I 115TH CONGRESS 2D SESSION H R 4747 To prohibit the Government from using or contracting with an entity that uses certain telecommunications services or equipment and for other purposes IN THE HOUSE OF REPRESENTATIVES JANUARY 9 2018 Mr CONAWAY for himself and Ms CHENEY introduced the following bill which was referred to the Committee on Oversight and Government Reform A BILL To prohibit the Government from using or contracting with an entity that uses certain telecommunications services or equipment and for other purposes 1 Be it enacted by the Senate and House of Representa- 2 tives of the United States of America in Congress assembled 3 SECTION 1 SHORT TITLE 4 This Act may be cited as the ''Defending U S Gov- 5 ernment Communications Act'' 6 SEC 2 FINDINGS lotter on DSKBCFDHB2PROD with BILLS 7 VerDate Sep 11 2014 The Congress finds the following 8 1 In its 2011 ''Annual Report to Congress on 9 Military and Security Developments Involving the 01 51 Jan 11 2018 Jkt 079200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E BILLS H4747 IH H4747 lotter on DSKBCFDHB2PROD with BILLS 2 1 People's Republic of China'' the Department of De- 2 fense stated that ''China's defense industry has ben- 3 efited from integration with a rapidly expanding ci- 4 vilian economy and science and technology sector 5 particularly elements that have access to foreign 6 technology Progress within individual defense sec- 7 tors appears linked to the relative integration of 8 each through China's civilian economy into the 9 global production and R D chain Information 10 technology 11 Huawei Datang and Zhongxing maintain close ties 12 to the PLA '' companies in particular 13 2 In a 2011 report titled ''The National Secu- 14 rity Implications of Investments and Products from 15 the People's Republic of China in the Telecommuni- 16 cations Sector'' the United States China Commis- 17 sion stated that '' n ational security concerns have 18 accompanied the dramatic growth of China's telecom 19 sector Additionally large Chinese companies - 20 particularly those 'national champions' prominent in 21 China's 'going out' strategy of overseas expansion - 22 are directly subject to direction by the Chinese Com- 23 munist Party to include support for PRC state poli- 24 cies and goals '' oHR 4747 IH VerDate Sep 11 2014 including 01 51 Jan 11 2018 Jkt 079200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E BILLS H4747 IH H4747 lotter on DSKBCFDHB2PROD with BILLS 3 1 3 The Commission further stated in its report 2 that '' f rom this point of view the clear economic 3 benefits of foreign investment in the U S must be 4 weighed against the potential security concerns re- 5 lated to infrastructure components coming under the 6 control of foreign entities This seems particularly 7 applicable in the telecommunications industry as 8 Chinese companies continue systematically to ac- 9 quire significant holdings in prominent global and 10 U S telecommunications and information technology 11 companies '' 12 4 In its 2011 Annual Report to Congress the 13 United States China Commission stated that '' t he 14 extent of the state's control of the Chinese economy 15 is difficult to quantify There is also a category 16 of companies that though claiming to be private are 17 subject to state influence Such companies are often 18 in new markets with no established SOE leaders and 19 enjoy favorable government policies that support 20 their development while posing obstacles to foreign 21 competition Examples include Chinese telecoms 22 giant Huawei and such automotive companies as 23 battery maker BYD and vehicle manufacturers 24 Geely and Chery '' oHR 4747 IH VerDate Sep 11 2014 01 51 Jan 11 2018 Jkt 079200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E BILLS H4747 IH H4747 lotter on DSKBCFDHB2PROD with BILLS 4 1 5 General Michael Hayden who served as Di- 2 rector of the Central Intelligence Agency and Direc- 3 tor of the National Security Agency stated in July 4 2013 that Huawei had ''shared with the Chinese 5 state intimate and extensive knowledge of foreign 6 telecommunications systems it is involved with '' 7 6 The Federal Bureau of Investigation in a 8 February 2015 Counterintelligence Strategy Part- 9 nership Intelligence Note stated that '' w ith the ex- 10 panded use of Huawei Technologies Inc equipment 11 and services in U S telecommunications service pro- 12 vider networks the Chinese Government's potential 13 access to U S business communications is dramati- 14 cally increasing Chinese Government-supported tele- 15 communications equipment