DoD Contractors' Purchasing Systems and Counterfeit PartsAs published in the Federal Register on May 6, 2014 the Department of Defense has issued a final rule amending the DFARS to require certain qualifying contractors to adequately address the detection and avoidance of counterfeit electronic parts.  This was done to implement those sections of the NDAA for fiscal years 2012 and 2013 respectively dealing with the same subject and is effective May 6, 2014.

Fundamentally the requirement is implemented by adding three additional elements to subsection (c) of DFARS 252.244–7001 Contractor Purchasing System Administration. If applicable a contractor will:

  • “(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 252.246–7007, Contractor Counterfeit Electronic Part Detection and Avoidance System”;
  • “(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 252.246–7007, Contractor Counterfeit Electronic Part Detection and Avoidance System”;
  • “(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 252.246–7007, Contractor Counterfeit Electronic Part Detection and Avoidance System, and the item marking requirements of 252.211–7003, Item Unique Identification and Valuation”.

Additionally DFARS 252.246–7007 establishes 12 criteria for an adequate Counterfeit Electronic Part Detection and Avoidance System but is applicable only to CAS covered contractors.

DCMA has not yet revised DCMA-INST 109 Contractor Purchasing System Reviews implemented in November 2012 and revised in January 2014 but we expect it to do so shortly.  However, even if the DCMA has not developed implementing guidance or review procedures prior to the commencement of any reviews applicable systems will be evaluated for compliance based on the May 6, 2014 DFARS revisions. 

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Written by Wayne Murdock

About Redstone GCI

Redstone Government Consultants are a team of the most senior industry veterans and the brightest new talent in the industry. Many have held senior government positions including leadership roles in the DCAA. Our new talents bring significant accounting and software experience along with fresh perspectives, inspiration and energy to our team. Through our leadership and combined experience, we provide a unique perspective, bringing both government and contractor proficiencies to bear and ensuring rock-solid government compliance for our clients.

Topics: Business Systems Review, Contracts Administration, Government Compliance Training, DFARS Business Systems, DCAA Audit Support, Contractor Purchasing System Review (CPSR)