Canada not tracking fake military parts, emails suggest

Government claims of ‘checks and balances’ undermined by emails on lack of policy
By Greg Weston, National Affairs Specialist, CBC News Posted: Oct 24, 2012 5:08 PM ET Last Updated: Oct 24, 2012 9:51 PM ET

Internal documents obtained by CBC News call into question the Harper government’s claim that Canadian military equipment is clear of counterfeit Chinese parts discovered in American aircraft, missiles and other weapons.

Canada buys a majority of its military equipment from the U.S., but the documents indicate the federal government has no way of knowing if unreliable bogus parts have been bought by the Canadian Forces.

At worst, the documents suggest the Canadian government may be ignoring a problem the Americans warn could have “catastrophic” consequences if fake parts fail on aircraft, missile systems and other military hardware.

Copies of emails from officials in the National Defence procurement department indicate the military isn’t doing much to detect counterfeit Chinese parts, has no record of fakes it may have found and has no policy to deal with them.

U.S. report raised alarm
It has been more than five months since a lengthy U.S. congressional investigation reported more than a million bogus electronic components were found in American military equipment.

Knock-offs recycled in China from discarded electronic trash have been discovered in everything from the targeting systems for U.S. Hellfire missiles to the instrument panels of military Hercules C-130 cargo planes.

A U.S. investigation found bogus parts from China in such military hardware as C-130 Hercules cargo planes, similar to one seen in this 2007 photo. Canada recently bought 17 of the transport planes. (Associated Press)Canada recently purchased an entire fleet of the same cargo planes.

In response to the U.S. congressional report, Canada’s then associate minister of defence, Julian Fantino, told CBC News: “We don’t have any particular concerns in this country.

“I have been advised that the checks and balances we have in our country are sufficient.”

But emails between his department and military officials suggest there was no way for Fantino to know that.

In one email, Terry Crich, director of quality assurance at National Defence, says the department “doesn’t have any data source for counterfeit parts that may have been installed on CF [Canadian Forces] equipment or purchased in platforms that CF acquired.”

Crich goes on to say he doubts “that there is any central repository anywhere with this information.”

‘Little or no regard to origin’ of parts
Another official in the same department admits National Defence likely wouldn’t know if a part was from China.

“Once we receipt stock into the supply chain, we account for it under the stock code(s) assigned to it with little or no regard to the origin.”

Alan Williams, retired as head of procurement at National Defence in 2005, reviewed the documents obtained by CBC, and says the government seems to be turning a blind eye to the problem.

“We seem to be just ignoring it and burying our head in the sand as though this can’t happen to us, and that is silly,” Williams says.

“I mean, the worst-case scenario: because of a malfunctioning part, the weapon system doesn’t deploy and we lose men and women in battle or in some other tragic way.”

The emails do not show where the minister got his information that all is well.

‘There is no policy’
One email sent on behalf of the minister’s office to the top brass in the procurement department was firm: “Kindly confirm whether, yes or no, counterfeit parts have ever been found/discovered/reported to be found on [Canadian Forces] equipment or within the supply chain.

Julian Fantino downplayed concern over counterfeit Chinese military parts in Canada when he was associate minister of defence. (Canadian Press)”As well, can you confirm what the policy states as to what the required course of action is when a counterfeit part is found?”

An hour later, senior official Crich responds: “As per my previous email, we do not have any information regarding counterfeit parts in CF equipment or in the supply chain.”

As for policy on what to do when counterfeit parts are discovered: “There is no policy … on this topic.”

The following day, Crich sent an email to another official in his office.

He writes: “Re: Counterfeit parts policy … Wow. Is that …. handbook ever out of date … I don’t see a policy on what to do if you get counterfeit parts, though.”

In all of the documents obtained by the CBC under the Access to Information Act, the only sign of action on the issue of counterfeit parts is in question-and-answer points defence officials prepared for the media.

For example, in answer to the question about what could be done about the fake parts issue as it affects the Canadian military, the national defence public relations department replied:

“Whether made in Canada or imported, there are appropriately rigorous processes in place to ensure that the spare parts used in CF equipment are of the highest quality.”

This week, we asked National Defence what, if anything, had changed in the past five months since the U.S. congressional report sounded the alarm about fake military parts.

The department provided a page of talking points similar to those it prepared for Fantino five months ago.

Bernard Valcourt recently took over from Fantino as the associate defence minister responsible for military procurement. In an interview Wednesday with CBC, Valcourt repeated Fantino’s contention that there are “processes in place” to deal with Chinese knockoffs getting into Canada’s military equipment.

“If there is an issue that arises as to origin of a part, for example, that could be counterfeit, then I mean there are processes in place to make sure that part can be used safely. And it will be replaced if ever it is not safe equipment for our men and women, no question.”

The government points out that since 2010, all defence procurement contracts require suppliers to agree they won’t use counterfeit parts in their products. But the U.S. investigation found that in many cases where fake parts were uncovered, defence contractors were not aware their own sub-suppliers were using counterfeit electronic components.

And even when the counterfeits were discovered, some contractors took months to notify the U.S. military.