Does Section 889 apply to my contract or my grant?

Section 889(a)(1)(A) bars an executive agency from procuring or obtaining 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. Section 889(a)(1)(B) bars an agency from contracting with an entity that uses any such equipment, system or service. Under FAR 4.2102, the first prohibition runs from August 13, 2019 and the second from August 13, 2020.

The statute carves two things out of both prohibitions. One is a service that connects to the facilities of a third party, such as backhaul, roaming or interconnection arrangements. The other is telecommunications equipment that cannot route or redirect user data traffic or permit visibility into any user data or packets that it transmits or otherwise handles.

Source: Pub. L. 115-232, div. A, title VIII, § 889(a), 132 Stat. 1917; 48 CFR 4.2102(a) and (b).

Clause 52.204-25(b)(2) applies the use prohibition regardless of whether that use is in performance of work under a federal contract. FAR 4.2102(a)(2) carries the same words on the agency side. Paragraph (b)(2) binds the prime contractor and is excluded from the flow-down to subcontracts.

Source: 48 CFR 52.204-25(b)(2) and (e); 48 CFR 4.2102(a)(2).

The definition of covered telecommunications equipment or services has four paragraphs. The first covers Huawei and ZTE telecommunications equipment, including that of any subsidiary or affiliate. The second covers Hytera, Hangzhou Hikvision and Dahua video surveillance and telecommunications equipment, subsidiaries and affiliates included, for the purpose of public safety, security of government facilities, physical security surveillance of critical infrastructure, and other national security purposes. The third covers services provided by those entities or using that equipment. The fourth covers equipment or services from an entity that the Secretary of Defense, in consultation with the Director of National Intelligence or the Director of the Federal Bureau of Investigation, reasonably believes to be owned or controlled by, or otherwise connected to, the government of a covered foreign country. The covered foreign country is the People’s Republic of China.

The statute, the FAR clause and 2 CFR 200.216 carry the same definition. The FCC’s Covered List is a separate list under 47 U.S.C. 1601, and covered telecommunications equipment under section 889(f)(3) is one of the four bases for placing equipment on it.

Source: Pub. L. 115-232, § 889(f)(2) and (f)(3); 48 CFR 52.204-25(a); 2 CFR 200.216(b); 47 U.S.C. 1601(c).

Clause 52.204-25(a) defines a substantial or essential component as any component necessary for the proper function or performance of a piece of equipment, system or service. The same paragraph defines critical technology by list, covering defense articles and services on the United States Munitions List, Commerce Control List items controlled under multilateral regimes or for regional stability or surreptitious listening, the nuclear controls of 10 CFR part 810 and 10 CFR part 110, select agents and toxins, and emerging and foundational technologies controlled under section 1758 of the Export Control Reform Act of 2018.

Source: 48 CFR 52.204-25(a); 50 U.S.C. 4817.

The short screen is 52.204-26, which FAR 4.2105(c) puts in all solicitations. Paragraph (c)(1) asks whether you provide covered telecommunications equipment or services as a part of your offered products or services to the government. Paragraph (c)(2) asks whether, after a reasonable inquiry, you use covered telecommunications equipment or services, or any equipment, system or service that uses them. Commercial offerors answer the identical pair at 52.212-3(v)(2).

The long form at 52.204-24(d) is completed only for a question the short screen answered “does.” The contracting officer may rely on a “does not” answer unless the contracting officer has reason to question it.

Source: 48 CFR 4.2103(a), 4.2105(c), 52.204-24(d), 52.204-26(c), 52.212-3(v)(2).

A “does” answer opens the per-item disclosure in 52.204-24(e). For equipment, it asks for the entity that produced it, with its name, unique entity identifier and Commercial and Government Entity (CAGE) code, and whether it is the original equipment manufacturer or a distributor, if known. It asks for the brand, the model number (the OEM number, manufacturer part number or wholesaler number) and an item description. It asks for an explanation of the proposed use and any factors relevant to whether that use would be permissible. For covered services tied to maintenance, it asks for the same identifiers for the item being maintained, and for other services, the product or service code with the explanation.

Source: 48 CFR 52.204-24(e).

Paragraphs 52.204-24(c), 52.204-26(b) and 52.212-3(v)(1) each direct the offeror to review the list of excluded parties in the System for Award Management for entities excluded from receiving federal awards for covered telecommunications equipment or services. Under FAR 4.2102(d), prohibitions on purchases from the entities in the definition’s first two paragraphs are recorded in SAM, and those on entities in its fourth paragraph are recorded there by the Department of Defense.

Source: 48 CFR 4.2102(d), 52.204-24(c), 52.204-26(b), 52.212-3(v)(1).

Clause 52.204-25(a) defines reasonable inquiry as an inquiry designed to uncover any information in the entity’s possession about the identity of the producer or provider of covered telecommunications equipment or services used by the entity. The definition excludes the need to include an internal or third-party audit. Representations 52.204-24 and 52.204-26 import the definition from the clause by reference.

