NASA Federal Acquisition Regulation Supplement: Detection and Avoidance of Counterfeit Parts (NFS Case 2017-N010), 52924-52929 [2020-16986]

Agencies

• National Aeronautics and Space Administration

[Federal Register Volume 85, Number 167 (Thursday, August 27, 2020)]
[Rules and Regulations]
[Pages 52924-52929]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-16986]


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NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 1812, 1831, 1846, and 1852

RIN 2700-AE38


NASA Federal Acquisition Regulation Supplement: Detection and 
Avoidance of Counterfeit Parts (NFS Case 2017-N010)

AGENCY: National Aeronautics and Space Administration.

ACTION: Final rule.

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SUMMARY: NASA is finalizing a revision to the NASA Federal Acquisition 
Regulation Supplement (NFS) requiring covered contractors and 
subcontractors at all tiers to use electronic parts that are currently 
in production and purchased from the original manufacturers of the 
parts, their authorized dealers, or suppliers who obtain such parts 
exclusively from the original manufacturers of the parts or their 
authorized dealers. These changes implement section 823(c)(2)(B) of 
Public Law 115-10, the National Aeronautics and Space Administration 
Transition Authorization Act of 2017.

DATES: This rule is effective September 28, 2020.

FOR FURTHER INFORMATION CONTACT: Dorice Kenely, NASA HQ, Office of 
Procurement, Policy, Training and Pricing Division, LP-011, 300 E 
Street SW, Washington, DC 20456-0001. Telephone 202-358-0443; facsimile 
202-358-3082.

SUPPLEMENTARY INFORMATION: 

I. Overview of the Rule

    This rule implements section 823(c)(2)(B) of Public Law 115-10, the 
National Aeronautics and Space Administration Transition Authorization 
Act of 2017. It revises the NASA Federal Acquisition Regulation 
Supplement (NFS) to add new text requiring a covered contractor, 
defined as a contractor supplying an electronic part or a product that 
contains an electronic part, and their subcontractors at all tiers to 
use electronic parts currently in production and purchased from the 
original manufacturers, their authorized dealers, or suppliers who 
obtain such parts exclusively from the original manufacturers of the 
parts or their authorized dealers. If the contractor does not purchase 
electronic parts as discussed above, they must purchase the parts from 
a NASA identified supplier or contractor-approved supplier. The 
contractor then assumes responsibility and be required to inspect, test 
and validate authentication of the part. The contractor is also 
required to obtain traceability information and provide this 
information to the contracting officer upon request. The selection of 
contractor-approved suppliers is subject to review and audit by the 
contracting officer.
    NASA's final rule is a separate but companion action to the FAR 
Council rule on Reporting of Nonconforming Items to the Government-
Industry Data Exchange Program (GIDEP) (FAR Case 2013-002) published at 
84 FR 64680. While both rules pertain to the topic of counterfeit parts 
and suspected counterfeit parts, there are discernable differences as 
they are implementing separate acts. These differences are discussed 
below.

Scope

    While both the FAR and the NFS rule pertain to the topic of 
counterfeit parts and suspected counterfeit parts, the FAR has a 
broader application in the types of items covered. It is applicable to 
all items subject to higher-level quality standards in accordance with 
the clause at FAR 52.246-11, Higher-Level Contract Quality Requirement; 
all items that the contracting officer, in consultation with the 
requiring activity determines to be critical items for which use of the 
clause is appropriate; and for the acquisition of services, if the 
contractor will furnish, as part of the service, any items that meet 
the criteria specified in paragraphs (a)(1) through (a)(2) of this 
section. In addition, the FAR covers acquisitions that exceed the 
simplified acquisition threshold and are by, or for, the Department of 
Defense for electronic parts or end items, components, parts, or 
materials containing electronic parts. Based on the requirements of 
section 823 the NFS rule applies only to electronic parts for use in a 
safety or mission critical applications.

