The Trump administration will soon ban all federal agencies from using taxpayer dollars to buy products or services from any companies that use products or services from Huawei and four other Chinese companies deemed to be national security threats.
The Office of Management and Budget is helping to finalize regulations that will comply with 2019’s National Defense Authorization Act.
Federal agencies were banned in August 2019 from purchasing telecommunications products, surveillance equipment, or any other products or services from Huawei, ZTE Corporation, Dahua Technology Company, Hangzhou Hikvision, and Hytera Communications. In a second and wider-ranging regulation that will be implemented on Aug. 13, the Washington Examiner has learned that these agencies will also have to avoid doing business with any companies that buy products or services from the five Chinese companies. The latest development was first reported by Reuters on Thursday.
“The danger our nation faces from foreign adversaries like China looking to infiltrate our systems is great,” acting OMB Director Russ Vought said in a statement to the Washington Examiner. “The Trump administration is keeping our government strong against nefarious networks like Huawei by fully implementing the ban on federal procurement.”
The Trump administration believes that a strong enforcement of the China telecom ban is important, given that the U.S. Intelligence Community and the Pentagon see these Chinese companies as closely linked to the Chinese Communist Party and as potential back doors for data theft or Chinese government spying. Soon, government contractors won’t be allowed to buy tech from these Chinese firms without a waiver.
Under the new regulations, federal agencies will need to carry out a national security analysis prior to any possible waivers being handed out — something that wasn’t directly required under the law. The Trump administration’s ultimate goal is to push back against Chinese Communist Party influence, especially emanating from Huawei, and to convince businesses to ditch allegedly unsafe Chinese technology that could be exploited by China’s government.
Attorney General William Barr was picked in April to lead a revamped national security group dubbed “Team Telecom” as part of the Trump administration’s effort to combat foreign influence in the U.S. telecommunications sector amid concerns about China and other foreign parties.
In June, the Federal Communications Commission designated Chinese telecom giants Huawei and ZTE as “national security threats” and banned the two companies from accessing U.S. government subsidies to build communication infrastructure.
The Pentagon also named Huawei and Hikvision as two of 20 Chinese companies operating in the United States with direct ties to the Chinese government’s People’s Liberation Army.
It is likely that the upcoming August rules will be laid out by the Federal Acquisition Regulatory Council, which was established to assist in the direction and coordination of the U.S. government’s procurement policies. Last August, it was that council that provided the guidance on implementing the prohibition on federal agencies using telecommunications equipment or services from Huawei and other Chinese tech firms, and it is expected to do so again with the wider-ranging ban.
The Government Accountability Office reports that U.S. government agencies spend more than $550 billion on government contracts each year, with the Pentagon making up the majority with more than $350 million in annual contract spending. Under the OMB’s new rule, none of those hundreds of billions can be spent on companies that themselves use products, equipment, or services from the named Chinese companies without a special exception.
The U.S. has engaged in an all-out effort to limit Huawei’s global reach, especially in the area of 5G, pushing its “Five Eyes” partners to reject Huawei technology in their communications networks. The Justice Department unveiled a superseding indictment against Huawei in February, charging it with racketeering and conspiracy to steal trade secrets.
The Permanent Subcommittee on Investigations, led by Republican Sen. Rob Portman of Ohio, released a report in June detailing how the federal government provided “little-to-no oversight” of Chinese state-owned telecoms for two decades and how China is illicitly targeting U.S. communications the same way it has targeted education, research, and personal data.
