Trade Groups Request NDAA Blacklist Delay Citing Coronavirus

Two trade groups representing government contractors have asked Congress to delay implementation of the NDAA's 'blacklist' clause from this August to "at least February 2021". UPDATE: SIA has joined the request.

While the trade groups say they support the blacklist, they say that coronavirus related disruptions make it impractical to start in just 4 months.

This clause has raised significant concern in video surveillance, as it would ban any firm that "uses" Hikvision/Dahua equipment from selling to the federal government. If granted, the delay would give substantially more time for users to adjust.

In this note, we examine this request, whether it will be granted, and its possible implications, including:

• Blacklist Clause Background
• Letter: Coronavirus Makes "Current Implementation Timeline Infeasible"
• Blacklist Clause Current Status
• Trade Groups Examined
• SIA Did Not Request/Update: SIA Joins
• No Government Reply Yet
• Likelihood of Delay Being Granted
• Impact of Delay

'Blacklist Clause' Background

Paragraph (a)(1)(B), or 'Part B' for short, of the NDAA Section 889 ban stipulates that federal agencies cannot "enter into a contract" with any entity that "uses" covered equipment, i.e. Hikvision, Dahua, and Huawei telecom and video surveillance products. This includes cameras with Huawei HiSilicon chips.

The clause is scheduled to go into effect August 2020. The latest government update is that a (non-public) draft of Part B is under review at the Office of Federal Procurement Policy (OFPP) in the White House's Office of Management and Budget (OMB).

Letter: Coronavirus Makes "Current Implementation Timeline Infeasible"

On March 31, the National Defense Industry Association (NDIA) and the Professional Services Council (PSC) announced releasing a letter asking key Congress members that the government delay Part B's implementation until "at least February 21" because" COVID-19 has made the current implementation timeline infeasible" [emphasis added]:

To allow contractors time to recover from the effects of COVID-19 and effectively comply with Part B, Congress should postpone government-wide Part B’s effective date until at least February 2021.

While we agree that Part B addresses a significant problem in defense supply chains, and that additional measures are needed to protect DOD information assets from covered equipment, COVID-19 has made the current implementation timeline infeasible.

Letter Requests More Time to Discuss Draft Rule

The trade groups added that they are not only seeking more time to comply but also more time for the government to issue a rule that they can then discuss/provide input:

NDIA and PSC seek the change for two reasons: to give the government time to issue a draft implementation rule, and to give industry and the public time to assess impacts and comment on the implementation plan for such a complex undertaking.

Trade Groups Examined

The NDIA is the US' main defense contractor trade association, with about 1,700 corporate and 70,000 individual members. Its board of directors is composed of members from the biggest firms in the US military-industrial complex: Raytheon, Lockheed, Northrop Grumman, Boeing, Honeywell, etc.

The PSC represents over 400 IT and business service US government contractors, including firms like Amazon Web Services, Accenture, Cisco, etc.

A key concern for large trade groups like the NDIA and PSC is that a tough, expansive interpretation of Section B would lead to many of its members getting blacklisted from any government deals.

SIA Absent

SIA was not part of this request for a delay, although SIA is concerned about Part B too. On March 2, for example, SIA gave a presentation at a public meeting with the government on Section B, critiquing its "vague language" and warning that a broad interpretation could create a "significant negative economic impact".

Update: SIA Joins Delay Request

On April 21, SIA announced it had joined the NDIA/PSC request to delay the blacklist clause, saying:

Delayed implementation of Part B will allow time for collaborative work on a solution that will make the implementation of Part B achievable consistent with the objectives of NDAA Section 889.

The letter co-signed by SIA did not only request a delay but also criticized the blacklist clause, stating it would harm coronavirus response efforts if implemented "as written":

As a result, U.S. providers will be barred from supplying essentially anyservice or good, such as personal protective equipment, to agencies. Part B will lead to a dramatic reduction in supplies to the government

Other groups joined as well, including the US Chamber of Commerce and others representing the IT, automotive, and aerospace sectors, increasing the likelihood a delay is granted.

No Government Reply Yet

The Senators and Representatives this letter was sent to have not yet publicly responded to the NDIA/PSC request.

Likelihood Examined

The NDIA and PSC represent huge companies critical to the US economy. Meanwhile, the coronavirus crisis is leading to all sorts of economic favors from the government in the form of delays (such as postponed tax filing) and corporate bailouts. Both these factors are certainly no guarantees that Part B will be delayed, but do increase the likelihood.

Impact of A Delay

Were the delay to be granted, this would give Hikvision/Dahua integrators at least 6 months longer to adjust to the new situation, and would also give more time for crucial implementation details to be discussed and potentially changed.

As IPVM has examined, key details remain unanswered, such as whether an integrator who once installed a Hikvision camera in a pizza parlor is considered a 'user' of covered equipment and therefore banned from federal projects.

Conclusion

IPVM is watching this process closely and will update if the delay is granted or not.

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