SEEKING A DELAY ON HUWAI AND ZTE BAN? DON’T BET ON IT

Despite calls from industry, and even the Pentagon, to delay requirements that defense contractors purge all Huawei, ZTE, and other banned tech throughout their entire company, Congressional leaders seem unwilling to grant a statutory extension.  Indeed, House Armed Services Committee Chair Adam Smith (D-WA) would like the Government Accountability Office to initiate a report on the implementation of Section 889, the portion of the FY’19 defense bill that set the ban in motion.  The FCC recently named Huawei and ZTE as formal risks to national security.  The question of how contractors should comply, though, is difficult to answer.  No regulation has yet been issued for either review or comment.  A draft reg is thought to be stalled in OMB’s Office of Information and Regulatory Affairs.  The mere absence of a regulation, though, does not forestall the implementation of the law, Part B of which is scheduled to become effective August 13th.  While DOD leaders had indicated earlier this year that they would like to see a six-month delay, one branch of the government can’t undo what another branch has done without some sort of formal action.  While some may believe that limited enforcement will provide a degree of relief, keep in mind that the initial watchdogs of company compliance were always more likely to be whistleblowers.  As such, contractors may be left to taking the broadest reading of the law, which bans the use of Huawei, ZTE and affiliated technologies throughout a DOD contractor’s company, regardless of where in the world it is located or whether or not the specific location is involved in DOD work.  The bottom line is that any company with significant DOD business must take precautions to ensure that both it and its subcontractors comply with the law.