Source: https://regulations.justia.com/regulations/fedreg/2020/01/07/2019-27714.html
Timestamp: 2020-06-04 05:21:10
Document Index: 401642046

Matched Legal Cases: ['art 76', 'art 76', 'ART 76', 'art 76', '§ 76', '§ 76', '§ 76', '§ 76', 'arts 1812', '§ 76', 'arts 1812', 'art 1846', 'arts 1812', 'arts 1816', 'ART 1812', 'ART 1831', 'ART 1846', 'art 45', 'art 1846', 'art. 1846', 'ART 1852', 'art 45', 'arts 1812', 'arts 1812', 'arts 1812', 'arts 1816', 'ART 1812', 'ART 1831', 'art 45', 'ART 1846', 'art 1846', 'art 1846', 'art 45']

NASA Federal Acquisition Regulation Supplement: Detection and Avoidance of Counterfeit Parts (NFS Case 2017-N010), 663-668 [2019-27714] :: National Aeronautics And Space Administration :: Agencies And Commissions :: Regulation Tracker :: Justia
Justia Regulation Tracker Agencies And Commissions National Aeronautics And Space Administration NASA Federal Acquisition Regulation Supplement: Detection and Avoidance of Counterfeit Parts (NFS Case 2017-N010), 663-668 [2019-27714]
NASA Federal Acquisition Regulation Supplement: Detection and Avoidance of Counterfeit Parts (NFS Case 2017-N010), 663-668 [2019-27714]
Download as PDF Federal Register / Vol. 85, No. 4 / Tuesday, January 7, 2020 / Proposed Rules shall send a copy of this Notice of Proposed Rulemaking, including the Initial Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration. List of Subjects in 47 CFR Part 76 Cable Television, Reporting and recordkeeping requirements. Federal Communications Commission. Marlene Dortch, Secretary. Proposed Rules For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 47 CFR part 76 as follows: PART 76—MULTICHANNEL VIDEO AND CABLE TELEVISION SERVICE 1. The authority citation for part 76 continues to read as follows: ■ Authority: 47 U.S.C. 151, 152, 153, 154, 301, 302, 302a, 303, 303a, 307, 308, 309, 312, 315, 317, 325, 338, 339, 340, 341, 503, 521, 522, 531, 532, 534, 535, 536, 537, 543, 544, 544a, 545, 548, 549, 552, 554, 556, 558, 560, 561, 571, 572, 573. ■ 2. Revise § 76.1601 to read as follows: § 76.1601 Deletion or repositioning of broadcast signals. A cable operator shall provide written notice to any broadcast television station at least 30 days prior to either deleting from carriage or repositioning that station. ■ 3. Amend § 76.1603 by revising paragraphs (b) and (c) to read as follows, removing paragraphs (d) and (e), and redesignating paragraph (f) as paragraph (d): § 76.1603 Customer service—rate and service changes. khammond on DSKJM1Z7X2PROD with PROPOSALS * 16:35 Jan 06, 2020 Jkt 250001 [FR Doc. 2019–28430 Filed 1–6–20; 8:45 am] BILLING CODE 6712–01–P NATIONAL AERONAUTICS AND SPACE ADMINISTRATION 48 CFR Parts 1812, 1831, 1846, and 1852 RIN 2700–AE38 NASA Federal Acquisition Regulation Supplement: Detection and Avoidance of Counterfeit Parts (NFS Case 2017– N010) National Aeronautics and Space Administration. ACTION: Proposed rule. AGENCY: NASA is proposing to amend the NASA Federal Acquisition Regulation Supplement (NFS) to add new text that 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 who obtain such parts exclusively from the original manufacturers of the parts or their authorized dealers. If the contractor does not purchase electronic parts as described above, they must purchase the parts from a NASA identified supplier or contractor-approved supplier. The contractor will then assume responsibility and be required to inspect, test and validate authentication of the parts. The contractor will also be required to obtain traceability information and provide this SUMMARY: * * * * (b) Cable operators shall provide written notice to subscribers of any changes in rates, services, or any of the other information required to be provided to subscribers by § 76.1602 using any reasonable written means at the operator’s sole discretion. Notice shall be provided to subscribers at least 30 days in advance of the change, unless the change results from circumstances outside of the cable operator’s control (including failed retransmission consent or program carriage negotiations during the last 30 days of a contract), in which case notice shall be provided as soon as possible. Notice of rate changes shall include the precise amount of the rate change and explain the reason for the change in readily understandable terms. Notice of changes involving the addition or deletion of channels shall VerDate Sep<11>2014 individually identify each channel affected. (c) Upon the request of the local franchising authority, cable operators shall provide written notice to local franchising authorities of any changes in rates or services using any reasonable written means at the operator’s sole discretion. Notice shall be provided to local franchising authorities 30 days in advance of the change, unless the change results from circumstances outside of the cable operator’s control (including failed retransmission consent or program carriage negotiations during the last 30 days of a contract), in which case notice shall be provided as soon as possible. Notice of rate changes shall include the precise amount of the rate change and explain the reason for the change in readily understandable terms. Notice of changes involving the addition or deletion of channels shall individually identify each channel affected. * * * * * PO 00000 Frm 00017 Fmt 4702 Sfmt 4702 663 information to the contracting officer upon request. The selection of contractor-approved suppliers is subject to review and audit by the contracting officer. DATES: Comments on the proposed rule should be submitted in writing to the address shown below on or before March 9, 2020, to be considered in the formation of a final rule. ADDRESSES: Submit comments identified by NFS Case 2017–N010, using any of the following methods: Æ Regulations.gov: http:// www.regulations.gov. Submit comments via the Federal eRulemaking portal by entering ‘‘NFS Case 2017–N010’’ under the heading ‘‘Enter keyword or ID’’ and selecting ‘‘Search.’’ Select the link ‘‘Submit a Comment’’ that corresponds with ‘‘NFS Case 2017–N010’’ Follow the instructions provided at the ‘‘Submit a Comment’’ screen. Please include your name, company name (if any), and ‘‘NFS Case 2017–N010’’ on your attached document. Æ Email: Dorice.M.Kenely@nasa.gov. Include NFS Case 2017–N010 in the subject line of the message. Æ Mail: National Aeronautics and Space Administration, Headquarters, Office of Procurement, Policy, Training and Pricing Division, Attn: Dorice Kenely, LP–011, 300 E Street SW, Washington, DC 20546–0001. FOR FURTHER INFORMATION CONTACT: Dorice Kenely, NASA HQ, Office of Procurement, Policy, Training and Pricing Division, LP–011, 300 E Street SW, Washington, DC 20456–0001. Telephone 202–358–0443; facsimile 202–358–3082. SUPPLEMENTARY INFORMATION: I. Background This proposed rule implements section 823(c)(2)(B) of Public Law 115– 10, the National Aeronautics and Space Administration Transition Authorization Act of 2017. In this Section Congress stated it found in a 2012 Investigation by the Committee on Armed Services counterfeit electronic parts in the Department of Defense supply chain. From 2009 through 2010 the investigation uncovered 1,800 cases and over 1,000,000 counterfeit parts. This exposed the threat counterfeit parts pose to service members and national security. Since 2010, the Comptroller General of the United States has discussed in three reports the risks and challenges associated with counterfeit parts and counterfeit prevention at both the Department of Defense and NASA, including inconsistent definitions of counterfeit parts, poorly targeted quality control practices, and other potential E:\FR\FM\07JAP1.SGM 07JAP1 664 Federal Register / Vol. 85, No. 4 / Tuesday, January 7, 2020 / Proposed Rules khammond on DSKJM1Z7X2PROD with PROPOSALS barriers to improvements to these practices. With this rule, NASA is proposing to revise the NASA Federal Acquisition Regulation Supplement (NFS) to add new text requiring a covered contractor, defined as a contractor supplying an electronic part or a product that contains an electronic part, and their subcontractors at all tiers to use electronic parts that are currently in production and purchased from the original manufacturers, their authorized dealers, or suppliers who obtain such parts exclusively from the original manufacturers of the parts or their authorized dealers. If the contractor does not purchase electronic parts as described above they must purchase the parts from a NASA identified supplier or contractor-approved supplier. The contractor then assumes