The U.S. Secretary of Commerce, Gary Locke, apparently called Sprint CEO Dan Hesse to discuss potential security concerns. He warned Hesse about the possible ties between the two companies and the Chinese government's infrastructure. Their primary concern was that the Chinese military could use their products to interrupt or intercept U.S. communications.
This was a reiteration of a similar warning, signed by 8 U.S. senators in August. The Department of Defense said that they were "very concerned about China's emerging cyber capabilities and any potential vulnerability within or threat to DoD networks." Huawei and ZTE have both denied such a security risk, but Sprint's decision seems final.
While the Commerce Department insists that Locke never told Hesse to exclude the companies, but it was convincing enough to immediately exclude them from bidding. The bids from ZTE and Huawei were the lowest, and would have won. Sprint is now going back to the negotiation table with Samsung and Alcatel-Lucent.
source: The Wall Street Journal via Engadget