A final rule effective November 22 dramatically expanded mandatory Government-Industry Data Exchange Program (GIDEP) reporting requirements for counterfeit parts and nonconforming items delivered to the federal government. Coverage from Miller & Chevalier and Seyfarth Shaw.
What triggers reporting
Contractors and subcontractors must report within 60 days to GIDEP and the contracting officer when they identify any of the following in supplies delivered to the U.S. government:
- Counterfeit parts (confirmed)
- Suspect counterfeit parts (under investigation)
- Nonconformances that could impact safety or mission effectiveness
- Reason to suspect electronic parts or end items purchased by DoD contain counterfeits
Flowdown requirements
Per DFARS 252.246-7007, counterfeit detection and avoidance requirements flow down to subcontractors at all levels responsible for buying or selling electronic parts or assemblies. That means tier-3 and tier-4 suppliers — often smaller firms — now carry direct reporting obligations.
The penalty math
Non-compliance triggers stacking exposure:
- False Claims Act exposure for misrepresentations (treble damages)
- Contract termination for default
- Suspension or debarment from federal contracts
- Loss of follow-on awards and subcontract eligibility
Open-market sourcing risk
Aerospace and defense contractors often source from the open market or independent distributors due to obsolescence, allocation shortages, and operational demand. The rule doesn't prohibit open-market sourcing — but it does impose higher documentation and detection burdens for firms relying on it.
What to do this week
- Verify your detection and avoidance system meets DFARS 252.246-7007 requirements
- Push counterfeit-detection flowdown language into all active subcontracts touching electronic parts
- Establish GIDEP reporting workflow — compliance officer, 60-day clock, documentation templates
- For open-market purchases, maintain authentication records (OCM certifications, pedigree tracing, test results)