[Federal Register Volume 78, Number 95 (Thursday, May 16, 2013)]
[Proposed Rules]
[Pages 28780-28785]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-11400]
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DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Parts 202, 231, 244, 246, and 252
RIN 0750-AH88
Defense Federal Acquisition Regulation Supplement: Detection and
Avoidance of Counterfeit Electronic Parts (DFARS Case 2012-D055)
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Proposed rule.
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SUMMARY: DoD is proposing to amend the Defense Federal Acquisition
Regulation Supplement (DFARS) in partial implementation of a section of
the National Defense Authorization Act for Fiscal Year 2012, and a
section of the National Defense Authorization Act for Fiscal Year 2013,
relating to the detection and avoidance of counterfeit electronic
parts.
DATES: Comment Date: Comments on the proposed rule should be submitted
in writing to the address shown below on or before July 15, 2013, to be
considered in the formation of a final rule.
ADDRESSES: Submit comments identified by DFARS Case 2012-D055, using
any of the following methods:
[cir] Regulations.gov: http://www.regulations.gov. Submit comments
via the Federal eRulemaking portal by entering ``DFARS Case 2012-D055''
under the heading ``Enter keyword or ID'' and selecting ``Search.''
Select the
[[Page 28781]]
link ``Submit a Comment'' that corresponds with ``DFARS Case 2012-
D055.'' Follow the instructions provided at the ``Submit a Comment''
screen. Please include your name, company name (if any), and ``DFARS
Case 2012-D055'' on your attached document.
[cir] Email: [email protected]. Include DFARS Case 2012-D055 in the
subject line of the message.
[cir] Fax: 571-372-6094.
[cir] Mail: Defense Acquisition Regulations System, Attn: Ms.
Meredith Murphy, OUSD(AT&L)DPAP/DARS, Room 3B855, 3060 Defense
Pentagon, Washington, DC 20301-3060.
Comments received generally will be posted without change to http://www.regulations.gov, including any personal information provided. To
confirm receipt of your comment(s), please check www.regulations.gov,
approximately two to three days after submission to verify posting
(except allow 30 days for posting of comments submitted by mail).
FOR FURTHER INFORMATION CONTACT: Ms. Meredith Murphy, Defense
Acquisition Regulations System, OUSD(AT&L)DPAP/DARS, Room 3B855, 3060
Defense Pentagon, Washington, DC 20301-3060. Telephone 571-372-6098;
facsimile 571-372-6101.
SUPPLEMENTARY INFORMATION:
I. Background
DoD is proposing to revise the DFARS to partially implement section
818 (paragraphs (c) and (f)) of the National Defense Authorization Act
(NDAA) for Fiscal Year (FY) 2012 (Pub. L. 112-81, enacted December 31,
2011). Section 818 is entitled ``Detection and Avoidance of Counterfeit
Electronic Parts.'' Paragraph (c) of section 818 requires the issuance
of DFARS regulations addressing contractor responsibilities for
detecting and avoiding the use or inclusion of counterfeit electronic
parts or suspect counterfeit electronic parts, the use of trusted
suppliers, and requirements for contractors to report counterfeit
electronic parts and suspect counterfeit electronic parts. Paragraph
(f) of section 818 contains the definitions of ``covered contractor''
and ``electronic part.'' Other aspects of section 818 are being
implemented separately.
In addition, this proposed rule addresses the amendments to section
818 that were made by section 833, entitled ``Contractor
Responsibilities in Regulations Relating to Detection and Avoidance of
Counterfeit Electronic Parts,'' of the NDAA for FY 2013 (Pub. L. 112-
239, enacted January 2, 2013).
II. Discussion
The intent of section 818 is to hold contractors responsible for
detecting and avoiding the use or inclusion of counterfeit electronic
parts or suspect counterfeit electronic parts. Three specific areas
were identified that required either modification or additions to DFARS
in order to implement the requirements defined in section 818.
