GSA Provides Additional Guidance on Section 889 Part B Implementation and “Waivers”

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On July 30, 2020, General Services Administration’s (“GSA”) Office of Small Business Utilization hosted a webinar on the implementation of Section 889 of the Fiscal Year 2019 National Defense Authorization Act (“NDAA”). The Alston & Bird Government Contracts team has been closely following developments and previously wrote about Section 889 Part B here.

The webinar confirmed GSA’s position that Part B of Section 889 applies to every sector, no matter what a company makes or sells, and all systems a government contractor uses—whether in the performance of a government contract or completely unrelated to its government contracts. GSA advised that contractor’s systems must be checked with a “reasonable inquiry” for Prohibited Telecommunications and Video Surveillance Services or Equipment (“Covered Telecom”). In addition to the Federal Acquisition Regulation (“FAR”) revisions already in effect implementing Section 889, GSA is anticipating another FAR rule to update the System for Award Management (“SAM”) representation provision pending a technological update to the SAM. GSA interpretations is that if an entity represents in SAM that it does not provide and does not use Covered Telecom, the entity then need only reaffirm that representation annually (and thus does not need to respond to FAR 52.204-24 when submitting offers).

GSA also clarified that while the representation provision regarding a government contractor’s use of Covered Telecom does not “flow-down” to subcontractors, an offeror must be careful in making its representation because “use” is not limited to Covered Telecom “owned” by the offeror. For example, if an offeror is “using” covered equipment, whether that use is via a supplier or subcontractor, and whether that use is entirely separate from a government contract, the offeror must still include that use in its representation. On the other hand, in the case that an offeror’s subcontractor uses Covered Telecom but that Covered Telecom is not at all used by the offeror, the offeror does not have to include that use in its representation. Importantly, GSA acknowledged that it is still an open question as to whether mere sale of Covered Telecom constitutes a “use”.

GSA also provided some additional guidance on Section 889 Part B waivers. GSA clarified that only the waiver by the Director of National Intelligence is a “real waiver” and thus presents “clearly very high bar.” In contrast, the agency specific waivers permitted under Section 889 Part B are really just a method to delay a contractor’s implementation, and thus any agency waivers that are granted will be with the understanding that the contractor will use the extension to become fully compliant at the end of the extra time allowed by the waiver.

Unfortunately, GSA did not provide meaningful guidance as to whether a government contractor’s employees’ use of Covered Telecom at home would constitute impermissible use under Section 889 Part B. This question has taken on new importance as employees shift to working from home during COVID-19 office closures. Instead, GSA tasked contractors with performing a “reasonable inquiry” into whether employee use can be considered use by the offeror, and then contractors should make the required representations accordingly. Similarly, in response to many of the questions that were raised, the GSA advised that these questions should be posed as public comments to the Interim Rule (which will be accepted until September 14, 2020), so the FAR Council can consider them in crafting a Final Rule.

As a reminder, GSA is hosting another live and recorded virtual webinar on August 12, 2020 at 1:00 p.m. ET, which will feature a panel leaders from GSA’s business lines who will explain how they are implementing Section 889. The panelists will also answer questions that have been pre-collected and submitted in advance by COB Eastern on August 5, 2020 to gsaombudsman@gsa.gov. See https://www.acquisition.gov/gsa-deviation/supply-chain-aug13 for more information and registration instructions.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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