Government Contracts NASA Finalizes Rule on Counterfeit Parts Detection and Avoidance
Wednesday, November 4, 2020

NASA Finalizes Rule on Counterfeit Parts Detection and Avoidance

By Government Contracts Editorial Staff

A National Aeronautics and Space Administration final rule addresses the detection and avoidance of counterfeit parts. The rule applies to contractors that supply an electronic part, or a product containing an electronic part, to NASA. The rule requires covered contractors, and subcontractors at all tiers, to use electronic parts that are currently in production and purchased from the original manufacturers of the parts, their authorized dealers, or suppliers. If a contractor does not purchase electronic parts in this manner, it must purchase the parts from a NASA-identified supplier or contractor-approved supplier. The contractor would then assume responsibility and be required to inspect, test, and validate authentication of the parts. The rule also requires the contractor to obtain traceability information and provide this information to the contracting officer when requested, and makes the selection of contractor-approved suppliers subject to review and audit by the CO.

Contract Clause. The rule adds these requirements at new NFS Subpart 1846.70, and a new contract clause, NFS 1852.246-74, which is to be used in solicitations and contracts that procure electronic parts; end items, components, parts, or assemblies containing electronic parts; and services, if the covered contractor will supply electronic parts. The clause is included in commercial items contracts pursuant to amended NFS 1812.301. Finally, under new NFS 1831.205-70, the costs of counterfeit electronic parts, suspect counterfeit electronic parts, and any corrective action that may be required to remedy the use or inclusion of such parts, are unallowable unless the contractor has an approved detection system and gives proper notice, or the parts were provided to the contractor as government property under FAR Part 45. This rule implements section 823(c)(2)(B) of the National Aeronautics and Space Administration Transition Authorization Act of 2017 (PL 115-10), which noted an investigation found 1,800 cases and over 1 million counterfeit parts in the Department of Defense supply chain from 2009 through 2010. The final rule makes no changes to the proposed rule (¶70,048.77). NASA Procurement Notice 20-08 (¶70,049.305) implements this NFS Case 2017-N010 final rule. For the text of the rule, which went into effect on September 28, 2020, see ¶70,047.248.

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