A. Definitions. Several definitions are proposed. ``Electronic
part'' is defined at paragraph (f) of section 818. Section 818(b)(1)
requires definition of ``counterfeit electronic part'' and ``suspect
counterfeit electronic part.'' As recommended by Government
Accountability Office (GAO) Report GAO-10-389, entitled ``DoD Should
Leverage Ongoing Initiatives in Developing Its Program to Mitigate Risk
of Counterfeit Parts,'' to establish a clear and consistent definition
of ``counterfeit parts.'' DoD is proposing to add a definition of
``legally authorized source'' to the definition of ``counterfeit part''
as an important component of its program to mitigate risks posed by
counterfeit parts. The new terms are proposed to be located at DFARS
202.101, Definitions, because they will apply to multiple parts of the
regulations.
B. Contractor responsibilities. Detection and avoidance of
counterfeit electronic parts or suspect counterfeit electronic parts.
New policy on counterfeit parts is proposed to be added to DFARS
subpart 246.8, Contractor Liability for Loss of or Damage to Property
of the Government. The proposed new coverage includes a clause at DFARS
252.246-7007, Contractor Counterfeit Electronic Part Avoidance and
Detection System. In addition, this rule proposes to add compliance
(with the requirements for identifying, avoiding, and reporting
counterfeit parts) to the existing requirements for the contractor's
purchasing system. To that end, the rule proposes to modify the clause
at DFARS 252.244-7001, Contractor Purchasing System Administration, to
add system criteria for the contractor's purchasing system. It also
proposes an alternate which adds systems criteria for a less
comprehensive review of the contractor's purchasing system that targets
review of those elements relating to the detection and avoidance of
counterfeit electronic parts and suspect counterfeit electronic parts.
The alternate is prescribed for use in solicitations and contracts that
include the clause at 252.246-7007, but do not include the clause at
FAR 52.244-2, Subcontracts.
(1) Unallowability of costs of rework and corrective action. A new
subsection, DFARS 231.205-71, proposes to prohibit contractors from
claiming, as a reimbursable cost under DoD contracts, the cost of
counterfeit electronic parts or suspect counterfeit electronic parts or
the cost of rework or corrective action that may be required to remedy
the use or inclusion of such parts. However, section 833 of the NDAA
for FY 2013 provides specific exceptions that would enable these costs
to be reimbursed if (i) a contractor has a DoD-approved operational
system to detect and avoid counterfeit parts; or the suspect
counterfeit parts were provided as Government-furnished property; and
(ii) the contractor has provided timely notice to the Government. These
exceptions are included at DFARS 231.205-71(c) in the proposed rule.
(2) Government role. The Government's role in reviewing and
monitoring the contractor's processes and procedures for detecting and
avoiding counterfeit or suspect counterfeit electronic parts (see
section 818(e)(2)(B)) is addressed as part of a contractor's purchasing
system review (see proposed DFARS 244.303(b)).
III. Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess
all costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). E.O.
13563 emphasizes the importance of quantifying both costs and benefits,
of reducing costs, of harmonizing rules, and of promoting flexibility.
This is a significant regulatory action and, therefore, was subject to
review under section 6(b) of E.O. 12866, Regulatory Planning and
Review, dated September 30, 1993. This rule is not a major rule under 5
U.S.C. 804.
IV. Regulatory Flexibility Act
DoD does not expect this proposed rule to have a significant
economic impact on a substantial number of small entities within the
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq.,
because it applies only to contracts that are subject to the Cost
Accounting Standards (CAS)(see section 818(f)). Contracts with small
entities are exempt from CAS. However, an initial regulatory
flexibility analysis has been performed and is summarized as follows:
[[Page 28782]]
This proposed rule is intended to partially implement section 818
of the National Defense Authorization Act for Fiscal Year 2012 and
section 833 of the National Defense Authorization Act for Fiscal Year
2013. Section 818 is entitled ``Detection and Avoidance of Counterfeit
Electronic Parts;'' it requires DoD-wide regulations concerning
contractors' requirements to identify, avoid, and report counterfeit
and suspect electronic counterfeit parts. Further, paragraph (a) of
section 818 requires DoD to establish and issue relevant DoD-wide
definitions. Section 833 provides exceptions to cost unallowability if
contractors take specific steps.
