Category Archives: DMSMS

Parts Obsolescence and the Final Rule for DFARS Case 2012-D055

The Final Rule for DFARS Case 2012-D055 includes “control of obsolete electronic parts” among the elements of a “counterfeit electronic part detection and avoidance system”. The analysis of public comments acknowledges “parts obsolescence is a matter of concern because it can create vulnerabilities in the supply chain”. The final rule, however, does not specifically address the collaboration between DoD and its contractors necessary for proactive obsolescence management. Requirements introduced in the NDAA for FY 2014, provides an opportunity to address this.

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NDAA2014 and Proposed Amendments to NDAA2012§818

Earlier this year, the House Armed Services Committee’s proposal for NDAA2014 included amendments to NDAA2012§818 to expand the conditions under which covered contractors can qualify for exemption from strict liability associated with rework and corrective action related to counterfeit electronic parts.
The proposed NDAA2014 would amend NDAA2012 §818 regarding contractor liability in two areas…

  1. electronic parts procured from an original manufacturer or its authorized dealer or from a trusted supplier (NDAA2014 §811), and
  2. obsolete electronic parts (NDAA2014 §812)

The agreement between the House and Senate Armed Services Committees on the National Defense Authorization Act for FY 2014 announced earlier this week, however, does not include these amendments.
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HASC amends proposal for NDAA 2014 to expand exemption from liability associated with counterfeit electronic parts

The House Armed Services Committee’s proposal for NDAA2014 would amend NDAA2012 §818 to expand the conditions under which covered contractors can qualify for exemption from strict liability associated with rework and corrective action related to counterfeit electronic parts.

The proposed NDAA2014 would amend NDAA2012 §818 regarding contractor liability in two areas…

  1. electronic parts procured from an original manufacturer or its authorized dealer or from a trusted supplier (NDAA2014 §811), and
  2. obsolete electronic parts (NDAA2014 §812)

Should these amendments come to be, NDAA2012 §818(c)(2) would read as follows (emphasis has been added to identify amended language)…

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Markup of H.R. 1960 (NDAA for FY2014) Includes Exemption From Strict Counterfeit Parts Financial Liability Associated with Obsolescence Issues

En Bloc Amendments to H.R. 1960, National Defense Authorization Act for Fiscal Year 2014 (Wednesday, June 5, 2013)

Log #: 002r1
Sponsor: Bridenstine
Description: Expands conditions under which covered contractors can qualify for exemption from strict financial liability associated with rework and corrective action of counterfeit or suspected counterfeit electronic parts including identified obsolete parts in certain circumstances.

The proposal establishes three criteria to provide a safe harbor from liability when using obsolete parts:

1. A contractor would need to identify obsolete parts necessary to meet requirements contained in a DOD contract solicitation and provide a plan to ensure trusted suppliers for those parts or offer design modifications as part of their proposal;

2. The government, in response to these options, would elect not to fund them and instead proceed with the original requirements to include the obsolete parts;

3. The contractor would apply inspections and tests to detect counterfeits when buying from other than the original equipment manufacturer or their authorized dealers.

If all three criteria can be demonstrated by the contractor, then the contractor would be able to submit the remedy costs of a counterfeit part as an allowable expense.

See “Full Committee En Bloc Package #1” added 06/06/2013 at 01:39 PM

For rationale associated with this proposal, my earlier essay.

TechAmerica Brief: LEGISLATIVE ALERT – National Defense Authorization Act

“At 10:00 a.m. ET, the House Armed Services Committee (HASC) began a markup of H.R. 1960, the National Defense Authorization Act for Fiscal Year 2014. …
… TechAmerica has aggressively sought liability protections for counterfeits found in obsolete parts, and has partnered with freshman Congressman Jim Bridenstine from Oklahoma to include an amendment via an en bloc package during markup today. This will be a major win for contractors doing business with the Department, and we will continue to seek similar language in the Senate version of the bill. … ”

More at TechAmerica Brief: LEGISLATIVE ALERT – National Defense Authorization Act.

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.

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Where Policy, Legislation, Standards and Practicality Collide – Counterfeit Parts Prevention Issues Requiring Government / Industry Collaboration to Address

Legislation and regulatory requirements and standards gaps continue to present aerospace & defense industry and US government users with significant implementation challenges with respect to counterfeit part avoidance and detection. The counterfeit parts issue is similar to the lead-free electronics issue in that regulations drive the need for standards, but technical challenges and supply chain limitations must be recognized so that reasonable and implementable regulations and policies are developed in response to the threat. Though many of these challenges have been discussed in Industry and Government forums and described in trade literature and the media, many remain unresolved.

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“Most Counterfeit Parts Involve obsolete Semiconductors and other EoL Components” – ECIA

“Electronics distributors say they were not surprised by a recent analysis by an industry researcher that found that 57 percent of counterfeit parts that were reported over a 10-year period involved obsolete or end-of-life semiconductors and other components. …”

More in “the source”, ECIA August 2012 Newsletter

“Counterfeits driven by obsolete parts, says IHS” – Electronics Weekly

“Some have said that if you can avoid all obsolete parts, you can eliminate all the risk of counterfeits, however, this is untrue for many reasons …
Obsolete parts represent only a portion of the counterfeit scourge, with active components accounting for a significant share of all counterfeits reported. Moreover, it’s unrealistic or technically infeasible to economically eliminate the use of all obsolete parts …
This underscores the critical need for electronics buyers to arm themselves with the right methods and tools to manage both obsolete and active critical components "

More @ Electronics Weekly

FY2012 NDAA – Obsolescence Management and Its Relationship to Counterfeit Electronic Part Avoidance

Section 818 of the FY2012 NDAA requires DOD to establish requirements for a contractor or subcontractor to notify its DOD customer when electronic parts are obtained from any source other than the original manufacturer or its authorized dealer. The continued demand for parts known to be obsolete is one scenario where DOD and its contractors can anticipate when it will be necessary to make such purchases unless obsolete parts are eliminated from electronic equipment designs.

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