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DoD is finalizing an interim rule that amended the Defense Federal Acquisition Regulation Supplement to implement section 1656 of the National Defense Authorization Act for Fiscal Year 2018. Section 1656 provides that DoD may not procure or obtain or extend or renew a contract to provide or obtain any equipment, system, or service to carry out the DoD nuclear deterrence mission or the DoD homeland defense mission that uses covered telecommunications equipment or services as a substantial or essential component of any system or as a critical technology as a part of any system. Covered telecommunications equipment or services means telecommunications equipment produced by Huawei Technologies Company or ZTE Corporation, or any subsidiary or affiliate of such entities; telecommunication services provided by such entities or using such equipment; or telecommunications equipment or services produced or provided by an entity that the Secretary of Defense reasonably believes to be an entity owned or controlled by, or otherwise connected to, the governments of China or Russia.

Statement of Need:

DoD's highest priority missions include the nuclear deterrence mission and homeland defense mission. These mission areas must be executed with complete confidence in their security, reliability, and resiliency to operate in a cyber-contested environment. This rule protects DoD and national security by ensuring telecommunications equipment or services produced or provided by entities owned or controlled by Russia or the People's Republic of China are not introduced into the DoD supply chain as substantial or essential components or critical technologies for the DoD nuclear deterrence mission or homeland defense mission.

Summary of the Legal Basis:

Section 1656(b) of the National Defense Authorization Act for Fiscal Year 2018 prohibits DoD from procuring or obtaining, or extending or renewing a contract to procure or obtain, any equipment, system, or service to carry out the nuclear deterrence mission and homeland defense mission 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.

Alternatives:

In order to reduce the burden on the public, the rule will employ a two-tiered approach for offeror representations regarding the presence of the covered telecommunications equipment or services. The first tier of the representation is an annual representation, which allows offerors who do not provide to the Government any covered telecommunications equipment or services to only represent once per year. The second tier of the representation, is an offer-by-offer representation that is only required for offerors who do provide to the Government the covered telecommunications equipment or services. In the second tier representation, offerors notify the Government of whether they will or will not provide covered telecommunications equipment or services in the performance of any award resulting from the solicitation. This is the alternative selected instead of a single offer-by-offer representation that places the burden on all offerors on DoD contracts.

Anticipated Costs and Benefits:

This rule impacts the approximately 175,000 offerors that compete for DoD contracts and will be required to represent to DoD on either an annual or offer-by-offer basis whether they provide the Government with covered defense telecommunications equipment or services. These representations are necessary to ensure contracting officers do not violate the statutory prohibition and enable contracting officers to determine if an offeror presents a risk to national security.

Risks:

If DoD does not implement section 1656, there will be no way for contracting officers to know if they are violating the statutory prohibition under section 1656. Without this rule, contracting officers are at risk of procuring telecommunications equipment or services produced or provided by entities owned or controlled by the covered countries as a substantial or essential component or critical technology for DoD's nuclear deterrence mission or homeland defense mission. This could create an opportunity for foreign interference with DoD telecommunications, which could jeopardize our military communications, the lives of our war fighters, and our national security. DoD must take immediate action to eliminate vulnerabilities in the supply chain that would undermine the security of our nation.