Reporting/Notification

    The FAR requires two reporting requirements which are cleared under 
OMB Control number 9000-0187 titled Reporting of Nonconforming Items to 
the Government-Industry Data Exchange Program--FAR Sections affected: 
52.246-26. One requirement is the submission of a report to GIDEP when 
the contractor becomes aware or has reason to suspect, such as through 
inspection, testing, record review, or notification from another source 
(e.g., seller, customer, third party) that an item purchased by the 
Contractor for delivery to, or for, the Government is a counterfeit or 
suspect counterfeit item

[[Page 52925]]

or a common item that has a major or critical nonconformance. The 
second reporting requirement is a notification to the contracting 
officer after becoming aware or having reason to suspect, such as 
through inspection, testing, record review, or notification from 
another source (e.g., seller, customer, third party) that any end item, 
component, subassembly, part, or material contained in supplies 
purchased by the Contractor for delivery to, or for, the Government is 
counterfeit or suspect counterfeit.
    While the NFS rule does not include a GIDEP reporting requirement 
it does include a requirement to notify the contracting officer when 
the contractor becomes aware, or has reason to suspect, that any end 
item, component, part or material contained in supplies purchased by 
NASA, or purchased by a covered contractor or subcontractor for 
delivery to, or on behalf of, NASA, contains a counterfeit electronic 
part or suspect counterfeit electronic part.

Allowability of Costs

    As required by statute this NFS rule establishes that costs related 
to counterfeit parts, suspect counterfeit parts, or any corrective 
action that may be required to remedy the use or inclusion of such 
parts is unallowable unless a specific set of criteria is met. The FAR 
does not address the allowability of costs as it relates to the 
counterfeit parts, suspect counterfeit parts, or any corrective action 
that may be required to remedy the use or inclusion of such parts.

Supply Chain Sources

    As required by statute the NFS rule establishes required sources 
for both electronic parts that are in production or currently available 
in stock and separately electronic parts are not in production or 
currently available in stock from suppliers. The FAR does not address 
sources of items.

Applicability--Commercial/COTS and SAT

    Section 823 does not provide for any exemptions. As required by 
statute, this NFS rule applies to any electronic part or products that 
contain electronic parts, which includes commercial items, including 
COTS items, and contracts at or below the SAT. The associated final FAR 
rule is not applicable to commercial items or commercially off the 
shelf items; additionally, it does not apply to contracts and 
subcontracts at or below the simplified acquisition threshold.

II. Summary of Public Comments

    The proposed rule was published in the Federal Register at 85 FR 
663 on January 7, 2020 with five commenters submitting materials. In 
several cases, commenters requested changes to definitions that did not 
align with definitions provided in the National Aeronautics and Space 
Administration Transition Authorization Act and were therefore not 
taken. Two commenters merely affirmed the proposed rule text with no 
suggested changes. While no changes were made to the final rule in 
response to public comment, NASA's analysis and response to all other 
comments are discussed below.
    One commenter suggested adding a requirement to electronically 
verify if a product was purchased from eBay.com or amazon.com. NASA 
notes no changes are necessary to the rule based on this comment 
because if the process outlined in the rule is followed, purchases from 
these sources will be captured without any additional verification 
required. Additionally, the selection of contractor-approved suppliers 
is subject to review and audit by the contracting officer.
    A commenter recommended requiring covered procuring parts that are 
not in production or available in stock to inspect & test the parts 
consistent with published industry standards, including reliability 
testing and apply additional standards and higher testing requirements 
to those parts to mitigate the risk. Additionally, the commenter 
requested clarification for the phrase ``in production'' in 1846.7002 
and 1852.246-74 specifically, when a manufacturer, authorized 
distributor, or authorized aftermarket manufacturer has stock of a 
semiconductor in wafer or die form, that it be considered to be ``in 
production.'' Lastly, the commenter recommend ``electronic parts'' be 
amended to match the definition outlined 48 CFR 252.246-7008(a).
    This rule uses the language and definitions as provided by the 2017 
NASA Transition Authorization Act so no changes are made to the 
definitions. NASA believes no additional changes are necessary because 
if the process outlined in the rule is followed, the contractor must 
obtain traceability information for the electronic parts (e.g., data 
code, lot code, serial number) and provide the information to the 
contracting officer upon request. In addition, for unique contract 
requirements that involve electronic parts that are not in production, 
NASA contractors are subject to NASA internal validation which include 
researching part availability from suppliers that meet the defined 
criteria, and researching supplier quality histories in the GIDEP 
database, NASA-internal supplier quality databases, part inspection and 
failure databases, open sources of supplier information indicating 
areas of risk, project nonconformance and risk databases, as well as 
other subscription-based databases that are designed for sharing 
insight about counterfeit risks in the supply chain. Also, NASA 
Headquarters' Office of Safety and Mission Assurance executes audits of 
Centers' and Projects' adherence to quality policies on a rotating 
basis and can instigate special audits when needed to discern 
conformance issues and risks.
    A commenter wanted to know how NASA will maintain this NASA-
identified supplier list.
    As discussed elsewhere in the rule, NASA-identified suppliers will 
be identified on a case-by-case basis, using internal counterfeit 
avoidance and contractor validation processes, in lieu of maintaining a 
list.
    A commenter wanted to know how NASA will mitigate risks for parts 
provided by a NASA-identified supplier.
    The Agency-identified suppliers will be compliant with and 
validated using the policies and procedures discussed in this rule as 
well as NASA's standard quality assurance and counterfeit avoidance 
policies and procedures and supplier validation practices as described 
elsewhere in the rule.
    A commenter wanted to know will NASA be accountable for corrective 
actions on identified suppliers.
    As discussed in the rule costs related to corrective action to 
remedy the use or inclusion of counterfeit electronic parts are 
allowable costs for covered contractors, including NASA-identified 
contractors, that: (a) Have a system to detect and avoid counterfeit 
electronic parts and suspect counterfeit electronic parts and (b) whose 
system has been reviewed and approved by NASA or the Department of 
Defense pursuant to 48 CFR 244.303.
    A commenter wanted to know what NASA's validation process be for 
their identified suppliers.
    The Agency's validation process actively pursues objective evidence 
of part and part supplier suitability throughout design, procurement, 
and product acceptance which provides the technical authority and risk 
management systems continuous/real-time awareness of conformance with 
NASA's standard quality assurance and counterfeit avoidance policies 
and procedures. Validation practices include

