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July 15, 2022
Section 889 Update
Dear Partners,
This message is to inform you that policy revisions to ADS 303, Grants and Cooperative Agreements to Non-Governmental Organizations were issued on July 1, 2022, relating to the prohibitions under Section 889 of the FY 2019 John S. McCain National Defense Authorization Act (NDAA). The revisions were made specifically to the standard provision entitled "Prohibition on Certain Telecommunication and Video Surveillance Services or Equipment (July 2022)," available in the following references:
For new assistance awards: The standard provision applies to all new notices of funding opportunity and new awards, except for fixed amount awards. For fixed amount awards, the standard provision applies to new notices of funding opportunity and new awards only if the milestone, unit price, or payment at completion is for telecommunication or video surveillance services or equipment.
For existing assistance awards: For existing awards with a period of performance that goes beyond September 30, 2022, and contains the Special Award Requirement entitled "Special Award Requirement Relating to the Prohibition on Certain Telecommunication and Video Surveillance Services or Equipment (November 2020)", AOs have been asked to amend those awards to replace the Special Award Requirement, with the standard provision entitled "Prohibition on Certain Telecommunication and Video Surveillance Services or Equipment (July 2022),". For existing awards to Non-U.S. Organizations and fixed amount awards, the previous standard provision with the same number and title ("Prohibition on Certain Telecommunication and Video Surveillance Services or Equipment") will be replaced with the revised standard provision. AOs will not add this new standard provision to existing awards that do not already contain the November 2020 Special Award Requirement, as the authority for the Special Award Requirement and standard provision does not apply to prior awards.
As a reminder, the Section 889 prohibitions for assistance are solely an issue of cost allowability. In accordance with the cost principles in 2 CFR § 200.471, obligating or expending costs for covered telecommunications and video surveillance services or equipment or services as described in 2 CFR § 200.216 are unallowable. Recipients and subrecipients are prohibited from using award funds, including direct and indirect costs, cost share and program income, for such covered telecommunications and video surveillance services or equipment, except as otherwise authorized in the award. The previous Special Award Requirement, if incorporated into the award, authorized such costs through September 30, 2022. This standard provision entitled "Prohibition on Certain Telecommunication and Video Surveillance Services or Equipment (July 2022)," if added to an award, continues to authorize such costs through September 30, 2022, and will also make such costs allowable from October 1, 2022, through September 30, 2028, only when there is no available alternate eligible source for the services or equipment.
Recipients are responsible for managing award funds consistent with the terms and conditions of their award, and for adequately documenting costs in accordance with 2 CFR 200.403. To avoid future disallowances, recipients with awards containing the standard provision entitled "Prohibition on Certain Telecommunication and Video Surveillance Services or Equipment (July 2022) are strongly encouraged to document that there is no available alternate eligible source when using award funds for covered telecommunications and video surveillance services or equipment or services as described in § 200.216.
If you have any questions relating to Section 889 requirements, please consult with your cognizant Agreement Officer.
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