hangzhou Hikvision Digital Technology Company [mobile phones, mobile hotspots, and network equipment]; or
    • Dahua Technology Company
    • (or any subsidiary or affiliate of such entities)
  • Telecommunications or video surveillance services provided by such entities or using such equipment
  • Telecommunications or video surveillance equipment or services produced or provided by an entity that the Secretary of Defense . . . reasonably believes to be an entity owned or controlled by, or otherwise connected to, the government of a covered foreign country [i.e. the People’s Republic of China].

The federal agencies are to prioritize available funding and technical support to assist affected businesses, institutions and organizations as is reasonably necessary for those affected entities to transition from covered communications equipment and services, to procure replacement equipment and services, and to ensure that communications service to users and customers is sustained.

What to Do

The trickiest part is that much of this technology is used as a component within a bigger object. For instance, the brand of laptops your company uses may very well have parts within it that come from the covered companies listed above.

Federal award recipients need to be aware of this prohibition that was effective August 13, 2020. Organizations should add new language to their procurement policies, if they haven’t already, as well as add steps that involve researching the background of any telecommunication or surveillance equipment that might be purchased.