The rule will not apply to small entities as prime contractors. The
requirements will apply to contracts that are subject to the Cost
Accounting Standards (CAS) under 41 U.S.C. chapter 15, as implemented
in regulations found at 48 CFR 9903.201-1 (other than educational
institutions, Federally Funded Research and Development Centers
operated by educational institutions, or University Associated Research
Centers). Contracts and subcontracts with small entities are exempt
from CAS requirements.
There is, however, the potential for an impact on small entities in
the supply chain of a prime contractor with contracts subject to CAS.
The impact should be negligible as long as the small entity is not
supplying counterfeit electronic parts to the prime contractor.
The proposed rule would use the existing requirements for
contractors' purchasing systems as the basis for the anti-
counterfeiting compliance (see the clause at DFARS 252.244-7001,
Contractor Purchasing System Administration).
The rule does not duplicate, overlap, or conflict with any other
Federal rules.
The economic impact of this proposed rule on small entities has
been minimized in the following ways:
(a) The proposed rule would use the existing requirements (and
contract clause) for contractors' purchasing systems, rather than
creating a separate, new system.
(b) The proposed rule would apply only to prime contractors that
must comply with the Cost Accounting Standards, which excludes small
entities without diminishing the ability of DoD to oversee compliance.
DoD invites comments from small business concerns and other
interested parties on the expected impact of this rule on small
entities.
DoD will also consider comments from small entities concerning the
existing regulations in subparts affected by this rule in accordance
with 5 U.S.C. 610. Interested parties must submit such comments
separately and should cite 5 U.S.C. 610 (DFARS Case 2012-D055), in
correspondence.
V. Paperwork Reduction Act
The rule contains information collection requirements that require
the approval of the Office of Management and Budget under the Paperwork
Reduction Act (44 U.S.C chapter 35; however, these changes to the
DFARS, as they pertain to contractors' purchasing systems, will
generally not impose additional information collection requirements to
the paperwork burden previously approved under OMB Control Number 0704-
0253, entitled Purchasing Systems. The current information collection
estimates that 90 respondents will submit one response annually, with
16 hours per response. We estimate that the additional information
collection burden associated with the clause at 52.244-7001--Alternate,
will be as much as five percent more than the existing burden.
Therefore, the change to the current annual reporting burden for OMB
Control Number 0704-0253 is estimated as follows:
Respondents: 5.
Responses per respondent: 1.
Total annual responses: 5.
Preparation hours per response: 16.
Total hours: 80.
B. Request for Comments Regarding Paperwork Burden
Written comments and recommendations on the proposed information
collection, including suggestions for reducing this burden, should be
sent to Ms. Jasmeet Seehra at the Office of Management and Budget, Desk
Officer for DoD, Room 10236, New Executive Office Building, Washington,
DC 20503, or email [email protected], with a copy to the
Defense Acquisition Regulations System, Attn: Ms. Meredith Murphy,
OUSD(AT&L)DPAP/DARS, Room 3B855, 3060 Defense Pentagon, Washington, DC
20301-3060. Comments can be received from 30 to 60 days after the date
of this notice, but comments to OMB will be most useful if received by
OMB within 30 days after the date of this notice.
Public comments are particularly invited on: whether this
collection of information is necessary for the proper performance of
functions of the DFARS, and will have practical utility; whether our
estimate of the public burden of this collection of information is
accurate, and based on valid assumptions and methodology; ways to
enhance the quality, utility, and clarity of the information to be
collected; and ways in which we can minimize the burden of the
collection of information on those who are to respond, through the use
of appropriate technological collection techniques or other forms of
information technology.
