US government agencies charged with reviewing sensitive acquisitions are engaged in a debate over how to handle Huawei, the Chinese software and telecoms equipment-maker viewed with deep scepticism by government security experts.

Last week, Huawei narrowly lost a bid to take over 2Wire, a privately-held US maker of broadband internet software that was ultimately acquired by Pace of the UK for $475m, even though Huawei offered more than its rival, according to people familiar with the matter.

This month, the Chinese company was also on the losing end of a bid for Motorola's mobile network infrastructure unit, which was bought by Nokia Siemens for $1.2bn.

In both cases, say people familiar with the matter, serious questions over Huawei's ability to win regulatory approval for the acquisitions played a role in the bidding process, forcing Huawei to offer a higher premium. Both deals would have had to win approval from the Committee on Foreign Investment (CFIUS), an interagency panel that reviews foreign acquisitions on national security grounds.

Cfius reviews are highly classified and the US government has refused to comment on its thinking about Huawei's future in the US. But people familiar with the process say government agencies are preparing themselves for a review of the company in the future given its stated desire to increase its presence in the US market.

There are two schools of thought within the US government. One pragmatic view holds that Cfius should approve a future transaction because it would allow the government to negotiate what is known as a mitigation agreement, a set of strict conditions and security-related requirements that could give the US valuable insight into the inner workings of a company that some allege has close ties to the Chinese military, although Huawei staunchly denies the charge.

Officials who believe that a future Huawei deal ought to be approved note that the company has already sold roughly $800m of its products to US customers under Motorola's brand as part of a long-standing business relationship that recently went sour.

Mitigation agreements negotiated by Cfius with other non-US companies, including Alcatel Lucent, include rules on employee screening and third-party audits.

Any mitigation agreement with Huawei would be likely go even further, such as forcing the Chinese company to hand its source code over to the US, which in turn could give the US insight into the Chinese communications network.

But there are strong arguments against such a move that support keeping Huawei at bay. One former official close to the Cfius process said the government engaged in a similar debate during its review of Huawei's joint bid for 3Com, the US technology group, during George W Bush's administration.

Huawei was forced to abandon the bid when it became clear it would be blocked on national security grounds.

“At the time, most of the national security agencies concluded that the window into Huawei would not be useful enough and that it would be very difficult to write procedures that would ensure safety, even if the government were given the source code,” the former official said.

While the US government has not been able to entirely block Huawei from making in-roads into the US market – the company has contracts with Clearwire and Leap – most experts agree that it has successfully prevented the biggest US telecoms companies, such as AT&T and Verizon, from buying Huawei equipment.

Even if the US does not have a formal say in such equipment negotiations, its scrutiny of Huawei is well known and it is a major customer of many of the biggest telcos, making it very influential in the companies' buying decisions.

As Huawei regroups and seeks new US acquisition targets, its future in the US ultimately depends on which philosophy, one that is pragmatic or one that is more ideological, wins out.