Defense Federal Acquisition Regulation Supplement: Covered Defense Telecommunications Equipment or Services (DFARS Case 2018-D022)

 
CONTENT
Federal Register, Volume 84 Issue 250 (Tuesday, December 31, 2019)
[Federal Register Volume 84, Number 250 (Tuesday, December 31, 2019)]
[Rules and Regulations]
[Pages 72231-72239]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-27824]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Parts 204, 212, 213, and 252
[Docket DARS-2019-0063]
RIN 0750-AJ84
Defense Federal Acquisition Regulation Supplement: Covered
Defense Telecommunications Equipment or Services (DFARS Case 2018-D022)
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Interim rule.
-----------------------------------------------------------------------
SUMMARY: DoD is issuing an interim rule amending the Defense Federal
Acquisition Regulation Supplement (DFARS) to implement sections of the
National Defense Authorization Acts for Fiscal Years 2018 and 2019
related to
[[Page 72232]]
the procurement of covered telecommunications equipment or services.
Specifically, the rule prohibits the procurement of any equipment,
system, or service to carry out the DoD nuclear deterrence or homeland
defense missions 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 includes telecommunications equipment or services
from certain Chinese entities, including their subsidiaries and
affiliates, and from any other entities that the Secretary of Defense
reasonably believes to be owned or controlled by or otherwise connected
to, the government of the People's Republic of China or the Russian
Federation.
DATES:
    Effective Date: December 31, 2019.
    Applicability: Contracting officers shall include the provisions at
DFARS 252.204-7016, Covered Defense Telecommunications Equipment or
Services--Representation, and DFARS 252.204-7017, Prohibition on the
Acquisition of Covered Defense Telecommunications Equipment or
Services--Representation, as prescribed--
     In solicitations issued on or after December 31, 2019; and
     In solicitations issued before December 31, 2019, provided
the resulting award occurs on or after December 31, 2019.
    Contracting officers shall include the clause at DFARS 252.204-
7018, Prohibition on the Acquisition of Covered Defense
Telecommunications Equipment or Services, as prescribed, in all awards
made on or after December 31, 2019.
    Contracting officers shall modify, in accordance with Federal
Acquisition Regulation (FAR) 1.108(d), existing indefinite-delivery
contracts, blanket purchase agreements, or basic ordering agreements to
include the DFARS clause for future orders or calls, prior to placing
any future orders or calls.
    If modifying an existing contract, order, or call to extend the
period of performance, including exercising an option, contracting
officers shall include the DFARS clause in accordance with FAR
1.108(d).
    Comment Date: Comments on the interim rule should be submitted in
writing to the address shown below on or before March 2, 2020, to be
considered in the formation of a final rule.
ADDRESSES: Submit comments identified by DFARS Case 2018-D022, using
any of the following methods:
    [cir] Federal eRulemaking Portal: http://www.regulations.gov.
Search for ``DFARS Case 2018-D022''. Select ``Comment Now'' and follow
the instructions provided to submit a comment. Please include ``DFARS
Case 2018-D022'' on any attached documents.
    [cir] Email: [email protected]. Include DFARS Case 2018-D022 in
the subject line of the message.
    [cir] Fax: 571-372-6094.
    [cir] Mail: Defense Acquisition Regulations System, Attn: Ms.
Heather Kitchens, OUSD(A&S)DPC/DARS, Room 3B941, 3060 Defense Pentagon,
Washington, DC 20301-3060.
    Comments received generally will be posted without change to http://www.regulations.gov, including any personal information provided. To
confirm receipt of your comment(s), please check www.regulations.gov,
approximately two to three days after submission to verify posting
(except allow 30 days for posting of comments submitted by mail).
FOR FURTHER INFORMATION CONTACT: Ms. Heather Kitchens, telephone 571-
372-6104.
SUPPLEMENTARY INFORMATION:
I. Background
    The Federal Acquisition Regulations System codifies and publishes
uniform policies and procedures for acquisition by all executive
agencies. The Federal Acquisition Regulations System consists of the
Federal Acquisition Regulation (FAR), which is the primary document,
and agency acquisition regulations that implement or supplement the
FAR. The DFARS is a supplement to the FAR that provides DoD-specific
acquisition regulations that DoD contracting officers--and those
contractors doing business with DoD--must follow in the procurement
process for supplies and services.
    Section 1656 of the National Defense Authorization Act (NDAA) for
Fiscal Year (FY) 2018 (Pub. L. 115-91) prohibited DoD from procuring or
obtaining, or extending or renewing a contract to procure or obtain,
any equipment, system, or service to carry out the DoD nuclear
deterrence or homeland defense missions 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 includes
telecommunications equipment or services from certain Chinese entities,
including their subsidiaries and affiliates, and from any other
entities that the Secretary of Defense reasonably believes to be an
entity owned or controlled by, or otherwise connected to, the
government of the People's Republic of China or the Russian Federation.
    Likewise, section 889(a)(1)(A) of the NDAA for FY 2019 (Pub. L.
115-232) established a Governmentwide prohibition on procuring or
obtaining, or extending or renewing 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 a critical technology as a part of any system. Covered
telecommunications equipment or services includes certain video
surveillance and telecommunications equipment or services from certain
Chinese entities, including their subsidiaries and affiliates, and from
any other entities that the Secretary of Defense, in consultation with
the Director of National Intelligence or the Director of the Federal
Bureau of Investigation, reasonably believes to be an entity owned or
controlled by, or otherwise connected to, the government of the
People's Republic of China.
