Blog Post

OMB Issues Guidance on Application of Section 889 to Federal Assistance Recipients—and Confirms No Part B “Use” Prohibition

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On April 22, 2024, the Office of Management and Budget (“OMB”) issued final guidance regarding the application of the Section 889 telecommunications ban to federal grants, loans, and cooperative agreements under 2 C.F.R. § 200.216. As a quick recap, Part A of Section 889 prohibits contractors from providing the federal government covered telecommunications equipment and services from certain Chinese manufacturers, whereas Part B prohibits contractors from using covered equipment and services. Section 889 also applies to grant, loan, and cooperative agreement recipients and subrecipients through 2 C.F.R. § 200.216, with certain differences. Most notably, OMB recently clarified that the Part B “use” prohibition does not apply to recipients and subrecipients, meaning they may use covered telecommunications equipment and services as long as they are not purchased with federal funds.

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