Computer and Telecom Resellers Band Together to Fight Counterfeit IT Equipment Flow

ASCDI and NATD appear before US Government Hearing

The Association of Service and Computer Dealers, International (ASCDI) and the North American Association of Telecommunications Dealers (NATD) have banded together in an effort to work with IT manufacturers and law enforcement to eliminate the increased flow of counterfeit equipment into the IT supply chain.

Background:

In 2008, the ASCDI established a Counterfeit Task Force to establish a plan to identify and attack the flow of counterfeit equipment into the computer resale industry. They were joined by the likes of IBM and the FBI in this effort. In an effort to broaden the coalition the ASCDI invited the NATD to join the effort.

Recent events:

A public hearing on a proposed federal rule to require government agencies to only accept bids from manufacturers or their authorized agents shutting out thousands of secondary market resellers in the process was held on Thursday, December 12th in Washington D.C. The proposed rule change represents a seismic shift in the federal government’s acquisition practice affecting thousands of suppliers of goods and services to the federal government. A copy of the proposed ruling can be found at http://edocket.access.gpo.gov/2008/E8-27275.htm.

Most of the 100 people were in attendance at the hearing held at NASA Headquarters were employees of the federal agencies promoting the proposed rule change. Six presentations were made by the following agencies or organizations: National Aeronautics and Space Administration (“NASA”)
Society of Automotive Engineers (“SEA”)
Department of Defense (“DOD”)
Department of Commerce
World Data Products
ASCDI & NATD

During 6 hours of testimony, no one challenged the need to eliminate counterfeit products. Rather, the question boiled down to whether, in order to avoid counterfeit products, is it necessary and appropriate to move the federal government to a policy of sole source acquisition for all IT products eliminating competition for price, quality and terms.

The ASCDI and NATD Position:

Joseph Marion represented the ASCDI and NATD. Mr. Marion prefaced his remarks by introducing the ASCDI and NATD as trade associations representing the interests of those who manufacture, buy, sell, lease and maintain new and used technology products. Mr. Marion pointed out that the secondary IT market is a $312 billion market consisting of thousands of legitimate businesses and an estimated 100,000 tax paying Americans.

Mr. Marion opined that sales to the federal government account for as much as 15% of secondary market industry revenues. He reminded the rule makers that this market place has been and continues to provide huge cost savings on refurbished and new IT products and services to the federal government.

Mr. Marion followed these remarks by expressing a number of concerns with the proposed rule change beginning with the belief that sole sourcing governmental acquisition is not the best solution to the avoidance of counterfeit products. Sole sourcing eliminates competition and is guaranteed to maximize price and reduce quality. Mr. Marion argued that competition from the secondary market acts as a check and a balance against the effects of sole source procurement.

Marion explained that most manufacturers provide product inspections (sometimes called “maintenance agreement qualification inspections”) which can identify counterfeit products and components. He pointed out that the federal government is in the best position to require, as a condition to bid, ALL manufacturers to offer a maintenance agreement qualification inspection upon request. “Mandating such an inspection will allow secondary markets to compete for government acquisition contracts and afford the government the salutary benefits of competition while avoiding counterfeit products,” Marion said.

The Civil Agency Acquisition Council and the Defense Acquisition Regulations Council closed the Public Hearing expressing appreciation for the presentations and acknowledged the fact that the proposed rule change was too narrow in focus and did not meet the acquisition needs of all government constituents which may require secondary markets to continue to provide support.

Both ASCDI and NATD have been called upon to submit supplemental public comment by Tuesday, January 20, 2009 together with proposed language addressing the concerns expressed during the hearing.

For more information about the ASCDI and NATD please go to www.ascdi.com and www.natd.com or contact Joseph Marion at jmarion {at} ascdi(.)com or 561-266-9440.

Contacts

ASCDI and NATD
Joseph Marion, 561-266-9440
jmarion {at} ascdi(.)com