Senate Homes in on China’s Role in Counterfeit Parts Entering DOD’s Supply Chain

Nov 8, 2011 6:11pm

Describing the national security implications of counterfeit electronic parts as a “serious problem,” the Senate Armed Services Committee today heard testimony from companies and agencies with firsthand knowledge of the way goods are counterfeited and how they dangerously circle back into the defense department’s supply chain.

“The failure of a single electronic part can leave a soldier, sailor, airman, or Marine vulnerable at the worst possible time,” Senate Armed Services Committee Chairman Carl Levin, D-Mich., said today, “A flood of counterfeit electronic parts has made it a lot harder to have confidence that won’t happen.”

“The problem of counterfeit electronic parts in the defense supply chain is more serious than most people realize,” said Sen. John McCain, the committee’s ranking member. “The committee uncovered over 1,800 incidents, totaling over 1 million parts, of counterfeit electronic parts in the defense supply chain. That is an astounding number. And it begs the question: if one million counterfeit parts were caught in the supply chain, how many were not?”

The committee’s investigation uncovered suspected counterfeit parts on thermal weapons sights delivered to the Army, on mission computers for the Missile Defense Agency’s THAAD (Terminal High Altitude Area Defense) missile, and on military airplanes including the C-17, C-130J, C-27J, and P-8A as well as on AH-64, SH-60B, and CH-46 helicopters.

It also found that the vast majority of cases where parts suspected to be counterfeits have been identified by companies in the defense supply chain go unreported.

“These counterfeit parts threaten the safety and mission readiness of our armed forces because they are unreliable,” McCain said. “They may work for a short time, but we do not know for how long, how well, and what will happen when they fail. We cannot risk a ballistic missile interceptor missing its target, or a helicopter pilot unable to fire his weapons, or display units failing in aircraft cockpits, or any other system failure, all because of the failure of a counterfeit electronic part.”

The senators pointed a firm finger at China for what they call it’s “refusal to act against brazen counterfeiting that is openly carried out” in their country that end up in critical defense systems in the United States.

“China must shut down the counterfeiters that operate with impunity in their country,” Levin said. “If China will not act promptly, then we should treat all electronic parts from China as suspected counterfeits. That would mean requiring inspections at our ports of all shipments of Chinese electronic parts to ensure that they are legitimate. The costs of these inspections would be borne by shippers, as is the case with other types of border inspections.”

Testimony today suggested that it is a constant battle though for companies to stay ahead of the counterfeiters. “It’s growing much worse,” Tom Sharpe, vice president of SMT Corporation, an independent distributor of electronic components, told the committee. “The counterfeiters are changing their processes to get in front of the processes that they know that we are currently doing to detect their processes. So the process is evolving, and it’s getting harder to detect.” S

Sharpe said it would be extremely difficult to stop this unless there was active cooperation of the Chinese government, which is a long way from happening.

“Since the Chinese government is so well aware of what’s going on as far as the counterfeiting in the country, it would seem to me that they could get a handle on this rather quickly, if they were to make that effort to do so,” Sharpe added.

 The committee invited the Chinese Ambassador, or a representative to testify today, but the invitation was declined.

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