    The DoD prohibition under 1656 differs from the Governmentwide
prohibition under 889(a)(1)(A) in that it: Applies to equipment,
systems, or services to carry out the DoD nuclear deterrence or
homeland defense missions; includes different definitions of ``covered
telecommunications equipment or services'' and ``covered foreign
country''; does not include exceptions from the prohibition; and
provides independent waiver authority to the Secretary of Defense. This
interim DFARS rule implements the section 1656 prohibition for DoD, and
is structured to align with the FAR implementation of the section
889(a)(1)(A) Governmentwide prohibition.
    To implement section 889(a)(1)(A) of the NDAA, DoD, the General
Services Administration (GSA), and the National Aeronautics and Space
Administration (NASA) published an interim rule in the Federal Register
at 84 FR 40216 on August 13, 2019, as amended by the interim rule
published at 84 FR 68314 on December 13, 2019 (reference FAR Case 2018-
017, Prohibition on Contracting for Certain Telecommunications and
Video Surveillance Services or Equipment).
    This interim DFARS rule implements the section 1656 and
889(a)(1)(A)
[[Page 72233]]
prohibitions for DoD, and is structured to align with the FAR
implementation of the section 889(a)(1)(A) Governmentwide prohibition.
The interim rule should increase security of systems and critical
technology that is part of any system used to carry out the nuclear
deterrence and homeland defense missions of DoD by prohibiting the use
of telecommunications equipment or services from certain Chinese
entities, including their subsidiaries and affiliates, and from any
other entities that the Secretary of Defense reasonably believes to be
owned or controlled by or otherwise connected to, the government of the
People's Republic of China or the Russian Federation.
II. Discussion and Analysis
    To implement the section 1656 prohibition and the DoD-specific
procedures associated with the 889(a)(1)(A) prohibition in the FAR,
this rule adds: DFARS subpart 204.21, Prohibition on Contracting for
Certain telecommunications and Video Surveillance Services or
Equipment; the provision at DFARS 252.204-7016, Covered Defense
Telecommunications Equipment or Services--Representation; the provision
at DFARS 252.204-7017, Prohibition on the Acquisition of Covered
Defense Telecommunications Equipment or Services--Representation; and
the clause at DFARS 252.204-7018, Prohibition on the Acquisition of
Covered Defense Telecommunications Equipment or Services. The new DFARS
subpart, provisions, and clause mirror the FAR implementation of
section 889(a)(1)(A) at FAR subpart 4.21, the provisions at FAR 52.204-
24 and 52.204-26, and the clause at FAR 52.204-25, but the subpart
addresses the section 1656 prohibition. The section 889(a)(1)(A)
prohibition remains implemented in the FAR, except that the DoD-
specific procedures for handling representations from offerors and
reports from contractors contained in this rule apply to both the
section 1656 and 889 prohibitions.
    The new DFARS subpart 204.21 notifies contracting officers of the
section 1656 prohibition, provides DoD-specific procedures for sections
1656 and 889(a)(1)(A), advises of the waiver process for section 1656,
and prescribes the two new solicitation provisions and the contract
clause associated with section 1656. To differentiate between the FAR
and DFARS prohibitions, this DFARS rule uses the term ``covered defense
telecommunications equipment or services'' instead of ``covered
telecommunications equipment or services,'' and provides a new
definition of ``covered foreign country'' for the DFARS coverage of the
section 1656 prohibition. These differences reflect the additional
requirements in section 1656, which only apply to the DFARS rule.
    This interim DFARS rule provides a two-tier representation
structure to ensure contracting officers comply with the section 1656
prohibition. The DFARS provision 252.204-7016 requires offerors to
represent in the System for Award Management (SAM) at least annually
whether they provide covered defense telecommunications equipment or
services as part of their offerings to the Government. Only offerors
who represent that they do provide covered defense telecommunications
equipment or services in the annual representation will be required to
provide the offer-by-offer representation in the provision at DFARS
252.204-7017. If an offeror represents in its offer-by-offer
representation under 252.204-7017 that it will provide covered defense
telecommunications equipment or services as part of its offered
products or services to DoD in the performance of any award resulting
from the solicitation, then the offeror must provide certain
disclosures about the equipment or services. DoD will use the
information provided in the disclosure to determine whether the award
is prohibited or if a waiver request may be appropriate. Offerors
should note that annual representation in SAM is currently provided
under the number 252.204-70ZZ, which references the clause at 252.204-
YY; in the next release of updates to SAM, the provision will be
updated to reflect 252.204-7016 and the clause will be updated to
reflect 252.204-7018.
    The FAR uses the same two-tier representation structure to
implement the section 889(a)(1)(A) prohibition, because it
significantly reduces the reporting burden on the public by allowing
for an annual representation, in lieu of an offer-by-offer
representation, if an offeror does not offer the prohibited products
and services to the Government. At FAR 4.2103(a), contracting officers
are directed to follow agency procedures when an offeror represents
that it will include covered telecommunications equipment or services
in its offer, or if the contracting officer has reason to question an
offeror's representations.
    To implement the section 889(a)(1)(A) prohibition, in part, and the
section 1656 prohibition, this interim DFARS rule provides the agency
procedures for handling the offeror representations in response to the
FAR provisions at 52.204-26, 52.212-3(v), and 52.204-24, and the DFARS
provisions at 252.204-7016 and 252.204-7017. The agency procedures
require that, if the contracting officer has reason to question a
negative representation from an offeror, then the contracting officer
is instructed to consult with their requiring activity and legal
counsel. If the offeror discloses information about covered
telecommunications equipment or services to be included in its offer
(as required by paragraph (e) of FAR 52.204-24) or covered defense
telecommunications equipment or services (as required by paragraph (e)
of DFARS 252.204-7017), then the contracting officer is required to
forward the information to the requiring activity and may not award to
the offeror unless the requiring activity advises that they have
obtained one of the waivers described at FAR 4.2104 or DFARS 204.2104,
as appropriate.