responsibility and be required to inspect, test and validate authentication of the part. The contractor will also be required to obtain traceability information and provide this information to the contracting officer upon request. The selection of contractor-approved suppliers is subject to review and audit by the contracting officer. II. Discussion The following NFS subparts, 1812 ‘‘Acquisition of Commercial Items’’, 1831 ‘‘Contract Cost Principles and Procedures’’ and 1846 ‘‘Quality Assurance’’ are being revised to add language to implement the requirements of the NASA Transition Authorization Act of 2017 by: Defining the term counterfeit electronic parts (1846 ‘‘Quality Assurance’’); requiring covered contractors and subcontractors at all tiers to use parts that are currently in production and purchased from the original manufacturers of the parts, their authorized dealers, or suppliers who obtain such parts exclusively from the original manufacturers of the parts or their authorized dealers and identifying requirements when the contractor doesn’t use those electronic parts (1846 ‘‘Quality Assurance’’); and making the cost of corrective actions involving counterfeit parts unallowable unless the contractor meets the requirements stated in the proposed policy (1831 ‘‘Contract Cost Principles and Procedures’’). The additional definitions within the proposed policy to the NFS can be found in the DFARS 252.246–7007 and 252.246–7008, addressing the same subject, Detection and Avoidance of Counterfeit Parts. The proposed changes to the NFS will apply to all procurements involving electronic parts, end items, components, parts, or assemblies containing electronic parts, VerDate Sep<11>2014 15:46 Jan 06, 2020 Jkt 250001 or services, if the covered contractor will supply electronic parts or components, parts, or assemblies containing electronic parts as part of the service. NASA is aware of one occurrence of a suspect counterfeit part within the last 17 years, as reported in Government Industry Data Exchange Program (GIDEP). Given what appears to be a low occurrence of counterfeit parts in NASA procurements, NASA anticipates the proposed rule will impose a limited burden on NASA contractors. III. Expected Impact of the Proposed Rule and Differentiation From FAR Council Rule on GIDEP Both the FAR final rule entitled, ‘‘Federal Acquisition Regulation: Reporting of Nonconforming Items to the Government-Industry Data Exchange Program (FAR Case 2013–002)’’ published at 84 FR 64680, and this NFS rule pertain to the topic of counterfeit parts and suspected counterfeit parts, however discernable differences do exist between the two rule as they are implementing separate acts. The FAR rule is implementing sections 818(c)(4) and (c)(5) of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2012 (Pub. L. 112–81, 10 U.S.C. 2302 Note) while the NFS rule is implementing section 823 of the National Aeronautics and Space Administration Transition Authorization Act of 2017 (Pub. L. 115– 10). The following highlights the similarities and differences between these two rules: Applicability—Commercial/COTS and SAT The FAR Council determined that the FAR rule does not apply to commercial items, including commercially available off-the-shelf (COTS) items, or to contract at or below the simplified acquisition threshold (SAT). NASA has determined that the NFS rule applies to commercial items, including COTS items, and to contracts at or below the SAT. Section 823 of the National Aeronautics and Space Administration Transition Authorization Act of 2017 (Pub. L. 115– 10) does not provide for any exemptions to the requirements being implemented via this rule. Scope While both rules pertain to the topic of counterfeit parts and suspected counterfeit parts, the rules differ in the scope of items to which the regulations apply. The FAR rule has a broader application in the types of items that are covered under the new requirements. PO 00000 Frm 00018 Fmt 4702 Sfmt 4702 Specifically, the FAR rule is applicable to all items that are subject to higherlevel quality standards in accordance with the clause at FAR 52.246–11, Higher-Level Contract Quality Requirement; all items that the contracting officer, in consultation with the requiring activity determines to be critical items for which use of the clause is appropriate; and for the acquisition of services, if the contractor will furnish, as part of the service, any items that meet the criteria specified in paragraphs (a)(1) through (a)(2) of this section. In addition, the FAR rule covers acquisitions that exceeds the simplified acquisition threshold and are by, or for, the Department of Defense for electronic parts or end items, components, parts, or materials containing electronic parts. Based on the requirements of section 823 of the National Aeronautics and Space Administration Transition Authorization Act of 2017 (Pub. L. 115– 10), the NFS rule applies only to electronic parts for use in a safety or mission critical applications. Reporting/Notification The FAR rule requires two reporting requirements which are currently cleared under OMB Control number 9000–0187 titled Reporting of Nonconforming Items to the Government-Industry Data Exchange Program (FAR Case 2013–002)—FAR Sections affected: 52.246–26. One requirement is the submission of a report to GIDEP when the contractor becomes aware or has reason to suspect, such as through inspection, testing, record review, or notification from another source (e.g., seller, customer, third party) that an item purchased by the Contractor for delivery to, or for, the Government is a counterfeit or suspect counterfeit item or a common item that has a major or critical nonconformance. The second reporting requirement is a notification to the contracting officer after becoming aware or having reason to suspect, such as through inspection, testing, record review, or notification from another source (e.g., seller, customer, third party) that any end item, component, subassembly, part, or material contained in supplies purchased by the Contractor for delivery to, or for, the Government is counterfeit or suspect counterfeit. While the NFS rule does not include a GIDEP reporting requirement, like the FAR rule, the NFS rule does include a requirement to notify the contracting officer when the contractor becomes aware, or has reason to suspect, that any end item, component, part or material contained in supplies purchased by NASA, or purchased by a covered contractor or E:\FR\FM\07JAP1.SGM 07JAP1 Federal Register / Vol. 85, No. 4 / Tuesday, January 7, 2020 / Proposed Rules subcontractor for delivery to, or on behalf of, NASA, contains a counterfeit electronic part or suspect counterfeit electronic part. Allowability of Costs As required by section 823(c)(2)(B), of the National Aeronautics and Space Administration Transition Authorization Act of 2017 (Pub. L. 115– 10), the NFS rule establishes that costs related to counterfeit parts, suspect counterfeit parts, or any corrective action that may be required to remedy the use or inclusion of such parts is unallowable unless a specific set of criteria is met. The FAR rule does not address the allowability of costs as it relates to the counterfeit parts, suspect counterfeit parts, or any corrective action that may be required to remedy the use or inclusion of such parts. Supply Chain Sources As required by section 823(c), of the National Aeronautics and Space Administration Transition Authorization Act of 2017 (Pub. L. 115– 10), the NFS rule establishes required sources for both electronic parts that are in production or currently available in stock and separately electronic parts are not in production or currently available in stock from suppliers. The FAR rule does not address sources of items. IV. Applicability to Commercial Item Acquisitions, Including Commercially Available Off-the-Shelf (COTS) Items, and Acquisitions Below the Simplified Acquisition Threshold (SAT) The objective of this rule is to implement section 823 of the National Aeronautics and Space Administration Transition Authorization Act of 2017 (Pub. L. 115–10). Section 823 does not limit the application of the requirements of the statue to non-commercial contracts or contracts above the simplified acquisition threshold. Consistent with 41 U.S.C. 1905, 1906 and 1907, the NASA Assistant Administrator for Procurement has determined that it is in the best interest of NASA to apply section 823 to the acquisition of commercial items, including COTS items, and those requirements below the SAT. V. 