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RISKS, REEFS, AND WRECKS: Charting a Course Through the Perils of Covered Telecommunications Equipment and Services

Like the sailors of old, the government What Lies Beneath Like the sailors of old, the government What Lies Beneath telecommunications equipment” in telecommunications equipment” in contracting community ventures contracting community ventures their operations. As is typical in the their operations. As is typical in the forth knowing full well that danger “Covered telecommunications forth knowing full well that danger “Covered telecommunications world of federal procurement, the world of federal procurement, the lies ahead – although fortunately not equipment,” as currently defined by existing FAR definitions – and those lies ahead – although fortunately not equipment,” as currently defined by existing FAR definitions – and those in the form of a kraken, leviathan, or FAR 4.2101, includes equipment and added in the Interim Rule to address in the form of a kraken, leviathan, or FAR 4.2101, includes equipment and added in the Interim Rule to address other mythical sea monster. Rather, services produced or provided by other mythical sea monster. Rather, services produced or provided by the restrictions of Section B – do not the restrictions of Section B – do not these perils and risks are embedded Huawei Technologies Company or ZTE dictate precisely what a contractor these perils and risks are embedded Huawei Technologies Company or ZTE dictate precisely what a contractor in sweeping new regulations that, in sweeping new regulations that, Corporation (or any subsidiary or affilimust do in order to comply with the Corporation (or any subsidiary or affilimust do in order to comply with the like an unseen reef, will be arriving ate of those entities) and certain video new prohibitions. While the Interim like an unseen reef, will be arriving ate of those entities) and certain video new prohibitions. While the Interim and taking effect all too quickly. and taking effect all too quickly. surveillance products or telecommuniRule establishes a definition of what surveillance products or telecommuniRule establishes a definition of what On July 14, 2020, the FAR Council On July 14, 2020, the FAR Council cations equipment and services cations equipment and services constitutes a “reasonable inquiry” constitutes a “reasonable inquiry” published a long-awaited (or published a long-awaited (or produced or provided by Hytera Comto be incorporated into FAR 4.2101, produced or provided by Hytera Comto be incorporated into FAR 4.2101, perhaps long-dreaded) Interim Rule munications Corporation, Hangzhou Definitions, and FAR 52.204–25, perhaps long-dreaded) Interim Rule munications Corporation, Hangzhou Definitions, and FAR 52.204–25, implementing Section 889(a)(1)(B) of Hikvision Digital Technology Company, Prohibition on Contracting for Certain implementing Section 889(a)(1)(B) of Hikvision Digital Technology Company, Prohibition on Contracting for Certain the National Defense Authorization or Dahua Technology Company (or Telecommunications and Video the National Defense Authorization or Dahua Technology Company (or Telecommunications and Video Act (NDAA) for Fiscal Year (FY) 2019 any subsidiary or affiliate of those Surveillance Services or Equipment, Act (NDAA) for Fiscal Year (FY) 2019 any subsidiary or affiliate of those Surveillance Services or Equipment, (Section B). Effective August 13, 2020, entities). The Interim Rule requires in actuality the definition is little more (Section B). Effective August 13, 2020, entities). The Interim Rule requires in actuality the definition is little more Section B prohibits executive agencies contractors to submit a representation than a mirage that provides minimal Section B prohibits executive agencies contractors to submit a representation than a mirage that provides minimal from “entering into, or extending or with each offer that, after conducting a substantive guidance: from “entering into, or extending or with each offer that, after conducting a substantive guidance: renewing, a contract with an entity “reasonable inquiry,” covered telecom renewing, a contract with an entity “reasonable inquiry,” covered telecomthat uses any equipment, system, or munications equipment or services Reasonable inquiry means an inquiry that uses any equipment, system, or munications equipment or services Reasonable inquiry means an inquiry service that uses covered telecommuare not being used by the offeror. Like designed to uncover any information service that uses covered telecommuare not being used by the offeror. Like designed to uncover any information nications equipment or services as a all representations to the government, in the entity’s possession about the nications equipment or services as a all representations to the government, in the entity’s possession about the substantial or essential component of the