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GAO reviewed the Department of Defense, General Services Administration, National Aeronautics and Space Administration's (the agencies) new rule on Federal Acquisition Regulation: Prohibition on Contracting With Entities Using Certain Telecommunications and Video Surveillance Services or Equipment. GAO found the the interim rule issued jointly by the agencies, amends the Federal Acquisition Regulation (FAR) to implement section 889(a)(1)(B) of the John S. McCain National Defense Authorization Act for Fiscal Year 2019. Pub. L. No. 115-232, 132 Stat. 1636, 1917 (Aug. 13, 2018) (section 899(a)(1)(B)) and seeks to avoid the disruption of federal contractor systems and operations that could in turn disrupt the operations of the federal government, which relies on contractors to provide a range of support and services.







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B-332365
July 27, 2020
The Honorable Ron Johnson
Chairman
The Honorable Gary C. Peters
Ranking Member
Committee on Homeland Security and Governmental Affairs
United States Senate
The Honorable Carolyn B. Maloney
Chairwoman
The Honorable James Comer
Ranking Member
Committee on Oversight and Reform
House of Representatives
Subject: Department of Defense,
General Services Administration, National Aeronautics and Space Administration: Federal
Acquisition Regulation: Prohibition on Contracting With Entities Using Certain
Telecommunications and Video Surveillance Services or Equipment
Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report on a
major rule promulgated by the Department of Defense, General Services Administration, and
National Aeronautics and Space Administration (the agencies) entitled ?Federal Acquisition
Regulation: Prohibition on Contracting With Entities Using Certain Telecommunications and
Video Surveillance Services or Equipment? (RIN: 9000-AN92).  We received the rule on
July 13, 2020.  It was published in the Federal Register as an interim rule on
July 14, 2020.  85 Fed. Reg. 42665.  The rule has an effective date of
August 13, 2020. 
This interim rule, issued jointly by the agencies, amends the Federal Acquisition
Regulation (FAR) to implement section 889(a)(1)(B) of the John S. McCain National Defense
Authorization Act for Fiscal Year 2019.  Pub. L. No. 115-232, 132 Stat. 1636, 1917
(Aug. 13, 2018) (section 899(a)(1)(B)).  The agencies explain that section
889(a)(1)(B) prohibits executive agencies from entering into, or extending or renewing, a
contract with an entity that uses any equipment, system, or service that uses covered
telecommunications equipment or services as a substantial or essential component of any
system, or as critical technology as part of any system.  The agencies asserted that
the rule seeks to avoid the disruption of federal contractor systems and operations that
could in turn disrupt the operations of the federal government, which relies on contractors
to provide a range of support and services.
The Congressional Review Act (CRA) requires a 60-day delay in the effective date of a
major rule from the date of publication in the Federal Register of receipt of the
rule by Congress, whichever is later.  5 U.S.C. § 801(a)(3)(A).  The 60-day delay
in effective date can be waived, however, if the agency finds for good cause that delay is
impracticable, unnecessary, or contrary to the public interest, and the agency incorporates
a statement of the findings and its reasons in the rule issued.  5 U.S.C. §
808(2).  Here, the agencies explained that due to a number of factors, compliance with
the delayed effective date was impracticable.  Specifically, the agencies stated that
the expansiveness and complexity of section 889(a)(1)(B) required substantial up-front
analysis, including meetings with industry.  Additionally, the agencies stated that
the concentration of available resources on COVID-19 pandemic response significantly
delayed the government?s ability to finish the rule.  The agencies further explained
that having a regulation in place to implement section 889(a)(1)(B) by the legislatively
established effective date of August 13, 2020, is critically important to avoid confusion,
uncertainty, and potentially substantial legal consequences for agencies and the vendor
community.  Thus, according to the agencies, urgent and compelling circumstances
necessitated that this interim rule go into effect earlier than 60 days after publication.
 
Enclosed is our assessment of the agencies? compliance with the procedural steps
required by section 801(a)(1)(B)(i) through (iv) of title 5 with respect to the rule. 
If you have any questions about this report or wish to contact GAO officials responsible
for the evaluation work relating to the subject matter of the rule, please contact Shari
Brewster, Assistant General Counsel, at (202) 512-6398.