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 which was subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This is not a major rule under 5 U.S.C. 804. VI. Executive Order 13771 This proposed rule is not expected to be subject to the requirements of E.O. 13771 because it is expected to result in no more than de minimus costs. VII. Regulatory Flexibility Act NASA does not expect this proposed rule to have a significant economic impact on small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq. An initial 665 regulatory flexibility analysis has been prepared and is summarized below. The rule will apply to all ‘‘covered contractors.’’ Covered contractors, as defined by Public Law 115–10 are contractors, including small entities, that supply an electronic part, or a product that contains an electronic part to NASA. While the rule will apply to all classes of small business, it will not necessarily affect those business because the rule requires reporting only when nonconforming defective and/or suspect counterfeit parts are present or there is suspicion that counterfeit parts are present in the supply chain. Since this rule requires contractors and subcontractors to purchase electronic parts that are currently in production from the original manufacturer, the authorized dealers or suppliers who obtain parts exclusively from the original manufacturer or for products that are not currently in production use of a NASA identified contractor, NASA believes that there is very little risk that a contractor or subcontractor will have a counterfeit part in the supply chain and thus very little risk that a small contractor will have to report. As reported in FPDS, NASA has had contract obligations with 3,120, 3,023 and 2,805 small business contractors in 2016, 2017 and 2018, respectively and no counterfeit parts were found in the supply chain. Further, based on the initial scope of the rule, NASA has assessed the number of commercial item acquisitions for electronic items procured above and below the simplified acquisition threshold and believe the impact of this proposed rule will be minimal. An analysis of data for the last three fiscal years from the FPDS revealed the following: Total dollar amount of actions Number of actions 2019 Electronic Commercial Items ........................................................................................................................... Under the SAT ................................................................................................................................................. Above the SAT ................................................................................................................................................ 131 110 21 $17,810,644 6,348,554 11,462,089 275 229 46 38,516,656 10,922,058 27,594,598 526 498 28 38,020,457 16,934,479 21,085,978 khammond on DSKJM1Z7X2PROD with PROPOSALS 2018 Electronic Commercial Items ........................................................................................................................... Under the SAT ................................................................................................................................................. Above the SAT ................................................................................................................................................ 2017 Electronic Commercial Items ........................................................................................................................... Under the SAT ................................................................................................................................................. Above the SAT ................................................................................................................................................ VerDate Sep<11>2014 15:46 Jan 06, 2020 Jkt 250001 PO 00000 Frm 00019 Fmt 4702 Sfmt 4702 E:\FR\FM\07JAP1.SGM 07JAP1 666 Federal Register / Vol. 85, No. 4 / Tuesday, January 7, 2020 / Proposed Rules khammond on DSKJM1Z7X2PROD with PROPOSALS NASA invites comments from small business concerns and other interested parties on the expected impact of this rule on small entities. The policy requires covered contractors and subcontractors to notify the applicable NASA contracting officer in writing not later than 30 calendar days after the date the covered contractor becomes aware, or has reason to suspect, that any end item, component, part or material contained in supplies purchased by NASA, or purchased by a covered contractor or subcontractor for delivery to, or on behalf of, NASA, contains a counterfeit electronic part or suspect counterfeit electronic part. The proposed rule also requires covered contractors and subcontractors to purchase electronic parts that are currently in production from the original manufacturer, their authorized dealers or suppliers who obtain parts exclusively from the original manufacturer or their authorized dealers. Electronic parts that are not currently in production or available in stock shall be obtained from NASA identified suppliers or contractorapproved suppliers and the contractor assumes responsibility for the authenticity, inspection, testing and traceability of the part. Contractorapproved suppliers are subject to review and audit by the CO. VIII. Paperwork Reduction Act This proposed rule contains information collection requirements that requires the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35). Accordingly, NASA has submitted a request for approval of a new information collection requirement associated with NFS Case 2017–N010 Detection and Avoidance of Counterfeit Parts to the Office of Management and Budget. Public reporting burden for this collection of information is estimated to be 2 hours per response including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed and completing and reviewing the collection of information. The annual reporting burden is estimated as follows based on: Respondents: 1. Responses per Respondent: 1. Total Annual Responses: 1. Preparation Hours per Response: 2. Total Response Burden Hours: 2. Data reported via GIDEP, reveals that NASA has had only one alert of suspect counterfeit parts associated with a NASA contract within the last 17 years. VerDate Sep<11>2014 15:46 Jan 06, 2020 Jkt 250001 Additionally, GIDEP alerts across the government have decreased since 2011 to the present. Both the one NASA specific GIDEP alert over the course of 17 years, and the downward trend of GIDEP alerts across the government substantiate the expected burden amounts. List of Subjects in 48 CFR: Parts 1812 ‘‘Acquisition of Commercial Items’’; 1831 ‘‘Contract Cost Principles and Procedures’’; 1846 ‘‘Quality Assurance’’: 1852 Provisions and Clauses. Government procurement. 4. Add subpart 1846.70 consisting of sections 1846.7000 through 1846.7003 to read as follows: Accordingly, NASA proposes to amend 48 CFR parts 1812, 1831, 1846, and 1852 as follows: ■ 1. The authority citation for parts 1816, 1832, and 1852 continues to read as follows: Authority: 51 U.S.C. sec. 20113(a) and 48 CFR chapter 1. PART 1812—ACQUISITION OF COMMERCIAL ITEMS 2. Amend section 1812.301 by— a. Redesignating paragraph (f)(i)(T) as paragraph (f)(i)(U); and ■ b. Adding a new paragraph (f)(i)(T). The addition reads as follows: ■ ■ 1812.301 Solicitation provisions and contract clauses for the acquisition of commercial items. (f)(i) * * * (T) 1852.246–74, Counterfeit Electronic Part Detection and Avoidance. * * * * * PART 1831—CONTRACT COST PRINCIPLES AND PROCEDURES 3. Add section 1831.205–70 to read as follows: ■ 1831.205–70 Costs related to counterfeit electronic parts and suspect counterfeit electronic parts. (a) Scope. This section implements the requirements of section 823(c)(2)(B), the NASA Transition Authorization Act of 2017 (Pub. L. 115–10). (b) 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— (1)(i) The covered contractor, as defined in section 1846.7001, has an operational system to detect and avoid counterfeit electronic parts and suspect counterfeit electronic parts that has Frm 00020 Fmt 4702 Sfmt 4702 PART 1846—QUALITY ASSURANCE ■ Geoffrey Sage, NASA FAR Supplement Manager. PO 00000 been reviewed and approved by NASA or the Department of Defense pursuant to 48 CFR 244.303; and (ii) The covered contractor, including subcontractors, notifies the applicable NASA contracting officer in writing in accordance with 1846.7002(c); or (2) The counterfeit electronic parts or suspect counterfeit electronic parts were provided to the covered contractor as Government property in accordance with part 45 of the Federal Acquisition Regulation. Subpart 1846.70—Counterfeit Electronic Part Detection and Avoidance 1846.7000 Scope of subpart. This subpart implements section 823(c), the NASA Transition Authorization Act of 2017 (Pub. L. 115– 10). (a) Prescribes policy and procedures for preventing counterfeit electronic parts and suspect counterfeit electronic parts from entering the supply chain when procuring electronic parts or end items, components, parts, or assemblies that contain electronic parts; and (b) Applies to electronic parts when their presence in the NASA supply chain poses a danger to United States government astronauts, crew, and other personnel and a risk to the agency overall. (c) Contracting officers, in consultation with the requiring activity, are responsible for making a determination concerning the applicability of this section and the appropriate use of the prescribed contract clauses. 