Chinese Counterfeit COTS Chaos Continues
By Paul Kruczkowski, Editor
On March 26, U.S. Government Accountability Office (GAO) released a new report from its ongoing investigation into counterfeit electronic parts in the Department of Defense (DOD) supply chain. The report provides alarming details about the flow of counterfeit parts out of the epicenter of electronic part counterfeiting, China. As I reported in November, Chinese counterfeit electronics seriously threaten the performance and reliability of U.S. defense systems. Senator Carl Levin recently stated that counterfeit parts, “put our national security and the safety of our military men and women at risk. Not only that, but it also costs thousands of American jobs.”
In order to delve deeper into the counterfeit problem, GOA created fictitious company with an owner and employees, a website, and even a listing on the Central Contractor Registration. Using this fake company, GAO attempted to gain membership on three Internet platforms that provide access to vendors selling military-grade electronic parts. One of these platforms rejected the GAO application, but the other two granted them access, and one did so despite not receiving all requested supporting documentation.
GAO then requested quotes from vendors on both platforms for 16 parts focused on three categories: (1) authentic part numbers for obsolete and rare parts, (2) authentic part numbers with post-production date codes, and (3) fake or bogus part numbers that are not associated with any authentic parts.
They received responses from 396 vendors, 334 of which were located in China, 25 in the United States, and 37 in other countries including the United Kingdom and Japan. There were 40 responses to the part inquiries using bogus parts numbers, all from Chinese vendors. (The fact that 84% of the total responses — and more importantly, 100% of the responses to the bogus part inquires — came from China indicates that this is specifically a Chinese counterfeit problem.) The fictitious company proceeded to purchase 16 parts from 13 Chinese vendors, seven with the correct part number (category 1), five with the correct part number but incorrect date codes (category 2), and four with a fake part number (category 3).
GAO contracted SMT Corp. to conduct thorough authentication analysis on these parts, beginning with a visual inspection and followed by these additional tests:
- Resistance to solvent and scrape test
- Package configuration and dimensions
- X-ray florescence element analysis
- Real-time X-ray analysis
- Scanning electron microscopy analysis
- Solderability test
- Dynasolve test
- Delidding and die microscopy
The four parts ordered with bogus part numbers were obviously counterfeit. The other 12 parts were all deemed suspect counterfeit since they all failed many of the tests performed. (One part failed seven of the nine authentication tests.) Therefore, SMT determined that all 16 parts were suspect counterfeit.
Authentic versions of the counterfeit parts acquired in the GAO’s investigation are used in systems by every branch of the U.S. armed services. To name a few:
- F-15, F/A-18E, AC-130H, B-2B, and many more aircraft
- Los Angeles Class and Trident submarines
- Arleigh Burke guided missile destroyer
- Maverick AGM-65A missile
- Joint Surveillance and Target Attack Radar System
The failure of counterfeit parts — due to poor form and fit, reduced MTBF (mean time between failures), or performance and tolerances that do not meet the specifications of the real component —can result in a wide range of problems, from unreliable operation of a platform’s subsystems to the risk of overall weapon system failure. This is unacceptable from a battle readiness standpoint, because the systems must be taken off-line to troubleshoot and repair the problem. Even worse, a counterfeit part failure can be deadly if a critical system fails during a mission.
Thus far, the Chinese government has been unable or unwilling to intervene to stem the tide of counterfeit electronic parts from its country, so that means the DOD must do everything it can do to secure its supply chain. It has already started taking steps in this direction: The Defense Supply Center Columbus (DSCC) has been qualifying distributors and their procurement processes, and government contractors are being encouraged to use legitimate sources to acquire parts. Now that the problem has attracted the attention and scrutiny of Congress, the consequence for allowing counterfeit parts to find their way into finished product will be much greater.
Such measures may stop the flow of new counterfeits into the DOD supply chain, but what about the parts that entered prior to the heightened awareness of counterfeits? Does anyone have a grasp of how many counterfeit parts reside in inventories at DSCC and OEMs? Defense contractors need a plan to conduct authentication tests on these parts before they are implemented, or else they will encounter costly delays.
The DOD may also want to make changes to its procurement process for weapon systems. During a recent conversation with Dale Lillard, president of Lansdale Semiconductor, we talked about how the DOD could look to the auto industry for one possible model. The DOD could procure the weapons system and support for parts and/or maintenance for a certain number of years. The unit cost of the weapons system would cover the additional parts and support and would give the OEMs both the funds and authorization to procure additional parts needed under the contract before those parts become obsolete.
After the support/warranty period is over, the DOD or OEM could rely on reputable aftermarket part manufacturers for future parts. This approach provides the opportunity for aftermarket part manufactures to identify which components will be required in advance, and give them ample time to prepare to properly support the industry. The most important benefit of an approach like this is that it chokes off the long-term demand for counterfeit parts from China. The only way to put the counterfeiters out of business is to stop buying their product.
I think the DOD’s penny-wise, dollar-foolish approach to procuring obsolete electronic parts will become a thing of the past, now that the counterfeit problem has gotten so big that it has become the elephant in the room. Why spend millions of dollars on pilot training and billions on the most advanced planes in the world if you are going to put both at risk to save a few thousand dollars by purchasing counterfeit parts? Why conduct exhaustive testing and emulation of components, subsystems, and system in new weapon systems, and then use replacement parts that aren’t held to those same standards?
I think this new GAO report is a wake-up call to the defense industry, and the remedy to the problem is quick and thorough action — and large dose of common sense. I wouldn’t accept counterfeit parts in the antilock breaking system or stability control modules in my car, and I certainly wouldn’t put $5 brake pads on my car when I know that reliable pads cost $50. Why? Because I put my family in that car. The young men and women that defend freedom around the world are somebody’s family. Start buying the $50 brake pads!
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