Shirley A. Jones
Managing Associate General Counsel
Enclosure
cc: William F. Clark
Director, Office of Acquisition Policy
Office of Government-wide Policy
General Services AdministrationENCLOSURE
REPORT UNDER 5 U.S.C. § 801(a)(2)(A) ON A
MAJOR RULE
ISSUED BY THE
Department of Defense,
General Services Administration,
National Aeronautics and Space Administration
ENTITLED
?Federal Acquisition Regulation: Prohibition on
Contracting With Entities Using Certain Telecommunications
 and Video Surveillance Services or Equipment? (RIN: 9000-AN92)
(i) Cost-benefit analysis
The Department of Defense, General Services Administration, and National Aeronautics and
Space Administration (the agencies) provided a description of the benefits of this interim
rule.  Specifically, the agencies stated that the rule has national security benefits
to the general public by protecting the homeland from the impact of federal contractors
using covered telecommunications equipment or services that present a national security
concern.  The agencies also stated that the rule will assist contractors in mitigating
supply chain risks, such as the potential theft of trade secrets and intellectual property,
due to the use of covered telecommunications equipment or services.  According to the
agencies, the costs to the public are the time needed to (1) review the rule; (2) establish
a corporate tracking tool and verify covered telecom not used within the corporation or by
the corporation, and ensure there are no future buys; (3) complete corporate-wide training
on the organization?s compliance plan; (4) remove and replace existing equipment or
services to be eligible for a federal contract award; (5) complete the representation under
the Federal Acquisition Regulation (FAR); and (6) develop a full and complete laydown and
phase-out plan to support waiver requests.  For some of these areas, the agencies
provided quantitative estimates of the costs for the first year after publication of the
rule, and subsequent years.  According to the agencies, the costs to the government
are that the government will pay more for the products and services it buys and will be
unable to meet some mission needs.  The agencies provided quantitative estimates for
the costs to the government in the first and second years after publication of the rule, as
well as subsequent years.
(ii) Agency actions relevant to the Regulatory Flexibility Act (RFA), 5 U.S.C. §§
603-605, 607, and 609
The agencies prepared an Initial Regulatory Flexibility Analysis.  The analysis
included the reasons for this interim rule; the objectives of, and legal basis for the
rule; a description and estimate of the number of small entities to which the rule will
apply; a description of projected reporting, recordkeeping, and other compliance
requirements of the rule; relevant federal rules which may duplicate, overlap, or conflict
with the rule; and a description of any significant alternatives to the rule which
accomplish the stated objectives of applicable statutes and which minimize any significant
economic impact of the rule of small entities.
(iii) Agency actions relevant to sections 202-205 of the Unfunded Mandates Reform Act
of 1995, 2 U.S.C. §§ 1532-1535
This interim rule did not discuss the Unfunded Mandates Reform Act.  In its
submission to us, the agencies indicated that they did not prepare a written statement
under section 202 of the Unfunded Mandates Reform Act of 1995.
(iv) Other relevant information or requirements under acts and executive
orders
Administrative Procedure Act, 5 U.S.C. §§ 551 et seq.
The agencies did not discuss the Administrative Procedure Act in this interim
rule.  The agencies stated that they made a determination pursuant to section 1707(d)
of title 41, United States Code, that urgent and compelling circumstances made compliance
with the notice and comment and delayed effective date requirements for procurement
regulations under sections 1707(a) and (b) of title 41, United States Code,
impracticable.  Specifically, the agencies stated that the expansiveness and
complexity of section 889(a)(1)(B) required substantial up-front analysis, including
meetings with industry, the first of which occurred in July of 2019, and the most recent
occurred in March of 2020.  Additionally, the agencies stated that the concentration
of available resources on COVID-19 pandemic response in the spring of 2020 significantly
delayed the government?s ability to finish the rule.  The agencies further explained
that having a regulation in place to implement section 889(a)(1)(B) by the legislatively
established effective date of August 13, 2020, is critically important to avoid confusion,
uncertainty, and potentially substantial legal consequences for agencies and the vendor
community.  The agencies stated they will consider public comments received in
response to this interim rule through September 14, 2020, in the formation of the
final rule.  
Paperwork Reduction Act (PRA), 44 U.S.C. §§ 3501-3520
The agencies determined that this interim rule contains information collection
requirements (ICRs) under the Act.  According to the agencies, the Office of
Management and Budget (OMB) previously authorized emergency processing of the collection of
information involved in the rule, consistent with 5 C.F.R. part 1320.13.  The agencies
stated that they intend to provide a separate notice in the Federal Register
requesting public comment on the information collections contained within this rule under
OMB Control Number 9000-0201.  The agencies estimated the burden of each ICR.
Statutory authorization for the rule
The agencies promulgated this interim rule pursuant to chapter 137 of title 10, United
States Code; section 121(c) of title 40, United States Code; and section 20113 of title 51,
United States Code. 
Executive Order No. 12,866 (Regulatory Planning and Review)
The agencies determined that this interim rule is economically significant under the
Order.
Executive Order No. 13,132 (Federalism)
This interim rule did not discuss the Order.  In its submission to us, the agencies
indicated that they did not discuss the Order in the preamble to the rule.




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