America’s Federal Acquisition Regulation rule, which applies to 5 Chinese companies — including Dahua and Hikvision – is confusing U.S. electronic security integrators.
The interim Federal Acquisition Regulation (FAR) rule, which was implemented on August 13, is referred to as Section 889 of the 2019 National Defense Authorization Act (NDAA). The interim rule applies to all new contracts and procurements as well as existing indefinite delivery contracts, plus options picked up for existing contracts and bars federal agencies from purchasing equipment from the 5 companies or renewing contracts with them.
The rule mandates that contractors identify as part of their specification any security, video surveillance and telecommunications products and services provided to the government, including those supplied by subcontractors.
Lynn de Seve, president of GSA Schedules, told SSI recently that government contractors have “expressed a great deal of confusion about the scope of the ban and what it will mean for their businesses”.
“GSA contractors will have some additional contracting requirements and certification to comply with as they are considered high risk for violations,” she said. “Government agencies will be mindful of whether they need to include the additional FAR language at the contracts level, in addition to the GSA requirements, for contractors and when they apply.”
Meanwhile, Jake Parker, senior director of government relations for the Security Industry Association (SIA) told SSI there was no statutory mandate included in Section 889 that requires the removal of existing equipment covered by the ban.
“However, given the procurement prohibition, eventual replacement is expected through the normal tech refresh cycle for such equipment, and it is possible agencies may decide on their own to initiate replacement,” Parker explained. “Additionally, a plan for replacement would be required from government entities seeking an agency waiver to allow continued procurement of the covered equipment after Aug. 13.”
Jennifer Mapes-Christ, senior analyst and manager of the consumer and commercial goods group at researcher Freedonia Group agreed there was confusion around the new rules.
“Even camera installers are still unclear if this provision means that all schools, hospitals, contractors, etc., must remove all existing electronic branded by those companies or if they just have to buy something else when they ultimately replace the equipment,” Mapes-Christ said.
Hikvision and Dahua said they were disappointed with the rule and said the ban was unmerited.
“We believe this provision is unjust and targeted Hikvision without reason or evidence of wrongdoing – meanwhile, we are evaluating every option available to contest this groundless inclusion and protect the rights and interests of the company and our partners,” Hikvision said.
In an online response to the rule, Dahua said: “The prohibition was hastily enacted without any supporting evidentiary basis or due process. To be clear, the prohibition only relates to federal agencies. Commercial entities may continue to purchase Dahua products, as may state and local governments generally.”
The rule impacts on a government security business vertical worth $US700 million – around one-sixth of the total U.S. CCTV market.
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