The phrase stands above the “use” answer at 52.204-26(c)(2), 52.212-3(v)(2)(ii) and 52.204-24(d)(2). The Gatewell Protocol applies its evidence standard to Section 889 through Profile S889.

Source: 48 CFR 52.204-24(a) and (d)(2), 52.204-25(a), 52.204-26(a) and (c)(2), 52.212-3(v)(2)(ii).

Under 2 CFR 200.216(e), a recipient or subrecipient certifies that it will comply with the prohibition by accepting the loan or grant. It is not required to certify that funds will not be expended on covered equipment beyond that acceptance and the certifications it gives with payment requests and financial reports. The defined reasonable-inquiry standard is written into the contract side, at clause 52.204-25(a) and the two FAR representations that import it. What that means for a recipient is argued in the Gatewell insight on reasonable inquiry and grant awards.

Source: 2 CFR 200.216(e); 48 CFR 52.204-24(a), 52.204-25(a), 52.204-26(a).

Paragraph (e) of 52.204-25 requires the contractor to insert the substance of the clause in all subcontracts and other contractual instruments, including subcontracts for commercial products or commercial services. The flow-down includes paragraph (e) itself, so the obligation carries to every lower tier. It excludes paragraph (b)(2). A subcontractor inherits the prohibition on providing covered equipment, not the standalone prohibition on using it.

The prime contractor is still bound by paragraph (b)(2). The reporting duty in paragraph (d) covers notice that comes up from a subcontractor at any tier. The exclusion is argued at length in Section 889 Flows Down. The Part That Reaches Your Whole Company Does Not.

Source: 48 CFR 52.204-25(b)(2), (d) and (e) (NOV 2021).

No dollar threshold appears in FAR 4.2105 or in 52.204-25(e). FAR 4.2105 puts the clause in all solicitations and contracts, the 52.204-24 representation in all solicitations for contracts, and 52.204-26 in all solicitations. Under indefinite-delivery, indefinite-quantity contracts, 52.204-24 also goes in notices of intent to place an order and in solicitations for an order.

The flow-down reaches subcontracts for commercial products and commercial services by name.

Source: 48 CFR 4.2105(a) through (c); 48 CFR 52.204-25(e).

Recipients and subrecipients may not obligate or expend loan or grant funds to procure or obtain covered telecommunications equipment or services, to extend or renew a contract to procure or obtain them, or to enter into such a contract. The prohibition also reaches systems that use covered equipment or services as a substantial or essential component of any system, or as critical technology as part of any system. Under 2 CFR 200.101(b)(3)(ii), section 200.216 applies to loans as well as grants.

The rule’s parent is section 889(b), which bars executive agencies from obligating or expending loan or grant funds on the equipment, services or systems that section 889(a) describes. Part 200 treats states, local governments, Indian Tribes, institutions of higher education and nonprofit organizations as non-federal entities when they carry out a federal award as a recipient or subrecipient. A school district is a local government under 2 CFR 200.1.

Source: Pub. L. 115-232, § 889(b); 2 CFR 200.1, 200.101(b)(3)(ii), 200.216(a) and (c).

The grant rule prohibits obligating or expending loan or grant funds. On its face it does not prohibit a recipient’s use of covered equipment bought with its own money, which is where it differs from the use prohibition in 52.204-25(b)(2).

The same purchase is also an unallowable cost. Section 200.471 makes telecommunications and video surveillance costs allowable except for obligating or expending on covered telecommunications and video surveillance services or equipment as described in section 200.216. Whether a Section 889 test appears in the Compliance Supplement is answered on the monitoring evidence page.

Source: 2 CFR 200.216(a), 200.471(a) and (b); 48 CFR 52.204-25(b)(2).

The reach to a for-profit recipient runs through the awarding agency’s own regulations and the terms of the award. Section 200.216(a) binds recipients and subrecipients, and Part 200 defines both terms without limiting them to any kind of entity. Under 2 CFR 200.101(a)(2), agencies may apply subparts A through E to for-profit organizations as permitted in agency regulations or program statutes.

Source: 2 CFR 200.1, 200.101(a)(1) and (a)(2), 200.216(a).

The pass-through entity makes that call case by case. Under 2 CFR 200.331, the substance of the relationship is more important than the form of the agreement. Subrecipient characteristics include responsibility for programmatic decision-making and for adherence to the program requirements specified in the federal award. Contractor characteristics include providing goods and services within normal business operations, providing similar goods or services to many different purchasers, and normally operating in a competitive environment.

A subaward does not include payments to a contractor, but it can be made through an agreement the pass-through entity considers a contract. A subrecipient is bound by 2 CFR 200.216 directly, because the rule names subrecipients in its own text.