requirement on the surface belies identity of the producer or provider substantial or essential component of the requirement on the surface belies identity of the producer or provider any system, or as critical technology the threat of what’s beneath – a false of covered telecommunications equip any system, or as critical technology the threat of what’s beneath – a false of covered telecommunications equipas part of any system.” Unlike its as part of any system.” Unlike its or misleading statement concerning ment or services used by the entity or misleading statement concerning ment or services used by the entity counterpart, Section 889(a)(1)(A) counterpart, Section 889(a)(1)(A) covered telecommunications covered telecommunications that excludes the need to include an that excludes the need to include an of the NDAA for FY 2019 (Section of the NDAA for FY 2019 (Section equipment could have catastrophic internal or third-party audit. equipment could have catastrophic internal or third-party audit. A), which prohibits agencies from A), which prohibits agencies from consequences, including but not consequences, including but not “procuring or obtaining equipment or limited to contract termination and the Read literally, this definition is subject “procuring or obtaining equipment or limited to contract termination and the Read literally, this definition is subject services that use covered telecommuever-present specter of actions and to infinite interpretations as to what services that use covered telecommuever-present specter of actions and to infinite interpretations as to what nications equipment or services as a investigations under the False Claims an inquiry “designed to uncover any in nications equipment or services as a investigations under the False Claims an inquiry “designed to uncover any insubstantial or essential component or Act. Thus, it will be critical for contracformation” would entail. The definition substantial or essential component or Act. Thus, it will be critical for contracformation” would entail. The definition critical technology,” the restrictions of tors to act expeditiously to ensure that is similarly deficient in that it fails to critical technology,” the restrictions of tors to act expeditiously to ensure that is similarly deficient in that it fails to Section B go far beyond the immediate they have a clear understanding of the describe what constitutes “information Section B go far beyond the immediate they have a clear understanding of the describe what constitutes “information contract between the contractor and Interim Rule’s expansive requirements in the entity’s possession.” That said, contract between the contractor and Interim Rule’s expansive requirements in the entity’s possession.” That said, the government. Instead, Section B – including what is required by the the Interim Rule does provide that the the government. Instead, Section B – including what is required by the the Interim Rule does provide that the directs contractors to discontinue directs contractors to discontinue “reasonable inquiry” that each contrac“reasonable inquiry” that each contracinquiry: inquiry: any and all use of covered telecommutor must now undertake. any and all use of covered telecommutor must now undertake. nications equipment or services. nications equipment or services. … includes examining relationships … includes examining relationships Even accounting for the choppy seas Considering the potential conse Even accounting for the choppy seas Considering the potential consewith any subcontractor or supplier with any subcontractor or supplier caused by the ongoing pandemic, the quences of noncompliance, contracfor which the prime contractor has caused by the ongoing pandemic, the quences of noncompliance, contracfor which the prime contractor has exceedingly broad scope of Section B tors of every variety – including exceedingly broad scope of Section B tors of every variety – including a Federal contract and uses the a Federal contract and uses the promises sharp, jagged, and uncharted small businesses – must now promises sharp, jagged, and uncharted small businesses – must now supplier or subcontractor’s “covered supplier or subcontractor’s “covered hazards to contractors attempting pay closer attention to their own hazards to contractors attempting pay closer attention to their own telecommunications” equipment or telecommunications” equipment or to implement compliant policies and operations and to supply chains to services as a substantial or essential to implement compliant policies and operations and to supply chains to services as a substantial or essential procedures.procedures. ensure that they are not using, or that component of any system. A reason ensure that they are not using, or that component of any system. A reasonthey can swiftly excise, all “covered able inquiry is an inquiry designed to they can swiftly excise, all “covered able inquiry is an inquiry designed to

