HR-10736-119
Referred to the House Committee on Oversight and Government Reform.
Sponsored by Brad Finstad (R-MN)
What it does
The bill would bar the head of any federal entity from acquiring a computer or printer when the manufacturer, bidder, or offeror is a "covered Chinese entity." That term covers entities the Secretary of Defense, consulting with the DNI or FBI Director, determines are owned, controlled, directed, subcontracted by, affiliated with, or otherwise connected to the Chinese government. It would apply to contracts entered into, renewed, or extended after enactment. The President may waive the ban by certifying to Congress that doing so is contrary to U.S. national security, and the bill defines "computer," "printer," and "manufacturer" with listed exclusions.
Who benefits
Federal agencies and security officials who want fewer foreign-linked devices on government networks. Domestic and non-Chinese computer and printer makers that could win federal contracts they might otherwise lose on price. Intelligence and defense officials who gain a statutory basis for screening suppliers. Taxpayers and the public, to the extent supporters are right that it reduces data-security risk.
Who is hurt
Federal agencies that may face higher prices, fewer bidders, and compliance work to verify supplier ownership. Computer and printer makers, including non-Chinese firms, that use Chinese parts, subsidiaries, or affiliates, since the "manufacturer" definition reaches parents, subsidiaries, and affiliates. Resellers and contractors that supply devices to the government and would need to vet supply chains. Chinese-linked manufacturers that would lose federal sales. The broad "otherwise connected to" standard may create uncertainty for firms that cannot predict whether they would be designated.
Supporters argue
Supporters argue that computers and printers are network-connected devices that could be used for data theft or surveillance, and that federal agencies should not buy them from firms linked to a government that U.S. intelligence agencies identify as a leading cyber threat. They contend the bill is narrow, since it covers only federal purchases, applies only to new or renewed contracts, and includes a presidential national security waiver for cases where the ban would cause harm. They also argue it follows earlier federal procurement limits on certain Chinese technology vendors.
Opponents argue
Opponents argue that the definition of "covered Chinese entity" is very broad. It reaches any entity "otherwise connected to" the Chinese government, and the "manufacturer" definition sweeps in parents, subsidiaries, and affiliates, so the rule could catch firms with only distant ties. They contend the ban could reduce competition and raise agency costs. They also argue that the waiver is limited to cases where the ban itself is contrary to national security, a narrow standard, and that the designation criteria leave much discretion with the Defense Department and little notice for affected firms.
Constitutional context
Congress may set conditions on federal purchasing under its spending and property powers (Art. I, §8 and Art. IV, §3) and may regulate foreign commerce (Art. I, §8, cl. 3). Contractors affected by a designation could raise due process claims, as in Kaspersky Lab v. DHS (D.C. Cir. 2018), which upheld a federal ban on a foreign vendor's products. I am not certain that case is the closest controlling authority, and no Supreme Court case squarely governs.
Checks and balances
The bill shifts procurement discretion toward the executive branch, giving the Defense Secretary the designation power and the President the waiver power, while Congress receives a certification and courts may review challenges to designations.
Historical precedent
Section 889 of the FY2019 National Defense Authorization Act barred federal agencies from procuring telecommunications and video surveillance equipment from certain Chinese companies such as Huawei and ZTE.