Monthly Archives: February 2013

Counterfeit Part Risk Analysis – moving from “subjective assessments” to risk analysis supported by empirical data and defensible estimates

Counterfeit part risk has been discussed from various perspectives. Briefings presented by DoD describe a “profile of counterfeit risk” based on the age of technologies and the susceptibility of those technologies to counterfeiting [1]. SAE Aerospace Standard AS6174 presents a counterfeit materiel risk assessment model based on “impact of supply chain” (cost of operations, degraded function, sabotage or malicious functions, personnel injury or death) and “likelihood of counterfeiting” based on production availability from original manufacturers [2]. SAE Aerospace Standard AS5553 includes a “risk stack chart” describing counterfeit electronic part risk as a function of “supplier reliability and product criticality” [3]. DfR Solutions describes counterfeit electronic part risk in terms of probability of failure versus supplier trustworthiness [4]. Integra Technologies describes types of counterfeit electronic parts, tests and inspections used to detect them, and the probability of detection [5]. A common thread weaving through all of these representations is that vulnerability to counterfeits and risk mitigation is a function of supplier selection, due diligence applied when using riskier suppliers and end use application considerations.

In a recent article, Dr. David E. Frick describes the hazards of ascribing levels of risk based on esoteric analysis versus risk assessments supported by empirical data and defensible estimates [6]. While each of the aforementioned representations are helpful toward pointing organizations in the right direction, quantitative techniques are needed to support practical applications for evaluating counterfeit avoidance approaches. In this essay, I present notional counterfeit parts risk analysis examples based on a methodology described within the “Risk Management Guide for DOD Acquisition” [7] and discuss implementation issues for DoD, A&D contractors and academia to consider when devising quantitative risk-based approaches to addressing the counterfeit parts threat.

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DOD gets serious about supply chain security — Washington Technology

Federal contractors are going to be hearing the words “supply chain” a lot over the next 18 months. Having a certifiably secure supply chain will eliminate a potential mark against your selection as a source, just as having the appropriate contract vehicles eliminates friction. …

 More at Washington Technology.

NOTE: Though the author is correct about the attention “supply chain” is getting on The Hill, the fine points concerning NDAA2013 Section 833 are not accurately described. Note “reader comments” posted by Bob Metzger.

Saudi Gazette – Kingdom top in detection of counterfeit vehicle parts

RIYADH — Saudi Arabia continues to play a leading role in cracking down on commercial fraud globally. …

More at Saudi Gazette

FAR / DFAR Case Update (22 Feb 2013)

Status updates from the 22 February ‘Open Cases Reports’ …

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Compliance Programs for Counterfeit Parts Avoidance and Detection

Counterfeit parts avoidance and detection has emerged as an area of business and legal risk that aerospace and defense (A&D) contractors should incorporate into compliance programs. Section 818 of the National Defense Authorization Act for Fiscal Year 2012 [i] requires the Secretary of Defense to “implement a program to enhance contractor detection and avoidance of counterfeit electronic parts”. The implementation of this program must include “processes for the review and approval of contractor systems for the detection and avoidance of counterfeit electronic parts and suspect counterfeit electronic parts”. Furthermore, DoD’s processes for the review and approval of contractor systems are to be similar to those established for “contractor business systems” under Section 893 of the Ike Skelton National Defense Authorization Act for Fiscal Year 2011. Though these new counterfeit parts avoidance and detection requirements were developed with DoD in mind, both DoD and foreign defense customers (whether Foreign Military Sale or direct commercial) will benefit [ii] as US defense suppliers improve their supply chain security.

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“In Chip-Counterfeiting War, a Small Win for IC Industry” – EBN

“DLA announced that it will allow third-party marking on components in addition to work done by Applied DNA Sciences …”

More in EBN.

ABA Meeting re “Business Systems Audits”

UPDATE: Fri 2/22/2013 12:24 PM

ABA revised its notice concerning the 26 February meeting.

On 26 February, The American Bar Associate Section of Public Contract Law Acquisition Reform and Emerging Issues and Cost and Pricing Committees are holding a meeting for an update on how Business Systems Audits are being performed…

“ … At the conclusion of the panel and a short break, we invite you to stay for a discussion on counterfeit parts with Mr. James Bucrek [Partner, Government Contracts Practice Midwest & West Regions, PricewaterhouseCoopers LLP]. ”

More at ABA PCLS

US regs on counterfeit parts would affect India’s willingness to purchase U.S. defense equipment

Courtesy of Robert Metzger of RJO …

“Earlier this week, the Policy and Regulatory Report (PaRR) of The Financial Times produced a report on how new US regs on counterfeit parts would affect India’s willingness to purchase U.S. defense equipment. I observed that India would benefit from the U.S initiative. Those who make counterfeits aim at equipment from many national suppliers. As US defense suppliers improve their supply chain security, direct and FMS customers will benefit, and tougher controls and procedures will migrate outside the U.S. to other reputable suppliers.”

Preview – NASA Quality Leadership Forum (QLF)

This year’s NASA Quality Leadership Forum (QLF) will take place March 20-21st at Cape Canaveral, FL. A number of speakers will be briefing topics associated with counterfeit parts …

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