New rule aims to secure US electronics supply chain

A new regulation has been proposed by the US Department of Defense to assist the military in the detection and avoidance of counterfeit electronic parts.

The revisions to the Defense Federal Acquisition Regulation Supplement (DFARS) clarify the DoD's position on traceability, emphasising that contractors and subcontractors that are not the original manufacturer must have a risk-based system to trace electronic parts from the manufacturer to the government.

Crucially however the draft indicates that traceability may not be feasible in all cases, and in these cases it notes that the contractor should try to source the part elsewhere or carry out tests and an assessment to check the source's reliability. If that fails, the purchaser must be notified.

The revised version also excludes embedded software or firmware from the definition of an electronic part, as these will be handled separately

A new clause has also been added that requires all contractors and subcontractors to obtain electronic parts currently in production from original manufacturers and authorised dealers, or suppliers that acquire them exclusively from these sources.

That extends the scope of the current DFARS rule, which applies only to prime contracts subject to the Cost Accounting Standards (CAS). , In addition, the DoD has confirmed that the requirements will apply equally to smaller contracts (below the simplified acquisition threshold or SAT - currently $150,000).

"An exception for contracts at or below the SAT would severely decrease the intended effect of the statute and increase the risk of receiving counterfeit parts, which may present a significant mission, security, or safety hazard," it notes.

Electronic parts that are out of stock or no longer in production must also be obtained from trusted suppliers, in recognition of the fact that obsolete parts are known to be an entry point for counterfeits in the supply chain.

The draft also updates the definitions of a 'trusted supplier' and 'authorized dealer', something that has caused confusion in the current DFARS text.

Specifically, the DoD notes that an authorised dealer is not the same as an authorised reseller - the former has a contractual relationship with the part manufacturer, while an authorised reseller is not bound to obtain parts from the original manufacturer.

Meanwhile, a trusted supplier does not only refer to the original manufacturers and their authorised and exclusive suppliers, but also those validated using "DoD-adopted counterfeit prevention industry standards and processes, including testing."

The definition for an 'original manufacturer' has also been updated in the draft to include contract electronics manufacturers, original component manufacturers or original equipment manufacturer, which are also defined in the regulation.

Comments on the Proposed Rule are due by November 20, 2015.

In 2012, a report from IHS suggested that almost 10,000 suppliers to the US government were reported for suspected involvement in fake parts and other illegal activities.