The DFARS Rule on Covered Telecommunications Equipment or Services Is Final

February 1, 2021

The Department of Defense (DoD) issued a final rule on Covered Telecommunications Equipment or Services that implements Section 1656 of the National Defense Authorization Act for Fiscal Year 2018 (Pub. L. 115-91).

The regulations promulgated under the rule prohibit DoD from buying any equipment, system or service that uses certain Chinese or Russian telecommunications equipment or services in connection with DoD's nuclear deterrence and homeland defense missions. According to DoD, this will increase the security of systems and critical technology, and is "structured to align" with the broader, government-wide implementation of Section 889(a)(1)(A) (Section 889 Part A) of the FY2019 National Defense Authorization Act in the Federal Acquisition Regulation.

The final rule makes two changes to the interim rule — Defense Federal Acquisition Regulation (DFARS) Case 2018-D022 — that was published Dec. 31, 2019:

1. The first change amends DFARS 252.204-7018, Prohibition on the Acquisition of Covered Defense Telecommunications Equipment or Services, and extends the reporting period for discovery of covered defense telecommunications or equipment, from one business day to three business days.

2. The second change to DFARS 252.204-7018 extends the reporting period for the submission of information about mitigating actions, from 10 business days to 30 business days.

The final rule also provides guidance through discussion and analysis of public comment, including the following:

1. It affirms that the government may rely upon an annual representation “if a negative representation (i.e., "does not") is provided in lieu of an offer-by-offer representation.”

2. It explains that prime contractors and higher-tier subcontractors subject to the mandatory flow-down requirements under DFARS 252.204-7018(e) may incur risk of violation for a failure to report lower-tier notifications. The language states that “[i]f the higher tier subcontractor or prime contractor does not report lower tier notifications of the discovery of covered defense telecommunications equipment or services, the higher tier subcontractor and prime contractor are at risk of being in violation of the prohibition.”

Please contact the authors if you have any questions about these changes and their potential impact on your business, or if you require assistance interpreting the underlying rules and regulations.

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