Counterfeit electronic components can jeopardize the performance, reliability and safety of defense products and endanger the lives of US personnel. Over the past several years, increasing amounts of counterfeit electronic components have been introduced into the DOD supply chain. Given the increasing complexity of the DOD supply chain, vigilance is needed to ensure that the authenticity and performance of parts and materials is not compromised and the integrity of the supply chain is maintained. Veterans Trading Company is committed to supporting our client’s and mitigating the risk of counterfeit parts entering the supply chain. As early as 2007 VTC took an industry leadership position by implementing robust internal policies and processes designed to mitigate the risk of counterfeit parts entering the DOD supply chain. In addition to being certified and registered as ISO9001, and AS9120 compliant, and complying with AS5553, VTC took additional steps to further reduce the risk of counterfeit parts entering the supply chain. The VTC Advantage™ is an internal program of policies and industry-accepted best practices designed to minimize the risk of counterfeits.
On the heels of the GAO ‘sting’ operation in which over 1,000,000 parts were identified to have entered the US DOD supply chain, the 112th Congress Senate Armed Services Committee released a report titled: “Inquiry Into Counterfeit Electronic Parts in The DOD Supply Chain”. In looking over just a two year period from 2009 – 2010 the GAO found over 1,800 cases of counterfeit parts entering the DOD supply chain. This accounted for over 1 million parts. Over 70% of the parts were identified to have originated in China. According to the report: “US Government reports consistently point to China as the epicenter of the global trade in counterfeits” The Senate Report outlines a number of conclusions:
- China is the dominant source country for counterfeit electronic parts entering the defense supply chain.
- The Chinese government has failed to take steps to prevent counterfeiting that is carried out openly in that country.
- The DOD lacks knowledge on the scope and impact of counterfeit parts on critical defense systems.
- The use of counterfeit parts can compromise performance, reliability, risk national security, and endanger the safety of US Military personnel.
- Permitting contractors to recover costs as a result of their own failure does not encourage the adoption of aggressive counterfeit detection and avoidance systems.
- The DODs reliance on unvetted, independent distributors results in unacceptable risk to national security and the safety of military personnel.
- Weaknesses in the testing regime create vulnerabilities that are exploited by counterfeiters.
- The defense industry routinely failed to report instances of suspected counterfeit parts putting the integrity of the DOD supply chain in jeopardy.
The report outlines the seriousness of the issue but it is summarized best when the Director of the Missile Defense Agency General Patrick O’Reilly said: “We do not want a $12 million missile defense interceptor’s reliability compromised by a $2 counterfeit part.”
The Government Accountability Office (GAO) conducted an online ‘sting’ operation to find counterfeit, military grade electronics equipment. According to the report: “GAO created a fictitious company and gained membership to two Internet platforms providing access to vendors selling military-grade electronic parts.” During the sting, the GAO purchased parts from vendors and, of all parts purchased, they were all labeled as ‘suspected counterfeit’ and all of the vendors and parts originated in China. As stated by the GAO during Congressional testimony on the report: “Counterfeit parts—generally the misrepresentation of parts’ identity or pedigree—can seriously disrupt the Department of Defense (DOD) supply chain, harm weapon systems integrity, and endanger troops’ lives.” This study reinforces the importance of quality control within the DOD supply chain. Veterans Trading Company is proud have a quality management system that has been assessed and approved for both ISO9001 and AS9120.