28780 Federal Register / Vol. 78, No. 95 / Thursday, May 16, 2013 / Proposed Rules 

will be issuing a Revised Preliminary 

Flood Insurance Rate Map, and if 

necessary a Flood Insurance Study 

report, featuring updated flood hazard 

information, the proposed rulemaking is 

being withdrawn. A Notice of Proposed 

Flood Hazard Determinations will be 

published in the Federal Register and in 

the affected community’s local 

newspaper. 

Authority: 42 U.S.C. 4104; 44 CFR 67.4. 

Roy E. Wright, 

Deputy Associate Administrator for 

Mitigation, Department of Homeland 

Security, Federal Emergency Management 

Agency. 

[FR Doc. 2013–11588 Filed 5–15–13; 8:45 am] 

BILLING CODE 9110–12–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Federal Emergency Management 

Agency 

44 CFR Part 67 

[Docket ID FEMA–2013–0002; Internal 

Agency Docket No. FEMA–B–1147] 

Proposed Flood Elevation 

Determinations for Beaver County, 

Pennsylvania (All Jurisdictions) 

AGENCY: Federal Emergency 

Management Agency, DHS. 

ACTION: Proposed rule; withdrawal. 

SUMMARY: The Federal Emergency 

Management Agency (FEMA) is 

withdrawing its proposed rule 

concerning proposed flood elevation 

determinations for Beaver County, 

Pennsylvania (All Jurisdictions). 

DATES: This withdrawal is effective on 

May 16, 2013. 

ADDRESSES: You may submit comments, 

identified by Docket No. FEMA–B–1147 

to Luis Rodriguez, Chief, Engineering 

Management Branch, Federal Insurance 

and Mitigation Administration, Federal 

Emergency Management Agency, 500 C 

Street SW., Washington, DC 20472, 

(202) 646–4064, or (email) 

Luis.Rodriguez3@fema.dhs.gov. 

FOR FURTHER INFORMATION CONTACT: Luis 

Rodriguez, Chief, Engineering 

Management Branch, Federal Insurance 

and Mitigation Administration, Federal 

Emergency Management Agency, 500 C 

Street SW., Washington, DC 20472, 

(202) 646–4064, or (email) 

Luis.Rodriguez3@fema.dhs.gov. 

SUPPLEMENTARY INFORMATION: On 

October 5, 2010, FEMA published a 

proposed rulemaking at 75 FR 61377, 

proposing flood elevation 

determinations along one or more 

flooding sources in Beaver County, 

Pennsylvania. Because FEMA has or 

will be issuing a Revised Preliminary 

Flood Insurance Rate Map, and if 

necessary a Flood Insurance Study 

report, featuring updated flood hazard 

information, the proposed rulemaking is 

being withdrawn. A Notice of Proposed 

Flood Hazard Determinations will be 

published in the Federal Register and in 

the affected community’s local 

newspaper. 

Authority: 42 U.S.C. 4104; 44 CFR 67.4. 

Roy E. Wright, 

Deputy Associate Administrator for 

Mitigation, Department of Homeland 

Security, Federal Emergency Management 

Agency. 

[FR Doc. 2013–11591 Filed 5–15–13; 8:45 am] 

BILLING CODE 9110–12–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Federal Emergency Management 

Agency 

44 CFR Part 67 

[Docket ID FEMA–2013–0002; Internal 

Agency Docket No. FEMA–B–1190] 

Proposed Flood Elevation 

Determinations for Greene County, 

Pennsylvania (All Jurisdictions) 

AGENCY: Federal Emergency 

Management Agency, DHS. 

ACTION: Proposed rule; withdrawal. 

SUMMARY: The Federal Emergency 

Management Agency (FEMA) is 

withdrawing its proposed rule 

concerning proposed flood elevation 

determinations for Greene County, 

Pennsylvania (All Jurisdictions). 

DATES: This withdrawal is effective on 

May 16, 2013. 

ADDRESSES: You may submit comments, 

identified by Docket No. FEMA–B–1190 

to Luis Rodriguez, Chief, Engineering 

Management Branch, Federal Insurance 

and Mitigation Administration, Federal 

Emergency Management Agency, 500 C 

Street SW., Washington, DC 20472, 

(202) 646–4064, or (email) 

Luis.Rodriguez3@fema.dhs.gov. 

FOR FURTHER INFORMATION CONTACT: Luis 

Rodriguez, Chief, Engineering 

Management Branch, Federal Insurance 

and Mitigation Administration, Federal 

Emergency Management Agency, 500 C 

Street SW., Washington, DC 20472, 

(202) 646–4064, or (email) 

Luis.Rodriguez3@fema.dhs.gov. 

SUPPLEMENTARY INFORMATION: On May 

10, 2011, FEMA published a proposed 

rulemaking at 76 FR 26978, proposing 

flood elevation determinations along 

one or more flooding sources in Greene 

County, Pennsylvania. Because FEMA 

has or will be issuing a Revised 

Preliminary Flood Insurance Rate Map, 

and if necessary a Flood Insurance 

Study report, featuring updated flood 

hazard information, the proposed 

rulemaking is being withdrawn. A 

Notice of Proposed Flood Hazard 

Determinations will be published in the 

Federal Register and in the affected 

community’s local newspaper. 

Authority: 42 U.S.C. 4104; 44 CFR 67.4. 

