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64 SMT Magazine • July 2014 The most important take away from the DFARS regarding the term "trusted supplier" is as follows: DoD is concerned that defining and using the term ''trusted supplier,'' or a variation of it, would create confusion due to the use of this term in other, current DoD and industry initiatives. Accordingly, the systems criteria in DFARS are revised to express what is intended by ''trusted supplier'' without di- rectly using the term, e.g., 252.246–7007(c)(5) uses the phrase ''suppliers that meet applicable counter- feit detection and avoidance system criteria.'' Ultimately, while the DoD is still noncom- mittal on what is, clearly, a key tenet of its own requirement that prime defense contractors use "trusted suppliers," it does at least present an update to this definition that requires the im- plementation of a counterfeit avoidance plan for parts that are not purchased from an OEM or authorized distributor. The DoD adds no additional clarity with its stance on the use of current industry standards to determine the suitability of suppliers. While according to the Supplement, the majority of respondents "urged" the DoD to adopt "indus- try standards such as AS5553A," noting that AS5553A has already been adopted for internal use by both DoD and NASA. According to the Supplement: Other respondents focused on the ''secondary market,'' i.e., distributors and brokers, stating that these types of sources are necessary. These respon- dents recommended that covered contractors should be encouraged, if not required, to impose known industry standards, such as AS5553A, AS6081, or AS6171 on their secondary market sources and small business suppliers. Despite the urging of the private sector, the DoD remains noncommittal on the applica- tion of industry standards to DFARS. Despite its own official adoption of the AS6081 counterfeit mitigation standard, among others, the DoD re- sponded to respondents with the following: "… industry standards on counterfeit parts cur- rently vary and continue to evolve. For this reason, the DoD has not mandated the use of specific indus- try standards but left their use to the contractor, and the DoD has not adopted the still-changing defini- tions in industry standards." The ultimate critical piece of information from the DFARS is that the DoD requires the im- plementation of some type of counterfeit avoid- ance program, even if it is unwilling to specify a standard to which suppliers should be held. What is telling, however, is the DoD's official stance on the flow down of these requirements to firms beyond the cash accounting standards (CAS)-covered firms that are called out in the original text of the DFARS. When faced with concerns that smaller firms and subcontractors would not be covered by the quality and coun- terfeit mitigation standards set forth in DFARS, the DoD had this to say: "However, all levels of the supply chain have the potential for introducing counterfeit or suspect- counterfeit electronic items into the end items con- tracted for under a CAS-covered prime contract. The KRAMER on CoMPonEnTS figure 2: Recent update on DfARS by the DoD. DFARS FloW DoWNS AND TRuSTED SuPPlIERS continues

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