Counterfeit Electronic Part Detection and Avoidance Systems

This is the second of our two part series on the new DFARS (DoD FAR Supplement) requirements to prevent counterfeit electronic parts from entering the supply chain. To read Part 1, click here.

Contractors that are subject to CAS (Cost Accounting Standards) and that supply electronic parts or products that include electronic parts (as well as their subcontractors that supply electronic parts or products that include electronic parts), are required to establish and maintain an acceptable counterfeit electronic part detection and avoidance system. Failure to do so may result in disapproval of the purchasing system by the contracting officer and/or withholding of payments.

The "subject to CAS" requirements applies to both full and modified CAS coverage. DoD made that point clear in its promulgation comments. However, small businesses are exempt from CAS and therefore exempt from this new requirement. That won't remove any responsibility from prime contractors however. DoD stated that contractors using small businesses as part of their supply chain doesn't remove any responsibility for ensuring an effective avoidance system. Primes that cannot flow down the requirements because of a small business exemption (or another exemption from CAS), will have a more difficult time to ensure that electronics parts and products that include electronic parts are identified and excluded from the supply chain.

So, how does a contractor go about devising and implementing a counterfeit electronic part detection and avoidance system (CEPADAS)? The new DFARS requirements tells us. The CEPADAS must include risk-based policies and procedures that address, at a minimum, the following areas:

1. Personnel training
2. Inspection and testing of electronic parts, including criteria for acceptance and rejection.
3. Process to abolish counterfeit parts proliferation.
4. Process for maintaining electronic part traceability.
5. Use of suppliers that are the original manufacturer, sources with the express written authority of the original manufacturer or current design activity, including an authorized aftermarket manufacturer or suppliers that obtain parts exclusively from one or more of these sources.
6. The reporting and quarantining of counterfeit electronic parts and suspect counterfeit electronic parts.
7. Methodologies to identify suspect counterfeit electronic parts and to rapidly determine if a suspect counterfeit electronic part is, in fact, counterfeit.
8. Design, operation, and maintenance of systems to detect and avoid counterfeit electronic parts and suspect counterfeit electronic parts.
9. Flow down of counterfeit detection and avoidance requirements.
10. Process for keeping continually informed of current counterfeiting information and trends.
11. Process for screening the Government-Industry Data Exchange Program (GIDEP) reports and other credible sources of counterfeiting information.
12. Control of obsolete electronic parts.

This new requirement applies to contracts awarded after May 6, 2014.