‘Contractor Counterfeit Electronic Part Detection and Avoidance Systems’ … Part 4

Abolishing Counterfeit Electronic Parts Proliferation through Reporting, Quarantining, and Screening Reports from Credible Sources

DFARS 252.246–7007 requires the reporting of counterfeit electronic parts and suspect counterfeit electronic part findings to Contracting Officer and to the Government-Industry Data Exchange Program (GIDEP). [1] When counterfeit electronic parts and suspect counterfeit electronic part are encountered, these events should be promptly communicated both to Government and to industry. Sharing this information in a broadly accessible forum, such as the Government-Industry Data Exchange Program (GIDEP), enables other purchasers of the same or similar components to learn of this finding and be able to (a) examine their inventories and quarantine any questionable material they identify as well as (b) to check their open purchase orders to ascertain whether or not such components may be on order from the same or similar sources of supply.

Other regulations require reporting of possible violations of a contractor’s code of business ethics and conduct.[2] The final rule under DFARS Case 2012-D055 notes that although DoD recognizes the importance of the “mandatory disclosure” rules, this may not be an appropriate use of them because it suggests a contractor has committed an “ethical or code of conduct violation.” [3] DFARS 252.246–7007, standing alone, does not expand the reporting obligations of a Contractor beyond those currently articulated at FAR 52.203-13(b)(3)(i). FAR 52.203-13(b)(3)(i). The mandatory DoD IG reporting requirement of would not apply to the discovery of a counterfeit electronic part in the following circumstances:

  • In those contracts issued before December 2008 where the subject FAR Clause was not subsequently incorporated;
  • In those contracts with a dollar value of less than $5 million or with a performance period of less than 120 days;
  • For contracts subject to FAR 52.203-13, in those situations where the Contractor has no creditable evidence that a subcontractor of the Contractor has committed a violation of federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations found in Title 18 of the U.S. Code or a violation of the False Claims Act, 31 U.S.C. 3729-3733.

However, the contractor is still obliged to report the finding to GIDEP.

Contractors and subcontractors can play an important role toward abolishing counterfeit electronic parts proliferation[4] by preventing their reintroduction into the supply chain. In the event a contractor discovers suspect counterfeit or counterfeit electronic parts in the course of materiel procurement, product inspection and testing activity, product failure analysis activity, etc.; the contractor must take steps to ensure the suspect counterfeit or counterfeit electronic parts do not find their way back into the supply chain. If counterfeit electronic parts are returned to the supplier, the parts could be resold to another user. Suspect counterfeit parts must not be returned to the supplier or otherwise returned to the supply chain until such time that the parts are determined to be authentic. AS5553 describes approaches to deal with counterfeit electronic parts.

 

Contractors and subcontractors should monitor GIDEP reports and other credible sources of counterfeiting information.[5] These reports provide information to help avoid the purchase and use of counterfeits and suspect counterfeit parts discovered by others and to identifying suppliers associated with sales of these parts. These reports often include information about how specific suspect counterfeit electronic parts were discovered which can provide insights to help contractors and subcontractors canvass their inventories and open purchase orders as well as refine and improve their own counterfeit electronic parts detection and avoidance practices.

Henry Livingston


[1] DFARS 252.246–7007 (c) (6) Reporting and quarantining of counterfeit electronic parts and suspect counterfeit electronic parts

[2] e.g. FAR 52.203-13(b)(3)(i) and DFARS 203.1003(b)

[3] Federal Register Vol. 79, No. 87 at p. 261023, 10. Reporting

[4] DFARS 252.246–7007 (c) (3) Processes to abolish counterfeit parts proliferation.

[5] DFARS 252.246–7007 (c) (11) Process for screening GIDEP reports and other credible sources …

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