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ZTE, Huawei Are Excluded From Government Contracts

President signs defense bill with carveout

The president has made it official: Government contractors can’t buy equipment from Chinese telecoms ZTE or Huawei as part of those contracts, and must submit a plan for phasing out the use of that equipment from its systems.

That came with President Donald Trump’s signing Monday (Aug. 13) of the John S. McCain National Defense Authorization Act and after the companies were called out by top U.S. intelligence officials as tied to the Chinese government and thus a national security threat.

The technology includes everything from phones, tablets and smartwatches to mobile hot spots, broadband routers, switchers and servers. 

See also: Best Buy Cutting Ties With Huawei

The bill could have been a lot tougher on ZTE and Huwaei. The Senate-passed version of the bill would have reinstated the ban on U.S. tech exports to ZTE as well, but that language was stripped from in the final, conferenced, version of the bill. The language preventing government contractors from the tech remained, however.

The House passed the compromise version late last month and the Senate earlier this month.

President Trump instructed the Commerce Department to strike a deal that lifted the ZTE ban after the Chinese president reached out to him over the resulting Chinese job losses.

Separately, the FCC is proposing to ban the use of broadband subsidy funds for ZTE and Huawei technology out of concern for national security. 

Back in April, the Commerce Department rescinded the export privileges of U.S. companies sending tech to ZTE saying it had violated the terms of its settlement agreement with the U.S. over illegally shipping telecom equipment to Iran and North Korea.

“Huawei supports the US government’s goals for better security, but this random addition to the [defense act] is ineffective, misguided, and unconstitutional,” that company said in a statement. “It does nothing to identify real security risks or improve supply chain security, and will only serve to stifle innovation while increasing internet costs for US consumers and businesses. We believe that the American people deserve equal access to the best possible connections and smart device options, and will keep working to make this happen.”