[[Page 52926]]

researching part availability, supplier quality histories in the GIDEP 
database, NASA-internal supplier quality databases, part inspection and 
failure databases, open sources of supplier information indicating 
areas of risk, project nonconformance and risk databases, as well as 
other subscription-based databases that are designed for sharing 
insight about counterfeit risks in the supply chain.
    A commenter recommended the final rule clarify how ``mission 
critical'' and ``safety'' applications will be identified.
    Section 823 cites the presence of counterfeit electronic parts in 
the supply chain as ``a danger to the United States government 
astronauts, crew, and other personnel and a risk to the agency 
overall'' as such, each unique contract requirement for electronic 
parts will be subject to the requirements of this rule when their 
presence in the NASA supply chain poses a danger to United States 
government astronauts, crew, and other personnel and a risk to the 
agency overall.

IV. Applicability to Commercial Item Acquisitions, Including 
Commercially Available Off-the-Shelf (COTS) Items, and Acquisitions 
Below the Simplified Acquisition Threshold (SAT)

    This rule implements section 823 of the National Aeronautics and 
Space Administration Transition Authorization Act of 2017 (Pub. L. 115-
10). Section 823 does not limit the application of the requirements of 
the statue to non-commercial contracts or contracts above the 
simplified acquisition threshold. Consistent with 41 U.S.C. 1905, 1906 
and 1907, the NASA Assistant Administrator for Procurement has 
determined that it is in the best interest of NASA to apply section 823 
to the acquisition of commercial items, including COTS items, and those 
requirements below the SAT.

V. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is not a significant regulatory action and therefore was not 
subject to review under section 6(b) of E.O. 12866, Regulatory Planning 
and Review, dated September 30, 1993. This is not a major rule under 5 
U.S.C. 804.

VI. Executive Order 13771.

    This rule is not subject to the requirements of E.O. 13771 because 
this rule is not significant under E.O. 12866.