Roy E. Wright, 

Deputy Associate Administrator for 

Mitigation, Department of Homeland 

Security, Federal Emergency Management 

Agency. 

[FR Doc. 2013–11594 Filed 5–15–13; 8:45 am] 

BILLING CODE 9110–12–P 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Parts 202, 231, 244, 246, and 

252 

RIN 0750–AH88 

Defense Federal Acquisition 

Regulation Supplement: Detection and 

Avoidance of Counterfeit Electronic 

Parts (DFARS Case 2012–D055) 

AGENCY: Defense Acquisition 

Regulations System, Department of 

Defense (DoD). 

ACTION: Proposed rule. 

SUMMARY: DoD is proposing to amend 

the Defense Federal Acquisition 

Regulation Supplement (DFARS) in 

partial implementation of a section of 

the National Defense Authorization Act 

for Fiscal Year 2012, and a section of the 

National Defense Authorization Act for 

Fiscal Year 2013, relating to the 

detection and avoidance of counterfeit 

electronic parts. 

DATES: Comment Date: Comments on 

the proposed rule should be submitted 

in writing to the address shown below 

on or before July 15, 2013, to be 

considered in the formation of a final 

rule. 

ADDRESSES: Submit comments 

identified by DFARS Case 2012–D055, 

using any of the following methods: 

Æ Regulations.gov: http:// 

www.regulations.gov. Submit comments 

via the Federal eRulemaking portal by 

entering ‘‘DFARS Case 2012–D055’’ 

under the heading ‘‘Enter keyword or 

ID’’ and selecting ‘‘Search.’’ Select the 


erowe on DSK2VPTVN1PROD with PROPOSALS-1
Federal Register / Vol. 78, No. 95 / Thursday, May 16, 2013 / Proposed Rules 28781 

link ‘‘Submit a Comment’’ that 

corresponds with ‘‘DFARS Case 2012– 

D055.’’ Follow the instructions provided 

at the ‘‘Submit a Comment’’ screen. 

Please include your name, company 

name (if any), and ‘‘DFARS Case 2012– 

D055’’ on your attached document. 

Æ Email: dfars@osd.mil. Include 

DFARS Case 2012–D055 in the subject 

line of the message. 

Æ Fax: 571–372–6094. 

Æ Mail: Defense Acquisition 

Regulations System, Attn: Ms. Meredith 

Murphy, OUSD(AT&L)DPAP/DARS, 

Room 3B855, 3060 Defense Pentagon, 

Washington, DC 20301–3060. 

Comments received generally will be 

posted without change to http:// 

www.regulations.gov, including any 

personal information provided. To 

confirm receipt of your comment(s), 

please check www.regulations.gov, 

approximately two to three days after 

submission to verify posting (except 

allow 30 days for posting of comments 

submitted by mail). 

FOR FURTHER INFORMATION CONTACT: Ms. 

Meredith Murphy, Defense Acquisition 

Regulations System, 

OUSD(AT&L)DPAP/DARS, Room 

3B855, 3060 Defense Pentagon, 

Washington, DC 20301–3060. 

Telephone 571–372–6098; facsimile 

571–372–6101. 

SUPPLEMENTARY INFORMATION: 

I. Background 

DoD is proposing to revise the DFARS 

to partially implement section 818 

(paragraphs (c) and (f)) of the National 

Defense Authorization Act (NDAA) for 

Fiscal Year (FY) 2012 (Pub. L. 112–81, 

enacted December 31, 2011). Section 

818 is entitled ‘‘Detection and 

Avoidance of Counterfeit Electronic 

Parts.’’ Paragraph (c) of section 818 

requires the issuance of DFARS 

regulations addressing contractor 

responsibilities for detecting and 

avoiding the use or inclusion of 

counterfeit electronic parts or suspect 

counterfeit electronic parts, the use of 

trusted suppliers, and requirements for 

contractors to report counterfeit 

electronic parts and suspect counterfeit 

electronic parts. Paragraph (f) of section 

818 contains the definitions of ‘‘covered 

contractor’’ and ‘‘electronic part.’’ Other 

aspects of section 818 are being 

implemented separately. 

In addition, this proposed rule 

addresses the amendments to section 

818 that were made by section 833, 

entitled ‘‘Contractor Responsibilities in 

Regulations Relating to Detection and 

Avoidance of Counterfeit Electronic 

Parts,’’ of the NDAA for FY 2013 (Pub. 

L. 112–239, enacted January 2, 2013). 

II. Discussion 

The intent of section 818 is to hold 

contractors responsible for detecting 

and avoiding the use or inclusion of 

counterfeit electronic parts or suspect 

counterfeit electronic parts. Three 

specific areas were identified that 

required either modification or 

additions to DFARS in order to 

implement the requirements defined in 

section 818. 

A. Definitions. Several definitions are 

proposed. ‘‘Electronic part’’ is defined at 

paragraph (f) of section 818. Section 

818(b)(1) requires definition of 

‘‘counterfeit electronic part’’ and 

‘‘suspect counterfeit electronic part.’’ As 

recommended by Government 

Accountability Office (GAO) Report 

GAO–10–389, entitled ‘‘DoD Should 

Leverage Ongoing Initiatives in 

Developing Its Program to Mitigate Risk 

of Counterfeit Parts,’’ to establish a clear 

and consistent definition of ‘‘counterfeit 

parts.’’ DoD is proposing to add a 

definition of ‘‘legally authorized source’’ 

to the definition of ‘‘counterfeit part’’ as 

an important component of its program 

to mitigate risks posed by counterfeit 

parts. The new terms are proposed to be 

located at DFARS 202.101, Definitions, 

because they will apply to multiple 

parts of the regulations. 