    Similar to the clause at FAR 52.204-25, the new DFARS clause
252.204-7018 prohibits contractors from providing equipment, system, or
services that use covered defense telecommunications equipment or
services as a substantial or essential component of any system, or as a
critical technology as a part of any system. However, unlike the FAR
clause, this prohibition only applies if the equipment, systems, or
services are to carry out the DoD nuclear deterrence or homeland
defense missions. The clause requires contractors and subcontractors to
report through https://dibnet.dod.mil any discovery of covered defense
telecommunications equipment or services during the course of contract
performance.
    FAR 4.2103(b) directs contracting officers to follow agency
procedures when a contractor provides the report required under FAR
52.204-25. This interim DFARS rule provides the agency procedures at
DFARS 204.2103(b) for handling reports received under FAR 52.204-25 and
DFARS 252.204-7018. Specifically, contracting officers are advised that
they will be notified by Defense Cyber Crime Center regarding any
reports received and the contracting officer shall consult with the
requiring activity on how to proceed with the contract.
    This interim rule also adds text in DFARS subpart 212.3,
Solicitation Provisions and Contract Clauses for the Acquisition of
Commercial Items, and DFARS subpart 213.2, Actions at or Below the
Micro-purchase Threshold, to address application of section 1656 to
commercial items and micro-purchases. This interim rule also amends
DFARS 252.204-7007, Alternate A, Annual
[[Page 72234]]
Representations and Certifications, by updating the list of annual
representations and certifications to include the new provision at
DFARS 252.204-7016.
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold and for Commercial Items, Including Commercially Available
Off-the-Shelf Items
    This rule creates two new provisions and a new clause, which apply
to contracts at or below the simplified acquisition threshold (SAT) and
to commercial items (including commercially available off-the-shelf
(COTS) items). The following provisions and clause are created by this
interim rule:
     The provision at DFARS 252.204-7016, Covered Defense
Telecommunications Equipment or Services--Representation.
     The provision at DFARS 252.204-7017, Prohibition on
Acquisition of Covered Defense Telecommunications Equipment or
Services--Representation.
     The clause at DFARS 252.204-7018, Prohibition on the
Acquisition of Covered Defense Telecommunications Equipment or
Services.
A. Applicability to Contracts at or Below the Simplified Acquisition
Threshold
    41 U.S.C. 1905 governs the applicability of laws to contracts or
subcontracts in amounts not greater than the simplified acquisition
threshold. It is intended to limit the applicability of laws to such
contracts or subcontracts. 41 U.S.C. 1905 provides that if a provision
of law contains criminal or civil penalties, or if the FAR Council
makes a written determination that it is not in the best interest of
the Federal Government to exempt contracts or subcontracts at or below
the SAT, the law will apply to them. The Principal Director, Defense
Pricing and Contracting (DPC), is the appropriate authority to make
comparable determinations for regulations to be published in the DFARS,
which is part of the FAR system of regulations. DoD has made that
determination to apply this rule at or below the simplified acquisition
threshold.
B. Applicability to Contracts for the Acquisition of Commercial Items,
Including COTS Items
    10 U.S.C. 2375 governs the applicability of laws to contracts and
subcontracts for the acquisition of commercial items, including COTS
items, and is intended to limit the applicability of laws to contracts
and subcontracts for the acquisition of commercial items, including
COTS items. 10 U.S.C. 2375 provides that if a provision of law contains
criminal or civil penalties, or if the Under Secretary of Defense
(Acquisition and Sustainment) (USD(A&S)) makes a written determination
that it is not in the best interest of the Federal Government to exempt
commercial item contracts, the provision of law will apply to contracts
for the acquisition of commercial items. Based on delegations of
authority from USD(A&S), the Principal Director, DPC, is the
appropriate authority to make this determination. DoD has made that
determination to apply this rule to the acquisition of commercial
items, including COTS items.
C. Determinations
    Consistent with the determinations that DoD has made with regard to
the application of the requirements of section 1656 of the NDAA for FY
2018, the two provisions and the clause apply to all solicitations and
contracts, including solicitations and contracts below the SAT and to
the acquisition of commercial items (including COTS items). It is
important to apply the statutory prohibitions to all acquisitions in
order to protect the security of nuclear command, control, and
communications systems and ballistic missile defense from commercial
dependencies on equipment and services from certain companies or
certain foreign countries that are considered to create a risk to our
national security.
IV. Executive Orders 12866 and 13563
    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess
all costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). E.O.
13563 emphasizes the importance of quantifying both costs and benefits,
of reducing costs, of harmonizing rules, and of promoting flexibility.
This is a significant regulatory action and, therefore, was subject to
review under section 6(b) of E.O. 12866, Regulatory Planning and
Review, dated September 30, 1993. This rule is not a major rule under 5
U.S.C. 804.
V. Executive Order 13771
    This rule is not subject to the requirements of E.O. 13771, because
the rule is issued with respect to a national security function of the
United States.
VI. Regulatory Flexibility Act
    This interim rule may have a significant economic impact on a
substantial number of small entities within the meaning of the
Regulatory Flexibility Act, 5 U.S.C. 601, et seq. An initial regulatory
flexibility analysis has been performed and is summarized as follows:
    This interim rule is necessary to implement section 1656 of the
National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2018 and
section 889(a)(1)(A) of the NDAA for FY 2019.
