NAVPROP 11-19 PREVENTION OF COUNTERFEITING ELECTRONIC COMPONENTS

NAVPROP 11-19 PREVENTION OF COUNTERFEITING ELECTRONIC COMPONENTS
GIDEP Management Meeting
February 2, 2010
John Butler
NAVSEA 04P

PREVENTION OF COUNTERFEITING OF ELECTRONIC
COMPONENTS
• In general.—Chapter 25 of title 18, United States Code, is amended
• Department of Defense or the National Aeronautics and Space
Administration (NASA)

Counterfeit Electronic Part
• A part that is an imitation or otherwise not genuine, or that is
substituted for, or otherwise misrepresented to be, the genuine part
required by the Government, or required, on behalf of the
Government, by any party to a Government contract, grant, other
transaction, cooperative agreement, or other instrument establishing
Government requirements.
• A ‘counterfeit electronic part’ can be a part originally manufactured
to specifications or other Government requirement that has been
deliberately altered or tampered with so as to no longer represent
the original part but to give the appearance of being the original part
• Flow down of requirements - to its subcontractors, vendors, and
other entities at all tiers


Counterfeit electronic parts causing loss of life
• Whoever knowingly, under a contract, grant, other transaction,
cooperative agreement, or other instrument establishing
Government requirements with the Department of Defense or the
National Aeronautics and Space Administration,
• delivers an end item, component, or part containing or consisting of
a counterfeit electronic part for use in
• any national security system, weapons system, vessel, or vehicle,
• which after delivery causes the system, vessel, or vehicle to fail, or
causes a disruption of performance, and that failure or disruption
results in the loss of life, shall be punished,
• in the case of a corporation, partnership, business trust, association,
or other organization, by a fine under this title and, in the case of an
individual, by a fine under this title, or imprisonment for not more
than 25 years, or both


Counterfeit electronic parts without loss of life
• Whoever knowingly, under a contract, grant, other transaction,
cooperative agreement, or other instrument establishing
Government requirements with the Department of Defense or the
National Aeronautics and Space Administration, delivers an end
item, component, or part containing or consisting of a counterfeit
electronic part for use in any national security system, weapons
system, vessel, or vehicle, which after delivery causes the system,
vessel, or vehicle to fail, or causes a disruption of performance, and
where it is not established that the failure or disruption resulted in
the loss of life, shall be punished, in the case of a corporation,
partnership, business trust, association, or other organization, by a
fine under this title and, in the case of an individual, by a fine under
this title, or imprisonment for not more than 10 years, or both.


Seizure and forfeiture of counterfeit electronic
• Any end item, component, or part containing or consisting of a
counterfeit electronic part purchased either for direct delivery, or for
incorporation into supplies to be delivered, in performance of a
contract, grant, other transaction, cooperative agreement, or other
instrument establishing Government requirements with the
Department of Defense or the National Aeronautics and Space
Administration that is determined to be counterfeit shall be
• subject to seizure and forfeiture to the United States to prevent
such items from re-entering the stream of commerce.
• The supplier of end items ….. that are determined, in accordance
with agency regulations, to be counterfeit shall forfeit all right to
payment for such electronic end items, components, or parts


Exports of populated scrap circuit boards prohibited
• Whoever knowingly —
– sells, gives, or otherwise transfers a populated scrap circuit board
outside of the United States; or
– receives, conceals, or retains a populated scrap circuit board with the
intent to transfer the same outside of the United States,
• shall be punished, in the case of a corporation, partnership, business
trust, association, or other organization, by a fine under this title and, in
the case of an individual, by a fine under this title, imprisonment for not
more than 10 years, or both.
• Populated scrap circuit board - a used circuit board that contains
microchips and other electronic items needed to make it functional


Acceptance of Counterfeit Items
• Any Government acceptance of supplies later found to contain
counterfeit material shall be null and void and
• delivery of such material shall not constitute a valid basis for
payment of a contractor’s invoice
• If the United States …. or that party shall be entitled to recover the
payment. The United States may recover interest on any such
payment computed at the rate of interest established by the
Secretary of the Treasury ….


Responsibility to Retain and Preserve
• It shall be the responsibility of any party … who uncovers or ascertains
that an electronic end item, … is counterfeit or contains counterfeit
parts to retain and preserve such counterfeit material as evidence and
to
• report within five business days such counterfeit material to the
Government contracting officer.
• In addition, such party is responsible for submitting a ‘suspect
counterfeit report’ to the Government Industry Data Exchange
Program for
– incorporation into the Program’s database and
– transmission of an alert notification to other government agencies.
• A ‘suspect counterfeit report’ shall include
– a description of the counterfeit material, including its current condition, the
location of the counterfeit material, and the party’s point of contact for the
counterfeit material


Responsibility of Contracting Officer
• It shall be the responsibility of the Department of Defense or National
Aeronautics and Space Administration contracting officer who receives
a report of counterfeit material from a contractor to
– submit that report, within five business days of receipt, to the appropriate
investigative service and
– the Inspector General of the Department of Defense, National Aeronautics
and Space Administration, the military department, or the component


Contractor certifications and testing data
• Certifying or Signing Official
–When a contractor is required to execute a certification or to sign testing
data in performance of a Government contract with the DoD or NASA,
– whether or not such certifications or such testing data is submitted to the
Government,
– the contractor shall ensure that the certifying or signing official is clearly
identified on the certification or testing data in accordance with agency
regulations
• Lack of Compliance
– Any certification or any testing data that is not in compliance … shall be
invalid and there shall be no valid basis for acceptance of the supplies to
which such certification or testing data relates


Legislation Current Status
• Sent to OMB week of 25 January 2010