B. Contractor responsibilities. 

Detection and avoidance of counterfeit 

electronic parts or suspect counterfeit 

electronic parts. New policy on 

counterfeit parts is proposed to be 

added to DFARS subpart 246.8, 

Contractor Liability for Loss of or 

Damage to Property of the Government. 

The proposed new coverage includes a 

clause at DFARS 252.246–7007, 

Contractor Counterfeit Electronic Part 

Avoidance and Detection System. In 

addition, this rule proposes to add 

compliance (with the requirements for 

identifying, avoiding, and reporting 

counterfeit parts) to the existing 

requirements for the contractor’s 

purchasing system. To that end, the rule 

proposes to modify the clause at DFARS 

252.244–7001, Contractor Purchasing 

System Administration, to add system 

criteria for the contractor’s purchasing 

system. It also proposes an alternate 

which adds systems criteria for a less 

comprehensive review of the 

contractor’s purchasing system that 

targets review of those elements relating 

to the detection and avoidance of 

counterfeit electronic parts and suspect 

counterfeit electronic parts. The 

alternate is prescribed for use in 

solicitations and contracts that include 

the clause at 252.246–7007, but do not 

include the clause at FAR 52.244–2, 

Subcontracts. 

(1) Unallowability of costs of rework 

and corrective action. A new 

subsection, DFARS 231.205–71, 

proposes to prohibit contractors from 

claiming, as a reimbursable cost under 

DoD contracts, the cost of counterfeit 

electronic parts or suspect counterfeit 

electronic parts or the cost of rework or 

corrective action that may be required to 

remedy the use or inclusion of such 

parts. However, section 833 of the 

NDAA for FY 2013 provides specific 

exceptions that would enable these 

costs to be reimbursed if (i) a contractor 

has a DoD-approved operational system 

to detect and avoid counterfeit parts; or 

the suspect counterfeit parts were 

provided as Government-furnished 

property; and (ii) the contractor has 

provided timely notice to the 

Government. These exceptions are 

included at DFARS 231.205–71(c) in the 

proposed rule. 

(2) Government role. The 

Government’s role in reviewing and 

monitoring the contractor’s processes 

and procedures for detecting and 

avoiding counterfeit or suspect 

counterfeit electronic parts (see section 

818(e)(2)(B)) is addressed as part of a 

contractor’s purchasing system review 

(see proposed DFARS 244.303(b)). 

III. Executive Orders 12866 and 13563 

Executive Orders (E.O.s) 12866 and 

13563 direct agencies to assess all costs 

and benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). E.O. 13563 emphasizes the 

importance of quantifying both costs 

and benefits, of reducing costs, of 

harmonizing rules, and of promoting 

flexibility. This is a significant 

regulatory action and, therefore, was 

subject to review under section 6(b) of 

E.O. 12866, Regulatory Planning and 

Review, dated September 30, 1993. This 

rule is not a major rule under 5 U.S.C. 

804. 

IV. Regulatory Flexibility Act 

DoD does not expect this proposed 

rule to have a significant economic 

impact on a substantial number of small 

entities within the meaning of the 

Regulatory Flexibility Act, 5 U.S.C. 601, 

et seq., because it applies only to 

contracts that are subject to the Cost 

Accounting Standards (CAS)(see section 

818(f)). Contracts with small entities are 

exempt from CAS. However, an initial 

regulatory flexibility analysis has been 

performed and is summarized as 

follows: 


erowe on DSK2VPTVN1PROD with PROPOSALS-1
28782 Federal Register / Vol. 78, No. 95 / Thursday, May 16, 2013 / Proposed Rules 

This proposed rule is intended to 

partially implement section 818 of the 

National Defense Authorization Act for 

Fiscal Year 2012 and section 833 of the 

National Defense Authorization Act for 

Fiscal Year 2013. Section 818 is entitled 

‘‘Detection and Avoidance of 

Counterfeit Electronic Parts;’’ it requires 

DoD-wide regulations concerning 

contractors’ requirements to identify, 

avoid, and report counterfeit and 

suspect electronic counterfeit parts. 

Further, paragraph (a) of section 818 

requires DoD to establish and issue 

relevant DoD-wide definitions. Section 

833 provides exceptions to cost 

unallowability if contractors take 

specific steps. 

The rule will not apply to small 

entities as prime contractors. The 

requirements will apply to contracts 

that are subject to the Cost Accounting 

Standards (CAS) under 41 U.S.C. 

chapter 15, as implemented in 

regulations found at 48 CFR 9903.201– 

1 (other than educational institutions, 

Federally Funded Research and 

Development Centers operated by 

educational institutions, or University 

Associated Research Centers). Contracts 

and subcontracts with small entities are 

exempt from CAS requirements. 

There is, however, the potential for an 

impact on small entities in the supply 

chain of a prime contractor with 

contracts subject to CAS. The impact 

should be negligible as long as the small 

entity is not supplying counterfeit 

electronic parts to the prime contractor. 