    The objective of this rule is to increase security of systems and
critical technology that is part of any system used to carry out the
nuclear deterrence and homeland defense missions of DoD by prohibiting
the use of telecommunications equipment or services from certain
Chinese entities, including their subsidiaries and affiliates, and from
any other entities that the Secretary of Defense reasonably believes to
be owned or controlled by or otherwise connected to, the government of
the People's Republic of China or the Russian Federation.
    To implement the prohibition, this rule creates two new
representations and a new reporting requirement. Data from the Federal
Procurement Data System (FPDS) and the System for Award Management
(SAM) were used to estimate the number of small businesses that will be
affected by this rule:
     DFARS provision 252.204-7016, Covered Defense
Telecommunications Equipment or Services--Representation, requires each
offeror to represent whether it provides covered defense
telecommunications equipment or services as a part of its offered
products or services to the Government in the performance of any
contract, subcontract, or other contractual instrument. All offerors
will be required to complete this representation in the SAM at least
annually. As of July 31, 2019, there were 424,927 active registrants in
SAM. Approximately 49.78% (211,529) of the active SAM registrants
completed the DoD-specific representations and certifications, of which
approximately 158,647 (75 percent) are estimated to be registered as a
small entity for their primary NAICS code. These small entities would
be required to complete the representation under DFARS 252.204-7016.
     DFARS 252.204-7017, Prohibition on the Acquisition of
Covered Defense Telecommunications Equipment or Services--
Representation, requires that if an offeror provides an affirmative
representation under the DFARS provision 252.204-7016, then that
[[Page 72235]]
offeror will be required to represent on every solicitation whether it
is including covered defense telecommunications equipment or services
as a part of its offer in response to the solicitation. If the offeror
responds affirmatively, the offeror is required to further disclose
information about the covered defense telecommunications equipment or
services. According to data in FPDS for fiscal years (FYs) 2016 through
2018, on average DoD makes awards each year to approximately 44,277
unique entities, of which 30,762 are unique small entities. DoD
estimates that approximately 3,076 (10 percent) of the unique small
entities that receive DoD awards each year may be required to submit
the additional offer-by-offer representation. DoD further estimates
that of the estimated 3,076 unique small entities that may be required
to represent on an offer-by-offer basis, it is estimated that 10
percent (308 unique small entities) may also be required to provide the
additional disclosure within the representation.
     DFARS clause 252.204-7018, Prohibition on the Acquisition
of Covered Defense Telecommunications Equipment or Services, requires
contractors and subcontractors to report through https://dibnet.dod.mil, any discovery of covered defense telecommunications
equipment or services that is being used as a substantial or essential
component of any system, or as critical technology as part of any
system, during the course of contract performance. At this time, there
is no way for DoD to estimate how many contractors (small or otherwise)
may make such discovery and be required to submit a report; however,
DoD expects this number to be relatively low. DoD estimates that
approximately 1,538 entities (5 percent of the 30,762 unique small
entities that receive DoD awards annually) may be required to submit a
report to DIBNET.
    The rule does not duplicate, overlap, or conflict with any other
Federal rules. This interim rule mirrors implementation of a similar
prohibition in the Federal Acquisition Regulation associated with
section 889(a)(1)(A) of the FY 2019 NDAA. It is necessary to create
additional representations and reporting requirements in the DFARS to
implement the section 1656 prohibition for DoD, because the statutory
definitions that form the basis of the prohibitions are not the same.
Section 889(a)(1)(A) includes certain types of video surveillance
equipment in the definition of covered telecommunications equipment or
services and defines ``covered foreign country'' as the People's
Republic of China. In section 1656, covered telecommunications
equipment and services includes only telecommunications equipment and
services (not video surveillance equipment or services); is limited to
equipment, system, or services used to carry out the nuclear deterrence
and homeland defense missions; and includes Russia in the definition of
``covered foreign country.''
    DoD has been unable to identify any significant alternatives that
would accomplish the stated objectives of the statute and minimize any
significant economic impact of the rule. Because this rule is a matter
of national security, it must apply to acquisitions that do not exceed
the simplified acquisition threshold (including micro-purchases), and
acquisitions of commercial items (including commercially available off-
the-shelf items). Small entities cannot be exempted from coverage
without increased risk to national security. The rule is not expected
to have significant economic impact, except on entities that currently
or plan to include covered defense telecommunications equipment or
services as part of their offered products and services to the
Government.
    DoD invites comments from small business concerns and other
interested parties on the expected impact of this rule on small
entities.
    DoD will also consider comments from small entities concerning the
existing regulations in subparts affected by this rule in accordance
with 5 U.S.C. 610. Interested parties must submit such comments
separately and should cite 5 U.S.C. 610 (DFARS Case 2018-D022), in
correspondence.
VII. Paperwork Reduction Act
    DoD has requested and the Office of Management and Budget has
approved an emergency clearance of information collection requirements
under the Paperwork Reduction Act (44 U.S.C. chapter 35). DoD is
soliciting comments on this emergency clearance 0750-0002, titled
``Covered Defense Telecommunications Equipment or Services.''
A. Estimate of Public Reporting Burden
    The annual public reporting burden is estimated as follows:
DFARS 252.204-7016 Representation
    Respondents: 211,529.
    Responses per respondent: 1.
    Total annual responses: 211,529.
    Hours per response: 0.08333.
    Total Burden Hours: 17,627.
DFARS 252.204-7017 Representation
    Respondents: 4,428.
    Responses per respondent: 45.
    Total annual responses: 199,260.
    Hours per response: 0.08333.