1846.7001 Definitions. ‘‘Authentic part’’ means a new and unmodified part produced by the original component manufacturer, or a source with the express written authority of the original manufacturer or current design activity, including an authorized aftermarket manufacturer. ‘‘Authentication’’ means a process to verify that a part is not counterfeit or suspect counterfeit. ‘‘Authorized aftermarket manufacturer’’ means an organization that fabricates an electronic part under a contract with, or with the express written authority of, the original component manufacturer based on the original component manufacturer’s designs, formulas, and/or specifications. E:\FR\FM\07JAP1.SGM 07JAP1 khammond on DSKJM1Z7X2PROD with PROPOSALS Federal Register / Vol. 85, No. 4 / Tuesday, January 7, 2020 / Proposed Rules ‘‘Authorized supplier’’ means a supplier, distributor, or an aftermarket manufacturer with a contractual arrangement with, or the express written authority of, the original manufacturer or current design activity to buy, stock, repackage, sell, or distribute the part. ‘‘Contract manufacturer’’ means a company that produces goods under contract for another company under the label or brand name of that company. ‘‘Contractor-approved supplier’’ means a supplier that does not have a contractual agreement with the original component manufacturer, but has been qualified as trustworthy by a contractor or subcontractor as having met prescribed counterfeit electronic part detection and avoidance system criteria using established counterfeit prevention industry standards and processes. ‘‘Covered contractor’’ means a contractor that supplies an electronic part, or a product that contains an electronic part, to NASA. ‘‘Counterfeit electronic part’’ means an unlawful or unauthorized reproduction, substitution, or alteration that has been knowingly mismarked, misidentified, or otherwise misrepresented to be an authentic, unmodified electronic part from the original manufacturer, or a source with the express written authority of the original manufacturer or current design activity, including an authorized aftermarket manufacturer. Unlawful or unauthorized substitution includes used electronic parts represented as new, or the false identification of grade, serial number, lot number, date code, or performance characteristics. ‘‘Electronic part’’ means a discrete electronic component, including a microcircuit, transistor, capacitor, resistor, or diode, that is intended for use in a safety or mission critical application. ‘‘Original component manufacturer’’ means an organization that designs and/ or engineers a part and is entitled to any intellectual property rights to that part. ‘‘Original equipment manufacturer’’ means a company that manufactures products that it has designed from purchased components and sells those products under the company’s brand name. ‘‘Original manufacturer’’ means the original component manufacturer, the original equipment manufacturer, or the contract manufacturer. ‘‘Suspect counterfeit electronic part’’ means an electronic part for which credible evidence (including, but not limited to, visual inspection or testing) provides reasonable doubt that the electronic part is authentic. VerDate Sep<11>2014 15:46 Jan 06, 2020 Jkt 250001 1846.7002 Policy. The government and its contractors and subcontractors at all tiers are required to obtain electronic parts as prescribed in this section, whether the electronic parts are procured as discrete items or contained in an assembly. (a) The covered contractor and subcontractors at all tiers shall obtain electronic parts that are in production or currently available in stock from— (1) The original manufacturers of the parts; (2) Their authorized dealers; or (3) Suppliers who obtain such parts exclusively from the original manufacturers of the parts or their authorized dealers. (b) If electronic parts are not in production or currently available in stock from suppliers as stated in paragraph (a) of this section, the covered contractor shall obtain electronic parts from NASA identified suppliers or contractor-approved suppliers for which— (1) The covered contractor assumes responsibility for the authenticity of parts; and (2) The covered contractor performs inspection, testing and authentication of parts; and (3) The covered contractor obtains traceability information for the electronic parts (e.g., data code, lot code, serial number) and provides this information to the contracting officer upon request; and (4) The selection of contractorapproved suppliers is subject to review and audit by the contracting officer. (c) The covered contractor, including subcontractors, shall notify the applicable NASA contracting officer in writing not later than 30 calendar days after the date the covered contractor becomes aware, or has reason to suspect, that any end item, component, part or material contained in supplies purchased by NASA, or purchased by a covered contractor or subcontractor for delivery to, or on behalf of, NASA, contains a counterfeit electronic part or suspect counterfeit electronic part. 1846.7003 Contract clause. For acquisitions with covered contractors as defined in section 1846.7001, use the clause at 1852.246– 74, Contractor Counterfeit Electronic Part Detection and Avoidance, in solicitations and contracts, when procuring— (a) Electronic parts; (b) End items, components, parts, or assemblies containing electronic parts; or (c) Services, if the covered contractor will supply electronic parts or PO 00000 Frm 00021 Fmt 4702 Sfmt 4702 667 components, parts, or assemblies containing electronic parts as part of the service. PART 1852—SOLICITATION PROVISIONS AND CONTRACT CLAUSES 5. Add section 1852.246–74 to read as follows: ■ 1852.246–74 Contractor Counterfeit Electronic Part Detection and Avoidance. As prescribed in 1846.7003, use the following clause: Contractor Counterfeit Electronic Part Detection and Avoidance. (DATE) (a) Definitions. As used in this clause— ‘‘Authentic part’’ means a new and unmodified part produced by the original component manufacturer, or a source with the express written authority of the original manufacturer or current design activity, including an authorized aftermarket manufacturer. ‘‘Authentication’’ means a process to verify that a part is not counterfeit or suspect counterfeit. ‘‘Authorized aftermarket manufacturer’’ means an organization that fabricates a part under a contract with, or with the express written authority of, the original component manufacturer based on the original component manufacturer’s designs, formulas, and/or specifications. ‘‘Authorized supplier’’ means a supplier, distributor, or an aftermarket manufacturer with a contractual arrangement with, or the express written authority of, the original manufacturer or current design activity to buy, stock, repackage, sell, or distribute the part. ‘‘Contract manufacturer’’ means a company that produces goods under contract for another company under the label or brand name of that company. ‘‘Contractor-approved supplier’’ means a supplier that does not have a contractual agreement with the original component manufacturer, but has been qualified by the contractor or subcontractor approved by the contractor or government as having met prescribed counterfeit electronic part detection and avoidance system criteria using established counterfeit prevention industry standards and processes. ‘‘Counterfeit electronic part’’ means an unlawful or unauthorized reproduction, substitution, or alteration that has been