Why It Matters

A recent audit found that federal agencies have sharply reduced spending with five Chinese telecommunications and surveillance companies covered by federal procurement restrictions, but the General Services Administration (GSA) and Department of Defense (DOD) are not sharing information and practices that could help other agencies comply with those restrictions and future supply chain prohibitions.

The U.S. Government Accountability Office (GAO) report, published Sept. 22, examined how GSA and DOD have implemented Section 889 of the John S. McCain National Defense Authorization Act for Fiscal Year 2019, which prohibits federal agencies from buying covered telecommunications and surveillance equipment or services from five named Chinese companies, their affiliates or subsidiaries, and from contracting with vendors that use such equipment or services.

The Big Picture

Concerns about U.S. government reliance on Chinese companies for telecommunications and information technology have existed for more than a decade, with agencies reporting that procurement of certain foreign-made items could facilitate cyberattacks, espionage and threats to national security. After implementing Section 889, federal agencies reduced spending with the five prohibited companies through fiscal year 2025, recording no spending with those companies in three fiscal years. As of March, nearly 90% of companies with active government contracts in fiscal year 2025 publicly represented that they did not use equipment from the five companies.

GSA and DOD have built internal processes to support compliance with those representations. GSA has automated processes to remove prohibited equipment and services from its Multiple Award Schedule contracts, which other agencies across the government use to make purchases. Both GSA and DOD have also deployed search tools that contracting officers and purchase cardholders can use to determine how contractors represent their Section 889 compliance in the System for Award Management.

GSA and DOD do not broadly share implementation insights, including information about the five companies' subsidiaries and affiliates and methods they have developed to improve supply chain visibility, with other federal agencies. That information could help agencies identify covered equipment connected to subsidiaries or affiliates of the five companies rather than directly to one of the named companies. GAO found that without broader information sharing, agencies may take longer to detect and address compliance problems.

Broader Context

GSA has begun planning to work with the Department of Homeland Security to expand access to customs data that it found useful for identifying the origin of goods while implementing Section 889. GAO found that information developed through supply chain visibility efforts could also help agencies implement future procurement restrictions, including a prohibition on procuring certain Chinese semiconductors and services scheduled to begin in December 2027. Rulemaking to implement that prohibition was underway as of July.

GAO focused on GSA and DOD in part because of their scale: together, the two agencies accounted for nearly two-thirds of the federal government's $793 billion in obligations for products and services in fiscal year 2025, while GSA contracts support procurement activity across the broader federal government. A House report accompanying the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 required the review, including a provision directing GAO to report on executive agencies' implementation of Section 889.

The Bottom Line

GAO issued four recommendations, directing the GSA Administrator and the Secretary of Defense to periodically share subsidiary and affiliate information with relevant federal agencies and coordinate with those agencies to share broader lessons from their Section 889 implementation experience. The recommendations call for leveraging the Cybersecurity and Infrastructure Security Agency's (CISA) existing information-sharing mechanisms where appropriate.

GSA and DOD concurred with all four recommendations, which remain open. GSA said it is working on a plan to address the recommendations. DOD said it would assess the feasibility of establishing criteria to identify subsidiary and affiliate information and coordinate with GSA and CISA on appropriate forums for sharing that information and lessons from its Section 889 implementation experience.

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