To request more information on this proposed information collection
or to obtain a copy of the proposal and associated collection
instruments, please write to the Defense Acquisition Regulations
System, Attn: Ms. Meredith Murphy, OUSD(AT&L)DPAP/DARS, Room 3B855,
3060 Defense Pentagon, Washington, DC 20301-3060, or email
[email protected]. Include DFARS Case 2012-D055 in the subject line of the
message.''
List of Subjects in 48 CFR Parts 202, 231, 244, 246, and 252
Government procurement.
Manuel Quinones,
Editor, Defense Acquisition Regulations System.
Therefore, DoD proposes to amend 48 CFR parts 202, 231, 244, 246,
and 252 as follows:
0
1. The authority citation for parts 202, 231, 244, and 252 continues to
read as follows:
Authority: 41 U.S.C. 1303 and 48 CFR Chapter 1.
PART 202--DEFINITIONS OF WORDS AND TERMS
0
2. Amend section 202.101 by adding, in alphabetical order, the
following definitions to read as follows:
202.101 Definitions.
* * * * *
Counterfeit part means--
(1) An unauthorized copy or substitute part that has been
identified, marked, and/or altered by a source other than the part's
legally authorized source and has been misrepresented to be from a
legally authorized source;
(2) An item misrepresented to be an authorized item of the legally
authorized source; or
(3) A new, used, outdated, or expired item from a legally
authorized source that is misrepresented by any source to the end-user
as meeting the performance requirements for the intended use.
* * * * *
Electronic part means an integrated circuit, a discrete electronic
component (including, but not limited to, a transistor, capacitor,
resistor, or diode), or a circuit assembly (section 818(f)(2) of Pub.
L. 112-81).
* * * * *
[[Page 28783]]
Legally authorized source means the current design activity or the
original manufacturer or a supplier authorized by the current design
activity or the original manufacturer to produce an item.
* * * * *
Suspect counterfeit part means a part for which visual inspection,
testing, or other information provide reason to believe that a part may
be a counterfeit part.
* * * * *
PART 231--CONTRACT COST PRINCIPLES AND PROCEDURES
0
3. Add section 231.205-71 to read as follows:
231.205-71 Cost of remedy for use or inclusion of 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) and section 833, National Defense Authorization Act
for Fiscal Year 2013 (Pub. L. 112-239).
(b) Contractors that are subject to the Cost Accounting Standards
(CAS) under 41 U.S.C. Chapter 15, as implemented in regulations found
at 48 CFR 9903.201-1 (see the FAR appendix), and that supply electronic
parts or products that include electronic parts under CAS-covered
contracts are responsible for detecting and avoiding the use or
inclusion of counterfeit electronic parts or suspect counterfeit
electronic parts in such products and for any rework or corrective
action that may be required to remedy the use or inclusion of such
parts.
(c) The 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 are expressly 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; and
(3) The covered contractor provides timely notice to the
Government.
PART 244--SUBCONTRACTING POLICIES AND PROCEDURES
0
4. Revise section 244.303 to read as follows:
244.303 Extent of review.
(a) Also review the adequacy of rationale documenting commercial
item determinations to ensure compliance with the definition of
``commercial item'' in FAR 2.101.
(b) Also review the adequacy of the contractor's counterfeit
electronic part avoidance and detection system under DFARS 252.246-
70XX, Contractor Counterfeit Electronic Part Avoidance and Detection
System.
0
5. Revise section 244.305-71 to read as follows:
244.305-71 Contract clause.
Use the Contractor Purchasing System Administration clause or its
alternate as follows:
(a) Use the clause at 252.244-7001, Contractor Purchasing System
Administration--Basic, in solicitations and contracts containing the
clause at FAR 52.244-2, Subcontracts.
(b) Use the clause at 252.244-7001, Contractor Purchasing System
Administration--Alternate I, in solicitations and contracts that
contain the clause at 252.246-70XX, Contractor Counterfeit Electronic
Part Avoidance and Detection System, but do not contain FAR 52.244-2,
Subcontracts.
