US federal contract ban on 5 Chinese companies takes effect

Platform Industry News: Huawei Technologies retail shop in China

New regulations took effect on Thursday barring the US government from buying goods or services from any company that uses products from five Chinese firms including Huawei Technologies, ZTE, Hikvision and Dahua, an official has said.

The principle, which was motivated by a 2019 law, could have far-ranging implications for businesses that sell goods and services to the US government, because they will now must certify they do not use products from Zhejiang Dahua Technology Co Ltd or Hangzhou Hikvision Digital Technology Co Ltd, even though both are among the top sellers of surveillance cameras and equipment globally.

The same goes for two-way radios from Hytera Communications Corp and telecommunications equipment or mobile devices like smartphones from Huawei Technologies or ZTE Corp.

Reuters first reported in July that the rule could take effect August the 13th.

Ellen Lord, the under secretary of defence for acquisition and sustainment, said Thursday the Defence Department “fully supports” the intent of the changes” but recognises the implementation challenges facing industry partners.

Her team was working with Congress to help”draft revisions to (the law) to facilitate effective implementation and to preclude untended consequences,” Lord said.

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Any company using services or equipment in day-to-day operations from these five companies will no longer have the ability to market to the US government without getting a government waiver.

The US government annually awards over $500 billion in contracts, according to the Government Accountability Office.

Last year, the United States placed Huawei Technologies, Hikvision and other businesses on its economic blacklist, barring the companies from purchasing components from US companies without US government acceptance. The US added the Chinese firms after concluding they were engaged in activities contrary to the interests of US national security or foreign policy.

The Information Technology Industry Council (ITI) noted Thursday the regulations were only published a month ago though the law requiring the modifications was passed in 2019.

“Because of the extended time it took to roll out rules for these far-reaching requirements, contractors may not be able to consistently meet the law’s objectives.”

Federal contractors had to examine company records to ensure the absence of the named Chinese equipment and services businesses.

The team at Platform Executive hope you have enjoyed the ‘US federal contract ban on 5 Chinese companies takes effect‘ article. Initial reporting via our content partners at Thomson Reuters. Reporting by David Shepardson and Mike Stone. Editing by Bernadette Baum.

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