Summary language excerpted from pg 4 of final guidance just issued by OMB on 2 CFR relevant to Section 889 of NDAA FY19
II. Meeting Statutory Requirements and Aligning 2 CFR with Other Authoritative Source RequirementsA. Prohibition on certain telecommunication and video surveillance services or equipmentOMB revised 2 CFR to align with section 889 of the NDAA for FY 2019 (NDAA 2019). The
NDAA 2019 prohibits the head of an executive agency from obligating or expending loan or
grant funds to procure or obtain, extend or renew a contract to procure or obtain, or enter into a
contract (or extend or renew a contract) to procure or obtain the equipment, services, or systems
prohibited systems as identified in NDAA 2019. To implement this requirement, OMB is adding
a new section, 2 CFR 200.216 Prohibition on certain telecommunication and video surveillance
services or equipment, which prohibit Federal award recipients from using government funds to
enter into contracts (or extend or renew contracts) with entities that use covered
telecommunications equipment or services. This prohibition applies even if the contract is not
intended to procure or obtain, any equipment, system, or service that uses covered
telecommunications equipment or services. As described in section 889 of the NDAA 2019,
covered telecommunications equipment or services includes:
Telecommunications equipment produced by Huawei Technologies Company
or ZTE Corporation (or any subsidiary or affiliate of such entities).
For the purpose 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, Hangzhou Hikvision Digital
Technology Company, 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, in consultation with the
Director of the National Intelligence or the Director of the Federal Bureau of
Investigation, reasonably believes to be an entity owned or controlled by, or
otherwise connected to, the government of a covered foreign country.
200.216 Prohibition on certain telecommunication and video surveillance services or
equipment
Commenters expressed widespread concerns on the impact and implementation of the statutory requirement. OMB sought to address commenter concerns by re-writing this section to align closely with the law, add a new definition for telecommunications and video surveillance costs, and add a new section 2 CFR 200.471. The final language provides guidance describing the meaning of covered telecommunications as explained in the statute. The language also aligns with the requirements in the statute affecting the financial assistance community to include the prohibition of non-Federal entities 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 a critical technology as part of any system.Federal awarding agencies are also required by the law to work with OMB to prioritize available funding and technical support to assist affected businesses, institutions and organizations. In addition, the funds must be prioritized as reasonably necessary for 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. Further, OMB added a new 2 CFR 200.471 Telecommunication and video surveillance costs to provide clarity that the telecommunications and video surveillance costs associated with 2 CFR 200.216 are unallowable. A new definition for telecommunication and video surveillance costs, which is described in 2 CFR 200.471, hasalso been added to 2 CFR for clarity.
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Cynthia Smith
Senior Advisor, Government Affairs & Regulatory Compliance
Humentum
cynthia.smith@humentum.org------------------------------