uncover any information in the entity’s • Regulatory Familiarization –uncover any information in the entity’s • Regulatory Familiarization –Interim Rule. For example, the Interim Interim Rule. For example, the Interim possession – primarily documentation Requiring that contractors read and Rule explicitly rejects a uniform waiver possession – primarily documentation Requiring that contractors read and Rule explicitly rejects a uniform waiver or other records – about the identity understand the rule for compliance. process, meaning each agency will or other records – about the identity understand the rule for compliance. process, meaning each agency will of the producer or provider of covered of the producer or provider of covered have to make its own process and have to make its own process and telecommunications equipment or ser• Corporate Enterprise Tracking – This determinations. Accordingly, contrac telecommunications equipment or ser• Corporate Enterprise Tracking – This determinations. Accordingly, contracvices used by the entity. A reasonable step provides some additional limited tors should be proactive in collecting vices used by the entity. A reasonable step provides some additional limited tors should be proactive in collecting inquiry need not include an internal or guidance as to what constitutes a information to support future requests inquiry need not include an internal or guidance as to what constitutes a information to support future requests third-party audit.third-party audit. “reasonable inquiry,” implying that the for waivers if and when the agencies “reasonable inquiry,” implying that the for waivers if and when the agencies inquiry should be anchored to a larger are able to design and implement their inquiry should be anchored to a larger are able to design and implement their 85 FR 42669.85 FR 42669. “corporate enterprise tracking” system unique waiver processes. In addition, “corporate enterprise tracking” system unique waiver processes. In addition, to be developed by contractors. In the Interim Rule is silent as to the to be developed by contractors. In the Interim Rule is silent as to the While this explanation is better than addition to establishing internal While this explanation is better than addition to establishing internal allowability of the costs to remove and allowability of the costs to remove and an open sea of ambiguity, it still an open sea of ambiguity, it still tracking of equipment, systems, tracking of equipment, systems, replace “covered telecommunications replace “covered telecommunications leaves ample rocks upon which to and services, such a system (and, equipment or services,” if identified. leaves ample rocks upon which to and services, such a system (and, equipment or services,” if identified. crash. At a minimum, it is clear that by extension, a reasonable inquiry) The Interim Rule estimates the cost crash. At a minimum, it is clear that by extension, a reasonable inquiry) The Interim Rule estimates the cost contractors will need to have discusalso requires an entity to examine its impact of these new requirements to contractors will need to have discusalso requires an entity to examine its impact of these new requirements to sions with their subcontractors and subcontractor/supplier relationships both contractors and the government sions with their subcontractors and subcontractor/supplier relationships both contractors and the government suppliers to verify that the prohibited for possible usage of “covered suppliers to verify that the prohibited for possible usage of “covered is billions of dollars, and it acknowlis billions of dollars, and it acknowlequipment is not lurking somewhere telecommunications.” equipment is not lurking somewhere telecommunications.” edges multiple times that there is edges multiple times that there is in the contractor’s supply chain. in the contractor’s supply chain. “substantial uncertainty underlying “substantial uncertainty underlying Contractors should also ensure Contractors should also ensure • Education – Training • Education – Training these estimates.” While we cannot these estimates.” While we cannot that they carefully document the that they carefully document the purchasing/procurement employees say for certain whether contractors purchasing/procurement employees say for certain whether contractors steps taken and the information steps taken and the information to ensure they are familiar with the will ultimately be reimbursed by the to ensure they are familiar with the will ultimately be reimbursed by the obtained from their subcontractors company’s compliance plan. obtained from their subcontractors company’s compliance plan. government in any way for these government in any way for these and suppliers so that, if questioned, and suppliers so that, if questioned, significant costs, we can reasonably significant costs, we can reasonably the “reasonableness” of the inquiry • Cost of Removal – If the use of the “reasonableness” of the inquiry • Cost of Removal – If the use of predict that if the costs are ultimately predict that if the costs are ultimately can be readily demonstrated.can be readily demonstrated. covered equipment and services covered equipment and services deemed allowable, the government will deemed allowable, the government will is identified, contractors should implecarefully scrutinize every dollar spent is identified, contractors should implecarefully scrutinize every dollar spent As the clock is ticking, contractors ment procedures