    Total burden hours: 16,604.
DFARS 252.204-7017 Disclosure
    Respondents: 443.
    Responses per respondent: 45.
    Total annual responses: 19,935.
    Hours per response: 3.
    Total burden hours: 59,805.
DFARS 252.204-7018 Reporting
    Respondents: 443.
    Responses per respondent: 5.
    Total annual responses: 2,215.
    Hours per response: 1.5.
    Total burden hours: 3,323.
Total Public Responses and Hours
    Total annual responses: 432,939.
    Total burden hours: 97,359.
B. Request for Comments Regarding Paperwork Burden
    Written comments and recommendations on the information collection,
including suggestions for reducing this burden, should be sent to Ms.
Jasmeet Seehra at the Office of Management and Budget, Desk Officer for
DoD, Room 10236, New Executive Office Building, Washington, DC 20503,
or email [email protected], with a copy to the Defense
Acquisition Regulations System, Attn: Ms. Heather Kitchens,
OUSD(A&S)DPC/DARS, Room 3B941, 3060 Defense Pentagon, Washington, DC
20301-3060. Comments can be received from 30 to 60 days after the date
of this notice, but comments to OMB will be most useful if received by
OMB within 30 days after the date of this notice.
    Public comments are particularly invited on: Whether this
collection of information is necessary for the proper performance of
functions of the DFARS, and will have practical utility; whether our
estimate of the public burden of this collection of information is
accurate, and based on valid assumptions and methodology; ways to
enhance the quality, utility, and clarity of the information to be
collected; and ways in which we can minimize the burden of the
collection of information on those who are to respond, through the use
of appropriate technological collection techniques or other forms of
information technology.
    To request more information on this proposed information collection
or to obtain a copy of the proposal and associated collection
instruments, please write to the Defense Acquisition Regulations
System, Attn: Ms. Heather
[[Page 72236]]
Kitchens, OUSD(A&S)DPC/DARS, Room 3B941, 3060 Defense Pentagon,
Washington, DC 20301-3060, or email [email protected]. Include DFARS
Case 2018-D022 in the subject line of the message.
VIII. Determination To Issue an Interim Rule
    A determination has been made under the authority of the Secretary
of Defense that urgent and compelling reasons exist to promulgate this
interim rule without prior opportunity for public comment. It is
critical that the DFARS is immediately revised to include the
requirements of this statute for the reason described below.
    Section 1656 of the National Defense Authorization Act (NDAA) for
Fiscal Year (FY) 2018 (Pub. L. 115-91) provides that DoD may not
procure or obtain, or extend or renew a contract to procure or obtain,
any equipment, system, or service to carry out the DoD nuclear
deterrence or homeland defense missions that uses covered defense
telecommunications equipment or services as a substantial or essential
component of any system or as a critical technology as a part of any
system. The section 1656 prohibition is similar to the Government-wide
prohibition enacted under section 889 of the NDAA for FY 2019 (Pub. L.
115-232) on the procurement of equipment, systems, or services that use
covered telecommunications and video surveillance equipment or services
as a substantial or essential component of any system or as a critical
technology as a part of any system. The rule also implements DoD-
specific procedures associated with the section 889(a)(1)(A)
prohibition in the FAR.
    While DoD worked closely with GSA, NASA, and the Office of Federal
Procurement Policy to develop the framework for these types of
prohibitions in the FAR rule implementing section 889, DoD issued
internal guidance to establish an approval process for the procurement
of certain telecommunications and video surveillance services or
equipment. However, codification of this prohibition in the DFARS and
the procedures contained in this rule are urgent, because the rule
aligns with the rollout of the annual representation from offerors in
the System for Award Management. The representations from offerors
required by this rule will give the Department the assurances it needs
that it is not violating the statutory prohibition and that it can rely
on the integrity and security of equipment that is critical to the DoD
nuclear deterrence mission of DoD and the homeland defense mission. It
is essential that DoD be able to protect against entities that may
intentionally try to deliver products or services that could infiltrate
and exploit our military communications and jeopardize our national
security network.
    DoD's highest priority missions (to include nuclear command,
control, and communications, continuity of Government; and ballistic
missile defense) must be executed with complete confidence on the
security, reliability, and resiliency to operate in a cyber-contested
environment. DoD must take immediate action to eliminate
vulnerabilities in the supply chain that would undermine the security
of our nation. However, pursuant to 41 U.S.C. 1707 and FAR 1.501-3(b),
DoD will consider public comments received in response to this interim
rule in the formation of the final rule.
List of Subjects in 48 CFR Parts 204, 212, 213, and 252
    Government procurement.
Jennifer Lee Hawes,
Regulatory Control Officer, Defense Acquisition Regulations System.
    Therefore, 48 CFR parts 204, 212, 213, and 252 are amended as
follows:
0
1. The authority citation for 48 CFR parts 204, 212, 213, and 252
continues to read as follows:
    Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.
PART 204--ADMINISTRATIVE MATTERS
0
2. Amend section 204.1202 by--
0
a. Redesignating paragraphs (2)(i) through (xiii) as paragraphs (2)(ii)
through (xix); and
0
b. Adding paragraph (2)(i).
    The addition reads as follows:
204.1202  Solicitation provision.
    (2) * * *
    (i) 252.204-7016, Covered Defense Telecommunications Equipment or
Services--Representation.
0
3. Add subpart 204.21, consisting of 204.2100 through 204.2105, to read
as follows:
SUBPART 204.21--PROHIBITION ON CONTRACTING FOR CERTAIN
TELECOMMUNICATIONS AND VIDEO SURVEILLANCE SERVICES OR EQUIPMENT
Sec.
