Proposed FAR Rule Expands Reporting Requirements for Nonconforming Items

The Department of Defense, General Services Administration, and National Aeronautics and Space Administration are proposing to amend the Federal Acquisition Regulation to require expanded reporting of nonconforming items.

The June 10, 2014, proposed rule would revise the quality assurance coverage at FAR Subpart 46.1 to require contractors to use the Government-Industry Data Exchange Program database to report nonconforming items and to screen GIDEP reports to avoid the use of nonconforming items.

For the reporting requirement to apply, the item must be a counterfeit or suspect counterfeit item (as defined in proposed FAR 46.101), or it must contain a major or critical nonconformance that is a common item and constitutes a quality escape (also defined in proposed FAR 46.101), from a lower-level subcontractor or supplier that resulted in the release of nonconforming items to more than one customer.

In addition to the GIDEP reporting the requirements, the rule would impose contracting officer reporting requirements. If the contractor identifies a major or critical nonconformance but corrects the problem prior to delivery, it would not have to notify the CO. However, the contractor must notify the CO when a counterfeit or suspect counterfeit item is identified, without regard to whether the contractor intends to deliver the product containing the counterfeit or suspect counterfeit items.

These requirements would be added in a new clause at FAR 52.246-XX, Reporting Nonconforming Items, which would also require the contractor to retain in its possession any items suspected or confirmed as counterfeit items. A flowdown requirement directs the contractor to add the substance of the clause in all subcontracts at any tier for supplies, or services that include supplies.

Comments referencing FAR Case 2013-002 are due August 11, 2014. For more information, see the Federal Register notice.

About William Van Huis

Bill Van Huis is a Senior Writer/Analyst for Wolters Kluwer Law & Business who tracks and analyzes new regulations impacting federal government contracting. He also follows court decisions involving bid protests and contract disputes. You can find his work in WK publications like Government Contract Reports and the FAR and DFARS Matrix Tools. Bill is a Certified Professional Contracts Manager, and he has a law degree from Southern Illinois University, where he graduated summa cum laude. Prior to joining WK, Bill worked both inside and outside state and local government in the areas of procurement and municipal finance. Bill also worked as a staff attorney for the Illinois Supreme Court.
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