The use of original manufacturers or their authorized suppliers is the keystone to counterfeit part avoidance practices recommended by industry and US government subject matter experts. In an earlier essay, I described why one would use other suppliers when parts are currently produced by and available from the original manufacturer or are available through its authorized dealer.
US Government agencies, including DoD, flow down expectations to enhance subcontracting opportunities for small and small disadvantaged business concerns. One method that contractors use to be responsive to these expectations is to outsource part procurement to small and small disadvantaged businesses. Section 818 of the FY2012 NDAA supports this approach. Referring to Section 818(c)(3)(A), DOD is expected to revise regulations to require that, whenever possible, DoD, contractors and subcontractors at all tiers to obtain electronic parts from the original manufacturers of the parts or their authorized dealers, or “from trusted suppliers who obtain such parts exclusively from the original manufacturers of the parts or their authorized dealers”. DoD and its contractors must recognize, however, that counterfeit electronic parts tend to enter the supply chain through Independent Distributors and brokers; many Independent Distributors and brokers are small or small disadvantaged businesses.
When selecting small and small disadvantaged businesses to be suppliers of electronic components, DoD and its contractors should ensure these suppliers have business practices in place to prevent the supply and proliferation of counterfeit parts. One method would be to flow down requirements to small and small disadvantaged businesses directing procurement from an original manufacturer or its authorized dealer. In cases where a contractor considers the use of small and small disadvantaged businesses to acquire electronic parts that are not available from an original manufacturer or its authorized dealer, the buyer must apply significant oversight to ensure the authenticity of parts.
DoD and contractors should consider the following when selecting Independent Distributors and brokers, including those that are small and small disadvantaged businesses, to acquire electronic parts that are not available from an original manufacturer or its authorized dealer:
1. The majority of Independent Distributors and brokers supplying product sourced from the open market do not have the capability to perform or effectively outsource inspections and tests other than those that would detect some forms of obvious fakes.
2. It will be left to the buyer (such as a contractor or DoD procurement organization) to determine what further tests and inspections are necessary to detect various forms of counterfeit parts.
3. The buyer must have the knowledge necessary to select additional tests and inspections to fill in gaps left behind by Independent Distributors and brokers; the buyer must see to the execution of those additional tests and inspections and assess the results.
4. The buyer must flow down expectations of Independent Distributors and brokers in the event counterfeit parts escape tests and inspections performed by the Independent Distributor or broker, but are detected through additional tests and inspections performed by the buyer or at the direction of the buyer by a third party laboratory.
These considerations are key to partnering with small and small disadvantaged business and, at the same time, preventing counterfeit electronic parts from entering the DoD supply chain.