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Senate Armed Forces Committee Meets Counterfeits Head On

By November 10, 2011No Comments

The Senate Armed Services Committee, in their latest hearing, has addressed the issue of counterfeit electronic components entering the Department of Defense’s supply chain.  Chairman of the Senate Armed Forces Committee, Senator Levin, began the hearing by sharing just a few examples of counterfeits being found in Military products that were life threatening to troops and civilians.  Some of his examples included the C27J military aircraft, military helicopters, missile systems, and more.  Some of the highlights of the hearing include;

  • The realization that military contractors do not currently have to pay the damages if they put a counterfeit in their products.  If there are expenses to rectify the counterfeit problem,  the taxpayers pay for the contractors oversight.
  • Shenzhen, China in the Guangdong province, is the epicenter of the electronic counterfeiting problem.
  • There was an acknowledgement that the Chinese government is unwilling to allow our representatives to enter their territory in order to investigate the reports that Shenzhen is the main location where these products are being counterfeited.
  • Government contractors say they have had 1,800 cases of counterfeit electronic components for a total of over 1,000,000 components.
  • There is currently an operation led by the GAO to investigate the state of the counterfeit problem in Shenzhen.  The GAO has become a member of electronic component search engines and is buying components from China to test their authenticity.  So far testing of the parts, which are typically used in military programs and bought from Shenzhen by the GAO, has determined that 100%of the purchases are counterfeit.
  • The senators shared frustration that the actual component manufacturers are not always helping consumers of components in validating their components authenticity.
  • Senator Brown, of Ohio, seemed particularly frustrated that if we know that China is the problem, why we can’t just shut down the trade of components from that region.
  • Senator Avotte, of New Hampshire, asked a great question, “why are we not prosecuting more of the offenders here in the United States?”  She wants to see more felonies to help curb the problem.
  • Senator Levin said “we are going to act.”  “We cannot rely on China to stop the problem.”  He had a few suggestions;
  1. Department of Defense to require some sort of certification for parts suppliers.
  2. Defense Contractors, not the taxpayer,  must be responsible for the cost of replacement and repair of their product in which counterfeits are found.
  3. Inspecting shipments of components at Chinese border – just like we do for dairy products.

The good news is that a lot of this work is already being done.  The SAE G19 Committee, which we are a contributing member of, is almost complete with a stringent certification process to mitigate counterfeit electronic components.  The document we are working on is the AS6081 Counterfeit Electronic Parts; Avoidance Protocol, Distributors.  Also, the Customs and Border Control has significantly stepped up their inspections of parts coming from the Chinese region.

The bad news is that it will be near impossible to encourage China to stop their counterfeiting practices. It has been proven in many other industries that counterfeiting is part of their culture and the state is not interested in anything but cheap talk.

To see the full video of the hearing, which is almost 6 hours long, please click here.