knowingly mismarked, misidentified, or otherwise misrepresented to be an authentic, unmodified electronic part from the original manufacturer, or a source with the express written authority of the original manufacturer or current design activity, including an authorized aftermarket manufacturer. Unlawful or unauthorized substitution includes used electronic parts represented as new, or the false identification of grade, serial number, lot number, date code, or performance characteristics. ‘‘Electronic part’’ means a discrete electronic component, including a microcircuit, transistor, capacitor, resistor, or diode, that is intended for use in a safety or E:\FR\FM\07JAP1.SGM 07JAP1 668 Federal Register / Vol. 85, No. 4 / Tuesday, January 7, 2020 / Proposed Rules khammond on DSKJM1Z7X2PROD with PROPOSALS mission critical application (section 823 (d)(2) of Pub L. 115–10). ‘‘Original component manufacturer’’ means an organization that designs and/or engineers a part and is entitled to any intellectual property rights to that part. ‘‘Original equipment manufacturer’’ means a company that manufactures products that it has designed from purchased components and sells those products under the company’s brand name. ‘‘Original manufacturer’’ means the original component manufacturer, the original equipment manufacturer, or the contract manufacturer. ‘‘Suspect counterfeit electronic part’’ means an electronic part for which credible evidence (including, but not limited to, visual inspection or testing) provides reasonable doubt that the electronic part is authentic. (b) Sources of Electronics Parts. In accordance with section 823(c)(3), the NASA Transition Authorization Act of 2017 (Pub. L. 115–10), the covered contractor shall— (1) Obtain electronic parts that are in production by the original manufacturer or an authorized aftermarket manufacturer or currently available in stock from— (i) The original manufacturers of the parts; (ii) Their authorized dealers; or (iii) Suppliers who obtain such parts exclusively from the original manufacturers of the parts or their authorized dealers; (2) If electronic parts are not in production or currently available in stock from suppliers as stated in paragraph (b) of this clause, the covered contractor shall obtain electronic parts from NASA identified suppliers or contractor-approved suppliers for which— VerDate Sep<11>2014 15:46 Jan 06, 2020 Jkt 250001 (i) The covered contractor assumes responsibility for the authenticity of parts; and (ii) The covered contractor performs inspection, testing and authentication of parts; and (iii) The covered contractor obtains traceability information for the electronic parts (e.g., data code, lot code, serial number) and provides this information to the contracting officer upon request; and (iv) The selection of contractor-approved suppliers is subject to review and audit by the contracting officer. (c) Notification. The covered contractor, including subcontractors, shall notify the NASA contracting officer in writing not later than 30 calendar days after the date the covered contractor becomes aware, or has reason to suspect, that any end item, component, part or material contained in supplies purchased by NASA, or purchased by a covered contractor or subcontractor for delivery to, or on behalf of, NASA, contains a counterfeit electronic part or suspect counterfeit electronic part. (d) Costs related to counterfeit electronic parts and suspect counterfeit electronic parts. In accordance with section 823(c)(2)(B), the NASA Transition Authorization Act of 2017 (Pub. L. 115–10), the costs of counterfeit electronic parts and suspect counterfeit electronic parts and the costs of rework or corrective action that may be required to remedy the use or inclusion of such parts are unallowable, unless— (1) The covered contractor has a system to detect and avoid counterfeit electronic parts and suspect counterfeit electronic parts that has been reviewed and approved by NASA or the Department of Defense pursuant to 48 CFR 244.303; and PO 00000 Frm 00022 Fmt 4702 Sfmt 9990 (2) The covered contractor, including a subcontractor, notifies the applicable NASA contracting officer in writing in accordance with paragraph (c) of this clause; or (3) The counterfeit electronic parts or suspect counterfeit electronic parts were provided to the covered contractor as Government property in accordance with part 45 of the Federal Acquisition Regulation. (e) Subcontracts. The covered contractor shall insert this clause, including this paragraph (e), in subcontracts for (1) Electronic parts; (2) End items, components, parts, or assemblies containing electronic parts; or (3) Services where the covered contractor will supply electronic parts or components, parts, or assemblies containing electronic parts as part of the service, including subcontracts for commercial items that are for electronic parts or assemblies containing electronic parts, unless the subcontractor is the original manufacturer. The covered contractor shall not alter the clause other than to identify appropriate parties. (f) Corrective Action. In the event that the covered contractor supplies a counterfeit electronic part, suspect counterfeit electronic part or end item, component, or assembly containing a counterfeit electronic part to NASA, the covered contractor shall take such corrective actions as the Administrator considers necessary to remedy the use or inclusion of additional counterfeit electronic parts, suspect counterfeit electronic part or end items, components, or assemblies containing a counterfeit electronic part. (End of clause) [FR Doc. 2019–27714 Filed 1–6–20; 8:45 am] BILLING CODE 7510–13–P E:\FR\FM\07JAP1.SGM 07JAP1
[Federal Register Volume 85, Number 4 (Tuesday, January 7, 2020)]
[Pages 663-668]
[FR Doc No: 2019-27714]
48 CFR Parts 1812, 1831, 1846, and 1852
RIN 2700-AE38
NASA Federal Acquisition Regulation Supplement: Detection and
Avoidance of Counterfeit Parts (NFS Case 2017-N010)
SUMMARY: NASA is proposing to amend the NASA Federal Acquisition
Regulation Supplement (NFS) to add new text that 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 who
obtain such parts exclusively from the original manufacturers of the
parts or their authorized dealers. If the contractor does not purchase
electronic parts as described above, they must purchase the parts from
a NASA identified supplier or contractor-approved supplier. The
contractor will then assume responsibility and be required to inspect,
test and validate authentication of the parts. The contractor will also
be required to obtain traceability information and provide this
information to the contracting officer upon request. The selection of
contractor-approved suppliers is subject to review and audit by the
the address shown below on or before March 9, 2020, to be considered in
ADDRESSES: Submit comments identified by NFS Case 2017-N010, using any
via the Federal eRulemaking portal by entering ``NFS Case 2017-N010''
Select the link ``Submit a Comment'' that corresponds with ``NFS Case
2017-N010'' Follow the instructions provided at the ``Submit a
``NFS Case 2017-N010'' on your attached document.
[cir] Email: [email protected]. Include NFS Case 2017-N010
[cir] Mail: National Aeronautics and Space Administration,
Headquarters, Office of Procurement, Policy, Training and Pricing
Division, Attn: Dorice Kenely, LP-011, 300 E Street SW, Washington, DC
20546-0001.
FOR FURTHER INFORMATION CONTACT: Dorice Kenely, NASA HQ, Office of
Procurement, Policy, Training and Pricing Division, LP-011, 300 E
Street SW, Washington, DC 20456-0001. Telephone 202-358-0443; facsimile
202-358-3082.
This proposed rule implements section 823(c)(2)(B) of Public Law
115-10, the National Aeronautics and Space Administration Transition
Authorization Act of 2017. In this Section Congress stated it found in
a 2012 Investigation by the Committee on Armed Services counterfeit
electronic parts in the Department of Defense supply chain. From 2009
through 2010 the investigation uncovered 1,800 cases and over 1,000,000
counterfeit parts. This exposed the threat counterfeit parts pose to
service members and national security. Since 2010, the Comptroller
General of the United States has discussed in three reports the risks
and challenges associated with counterfeit parts and counterfeit
prevention at both the Department of Defense and NASA, including
inconsistent definitions of counterfeit parts, poorly targeted quality
control practices, and other potential
[[Page 664]]
barriers to improvements to these practices.