VII. Regulatory Flexibility Act

    No comments were received on NASA's initial analysis and the Final 
Regulatory Flexibility Analysis (FRFA) is summarized below.
    The rule will apply to all ``covered contractors.'' Covered 
contractors, as defined by Public Law 115-10 are contractors, including 
small entities, that supply an electronic part, or a product that 
contains an electronic part to NASA. While the rule will apply to all 
classes of small business, it will not necessarily affect all of those 
business because the rule requires reporting only when nonconforming 
defective and/or suspect counterfeit parts are present or there is 
suspicion that counterfeit parts are present in the supply chain. Since 
this rule requires contractors and subcontractors to purchase 
electronic parts that are currently in production from the original 
manufacturer, the authorized dealers or suppliers who obtain parts 
exclusively from the original manufacturer or for products that are not 
currently in production use of a NASA identified contractor, NASA 
believes that there is very little risk that a contractor or 
subcontractor will have a counterfeit part in the supply chain and thus 
very little risk that a small contractor will have to report. As 
reported in FPDS, NASA has had contract obligations with 3,120, 3,023 
and 2,805 small business contractors in 2016, 2017 and 2018, 
respectively and no counterfeit parts were found in the supply chain. 
Further, based on the initial scope of the rule, NASA has assessed the 
number of commercial item acquisitions for electronic items procured 
above and below the simplified acquisition threshold and believe the 
impact of this proposed rule will be minimal. An analysis of data for 
the last three fiscal years from the FPDS revealed the following:

------------------------------------------------------------------------
                                          Number of       Total dollar
                                           actions     amount of actions
------------------------------------------------------------------------
2019:
    Electronic Commercial Items......             131        $17,810,644
    Under the SAT....................             110          6,348,554
    Above the SAT....................              21         11,462,089
2018:
    Electronic Commercial Items......             275         38,516,656
    Under the SAT....................             229         10,922,058
    Above the SAT....................              46         27,594,598
2017:
    Electronic Commercial Items......             526         38,020,457
    Under the SAT....................             498         16,934,479
    Above the SAT....................              28         21,085,978
------------------------------------------------------------------------

    The policy requires covered contractors and subcontractors to 
notify the applicable NASA contracting officer in writing not later 
than 30 calendar days after the date the covered contractor becomes 
aware, or has reason to suspect, that any end item, component, part or 
material contained in supplies purchased by NASA, or purchased by a 
covered contractor or subcontractor for delivery to, or on behalf of, 
NASA, contains a counterfeit electronic part or suspect counterfeit 
electronic part.
    The final rule also requires covered contractors and subcontractors 
to purchase electronic parts that are currently in production from the 
original manufacturer, their authorized dealers or suppliers who obtain 
parts exclusively from the original manufacturer or their authorized 
dealers. Electronic parts that are not currently in production or 
available in stock shall be obtained from NASA identified suppliers or 
contractor-approved suppliers and the contractor

[[Page 52927]]

assumes responsibility for the authenticity, inspection, testing and 
traceability of the part. Contractor-approved suppliers are subject to 
review and audit by the Contracting Officer.

VIII. Paperwork Reduction Act

    This rule contains information collection requirements that 
requires the approval of the Office of Management and Budget under the 
Paperwork Reduction Act (44 U.S.C. chapter 35). Accordingly, NASA has 
submitted a request for approval of a new information collection 
requirement associated with NFS Case 2017-N010 Detection and Avoidance 
of Counterfeit Parts to the Office of Management and Budget.

List of Subjects in 48 CFR:

    Parts 1812 ``Acquisition of Commercial Items''; 1831 ``Contract 
Cost Principles and Procedures''; 1846 ``Quality Assurance'': 1852 
Provisions and Clauses. Government procurement.

Geoffrey Sage,
NASA FAR Supplement Manager.

    Accordingly, 48 CFR parts 1812, 1831, 1846, and 1852 are amended as 
follows:

0
1. The authority citation for parts 1816, 1832 and 1852 continues to 
read as follows:

    Authority: 51 U.S.C. 20113(a) and 48 CFR chapter 1.

PART 1812--ACQUISITION OF COMMERCIAL ITEMS

0
2. Amend section 1812.301 by redesignating paragraph (f)(i)(T) as 
paragraph (f)(i)(U) and adding a new paragraph (f)(i)(T) to read as 
follows.


1812.301   Solicitation provisions and contract clauses for the 
acquisition of commercial items.

    (f)(i) * * *
    (T) 1852.246-74, Counterfeit Electronic Part Detection and 
Avoidance.
    (U) 1852.247.71, Protection of the Florida Manatee.

PART 1831--CONTRACT COST PRINCIPLES AND PROCEDURES

0
3. Add section 1831.205-71 to read as follows:


1831.205-70  Costs related to counterfeit electronic parts and suspect 
counterfeit electronic parts.