The proposed rule would use the 

existing requirements for contractors’ 

purchasing systems as the basis for the 

anti-counterfeiting compliance (see the 

clause at DFARS 252.244–7001, 

Contractor Purchasing System 

Administration). 

The rule does not duplicate, overlap, 

or conflict with any other Federal rules. 

The economic impact of this proposed 

rule on small entities has been 

minimized in the following ways: 

(a) The proposed rule would use the 

existing requirements (and contract 

clause) for contractors’ purchasing 

systems, rather than creating a separate, 

new system. 

(b) The proposed rule would apply 

only to prime contractors that must 

comply with the Cost Accounting 

Standards, which excludes small 

entities without diminishing the ability 

of DoD to oversee compliance. 

DoD invites comments from small 

business concerns and other interested 

parties on the expected impact of this 

rule on small entities. 

DoD will also consider comments 

from small entities concerning the 

existing regulations in subparts affected 

by this rule in accordance with 5 U.S.C. 

610. Interested parties must submit such 

comments separately and should cite 5 

U.S.C. 610 (DFARS Case 2012–D055), in 

correspondence. 

V. Paperwork Reduction Act 

The rule contains information 

collection requirements that require the 

approval of the Office of Management 

and Budget under the Paperwork 

Reduction Act (44 U.S.C chapter 35; 

however, these changes to the DFARS, 

as they pertain to contractors’ 

purchasing systems, will generally not 

impose additional information 

collection requirements to the 

paperwork burden previously approved 

under OMB Control Number 0704–0253, 

entitled Purchasing Systems. The 

current information collection estimates 

that 90 respondents will submit one 

response annually, with 16 hours per 

response. We estimate that the 

additional information collection 

burden associated with the clause at 

52.244–7001—Alternate, will be as 

much as five percent more than the 

existing burden. Therefore, the change 

to the current annual reporting burden 

for OMB Control Number 0704–0253 is 

estimated as follows: 

Respondents: 5. 

Responses per respondent: 1. 

Total annual responses: 5. 

Preparation hours per response: 16. 

Total hours: 80. 

B. Request for Comments Regarding 

Paperwork Burden 

Written comments and 

recommendations on the proposed 

information collection, including 

suggestions for reducing this burden, 

should be sent to Ms. Jasmeet Seehra at 

the Office of Management and Budget, 

Desk Officer for DoD, Room 10236, New 

Executive Office Building, Washington, 

DC 20503, or email 

Jasmeet_K._Seehra@omb.eop.gov, with a 

copy to the Defense Acquisition 

Regulations System, Attn: Ms. Meredith 

Murphy, OUSD(AT&L)DPAP/DARS, 

Room 3B855, 3060 Defense Pentagon, 

Washington, DC 20301–3060. 

Comments can be received from 30 to 60 

days after the date of this notice, but 

comments to OMB will be most useful 

if received by OMB within 30 days after 

the date of this notice. 

Public comments are particularly 

invited on: whether this collection of 

information is necessary for the proper 

performance of functions of the DFARS, 

and will have practical utility; whether 

our estimate of the public burden of this 

collection of information is accurate, 

and based on valid assumptions and 

methodology; ways to enhance the 

quality, utility, and clarity of the 

information to be collected; and ways in 

which we can minimize the burden of 

the collection of information on those 

who are to respond, through the use of 

appropriate technological collection 

techniques or other forms of information 

technology. 

To request more information on this 

proposed information collection or to 

obtain a copy of the proposal and 

associated collection instruments, 

please write to the Defense Acquisition 

Regulations System, Attn: Ms. Meredith 

Murphy, OUSD(AT&L)DPAP/DARS, 

Room 3B855, 3060 Defense Pentagon, 

Washington, DC 20301–3060, or email 

dfars@osd.mil. Include DFARS Case 

2012–D055 in the subject line of the 

message.’’ 

List of Subjects in 48 CFR Parts 202, 

231, 244, 246, and 252 

Government procurement. 

Manuel Quinones, 

Editor, Defense Acquisition Regulations 

System. 

Therefore, DoD proposes to amend 48 

CFR parts 202, 231, 244, 246, and 252 

as follows: 

■ 1. The authority citation for parts 202, 

231, 244, and 252 continues to read as 

follows: 

Authority: 41 U.S.C. 1303 and 48 CFR 

Chapter 1. 

PART 202—DEFINITIONS OF WORDS 

AND TERMS 

■ 2. Amend section 202.101 by adding, 

in alphabetical order, the following 

definitions to read as follows: 

202.101 Definitions. 

* * * * * 

Counterfeit part means— 

(1) An unauthorized copy or 

substitute part that has been identified, 

marked, and/or altered by a source other 

than the part’s legally authorized source 

and has been misrepresented to be from 

a legally authorized source; 

(2) An item misrepresented to be an 

authorized item of the legally 

authorized source; or 

(3) A new, used, outdated, or expired 

item from a legally authorized source 

that is misrepresented by any source to 

the end-user as meeting the performance 

requirements for the intended use. 

* * * * * 

Electronic part means an integrated 

circuit, a discrete electronic component 

(including, but not limited to, a 

transistor, capacitor, resistor, or diode), 

or a circuit assembly (section 818(f)(2) 

of Pub. L. 112–81). 