With this rule, NASA is proposing to revise the NASA Federal
Acquisition Regulation Supplement (NFS) to add new text requiring a
covered contractor, defined as a contractor supplying an electronic
part or a product that contains an electronic part, and their
subcontractors at all tiers to use electronic parts that are currently
in production and purchased from the original manufacturers, their
authorized dealers, or suppliers who obtain such parts exclusively from
the original manufacturers of the parts or their authorized dealers. If
the contractor does not purchase electronic parts as described above
they must purchase the parts from a NASA identified supplier or
contractor-approved supplier. The contractor then assumes
responsibility and be required to inspect, test and validate
authentication of the part. The contractor will also be required to
obtain traceability information and provide this information to the
contracting officer upon request. The selection of contractor-approved
suppliers is subject to review and audit by the contracting officer.
The following NFS subparts, 1812 ``Acquisition of Commercial
Items'', 1831 ``Contract Cost Principles and Procedures'' and 1846
``Quality Assurance'' are being revised to add language to implement
the requirements of the NASA Transition Authorization Act of 2017 by:
Defining the term counterfeit electronic parts (1846 ``Quality
Assurance''); requiring covered contractors and subcontractors at all
tiers to use parts that are currently in production and purchased from
the original manufacturers of the parts, their authorized dealers, or
suppliers who obtain such parts exclusively from the original
manufacturers of the parts or their authorized dealers and identifying
requirements when the contractor doesn't use those electronic parts
(1846 ``Quality Assurance''); and making the cost of corrective actions
involving counterfeit parts unallowable unless the contractor meets the
requirements stated in the proposed policy (1831 ``Contract Cost
Principles and Procedures'').
The additional definitions within the proposed policy to the NFS
can be found in the DFARS 252.246-7007 and 252.246-7008, addressing the
same subject, Detection and Avoidance of Counterfeit Parts. The
proposed changes to the NFS will apply to all procurements involving
electronic parts, end items, components, parts, or assemblies
containing electronic parts, or services, if the covered contractor
will supply electronic parts or components, parts, or assemblies
containing electronic parts as part of the service.
NASA is aware of one occurrence of a suspect counterfeit part
within the last 17 years, as reported in Government Industry Data
Exchange Program (GIDEP). Given what appears to be a low occurrence of
counterfeit parts in NASA procurements, NASA anticipates the proposed
rule will impose a limited burden on NASA contractors.
III. Expected Impact of the Proposed Rule and Differentiation From FAR
Council Rule on GIDEP
Both the FAR final rule entitled, ``Federal Acquisition Regulation:
Reporting of Nonconforming Items to the Government-Industry Data
Exchange Program (FAR Case 2013-002)'' published at 84 FR 64680, and
this NFS rule pertain to the topic of counterfeit parts and suspected
counterfeit parts, however discernable differences do exist between the
two rule as they are implementing separate acts. The FAR rule is
implementing sections 818(c)(4) and (c)(5) of the National Defense
Authorization Act (NDAA) for Fiscal Year (FY) 2012 (Pub. L. 112-81, 10
U.S.C. 2302 Note) while the NFS rule is implementing section 823 of the
Act of 2017 (Pub. L. 115-10).
The following highlights the similarities and differences between
Applicability--Commercial/COTS and SAT
The FAR Council determined that the FAR rule does not apply to
items, or to contract at or below the simplified acquisition threshold
(SAT). NASA has determined that the NFS rule applies to commercial
items, including COTS items, and to contracts at or below the SAT.
Section 823 of the National Aeronautics and Space Administration
Transition Authorization Act of 2017 (Pub. L. 115-10) does not provide
for any exemptions to the requirements being implemented via this rule.
While both rules pertain to the topic of counterfeit parts and
suspected counterfeit parts, the rules differ in the scope of items to
which the regulations apply. The FAR rule has a broader application in
the types of items that are covered under the new requirements.
Specifically, the FAR rule is applicable to all items that are subject
to higher-level quality standards in accordance with the clause at FAR
52.246-11, Higher-Level Contract Quality Requirement; all items that
the contracting officer, in consultation with the requiring activity
determines to be critical items for which use of the clause is
appropriate; and for the acquisition of services, if the contractor
will furnish, as part of the service, any items that meet the criteria
specified in paragraphs (a)(1) through (a)(2) of this section. In
addition, the FAR rule covers acquisitions that exceeds the simplified
acquisition threshold and are by, or for, the Department of Defense for
electronic parts or end items, components, parts, or materials
containing electronic parts. Based on the requirements of section 823
of the National Aeronautics and Space Administration Transition
Authorization Act of 2017 (Pub. L. 115-10), the NFS rule applies only
to electronic parts for use in a safety or mission critical
The FAR rule requires two reporting requirements which are
currently cleared under OMB Control number 9000-0187 titled Reporting
of Nonconforming Items to the Government-Industry Data Exchange Program
(FAR Case 2013-002)--FAR Sections affected: 52.246-26. One requirement
is the submission of a report to GIDEP when the contractor becomes
aware or has reason to suspect, such as through inspection, testing,
record review, or notification from another source (e.g., seller,
customer, third party) that an item purchased by the Contractor for
delivery to, or for, the Government is a counterfeit or suspect
counterfeit item or a common item that has a major or critical
The second reporting requirement is a notification to the
contracting officer after becoming aware or having reason to suspect,
such as through inspection, testing, record review, or notification
from another source (e.g., seller, customer, third party) that any end
item, component, subassembly, part, or material contained in supplies
purchased by the Contractor for delivery to, or for, the Government is
counterfeit or suspect counterfeit. While the NFS rule does not include
a GIDEP reporting requirement, like the FAR rule, the NFS rule does
include a requirement to notify the contracting officer when the
contractor becomes aware, or has reason to suspect, that any end item,
component, part or material contained in supplies purchased by NASA, or
purchased by a covered contractor or
subcontractor for delivery to, or on behalf of, NASA, contains a
counterfeit electronic part or suspect counterfeit electronic part.
As required by section 823(c)(2)(B), of the National Aeronautics
and Space Administration Transition Authorization Act of 2017 (Pub. L.
115-10), the NFS rule establishes that costs related to counterfeit
parts, suspect counterfeit parts, or any corrective action that may be
required to remedy the use or inclusion of such parts is unallowable
unless a specific set of criteria is met. The FAR rule does not address
the allowability of costs as it relates to the counterfeit parts,
suspect counterfeit parts, or any corrective action that may be
required to remedy the use or inclusion of such parts.
As required by section 823(c), of the National Aeronautics and
Space Administration Transition Authorization Act of 2017 (Pub. L. 115-
10), the NFS rule establishes required sources for both electronic
parts that are in production or currently available in stock and
separately electronic parts are not in production or currently
available in stock from suppliers. The FAR rule does not address
sources of items.
IV. Applicability to Commercial Item Acquisitions, Including
Commercially Available Off-the-Shelf (COTS) Items, and Acquisitions
Below the Simplified Acquisition Threshold (SAT)
The objective of this rule is to implement section 823 of the
Act of 2017 (Pub. L. 115-10). Section 823 does not limit the
application of the requirements of the statue to non-commercial
contracts or contracts above the simplified acquisition threshold.
Consistent with 41 U.S.C. 1905, 1906 and 1907, the NASA Assistant
Administrator for Procurement has determined that it is in the best
interest of NASA to apply section 823 to the acquisition of commercial
items, including COTS items, and those requirements below the SAT.
This is a significant regulatory action which was subject to review
This proposed rule is not expected to be subject to the
requirements of E.O. 13771 because it is expected to result in no more
than de minimus costs.
NASA does not expect this proposed rule to have a significant
economic impact on small entities within the meaning of the Regulatory
Flexibility Act, 5 U.S.C. 601 et seq. An initial regulatory flexibility
analysis has been prepared and is summarized below.
