Ban Proceeds But White House Requests Delay of Hikvision / Dahua Partner Blacklist

By Charles Rollet, Published Jun 10, 2019, 09:53am EDT

While the August 2019 start of the US government ban on buying Dahua, Hikvision, Huawei, etc. proceeds, the White House's budget director is requesting an extension to the NDAA which would delay the implementation of its 'blacklist' clause by two years, i.e. in August 2022 instead of August 2020).

If the request is granted, the move would provide significant breathing room for many US integrators, distributors and OEMs, since the NDAA's blacklist provision bans any firm using Hikvision/Dahua/Huawei equipment in any capacity from doing business with the federal government. (Sell Dahua or Hikvision At All, Banned From Selling to US Federal Government, Says US HASC.)

However, the request provides no assurances that the blacklist provision, whose specific rules have not been finalized, will actually be watered down; whether it's in 2020 or 2022, it's still possible that an integrator who installs a Hikvision camera in a pizza parlor will eventually be banned from doing business with the federal government.

Inside this note, we examine the details of the letter and the proposed modifications.

News Breaks

The news broke after a letter was published on the White House's website showing its Office of Management and Budget (OMB) director, Russell Vought, formally requesting the delay from Congress.

Background: Two Rules

The NDAA's federal purchasing ban was formally split into two separate Federal Acquisition Regulations (FAR) rules in March:

  • one rule addresses section (a)(1)(A), the section banning sales of covered equipment to any federal government agency. This rule is scheduled to take effect in August 2019.
  • another rule addressing section (a)(1)(B) - aka the blacklist clause - which bans federal government purchases from firms that use covered equipment in any way. This rule is scheduled to take effect in August 2020 but would be modified if this proposal is accepted.

(For more, see US Drafting Separate Rule for NDAA Dahua/Hikvision 'Blacklist'.)

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What the Letter Said

OMB's letter specifically requests that the implementation of (a)(1)(B) take place four years instead of two years after the NDAA was passed in August 2018:

That is, the blacklist clause would take effect in August 2022 rather than August 2020.

No Delay for Core NDAA Rule

However, one important thing to keep in mind is that there was no delay request for section (a)(1)(A), i.e. the core NDAA rule banning covered equipment sales to the federal government. This will take effect in August 2019 (in 2 months) as scheduled.

Blacklist Clause Released to Public

The OMB letter also adds new language to the NDAA regarding the rule implementing the blacklist clause, stipulating that:

  1. a public meeting be held about the rule in one year
  2. that the proposed rule is published in 18 months, followed by a second meeting to discuss the rule

Strengthen Ban of Using Federal Funds

The proposal also clarifies and reinforces that federal loans or grants cannot be used for purchasing banned products by placing the emphasis on the recipients of those funds:

Impact: Breathing Room, But No Assurances

The request from the OMB has been put to Congress. Congress has to vote on it, most likely as an amendment to existing legislation, as the letter suggests:

We seek enactment of the proposal as part of the National Defense Authorization Act for Fiscal Year 2020 or as part of other appropriate Congressional bills.

If granted, it would allow significantly more time for businesses using covered equipment to keep doing business with the federal government. It would also allow more time for the precise details of the rule implementing the blacklist clause to be fleshed out. It is possible that it could eventually allow for eliminating the blacklist but it may simply delay its start for a few years.

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