DOD Issues Proposed Regulations on the Detection and Avoidance of Counterfeit Electronic Parts

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If implemented, the proposed regulations will significantly impact contractors who supply products with electronic parts to the Government

The Department of Defense (DOD) recently issued proposed regulations which would partially implement Section 818 of the National Defense Authorization Act for Fiscal Year 2012 (NDAA 2012) related to the detection and avoidance of counterfeit electronic parts. The proposed regulations make several changes to the Defense Federal Acquisition Regulations Supplement (DFARS) and, if implemented, will significantly impact contractors who supply products with electronic parts to the Government.

New Requirements for Contractor Purchasing System Administration -

The proposed regulations incorporate a new requirement to avoid and detect counterfeit electronic parts within the framework of the Government’s approval of contractors’ purchasing systems. To obtain an approved purchasing system, contractors will be required to establish and maintain a counterfeit electronic parts avoidance and detection system, which must address nine specific areas, including: training personnel; inspecting and testing electronic parts; creating mechanisms to trace parts to suppliers; reporting and quarantining of counterfeit electronic parts; and flowing down avoidance and detection requirements to subcontractors. The adequacy of the avoidance and detection system will be a factor in reviewing a contractor’s purchasing system. Consequently, the failure to maintain an acceptable avoidance and detection system may result in the disapproval of the contractor’s purchasing system as well as the withholding of contract payments.

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