The rule will apply to all ``covered contractors.'' Covered
contractors, as defined by Public Law 115-10 are contractors, including
small entities, that supply an electronic part, or a product that
contains an electronic part to NASA. While the rule will apply to all
classes of small business, it will not necessarily affect those
business because the rule requires reporting only when nonconforming
defective and/or suspect counterfeit parts are present or there is
suspicion that counterfeit parts are present in the supply chain. Since
this rule requires contractors and subcontractors to purchase
electronic parts that are currently in production from the original
manufacturer, the authorized dealers or suppliers who obtain parts
exclusively from the original manufacturer or for products that are not
currently in production use of a NASA identified contractor, NASA
believes that there is very little risk that a contractor or
subcontractor will have a counterfeit part in the supply chain and thus
very little risk that a small contractor will have to report. As
reported in FPDS, NASA has had contract obligations with 3,120, 3,023
and 2,805 small business contractors in 2016, 2017 and 2018,
respectively and no counterfeit parts were found in the supply chain.
Further, based on the initial scope of the rule, NASA has assessed the
number of commercial item acquisitions for electronic items procured
above and below the simplified acquisition threshold and believe the
impact of this proposed rule will be minimal. An analysis of data for
the last three fiscal years from the FPDS revealed the following:
Number of         amount of
actions           actions
Electronic Commercial Items.........               131       $17,810,644
Under the SAT.......................               110         6,348,554
Above the SAT.......................                21        11,462,089
Electronic Commercial Items.........               275        38,516,656
Under the SAT.......................               229        10,922,058
Above the SAT.......................                46        27,594,598
Electronic Commercial Items.........               526        38,020,457
Under the SAT.......................               498        16,934,479
Above the SAT.......................                28        21,085,978
[[Page 666]]
NASA invites comments from small business concerns and other
The policy requires covered contractors and subcontractors to
notify the applicable NASA contracting officer in writing not later
than 30 calendar days after the date the covered contractor becomes
aware, or has reason to suspect, that any end item, component, part or
material contained in supplies purchased by NASA, or purchased by a
covered contractor or subcontractor for delivery to, or on behalf of,
NASA, contains a counterfeit electronic part or suspect counterfeit
The proposed rule also requires covered contractors and
subcontractors to purchase electronic parts that are currently in
production from the original manufacturer, their authorized dealers or
suppliers who obtain parts exclusively from the original manufacturer
or their authorized dealers. Electronic parts that are not currently in
production or available in stock shall be obtained from NASA identified
suppliers or contractor-approved suppliers and the contractor assumes
responsibility for the authenticity, inspection, testing and
traceability of the part. Contractor-approved suppliers are subject to
review and audit by the CO.
This proposed rule contains information collection requirements
that requires the approval of the Office of Management and Budget under
the Paperwork Reduction Act (44 U.S.C. chapter 35). Accordingly, NASA
has submitted a request for approval of a new information collection
requirement associated with NFS Case 2017-N010 Detection and Avoidance
of Counterfeit Parts to the Office of Management and Budget.
estimated to be 2 hours per response including the time for reviewing
maintaining the data needed and completing and reviewing the collection
The annual reporting burden is estimated as follows based on:
Preparation Hours per Response: 2.
Total Response Burden Hours: 2.
Data reported via GIDEP, reveals that NASA has had only one alert
of suspect counterfeit parts associated with a NASA contract within the
last 17 years. Additionally, GIDEP alerts across the government have
decreased since 2011 to the present. Both the one NASA specific GIDEP
alert over the course of 17 years, and the downward trend of GIDEP
alerts across the government substantiate the expected burden amounts.
List of Subjects in 48 CFR: Parts 1812 ``Acquisition of Commercial
Items''; 1831 ``Contract Cost Principles and Procedures''; 1846
``Quality Assurance'': 1852 Provisions and Clauses.
Accordingly, NASA proposes to amend 48 CFR parts 1812, 1831, 1846,
and 1852 as follows:
1. The authority citation for parts 1816, 1832, and 1852 continues to
Authority:  51 U.S.C. sec. 20113(a) and 48 CFR chapter 1.
PART 1812--ACQUISITION OF COMMERCIAL ITEMS
2. Amend section 1812.301 by--
a. Redesignating paragraph (f)(i)(T) as paragraph (f)(i)(U); and
b. Adding a new paragraph (f)(i)(T).
1812.301   Solicitation provisions and contract clauses for the
(T) 1852.246-74, Counterfeit Electronic Part Detection and
PART 1831--CONTRACT COST PRINCIPLES AND PROCEDURES
3. Add section 1831.205-70 to read as follows:
1831.205-70  Costs related to counterfeit electronic parts and suspect
(a) Scope. This section implements the requirements of section
823(c)(2)(B), the NASA Transition Authorization Act of 2017 (Pub. L.
115-10).
(b) 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--
(1)(i) The covered contractor, as defined in section 1846.7001, has
an operational system to detect and avoid counterfeit electronic parts
and suspect counterfeit electronic parts that has been reviewed and
approved by NASA or the Department of Defense pursuant to 48 CFR
244.303; and
(ii) The covered contractor, including subcontractors, notifies the
applicable NASA contracting officer in writing in accordance with
1846.7002(c); or
electronic parts were provided to the covered contractor as Government
property in accordance with part 45 of the Federal Acquisition
PART 1846--QUALITY ASSURANCE
4. Add subpart 1846.70 consisting of sections 1846.7000 through
1846.7003 to read as follows:
Subpart 1846.70--Counterfeit Electronic Part Detection and
1846.7000  Scope of subpart.
This subpart implements section 823(c), the NASA Transition
Authorization Act of 2017 (Pub. L. 115-10).
(a) Prescribes policy and procedures for preventing counterfeit
electronic parts and suspect counterfeit electronic parts from entering
the supply chain when procuring electronic parts or end items,
components, parts, or assemblies that contain electronic parts; and
(b) Applies to electronic parts when their presence in the NASA
supply chain poses a danger to United States government astronauts,
crew, and other personnel and a risk to the agency overall.
(c) Contracting officers, in consultation with the requiring
activity, are responsible for making a determination concerning the
applicability of this section and the appropriate use of the prescribed
1846.7001  Definitions.
``Authentic part'' means a new and unmodified part produced by the
original component manufacturer, or a source with the express written
authority of the original manufacturer or current design activity,
including an authorized aftermarket manufacturer.
``Authentication'' means a process to verify that a part is not
counterfeit or suspect counterfeit.
``Authorized aftermarket manufacturer'' means an organization that
fabricates an electronic part under a contract with, or with the
express written authority of, the original component manufacturer based
on the original component manufacturer's designs, formulas, and/or
[[Page 667]]
``Authorized supplier'' means a supplier, distributor, or an
aftermarket manufacturer with a contractual arrangement with, or the
express written authority of, the original manufacturer or current
design activity to buy, stock, repackage, sell, or distribute the part.
``Contract manufacturer'' means a company that produces goods under
contract for another company under the label or brand name of that
``Contractor-approved supplier'' means a supplier that does not
have a contractual agreement with the original component manufacturer,
but has been qualified as trustworthy by a contractor or subcontractor
as having met prescribed counterfeit electronic part detection and
avoidance system criteria using established counterfeit prevention
industry standards and processes.
