For Owl Labs, the question was whether the GSA could have found a similar product made here. They could, said Deputy Inspector General Robert Erickson [Testimony]. And so GSA, which is the primary government-wide purchasing agent, managing tens of billions of dollars in annual contract spending, may have broken Buy America Act rules for government procurement, and the Trade Agreements Act of 1979 (TAA), too, of which China is not a part.
The hearing really pitted Erickson at the Inspector General’s office against David Shive, the CIO for the GSA [Testimony].
Subcommittee Chairwoman Nancy Mace (R-SC-1) told Shive she believes the GSA broke the Trade Agreements Act because it bans government agencies from buying products made in China. Shrive signed off on the purchase.
Shive said that they chose Owl Labs because it had a unique 360-degree view camera, and was portable. It also required no installation, was compact, and easy to relocate in different offices and to store away. It was also the least expensive, which goes without saying seeing how it is made in Asia.
He said GSA was in full compliance with the Buy American Act for both the first and second procurement of the Meeting Owl cameras. And that the Trade Agreements Act did not apply because the purchases came in under $183,000.
According to the Dec. 2023 thresholds for government contracts as agreed to with World Trade Organization member states in the Government Procurement Agreement, the threshold for central government entities – of which GSA is a part – is $174,000.
Shive said that GSA staff told him that there were no compliant video conferencing products out there that were suitable for their needs. “And so I said, ‘Okay,’ and I signed the purchase order,” he told Mace.
Shive was under constant fire.
Deputy Inspector General Erickson told Mace and Ranking Member Gerald Connolly (D-VA-11) that they got wind of the Owl Labs purchase from a GSA whistle blower in 2022, when the purchase was made. He said they initiated the investigation shortly after and found that GSA IT staffers “misled” Shive.
“GSA IT provided misleading market research in support of the TAA non-compliant cameras,” Erickson said about the China-made Meeting Owls. “They failed to disclose that comparable alternatives were available.” Erickson never mentioned an alternative to Owl Labs, however.
Connolly asked if Shive knew of any alternatives made in the U.S.
“According to the requirements that were commonly discussed by the entire procurement and technology teams, we have not been able to find another camera that’s highly portable, has a 360-degree view, and also contains the other 13 requirements that were detailed,” Shive said.
But Erickson insisted that there were. He later warned that the Chinese cameras were a security risk.
“We were worried about Chinese surveillance and the firewall being breached and information that’s not supposed to leave the government, getting out,” he told Connolly, adding that the GSA did take those security concerns to heart.
“Isn’t there a concern here that the standard-setting agency of the federal government, GSA, which tells us all kinds of products we can buy and can’t buy and sets standards for all federal agencies except the Defense Department, is essentially saying that there is nothing wrong with this Chinese product; have at it. Everyone should buy them. Isn’t that the risk of the message, whether it’s witting or unwitting, with this procurement?” Connolly asked.
Erickson agreed.
“And doesn’t that fly in the face of not only congressional intent but the policies of the Biden administration,” Connolly asked.
Erickson agreed again, saying it did violate the Trade Agreements Act.
“So it’s actually a violation of law?” Connolly asked the deputy inspector, who then responded with a “yes, sir” to the question.
Shive maintains that the GSA did not break any laws, surely not on purpose or trying to be sly about it. “We are under the TAA threshold,” he said.
Connolly did not like that response.
“That response doesn’t even pass the giggle test,” the Virginia Democrat said. “You have already got GSA employees saying there was no other product. So that would tell me that once you have the product, you are going to scale up with this same product. There seemed to be no sensitivity or care that it was made in China and that there were security concerns inherent in a Chinese camera connected to the internet. We have experience with other Chinese tech that ought to have sent red lights blaring. This was a violation, frankly, of U.S. government policy,” Connolly said. “And yet you are the General Services Administration official charged with this very mission of watching government purchases on behalf of the federal government. This is a very troubling episode.”
Did the General Services Administration Break “Buy American” Laws In Purchase Of Owl Labs Video Cameras Made in China?
Owl Labs of Massachusetts may look like an American company, but other than the U.S.-based venture capital that funds it, and the intellectual property behind it, their 360-degree video cameras are made in China. When the General Services Administration (GSA) bought them last year, they broke Buy America Act rules, the Inspector General’s office said in a report issued January 23. The full 19-page report was titled “GSA purchased Chinese-manufactured video conference cameras and justified it using misleading market research.”
Owl Labs was not mentioned in the report, but was the star of a House Oversight and Accountability subcommittee hearing on cybersecurity on Feb. 29.
The purchase of the Massachusetts-based, China-made equipment clearly irked both the Chair and Ranking Member on the Committee.
A spokesperson for the company said long after the hearing was over that Owl Labs “is a U.S. company with the majority of our employees based in the United States and our corporate headquarters in Boston. We design and develop our products in the United States. Our core products are made in Vietnam today. Prior to mid-2023, Owl Labs worked with a leading, multinational contract manufacturer in China, as many large U.S. companies do.”
