FY2012 NDAA – Authenticity Inspections and Tests

The National Defense Authorization Act (NDAA) for Fiscal Year 2012 will prompt contractors to carefully consider product authenticity inspections and tests applied to parts purchased from Independent Distributors and ‘brokers’.

Over the past several years, US Government representatives, defense contractors and distributors have been developing industry standards that include inspection and testing protocols to detect and intercept counterfeit electronic parts. Examples include…

  • SAE International Aerospace Standard AS5553, Counterfeit Electronic Parts; Avoidance, Detection, Mitigation, and Disposition
  • TechAmerica Technical Bulletin TechAmerica-TB-0003: Counterfeit Parts & Materials Risk Mitigation
  • Independent Distributors of Electronics Association IDEA-STD-1010, Acceptability of Electronic Components Distributed in the Open Market
  • Components Technology Institute, Inc. CCAP-101, Counterfeit Components Avoidance Program, Certification For

The US Government has now established requirements in the FY2012 NDAA that should prompt the defense contractor to reassess the degree to which these standards continue to meet its needs and the future expectations of its customers. This reassessment should also cover new standards being developed, such as SAE International Aerospace Standard AS6081, Counterfeit Electronic Parts; Avoidance Protocol, Distributors.

In an earlier essay, I discussed the FY2012 NDAA and its implications for contractors. The defense contractor will be faced with a significant challenge which now makes the careful selection of product authenticity inspections and tests all the more compelling …

Despite the inspection and testing protocol applied by Independent Distributors and “Brokers”, counterfeit products continue to escape detection

The following is an excerpt from my recent paper, “Observations from Counterfeit Cases Reported Through the Government–Industry Data Exchange Program (GIDEP)“. Please note that when I refer to SAE Standard AS5553, I refer to the current released version (published 2009-04-02).

The [Department of Commerce, Bureau of Industry and Security] study reveals that the most common methods of uncovering counterfeits were parts returned by customers as defective and the discovery of parts with poor performance. This finding indicates that despite the inspection and testing practices employed by suppliers other than the original manufacturer or its authorized suppliers, a significant risk remains that counterfeits may escape detection by these suppliers.

Within several of the GIDEP reports, the supplier of the suspect counterfeit (an Independent Distributor or broker) frequently describes themselves as a supplier in good standing by virtue of its quality system status and its membership in prominent industry organizations specializing in counterfeit avoidance best practices. Some GIDEP reports reveal that the supplier did not perform tests or inspections to intercept counterfeits. Many of the GIDEP reports, however, include the supplier’s description of testing and inspection protocols applied with the expectation that counterfeit product would be detected. Despite the inspection and testing protocols applied by these Independent Distributors and brokers, counterfeit products escaped detection and were first identified to them by their customers.

Current industry and Government inspection and test methods are designed to verify the integrity and performance of authentic parts; not to detect counterfeits. While adjustments to and combinations of these methods can detect suspect counterfeits, they are not foolproof. SAE standard AS5553, Counterfeit Electronic Parts; Avoidance, Detection, Mitigation, and Disposition, was developed for use by organizations that purchase electronic components, such as aerospace and defense equipment producers. In addition to other key elements of a robust counterfeit avoidance program, AS5553 includes a recommended suite of inspections and tests designed to detect counterfeit electronic components. This suite of inspections and tests includes low cost and expedient techniques that reveal easily detectable counterfeits, but also includes more rigorous, costly and time consuming methods to (a) detect more subtle variants of counterfeiting that can affect performance in the end use application and (b) reveal defects from damage induced by inadequate handling and storage, termination refurbishing, or reclamation.

Close examination of the GIDEP reports reveals that the testing and inspection approach applied by the supplier did not include important methods described in AS5553, particularly the more rigorous, costly and time consuming methods that have greater potential to detect more subtle variants of counterfeiting that can affect performance in the end use application and defects from damage induced by inadequate handling and storage, termination refurbishing, or reclamation.

Techniques used in the counterfeiting industry are continuously advancing. Though counterfeit detection methods have been developed in recent years, counterfeiters continue to hone their craft to counter these methods. Examination of the GIDEP reports reveals that the supplier was not applying methods to counter newer and more advanced counterfeiting techniques discussed at various industry conferences, symposia and training programs available to Independent Distributors and brokers.

CONCLUDING REMARKS

With the introduction of the FY2012 NDAA, there will be liability to a defense contractor regardless of where the counterfeit part entered the supply chain. Part suppliers may be subject to debarment for selling counterfeit parts, but the contractor or subcontractor will assume responsibility for the authenticity of parts provided by the supplier and the costs to remedy a counterfeit part escape. Furthermore, that escape could put DOD’s approval of a contractor’s business systems in jeopardy despite analysis that may show that the escape is relatively innocuous and despite whether or not a contractor purchased the parts from a ‘trusted supplier’. Defense contractors should, therefore, carefully consider product authenticity inspections and tests applied to parts purchased from Independent Distributors and ‘brokers’ versus the liability risks in the event of a counterfeit part escape. A defense contractor should also assess the degree to which industry standards continue to meet its needs and the future expectations of its customers.

© Henry Livingston

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One thought on “FY2012 NDAA – Authenticity Inspections and Tests

  1. Steve Ingardia says:

    This is such a daunting problem. The question is how can you manage your parts to ensure that you will not be in a position to have to go outside the OEM or franchised lines years down the road after the parts go EOL and you need a few spares.
    This assumes that your standard process prohibits going outside those lines unless you have no other choice. The other problem is I am hearing that there may now be significant risk with obtaining counterfeits from the OEM or Franchised sources. So how much effort should be expended testing those parts for signs of counterfeting and what techniques should be used. There are some fancy techniques available, but cost will be an issue.

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