    (a) Scope. This section implements the requirements of section 
823(c)(2)(B), the NASA Transition Authorization Act of 2017 (Pub. L. 
115-10).
    (b) The costs of counterfeit electronic parts, suspect counterfeit 
electronic parts, and any corrective action that may be required to 
remedy the use or inclusion of such parts are unallowable, unless--
    (1)(i) The covered contractor, as defined in section 1846.7001, has 
an operational system to detect and avoid counterfeit electronic parts 
and suspect counterfeit electronic parts that has been reviewed and 
approved by NASA or the Department of Defense pursuant to 48 CFR 
244.303; and
    (ii) The covered contractor, including subcontractors, notifies the 
applicable NASA contracting officer in writing in accordance with 
1846.7002(c); or
    (2) The counterfeit electronic parts or suspect counterfeit 
electronic parts were provided to the covered contractor as Government 
property in accordance with part 45 of the Federal Acquisition 
Regulation.

PART 1846--QUALITY ASSURANCE

0
4. Add subpart 1846.70 to read as follows:

Subpart 1846.70--Counterfeit Electronic Part Detection and 
Avoidance.

Sec.
1846.7000 Scope of subpart.
1846.7001 Definitions.
1846.7002 Policy.
1846.7003 Contract clause.


1846.7000  Scope of subpart.

    This subpart implements section 823(c), the NASA Transition 
Authorization Act of 2017 (Pub. L. 115-10).
    (a) Prescribes policy and procedures for preventing counterfeit 
electronic parts and suspect counterfeit electronic parts from entering 
the supply chain when procuring electronic parts or end items, 
components, parts, or assemblies that contain electronic parts; and
    (b) Applies to electronic parts when their presence in the NASA 
supply chain poses a danger to United States government astronauts, 
crew, and other personnel and a risk to the agency overall.
    (c) Contracting officers, in consultation with the requiring 
activity, are responsible for making a determination concerning the 
applicability of this section and the appropriate use of the prescribed 
contract clauses.


1846.7001   Definitions.

    ``Authentic part'' means a new and unmodified part produced by the 
original component manufacturer, or a source with the express written 
authority of the original manufacturer or current design activity, 
including an authorized aftermarket manufacturer.
    ``Authentication'' means a process to verify that a part is not 
counterfeit or suspect counterfeit.
    ``Authorized aftermarket manufacturer'' means an organization that 
fabricates an electronic part under a contract with, or with the 
express written authority of, the original component manufacturer based 
on the original component manufacturer's designs, formulas, and/or 
specifications.
    ``Authorized supplier'' means a supplier, distributor, or an 
aftermarket manufacturer with a contractual arrangement with, or the 
express written authority of, the original manufacturer or current 
design activity to buy, stock, repackage, sell, or distribute the part.
    ``Contract manufacturer'' means a company that produces goods under 
contract for another company under the label or brand name of that 
company.
    ``Contractor-approved supplier'' means a supplier that does not 
have a contractual agreement with the original component manufacturer, 
but has been qualified as trustworthy by a contractor or subcontractor 
as having met prescribed counterfeit electronic part detection and 
avoidance system criteria using established counterfeit prevention 
industry standards and processes.
    ``Covered contractor'' means a contractor that supplies an 
electronic part, or a product that contains an electronic part, to 
NASA.
    ``Counterfeit electronic part'' means an unlawful or unauthorized 
reproduction, substitution, or alteration that has been knowingly 
mismarked, misidentified, or otherwise misrepresented to be an 
authentic, unmodified electronic part from the original manufacturer, 
or a source with the express written authority of the original 
manufacturer or current design activity, including an authorized 
aftermarket manufacturer. Unlawful or unauthorized substitution 
includes used electronic parts represented as new, or the false 
identification of grade, serial number, lot number, date code, or 
performance characteristics.
    ``Electronic part'' means a discrete electronic component, 
including a microcircuit, transistor, capacitor, resistor, or diode, 
that is intended for use in a safety or mission critical application.
    ``Original component manufacturer'' means an organization that 
designs and/or engineers a part and is entitled to any intellectual 
property rights to that part.
    ``Original equipment manufacturer'' means a company that 
manufactures products that it has designed from purchased components 
and sells those

[[Page 52928]]

products under the company's brand name.
    ``Original manufacturer'' means the original component 
manufacturer, the original equipment manufacturer, or the contract 
manufacturer.
    ``Suspect counterfeit electronic part'' means an electronic part 
for which credible evidence (including, but not limited to, visual 
inspection or testing) provides reasonable doubt that the electronic 
part is authentic.