PART 246--QUALITY ASSURANCE
0
6. The authority citation for part 246 is revised to read as follows:
Authority: 41 U.S.C. 1303 and 48 CFR Chapter 1.
0
7. Add section 246.870 through 246.870-3 to read as follows:
246.870 Contractors' counterfeit electronic part avoidance and
detection systems.
246.870-1 Scope.
This section--
(a) Implements section 818(c) of the National Defense Authorization
Act for Fiscal Year 2012 (Pub. L. 112-81); and
(b) Prescribes policy and procedures for preventing counterfeit
parts and suspect counterfeit parts from entering the supply chain when
procuring electronic parts or end items, components, parts, or
materials that contain electronic parts.
246.870-2 Policy.
(a) General. Contractors are required to establish and maintain an
acceptable counterfeit electronic part avoidance and detection system.
Failure to do so may result in disapproval of the purchasing system by
the contracting officer and/or withholding of payments (see 52.244-
7001).
(b) System criteria. A contractor's counterfeit electronic part
avoidance and detection system must address, at a minimum, the
following areas:
(1) The training of personnel.
(2) The inspection and testing of electronic parts, including
criteria for acceptance and rejection.
(3) Processes to abolish counterfeit parts proliferation.
(4) Mechanisms to enable traceability of parts to suppliers.
(5) Use and qualification of trusted suppliers.
(6) The reporting and quarantining of counterfeit electronic parts
and suspect counterfeit electronic parts.
(7) Methodologies to identify suspect counterfeit parts and to
rapidly determine if a suspect counterfeit part is, in fact,
counterfeit.
(8) The design, operation, and maintenance of systems to detect and
avoid counterfeit electronic parts and suspect counterfeit electronic
parts.
(9) The flow down of counterfeit avoidance and detection
requirements to subcontractors.
246.870-3 Contract clause.
Use the clause at 252.246-70XX, Contractor Counterfeit Electronic
Part Avoidance and Detection System, in solicitations and contracts
(other than in contracts with educational institutions, Federally
Funded Research and Development Centers (FFRDCs), or University
Associated Research Centers (UARCs) operated by educational
institutions) when procuring electronic parts or an end item,
component, part, or material containing electronic parts or services
where the contractor will supply electronic components, parts, or
materials as part of the service and the resulting contract will be
subject to the Cost Accounting standards under 41 U.S.C. chapter 15, as
implemented in regulations found at 48 CFR 9903.201-1 (see the FAR
Appendix).
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
8. Revise section 252.244-7001 to read as follows:
252.244-7001 Contractor purchasing system administration.
As prescribed in 244.305-71, use one of the following clauses.
Contractor Purchasing System Administration--Basic. For the
specific use of the basic clause, see the prescription at 244.305-
71(a).
Contractor Purchasing System Administration--Basic (Date)
(a) Definitions. As used in this clause--
``Acceptable purchasing system'' means a purchasing system that
complies with the system criteria in paragraph (c) of this clause.
``Purchasing system'' means the Contractor's system or systems
for
[[Page 28784]]
purchasing and subcontracting, including make-or-buy decisions, the
selection of vendors, analysis of quoted prices, negotiation of
prices with vendors, placing and administering of orders, and
expediting delivery of materials.
``Significant deficiency'' means a shortcoming in the system
that materially affects the ability of officials of the Department
of Defense to rely upon information produced by the system that is
needed for management purposes.
(b) General. The Contractor shall establish and maintain an
acceptable purchasing system. Failure to maintain an acceptable
purchasing system, as defined in this clause, may result in
disapproval of the system by the Contracting Officer and/or
withholding of payments.