to assess the cost by contractors on these compliance As the clock is ticking, contractors ment procedures to assess the cost by contractors on these compliance wishing to address these requirewishing to address these requireof removing and replacing covered efforts. Therefore, contractors would of removing and replacing covered efforts. Therefore, contractors would ments should review existing agreetelecommunications equipment or be well-advised to start identifying, ments should review existing agreetelecommunications equipment or be well-advised to start identifying, ments with all suppliers in order to services. ments with all suppliers in order to services. estimating, and carefully documenting estimating, and carefully documenting incorporate the Section B prohibitions. incorporate the Section B prohibitions. compliance costs in order to position compliance costs in order to position Notably, the Interim Rule specifies that • Representation – A two-fold obligathemselves to obtain the maximum Notably, the Interim Rule specifies that • Representation – A two-fold obligathemselves to obtain the maximum the requirements of Section B “will not tion: first the contractor must submit amount of reimbursement if and when the requirements of Section B “will not tion: first the contractor must submit amount of reimbursement if and when flow down because the prime contracto the government a representation flow down because the prime contracto the government a representation allowed. allowed. tor is the only ‘entity’ that the agency as to whether the entity uses covered tor is the only ‘entity’ that the agency as to whether the entity uses covered ‘enters into a contract’ with, and an telecommunications equipment ‘enters into a contract’ with, and an telecommunications equipment Through a tempest of a changing Through a tempest of a changing agency does not directly ‘enter into a and services, then it must also alert environment and new regulations, fed agency does not directly ‘enter into a and services, then it must also alert environment and new regulations, fedcontract’ with any subcontractors, at the government if use is discovered eral contractors now find themselves contract’ with any subcontractors, at the government if use is discovered eral contractors now find themselves any tier.” Here again lies the danger during contract performance. any tier.” Here again lies the danger during contract performance. embarking upon a narrow course embarking upon a narrow course down below. Even if the prohibitions down below. Even if the prohibitions between two lurking alternatives: (1) between two lurking alternatives: (1) are not required to be flowed down, • Cost to Develop a Phase-Out Plan allocate time and resources toward are not required to be flowed down, • Cost to Develop a Phase-Out Plan allocate time and resources toward contractors would be steering their and Submit Waiver Information –contractors would be steering their and Submit Waiver Information – For For the development and implementation the development and implementation ship toward disaster if they do not contractors requesting a waiver, (1) deof a comprehensive compliance ship toward disaster if they do not contractors requesting a waiver, (1) deof a comprehensive compliance incorporate these restrictions into velop a plan to phase out existing covplan that accounts for the strictest incorporate these restrictions into velop a plan to phase out existing covplan that accounts for the strictest their subcontracts.their subcontracts. ered telecommunications equipment interpretation of the prohibition, or (2) ered telecommunications equipment interpretation of the prohibition, or (2) or services, and (2) provide waiver steer too close to the whirlpool of non or services, and (2) provide waiver steer too close to the whirlpool of nonBeware of the False LighthouseBeware of the False Lighthouse information to the government.information to the government. compliance and risk being swallowed compliance and risk being swallowed whole by a par. While it will certainly whole by a par. While it will certainly With the theoretical aim of providing While the first steps regarding With the theoretical aim of providing While the first steps regarding take a strong hand to navigate this take a strong hand to navigate this additional guidance, the Interim Rule knowledge, tracking, and training additional guidance, the Interim Rule knowledge, tracking, and training storm, contractors who put in the storm, contractors who put in the identifies six steps that should be seem straightforward (even if only by compliance effort now should see identifies six steps that should be seem straightforward (even if only by compliance effort now should see incorporated into a contractor’s comcomparison), the latter steps – which smooth sailing ahead. incorporated into a contractor’s comcomparison), the latter steps – which smooth sailing ahead. pliance plan. While these steps serve are obviously intended to be supported pliance plan. While these steps serve are obviously intended to be supported as a convenient tempo and timeline by individual agency requirements – as a convenient tempo and timeline by individual agency requirements – for compliance, they do little more only serve to raise questions as to for compliance, they do little more only serve to raise questions as to than muddy already unclear waters: the scope and potential impact of the than muddy already unclear waters: the scope and potential impact of the