* * * * * 


erowe on DSK2VPTVN1PROD with PROPOSALS-1
Federal Register / Vol. 78, No. 95 / Thursday, May 16, 2013 / Proposed Rules 28783 

Legally authorized source means the 

current design activity or the original 

manufacturer or a supplier authorized 

by the current design activity or the 

original manufacturer to produce an 

item. 

* * * * * 

Suspect counterfeit part means a part 

for which visual inspection, testing, or 

other information provide reason to 

believe that a part may be a counterfeit 

part. 

* * * * * 

PART 231—CONTRACT COST 

PRINCIPLES AND PROCEDURES 

■ 3. Add section 231.205–71 to read as 

follows: 

231.205–71 Cost of remedy for use or 

inclusion of counterfeit electronic parts and 

suspect counterfeit electronic parts. 

(a) Scope. This subsection 

implements the requirements of section 

818(c)(2), National Defense 

Authorization Act for Fiscal Year 2012 

(Pub. L. 112–81) and section 833, 

National Defense Authorization Act for 

Fiscal Year 2013 (Pub. L. 112–239). 

(b) Contractors that are subject to the 

Cost Accounting Standards (CAS) under 

41 U.S.C. Chapter 15, as implemented in 

regulations found at 48 CFR 9903.201– 

1 (see the FAR appendix), and that 

supply electronic parts or products that 

include electronic parts under CAScovered contracts are responsible for 

detecting and avoiding the use or 

inclusion of counterfeit electronic parts 

or suspect counterfeit electronic parts in 

such products and for any rework or 

corrective action that may be required to 

remedy the use or inclusion of such 

parts. 

(c) The costs of counterfeit electronic 

parts or suspect counterfeit electronic 

parts and the cost of rework or 

corrective action that may be required to 

remedy the use or inclusion of such 

parts are expressly unallowable, 

unless— 

(1) The contractor has an operational 

system to detect and avoid counterfeit 

parts and suspect counterfeit electronic 

parts that has been reviewed and 

approved by DoD pursuant to 244.303; 

(2) The counterfeit electronic parts or 

suspect counterfeit electronic parts are 

Government-furnished property as 

defined in FAR 45.101; and 

(3) The covered contractor provides 

timely notice to the Government. 

PART 244—SUBCONTRACTING 

POLICIES AND PROCEDURES 

■ 4. Revise section 244.303 to read as 

follows: 

244.303 Extent of review. 

(a) Also review the adequacy of 

rationale documenting commercial item 

determinations to ensure compliance 

with the definition of ‘‘commercial 

item’’ in FAR 2.101. 

(b) Also review the adequacy of the 

contractor’s counterfeit electronic part 

avoidance and detection system under 

DFARS 252.246–70XX, Contractor 

Counterfeit Electronic Part Avoidance 

and Detection System. 

■ 5. Revise section 244.305–71 to read 

as follows: 

244.305–71 Contract clause. 

Use the Contractor Purchasing System 

Administration clause or its alternate as 

follows: 

(a) Use the clause at 252.244–7001, 

Contractor Purchasing System 

Administration—Basic, in solicitations 

and contracts containing the clause at 

FAR 52.244–2, Subcontracts. 

(b) Use the clause at 252.244–7001, 

Contractor Purchasing System 

Administration—Alternate I, in 

solicitations and contracts that contain 

the clause at 252.246–70XX, Contractor 

Counterfeit Electronic Part Avoidance 

and Detection System, but do not 

contain FAR 52.244–2, Subcontracts. 

PART 246—QUALITY ASSURANCE 

■ 6. The authority citation for part 246 

is revised to read as follows: 

Authority: 41 U.S.C. 1303 and 48 CFR 

Chapter 1. 

■ 7. Add section 246.870 through 

246.870–3 to read as follows: 

246.870 Contractors’ counterfeit electronic 

part avoidance and detection systems. 

246.870–1 Scope. 

This section— 

(a) Implements section 818(c) of the 

National Defense Authorization Act for 

Fiscal Year 2012 (Pub. L. 112–81); and 

(b) Prescribes policy and procedures 

for preventing counterfeit parts and 

suspect counterfeit parts from entering 

the supply chain when procuring 

electronic parts or end items, 

components, parts, or materials that 

contain electronic parts. 

246.870–2 Policy. 

(a) General. Contractors are required 

to establish and maintain an acceptable 

counterfeit electronic part avoidance 

and detection system. Failure to do so 

may result in disapproval of the 

purchasing system by the contracting 

officer and/or withholding of payments 

(see 52.244–7001). 

(b) System criteria. A contractor’s 

counterfeit electronic part avoidance 

and detection system must address, at a 

minimum, the following areas: 

(1) The training of personnel. 

(2) The inspection and testing of 

electronic parts, including criteria for 

acceptance and rejection. 

(3) Processes to abolish counterfeit 

parts proliferation. 

(4) Mechanisms to enable traceability 

of parts to suppliers. 

(5) Use and qualification of trusted 

suppliers. 

(6) The reporting and quarantining of 

counterfeit electronic parts and suspect 

counterfeit electronic parts. 

(7) Methodologies to identify suspect 

counterfeit parts and to rapidly 

determine if a suspect counterfeit part 

is, in fact, counterfeit. 

(8) The design, operation, and 

maintenance of systems to detect and 

avoid counterfeit electronic parts and 

suspect counterfeit electronic parts. 

