Proposed Rule re DFARS Case 2016-D010: Cost of Remedy for Use or Inclusion of Counterfeit Electronic Parts

DoD is proposing to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to implement a section of the National Defense Authorization Act for Fiscal Year 2016 that amends the allowability of costs of counterfeit electronic parts or 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.

Defense Federal Acquisition Regulation Supplement: Costs Related to Counterfeit Electronic Parts

The proposed rule would revise section 231.205-71 to read as follows:

231.205-71 Costs related to counterfeit electronic parts and suspect counterfeit electronic parts.

(a) Scope. This subsection implements the requirements of section 818(c)(2), National Defense Authorization Act for Fiscal Year 2012 (Pub. L. 112-81), as modified by section 833, National Defense Authorization Act for Fiscal Year 2013 (Pub. L. 112-239) and section 885 of the National Defense Authorization Act for Fiscal Year 2016 (Pub. L. 114-92).

(b) The costs of counterfeit electronic parts and suspect counterfeit electronic parts and the costs of rework or corrective action that may be required to remedy the use or inclusion of such parts are unallowable, unless—

(1) The contractor has an operational system to detect and avoid counterfeit parts and suspect counterfeit electronic parts that has been reviewed and approved by DoD pursuant to 244.303;

(2) The counterfeit electronic parts or suspect counterfeit electronic parts are Government-furnished property as defined in FAR 45.101 or were obtained by the contractor in accordance with the clause at DFARS 252.246-70XX, Sources of Electronic Parts [as proposed to be added at 80 FR 56939, September 21, 2015]; and

(3) The contractor—

(i) Discovers the counterfeit electronic parts or suspect counterfeit electronic parts; and

(ii) Provides timely (i.e., within 60 days after the contractor becomes aware) notice to the cognizant contracting officer(s).

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