Category Archives: Reporting

Thoughts Re New Regulations on Reporting of Nonconforming Items to the Government-Industry Data Exchange Program

DoD, GSA, and NASA recently issued a final rule amending the Federal Acquisition Regulation (FAR) to require contractors and subcontractors to report to the Government-Industry Data Exchange Program (GIDEP) certain counterfeit or suspect counterfeit parts and certain major or critical nonconformances. This FAR amendment also requires contractors and subcontractors to screen GIDEP reports to avoid the use and delivery of counterfeit or suspect counterfeit items or delivery of items that contain a major or critical nonconformance. After the review of public comments submitted in response to the proposed rule under FAR Case 2013-002, and after weighing the risks of failure against the cost of compliance, the final rule was “significantly descoped”.
Continue reading

Federal Acquisition Regulation: Reporting of Nonconforming Items to the Government-Industry Data Exchange Program

Final rule. … DoD, GSA, and NASA are issuing a final rule amending the Federal Acquisition Regulation (FAR) to require contractors and subcontractors to report to the Government-Industry Data Exchange Program certain counterfeit or suspect counterfeit parts and certain major or critical nonconformances.

This final rule is available from the Federal Register

The following is a summary of significant changes from the proposed rule under FAR Case 2013-002 …

“The final rule is significantly descoped.

  • It does not apply to contracts and subcontracts for the acquisition of commercial items, including commercially available off-the-shelf (COTS) items.
  • Section 818(c)(4) of the NDAA for FY 2012 will not apply to contracts and subcontracts at or below the simplified acquisition threshold (SAT).

  • Rather than applying to all supplies, in addition to the requirements for section 818(c)(4) with regard to electronic parts for DoD, the rule focuses on supplies that require higher-level quality standards or are determined to be critical items (definition added).

  • The rule also exempts
    • medical devices that are subject to the Food and Drug Administration reporting requirements at 21 CFR 803;
    • foreign corporations or partnerships that do not have an office, place of business, or paying agent in the United States;
    • counterfeit, suspect counterfeit, or nonconforming items that are the subject of an on-going criminal investigation, unless the report is approved by the cognizant law- enforcement agency; and
    • nonconforming items (other than counterfeit or suspect counterfeit items) for which it can be confirmed that the organization where the defect was generated (e.g., original component manufacturer, original equipment manufacturer, aftermarket manufacturer, or distributor that alters item properties or configuration) has not released the item to more than one customer.

  • Flowdown to subcontracts is similarly descoped. The contractor is prohibited from altering the clause other than to identify the appropriate parties. …”

 

 

Hundreds of Component Buyers Scammed by Fraudulent Websites – ERAI

“Malicious individual(s) are continuing to use premium Google placement to entice victims into placing orders that require advanced payment for goods which the perpetrators do not intend to ship. To date, ERAI has recorded losses totaling in excess of $300,000.00 and has notified appropriate law enforcement agencies. Organizations around the world and from various industry sectors have been, and continue to be, targets. …

More at ERAI

Compelling evidence of counterfeiting

Several GIDEP reports have been published over the past month describing samples of parts seized during the investigation of PRB Electronics. Here is an excerpt from my favorite report thus far …

The part in this Alert was determined to be suspect counterfeit due to the box containing these parts was marked “Counterfeit Parts”, while the inside of the box had a post-it note stating “Caps are counterfit [sic] out of tolerance.” …

A prosecutor’s dream.

 

 

Agency Information Collection Activities; Proposals, Submissions, and Approvals: Defense Federal Acquisition Regulation Supplement; Quality Assurance

[Docket Number DARS-2019-0040; OMB Control Number 0704-0441]

Information Collection Requirement; Defense Federal Acquisition Regulation Supplement (DFARS); Quality Assurance

AGENCY: Defense Acquisition Regulations System, Department of Defense (DoD)

ACTION: Notice and request for comments regarding a proposed revision and extension of an approved information collection requirement.