(9) The flow down of counterfeit 

avoidance and detection requirements 

to subcontractors. 

246.870–3 Contract clause. 

Use the clause at 252.246–70XX, 

Contractor Counterfeit Electronic Part 

Avoidance and Detection System, in 

solicitations and contracts (other than in 

contracts with educational institutions, 

Federally Funded Research and 

Development Centers (FFRDCs), or 

University Associated Research Centers 

(UARCs) operated by educational 

institutions) when procuring electronic 

parts or an end item, component, part, 

or material containing electronic parts 

or services where the contractor will 

supply electronic components, parts, or 

materials as part of the service and the 

resulting contract will be subject to the 

Cost Accounting standards under 41 

U.S.C. chapter 15, as implemented in 

regulations found at 48 CFR 9903.201– 

1 (see the FAR Appendix). 

PART 252—SOLICITATION 

PROVISIONS AND CONTRACT 

CLAUSES 

■ 8. Revise section 252.244–7001 to 

read as follows: 

252.244–7001 Contractor purchasing 

system administration. 

As prescribed in 244.305–71, use one 

of the following clauses. 

Contractor Purchasing System 

Administration—Basic. For the specific 

use of the basic clause, see the 

prescription at 244.305–71(a). 

Contractor Purchasing System 

Administration—Basic (Date) 

(a) Definitions. As used in this clause— 

‘‘Acceptable purchasing system’’ means a 

purchasing system that complies with the 

system criteria in paragraph (c) of this clause. 

‘‘Purchasing system’’ means the 

Contractor’s system or systems for 


erowe on DSK2VPTVN1PROD with PROPOSALS-1
28784 Federal Register / Vol. 78, No. 95 / Thursday, May 16, 2013 / Proposed Rules 

purchasing and subcontracting, including 

make-or-buy decisions, the selection of 

vendors, analysis of quoted prices, 

negotiation of prices with vendors, placing 

and administering of orders, and expediting 

delivery of materials. 

‘‘Significant deficiency’’ means a 

shortcoming in the system that materially 

affects the ability of officials of the 

Department of Defense to rely upon 

information produced by the system that is 

needed for management purposes. 

(b) General. The Contractor shall establish 

and maintain an acceptable purchasing 

system. Failure to maintain an acceptable 

purchasing system, as defined in this clause, 

may result in disapproval of the system by 

the Contracting Officer and/or withholding of 

payments. 

(c) System criteria. The Contractor’s 

purchasing system shall— 

(1) Have an adequate system description 

including policies, procedures, and 

purchasing practices that comply with the 

Federal Acquisition Regulation (FAR) and 

the Defense Federal Acquisition Regulation 

Supplement (DFARS); 

(2) Ensure that all applicable purchase 

orders and subcontracts contain all 

flowdown clauses, including terms and 

conditions and any other clauses needed to 

carry out the requirements of the prime 

contract; 

(3) Maintain an organization plan that 

establishes clear lines of authority and 

responsibility; 

(4) Ensure all purchase orders are based on 

authorized requisitions and include a 

complete and accurate history of purchase 

transactions to support vendor selected, price 

paid, and document the subcontract/ 

purchase order files which are subject to 

Government review; 

(5) Establish and maintain adequate 

documentation to provide a complete and 

accurate history of purchase transactions to 

support vendors selected and prices paid; 

(6) Apply a consistent make-or-buy policy 

that is in the best interest of the Government; 

(7) Use competitive sourcing to the 

maximum extent practicable, and ensure 

debarred or suspended contractors are 

properly excluded from contract award; 

(8) Evaluate price, quality, delivery, 

technical capabilities, and financial 

capabilities of competing vendors to ensure 

fair and reasonable prices; 

(9) Require management level justification 

and adequate cost or price analysis, as 

applicable, for any sole or single source 

award; 

(10) Perform timely and adequate cost or 

price analysis and technical evaluation for 

each subcontractor and supplier proposal or 

quote to ensure fair and reasonable 

subcontract prices; 

(11) Document negotiations in accordance 

with FAR 15.406–3; 

(12) Seek, take, and document 

economically feasible purchase discounts, 

including cash discounts, trade discounts, 

quantity discounts, rebates, freight 

allowances, and company-wide volume 

discounts; 

(13) Ensure proper type of contract 

selection and prohibit issuance of cost-plusa-percentage-of-cost subcontracts; 

(14) Maintain subcontract surveillance to 

ensure timely delivery of an acceptable 

product and procedures to notify the 

Government of potential subcontract 

problems that may impact delivery, quantity, 

or price; 

(15) Document and justify reasons for 

subcontract changes that affect cost or price; 

(16) Notify the Government of the award of 

all subcontracts that contain the FAR and 

DFARS flowdown clauses that allow for 

Government audit of those subcontracts, and 

ensure the performance of audits of those 

subcontracts; 

(17) Enforce adequate policies on conflict 

of interest, gifts, and gratuities, including the 

requirements of 41 U.S.C. chapter 87, 

Kickbacks; 

(18) Perform internal audits or 

management reviews, training, and maintain 

policies and procedures for the purchasing 

department to ensure the integrity of the 

purchasing system; 

(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 252.246–70XX, 

Contractor Counterfeit Electronic Part 

Avoidance and Detection System, if 

applicable; 

