On August 12, 2020, Director of National Intelligence John Ratcliffe issued a memorandum to the Department of Defense (DOD) that waives the applicability of Section 889 of the National Defense Authorization Act for Fiscal Year 2019 as applied to DOD. Section 889 prohibits agencies from procuring telecommunications equipment and services from Huawei Technologies Company, Hangzhou Hikvision Digital Technology Company, Hytera Communications Company, Dahua Technology Company, and ZTE Corporation. DOD originally released a memorandum on July 23, 2020, to begin implementing Section 889, which was set to take effect on August 13, 2020, by law, but Director Ratcliffe’s memorandum delays its implementation. His waiver allows DOD contractors to continue using banned Chinese telecommunications equipment until September 30, 2020.

The memorandum cites national security concerns as the cause of the waiver. Specifically, it mentions DOD Under Secretary of Defense for Acquisition and Sustainment Ellen Lord’s argument that an extension was needed to enable DOD to continue providing for the nation’s military forces.

It is unclear if other agencies will request a similar waiver. Director John Ratcliffe noted that, between now and September 30, 2020, DOD and national intelligence staff will conduct a thorough review of the waiver and determine whether it needs to be more broadly extended. Even if it is not, it is widely expected that all executive agencies and, by extension, federal contractors may receive a more extensive waiver as part of the next coronavirus relief package.

Section 889 is likely to have some impact on essentially every government contractor, if only by forcing them to conduct a reasonable inquiry into whether they have prohibited equipment and services in their supply chain or in use in some aspect of their business.