Proposed Amendment to Section 818 of the NDAA for FY2012 (113th Congress, S.2410)

In May of this year, the Senate Armed Services Committee proposed an amendment to Section 818 of the NDAA for FY2012 (detection and avoidance of counterfeit electronic parts).

This proposed amendment appears in S.2410 – Carl Levin National Defense Authorization Act for Fiscal Year 2015, Section 824 “Sourcing Requirements Related to Avoiding Counterfeit Electronic Parts”. According to Senate Report 113-176, “[SASC] recommends a provision that would clarify sourcing requirements related to avoiding counterfeit electronic parts.”

Within the Senate Report, SASC directs the Comptroller General to provide a report on counterfeit or suspect counterfeit electronic parts. This report is to include analysis of GIDEP reports (quantity and sources of supply); and a description of DOD efforts to work with the defense industrial base to improve contractor systems for the detection and avoidance of counterfeit parts.

Excerpts from S.2410 appear below.

S.2410 – Carl Levin National Defense Authorization Act for Fiscal Year 2015

http://thomas.loc.gov/cgi-bin/bdquery/z?d113:SN02410:

Latest Major Action: 6/2/2014 Placed on Senate Legislative Calendar under General Orders. Calendar No. 402.

 

Senate Report 113-176

TITLE VIII–ACQUISITION POLICY, ACQUISITION MANAGEMENT, AND RELATED MATTERS

SUBTITLE B–AMENDMENTS TO GENERAL CONTRACTING AUTHORITIES, PROCEDURES, AND LIMITATIONS

Sourcing requirements related to avoiding counterfeit electronic parts (sec. 824)

The committee recommends a provision that would clarify sourcing requirements related to avoiding counterfeit electronic parts.

SUBTITLE D–OTHER MATTERS

ITEMS OF SPECIAL INTEREST

Comptroller General of the United States report on counterfeit or suspect counterfeit electronic parts

The committee remains concerned about the counterfeit electronic parts in the Department of Defense (DOD) supply chain. While efforts have been made to secure the supply chain, vulnerabilities still exist.

The committee directs the Comptroller General of the United States to provide the congressional defense committees a report within 270 days of enactment of this Act.

The required report should contain an analysis of reports relating to counterfeit or suspect counterfeit electronic parts submitted to the Government Industry Data Exchange Program (GIDEP) from January 2011 to present, including: (a) The number of reports filed by original component manufacturers, authorized distributors, independent distributors, and original equipment manufacturers; and (b) The source of supply, i.e., original component manufacturers, authorized distributors, and independent distributors, for parts identified in reports as counterfeit or suspect counterfeit.

The required report should also contain a description of DOD efforts to work with the defense industrial base to improve contractor systems for the detection and avoidance of counterfeit parts. Further, the report should describe government or industry practices that detect counterfeit or suspect counterfeit parts prior to their entry into the DOD supply chain but do not fall under the GIDEP reporting requirement, and make recommendations on how to best ensure such cases are reported in the future.

 

Text of Legislation …

SEC. 824. SOURCING REQUIREMENTS RELATED TO AVOIDING COUNTERFEIT ELECTRONIC PARTS.

Section 818(c)(3) of the National Defense Authorization Act for Fiscal Year 2012 (Public Law 112-81; 125 Stat. 1495; 10 U.S.C. 2302 note) is amended–

(1) in subparagraph (A)–

(A) by striking `, whenever possible,’;

(B) in clause (i)–

(i) by striking `trusted suppliers’ and inserting `suppliers identified as trusted suppliers in accordance with regulations issued pursuant to subparagraphs (C) and (D)’; and

(ii) by striking `; and’ and inserting a semicolon;

(C) in clause (ii), by striking `trusted suppliers;’ and inserting `suppliers identified as trusted suppliers in accordance with the regulations issued pursuant to subparagraphs (C) and (D); and’; and

(D) by adding at the end the following new clause:

`(iii) obtain electronic parts from alternate suppliers when such parts are not available from original manufacturers, their authorized dealers, or trusted suppliers;’;

(2) in subparagraph (B)–

(A) by inserting `for’ before `inspection’; and

(B) by striking `subparagraph (A)’ and inserting `clause (i) or (ii) of subparagraph (A), when obtaining the electronic parts in accordance with such clauses is not possible’;

(3) in subparagraph (C), by striking `identify trusted suppliers that have appropriate policies’ and inserting `identify as trusted suppliers those that have appropriate policies’; and

(4) in subparagraph (D), by striking `additional trusted suppliers’ and inserting `their own identified trusted suppliers’.

 


NOTE: If approved, Section 818(c)(3) would read as follows (emphasis added to highlight changes) …

(c) Regulations-

(3) TRUSTED SUPPLIERS- The revised regulations issued pursuant to paragraph (1) shall–

(A) require that the Department and Department contractors and subcontractors at all tiers–

(i) obtain electronic parts that are in production or currently available in stock from the original manufacturers of the parts or their authorized dealers, or from suppliers identified as trusted suppliers in accordance with regulations issued pursuant to subparagraphs (C) and (D); and who obtain such parts exclusively from the original manufacturers of the parts or their authorized dealers;

(ii) obtain electronic parts that are not in production or currently available in stock from suppliers identified as trusted suppliers in accordance with the regulations issued pursuant to subparagraphs (C) and (D); and

(iii) obtain electronic parts from alternate suppliers when such parts are not available from original manufacturers, their authorized dealers, or trusted suppliers;

(B) establish requirements for notification of the Department, and for inspection, testing, and authentication of electronic parts that the Department or a Department contractor or subcontractor obtains from any source other than a source described in clause (i) or (ii) of subparagraph (A), when obtaining the electronic parts in accordance with such clauses is not possible;

(C) establish qualification requirements, consistent with the requirements of section 2319 of title 10, United States Code, pursuant to which the Department may identify as trusted suppliers those that have appropriate policies and procedures in place to detect and avoid counterfeit electronic parts and suspect counterfeit electronic parts; and

(D) authorize Department contractors and subcontractors to identify and use their own identified trusted suppliers, provided that–

(i) the standards and processes for identifying such trusted suppliers comply with established industry standards;

(ii) the contractor or subcontractor assumes responsibility for the authenticity of parts provided by such suppliers as provided in paragraph (2); and

(iii) the selection of such trusted suppliers is subject to review and audit by appropriate Department officials.

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