204.2100 Scope of subpart.
204.2101 Definitions.
204.2102 Prohibition.
204.2103 Procedures.
204.2104 Waivers.
204.2105 Solicitation provisions and contract clause.
SUBPART 204.21--PROHIBITION ON CONTRACTING FOR CERTAIN
TELECOMMUNICATIONS AND VIDEO SURVEILLANCE SERVICES OR EQUIPMENT
204.2100  Scope of subpart.
    This subpart implements section 1656 of the National Defense
Authorization Act for Fiscal Year 2018 (Pub. L. 115-91) and section
889(a)(1)(A) of the National Defense Authorization Act for Fiscal Year
2019 (Pub. L. 115-232).
204.2101  Definitions.
    As used in this subpart--
    Covered defense telecommunications equipment or services means--
    (1) Telecommunications equipment produced by Huawei Technologies
Company or ZTE Corporation, or any subsidiary or affiliate of such
entities;
    (2) Telecommunications services provided by such entities or using
such equipment; or
    (3) 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
government of a covered foreign country.
    Covered foreign country means--
    (1) The People's Republic of China; or
    (2) The Russian Federation.
    Covered missions means--
    (1) The nuclear deterrence mission of DoD, including with respect
to nuclear command, control, and communications, integrated tactical
warning and attack assessment, and continuity of Government; or
    (2) The homeland defense mission of DoD, including with respect to
ballistic missile defense.
204.2102  Prohibition.
    (a) Prohibited equipment, systems, or services. In addition to the
prohibition at FAR 4.2102(a), unless the covered defense
telecommunications equipment or services are subject to a waiver
described in 204.2104, the contracting officer shall not procure or
obtain, or extend or renew a contract (e.g., exercise an option) to
procure or obtain, any equipment, system, or service to carry out
covered missions that uses covered defense telecommunications equipment
or services as a substantial or essential component of any system, or
as critical technology as part of any system.
204.2103  Procedures.
    (a) Representations.
    (1)(i) If the offeror selects ``does not'' in response to the
provision at DFARS
[[Page 72237]]
252.204-7016, the contracting officer may rely on the representation,
unless the contracting officer has an independent reason to question
the representation. If the contracting officer has a reason to question
the ``does not'' representation in FAR 52.204-26, FAR 52.212-3(v), or
252.204-7016, then the contracting officer shall consult with the
requiring activity and legal counsel.
    (ii) If the offeror selects ``does'' in paragraph (c) of the
provision at DFARS 252.204-7016, the offeror must complete the
representation at DFARS 252.204-7017.
    (2)(i) If the offeror selects ``will not'' in paragraph (d) of the
provision at DFARS 252.204-7017, the contracting officer may rely on
the representation, unless the contracting officer has an independent
reason to question the representation. If the contracting officer has a
reason to question the ``will not'' representation in FAR 52.204-24 or
DFARS 252.204-7017, then the contracting officer shall consult with the
requiring activity and legal counsel.
    (ii) If an offeror selects ``will'' in paragraph (d) of the
provision at DFARS 252.204-7017, the offeror must provide the
information required by paragraph (e) of the provision. When an offeror
completes paragraph (e) of either of the provisions at FAR 52.204-24 or
DFARS 252.204-7017, the contracting officer shall--
    (A) Forward the offeror's representation and disclosure information
to the requiring activity; and
    (B) Not award to the offeror unless the requiring activity
advises--
    (1) For equipment, systems, or services that use covered
telecommunications equipment or services as a substantial or essential
component of any system, or as critical technology as part of any
system, that a waiver as described at FAR 4.2104 has been granted; or
    (2) For equipment, systems, or services to be used to carry out
covered missions that use covered defense telecommunications equipment
or services as a substantial or essential component of any system, or
as critical technology as part of any system, that a waiver as
described at DFARS 204.2104 has been granted.
    (b) Reporting. If a contractor reports information to https://dibnet.dod.mil in accordance with the clause at FAR 52.204-25 or DFARS
252.204-7018, the Defense Cyber Crime Center will notify the
contracting officer, who will consult with the requiring activity on
how to proceed with the contract.
204.2104  Waivers.
    The Secretary of Defense may waive the prohibition in 204.2102(a)
on a case-by-case basis for a single, one-year period, if the
Secretary--
    (a) Determines such waiver to be in the national security interests
of the United States; and
    (b) Certifies to the Congressional defense committees that--
    (1) There are sufficient mitigations in place to guarantee the
ability of the Secretary to carry out the covered missions; and
    (2) The Secretary is removing the use of covered defense
telecommunications equipment or services in carrying out such missions.
204.2105  Solicitation provisions and contract clause.
    (a) Use the provision at 252.204-7016, Covered Defense
Telecommunications Equipment or Services--Representation, in all
solicitations, including solicitations using FAR part 12 procedures for
the acquisition of commercial items and, solicitations for task and
delivery orders, basic ordering agreements (BOAs), orders against BOAs,
blanket purchase agreements (BPAs), and calls against BPAs.
    (b) Use the provision at 252.204-7017, Prohibition on the
Acquisition of Covered Defense Telecommunications Equipment or
Services--Representation, in all solicitations, including solicitations
using FAR part 12 procedures for the acquisition of commercial items,
and solicitations for task and delivery orders, BOAs, orders against
BOAs, BPAs, and calls against BPAs.
    (c) Use the clause at 252.204-7018, Prohibition on the Acquisition
of Covered Defense Telecommunications Equipment or Services, in all
solicitations and resultant awards, including solicitations and
contracts using FAR part 12 procedures for the acquisition of
commercial items, and solicitations and awards for task and delivery
orders, BOAs, orders against BOAs, BPAs, and calls against BPAs.
