Fake parts reporting: FAR extends comment deadline

gavel and lawbookThe US government has extending the comment deadline on its proposals to require contractors to report non-conforming components discovered in the supply chain, including counterfeits.

Earlier this year, the US Department of Defense issued a final rule that required certain contractors to detect and report counterfeit electronic parts, and this was swiftly followed by a separate proposal - issued by the Federal Acquisition Regulation (FAR) Council that would significantly broaden the scope of the reporting requirements.

The DoD's rule is specific to electronic parts and specific contractors retained under Cost Accounting Standards (CAS). The FAR proposal however - which covers the DoD, the General Services Administration (GSA) and NASA - would apply to all government contractors (not just those covered by CAS) and extend the scope of reporting beyond electronic components.

FAR's proposal would require details of not only counterfeit and suspected counterfeit items, but also those deemed to be 'non-conforming' - for example as a result of being defective - to be uploaded to a federal database known as GIDEP (Government-Industry Data Exchange Programme). Contractors would also have to check the database before purchasing components.

The proposed rule includes all contractors without exception, so subcontractors and overseas suppliers are also in the frame.

At the time the proposals were unveiled in the Federal Register, the FAR said: "the problem of counterfeit and nonconforming parts extends far beyond electronic parts and can impact the mission of all government agencies."

Perhaps reflecting the controversial nature of the expanded requirements, the FAR Council is claiming an extra month to digest feedback on the proposals. It will now accept comments up until September 10, while the original deadline fell on August 9, 60 days after the initial proposals.

Some commentators have expressed concerns about the sweeping nature of the reporting requirements, which will require significant changes in business practices for many contractors as well as investment in new equipment to link with the GIDEP network.

"While it may be challenging for contractors to argue against the reason for the rule, they should request clarity on and some easement of the burden of this regulation," said Lorraine Mullins Campos and Leslie Monahan of lawfirm Reed Smith LLP in a recent blog post on the proposals.

A key issue is the subjective and subjective nature of the definitions contained in the proposal, they note.

"One contractor may view a non-conformance as 'major' for its purposes, while another may view a non-conformance as not triggering reporting as it applies to the specific project at hand," they write.

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