Exclusive: US finalizes ban on federal contracts for companies using Huawei, others

WASHINGTON (Reuters) – The Trump administration plans to finalize regulations this week that will prevent the US government from buying goods or services from any company that uses products from five Chinese companies, including Huawei, Hikvision and Dahua, said an American official.

The rule, inspired by a 2019 law, could have far-reaching implications for companies selling goods and services to the U.S. government, as they will now have to certify that they are not using products from Dahua or Hikvision ( 002415.SZ), although both are among the best sellers of surveillance equipment and cameras in the world.

The same goes for two-way radios from Hytera Communications Corp (002583.SZ) and telecommunications equipment or mobile devices like smartphones from Huawei Technologies or ZTE Corp (000063.SZ).

Any company that uses equipment or services in the course of its daily activities with these five companies will no longer be able to sell to the United States government without obtaining a waiver from the United States government.

The White House’s action comes amid growing tension between the United States and China over the management of the new coronavirus, China’s actions in the former British colony of Hong Kong, and a close-knit trade war. two years.

“The danger facing our nation in the face of foreign adversaries like China seeking to infiltrate our systems is great,” said Russ Vought, acting director of the White House Office of Management and Budget in a statement to Reuters.

“The Trump administration is keeping our government strong against harmful networks like Huawei by fully implementing the ban on federal government procurement.”

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Huawei had no immediate comment. Dahua, ZTE, Hikvision and Hytera could not be reached immediately for comment.

The United States government awards more than $ 500 billion in contracts annually, according to the Government Accountability Office.

The Federal Acquisition Regulatory Council rule will take effect on August 13.

While there was previously uncertainty in the contracting community regarding the implementation and enforcement of the rule, given its potential impact on entrepreneurs, the White House makes it clear that it will not be delayed and that exemptions might be difficult to obtain.

Although it is not clear if this will have an impact on current contracts, it could complicate future contracts. Inc (AMZN.O), for example, received 1,500 cameras to take worker temperatures during the Zhejiang Dahua Technology Co Ltd coronavirus pandemic (002236.SZ) in April.

Amazon’s cloud unit is a major contractor in the U.S. intelligence community, and it is fighting Microsoft Corp (MSFT.O) for a cloud computing deal of up to $ 10 billion with the Pentagon.

The official said the administration will require agencies to conduct a national security analysis before granting waivers, which Congress did not expressly require in the statute.

The official added that the rule aims more than just to prohibit government agencies from using products from Huawei and other named Chinese companies, but aims to limit their influence, saying it essentially gives companies the choice: do business with the United States government or with Chinese companies.

This is Washington’s latest effort to isolate Chinese companies.

Last year, the United States placed Huawei, Hikvision and other companies on its economic blacklist, prohibiting companies from buying components from American companies without the approval of the US government.

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On June 30, the Federal Communications Commission officially designated Huawei and ZTE Corp as constituting a threat to the national security of the United States, a statement that prohibits American companies from tapping into an $ 8.3 billion government fund to buy business equipment.

Source: Reuters

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