SUPPLEMENTARY INFORMATION:

The widespread availability of counterfeit Information Technology (IT) products presents a multidimensional threat to our nation. While it is estimated that our nation's industries and governments lose millions of dollars each year to counterfeiters, the trade in counterfeit IT products also presents serious threats to our national security and consumer safety.

Today, IT products, such as computer network hardware, (the infrastructure of business, healthcare, education, and communication and information networks) and integrated circuits (IC), are used in a wide range of applications; including automobiles, aircraft, computers, telecommunications, medical devices, and consumer electronics. These IT products are also essential to our national infrastructure systems; such as air traffic control, financial and telecommunication networks, and government and military communications, information, and operating systems.

Counterfeit network hardware and ICs pose a risk in that they frequently do not meet the quality standards of genuine equipment. Various information indicates that these products have a higher failure rate than genuine equipment, and often fail upon installation, or weeks or months after installation. Thus, these counterfeit IT products pose a threat to the national security and consumer safety because when they fail, the entire systems in which they are embedded may also fail.

The Councils believe requiring contractors to represent that the IT products they sell to the Government are authentic, will aid in efforts to combat counterfeit IT products. In addition to commenting on the Government proposal, the public and industry are invited to offer suggestions on other ways to limit the risk to the Government from acquiring counterfeit IT products.

To facilitate public comment, the Councils have attached provisional FAR text.

While the focus of this notice is IT products, comments are invited on (1) whether the measures proposed herein should be expanded to include other items sold to the Government and (2) whether the rule should apply when information technology is a component of a system or assembled product. Further, the provisional text places the OEM in the role of “gatekeeper” as to who is an authorized distributor or reseller. Is there another party or process which would be more appropriate to this role? Also, through what means should authorized status be substantiated? By a letter from the OEM, or a reference on an OEM website?

This is not a significant regulatory action and, therefore, was not subject to review under Section 6(b) of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

Therefore, DoD, GSA, and NASA propose amending 48 CFR parts 2, 4, 12, 39, and 52 as set forth below:

1. The authority citation for 48 CFR parts 2, 4, 12, 39, and 52 continues to read as follows:

Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 U.S.C. 2473(c).

2. Amend section 2.101 in paragraph (b) in the definition “Information technology” by revising paragraph (2) to read as follows:

(b) * * *

Information technology * * *

(2) The term “information technology” includes—

(i) Computers;

(ii) Ancillary equipment (including imaging peripherals, input, output, and storage devices necessary for security and surveillance);

(iii) Peripheral equipment designed to be controlled by the central processing unit of a computer;

(iv) Software, firmware and similar products;

(v) Services (including support services); and ( printed page 68375)

(vi) Related resources.

3. Amend section 4.1202 by adding paragraph (cc) to read as follows:

(cc) 52.239-XX, Authentic Information Technology Products—Representation.

4. Amend section 12.301 by adding paragraphs (d)(3) and (d)(4) to read as follows:

(d) * * *

(3) Insert the provision at 52.239-XX, Authentic Information Technology Products—Representation, as prescribed at 39.107(b)(1).

(4) Insert the clause at 52.239-YY, Authentic Information Technology Products, as prescribed at 39.107(b)(2).

5. Amend section 39.002 by adding, in alphabetical order, the definition “Counterfeit information technology product” to read as follows:

Counterfeit information technology product means any item of information technology (IT), including hardware and software, that is an unauthorized copy, replica, or substitute.

6. Amend section 39.101 by adding paragraph (e) to read as follows:

(e) To protect the Government from procuring counterfeit IT products, agencies shall ensure that all acquisitions for IT products are procured from the original equipment manufacturer (OEM), software developer, or authorized distributor or reseller. Agencies shall ensure that all solicitations and contracts for the acquisition of IT products include a requirement for the offeror or contractor to represent that the IT products being sold under its contract to the Government are not counterfeit.

7. Amend section 39.102 by removing from paragraph (b) “availability,” and adding “availability, counterfeit IT products, performance, security,” in its place.

8. Amend section 39.107 by designating the undesignated paragraph as paragraph (a); and adding paragraph (b) to read as follows:

(b)(1) The contracting officer shall insert the provision at 52.239-XX, Authentic Information Technology Products—Representation, in all solicitations for the acquisition of IT products.

(2) The contracting officer shall insert the clause at 52.239-YY, Authentic Information Technology Products, in all contracts for the acquisition of IT products.

9. Amend section 52.239-1 by removing from the introductory paragraph “39.107” and adding “39.107(a)” in its place.

10. Add sections 52.239-XX and 52.239-YY to read as follows:

As prescribed in 39.107(b)(1), insert the following provision:

AUTHENTIC INFORMATION TECHNOLOGY PRODUCTS—REPRESENTATION (DATE)

(a) Definition. Counterfeit information technology product means any item of information technology (IT), including hardware and software, that is an unauthorized copy, replica, or substitute.

(b) To be eligible for award of the proposed contract, an offeror must—

(1) Be either the original equipment manufacturer (OEM); or

(2) Have written authorization from the OEM or software developer to function as a distributor or reseller of the subject products.

(c) By submission of this offer, the offeror represents that—

(1) The IT products to be sold or leased to the Government under the proposed contract are authentic and not counterfeit; and

(2) It is the original equipment manufacturer or software developer, or an authorized distributor or reseller for the IT products.

(End of provision)

As prescribed in 39.107(b)(2), insert the following clause:

AUTHENTIC INFORMATION TECHNOLOGY PRODUCTS (DATE)

(a) Definition. Counterfeit information technology product means any item of information technology (IT), including hardware and software, that is an unauthorized copy, replica, or substitute.

(b) The Contractor shall sell to the Government only IT products that are authentic and not counterfeit. In the event that such IT products are determined to be counterfeit, there is no limitation to the Contractor's liability.

(End of clause)