(c) System criteria. The Contractor's purchasing system shall--
(1) Have an adequate system description including policies,
procedures, and purchasing practices that comply with the Federal
Acquisition Regulation (FAR) and the Defense Federal Acquisition
Regulation Supplement (DFARS);
(2) Ensure that all applicable purchase orders and subcontracts
contain all flowdown clauses, including terms and conditions and any
other clauses needed to carry out the requirements of the prime
contract;
(3) Maintain an organization plan that establishes clear lines
of authority and responsibility;
(4) Ensure all purchase orders are based on authorized
requisitions and include a complete and accurate history of purchase
transactions to support vendor selected, price paid, and document
the subcontract/purchase order files which are subject to Government
review;
(5) Establish and maintain adequate documentation to provide a
complete and accurate history of purchase transactions to support
vendors selected and prices paid;
(6) Apply a consistent make-or-buy policy that is in the best
interest of the Government;
(7) Use competitive sourcing to the maximum extent practicable,
and ensure debarred or suspended contractors are properly excluded
from contract award;
(8) Evaluate price, quality, delivery, technical capabilities,
and financial capabilities of competing vendors to ensure fair and
reasonable prices;
(9) Require management level justification and adequate cost or
price analysis, as applicable, for any sole or single source award;
(10) Perform timely and adequate cost or price analysis and
technical evaluation for each subcontractor and supplier proposal or
quote to ensure fair and reasonable subcontract prices;
(11) Document negotiations in accordance with FAR 15.406-3;
(12) Seek, take, and document economically feasible purchase
discounts, including cash discounts, trade discounts, quantity
discounts, rebates, freight allowances, and company-wide volume
discounts;
(13) Ensure proper type of contract selection and prohibit
issuance of cost-plus-a-percentage-of-cost subcontracts;
(14) Maintain subcontract surveillance to ensure timely delivery
of an acceptable product and procedures to notify the Government of
potential subcontract problems that may impact delivery, quantity,
or price;
(15) Document and justify reasons for subcontract changes that
affect cost or price;
(16) Notify the Government of the award of all subcontracts that
contain the FAR and DFARS flowdown clauses that allow for Government
audit of those subcontracts, and ensure the performance of audits of
those subcontracts;
(17) Enforce adequate policies on conflict of interest, gifts,
and gratuities, including the requirements of 41 U.S.C. chapter 87,
Kickbacks;
(18) Perform internal audits or management reviews, training,
and maintain policies and procedures for the purchasing department
to ensure the integrity of the purchasing system;
(19) Establish and maintain policies and procedures to ensure
purchase orders and subcontracts contain mandatory and applicable
flowdown clauses, as required by the FAR and DFARS, including terms
and conditions required by the prime contract and any clauses
required to carry out the requirements of the prime contract,
including the requirements of 252.246-70XX, Contractor Counterfeit
Electronic Part Avoidance and Detection System, if applicable;
(20) Provide for an organizational and administrative structure
that ensures effective and efficient procurement of required quality
materials and parts at the best value from responsible and reliable
sources, including the requirements of 252.246-70XX, Contractor
Counterfeit Electronic Part Avoidance and Detection System, if
applicable;
(21) Establish and maintain selection processes to ensure the
most responsive and responsible sources for furnishing required
quality parts and materials and to promote competitive sourcing
among dependable suppliers so that purchases are reasonably priced
and from sources that meet contractor quality requirements,
including the requirements of 252.246-70XX, Contractor Counterfeit
Electronic Part Avoidance and Detection System, if applicable;
(22) Establish and maintain procedures to ensure performance of
adequate price or cost analysis on purchasing actions;
(23) Establish and maintain procedures to ensure that proper
types of subcontracts are selected, and that there are controls over
subcontracting, including oversight and surveillance of
subcontracted effort; and
(24) Establish and maintain procedures to timely notify the
Contracting Officer, in writing, if--
(i) The Contractor changes the amount of subcontract effort
after award such that it exceeds 70 percent of the total cost of the
work to be performed under the contract, task order, or delivery
order. The notification shall identify the revised cost of the
subcontract effort and shall include verification that the
Contractor will provide added value; or
(ii) Any subcontractor changes the amount of lower-tier
subcontractor effort after award such that it exceeds 70 percent of
the total cost of the work to be performed under its subcontract.
