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62 SMT Magazine • July 2014 by Todd Kramer SECURE CoMPonEnTS LLC KRAMER oN CoMPoNENTS CoLUMn DFARS Flow Downs and Trusted Suppliers On May 6, 2014, the Department of De- fense issued Defense Federal Acquisition Regu- lation Supplement: Detection and Avoidance of Counterfeit Electronic Parts (DFARS Case 2012– D055); Final Rule. The purpose of this rule is to clarify the sections of the National Defense Authorization Act (NDAA) for 2012 and 2013, which deal with counterfeit parts. This supple- ment sought insight from industry that would allow the clarification of several key terms such as "trusted supplier" and "counterfeit part." Ad- ditionally, this supplement addresses both the applicability of these clarifications and the role that existing industry standards play in assess- ing the trusted status of suppliers. One of the main components of the DFARS is the clarification of two key definitions: "coun- terfeit part" and "trusted supplier." These two terms are both major components of NDAA Section 818, which among other things, re- quires the use of trusted suppliers in order to mitigate the proliferation of counterfeits. There was a very large industry response to requests for comment, which were put forward on these subjects. Ultimately, several key responses were given by the DoD to industry recommenda- tions regarding the definition of "counterfeit part," as follows: • Due to concerns regarding the broad nature of the term "counterfeit part," the term was determined to apply specifically to electronic components • An element of intent was added to the term "counterfeit part" by including the term "misrepresented" • All terms in the original definition referring to a part's "substitute" were replaced with the term "unlawful substitute" The ultimate effect of these three changes is the fact that in order for a part to be considered counterfeit under DFARS, it must be substituted for a legitimate part with the intent of deceit. This eliminates the possibility that parts might be considered counterfeit as a result of manu- facturing defects or improper handling. The definition of the term "trusted sup- plier" is likely of even larger importance than what determines a counterfeit component. This is due to the fact that the idea of who is consid- ered a trusted supplier is not only essential to DFARS, but also one of the main concepts put forth by NDAA Section 818: the use of "trusted suppliers" in the defense industry is now re- quired by law. figure 1: Defense federal Acquisition Regulation Supplement: Detection and Avoidance of Counterfeit Electronic Parts.

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