PART 212--ACQUISITION OF COMMERCIAL ITEMS
0
4. Amend section 212.301 by adding paragraphs (f)(ii)(H), (I), and (J)
to read as follows:
212.301  Solicitation provisions and contract clauses for the
acquisition of commercial items.
* * * * *
    (f) * * *
    (ii) * * *
    (H) Use the provision at 252.204-7016, Covered Defense
Telecommunications Equipment or Services--Representation, as prescribed
in 204.2105(a), to comply with section 1656 of the National Defense
Authorization Act for Fiscal Year 2018 (Pub. L. 115-91).
    (I) Use the provision at 252.204-7017, Prohibition on the
Acquisition of Covered Defense Telecommunications Equipment or
Services--Representation, as prescribed in 204.2105(b), to comply with
section 1656 of the National Defense Authorization Act for Fiscal Year
2018 (Pub. L. 115-91).
    (J) Use the clause at 252.204-7018, Prohibition on the Acquisition
of Covered Defense Telecommunications Equipment or Services, as
prescribed in 204.2105(c), to comply with section 1656 of the National
Defense Authorization Act for Fiscal Year 2018 (Pub. L. 115-91).
* * * * *
PART 213--SIMPLIFIED ACQUISITION PROCEDURES
0
5. Amend section 213.201 by adding a new paragraph (j) to read as
follows:
213.201  General.
* * * * *
    (j) Do not procure or obtain, or extend or renew a contract to
procure or obtain, any equipment, system, or service to carry out
covered missions that use covered defense telecommunications equipment
or services as a substantial or essential component of any system, or
as critical technology as part of any system, unless a waiver is
granted. (See subpart 204.21.)
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
6. Amend section 252.204-7007 by--
0
a. Removing the clause date ``JUN 2019'' and adding ``DEC 2019'' in its
place;
0
b. Redesignate paragraphs (d)(1)(i) through (viii) as paragraphs
(d)(1)(ii) through (ix), respectively; and
0
c. Adding paragraph (d)(1)(i).
    The addition reads as follows:
252.204-7007  Alternate A, Annual Representations and Certifications.
* * * * *
    (d)(1) * * *
    (i) 252.204-7016, Covered Defense Telecommunications Equipment or
Services--Representation. Applies to all solicitations.
* * * * *
0
7. Add sections 252.204-7016, 252.204-7017, and 252.204-7018 to read as
follows:
[[Page 72238]]
252.204-7016  Covered Defense Telecommunications Equipment or
Services--Representation.
    As prescribed in 204.2105(a), use the following provision:
Covered Defense Telecommunications Equipment or Services--
Representation (Dec 2019)
    (a) Definitions. As used in this provision, covered defense
telecommunications equipment or services has the meaning provided in
the clause 252.204-7018, Prohibition on the Acquisition of Covered
Defense Telecommunications Equipment or Services.
    (b) Procedures. The Offeror shall review the list of excluded
parties in the System for Award Management (SAM) (https://www.sam.gov) for entities excluded from receiving federal awards for
``covered defense telecommunications equipment or services''.
    (c) Representation. The Offeror represents that it [ ] does, [ ]
does not provide covered defense telecommunications equipment or
services as a part of its offered products or services to the
Government in the performance of any contract, subcontract, or other
contractual instrument.
(End of provision)
252.204-7017  Prohibition on the Acquisition of Covered Defense
Telecommunications Equipment or Services--Representation.
    As prescribed in 204.2105(b), use the following provision:
Prohibition on the Acquisiton of Covered Defense Telecommunications
Equipment or Services--Representation (Dec 2019)
    The Offeror is not required to complete the representation in
this provision if the Offeror has represented in the provision at
252.204-7016, Covered Defense Telecommunications Equipment or
Services--Representation, that it ``does not provide covered defense
telecommunications equipment or services as a part of its offered
products or services to the Government in the performance of any
contract, subcontract, or other contractual instrument.''
    (a) Definitions. Covered defense telecommunications equipment or
services, covered mission, critical technology, and substantial or
essential component, as used in this provision, have the meanings
given in the 252.204-7018 clause, Prohibition on the Acquisition of
Covered Defense Telecommunications Equipment or Services, of this
solicitation.
    (b) Prohibition. Section 1656 of the National Defense
Authorization Act for Fiscal Year 2018 (Pub. L. 115-91) prohibits
agencies from procuring or obtaining, or extending or renewing a
contract to procure or obtain, any equipment, system, or service to
carry out covered missions that uses covered defense
telecommunications equipment or services as a substantial or
essential component of any system, or as critical technology as part
of any system.
    (c) Procedures. The Offeror shall review the list of excluded
parties in the System for Award Management (SAM) at https://www.sam.gov for entities that are excluded when providing any
equipment, system, or service to carry out covered missions that
uses covered defense telecommunications equipment or services as a
substantial or essential component of any system, or as critical
technology as part of any system, unless a waiver is granted.
    (d) Representation. If in its annual representations and
certifications in SAM the Offeror has represented in paragraph (c)
of the provision at 252.204-7016, Covered Defense Telecommunications
Equipment or Services--Representation, that it ``does'' provide
covered defense telecommunications equipment or services as a part
of its offered products or services to the Government in the
performance of any contract, subcontract, or other contractual
instrument, then the Offeror shall complete the following additional
representation:
    The Offeror represents that it [ ] will [ ] will not provide
covered defense telecommunications equipment or services as a part
of its offered products or services to DoD in the performance of any
award resulting from this solicitation.