The notification shall identify the revised cost of the subcontract
effort and shall include verification that the subcontractor will
provide added value as related to the work to be performed by the
lower-tier subcontractor(s).
(d) Significant deficiencies. (1) The Contracting Officer will
provide notification of initial determination to the Contractor, in
writing, of any significant deficiencies. The initial determination
will describe the deficiency in sufficient detail to allow the
Contractor to understand the deficiency.
(2) The Contractor shall respond within 30 days to a written
initial determination from the Contracting Officer that identifies
significant deficiencies in the Contractor's purchasing system. If
the Contractor disagrees with the initial determination, the
Contractor shall state, in writing, its rationale for disagreeing.
(3) The Contracting Officer will evaluate the Contractor's
response and notify the Contractor, in writing, of the Contracting
Officer's final determination concerning--
(i) Remaining significant deficiencies;
(ii) The adequacy of any proposed or completed corrective
action; and
(iii) System disapproval, if the Contracting Officer determines
that one or more significant deficiencies remain.
(e) If the Contractor receives the Contracting Officer's final
determination of significant deficiencies, the Contractor shall,
within 45 days of receipt of the final determination, either correct
the significant deficiencies or submit an acceptable corrective
action plan showing milestones and actions to eliminate the
deficiencies.
(f) Withholding payments. If the Contracting Officer makes a
final determination to disapprove the Contractor's purchasing
system, and the contract includes the clause at 252.242-7005,
Contractor Business Systems, the Contracting Officer will withhold
payments in accordance with that clause.
(End of clause)
Contractor Purchasing System Administration--Alternate I. For the
specific use of Alternate I, see the prescription at 244.305-71.
Alternate I paragraph (c) does not include paragraphs (c)(1) through
(c)(18) and (c)(22) through (c)(24) of the basic clause and paragraphs
(c)(19) through (c)(21) of the basic clause are revised and renumbered
in Alternate I.
Contractor Purchasing System Administration--Alternate I (Date)
(a) Definitions. As used in this clause--
Acceptable purchasing system means a purchasing system that
complies with the system criteria in paragraph (c) of this clause.
Purchasing system means the Contractor's system or systems for
purchasing and subcontracting, including make-or-buy decisions, the
selection of vendors, analysis of quoted prices, negotiation of
prices with vendors, placing and administering of orders, and
expediting delivery of materials.
[[Page 28785]]
Significant deficiency means a shortcoming in the system that
materially affects the ability of officials of the Department of
Defense to rely upon information produced by the system that is
needed for management purposes.
(b) General. The Contractor shall establish and maintain an
acceptable purchasing system. Failure to maintain an acceptable
purchasing system, as defined in this clause, may result in
disapproval of the system by the Contracting Officer and/or
withholding of payments.
(c) System criteria. The Contractor's purchasing system shall--
(1) Establish and maintain policies and procedures to ensure
purchase orders and subcontracts contain mandatory and applicable
flowdown clauses, as required by the FAR and DFARS, including terms
and conditions required by the prime contract and any clauses
required to carry out the requirements of the prime contract,
including the requirements of 252.246-70XX, Contractor Counterfeit
Electronic Part Avoidance and Detection System;
(2) Provide for an organizational and administrative structure
that ensures effective and efficient procurement of required quality
materials and parts at the best value from responsible and reliable
sources, including the requirements of 252.246-70XX, Contractor
Counterfeit Electronic Part Avoidance and Detection System; and
(3) Establish and maintain selection processes to ensure the
most responsive and responsible sources for furnishing required
quality parts and materials and to promote competitive sourcing
among dependable suppliers so that purchases are from sources that
meet contractor quality requirements, including the requirements of
252.246-70XX, Contractor Counterfeit Electronic Part Avoidance and
Detection System.
