RGCI - DoD Contractors’ Purchasing Systems and Counterfeit Parts

As 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. 

Learn More About Our Contractor Purchasing System Review (CPSR) Services

Written by Wayne Murdock

About Redstone GCI

Redstone GCI is a consulting firm focused on fulfilling the needs of government contractors in all areas of compliance. With a singular mission to help contractors through the multiple layers of “red tape,” we allow contractors to focus on what they do best – support their mission with the U.S. Government. We are home to a group of consultants made up of GovCon industry professionals, CPAs, attorneys, and retired government audit and acquisition professionals.

Our focus and knowledge of audit and compliance functions administered by DCAA and DCMA will always be at the heart of what we do. However, for the past decade, we’ve strategically grown to support other areas of the government contractor back-office with that same level of focus and expertise. We’ve added expertise in contracts management, subcontract administration, proposal pricing, various software systems, HR and employment law, property administration, manufacturing, data analytics/reporting, Grant specialists, M&A, and many other areas. When we see a trend in the needs of contractors, we act to ensure we can provide the best expertise in the market to fulfill those needs.

One thing our clients can be certain of is that with the Redstone GCI Team in your corner, there is no problem too big and no issue too technical for our team to tackle.

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