1846.7002  Policy.

    The government and its contractors and subcontractors at all tiers 
are required to obtain electronic parts as prescribed in this section, 
whether the electronic parts are procured as discrete items or 
contained in an assembly.
    (a) The covered contractor and subcontractors at all tiers shall 
obtain electronic parts that are in production or currently available 
in stock from--
    (1) The original manufacturers of the parts;
    (2) Their authorized dealers; or
    (3) Suppliers who obtain such parts exclusively from the original 
manufacturers of the parts or their authorized dealers.
    (b) If electronic parts are not in production or currently 
available in stock from suppliers as stated in paragraph (a) of this 
section, the covered contractor shall obtain electronic parts from NASA 
identified suppliers or contractor-approved suppliers for which--
    (1) The covered contractor assumes responsibility for the 
authenticity of parts; and
    (2) The covered contractor performs inspection, testing and 
authentication of parts; and
    (3) The covered contractor obtains traceability information for the 
electronic parts (e.g., data code, lot code, serial number) and 
provides this information to the contracting officer upon request; and
    (4) The selection of contractor-approved suppliers is subject to 
review and audit by the contracting officer.
    (c) The covered contractor, including subcontractors, shall notify 
the applicable NASA contracting officer in writing not later than 30 
calendar days after the date the covered contractor becomes aware, or 
has reason to suspect, that any end item, component, part or material 
contained in supplies purchased by NASA, or purchased by a covered 
contractor or subcontractor for delivery to, or on behalf of, NASA, 
contains a counterfeit electronic part or suspect counterfeit 
electronic part.


1846.7003   Contract clause.

    For acquisitions with covered contractors as defined in section 
1846.7001, use the clause at 1852.246-74, Contractor Counterfeit 
Electronic Part Detection and Avoidance, in solicitations and 
contracts, when procuring--
    (a) Electronic parts;
    (b) End items, components, parts, or assemblies containing 
electronic parts; or
    (c) Services, if the covered contractor will supply electronic 
parts or components, parts, or assemblies containing electronic parts 
as part of the service.

PART 1852--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
5. Add section 1852.246-74 to read as follows:


1852.246-74  Contractor Counterfeit Electronic Part Detection and 
Avoidance.

    As prescribed in 1846.7003, use the following clause:

CONTRACTOR COUNTERFEIT ELECTRONIC PART DETECTION AND AVOIDANCE. 
(DATE)

    (a) Definitions. As used in this clause--
    ``Authentic part'' means a new and unmodified part produced by 
the original component manufacturer, or a source with the express 
written authority of the original manufacturer or current design 
activity, including an authorized aftermarket manufacturer.
    ``Authentication'' means a process to verify that a part is not 
counterfeit or suspect counterfeit.
    ``Authorized aftermarket manufacturer'' means an organization 
that fabricates a part under a contract with, or with the express 
written authority of, the original component manufacturer based on 
the original component manufacturer's designs, formulas, and/or 
specifications.
    ``Authorized supplier'' means a supplier, distributor, or an 
aftermarket manufacturer with a contractual arrangement with, or the 
express written authority of, the original manufacturer or current 
design activity to buy, stock, repackage, sell, or distribute the 
part.
    ``Contract manufacturer'' means a company that produces goods 
under contract for another company under the label or brand name of 
that company.
    ``Contractor-approved supplier'' means a supplier that does not 
have a contractual agreement with the original component 
manufacturer, but has been qualified by the contractor or 
subcontractor approved by the contractor or government as having met 
prescribed counterfeit electronic part detection and avoidance 
system criteria using established counterfeit prevention industry 
standards and processes.
    ``Counterfeit electronic part'' means an unlawful or 
unauthorized reproduction, substitution, or alteration that has been 
knowingly mismarked, misidentified, or otherwise misrepresented to 
be an authentic, unmodified electronic part from the original 
manufacturer, or a source with the express written authority of the 
original manufacturer or current design activity, including an 
authorized aftermarket manufacturer. Unlawful or unauthorized 
substitution includes used electronic parts represented as new, or 
the false identification of grade, serial number, lot number, date 
code, or performance characteristics.
    ``Electronic part'' means a discrete electronic component, 
including a microcircuit, transistor, capacitor, resistor, or diode, 
that is intended for use in a safety or mission critical application 
(section 823 (d)(2) of Pub L. 115-10).
    ``Original component manufacturer'' means an organization that 
designs and/or engineers a part and is entitled to any intellectual 
property rights to that part.
    ``Original equipment manufacturer'' means a company that 
manufactures products that it has designed from purchased components 
and sells those products under the company's brand name.
    ``Original manufacturer'' means the original component 
manufacturer, the original equipment manufacturer, or the contract 
manufacturer.
    ``Suspect counterfeit electronic part'' means an electronic part 
for which credible evidence (including, but not limited to, visual 
inspection or testing) provides reasonable doubt that the electronic 
part is authentic.
    (b) Sources of electronics parts. In accordance with section 
823(c)(3), the NASA Transition Authorization Act of 2017 (Pub. L. 
115-10), the covered contractor shall--
    (1) Obtain electronic parts that are in production by the 
original manufacturer or an authorized aftermarket manufacturer or 
currently available in stock from--
    (i) The original manufacturers of the parts;
    (ii) Their authorized dealers; or
    (iii) Suppliers who obtain such parts exclusively from the 
original manufacturers of the parts or their authorized dealers;
    (2) If electronic parts are not in production or currently 
available in stock from suppliers as stated in paragraph (b) of this 
clause, the covered contractor shall obtain electronic parts from 
NASA identified suppliers or contractor-approved suppliers for 
which--
    (i) The covered contractor assumes responsibility for the 
authenticity of parts; and
    (ii) The covered contractor performs inspection, testing and 
authentication of parts; and
    (iii) The covered contractor obtains traceability information 
for the electronic parts (e.g., data code, lot code, serial number) 
and provides this information to the contracting officer upon 
request; and
    (iv) The selection of contractor-approved suppliers is subject 
to review and audit by the contracting officer.
    (c) Notification. The covered contractor, including 
subcontractors, shall notify the NASA contracting officer in writing 
not later

