Parts Obsolescence Issues and the Proposed DFARS Rule on “Detection and Avoidance of Counterfeit Electronic Parts”

Obsolete parts and its relationship to the counterfeit electronic part threat is generally known to DoD and it contractors. It has been a prominent topic at various aerospace & defense industry conferences, symposiums, and training programs which have been heavily attended to DoD personnel. This relationship was also discussed in the U.S. Senate Armed Services Committee “Report of the Inquiry into Counterfeit Electronic Parts in the Department of Defense Supply Chain” [1]. The proposed DFARS rule on “Detection and Avoidance of Counterfeit Electronic Parts” fails to address the vulnerability created by continued demand for obsolete parts and fails to address the increasing constraints on DoD regarding its ability to support and fund approaches to eliminate the use of obsolete parts.

Defense and aerospace products are particularly vulnerable to counterfeit parts due to part obsolescence. Microelectronics products, in particular, have life cycles far shorter than the defense / aerospace products that use them. When obsolete parts are not eliminated from product designs, independent distributors are often used to obtain components that are no longer in production. In order to reduce the likelihood of having to purchase parts through riskier supply chains, defense electronics producers and their customers recognize the need to proactively manage the life cycle of electronic products versus the life cycles of the parts used within them. While requirements within the proposed rule may reduce the number of purchases from higher risk suppliers, the prominence of through-life support contracts will make part obsolescence a larger challenge and counterfeits a possibly bigger problem for DOD and defense companies in the future.

 

Recommendations

The proposed rule should incorporate recommendations communicated to DoD earlier this year by the Acquisition Reform Working Group (ARWG) on “Refinement of the Framework for the Detection and Avoidance of Counterfeit Electronic Parts” [2] …

 

Obsolete Parts: the cost of counterfeit electronic parts and suspect counterfeit electronic parts and the cost of rework or corrective action that may be required to remedy the use or inclusion of such parts are not allowable costs under Department contracts, unless:

(1) The contractor’s proposal in response to a DoD solicitation for maintenance, refurbishment or remanufacture work identifies obsolete electronic parts and includes a plan to assure trusted sources of supply for obsolete electronic parts, or to implement design modifications to eliminate obsolete electronic parts; and

(2) DoD elects not to fund design modifications to eliminate obsolete electronic parts; and

(3) The contractor applies inspections and tests intended to detect counterfeit electronic parts when purchasing electronic parts from other than the OEM or its authorized dealer.

 

Such approaches will provide the opportunity for DOD and its contractors to establish plans for addressing part obsolescence and to balance the cost of design modifications to eliminate obsolete parts vs. the risk of seeking obsolete parts through riskier supply chains and the cost to mitigate those risks.

 

Henry Livingston


 

[1] “Report of the Inquiry into Counterfeit Electronic Parts in the Department of Defense Supply Chain”, Senate Armed Services Committee, May 21, 2012 (112th Congress, 2nd Session, Senate Report 112–167
http://armed-services.senate.gov/Publications/Counterfeit%20Electronic%20Parts.pdf

[2] 2013 Legislative Recommendations, Acquisition Reform Working Group, March 13, 2013
http://www.pscouncil.org/CMDownload.aspx?ContentKey=d2f9bc09-d6e8-41d9-b3a4-d71142e23779&ContentItemKey=bd8b178d-a5ec-4dc0-a9c8-2ffbc9f320bc

 

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