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252.246-7008, Sources of Electronic Parts (b)(3)(i) directs the contractor to (b)(3)(ii) if the contractor obtains an electronic part from (2) a subcontractor (other than the original manufacturer) that refuses to accept flowdown of this clause:

What if it is the original manufacturer that is refusing the flowdown provisions of 252.246-7007?  No action needed, and the contractor is able to procure the item from the Original Equipment Manufacturer (OEM). 

Kind of an odd scenario, but the provision seems overlook the OEM as an potential entry point for counterfeit parts.   Love to hear your thoughts.   

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Could you clarify the chain of potential subcontract levels (who is buying from whom in your hypothetical), and/or explain what you are thinking about the relationship between -7007 and -7008?  Perhaps I do not understand the post. In my mind, a prime contractor should be flowing both clauses to its supplier and in so doing, change the parties in the last paragraph such that each supplier would be required to flow it to the next level supplier. If -7007 is included in a prime contract, a prime Contractor subject to Cost Accounting Standards and any of the lower level suppliers in the chain would be in violation of a contract if it does business with an OEM that does not agree to accept -7007. What am I missing?   

Edited by Neil Roberts
typo

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Yes.  A prime is subcontracting with the OEM (compliant with 7008(b)(1)(i) and the OEM states they do not comply with 7007.  7008 states in (b)(3)(ii)  the contractor shall notify the KO in writing, but that only applies to subcontractors other than the OEM.  Therefore ther is no notification requirement if it is the OEM that fails to comply with the requirement of 7007.  Is this correct?

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On the concern about required action should a prime contractor decide to purchase from an OEM that will not accept -7007, I agree that the prime contractor is not required by -7007 to notify the contracting officer that (1) the prime contractor appears to be in breach of contract for doing business with the OEM and (2) the prime contractor Purchasing System appears to be non-compliant with 252.244-7001 (see paragraph (d) of -7007). However, a case can be made that the prime contractor is required by -7007 paragraph (c)(6) to report to the Government that the OEM is suspected for counterfeit electronic parts (because it refuses to accept -7007) and quarantine such parts upon receipt from the OEM until such time as they can be determined to be authentic.  

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Thank you Neil.   It is what I thought.  It's not that the OEM rejected the flowdown, but rather that we were unable to confirm that they have a system in place.  We are going the extra step, having subcontractors that  provide us with an EEE parts or assemblies with a certification that they have a compliant QMS that covers the requirements of DFAR 2352.246-7007.   The OEM's initial response to us was no they do not.    

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7 hours ago, Neil Roberts said:

However, a case can be made that the prime contractor is required by -7007 paragraph (c)(6) to report to the Government that the OEM is suspected for counterfeit electronic parts (because it refuses to accept -7007) and quarantine such parts upon receipt from the OEM until such time as they can be determined to be authentic.  

Suspected because they won't accept another government clause? Maybe they won't accept the government clause because they think it's just another stupid government clause, in which case i suspect them of being fed up.

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17 hours ago, Vern Edwards said:

Maybe they won't accept the government clause because they think it's just another stupid government clause, in which case i suspect them of being fed up.

I worked in private industry for a small division of a very large company (in the top 20 of the Fortune 100).  I remember helping one of our proposal writers look at a list of DoD flow down clauses.  We were looking at being a sub for a prime with a contract.  I started to help him interpret them and he essentially said forget it just after a couple minutes.  He decided that we weren't going to bid on that work because we didn't want to accept all of the flow down requirements, some of which he thought were excessive.

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Whether or not a mandatory flowdown clause included in a prime contract is seen as "stupid" or "forget it", is irrelevant to the contractor or subcontractor's contract obligation. My view is they should take such action as finding another source willing to accept the clause, requesting DPAS related assistance from the Government if a rated order and applicable, obtaining a contract modification for this procurement, escalating available leverage with the OEM, etc., which is what Z-Mil, this post initiator has apparently done. 

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5 hours ago, Neil Roberts said:

Whether or not a mandatory flowdown clause included in a prime contract is seen as "stupid" or "forget it", is irrelevant to the contractor or subcontractor's contract obligation.

What "subcontractor's contract obligation" are you talking about? I thought the issue was whether a prospective subcontractor would/should assent to a proposed obligation.

I agree that if a prime has promised to flow down a clause, and if the prospective sub refuses to assent to the clause, then the prime must seek another source.

It looks like you no longer recommend casting suspicion on a prospective sub of selling counterfeit parts just because they won't assent to a clause.

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Hi Vern:

Happy to see you are still involved day to day with this forum. The contract obligation I am talking about is the obligation to flow the -7007 clause. Z-Mil's initial posting asked for thoughts about a contractor buying electronic parts from an OEM even though the OEM would not agree to accept -7007. My thoughts were that action would be required to report the OEM parts as potentially counterfeit and  quarantine the parts until this was resolved. I don't know why any contractor or subcontractor would want to shoot themselves in the foot by entering into such a contract with an OEM that will not accept -7007.    

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