Section 889 (Huawei/ZTE Ban)

Section 889 created one of the most operationally disruptive compliance requirements in recent federal contracting history. Its prohibition cascades through the entire supply chain, affecting not just the obvious decision of what networking equipment to buy, but the services of cloud providers, telecommunications carriers, and managed service providers who may use covered equipment in their networks.

What is Section 889?

Section 889 of the FY2019 National Defense Authorization Act (NDAA) prohibits the federal government from (Part A) buying telecommunications equipment or services from Huawei Technologies, ZTE Corporation, Hytera Communications, Hangzhou Hikvision Digital Technology, or Dahua Technology, or any of their subsidiaries or affiliates; and (Part B, effective August 2020) from contracting with any entity that uses such covered equipment or services anywhere in its operations. The FAR rule implementing Section 889 requires contractors to represent in their offers whether they will or will not provide covered equipment, and separately whether they use covered equipment themselves. A false representation is treated as a false claim under the False Claims Act. The prohibition extends beyond hardware to include services: a managed security services provider that uses Hikvision cameras in its offices technically uses covered equipment and must so represent. The definition of "subsidiaries and affiliates" has generated significant compliance complexity.

Why Section 889 matters for government contractors

Section 889 Part B's sweeping prohibition on using covered equipment anywhere in a contractor's own business operations means that a small business using inexpensive Hikvision security cameras in its office may be disqualified from federal contracting. Contractors must audit their own operations, not just their supply chain, to comply. Telecommunications service providers that route traffic through networks using covered equipment create additional compliance questions.

Example

A federal IT services firm audits its office infrastructure before representing compliance on a new DHS solicitation. It discovers that its physical security system uses a Hikvision IP camera. The firm replaces the camera with a non-covered alternative, updates its internal policy to prohibit covered equipment purchases, and represents accurately on the solicitation.

Frequently Asked Questions

Does Section 889 apply to all federal contracts?

Section 889 applies broadly to federal contracts. The FAR rule requires a representation from contractors on most solicitations regardless of the subject matter of the contract.

What counts as a "subsidiary or affiliate" of the covered companies?

The covered companies include Huawei, ZTE, Hytera, Hikvision, and Dahua, along with any subsidiary or affiliate of those companies. Determining affiliation can be complex for companies with indirect ownership structures.

Does Section 889 extend to subcontractors?

Prime contractors must flow the prohibition down to subcontractors. Subcontractors that use covered equipment are a compliance liability for the prime.

Can a contractor get a waiver for Section 889?

The head of an executive agency can grant a waiver for specific procurements in the national security interest, but waivers are rare and must be renewed periodically.

What happens if a contractor falsely represents Section 889 compliance?

A false representation constitutes a False Claims Act violation, which carries treble damages and civil monetary penalties. It can also be grounds for contract termination and debarment.