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On January 29, 2024, the Department of Commerce (“Department”) published a proposed rule (“Proposed Rule”) to require providers and foreign resellers of U.S. Infrastructure-as-a-Service (“IaaS”) products to (i) verify the identity of their foreign customers and (ii) notify the Department when a foreign person transacts with that provider or reseller to train a large artificial intelligence (“AI”) model with potential capabilities that could be used in malicious cyber-enabled activity. The proposed rule also contemplates that the Department may impose special measures to be undertaken by U.S. IaaS providers to deter foreign malicious cyber actors’ use of U.S. IaaS products.  The accompanying request for comments has a deadline of April 29, 2024.

The Proposed Rule would effectuate many of the requirements laid out in the Executive Order on Taking Additional Steps to Address the National Emergency with Respect to Significant Malicious Cyber-Enabled Activities (“E.O. 13984”).  E.O. 13984, issued three years prior to the Proposed Rule, set in motion requirements for IaaS providers to enact certain customer identity verification procedures and take special measures to prevent their services from being used by foreign actors for malicious cyber-enabled activities.  The AI provisions of the Proposed Rule stem from the more recent Executive Order on Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence (“E.O. 14110″), issued on October 30, 2023, which directed the Department to propose regulations for U.S. IaaS providers to (i) submit reports to the Department when a customer transacts with the provider to train an AI model that could be used for malicious cyber-enabled activities and (ii) ensure foreign resellers of IaaS products also conduct identity verification of foreign account holders.

The proposed regulations are further explained and summarized below:

Continue Reading Department of Commerce Issues Proposed Rule to Regulate Infrastructure-as-a-Service Providers and Resellers

On January 4, 2024, the U.S. Attorney’s Office for the District of New Jersey announced that it has filed criminal wire fraud and false statement charges against the Chief Executive Officer (CEO) of a company that knowingly sold certain surveillance and security cameras to prosecutors’ offices, sheriffs’ offices, and police…

Continue Reading U.S. Government Brings Criminal Charges Against Individual Alleged to be Responsible for Falsely Representing that Cameras Sold to Government Customers were Compliant with Section 889 Requirements

Echoing the Obama Administration’s Better Buying Initiative, the Biden Administration announced the Better Contracting Initiative (“BCI”), a four-pronged initiative designed to ensure the Federal Government gets better, and more consistent, terms and prices when purchasing commercial goods and services, while enhancing support for small and disadvantaged businesses.  The Initiative’s four prongs include:

Continue Reading More Bang for the Government’s Buck: The Biden Administration Announces the Better Contracting Initiative

On October 5, 2023, the Federal Acquisition Regulatory Council (FAR Council) issued an interim Federal Acquisition Regulation rule (FAR rule) that implements the Federal Acquisition Supply Chain Security Act (FASCSA).  This FAR rule implements the requirements of the Federal Acquisition Supply Chain Security Act of 2018 and the Federal Acquisition Security Council (FASC) final rule for complying with exclusion or removal orders. The FAR rule represents yet another step by the Government to mitigate the security risks that the Government perceives with the use of information technology that may be produced or provided by countries considered to be foreign adversaries.  Like similar supply chain prohibitions, the rule requires contractors to conduct diligence to ensure that articles and sources covered by a FASCA exclusion or removal order are not provided to the Government, to make an affirmative representation to the Government that such articles and sources will not be provided, and to promptly report if any are identified.  The FAR rule will become effective on December 4, 2023, and will apply to new contracts and contracts subject to extension or renewal.  The rule instructs that existing IDIQ contracts should be modified by the Government within six months of December 4, 2023 to apply the requirements to future orders.

Additional information about the rule and its relationship to existing FASCSA regulations is outlined below.

Continue Reading FAR Council Issues Interim Rule Outlining Procedures Relating to Excluded Covered Articles and Sources

Domestic sourcing requirements are not new, but the Government is always developing new tools for increasing the sourcing of goods from the U.S. and allied countries.  Both sides of the political aisle have marched to a drumbeat of increased domestic sourcing for the past several years.  Most recently, the Biden Administration implemented Executive Order 14005 to “maximize” the U.S. Government’s purchase of goods and services produced in the United States and Executive Order 14104 to increase domestic manufacturing and commercialization in certain research and development supported by federal funding.  The ongoing bi-partisan support for bolstering domestic sourcing is illustrated no better than through this year’s NDAA, which focuses on expanding the domestic supply chain for materials and supplies critical to the U.S. military, encouraging the purchase of domestic end items, and providing more opportunities for the Department of Defense (“DoD”) to engage with and purchase from domestic businesses.

