FAR 52.246-26—Reporting Nonconforming Items.
Plain-English Summary
FAR 52.246-26, Reporting Nonconforming Items, is a quality-control and supply-chain integrity clause aimed at preventing counterfeit, suspect counterfeit, and materially defective items from reaching the Government. It defines the key terms used in the clause, including common item, counterfeit item, suspect counterfeit item, critical item, critical nonconformance, major nonconformance, and design activity, so contractors and contracting officers can apply the reporting rules consistently. The clause requires contractors to screen GIDEP reports as part of their inspection or quality system, notify the contracting officer within 60 days when they suspect counterfeit items, retain suspect items pending disposition, and report certain counterfeit or nonconforming items to GIDEP within 60 days. It also explains when GIDEP reporting is not required, including for certain foreign contractors, items under an ongoing criminal investigation, and some nonconforming items where the defect source has not released the item to more than one customer. The clause limits what may be included in GIDEP reports to protect trade secrets and other legally protected information, provides a DoD-specific civil liability protection for good-faith reporting of counterfeit electronic parts, and requires flowdown of the clause to certain subcontracts. In practice, this clause is a key tool for early detection, traceability, and information sharing across the defense and federal supply chain, and it places real compliance obligations on contractors to identify, hold, report, and flow down nonconformance information promptly and accurately.
Key Rules
Key definitions control scope
The clause starts by defining the terms that drive compliance, including counterfeit item, suspect counterfeit item, common item, critical item, critical nonconformance, major nonconformance, and design activity. These definitions determine what must be screened, reported, retained, and flowed down.
Screen GIDEP reports
Contractors must use GIDEP reports as part of their inspection or quality-control system to avoid using or delivering counterfeit, suspect counterfeit, or major/critical nonconforming items. This screening requirement does not apply to foreign corporations or partnerships without a U.S. office, place of business, or fiscal paying agent.
Notify the contracting officer
When the contractor becomes aware or has reason to suspect that an end item, component, subassembly, part, or material in supplies purchased for the Government is counterfeit or suspect counterfeit, it must notify the contracting officer in writing within 60 days. The trigger is awareness or reasonable suspicion from inspection, testing, records review, or other sources.
Hold suspect items
Any counterfeit or suspect counterfeit items in the contractor’s possession at discovery must be retained until the contracting officer provides disposition instructions. Contractors should not scrap, return, install, or otherwise dispose of the items on their own.
Report to GIDEP within 60 days
Unless an exception applies, the contractor must submit a GIDEP report within 60 days when it becomes aware or has reason to suspect that an item purchased for Government delivery is counterfeit, suspect counterfeit, or a common item with a major or critical nonconformance. This reporting requirement is separate from notice to the contracting officer.
Exceptions to GIDEP reporting
The contractor must not submit a GIDEP report if it is a qualifying foreign entity without a U.S. office or paying agent, if the item is the subject of an ongoing criminal investigation unless law-enforcement approves the report, or for certain noncounterfeit nonconforming items when the defect source has not released the item to more than one customer.
Protect confidential information
GIDEP reports under the clause may not include trade secrets, confidential commercial or financial information protected by the Trade Secrets Act, or any other information prohibited from disclosure by statute or regulation. Contractors must report enough to warn the supply chain without disclosing protected information.
DoD reporting liability protection
For Department of Defense contracts, the clause implements statutory protection from civil liability for contractors or subcontractors that make written reports or notifications about counterfeit electronic parts or suspect counterfeit electronic parts, so long as they made a reasonable effort to ensure the report was factual.
Flow down to subcontracts
The contractor must insert the clause, including the subcontract flowdown paragraph, into certain subcontracts. The flowdown applies to subcontracts for items subject to higher-level quality standards and other covered subcontract types identified in the clause.
Responsibilities
Contracting Officer
Receive written notifications of suspected counterfeit items, provide disposition instructions for retained items, and manage the contract administration response to reported nonconformance or counterfeit concerns. The contracting officer may also need to coordinate with quality, legal, and investigative personnel when reports involve serious defects or criminal investigation issues.