(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 

252.246–70XX, Contractor Counterfeit 

Electronic Part Avoidance and Detection 

System, if applicable; 

(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 252.246–70XX, Contractor 

Counterfeit Electronic Part Avoidance and 

Detection System, if applicable; 

(22) Establish and maintain procedures to 

ensure performance of adequate price or cost 

analysis on purchasing actions; 

(23) Establish and maintain procedures to 

ensure that proper types of subcontracts are 

selected, and that there are controls over 

subcontracting, including oversight and 

surveillance of subcontracted effort; and 

(24) Establish and maintain procedures to 

timely notify the Contracting Officer, in 

writing, if— 

(i) The Contractor changes the amount of 

subcontract effort after award such that it 

exceeds 70 percent of the total cost of the 

work to be performed under the contract, task 

order, or delivery order. The notification 

shall identify the revised cost of the 

subcontract effort and shall include 

verification that the Contractor will provide 

added value; or 

(ii) Any subcontractor changes the amount 

of lower-tier subcontractor effort after award 

such that it exceeds 70 percent of the total 

cost of the work to be performed under its 

subcontract. The notification shall identify 

the revised cost of the subcontract effort and 

shall include verification that the 

subcontractor will provide added value as 

related to the work to be performed by the 

lower-tier subcontractor(s). 

(d) Significant deficiencies. (1) The 

Contracting Officer will provide notification 

of initial determination to the Contractor, in 

writing, of any significant deficiencies. The 

initial determination will describe the 

deficiency in sufficient detail to allow the 

Contractor to understand the deficiency. 

(2) The Contractor shall respond within 30 

days to a written initial determination from 

the Contracting Officer that identifies 

significant deficiencies in the Contractor’s 

purchasing system. If the Contractor 

disagrees with the initial determination, the 

Contractor shall state, in writing, its rationale 

for disagreeing. 

(3) The Contracting Officer will evaluate 

the Contractor’s response and notify the 

Contractor, in writing, of the Contracting 

Officer’s final determination concerning— 

(i) Remaining significant deficiencies; 

(ii) The adequacy of any proposed or 

completed corrective action; and 

(iii) System disapproval, if the Contracting 

Officer determines that one or more 

significant deficiencies remain. 

(e) If the Contractor receives the 

Contracting Officer’s final determination of 

significant deficiencies, the Contractor shall, 

within 45 days of receipt of the final 

determination, either correct the significant 

deficiencies or submit an acceptable 

corrective action plan showing milestones 

and actions to eliminate the deficiencies. 

(f) Withholding payments. If the 

Contracting Officer makes a final 

determination to disapprove the Contractor’s 

purchasing system, and the contract includes 

the clause at 252.242–7005, Contractor 

Business Systems, the Contracting Officer 

will withhold payments in accordance with 

that clause. 

(End of clause) 

Contractor Purchasing System 

Administration—Alternate I. For the 

specific use of Alternate I, see the 

prescription at 244.305–71. Alternate I 

paragraph (c) does not include 

paragraphs (c)(1) through (c)(18) and 

(c)(22) through (c)(24) of the basic 

clause and paragraphs (c)(19) through 

(c)(21) of the basic clause are revised 

and renumbered in Alternate I. 

Contractor Purchasing System 

Administration—Alternate I (Date) 

(a) Definitions. As used in this clause— 

Acceptable purchasing system means a 

purchasing system that complies with the 

system criteria in paragraph (c) of this clause. 

Purchasing system means the Contractor’s 

system or systems for purchasing and 

subcontracting, including make-or-buy 

decisions, the selection of vendors, analysis 

of quoted prices, negotiation of prices with 

vendors, placing and administering of orders, 

and expediting delivery of materials. 


erowe on DSK2VPTVN1PROD with PROPOSALS-1
Federal Register / Vol. 78, No. 95 / Thursday, May 16, 2013 / Proposed Rules 28785 

Significant deficiency means a shortcoming 

in the system that materially affects the 

ability of officials of the Department of 

Defense to rely upon information produced 

by the system that is needed for management 

purposes. 

(b) General. The Contractor shall establish 

and maintain an acceptable purchasing 

system. Failure to maintain an acceptable 

purchasing system, as defined in this clause, 

may result in disapproval of the system by 

the Contracting Officer and/or withholding of 

payments. 

(c) System criteria. The Contractor’s 

purchasing system shall— 

(1) 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 252.246–70XX, 

Contractor Counterfeit Electronic Part 

Avoidance and Detection System; 

(2) 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 

252.246–70XX, Contractor Counterfeit 

Electronic Part Avoidance and Detection 

System; and 

(3) 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 from sources 

that meet contractor quality requirements, 

including the requirements of 252.246–70XX, 

Contractor Counterfeit Electronic Part 

Avoidance and Detection System. 

(d) Significant deficiencies. (1) The 

Contracting Officer will provide notification 

of initial determination to the Contractor, in 

writing, of any significant deficiencies. The 

initial determination will describe the 

deficiency in sufficient detail to allow the 

Contractor to understand the deficiency. 

(2) The Contractor shall respond within 30 

days to a written initial determination from 

the Contracting Officer that identifies 

significant deficiencies in the Contractor’s 

purchasing system. If the Contractor 

disagrees with the initial determination, the 

Contractor shall state, in writing, its rationale 

for disagreeing. 

