The introduction of counterfeit parts or goods can happen in just about any supply chain. In some supply chains, however, such as Aerospace & Defense, the use of counterfeit parts could lead to fatal consequences.
That’s the message coming from a U.S. Senate Armed Services Committee hearing. A Businessweek article yesterday reports that dozens of suspected counterfeit parts have been installed in U.S. defense equipment from Raytheon Co., L-3 Communications Holdings Inc., and Boeing Co., including aircraft deployed to Afghanistan. The Senate Armed Services Committee found counterfeit parts—usually from China—on at least seven aircraft, including the Lockheed Martin Corp. C-130J transport plane, Boeing P-8A Poseidon maritime patrol, and L-3 27J Spartan transport.
None of the examples were connected to instances of lives lost or dramatic failures causing an aircraft crash, Michigan Senator Carl Levin, Senate Armed Services Committee Chairman, said. Still, the committee staff has identified numerous places where, unless corrections are made, there is real fear that those kind of disastrous consequences could take place, Levin said in the article.
The problem is widespread, and even more troubling, is growing quickly. Last spring, the Aerospace Industries Association released a white paper titled “Counterfeit Parts: Increasing Awareness and Developing Countermeasures,” which reported on research from the Department of Commerce’s Bureau of Industry and Security (BIS) that studied the infiltration of counterfeit electronic parts into U.S. defense supply chains. The study documented a growth in incidents of counterfeit parts across the electronics industry from 3,300 incidents in 2005 to more than 8,000 incidents in 2008. This sharp increase in incidents, in only three years, clearly indicates that the volume of counterfeit parts is increasing, and that mitigation plans must be developed and implemented, the paper notes.
Indeed, Committee Chairman Levin said committee investigators identified about 1,800 cases involving one million counterfeit parts since 2009. What’s more, those numbers are “just the tip of the iceberg,” Levin said in the Businessweek article.
A Reuters story running earlier this week reports that Senator John McCain, the top Republican on the committee, said the issue was serious and needed to be addressed urgently because counterfeit parts pose real dangers to the U.S. troops and contributed to the high costs of weapons systems. Senator McCain went on to add that the U.S. can’t tolerate the risk of a ballistic missile interceptor failing to hit its target, a helicopter pilot unable to fire missiles, or any other mission failure because of a counterfeit part.
Obviously then, something needs to be done. Toward that end, the committee plans to introduce measures to force defense contractors and the Pentagon to purge the counterfeit parts from the supply chain, Levin told reporters Monday. McCain and Levin said various measures were being considered to address the issue, including amendments that would clearly spell out that contractors should be held responsible for the cost of replacing any counterfeit parts.
The Reuters story also reports that Levin went on to add that if the onus is placed on contractors to make sure that the parts that are being supplied are legitimate parts, they’ll get that message back to their suppliers as well.
What do you think? Would those measures eliminate—or at least slow, the introduction of counterfeit parts into the defense equipment supply chain?