Scale of counterfeiting problem is revealed in new figures

The number of high risk suppliers to the US government, including companies that sold suspect counterfeit product to military and commercial electronics channels, increased dramatically by 63% from 2002 to 2011, according to market analyst IHS.

“This large and growing trend highlights the need for members of all tiers of the supply chain to implement tighter supplier-monitoring and procurement procedures in order to meet increasingly stringent regulations,” said IHS.

A total of 9,539 suppliers in 2011 were reported either for known involvement in high-risk, fraudulent and suspect counterfeit-part transactions, or for conduct identified by the government as grounds to debar, suspend or otherwise exclude from contract participation.

In all, 78,217 potential high-risk firms and suppliers to US government agencies, defense contractors and subcontractors were reported during the period from 2002 to 2011.

IHS has said that reports of counterfeit parts in the electronics supply chain quadrupled from 2009 to 2011.

“It’s abundantly clear that supplier risk is real, extensive and growing,” said Vicki Knauf, parts logistics expert and Haystack product manager, supply chain solutions at IHS.

“It’s a federal acquisition requirement to screen for debarred, suspended or otherwise excluded parties. The Department of Defense, as well as its contractors and subcontractors, must comply with new regulations for the use of trusted suppliers and authorised sources,” said Knauf.

In response to the increasing volume of counterfeit electronic parts entering the aerospace supply chain, NASA in September 2007 became involved in the formation of the SAE International G-19 Committee to develop standardized requirements, practices and methods related to counterfeit-parts risk mitigation.

The committee subsequently released the SAE International AS5553 standard, “Counterfeit Electronic Parts: Avoidance, Detection, Mitigation, and Disposition”; NASA was the first government agency to formally adopt the standard.

NASA has since put in place many processes and procedures aimed at counterfeit detection and avoidance.

NASA will be providing more details on its anti-counterfeiting efforts at a webcast entitled, “Eliminating Counterfeits at NASA: How NASA’s Dryden Flight Research Center is Leading the Way on Counterfeit Detection & Avoidance.” The webcast will held on Nov. 2, at noon Eastern Time, and will last 1 hour with a live question-and-answer session.

Presenters at the webcast will be Steven Foster, for Procurement Quality Assurance at NASA; and Rory King, director of supply chain global product marketing at IHS.