U.S.

March 30, 2012

GAO reports counterfeit and bogus part numbers found on Internet purchasing platforms

Suspected counterfeit and bogus part numbers, not associated with any authentic military-grade electronic parts, were discovered on Internet purchasing platforms, while being investigated by the U.S. Senate Armed Services Committee and the Government Accountability Office, an investigative arm of Congress.

At the request of the U.S. Senate Armed Services Committee, the GAO launched an investigation in August 2011, to examine the threat of counterfeit parts sold to the Department of Defense, which could undermine the military.

“The GAO’s involvement was designed to complement the full committee’s objectives,” said Timothy Persons, chief scientist for the GAO.

The GAO created a fictitious company and gained membership to two Internet platforms providing access to vendors selling military-grade electronic parts.

“Almost anything is at risk of being counterfeited, from fasteners used on aircraft to electronics used on missile guidance systems. There can be many sources of counterfeit parts as DOD draws from a large network of global suppliers,” the report said.

After submitting requests for quotes on both platforms, the GAO selected the first of any vendor among those offering the lowest prices and that provided enough information to purchase a given part, generally within two weeks. The agency requested parts that were new, not refurbished and were in original packaging.

GAO officials stated in their report that they, “received responses from 396 vendors, of which 334 were located in China; 25 in the United States; and 37 in other countries, including the United Kingdom and Japan.”

The GAO purchased a total of 16 parts from three categories: (1) authentic part numbers for obsolete and rare parts; (2) authentic part numbers with postproduction date codes (date code after the last date the part was manufactured); and (3) bogus, or fictitious, part numbers that are not associated with any authentic parts.

Under the GAO’s selection methodology, vendors in China provided all 16 parts.

According to the GAO, of the 16 parts purchased, vendors usually responded within a day and none of the 16 parts vendors provided to the GAO were legitimate.

“More specifically, all 12 of the parts received after GAO requested rare part numbers or postproduction date codes were suspect counterfeit, according to the testing lab, and after submitting requests for bogus parts using invalid part numbers, the GAO purchased four parts from four vendors, which shows their willingness to supply parts that do not technically exist,” stated GAO officials in their report to Congress.

To determine whether the parts received were counterfeit, GAO contracted with a qualified, independent testing lab for full component authentication analysis of the first two categories of parts, but not the third (bogus) category.

“Suspect counterfeit,” which applies to the first two categories of parts that were tested, is the strongest term used by the independent testing lab, signifying a potential violation of intellectual property rights, copyrights, or trademark laws, or misrepresentation to defraud or deceive.

Multiple authentication tests, ranging from inspection with electron microscopes to X-ray analysis, revealed that the parts had been re-marked to display the part numbers and manufacturer logos of authentic parts.

Other features were found to be deficient from military standards, such as the metallic composition of certain pieces.

For the parts requested using postproduction date codes, the vendors also altered date markings to represent the parts as newer than when they were last manufactured, as verified by the parts’ makers.

According to the GAO, “Counterfeit parts can seriously disrupt the Department of Defense supply chain, harm weapon systems integrity, and endanger troops’ lives.”

In a November testimony, the GAO summarized preliminary observations from its investigation into the purchase and authenticity testing of selected, military-grade electronic parts that may enter the DOD supply chain.

The GAO worked with the Defense Logistics Agency, which provides supplies and services to U.S. military forces worldwide.

“The GAO’s results are based on a non-generalizable sample and cannot be used to make inferences about the extent to which parts are being counterfeited, ” stated GAO officials.

The Defense Logistics Agency said in an interview with the Dayton Daily News that, “It does not have estimates of how many counterfeit electronic parts are sold to the Defense Department. However, DLA officials said they regard the problem seriously and will take steps to try to keep bogus parts out of their agency’s eight supply chains.”




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