This month the United States Air Force announced that it had suspended Futurewei Technologies, Inc. from government contracting, and from directly or indirectly receiving any benefits from federal assistance programs. The suspension was based upon an indictment of Futurewei filed by the Department of Justice (DoJ) in New York for violating federal criminal laws.
“The indictment is evidence Futurewei lacks business integrity or business honesty that directly affects its present responsibility to be a government contractor,” said Derek Santos, Air Force deputy general counsel, and the department’s suspension and debarment official, via a statement.
“The suspension furthers the policy of awarding federal contracts only to responsible contractors and is necessary to protect the government’s interest,” added Santos.
Futurewei is the U.S.-based research arm of China’s Huawei Technologies Company Ltd. Last year the Huawei affiliate had moved to separate its operations from its corporate parent after the U.S. government put Huawei on a trade blacklist according to a report from Reuters from last May.
The U.S. had accused the company of committing forced technology transfers and stealing trade secrets.
At the time, Futurewei banned Huawei employees from its offices, moved Futurewei employees to a new IT system and even forbid employees from using the Huawei name or logo in communications. However, Futurewei, which had employed some 850 workers spread across its offices in Silicon Valley, greater Seattle, Chicago and Dallas, was still largely indistinguishable from its parent company.
Under the terms of that entity list ban, Futurewei was prohibited from transferring technologies it developed to its own parent company, but was still allowed to trade with American companies. Despite the attempts to break, or at least loosen, those ties with its parent company, the wholly owned subsidiary has fired a large portion of its staff, cutting a total of 600 jobs or nearly two-thirds of its total U.S. workforce.
The Air Force had already suspended Huawei from government contracting in February 2019 based on related criminal proceedings.
Huawei has been considered a proxy for China in its global effort to acquire advanced technologies via any means possible. The U.S. had placed trade restrictions on the firm and blocked American companies doing business with it, as it has ties to the Chinese state and could be forced to spy for Beijing, something the company has strongly denied.
In April 2019 the Five Eyes intelligence sharing nations – which include the United States, Australia, Canada, Great Britain and New Zealand – had agreed not to use technology from the Chinese technology firm in the “sensitive” parts of their respective 5G telecom networks.
Santos noted the suspension of Futurewei will remain in effect pending completion of legal proceedings, and that the suspension is governed by Federal Acquisition Regulation (FAR) Subpart 9.4.