on U S networks may be 16 exploited through Chinese cyber activity with Chi- 17 na's intelligence services operating as an advanced 18 persistent threat to U S networks '' 19 7 The FBI further stated in its February 20 2015 counterintelligence note that ''China makes no 21 secret that its cyber warfare strategy is predicated 22 on controlling global communications network infra- 23 structure '' 24 8 At a hearing before the Committee on 25 Armed Services of the House of Representatives on oHR 4747 IH VerDate Sep 11 2014 01 51 Jan 11 2018 Jkt 079200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E BILLS H4747 IH H4747 lotter on DSKBCFDHB2PROD with BILLS 5 1 September 30 2015 Deputy Secretary of Defense 2 Robert Work responding to a question about the 3 use of Huawei telecommunications equipment stat- 4 ed ''In the Office of the Secretary of Defense abso- 5 lutely not And I know of no other--I don't believe 6 we operate in the Pentagon any Huawei systems 7 in the Pentagon '' 8 9 At such hearing the Commander of the 9 United States Cyber Command Admiral Mike Rog- 10 ers responding to a question about why such 11 Huawei telecommunications equipment is not used 12 stated ''as we look at supply chain and we look at 13 potential vulnerabilities within the system that it is 14 a risk we felt was unacceptable '' 15 10 In March 2017 ZTE Corporation pled 16 guilty to conspiring to violate the International 17 Emergency Economic Powers Act by illegally ship- 18 ping U S -origin items to Iran paying the United 19 States Government a penalty of $892 360 064 dol- 20 lars for activity between January 2010 and January 21 2016 22 11 The Treasury Department's Office of For- 23 eign Assets Control issued a subpoena to Huawei as 24 part of a Federal investigation of alleged violations oHR 4747 IH VerDate Sep 11 2014 01 51 Jan 11 2018 Jkt 079200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E BILLS H4747 IH H4747 6 1 of trade restrictions on Cuba Iran Sudan and 2 Syria 3 12 In the bipartisan House Permanent Select 4 Committee on Intelligence ''Investigative Report on 5 the United States National Security Issues Posed by 6 Chinese Telecommunication Companies Huawei and 7 ZTE'' released in 2012 it was recommended that 8 ''U S government systems particularly sensitive 9 systems should not include Huawei or ZTE equip- 10 ment including in component parts Similarly gov- 11 ernment contractors - particularly those working on 12 contracts for sensitive U S programs - should ex- 13 clude ZTE or Huawei equipment in their systems '' 14 SEC 3 PROHIBITION ON CERTAIN TELECOMMUNICATIONS 15 SERVICES OR EQUIPMENT 16 17 a PROHIBITION MENT --The ON AGENCY USE OR PROCURE- head of an agency may not procure or obtain 18 may not extend or renew a contract to procure or obtain 19 and may not enter into a contract or extend or renew 20 a contract with an entity that uses any equipment sys21 tem or service that uses covered telecommunications 22 equipment or services as a substantial or essential compo- lotter on DSKBCFDHB2PROD with BILLS 23 nent of any system or as critical technology as part of 24 any system 25 b DEFINITIONS --In this section oHR 4747 IH VerDate Sep 11 2014 01 51 Jan 11 2018 Jkt 079200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E BILLS H4747 IH H4747 7 1 1 AGENCY --The term ''agency'' has the 2 meaning given that term in section 551 of title 5 3 United States Code 4 2 COVERED FOREIGN COUNTRY --The 5 ''covered foreign country'' means the People's Re- 6 public of China 7 3 COVERED TELECOMMUNICATIONS MENT 9 communications equipment or services'' means any OR SERVICES --The term ''covered tele- of the following 11 A Telecommunications equipment pro- 12 duced by Huawei Technologies Company or 13 ZTE Corporation or any subsidiary or affiliate 14 of such entities 15 B Telecommunications services provided 16 by such entities or using such equipment 17 C Telecommunications equipment or 18 services produced or provided by an entity that 19 the head of the relevant agency reasonably be- 20 lieves to be an entity owned or controlled by or 21 otherwise connected to the government of a 22 covered foreign country AE lotter on DSKBCFDHB2PROD with BILLS EQUIP- 8 10 oHR 4747 IH VerDate Sep 11 2014 term 01 51 Jan 11 2018 Jkt 079200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6301 E BILLS H4747 IH H4747 This document is from the holdings of The National Security Archive Suite 701 Gelman Library The George Washington University 2130 H Street NW Washington D C 20037 Phone 202 994-7000 Fax 202 994-7005 nsarchiv@gwu edu