Hallway of servers.

President Donald Trump signed the John S. McCain National Defense Authorization Act for Fiscal Year 2019 (NDAA) (Pub. L. No. 115-232) into law on August 13, 2018. Section 889 of the NDAA applies to schools, including hospital systems, labs, and research affiliates, receiving federal contracts, grants, and loans. Specifically, § 889(a)(1)(A), which went into effect on August 13, 2019, prohibits an executive agency from “procur[ing] or obtain[ing] or extend[ing] or renew[ing] a contract to procure or obtain 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 a part of any system.” Under the NDAA, covered telecommunications equipment or services includes any telecommunications equipment produced by five Chinese companies and their subsidiaries and affiliates.

While complying with § 889(a)(1)(A) will be challenging to some higher education federal contractors already, § 889(a)(1)(B)—which becomes effective on August 13, 2020—will likely complicate things even more. Under the latter subsection, the federal government is prohibited from “enter[ing] into a contract (or extend[ing] or renew[ing] a contract) with an entity that uses 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.” Section 889 does not define “system,” but the NDAA prohibits telecommunications equipment produced by the 5 Chinese companies and their subsidiaries and affiliates in government facilities, physical security surveillance of critical infrastructure, and other national security purposes. Therefore, an executive agency could extend the limitation of “system” to a federal contractor’s internal systems if the contractor processes, stores, or transmits government information in its own systems.

A federal contractor can request a one-time waiver from the executive agency if it “provides a compelling justification for the additional time to implement the requirements” and “submits to the head of the executive agency … a full and complete laydown of the presences of covered telecommunications or video surveillance equipment or services in the entity’s supply chain and a phase-out plan to eliminate such covered telecommunications or video surveillance equipment or services from the entity’s systems.” This waiver is available for a period of not more than two years after the respective effective dates of §§ 889(a)(1)(A) and 889(a)(1)(B). After the waiver period expires, only the Director of National Intelligence may provide a waiver “if the Director determines the waiver is in the national security interests of the United States.”

Takeaway

The lesson for higher education federal contractors is as follows: a temporary waiver for a period of not more than two years after the effective dates of subparts (A) and (B) of section 898(a)(1) can be requested from the executive agency under certain circumstances, but ultimately only time will tell how stringently the government will enforce the NDAA because of the ambiguity in the statute. We will continue to monitor for any developments and report on the Affirmative Action/OFCCP and Higher Education blogs.

Author


Browse More Insights

Practice Group

OFCCP Compliance, Government Contracting, and Reporting

The experienced attorneys in our OFCCP Compliance, Government Contracting, and Reporting Practice Group advise and defend federal contractors and subcontractors on jurisdictional, compliance, and enforcement issues relevant to government contracting, including those involving the Office of Federal Contract Compliance Programs (OFCCP).

Learn more
Modern dark data center, all objects in the scene are 3D
Practice Group

Cybersecurity and Privacy

The attorneys in the Cybersecurity and Privacy Practice Group at Ogletree Deakins understand that data now accumulates quickly and transmits easily. As the law adapts to technical advancements, we effectively advise our clients as they work to comply with new developments and best practices for protecting the privacy of the data that their businesses collect and retain.

Learn more
A modern university lecture hall full of students listening to the lecturer.
Practice Group

Higher Education

Ogletree Deakins is an industry leader in higher education legal practice. Our attorneys have decades of experience advising and defending public and private, religious and secular colleges, universities, and vocational schools.

Learn more

Sign up to receive emails about new developments and upcoming programs.

Sign Up Now