"China Week” Legislation Constrains Federal Purchasing. And Are You Ready for a Government Shutdown?

China Week on Capitol Hill

On September 10 through 12, 2024, the House of Representatives approved 25 stand-alone bills targeting various sectors and activities of China and the Chinese Communist Party. Dubbed “China Week” by the House Republicans,[1] these proposals target issues and actions related to biosecurity protection, securing the U.S. supply chain, protecting American technology, and more. Several of the bills prohibit federal agencies from buying designated goods or services from covered Chinese entities and limit contractors’ use of such equipment or services.

While initiated against a backdrop of the upcoming congressional election, many of the proposals have broad, bipartisan support as evidenced by House approval through the “suspension” calendar, which requires a two-thirds majority for approval. Many of the bills were approved without a roll-call vote.

Three bills have a direct impact on the federal procurement system and contractors.

BIOSECURE Act (HR 8333)

One of the House-passed bills is the “BIOSECURE Act.”[2] Primarily, the bill prohibits federal agencies and recipients of federal funds from procuring or using any biotechnology equipment or services that is from any of the five Chinese biotechnology companies listed in the bill, or as added to a new list of prohibited sources to be developed by the Office of Management and Budget. Existing contracts are exempt until January 2032 and the bill includes a targeted waiver and exception process. A similar but not identical bill[3] was approved by the Senate Committee on Homeland Security and Governmental Affairs Committee on March 6, 2024, but the Senate has not yet taken action on that bill. Contractors and agencies familiar with the 2019 statutory restriction on federal agencies purchasing certain telecommunications or video equipment and services from identified Chinese telecommunications companies,[4] or from government contractors using such equipment or services, will recognize the structure and approach employed in the House-passed BIOSECURE Act.

Decoupling from Foreign Adversarial Battery Dependence Act (HR 8631)

This bill[5] prohibits the Department of Homeland Security from procuring batteries from six named companies owned and operating in China, beginning on October 1, 2027.

Countering CCP Drones Act (HR 2864)

This bill[6] amends the Secure and Trusted Communications Network Act to add certain equipment and services produced by DJI Technologies to the list of covered communications equipment and services prohibited from being used in U.S. networks.

Finally, while not specifically a federal procurement prohibition, legislation titled “Protecting American Agriculture from Foreign Adversaries Act of 2024”,[7] would amend the Defense Production Act (and specifically the provisions relating to the national security reviews under CFIUS) to prohibit certain foreign investments in U.S. agriculture near U.S. national security facilities.

These initiative are not surprising, and build on actions signed into law in prior years, such as the prohibition on the purchase or use of certain Chinese telecommunication services or the  Uyghur Forced Labor Prevention Act[8] that prohibits federal agencies from buying any goods made with forced labor in the Uyghur region of China, as determined by the Department of Homeland Security and publicly published on their regular report of their determinations.

Are you Ready for a Government Shutdown?

Time is running out for the Congress and the White House to agree on the details of a Continuing Resolution to keep the Federal Government open for some period of time after the October 1, 2024, start of the new federal fiscal year. We have been in this situation every year for more than a decade, and even seen extensions for even a few days while negotiations continue. Nevertheless, the impact of these short-term CRs (or worse, a partial or complete shutdown) on federal agencies and on contractors is significant and irreversible and should be avoided. Agencies have extensive contingency plans should there be a lapse in appropriations; contractors would be well advised to have a similar playbook on the shelf and pressure test their plans should it be necessary to use them.

Conclusion

It is unlikely that most of the “China Week” legislation will be enacted into law during the remaining weeks of this 118^th Congress. But the congressional concerns over China’s access to U.S. technologies and critical sectors of the U.S. economy remain deeply held, and these concerns will not evaporate after this presidential and congressional election cycle.

As for Congress completing action on appropriations for the upcoming federal fiscal year, that won’t happen. I predicted this outcome last May.[9] Fortunately, we haven’t had a government shutdown since the 2018-2019, thirty-five-day shutdown during President Trump’s tenure, but the prospects for a repeat remain high.

If you have any questions or need any additional information, please do not hesitate to contact the author at [email protected] or the Centre Law attorney with whom you normally work.

[1]“Congress Passes 25 Bills to Combat Chinese Communist Party Threats”, Press Release of the House Select Committee on the Chinese Communist Party, Sept 12, 2024, available at  https://selectcommitteeontheccp.house.gov/media/press-releases/china-week-recap-congress-passes-25-bills-combat-chinese-communist-party (last viewed Sept 17, 2024).

[2] HR 8333, “BIOSECURE Act,” as passed the House of Representatives on Sep 9, 2024, available at https://www.congress.gov/118/bills/hr8333/BILLS-118hr8333rfs.pdf (last viewed Sept 17, 2024).

[3] S.3558, as ordered reported by the Senate Homeland Security and Governmental Affairs Committee, March 6, 2024, available at https://www.congress.gov/bill/118th-congress/senate-bill/3558?q=%7B%22search%22%3A%22S.+3558%22%7D&s=4&r=1 (last viewed Sept 17, 2024).

[4] Section 889(a)(1) of the National Defense Authorization Act for Fiscal Year 2019  (Public Law 115-232) and the related FAR rules.

[5] HR8631, as passed the House of Representatives on September 9, 2024, available at https://www.congress.gov/118/bills/hr8631/BILLS-118hr8631rfs.pdf (last viewed Sept 17, 2024).

[6] HR 2864, as passed the House of Representatives on September 9, 2024, available at https://www.congress.gov/118/bills/hr2864/BILLS-118hr2864rfs.pdf (last viewed Sept 17, 2024).

[7] HR 9456, as passed the House of Representatives on September 11, 2024, available at https://www.congress.gov/118/bills/hr9456/BILLS-118hr9456eh.pdf (last viewed Sept 17, 2024).

[8] Uyghur Forced Labor Protection Act, Public Law 117-78  (Dec 23, 2021), available at https://www.congress.gov/117/plaws/publ78/PLAW-117publ78.pdf (last viewed Sept 17, 2024).

[9] “Guaranteeing a Continuing Resolution for the Start of Federal Fiscal Year 2025” (May 30, 2024), Centre Law blog available at https://centrelawgroup.com/blog/guaranteeing-a-continuing-resolution-for-the-start-of-federal-fiscal-year-2025/ (last viewed Sept 17, 2024).