Client Alert: New DoD DCMA Instructions on Counterfeit Part Mitigation Procedure
In the growing effort to prevent counterfeit parts from entering the United States’ defense supply chain, on July 6, 2015, the Defense Contract Management Agency (DCMA) published new internal instructions for assessing and mitigating risks within Contractor Counterfeit Electronic Part Avoidance and Detection Systems. The instructions comply with the anti-counterfeiting provisions in section 818 of the fiscal 2012 National Defense Authorization Act. Section 818 requires contractors to purchase electronic parts from trusted suppliers and to create systems for detecting and avoiding counterfeit electronic parts.
The new instructions take a practical approach to detecting counterfeits, focused on risk assignment and monitoring rather than legitimacy inspections for each part. Technical Specialists will now assign risk categories of “high,” “moderate,” or “low” to parts depending on the monitoring needs anticipated. This scoring method considers factors related to the source of the product, including franchised and unfranchised distributors, product discontinuation, and ease of availability. Parts with a higher risk require more frequent monitoring by a Technical Specialist.
Contractors should expect DCMA to become more involved in assessing contractors’ avoidance and detection processes in the pre-award and post-award phases, as well. For instance, DCMA will participate in pre-award reviews for DoD contracts, identifying counterfeit avoidance and detection clauses. It will participate in post-award orientation conferences to suggest mitigation strategies. During contract performance, if a contractor is not following its own Counterfeit Detection and Avoidance System, a DCMA Technical Specialist will issue a Level II corrective action request. In the event that a suspected counterfeit part is discovered, a Technical Specialist is directed to notify the Contract Integrity Center, which then coordinates an investigation with DCMA and intelligence authorities.
The new instructions can be found here.