Grantees Should Know New Rules About Using Certain Chinese Telecommunication Products
- Author: Bryan Miller
- Posted: 2023-01-27
Federal grant recipients now have to comply with a new set of federal rules that bar the government from repaying awardees for purchases of certain Chinese technology. After a waiver from compliance, these rules are now effective. Grant recipients need to be aware of these rules so that they do not end up with a case of sticker shock when they submit invoices for payment. As a result, grant recipients need to know exactly what is covered by these rules. These rules were part of a law passed by Congress and not an Executive Order, so they will remain in place even during the upcoming Biden Administration.
These Rules Do Not Apply to Only Contractors
While one might think that the rule applies only to government contractors and not to those who receive grants, the Office of Management and Budget made it clear that grant recipients must follow them as well. The reason for the rule was that Congress had security concerns with products from certain Chinese companies. There is some fear that they could be used for surveillance and might compromise key national security information. The primary targets of this rule include Huawei and ZTE. It also applies to Hikvision, Hytera Communications Corporation and Dahua Technology Company.
Grant recipients need to go through their technology and ensure that they are not using any covered telecommunication equipment from these companies. They would need to certify this to the federal government. Not only are grant recipients not able to use any of these technologies in their grants, but they can also not utilize any of these technologies in any parts of their entire companies. If not, they can lose out on their government contracts and not receive any new ones. The only way that these companies could continue to perform grants is if they receive a waiver from the government. They would need a very compelling reason for one, so chances are that it would not be happening.
For grant recipients, they will need to study these rules and ensure that their company or entity has a compliance plan in place. Moreover, they will need to learn whether their systems use parts from these covered companies. This is not something that may be readily apparent right off the bat and may require some investigation.
You Could Lose Grants and Not Be Able to Receive New Ones
Even if you have already been awarded a grant by the federal government, you must still ensure that you have complied with this rule. In other words, you could lose the grants that you already have. The government has the right to terminate a grant if awardees are not following rules. Your grant might also be for a certain budget period and will require a renewal to get more funding from the government. Either way, unless you are able to certify that you are following the rule, your award can be terminated or not renewed. This will result in a financial loss for you.
For now, the requirement is merely that awardees self-certify that they are following the rules. They should still not take that requirement lightly. A self-certification can be under the penalty of perjury if it is made knowing that it is false. For now, there are no current plans for the government to audit grant recipient to ensure compliance. This is not to say that there will not be an audit program in the future.
It is important not only for award recipient to comply, but subrecipients as well. This means that the recipient is responsible for what their subrecipient does. While there is no requirement that the prime recipient flow these provisons down to their subrecipients, primes are playing with fire if they take a completely hands-off attitude with regard to their subs. If the subrecipient is lax themselves, then the prime may be found to be using covered telecommunications equipment in violation of the law. Thus, prime recipients may want to have contractual provisions to prohibit this and find some way of monitoring their subrecipients.
Many in industry are confused about how these rules will be implemented. Individual agencies are coming up with their own rules on how to implement these rules. In the meantime, recipients are advised to study these rules closely. This has been in the works for a while, so recipients have probably already begun their compliance efforts.