Continue Reading Key Domestic Sourcing Provisions of the House and Senate Versions of the Fiscal Year (FY) 2024 National Defense Authorization Act (NDAA)

Following our recent overview of key topics to watch in the National Defense Authorization Act (“NDAA”) for Fiscal Year (“FY”) 2024, available here, we continue our coverage with a “deep dive” into NDAA provisions related to the People’s Republic of China (“China” or “PRC”) in each of the House and Senate bills.  DoD’s focus on strengthening U.S. deterrence and competitive positioning vis-à-vis China features prominently in the 2022 National Defense Strategy (“NDS”) and in recent national security discourse.  This focus is shared by the Select Committee on Strategic Competition Between the United States and the Chinese Communist Party (“Select Committee”), led by Chairman Mike Gallagher (R-WI) and Ranking Member Raja Krishnamoorthi (D-IL). 

It is no surprise, then, that House and Senate versions of the NDAA include hundreds of provisions—leveraging all elements of national power—intended to address what the NDS brands as China’s “pacing” challenge, including many grounded in Select Committee policy recommendations.  Because the NDAA is viewed as “must-pass” legislation, it has served in past years as a vehicle through which other bills not directly related to DoD are enacted in law.  In one respect, this year is no different—the Senate version of the NDAA incorporates both the Department of State and Intelligence 2024 Authorization bills, each of which includes provisions related to China. 

Continue Reading Not to Be Outpaced: NDAA Presents Measures Addressing China

It’s that time of year again: the House and Senate have each passed their respective version of the National Defense Authorization Act for FY 2024 (“NDAA”) (H.R. 2670, S. 2226).  The NDAA is a “must pass” set of policy programs and discretionary authorizations to fund Department of Defense (“DoD”) operations.  Lawmakers are currently undertaking the arduous process of reconciling these bills, while jockeying to include topics of importance in the final legislation.  The engrossed bills contain a number of significant provisions for defense contractors, technology providers, life science companies and commercial-item contractors – many of which we discuss briefly below and others that we will analyze in more depth in our NDAA series in the coming weeks.  Subscribe to our blog here so that you do not miss these updates.

Continue Reading Key Topics to Watch as Congress Works to Fund Next Year’s DoD Budget

As the House and Senate Armed Services Committees prepare to mark up the Fiscal Year 2024 National Defense Authorization Act (NDAA), they are very likely to consider a number of China-related measures that have been recommended by the national security community and which could enjoy bipartisan support.  These recommendations are generally focused on countering Chinese influence in the United States or increasing the United States’ relative power advantage in the Pacific region. 

Continue Reading Fiscal Year 2024 National Defense Authorization Act: More China-Related Measures on the Horizon

Today the National Telecommunications and Information Administration (NTIA) released its first notice of funding opportunity for development of next-generation wireless infrastructure under the new Public Wireless Supply Chain Innovation Fund (“Innovation Fund”).  According to NTIA’s announcement, this first tranche of funding will include up to $140.5 million in grants, ranging from $250,000 to $50 million, specifically to support expanded testing and evaluation of the performance, security, or interoperability of open, interoperable (“open-RAN”) wireless networks.  Companies (both for- and nonprofit), higher education institutions, industry groups, and consortia of multiple organizations are eligible to apply.

Continue Reading Commerce Department Issues First Funding Notice for Wireless Innovation Fund

On February 7, 2023, the House Committee on Armed Services (the “Committee”) held a hearing entitled “The Pressing Threat of the Chinese Community Party to U.S. National Defense.” This hearing marked the Committee’s first in the 118th Congress and it focused on U.S. strategic competition with the Chinese Communist Party (“CCP”) of the People’s Republic of China (“PRC”). This overview is the first in a series of legislative updates we will provide on congressional oversight activities related to China throughout the Congress, including specific activities focused on trade controls, supply chain dependencies, and PRC-sourced telecommunications infrastructure in U.S. networks.

Continue Reading Key Takeaways from the House Armed Services Committee Hearing on the Chinese Communist Party Threat to U.S. National Defense