(3) The Contracting Officer will evaluate 

the Contractor’s response and notify the 

Contractor, in writing, of the Contracting 

Officer’s final determination concerning— 

(i) Remaining significant deficiencies; 

(ii) The adequacy of any proposed or 

completed corrective action; and 

(iii) System disapproval, if the Contracting 

Officer determines that one or more 

significant deficiencies remain. 

(e) If the Contractor receives the 

Contracting Officer’s final determination of 

significant deficiencies, the Contractor shall, 

within 45 days of receipt of the final 

determination, either correct the significant 

deficiencies or submit an acceptable 

corrective action plan showing milestones 

and actions to eliminate the deficiencies. 

(f) Withholding payments. If the 

Contracting Officer makes a final 

determination to disapprove the Contractor’s 

purchasing system, and the contract includes 

the clause at 252.242–7005, Contractor 

Business Systems, the Contracting Officer 

will withhold payments in accordance with 

that clause. 

(End of clause) 

■ 9. Amend subpart 252.2 by adding 

new section 252.246–70XX to read as 

follows: 

252.246–70XX Contractor Counterfeit 

Electronic Part Avoidance and Detection 

System. 

As prescribed in 246.870–3, use the 

following clause: 

Contractor Counterfeit Electronic Part 

Avoidance and Detection System (Date) 

(a) Definitions. As used in this clause— 

Counterfeit part means— 

(1) An unauthorized copy or substitute part 

that has been identified, marked, and/or 

altered by a source other than the part’s 

legally authorized source and has been 

misrepresented to be from a legally 

authorized source; 

(2) An item misrepresented to be an 

authorized item of the legally authorized 

source; or 

(3) A new, used, outdated, or expired item 

from a legally authorized source that is 

misrepresented by any source to the end-user 

as meeting the performance requirements for 

the intended use. 

Counterfeit electronic part avoidance and 

detection system means the Contractor’s 

system or systems for eliminating counterfeit 

electronic parts from the supply chain. 

Legally authorized source means the 

current design activity or the original 

manufacturer or a supplier authorized by the 

current design activity or the original 

manufacturer to produce an item. 

Suspect counterfeit part means a part for 

which visual inspection, testing, or other 

information provide reason to believe that a 

part may be a counterfeit part. 

(b) General. The Contractor shall establish 

and maintain an acceptable counterfeit 

electronic part avoidance and detection 

system. Failure to maintain an acceptable 

counterfeit electronic part avoidance and 

detection system, as defined in this clause, 

may result in disapproval of the purchasing 

system by the Contracting Officer and/or 

withholding of payments. 

(c) System criteria. The Contractor’s 

counterfeit electronic part avoidance and 

detection system shall develop and 

implement policies and procedures that 

address— 

(i) The training of personnel; 

(ii) The inspection and testing of electronic 

parts, including criteria for acceptance and 

rejection; 

(iii) Processes to abolish counterfeit parts 

proliferation; 

(iv) Mechanisms to enable traceability of 

parts to suppliers; 

(v) Use and qualification of trusted 

suppliers; 

(vi) The reporting and quarantining of 

counterfeit electronic parts and suspect 

counterfeit electronic parts; 

(vii) Methodologies to identify suspect 

counterfeit parts and to rapidly determine if 

a suspect counterfeit part is, in fact, 

counterfeit; 

(viii) The design, operation, and 

maintenance of systems to detect and avoid 

counterfeit electronic parts and suspect 

counterfeit electronic parts; and 

(ix) The flow down of counterfeit 

avoidance and detection requirements to 

subcontractors. 

(d) Government review and evaluation of 

the Contractor’s policies and procedures will 

be accomplished as part of the evaluation of 

the Contractor’s purchasing system in 

accordance with 252.244–7001, Contractor 

Purchasing System Administration. 

(End of clause) 

[FR Doc. 2013–11400 Filed 5–15–13; 8:45 am] 

BILLING CODE 5001–06–P 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Parts 212, 215, 225, and 252 

RIN 0750–AH89 

Defense Federal Acquisition 

Regulation Supplement: Only One 

Offer—Further Implementation (DFARS 

Case 2013–D001) 

AGENCY: Defense Acquisition 

Regulations System, Department of 

Defense (DoD). 

ACTION: Proposed rule. 

SUMMARY: DoD is proposing to amend 

the Defense Federal Acquisition 

Regulation Supplement (DFARS) to 

further implement DoD policy relating 

to competitive acquisitions in which 

only one offer is received, providing 

additional exceptions, and further 

addressing requests for data other than 

certified cost or pricing data from the 

Canadian Commercial Corporation. 

DATES: Comment date: Comments on the 

proposed rule should be submitted in 

writing to the address shown below on 

or before July 15, 2013, to be considered 

in the formation of a final rule. 

ADDRESSES: Submit comments 

identified by DFARS Case 2013–D001, 

using any of the following methods: 

Æ Regulations.gov: http:// 

www.regulations.gov. Submit comments 

via the Federal eRulemaking portal by 

entering ‘‘DFARS Case 2013–D001’’ 

under the heading ‘‘Enter keyword or 

ID’’ and selecting ‘‘Search.’’ Select the 

link ‘‘Submit a Comment’’ that 

corresponds with ‘‘DFARS Case 2013– 

D001.’’ Follow the instructions provided 


erowe on DSK2VPTVN1PROD with PROPOSALS-1