``Covered contractor'' means a contractor that supplies an
electronic part, or a product that contains an electronic part, to
``Counterfeit electronic part'' means an unlawful or unauthorized
reproduction, substitution, or alteration that has been knowingly
mismarked, misidentified, or otherwise misrepresented to be an
authentic, unmodified electronic part from the original manufacturer,
or a source with the express written authority of the original
aftermarket manufacturer. Unlawful or unauthorized substitution
includes used electronic parts represented as new, or the false
identification of grade, serial number, lot number, date code, or
``Electronic part'' means a discrete electronic component,
including a microcircuit, transistor, capacitor, resistor, or diode,
that is intended for use in a safety or mission critical application.
``Original component manufacturer'' means an organization that
designs and/or engineers a part and is entitled to any intellectual
property rights to that part.
``Original equipment manufacturer'' means a company that
``Original manufacturer'' means the original component
manufacturer, the original equipment manufacturer, or the contract
``Suspect counterfeit electronic part'' means an electronic part
for which credible evidence (including, but not limited to, visual
inspection or testing) provides reasonable doubt that the electronic
part is authentic.
1846.7002  Policy.
The government and its contractors and subcontractors at all tiers
are required to obtain electronic parts as prescribed in this section,
whether the electronic parts are procured as discrete items or
contained in an assembly.
(a) The covered contractor and subcontractors at all tiers shall
obtain electronic parts that are in production or currently available
in stock from--
(1) The original manufacturers of the parts;
(2) Their authorized dealers; or
(3) Suppliers who obtain such parts exclusively from the original
manufacturers of the parts or their authorized dealers.
(b) If electronic parts are not in production or currently
available in stock from suppliers as stated in paragraph (a) of this
section, the covered contractor shall obtain electronic parts from NASA
identified suppliers or contractor-approved suppliers for which--
(1) The covered contractor assumes responsibility for the
authenticity of parts; and
(2) The covered contractor performs inspection, testing and
authentication of parts; and
(3) The covered contractor obtains traceability information for the
electronic parts (e.g., data code, lot code, serial number) and
provides this information to the contracting officer upon request; and
(4) The selection of contractor-approved suppliers is subject to
review and audit by the contracting officer.
(c) The covered contractor, including subcontractors, shall notify
the applicable NASA contracting officer in writing not later than 30
calendar days after the date the covered contractor becomes aware, or
has reason to suspect, that any end item, component, part or material
contained in supplies purchased by NASA, or purchased by a covered
contractor or subcontractor for delivery to, or on behalf of, NASA,
contains a counterfeit electronic part or suspect counterfeit
1846.7003   Contract clause.
For acquisitions with covered contractors as defined in section
1846.7001, use the clause at 1852.246-74, Contractor Counterfeit
Electronic Part Detection and Avoidance, in solicitations and
contracts, when procuring--
(a) Electronic parts;
(b) End items, components, parts, or assemblies containing
(c) Services, if the covered contractor will supply electronic
5. Add section 1852.246-74 to read as follows:
1852.246-74   Contractor Counterfeit Electronic Part Detection and
As prescribed in 1846.7003, use the following clause:
Contractor Counterfeit Electronic Part Detection and Avoidance. (DATE)
``Authentic part'' means a new and unmodified part produced by
the original component manufacturer, or a source with the express
written authority of the original manufacturer or current design
activity, including an authorized aftermarket manufacturer.
``Authorized aftermarket manufacturer'' means an organization
that fabricates a part under a contract with, or with the express
written authority of, the original component manufacturer based on
the original component manufacturer's designs, formulas, and/or
design activity to buy, stock, repackage, sell, or distribute the
``Contract manufacturer'' means a company that produces goods
under contract for another company under the label or brand name of
have a contractual agreement with the original component
manufacturer, but has been qualified by the contractor or
subcontractor approved by the contractor or government as having met
prescribed counterfeit electronic part detection and avoidance
system criteria using established counterfeit prevention industry
``Counterfeit electronic part'' means an unlawful or
unauthorized reproduction, substitution, or alteration that has been
knowingly mismarked, misidentified, or otherwise misrepresented to
be an authentic, unmodified electronic part from the original
manufacturer, or a source with the express written authority of the
original manufacturer or current design activity, including an
authorized aftermarket manufacturer. Unlawful or unauthorized
substitution includes used electronic parts represented as new, or
the false identification of grade, serial number, lot number, date
code, or performance characteristics.
that is intended for use in a safety or
[[Page 668]]
mission critical application (section 823 (d)(2) of Pub L. 115-10).
(b) Sources of Electronics Parts. In accordance with section
823(c)(3), the NASA Transition Authorization Act of 2017 (Pub. L.
115-10), the covered contractor shall--
(1) Obtain electronic parts that are in production by the
original manufacturer or an authorized aftermarket manufacturer or
currently available in stock from--
(iii) Suppliers who obtain such parts exclusively from the
original manufacturers of the parts or their authorized dealers;
(2) If electronic parts are not in production or currently
available in stock from suppliers as stated in paragraph (b) of this
clause, the covered contractor shall obtain electronic parts from
NASA identified suppliers or contractor-approved suppliers for
(i) The covered contractor assumes responsibility for the
(ii) The covered contractor performs inspection, testing and
(iii) The covered contractor obtains traceability information
for the electronic parts (e.g., data code, lot code, serial number)
and provides this information to the contracting officer upon
(iv) The selection of contractor-approved suppliers is subject
to review and audit by the contracting officer.
(c) Notification. The covered contractor, including
subcontractors, shall notify the NASA contracting officer in writing
not later than 30 calendar days after the date the covered
contractor becomes aware, or has reason to suspect, that any end
item, component, part or material contained in supplies purchased by
NASA, or purchased by a covered contractor or subcontractor for
delivery to, or on behalf of, NASA, contains a counterfeit
electronic part or suspect counterfeit electronic part.
(d) Costs related to counterfeit electronic parts and suspect
counterfeit electronic parts. In accordance with section
115-10), the costs of counterfeit electronic parts and suspect
counterfeit electronic parts and the costs of rework or corrective
parts are unallowable, unless--
(1) The covered contractor has a system to detect and avoid
counterfeit electronic parts and suspect counterfeit electronic
parts that has been reviewed and approved by NASA or the Department
of Defense pursuant to 48 CFR 244.303; and
(2) The covered contractor, including a subcontractor, notifies
the applicable NASA contracting officer in writing in accordance
with paragraph (c) of this clause; or
(3) The counterfeit electronic parts or suspect counterfeit
electronic parts were provided to the covered contractor as
Government property in accordance with part 45 of the Federal
(e) Subcontracts. The covered contractor shall insert this
clause, including this paragraph (e), in subcontracts for (1)
Electronic parts; (2) End items, components, parts, or assemblies
containing electronic parts; or (3) Services where the covered
contractor will supply electronic parts or components, parts, or
assemblies containing electronic parts as part of the service,
parts or assemblies containing electronic parts, unless the
subcontractor is the original manufacturer. The covered contractor
shall not alter the clause other than to identify appropriate
(f) Corrective Action. In the event that the covered contractor
supplies a counterfeit electronic part, suspect counterfeit
electronic part or end item, component, or assembly containing a
counterfeit electronic part to NASA, the covered contractor shall
take such corrective actions as the Administrator considers
necessary to remedy the use or inclusion of additional counterfeit
electronic parts, suspect counterfeit electronic part or end items,
components, or assemblies containing a counterfeit electronic part.
[FR Doc. 2019-27714 Filed 1-6-20; 8:45 am]