[[Page 52929]]

than 30 calendar days after the date the covered contractor becomes 
aware, or has reason to suspect, that any end item, component, part 
or material contained in supplies purchased by NASA, or purchased by 
a covered contractor or subcontractor for delivery to, or on behalf 
of, NASA, contains a counterfeit electronic part or suspect 
counterfeit electronic part.
    (d) Costs related to counterfeit electronic parts and suspect 
counterfeit electronic parts. In accordance with section 
823(c)(2)(B), the NASA Transition Authorization Act of 2017 (Pub. L. 
115-10), the costs of counterfeit electronic parts and suspect 
counterfeit electronic parts and the costs of rework or corrective 
action that may be required to remedy the use or inclusion of such 
parts are unallowable, unless--
    (1) The covered contractor has a system to detect and avoid 
counterfeit electronic parts and suspect counterfeit electronic 
parts that has been reviewed and approved by NASA or the Department 
of Defense pursuant to 48 CFR 244.303; and
    (2) The covered contractor, including a subcontractor, notifies 
the applicable NASA contracting officer in writing in accordance 
with paragraph (c) of this clause; or
    (3) The counterfeit electronic parts or suspect counterfeit 
electronic parts were provided to the covered contractor as 
Government property in accordance with part 45 of the Federal 
Acquisition Regulation.
    (e) Subcontracts. The covered contractor shall insert this 
clause, including this paragraph (e), in subcontracts for--
    (1) Electronic parts;
    (2) End items, components, parts, or assemblies containing 
electronic parts; or
    (3) Services where the covered contractor will supply electronic 
parts or components, parts, or assemblies containing electronic 
parts as part of the service, including subcontracts for commercial 
items that are for electronic parts or assemblies containing 
electronic parts, unless the subcontractor is the original 
manufacturer. The covered contractor shall not alter the clause 
other than to identify appropriate parties.
    (f) Corrective Action. In the event that the covered contractor 
supplies a counterfeit electronic part, suspect counterfeit 
electronic part or end item, component, or assembly containing a 
counterfeit electronic part to NASA, the covered contractor shall 
take such corrective actions as the Administrator considers 
necessary to remedy the use or inclusion of additional counterfeit 
electronic parts, suspect counterfeit electronic part or end items, 
components, or assemblies containing a counterfeit electronic part.
    (End of clause)
[FR Doc. 2020-16986 Filed 8-26-20; 8:45 am]
BILLING CODE 7510-13-P