(d) Significant deficiencies. (1) The Contracting Officer will
provide notification of initial determination to the Contractor, in
writing, of any significant deficiencies. The initial determination
will describe the deficiency in sufficient detail to allow the
Contractor to understand the deficiency.
(2) The Contractor shall respond within 30 days to a written
initial determination from the Contracting Officer that identifies
significant deficiencies in the Contractor's purchasing system. If
the Contractor disagrees with the initial determination, the
Contractor shall state, in writing, its rationale for disagreeing.
(3) The Contracting Officer will evaluate the Contractor's
response and notify the Contractor, in writing, of the Contracting
Officer's final determination concerning--
(i) Remaining significant deficiencies;
(ii) The adequacy of any proposed or completed corrective
action; and
(iii) System disapproval, if the Contracting Officer determines
that one or more significant deficiencies remain.
(e) If the Contractor receives the Contracting Officer's final
determination of significant deficiencies, the Contractor shall,
within 45 days of receipt of the final determination, either correct
the significant deficiencies or submit an acceptable corrective
action plan showing milestones and actions to eliminate the
deficiencies.
(f) Withholding payments. If the Contracting Officer makes a
final determination to disapprove the Contractor's purchasing
system, and the contract includes the clause at 252.242-7005,
Contractor Business Systems, the Contracting Officer will withhold
payments in accordance with that clause.
(End of clause)
0
9. Amend subpart 252.2 by adding new section 252.246-70XX to read as
follows:
252.246-70XX Contractor Counterfeit Electronic Part Avoidance and
Detection System.
As prescribed in 246.870-3, use the following clause:
Contractor Counterfeit Electronic Part Avoidance and Detection System
(Date)
(a) Definitions. As used in this clause--
Counterfeit part means--
(1) An unauthorized copy or substitute part that has been
identified, marked, and/or altered by a source other than the part's
legally authorized source and has been misrepresented to be from a
legally authorized source;
(2) An item misrepresented to be an authorized item of the
legally authorized source; or
(3) A new, used, outdated, or expired item from a legally
authorized source that is misrepresented by any source to the end-
user as meeting the performance requirements for the intended use.
Counterfeit electronic part avoidance and detection system means
the Contractor's system or systems for eliminating counterfeit
electronic parts from the supply chain.
Legally authorized source means the current design activity or
the original manufacturer or a supplier authorized by the current
design activity or the original manufacturer to produce an item.
Suspect counterfeit part means a part for which visual
inspection, testing, or other information provide reason to believe
that a part may be a counterfeit part.
(b) General. The Contractor shall establish and maintain an
acceptable counterfeit electronic part avoidance and detection
system. Failure to maintain an acceptable counterfeit electronic
part avoidance and detection system, as defined in this clause, may
result in disapproval of the purchasing system by the Contracting
Officer and/or withholding of payments.
(c) System criteria. The Contractor's counterfeit electronic
part avoidance and detection system shall develop and implement
policies and procedures that address--
(i) The training of personnel;
(ii) The inspection and testing of electronic parts, including
criteria for acceptance and rejection;
(iii) Processes to abolish counterfeit parts proliferation;
(iv) Mechanisms to enable traceability of parts to suppliers;
(v) Use and qualification of trusted suppliers;
(vi) The reporting and quarantining of counterfeit electronic
parts and suspect counterfeit electronic parts;
(vii) Methodologies to identify suspect counterfeit parts and to
rapidly determine if a suspect counterfeit part is, in fact,
counterfeit;
(viii) The design, operation, and maintenance of systems to
detect and avoid counterfeit electronic parts and suspect
counterfeit electronic parts; and
(ix) The flow down of counterfeit avoidance and detection
requirements to subcontractors.
(d) Government review and evaluation of the Contractor's
policies and procedures will be accomplished as part of the
evaluation of the Contractor's purchasing system in accordance with
252.244-7001, Contractor Purchasing System Administration.
(End of clause)
[FR Doc. 2013-11400 Filed 5-15-13; 8:45 am]
BILLING CODE 5001-06-P