August 7, 2019 / 3:24 PM / a month ago

U.S. government contractors get first look at Huawei ban

WASHINGTON (Reuters) - The U.S. agency responsible for government contracts on Wednesday released an interim rule for a ban on federal purchases of telecommunications equipment from five Chinese companies, including Huawei.

FILE PHOTO: A Huawei company logo is pictured at the Shenzhen International Airport in Shenzhen, Guangdong province, China July 22, 2019. REUTERS/Aly Song

The ban is part of a broad U.S. push against Huawei Technologies Co Ltd, the world’s largest telecommunications network gear maker, which Washington accuses of espionage and stealing intellectual property.

Huawei has repeatedly denied it is controlled by the Chinese government, military or intelligence services. It has filed a lawsuit against the U.S. government over the restrictions in the defense policy bill.

The ban was included in the National Defense Authorization Act (NDAA) passed last year, and restricted the use of federal money to purchase telecommunications equipment and services and video surveillance equipment from “covered” telecommunications companies, citing national security concerns.

Huawei said in a statement that it “continues to challenge the constitutionality of the ban in federal court.”

A spokesman for Hikvision (002415.SZ), another of the five banned companies, said it is committed to complying with laws and regulations in countries where it operates. Hikvision “has made efforts to ensure the security of our products adhere to what is mandated by the U.S. government,” the spokesman said.

Huawei and two of the other companies - ZTE Corp (000063.SZ) and Hytera 002583.SZ - did not immediately respond to a request for comment on Wednesday. The fifth company, Dahua 002236.SZ, could not immediately be reached for comment.

Government contractors have said they were confused about the scope of the ban and what it will mean for their businesses.

The first rule bit.ly/33iTbiT implementing the ban was posted on a website for contractors called Acquisition.gov run by the General Services Administration, the government agency responsible for contracting. The interim rule is slated to take effect on Aug. 13.

The government will accept comments on the rule for 60 days before it comes to a final version. It will allow agencies some ability to grant waivers through Aug. 13, 2021, for contractors where security is not at issue.

The broader ban, which will apply to contracts with any company that uses equipment from the companies, will take effect in August 2020.

In June, the White House Office of Management and Budget had asked Congress for two additional years to phase in the ban - a request that was quickly rebuffed by Republican national security hawks.

“The administration has a strong commitment to defending our nation from foreign adversaries, and will fully comply with Congress on the implementation of the prohibition of Chinese telecom and video surveillance equipment, including Huawei equipment,” said Jacob Wood, a spokesman for the OMB.

Reporting by Roberta Rampton in Washington; additional reporting by Chris Sanders in Washington; editing by Bernadette Baum, Matthew Lewis and Leslie Adler

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