Contractor
Screen GIDEP reports as part of its quality system, identify counterfeit or suspect counterfeit items and major or critical nonconformances, notify the contracting officer within 60 days, retain suspect items pending disposition, submit required GIDEP reports within 60 days unless an exception applies, protect confidential information in reports, and flow the clause down to required subcontracts.
Subcontractor
When the clause is flowed down, comply with the same reporting, retention, and quality-control obligations for covered items and support the prime contractor’s supply-chain integrity efforts. Subcontractors may also benefit from the DoD liability protection when they make qualifying good-faith reports of counterfeit electronic parts.
Agency / Government
Use the information received through notifications and GIDEP reports to protect the supply chain, assess risk, and take corrective or investigative action as needed. For DoD matters, law-enforcement coordination may be necessary when a criminal investigation is ongoing and reporting approval is required.
GIDEP
Serve as the reporting and information-sharing repository for counterfeit, suspect counterfeit, and certain nonconforming item reports so that the broader acquisition community can avoid affected items and suppliers.
Practical Implications
Contractors need a documented process for screening, escalation, retention, and reporting; ad hoc handling is not enough. Quality personnel, procurement staff, and program managers should know the 60-day clocks and who owns each step.
The clause creates two separate reporting tracks in many cases: notice to the contracting officer and a GIDEP report. Missing either one can create compliance exposure even if the other was completed.
The distinction between counterfeit, suspect counterfeit, major nonconformance, and critical nonconformance matters a lot. Misclassifying an issue can lead to underreporting, overreporting, or improper disposition of parts.
Foreign entities without a U.S. office, place of business, or fiscal paying agent have limited exceptions, but they still may need to manage contract-specific quality and notification obligations carefully.
Contractors should be cautious about confidentiality and criminal-investigation issues. Reports must be useful, but they cannot disclose protected information or interfere with law-enforcement activity.
Official Regulatory Text
As prescribed in 46.317 , insert the following clause Reporting Nonconforming Items (Aug 2024) (a) Definitions. As used in this clause— Common item means an item that has multiple applications versus a single or peculiar application. Counterfeit item means an unlawful or unauthorized reproduction, substitution, or alteration that has been knowingly mismarked, misidentified, or otherwise misrepresented to be an authentic, unmodified item from the original manufacturer, or a source with the express written authority of the original manufacturer or current design activity, including an authorized aftermarket manufacturer. Unlawful or unauthorized substitution includes used items represented as new, or the false identification of grade, serial number, lot number, date code, or performance characteristics. Critical item means an item, the failure of which is likely to result in hazardous or unsafe conditions for individuals using, maintaining, or depending upon the item; or is likely to prevent performance of a vital agency mission. Critical nonconformance means a nonconformance that is likely to result in hazardous or unsafe conditions for individuals using, maintaining, or depending upon the supplies or services; or is likely to prevent performance of a vital agency mission. Design activity means an organization, Government or contractor, that has responsibility for the design and configuration of an item, including the preparation or maintenance of design documents. Design activity could be the original organization, or an organization to which design responsibility has been transferred. Major nonconformance means a nonconformance, other than critical, that is likely to result in failure of the supplies or services, or to materially reduce the usability of the supplies or services for their intended purpose. Suspect counterfeit item means an item for which credible evidence (including but not limited to, visual inspection or testing) provides reasonable doubt that the item is authentic. (b) The Contractor shall— (1) Screen Government-Industry Data Exchange Program (GIDEP) reports, available at www.gidep.org , as a part of the Contractor's inspection system or program for the control of quality, to avoid the use and delivery of counterfeit or suspect counterfeit items or delivery of items that contain a major or critical nonconformance. This