FAR Council’s Interim Rule Bans Use of ByteDance Covered Application in Government Contracting

At a Glance

• The FAR Council issued an interim final rule banning the use of TikTok in government contracting.
• The interim rule requires immediate implementation but does not call for a reporting requirement or include a method of enforcement.
• Contractors have until August 1, 2023, to submit comments to be considered in the formation of the final rule.

On June 2, 2023, the FAR Council issued an interim final rule banning the use of a ByteDance Covered Application — better known as TikTok — in government contracting. The interim final rule implements OMB Memorandum M-23-13 and creates FAR 52.204-27, which “prohibits contractors from having or using a covered application on any information technology owned or managed by the Government, or on any information technology used or provided by the contractor under a contract, including equipment provided by the contractor's employees.” Most notably, the rule “applies to devices regardless of whether the device is owned by the Government, the contractor, or the contractor's employees (e.g., employee-owned devices that are used as part of an employer bring your own device (BYOD) program),” to the extent a device is used in the performance of a contract. 

The rule recognizes the same narrow exceptions for national security interests and activities, law enforcement activities, and security research activities set forth in OMB M-23-13.  The rule also provides that “a personally-owned cell phone that is not used in the performance of the contract is not subject to the prohibition” and excludes from its coverage “any equipment acquired by a Federal contractor incidental to a Federal contract.” The rule does not define the key phrases “not used in performance of the contract” or “incidental to a Federal contract.” Thus, contractors are left without guidance on many issues, such as whether the use of a personally owned cell phone to communicate with government personnel through email, text, or phone calls would constitute use “in performance of the contract” subjecting the cell phone to the prohibition, or whether equipment acquired for support or overhead functions qualify as “equipment acquired incidental to a Federal contract.”  The definition of “information technology” incorporated in the rule and OMB M-23-13 from 40 U.S.C. § 11101(6), “information technology” that a contractor may use “to a significant extent in the performance of a service or the furnishing of a product,” does not resolve these questions.

The interim final rule applies to all government procurement contracts, including contracts under the simplified acquisition threshold and contracts for products and commercial services. It is effective immediately and must be included in solicitations issued on or after June 2, 2023, and in solicitations issued before June 2, 2023, provided the award of the resulting contract occurs after that date. Likewise, the rule requires that FAR 52.204-27 be included in all subcontracts, including subcontracts for the acquisition of commercial products or commercial services. Despite requiring immediate implementation, the rule does not include a reporting requirement. Nor does it require contractors to certify or represent their compliance. Presumably, it would seem that, at a minimum, the reasonable inquiry requirement in the Huawei Rule could be considered a reasonable standard applicable here. While the rule is broad in scope and potential impact, the method of enforcement remains to be seen.

Contractors have until August 1, 2023, to submit comments to be considered in the formation of the final rule. Contractors submitting comments should consider highlighting any concerns relating to the broad scope of the rule and its enforcement.