A critique of draft SAE Standard AS6174 Counterfeit Materiel

The SAE International G-21 Counterfeit Materiel Committee recently distributed a ballot among its members to approve proposed standard AS6174 Counterfeit Materiel; Assuring Acquisition of Authentic and Conforming Materiel. The following is a critique from my first blush review of this proposal.

Boiling the ocean

According to the 2012-02-18 ballot draft, AS6174 “was created in response to a significant and increasing volume of counterfeit materiel entering the supply chain, posing significant performance, reliability, and safety risks.” The use of the term “materiel” in this proposed standard refers to “material, parts, assemblies, and other procured items (except for electronic parts, which are covered by AS5553)”— in other words: all products other than electronic parts. The ballot draft of AS6174 does not, however, provide clear direction or focus to help industry or government implement meaningful or effective counterfeit avoidance policies or risk management approaches.

Rather than establishing broad policies, practices and standards that encompass all materiel commodities, near term policies, practices and standards should: 1) focus on materiel that present the greatest counterfeiting risk, 2) call for routine assessment of trends to determine the extent to which other materiel commodities emerge as a significant counterfeiting risk, 3) broaden the scope of policies, practices and standards based on trend assessment results. This will enable existing resources to be directed to where significant risks presently lie and avoid diluting the execution of, and effectiveness of, policies, practices and standards by casting too wide a net.

The SAE G-21 Committee should consider incorporating findings from recent industry and government studies to identify specific types of materiel that present the greatest counterfeiting risk. Examples of such studies are …

Confusing and incomplete definition of “Counterfeit”

This proposed standard clouds the issue by referring to “legal distinctions between counterfeit and fraudulent parts”. There is neither discussion about what these distinctions are, why these distinctions are relevant, nor how these distinctions have bearing on the execution of the requirements of this proposed standard.

“Used parts represented as new” should be included in the definition of “counterfeit”. Defense and Aerospace subject matter experts have included “used parts represented as new” in the definition of a counterfeit for the past several years without significant objection from users or suppliers. A significant proportion of counterfeit parts (per today’s definition) reported by industry consist of parts that are “used parts represented as new”. Industry subject matter experts have described in the literature and in briefings on the counterfeit parts issue how “used parts represented as new” can present a reliability risk. Recent US Government anti-counterfeiting initiatives provide compelling rationale for including “used parts represented as new” in the definition of “counterfeit”. The US Government Inter-Agency Anti-Counterfeiting Working Group, under the leadership of the White House Intellectual Property Enforcement Coordinator is developing a strategy to eliminate counterfeit products from the US Government Supply Chain”. Studies serving as the basis for this strategy include “used parts represented as new” in the discussion of counterfeit examples. During the US Senate Armed Services Committee hearing on 8 November 2011, Senator Carl Levin, D-Mich., reported “The definition of ‘counterfeit’ as it relates to electronic parts, which has been endorsed by the Department of Defense and defense contractors alike, includes both fakes and previously used parts that are made to look new and are sold as new.” (SAE Aerospace Standard AS5553, adopted by DOD in August of 2009, includes “used parts represented as new” in its current definition.) Witnesses at this hearing discussed how used parts harvested from e-waste serves as feedstock for counterfeiters. Specific examples discussed during the hearing included failures attributed to “previously used parts counterfeited to make them appear new”. Subsequent to this hearing, the US Congress agreed to requirements for “Detection and Avoidance of Counterfeit Electronic Parts” which now appear in Section 818 of the National Defense Authorization Act for Fiscal Year 2012. Section 818 requires the Secretary of Defense to “establish Department-wide definitions of the terms ‘counterfeit electronic part’ and ‘suspect counterfeit electronic part’, which definitions shall include previously used parts represented as new.”

Unrealistic expectations concerning a “Materiel Authenticity Assurance Plan”

The proposed standard states that “The organization shall develop and implement a materiel authenticity assurance plan that documents: (a) its processes used for assuring that only authentic and conforming materiel is procured from legally authorized sources”. This is not possible for products that are no longer produced by the original manufacturer and stock has been depleted from other “legally authorized sources”.

Vague and inaccurate guidance on “Authentic and Conforming Materiel Availability”

The proposed standard states that “Organizations shall modify/develop their risk management policies to direct immediate identification of items and supply sources susceptible to counterfeiting for enhanced product assurance”. This open ended requirement with no clear direction will not help industry or government to implement meaningful or effective counterfeit avoidance policies or risk management management approaches. This section refers to Appendix A for guidance. Appendix A, however, provides misleading guidance and includes information specific to electronic component risk which is covered within AS5553.

Appendix A describes the likelihood of counterfeiting occurrence based on where the authentic item lies within its life cycle. This is an incorrect and dangerous assumption that misleads the user into believing that the probability of a counterfeiting occurrence for products within a “stable, high quality production base” is “not likely”. According to credible industry and US government reports with supporting facts and data, the counterfeits reported are about equally distributed between products currently in production versus those that are no longer in production. An example of such a study is…

Product sourcing is the key discriminator with respect to likelihood of counterfeiting occurrence. Logic dictates that a user will receive an authentic product from the original manufacturer and a user is less likely to receive authentic products from other sources. The probability of a counterfeiting occurrence is best articulated in terms of the type of supplier involved. The keystone to counterfeit avoidance practices recommended by industry and US government subject matter experts is sourcing through original manufacturers or their authorized distributors. Should the user consider procurements from suppliers other than original manufacturers or their authorized distributor, the user will by definition be accepting some level of risk that counterfeit items will enter its supply chain. Risk assessments must account for the fact that the probability of a counterfeit item quality escape will depend heavily on supplier qualification requirements and the extent of inspections and tests applied to detect counterfeits.

CLOSING REMARKS

The SAE G-21 Committee should include specific guidance within AS6174 to provide clear direction and focus to help industry and government implement meaningful or effective counterfeit avoidance policies or risk management approaches.

  1. Focus on materiel that present the greatest counterfeiting risk, including “used parts represented as new”,
  2. Establish realistic expectations for a “Materiel Assurance Plan” based on this focus, and
  3. Provide guidance on a risk management approach based on facts and data.

Henry Livingston

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One thought on “A critique of draft SAE Standard AS6174 Counterfeit Materiel

  1. dghosack says:

    Excellent set of points, Henry. It appears that the draft expects industry to “eat the elephant” in one bite, rather than focus energy and vigilance where it would provide the most protection. My experience would suggest that perhaps focusing on a method of standardizing authentication of fasteners might be a good place to start.

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