SUMMARY:
… DoD invites comments on: whether the proposed collection of information is necessary for the proper performance of the functions of DoD, including whether the information will have practical utility; the accuracy of the estimate of the burden of the proposed information collection; ways to enhance the quality, utility, and clarity of the information to be collected; and ways to minimize the burden of the information collection on respondents …

SUPPLEMENTARY INFORMATION:

… The information collections … pertain to all information that offerors or contractors must submit related to DFARS contract quality assurance programs. …

a. 252.246-7003, Notification of Potential Safety Issues. …

b. 252.246-7005, Notice of Warranty Tracking of Serialized Items. …

c. 252.246-7006, Warranty Tracking of Serialized Items. …

d. 252.246-7008, Sources of Electronic Parts.
The notification and documentation requirements are necessary to comply with statute. The contracting officer will use the information to ensure that the contractor performs the traceability of parts, additional inspection, testing, and authentication required when an electronic part is not obtained from a trusted supplier. The Government may also use this information to more actively perform acceptance. …

More at federalregister.gov

Agency Information Collection Activities; Proposals, Submissions, and Approvals: Reporting of Nonconforming Items to the Government-Industry Data Exchange Program – Federal Register

“Under the provisions of the Paperwork Reduction Act, the Regulatory Secretariat Division has submitted to the Office of Management and Budget (OMB) a request to review and approve a new information collection requirement regarding reporting certain counterfeit or suspect counterfeit parts and certain major or critical nonconformances to the Government-Industry Data Exchange Program system. …”

More at Federal Register

2017 ERAI Reported Parts Analysis

ERAI reported a total of 771 suspect counterfeit and nonconforming parts in 2017, which shows a marked decline from the last several years, despite an increase in global semiconductor sales. The decline, while interesting in itself, cannot be considered a change in the overall trend without taking into consideration data from future years. …

More at ERAI

Semiannual Regulatory Agenda

“This agenda provides summary descriptions of regulations being developed by the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council in compliance with Executive Order 12866, Regulatory Planning and Review. This agenda is being published to allow interested persons an opportunity to participate in the rulemaking process. …”

Regulatory Agenda: Semiannual Regulatory Agenda

Observations:

The timetable for FAR Case 2013-002: Reporting of Nonconforming Items to the Government-Industry Data Exchange Program shows a final rule is now planned for release in November 2018.

When compared to the notice of proposed rulemaking published four years ago, the scope of the proposed rule appears to have changed…
“The primary benefit of this rule is to reduce the risk of counterfeit items entering the supply chain by ensuring that contractors report suspect items to a widely available database. This will allow the contracting officer to provide disposition instructions for counterfeit or suspect counterfeit items in accordance with agency policy.”

 

GIDEP Reports re Counterfeits – Jan 2011 thru Jan 2018

Here is a trend analysis of GIDEP Alerts and Problem Advisories concerning suspect counterfeits. The last time I published an analysis like this was in February of 2014[i] and its time for an update; particularly since we can anticipate FAR Case 2013-002 to wrap up this summer (Reporting of Nonconforming Items to the Government-Industry Data Exchange Program).

To my eye, this data indicates a continuing decline in GIDEP reporting of suspect counterfeit findings. From 2013 through 2015, approximately forty (40) reports were published each year. Though sixty-one (61) reports were published in 2016, twenty-four (24) of them reporting the results of forensic analysis of several parts seized during a criminal investigation; if we remove these 24 reports from the population, that leaves 37 for the year 2016 which falls below the trend from 2013 through 2015. In 2017, the total number of reports fell to nearly half that of prior years.

GIDEP reports concerning suspect counterfeit microcircuits and semiconductors represent about 90% of findings reported over the 2011 through 2017 timeframe. However, reports concerning other products types are on the rise.

Original Equipment Manufacturers have published about two-thirds of the GIDEP Alerts and Problem Advisories concerning suspect counterfeits. Independent Distributors published 28% of these reports. US Government Agencies (four of them) published 8% of these reports. One report was published by a Franchised Distributor.

[i] Counterfeit Part Reporting Trends Revisited – Observations in anticipation of forthcoming regulations

 

Semiannual Regulatory Agenda – FAR Case 2013-002: Reporting of Nonconforming Items to the Government-Industry Data Exchange Program

This agenda provides summary descriptions of regulations being developed by the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council. The timetable for FAR Case 2013-002 shows a final rule is planned for release in June of this year…

Regulatory Agenda: Semiannual Regulatory Agenda; Regulatory Plan

(Nothing shown here for DFARS Case 2016-D013: Amendments Related to Sources of Electronic Parts)