Still, China’s role in the American tech supply chain is seen by companies and investors as both a positive (low labor costs, and scaled-up manufacturing ready to go) and a problem. No better example of the problematic nature of this relationship can be seen than the recent headlines about a Chinese-American Google employee who shared artificial intelligence codes with China.
On January 25, 2021, President Biden issued Executive Order 14005, titled Ensuring the Future Is Made in All of America by All of America’s Workers. This executive order promoted the enforcement of the Buy American Act, stating that “the U.S. government should, whenever possible, purchase goods, products, materials, and services from sources that will help American businesses compete in strategic industries and help America’s workers thrive.” The Office of Inspector General said that the General Services Administration did not abide by that law when purchasing 150 Owl Labs video conference products from a Somerville, Massachusetts-based company that manufactures their equipment in China. The Inspector General said that there have been known “security vulnerabilities” with these specific cameras – known as Meeting Owl – which had been documented by a private security company in Switzerland called Modzero and was the subject of a CISA public alert in 2022.
For Owl Labs, the question was whether the GSA could have found a similar product made here. They could, said Deputy Inspector General Robert Erickson [Testimony]. And so GSA, which is the primary government-wide purchasing agent, managing tens of billions of dollars in annual contract spending, may have broken Buy America Act rules for government procurement, and the Trade Agreements Act of 1979 (TAA), too, of which China is not a part.
The hearing really pitted Erickson at the Inspector General’s office against David Shive, the CIO for the GSA [Testimony].
Subcommittee Chairwoman Nancy Mace (R-SC-1) told Shive she believes the GSA broke the Trade Agreements Act because it bans government agencies from buying products made in China. Shrive signed off on the purchase.
Shive said that they chose Owl Labs because it had a unique 360-degree view camera, and was portable. It also required no installation, was compact, and easy to relocate in different offices and to store away. It was also the least expensive, which goes without saying seeing how it is made in Asia.
He said GSA was in full compliance with the Buy American Act for both the first and second procurement of the Meeting Owl cameras. And that the Trade Agreements Act did not apply because the purchases came in under $183,000.
According to the Dec. 2023 thresholds for government contracts as agreed to with World Trade Organization member states in the Government Procurement Agreement, the threshold for central government entities – of which GSA is a part – is $174,000.
Shive said that GSA staff told him that there were no compliant video conferencing products out there that were suitable for their needs. “And so I said, ‘Okay,’ and I signed the purchase order,” he told Mace.
Shive was under constant fire.
Deputy Inspector General Erickson told Mace and Ranking Member Gerald Connolly (D-VA-11) that they got wind of the Owl Labs purchase from a GSA whistle blower in 2022, when the purchase was made. He said they initiated the investigation shortly after and found that GSA IT staffers “misled” Shive.
“GSA IT provided misleading market research in support of the TAA non-compliant cameras,” Erickson said about the China-made Meeting Owls. “They failed to disclose that comparable alternatives were available.” Erickson never mentioned an alternative to Owl Labs, however.
Connolly asked if Shive knew of any alternatives made in the U.S.
“According to the requirements that were commonly discussed by the entire procurement and technology teams, we have not been able to find another camera that’s highly portable, has a 360-degree view, and also contains the other 13 requirements that were detailed,” Shive said.
But Erickson insisted that there were. He later warned that the Chinese cameras were a security risk.
“We were worried about Chinese surveillance and the firewall being breached and information that’s not supposed to leave the government, getting out,” he told Connolly, adding that the GSA did take those security concerns to heart.
“Isn’t there a concern here that the standard-setting agency of the federal government, GSA, which tells us all kinds of products we can buy and can’t buy and sets standards for all federal agencies except the Defense Department, is essentially saying that there is nothing wrong with this Chinese product; have at it. Everyone should buy them. Isn’t that the risk of the message, whether it’s witting or unwitting, with this procurement?” Connolly asked.
Erickson agreed.
“And doesn’t that fly in the face of not only congressional intent but the policies of the Biden administration,” Connolly asked.
Erickson agreed again, saying it did violate the Trade Agreements Act.
“So it’s actually a violation of law?” Connolly asked the deputy inspector, who then responded with a “yes, sir” to the question.
Shive maintains that the GSA did not break any laws, surely not on purpose or trying to be sly about it. “We are under the TAA threshold,” he said.
Connolly did not like that response.
“That response doesn’t even pass the giggle test,” the Virginia Democrat said. “You have already got GSA employees saying there was no other product. So that would tell me that once you have the product, you are going to scale up with this same product. There seemed to be no sensitivity or care that it was made in China and that there were security concerns inherent in a Chinese camera connected to the internet. We have experience with other Chinese tech that ought to have sent red lights blaring. This was a violation, frankly, of U.S. government policy,” Connolly said. “And yet you are the General Services Administration official charged with this very mission of watching government purchases on behalf of the federal government. This is a very troubling episode.”
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