Government Contracts District Court Upholds 2019 NDAA’s Huawei Equipment Ban
Tuesday, March 17, 2020

District Court Upholds 2019 NDAA’s Huawei Equipment Ban

By Government Contracts Editorial Staff

The government’s motion to dismiss a suit challenging section 889 of the John S. McCain National Defense Authorization Act for Fiscal Year 2019 was granted by the District Court for the Eastern District of Texas because the ban on Huawei products did not violate the Constitution’s Bill of Attainder Clause, Due Process Clause, or Vesting Clauses. The plaintiffs challenged the constitutionality of §889 of NDAA FY 2019 (PL 115-232), which prohibits the head of an executive agency from procuring specific covered telecommunications equipment made by Huawei, contracting with an entity that uses such equipment, or obligating or expending funds to procure such equipment.

Bill of Attainder Tests. A statute is a bill of attainder if it applies with specificity and imposes punishment. The government conceded §889 applied with specificity to the plaintiffs, but the statute did not impose punishment under a three-part inquiry. Section 889 was not a historical punishment, because it was not a brand of disloyalty or infamy, an employment bar, or banishment. Rather, as in Kaspersky Lab, Inc., et al. v. Dept. of Homeland Security, et al. (CA-DC, 62 CCF ¶81,532), the statute “represent[ed] no more than a customer’s decision to take its business elsewhere.” Under the functional test, the two purported non-punitive purposes of §889—to protect telecommunications systems against Chinese cyber-threats and ensure federal funds are not expended to procure or propagate Chinese cyber-threats on U.S. networks—were legitimate. Further, §889 was appropriately tailored to the burdens imposed. It was limited in scope and did not impose a blanket ban, it was tailored to the goal of government-wide protection of “critical telecommunication infrastructure,” and the ban was not permanent and could be waived if the security threats posed by Huawei subsided. Finally, under the motivational test, the legislative record did not provide “smoking gun” evidence of punitive intent.

Legitimate Purpose. As for the due process challenge, the plaintiffs did not show §889 was not rationally related to a legitimate legislative purpose. Also, the statute did not directly impact private contractual relationships, and contracting with the government is a privilege, not a constitutionally guaranteed right. The Vesting Clauses challenge also failed because §889 was the result of an inherently congressional function and did not prevent the executive and judicial branches from performing their constitutional functions. (Huawei Technologies USA, Inc., et al. v. U.S., et al., DC ED Tex, 64 CCF ¶81,855)

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