FAR 2008

SUMMARY OF PUBLIC COMMENTS TO

FAR CASE 2008-019

Date:               January 29, 2009

From:              Jake Manahan (ASCDI and NATD Legal Counsel)

                        Copies of the complete written comments are in the following folder:

                        BVPAMain/Associations/ASCDI/Government Sales/Public Comments

Naval Air Systems Command

1. There should NOT be a limitation to only OEMs or OEM-authorized dealers (both collectively referred to as “OEMs”) because
   1. Many replacement parts are not available from OEMs; and
   2. IT would negatively “impact fleet operations.”
2. If not OEM, then source documentation must be provided; if none, then submitted to a sanctioned independent testing program.
   1. Payment placed in escrow pending completion of testing
3. GSA should maintain listed of trusted, qualified independent (non-OEM) distributors.
4. Definition of “Counterfeit” should not include “substitute” products, which are often legitimately produced.
5. Expand scope of new regulation to include electrical components and mechanical/hardware items.

NASA

1. NASA “recognizes the need to preserve the competitive environment and to ensure that there is opportunity for all responsible suppliers to be able to compete for Government work.  NASA believes that the FAR requirements could be crafted to such a way to adhere to these principles.”
2. NASA believes the regulations should be extended to critical EEE parts (electrical, electronic and electromechanical) vital to the agency’s mission.
3. Numerous suggestions to mitigate risk of counterfeit parts
   1. Represent that parts are authentic
   2. Provide documentation that parts are authentic, sych as

                                                               i.      Provide original certificate of conformance (COC); or

                                                             ii.      Provide records of unbroken supply chain;

                                                            iii.      Provide testing or inspection records demonstrating authenticity

3. If a “high risk” assembly, require same of subcontractors
3. Provide some suggested language for including EEE parts
4. NASA makes two distinctions:
   1. It differentiates between critical applications and non-critical applications; and
   2. Non-OEMs are recognized as legitimate purchasing sources, but must provide evidence of their trustworthiness in some manner.

WORLD DATA PRODUCTS, INC. (WDPI) – ASCDI Member from Minnetonka

1. Liability should be limited to full replacement or refund of purchase price
2. Requiring OEMs does not solve the problem
   1. Provided an example of Atec, Inc. (a Cisco-authorized dealer) sold counterfeit equipment to MortgageIT – included copies of a FBI slide that is on the internet.
   2. Reduces competition
   3. Reduces/eliminates access to discontinued equipment
   4. Potential increase in delivery times – independents frequently have product on-hand
   5. Promotes vendor lock-in
   6. Reduces ability of government units to satisfy requirements to purchase from small and/or minority-owned businesses.
3. Suggests that OEMs, independents, government representatives, and customers get together to share best practices and eliminate counterfeit products.

CISCO

1. “No one approach can constitute a ‘silver bullet’ to completely solve the problem [of counterfeit products].”
2. Agrees that vendors should represent that its products are authentic.
3. Repeats the following a number of times (or some version of it):

The vast majority of counterfeit products that Cisco or law enforcement has found in, or destined for, Government networks have come from non Cisco-authorized sources or resellers.

4. Distinguishes between “commercial” and “non-commercial” products.  Cisco says it is a provider of commercial products.
5. If the government is buying commercial products that are still in production then vendors should
   1. Possess all OEM certifications, etc
   2. Confirm it and all subs have sourced all products from OEMs
   3. Keep records and produce upon request copies of evidence that establishes purchase point and origin of shipment of all products
   4. Provide a copy of OEM’s end user license agreement on software.
6. If government is buying non-commercial products then vendors should
   1. Represent that OEM channels do not exist; otherwise provide 5.b. above
   2. Establish 5c. and 5d. above
7. If government is buying products no longer in production then vendors should
   1. Do the same as in 6. above
8. If products are not authentic, then Cisco does NOT agree that there should be unlimited liability.  Current remedies are sufficient.
9. Cisco believes that the government “should require OEM authorized or provided maintenance.”
10. Government should not distinguish between systems and components – too subjective.
11. Cisco suggests that BPAs (Blanket Purchase Agreements) be used for system integrators, with pre-approved vendors and subcontractors  -  they would provide a “trusted supply chain” for sensitive federal procurements.
12. Cisco also thinks all GWACs (Government Wide Acquisition Contracts) should be immediately modified to insure all GWAC contract holders are OEMs.
13. Compares OEMS to state medical boards and bar associations.

“OEM authorized partners is not much different than the Government requiring credentialed doctors, or lawyers to fill certain roles.”