November 18, 2019

November 18, 2019

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GSA Implements Restrictions on Certain Chinese-Made Telecommunications Services and Equipment

On September 9, 2019, the U.S. General Services Administration (“GSA”) announced it would be issuing a mass modification (expected sometime this month)[1] requiring all new and existing GSA Multiple Award Schedule (“MAS”) contracts include two new clauses. The new clauses come in response to Section 889 of the FY2019 National Defense Authorization Act (“NDAA”), and recently implemented FAR provisions, which impose prohibitions relating to the procurement of certain Chinese telecommunications equipment and services (which we have previously discussed here and here). The two clauses to be added to all MAS contracts are:

  • FAR 52.204-25, Prohibition on Contracting for Certain Telecommunications and Video Surveillance Services or Equipment (Aug 2019)

  • GSAR 552.204-70, Representation Regarding Certain Telecommunications and Video Surveillance Services or Equipment (Aug 2019)

FAR 52.204-25 – A new government-wide FAR clause (discussed in a previous post), prohibits contractors from providing any equipment, system, or service 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, unless an exception or waiver applies. Companies Huawei and ZTE are specifically called out in the new clause, as are three additional Chinese-owned entities. The clause applies to covered equipment and services from these entities as well as their subsidiaries and affiliates, and leaves open the possibility for other Chinese companies to be included based on a specific determination by, among others, the Secretary of Defense. This clause also requires contractors to report the discovery of covered equipment or services during performance within one business day from the date of discovery, with a follow-up report containing information on the contractor’s mitigation actions required within 10 business days after the initial report.

GSAR 552.204-70 – A new, GSA-specific clause, requires contractors to submit a formal representation to the GSA indicating whether the contractor will “provide covered telecommunications equipment or services to the Government” in performing “any contract, subcontract, order, or other contractual instrument” resulting from its Schedule contract. If so, the contractor must identify all such equipment or services and describe its proposed use under the contract. Notably, this representation is materially the same representation required by FAR 52.204-24, albeit altered slightly to emphasize inclusion of the clause will be required for both new and existing Schedule contracts.

MAS contractors will have 60 days from the date the modification is issued to accept the modification by incorporating the above clauses into their Schedule contracts and providing the representation required by GSAR 552.204-70. Additionally, MAS contractors must accept this modification prior to exercising their contract’s next option period, and GSA may cancel contracts if the contractor has not accepted after the 60-day period. GSA anticipates the mass modification will be released sometime this month, but has yet to provide a definitive date on which the 60-day period will commence.

This is also a good reminder for companies to review the flowdown requirements in their standard form terms and conditions. Contractors should be updating these forms to include the new FAR 52.204-25 (and, quite possibly, FAR 52.204-24 and/or GSAR 552.204-70 as well).

[1] As of the publication of this article, GSA has yet to release the mass mod.

Copyright © 2019, Sheppard Mullin Richter & Hampton LLP.

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About this Author

Jonathan E. Meyer, Sheppard Mullin, International Trade Lawyer, Encryption Technology Attorney
Partner

Jon Meyer is a partner in the Government Contracts, Investigations & International Trade Practice Group in the firm's Washington, D.C. office.

Mr. Meyer was most recently Deputy General Counsel at the United States Department of Homeland Security, where he advised the Secretary, Deputy Secretary, General Counsel, Chief of Staff and other senior leaders on law and policy issues, such as cyber security, airline security, high technology, drones, immigration reform, encryption, and intelligence law. He also oversaw all litigation at DHS,...

202-747-1920
Townsend Bourne, Government Affairs Attorney, Sheppard Mullin Law FIrm
Associate

Ms. Bourne's practice focuses on Government Contracts law and litigation. Her experience includes complex litigation in connection with the False Claims Act, bid protest actions both challenging and defending agency decisions on contract awards before the Government Accountability Office and Court of Federal Claims, claims litigation before the Armed Services Board of Contract Appeals and the Civilian Board of Contract Appeals, investigating and preparing contractor claims, and conducting internal investigations. 

Ms. Bourne advises clients on a wide variety of matters relating to government contracts, including contract administration, procurement integrity, the FAR Mandatory Disclosure Rule, and GSA’s Multiple Award Schedule (MAS) Program.  In addition to her practice, Ms. Bourne writes frequently on legal and regulatory developments affecting the Government Contracts industry.

202-469-4917
David Gallacher, Attorney, litigation, administrative, and counseling issues
Associate

David Gallacher is a partner in the Government Contracts, Investigations & International Trade Practice Group in the firm's Washington, D.C. office.

Areas of Practice

Mr. Gallacher's professional experience involves a wide variety of litigation, administrative, and counseling issues related to federal procurement laws. His experience is extensive and includes complex litigation in federal court under the qui tam provisions of the False Claims Act, claims disputes before the Boards of Contract...

202-218-0033
Bryce Chadwick, Government Contracts, Attorney, Sheppard Mullin, law firm
Associate

Bryce Chadwick is a member of Government Contracts, Investigations & International Trade at Sheppard Mullin. Bryce provides a full range of legal services to clients that do business with governmental entities. He advises clients on complying with complex government regulations and defends them in the event of litigation. He specializes in handling government contract disputes, bid protests, claims and defending individuals and corporations in a wide range of administrative, civil and criminal proceedings, including fraud investigations and whistle blower lawsuits....

202-747-2329