DoD Finalizes Counterfeit Part Rule at Last…Only to Backtrack

Almost a year after releasing its first version of a proposed rule to eliminate the use of counterfeit electronic parts, the Department of Defense (DoD) finalized it last week. The rule implements a law passed nearly two-and-a-half years ago, and, as the Department pointed out in the “Discussion and Analysis” section of its released rule, “DoD cannot afford to wait to take action.”

Yet within days, the DoD announced another public meeting on the issue, where more “recommendations for further implementation” of the rule can be discussed. It appears the DoD has once again slowed down the process of implementing crucial anti-counterfeit rules.

The “Detection and Avoidance of Counterfeit Electronic Parts” rule was proposed in May 2013 by the DoD in response to Section 818 of the National Defense Authorization Act for Fiscal Year 2012 (FY 2012 NDAA). This provision was signed into law on December 31, 2011, and was created to combat the major issue of counterfeit electronic parts lowering the quality of military equipment. For example, a 2011 investigation by the Senate Armed Services Committee (SASC) uncovered approximately 1,800 cases of suspected counterfeit electronic parts in military equipment, such as the Air Force’s C-130J Super Hercules cargo plane.

The DoD’s proposed rule required contractors to take more responsibility for detecting and preventing the use of counterfeit parts by training personnel, inspecting and testing parts, and using only trusted suppliers. Yet, as the Project On Government Oversight detailed in a previous blog, the DoD allowed contractors to delay the rule-making process. The Department held a comment period and public meeting last June, and then another meeting this past March.

By finalizing the rule, which took effect on May 6, it looked like the DoD had at last realized the urgency of addressing the threat of counterfeit electronic parts decreasing the quality of military equipment. As the Department explained, “the best course of action was determined to be the issuance of this final rule without undue delay.”

However, the DoD watered down several aspects of the finalized rule in order to accommodate many of the comments submitted and mentioned by contractors at the March public meeting. For instance, the contractors complained that the definition of “trusted suppliers” was too vague. The DoD responded by avoiding the phrase in the final rule altogether, replacing it with statements such as “suppliers that meet applicable counterfeit detection and avoidance system criteria.”

Then, just three days after finalizing the rule, the DoD backtracked, opening up another round of comments and discussions that will surely give contractors the opportunity to alter this final rule in some way—likely causing a greater delay. The real job of preventing the use of counterfeit electronic parts in military equipment remains unfinished.