requirement does not apply if the Contractor is a foreign corporation or partnership that does not have an office, place of business, or fiscal paying agent in the United States; (2) Provide written notification to the Contracting Officer within 60 days of becoming aware or having reason to suspect, such as through inspection, testing, record review, or notification from another source ( e.g. , seller, customer, third party) that any end item, component, subassembly, part, or material contained in supplies purchased by the Contractor for delivery to, or for, the Government is counterfeit or suspect counterfeit; (3) Retain counterfeit or suspect counterfeit items in its possession at the time of discovery until disposition instructions have been provided by the Contracting Officer; and (4) Except as provided in paragraph (c) of this clause, submit a report to GIDEP at www.gidep.org within 60 days of becoming aware or having reason to suspect, such as through inspection, testing, record review, or notification from another source ( e.g. , seller, customer, third party) that an item purchased by the Contractor for delivery to, or for, the Government is– (i) A counterfeit or suspect counterfeit item; or (ii) A common item that has a major or critical nonconformance. (c) The Contractor shall not submit a report as required by paragraph (b)(4) of this clause, if— (1) The Contractor is a foreign corporation or partnership that does not have an office, place of business, or fiscal paying agent in the United States; (2) The Contractor is aware that the counterfeit, suspect counterfeit, or nonconforming item is the subject of an on-going criminal investigation, unless the report is approved by the cognizant law-enforcement agency; or (3) For nonconforming items other than counterfeit or suspect counterfeit items, it can be confirmed that the organization where the defect was generated ( e.g. , original component manufacturer, original equipment manufacturer, aftermarket manufacturer, or distributor that alters item properties or configuration) has not released the item to more than one customer. (d) Reports submitted in accordance with paragraph (b)(4) of this clause shall not include— (1) Trade secrets or confidential commercial or financial information protected under the Trade Secrets Act ( 18 U.S.C. 1905 ); or (2) Any other information prohibited from disclosure by statute or regulation. (e) Additional guidance on the use of GIDEP is provided at https://www.gidep.org/login?returnUrl=%2Fdashboard . (f) If this is a contract with the Department of Defense, as provided in paragraph (c)(5) of section 818 of the National Defense Authorization Act for Fiscal Year 2012 (Pub. L. 112-81), the Contractor or subcontractor that provides a written report or notification under this clause that the end item, component, part, or material contained electronic parts ( i.e. , an integrated circuit, a discrete electronic component (including, but not limited to, a transistor, capacitor, resistor, or diode), or a circuit assembly)) that are counterfeit electronic parts or suspect counterfeit electronic parts shall not be subject to civil liability on the basis of such reporting, provided that the Contractor or any subcontractor made a reasonable effort to determine that the report was factual. (g) Subcontracts. (1) Except as provided in paragraph (g)(2) of this clause, the Contractor shall insert this clause, including this paragraph (g), in subcontracts that are for– (i) Items subject to higher-level quality standards in accordance with the clause at Federal Acquisition Regulation (FAR) 52.246-11 , Higher-Level Contract Quality Requirement; (ii) Items that the Contractor determines to be critical items for which use of the clause is appropriate; (iii) Electronic parts or end items, components, parts, or materials containing electronic parts, whether or not covered in paragraph (g)(1)(i) or (ii) of this clause, if the subcontract exceeds the simplified acquisition threshold, as defined in FAR 2.101 on the date of subcontract award,and this contract is by, or for, the Department of Defense (as required by paragraph (c)(4) of section 818 of the National Defense Authorization Act for Fiscal Year 2012 (Pub. L. 112-81)); or (iv) For the acquisition of services, if the subcontractor will furnish, as part of the service, any items that meet the criteria specified in paragraphs (g)(1)(i) through (g)(1)(iii) of this clause. (2) The Contractor shall not insert the clause in subcontracts for– (i) Commercial products and commercial services; or (ii) Medical devices that are subject to the Food and Drug Administration reporting requirements at 21 CFR 803 . (3) The Contractor shall not alter the clause other than to identify the appropriate parties. (End of clause)