RIM Architects Names David McVeigh as CEO/President

RIM Architects (RIM) announced David L. McVeigh as CEO/President, succeeding Larry S. Cash, who plans to continue as Founder and Chair of the Board. “Dave is a proven leader who has demonstrated his business skills, architectural knowledge, and keen ability to bring people together for more than 34 years. His vision is exactly what RIM needs as the company enters its next chapter of invigoration, innovation, and growth.”

Since joining the company in 1986 Dave has spearheaded initiatives across the company’s portfolio, working with each of RIM’s five offices to maximize the potential of each regional site and strengthen the offerings of the entire firm. He has introduced and led the firm into foreign markets spanning from Australia, Russia, and throughout Asia. Having resided in Alaska, Guam, and Hawaii, Dave recognizes regional and business diversification. He is keenly aware of the impact local culture brings to the design process.

He is a well-respected consensus builder who has thoughtfully and tirelessly supported RIM’s staff and clients. We couldn’t have selected a

David L. McVeigh, AIA, NCARB

CEO/President

more qualified, knowledgeable role model to lead RIM.”

Dave’s focus will be business development and strategic growth the offering of diversified services and locations that complement RIM’s geographic diversity and design expertise. “I am humbled to lead RIM in this new decade. Larry has been my inspiration, my guide, and my lifetime mentor. I will do all I can to continue the great work Larry has inspired. Although Larry is not retiring, he will take a modified role, advising and counseling the firm while maintaining a schedule that allows more time with his family.”

RIM Architects is a design firm providing excellence in comprehensive architecture, interior design, planning strategy, sustainable design, and branding/graphic design services since 1986. Today, RIM is recognized for its diversity in regional design expertise—created and managed by a staff of 70 who are strategically located in Anchorage, Alaska; San Francisco and Tustin, California; Hagatña, Guam; and Honolulu, Hawaii. RIM supports clients from pre-design strategy through project implementation, occupancy, and post-occupancy follow up.

Taylor International New Dealer Announced

Taylor International is making great strides to expand across the globe. Recently, Landscape Management Systems, Inc. (LMS) joined the “Big Red Team” as an Authorized Taylor Dealer on the island of Guam.

“We are very excited about the opportunity to expand our footprint in Micronesia through our commercial relationship with LMS, on Guam,” said Hal Nowell, Director of Sales at Taylor International. “Taylor could not have a better partner than LMS. We share the vision and understanding that customers demand consistent, dependable performance — from the products they use to the vendors that supply them. It is the commitment of this dealer partnership between LMS and Taylor to provide the very best, most dependable, longest lasting, and most effective service, machines, and parts for the Micronesian market.”

With more than 26 years of experience, LMS, Inc. recently expanded its services to include LMS Imports, a one-stop shop for equipment rentals. Community, service, and growth are the three most important keywords in the LMS culture. LMS, Inc. is well-renowned on Guam for their work with both the local and military communities and has been the recipient of multiple NAVFAC (naval facilities engineering command) contracts over the past few years. LMS, Inc. focuses on high-quality services and products delivered in a timely and sustainable manner.

“We demonstrate a commitment to service, excellence, innovation, and integrity in our interactions with our clients, suppliers, competitors, and the community,” said Bob Salas, Founder of Landscape Management Services, Inc. LMS, Inc. has consistently been recognized for its high quality of work and products through numerous Excellence awards.

Taylor International is expanding its footprint globally and is currently seeking dealers worldwide. For more information on Taylor International, or Taylor products, visit www.taylorintl.com.

MATSON, MATSON LOGISTICS, SPAN ALASKA RATED AMONG TOP FREIGHT TRANSPORTATION COMPANIES

HONOLULU, August 10, 2020 – Matson, Inc. (NYSE: MATX) subsidiary companies Matson Navigation Company, Matson Logistics and Span Alaska have all been rated by shipping customers among the top freight transportation companies in the industry’s leading survey of service quality.

The ratings were published today by Logistics Management magazine and Peerless Research Group (PRG), whose annual Quest for Quality Awards survey of qualified buyers of transportation and logistics services is considered the most important measure of customer satisfaction and performance excellence in the industry.

This year’s 37th annual survey drew more than 4,500 participants who rated transportation companies in all modes and service disciplines against the five criteria most valued by shipping customers.

Of the 11 domestic and foreign companies rated in the Ocean Carriers category for On-time Performance, Value, Information Technology, Customer Service, and Equipment & Operations, Matson was rated second highest overall, missing the top rank by 0.07 points. Matson was rated #1 in On-Time Performance, Customer Service, and Equipment & Operations.

Of the 23 domestic and international companies rated in the Third Party Logistics category for Carrier Selection/Negotiation, Order Fulfillment, Transportation Distribution, Inventory Management, and Logistics Information Systems, Matson Logistics was rated fifth highest overall and #1 for Logistics Information Systems.

Of the seven companies in the Intermodal Marketing Companies category, Matson Logistics was ranked #1 overall, earning the top rating in On-Time Performance, Value, and Information Technology service disciplines.

Matson Logistics subsidiary Span Alaska also earned a Quest for Quality Award this year in the category of Western Regional LTL (Less than Container Load) logistics providers, ranking #1 for Information Technology.

More information on the 2020 Quest for Quality annual survey and awards is available at: https://www.logisticsmgmt.com/article/37th_annual_quest_for_quality_awards_pristine_service_pr evails_in_challengi