    (e) Disclosures. If the Offeror has represented in paragraph (d)
of this provision that it ``will provide covered defense
telecommunications equipment or services,'' the Offeror shall
provide the following information as part of the offer:
    (1) A description of all covered defense telecommunications
equipment and services offered (include brand or manufacturer;
product, such as model number, original equipment manufacturer (OEM)
number, manufacturer part number, or wholesaler number; and item
description, as applicable).
    (2) An explanation of the proposed use of covered defense
telecommunications equipment and services and any factors relevant
to determining if such use would be permissible under the
prohibition referenced in paragraph (b) of this provision.
    (3) For services, the entity providing the covered defense
telecommunications services (include entity name, unique entity
identifier, and Commercial and Government Entity (CAGE) code, if
known).
    (4) For equipment, the entity that produced or provided the
covered defense telecommunications equipment (include entity name,
unique entity identifier, CAGE code, and whether the entity was the
OEM or a distributor, if known).
(End of provision)
252.204-7018  Prohibition on the Acquisition of Covered Defense
Telecommunications Equipment or Services.
    As prescribed in 204.2105(c), use the following clause:
Prohibition on the Acquisition of Covered Defense Telecommunications
Equipment or Services (Dec 2019)
    (a) Definitions. As used in this clause--
    Covered defense telecommunications equipment or services means--
    (1) Telecommunications equipment produced by Huawei Technologies
Company or ZTE Corporation, or any subsidiary or affiliate of such
entities;
    (2) Telecommunications services provided by such entities or
using such equipment; or
    (3) 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 government of a covered foreign country.
    Covered foreign country means--
    (1) The People's Republic of China; or
    (2) The Russian Federation.
    Covered missions means--
    (1) The nuclear deterrence mission of DoD, including with
respect to nuclear command, control, and communications, integrated
tactical warning and attack assessment, and continuity of
Government; or
    (2) The homeland defense mission of DoD, including with respect
to ballistic missile defense.
    ``Critical technology'' means--
    (1) Defense articles or defense services included on the United
States Munitions List set forth in the International Traffic in Arms
Regulations under subchapter M of chapter I of title 22, Code of
Federal Regulations;
    (2) Items included on the Commerce Control List set forth in
Supplement No. 1 to part 774 of the Export Administration
Regulations under subchapter C of chapter VII of title 15, Code of
Federal Regulations, and controlled--
    (i) Pursuant to multilateral regimes, including for reasons
relating to national security, chemical and biological weapons
proliferation, nuclear nonproliferation, or missile technology; or
    (ii) For reasons relating to regional stability or surreptitious
listening;
    (3) Specially designed and prepared nuclear equipment, parts and
components, materials, software, and technology covered by part 810
of title 10, Code of Federal Regulations (relating to assistance to
foreign atomic energy activities);
    (4) Nuclear facilities, equipment, and material covered by part
110 of title 10, Code of Federal Regulations (relating to export and
import of nuclear equipment and material);
    (5) Select agents and toxins covered by part 331 of title 7,
Code of Federal Regulations, part 121 of title 9 of such Code, or
part 73 of title 42 of such Code; or
    (6) Emerging and foundational technologies controlled pursuant
to section 1758 of the Export Control Reform Act of 2018 (50 U.S.C.
4817).
    Substantial or essential component means any component necessary
for the proper function or performance of a piece of equipment,
system, or service.
    (b) Prohibition. In accordance with section 1656 of the National
Defense Authorization Act for Fiscal Year 2018 (Pub. L. 115-91), the
contractor shall not provide to the Government any equipment,
system, or service to carry out covered missions that uses covered
defense telecommunications equipment or services as a substantial or
essential component of any system, or as critical technology as part
of any system, unless the covered defense telecommunication
equipment or services are covered by a waiver described in Defense
Federal Acquisition Regulation Supplement 204.2104.
[[Page 72239]]
    (c) Procedures. The Contractor shall review the list of excluded
parties in the System for Award Management (SAM) at https://www.sam.gov for entities that are excluded when providing any
equipment, system, or service, to carry out covered missions, that
uses covered defense telecommunications equipment or services as a
substantial or essential component of any system, or as critical
technology as part of any system, unless a waiver is granted.
    (d) Reporting.
    (1) In the event the Contractor identifies covered defense
telecommunications equipment or services used as a substantial or
essential component of any system, or as critical technology as part
of any system, during contract performance, the Contractor shall
report at https://dibnet.dod.mil the information in paragraph (d)(2)
of this clause.
    (2) The Contractor shall report the following information
pursuant to paragraph (d)(1) of this clause:
    (i) Within one business day from the date of such identification
or notification: The contract number; the order number(s), if
applicable; supplier name; brand; model number (original equipment
manufacturer number, manufacturer part number, or wholesaler
number); item description; and any readily available information
about mitigation actions undertaken or recommended.
    (ii) Within 10 business days of submitting the information in
paragraph (d)(2)(i) of this clause: Any further available
information about mitigation actions undertaken or recommended. In
addition, the Contractor shall describe the efforts it undertook to
prevent use or submission of a covered defense telecommunications
equipment or services, and any additional efforts that will be
incorporated to prevent future use or submission of covered
telecommunications equipment or services.
    (e) Subcontracts. The Contractor shall insert the substance of
this clause, including this paragraph (e), in all subcontracts and
other contractual instruments, including subcontracts for the
acquisition of commercial items.
(End of clause)
* * * * *
[FR Doc. 2019-27824 Filed 12-30-19; 8:45 am]
BILLING CODE 5001-06-P