NDAA Section 889 Update: Grant Funding Eligibility for Equipment Replacement

Since 2018, the Security Industry Association (SIA) has provided timely updates to members about implementation of “Section 889” U.S. government procurement and grant prohibitions on certain Chinese video surveillance and telecommunication equipment, as a benefit to SIA members and their customers. Today SIA provides new information that clarifies recent reports about the authorized use of government grant funds to replace equipment covered by Section 889 and potential use of federal grant funds for this purpose (i. e, the total number of cameras that may be replaced), the subject of frequently asked questions regarding this law.

As SIA has previously reported, in addition to prohibiting federal grant and loan funds from being used to purchase covered equipment, Section 889 directed agencies to prioritize grant awards for efforts by recipients to transition away from the covered equipment by replacing it with alternatives:

“…heads of executive agencies administering loan, grant or subsidy programs shall prioritize available funding and technical support to assist affected businesses, institutions and organizations as is reasonably necessary for those affected entities to transition from covered communications equipment and services, to procure replacement equipment and services and to ensure that communications service to users and customers is sustained.”

Under completely separate legislation, the Secure Networks Act, the Federal Communications Commission (FCC) established a program to reimburse telecommunications service providers for replacement of covered telecommunications equipment, but this specifically excludes video surveillance equipment. Additionally, Section 889 did not include any requirement or funding for replacement of covered equipment in use by federal agencies.

Regarding grants, no specific grant program has been created, or grant funding specifically allocated, for the sole purpose of replacement of covered video surveillance equipment. However, replacement has recently been included as an allowable purpose under several existing federal assistance programs.

In May 2022, the Federal Emergency Management Agency (FEMA), issued its formal policy implementing the prohibitions on spending grant funds on covered equipment under Sec. 889, also clarified that:  

“Depending on the specific FEMA program, recipients and subrecipients may be permitted to use FEMA award funds to purchase replacement equipment or services.

a. Recipients and subrecipients should refer to program guidance or contact the applicable program office to determine whether replacement equipment or services is eligible under that       program.”

Subsequently the following provision has been included in 2022 and subsequent FEMA Preparedness Grants Manuals:

“Replacement Equipment and Services: FEMA grant funding may be permitted to procure replacement equipment and services impacted by this prohibition, provided the costs are otherwise consistent with the requirements in this Manual and the applicable NOFO.”

This means under potentially any FEMA preparedness grant program, including homeland security grants (See SIA Federal Grants Guide), applications specifically for replacement projects, or projects with a larger scope that include replacement of covered equipment as an element, would be considered for possible grant awards – so long as this is specifically identified as an allowable purpose under the program’s Notice of Funding Opportunity (NOFO).

More than 11 FEMA preparedness grant programs have included this so far, beginning in fiscal year 2022. Links to the relevant NOFOs can be found at https://www.fema.gov/grants/preparedness.

• Emergency Management Performance Grant Program
• Emergency Operations Center Grant Program
• Homeland Security Grant Program
• Intercity Bus Security Grant Program
• Intercity Passenger Rail – Amtrak Program
• Nonprofit Security Grant Program
• Port Security Grant Program
• State and Local Cybersecurity Grant Program
• Transit Security Grant Program
• Tribal Homeland Security Grant Program
• Tribal Cybersecurity Grant Program

Note that these developments do not guarantee that funding will be made available for replacement projects or allow any plausible forecast of the extent to which grants will be utilized for this purpose; however, suppliers and grant recipients should be aware of the significant potential opportunity for federal assistance to meet such needs.   

Over time and as implementation of Section 889 continues, it is likely more federal grant programs will specifically include both Section 889 grants provisions (pertaining to the prohibition on covered equipment and to allowable use for replacement equipment) in guidance documents. Grant program announcements and related webinars, training, etc. should be closely monitored for additional opportunities.