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Understanding NDAA 2012 Section 818: Implementing Trusted Suppliers for Electronic Parts

This document outlines the requirements and responsibilities for government and contractors regarding the acquisition of electronic parts as dictated by NDAA 2012, Section 818. It emphasizes the procurement of in-production and obsolete parts from trusted suppliers, the establishment of supplier qualifications, and the necessity for inspections and notifications to the Department of Defense (DoD) if these requirements cannot be met. Additionally, it details the roles of contractors in ensuring authenticity and the measures they should take to combat counterfeit electronic parts.

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Understanding NDAA 2012 Section 818: Implementing Trusted Suppliers for Electronic Parts

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  1. NDAA 2012 Section 818 Further Implementation for Trusted Suppliers March 27, 2014 Fred Schipp Naval Surface Warfare Center, Crane Division 812-854-5848 frederick.schipp@navy.mil

  2. NDAA 2012 Section 818 What does Section 818 (c)(3) require whenever possible? • Government and Contractors shall buy in-production electronic parts direct from authorized suppliers, or one level removed via trusted suppliers. • Government and Contractors shall buy obsolete parts from trusted suppliers. • If the above can’t be met, there shall be inspection, test, and notification of DoD. • Government shall establish qualification requirements for trusted suppliers. • Contractors may also identify trusted suppliers. Contractors: • must use established industry standards, • are responsible for authenticity, and • choices may be reviewed/audited by Government.

  3. NDAA 2012 Section 818 What DO we require of trusted suppliers via DFARS 2012-D055 (May 16, 2013)? • Contractors’ Counterfeit Electronic Part Avoidance and Detection System must address the use and qualification of trusted suppliers. What CAN we require of trusted suppliers? • Avoidance (supply chain management) • Detection (inspection and test) • Containment (do not return) • Notification (to customer) • Reporting (to GIDEP) Trusted suppliers are currently ‘defined’ by DoD (DLA, MDA, Navy, etc.), Prime Contractors, and Subcontractors. How consistent is this?

  4. NDAA 2012 Section 818 Avoidance • We should tell our trusted suppliers to buy from authorized suppliers as a first priority (whenever possible). Detection • We should tell our trusted suppliers how, what, and where to inspect and test parts for authenticity. Containment • We should tell our trusted suppliers not to return suspect counterfeit electronic parts. What does ‘whenever possible’ mean? Last resort? Schedule? Budget? Non-competitive? What is the impact of requiring full manufacturer’s warranty for all electronic part purchases?

  5. NDAA 2012 Section 818 Notification • DFARS 2012-D055 requires DoD notification when suspect counterfeit electronic parts are installed, but not when the contractor plans to buy from untrusted suppliers. Reporting • We should tell our trusted suppliers that we expect them to report suspect counterfeit electronic parts to GIDEP. Audits/Review • We should tell our auditors what to require in a trusted supplier. • Electronic parts intended for DoD systems are seldom reported to GIDEP if they are detected by the ‘trusted supplier’. Why? • Contractor does not own the parts • Trusted supplier fears retaliation from a valuable supplier • Stigma

  6. NDAA 2012 Section 818 We should explore the potential flow down (to trusted suppliers) of every subcontractor anti-counterfeit requirement. THANK YOU

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