Source: 2 CFR 200.1 (Subaward), 200.216(a), 200.331(a) and (b).

Paragraph (d) of 52.204-25 requires a report to the contracting officer when the contractor identifies covered equipment during performance, or is notified of it by a subcontractor at any tier or by any other source. On Department of Defense contracts, the report goes through dibnet.dod.mil. The enumerated fields are due within one business day of identification or notification, with further mitigation information due within 10 business days after that.

Source: 48 CFR 52.204-25(d).

Section 889(d)(1) provides that the head of an executive agency may waive the subsection (a) prohibitions for a requesting entity, on a one-time basis, for not more than two years after the effective dates. The entity must give a compelling justification and submit a full and complete laydown of the presences of covered telecommunications or video surveillance equipment or services in its supply chain, with a phase-out plan. Section 889(d)(2) also provides a later waiver by the Director of National Intelligence on national-security grounds.

Source: Pub. L. 115-232, § 889(d)(1) and (d)(2).

Universal service support falls under the FCC’s rules at 47 CFR 54.9, 54.10 and 54.11. Sections 54.10 and 54.11 implement the Secure and Trusted Communications Networks Act of 2019. Section 54.9 was adopted in FCC 19-121 in 2019. Section 54.9(a) bars the use of any universal service support to purchase, obtain, maintain, improve, modify or otherwise support equipment or services produced or provided by a company posing a national security threat to the integrity of communications networks or the communications supply chain. The Public Safety and Homeland Security Bureau designates those companies, and the designations of Huawei and ZTE were finalized on June 30, 2020.

Section 54.10(a) bars the use of any FCC-administered subsidy for the capital expenditures of advanced communications service to purchase, rent, lease, otherwise obtain or maintain equipment or services on the Covered List, starting 60 days after the item is listed. Section 54.11(a) requires each eligible telecommunications carrier receiving Universal Service Fund support to certify, before it receives a funding commitment or support, that it does not use covered communications equipment or services. That certification turns on what the carrier uses, whatever paid for it.

For E-Rate and Rural Health Care, section 54.9 applies to funding years that start after a company is designated, which for Huawei and ZTE meant Funding Year 2020, starting July 1, 2020.

Source: Pub. L. 116-124, 47 U.S.C. 1601 through 1609; 47 CFR 54.9, 54.10, 54.11; DA 20-690 and DA 20-691, June 30, 2020; FCC 19-121 ¶ 86.

FAR Case 2026-001 is a proposed rule, published June 23, 2026 at 91 FR 37550. Its comment period closed July 23, 2026, with 86 comments received as of September 18, 2026. No final rule had published by that date. The clause numbers and paragraphs on this page are the ones in force on that date.

The proposal would consolidate five representation provisions into one at FAR 52.240-2 and seven clauses into one at FAR 52.240-3, moving the Section 889 material out of FAR part 4 and into a reorganized part 40. The consolidated clause would also carry the Kaspersky bar, the American Security Drone Act bar and orders under the Federal Acquisition Supply Chain Security Act.

It would define “produced” in the covered telecommunications definition as manufactured, designed, developed, or licensed intellectual property. FAR 4.2101, as in force on September 16, 2026, reads “produced by” and carries no definition of the word. The proposal would replace the export-control list definition of critical technology with a functional test, “a technology in whose absence a system cannot adequately operate or function.” It would write a use carve-out into the clause, under which commercial sales, maintenance, testing services, warranty services and an employee’s use of personal equipment are not individually considered use of covered equipment.

It would set one reasonable-inquiry standard across the consolidated prohibitions. Its preamble states that an offeror or contractor does not need to conduct an internal or third-party audit, and that due diligence does not require gathering information outside its possession. It would standardize disclosure to 72 hours from discovery.

Source: FAR Case 2026-001, proposed rule, 91 FR 37550, June 23, 2026, at 91 FR 37556, 37557, 37603 and 37626; 48 CFR 4.2101.

The integrator reasonable-inquiry file, from $10,000, is built for security and low-voltage systems integrators. It covers the file behind the representation at FAR 52.204-26, vendor screening against the covered entities the clause names, and the per-item disclosure a “does” answer requires under 52.204-24(e).

Reasonable-inquiry files for covered telecom, from $15,000, assemble and test the record behind the FAR 52.204-24 and 52.204-25 representation vendor by vendor, with the corporate chain resolved and the equipment authorizations reconciled. Federal-funds recipient screening, from $15,000, serves recipients and subrecipients of federal grants, loans and cooperative agreements under 2 CFR 200.216. Attestation programs, from $15,000/year, maintain the file and re-verify it on a calendar.

The Protocol crosswalk covers whether an Origin Evidence File answers a Section 889 representation, and the buyer’s kit covers whether its clauses replace one.

Source: published fees at /services and /federal; 48 CFR 52.204-24(e), 52.204-26; 2 CFR 200.216.