DOD Supply Chain: Suspect Counterfeit Electronic Parts Can Be Found on Internet Purchasing Platforms
Published: 2012-02-21T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Counterfeit partsgenerally the misrepresentation of parts identity or pedigreecan seriously disrupt the Department of Defense (DOD) supply chain, harm weapon systems integrity, and endanger troops lives. In a November testimony (GAO-12-213T), 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. As requested, this report presents GAOs final findings on this issue. The results are based on a nongeneralizable sample and cannot be used to make inferences about the extent to which parts are being counterfeited. GAO created a fictitious company and gained membership to two Internet platforms providing access to vendors selling military-grade electronic parts. GAO requested quotes from numerous vendors to purchase 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. 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. Part numbers have been altered for reporting purposes. GAO is not making recommendations in this report.
section_title: What GAO Found
paragraphs: Suspect counterfeit and boguspart numbers that are not associated with any authentic partsmilitary-grade electronic parts can be found on Internet purchasing platforms, as none of the 16 parts vendors provided to GAO were legitimate. Suspect counterfeit, which applies to the first two categories of parts that were tested, is the strongest term used by an independent testing lab, signifying a potential violation of intellectual property rights, copyrights, or trademark laws, or misrepresentation to defraud or deceive. After submitting requests for quotes on both platforms, GAO 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. Of the 16 parts purchased, vendors usually responded within a day. GAO selected the first of any vendor among those offering the lowest prices that provided enough information to purchase a given part, generally within 2 weeks. Under GAOs selection methodology, all 16 parts were provided by vendors in China.
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. 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. Finally, after submitting requests for bogus parts using invalid part numbers, GAO purchased four parts from four vendors, which shows their willingness to supply parts that do not technically exist.

section_title: Letter
paragraphs: Counterfeit parts—generally the misrepresentation of parts’ identity or  pedigree—have the potential to seriously disrupt the Department of  Defense (DOD) supply chain, delay missions, affect the integrity of  weapon systems, and ultimately endanger the lives of our troops. 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.
In 2011, we reported that the increase in counterfeit electronic parts is  one of several potential barriers DOD faces in addressing parts quality  problems. parts on Internet platforms commonly used to buy hard-to-find military- grade electronic parts, including those used in weapon systems. In a  November testimony, we summarized preliminary observations from our  investigation into the purchase and authenticity testing of selected,  military-grade electronic parts that may enter the DOD supply chain.report presents our final findings on this issue.
GAO, Space and Missile Defense Acquisitions: Periodic Assessment Needed to Correct  Parts Quality Problems in Major Programs, GAO-11-404 (Washington, D.C.: June 24,  2011). military-grade electronic parts. Our company included a fictitious owner  and employees, mailing and e-mail addresses, a website, and a listing on  the Central Contractor Registration. We attempted to purchase  memberships to three Internet platforms that were of interest to this  committee. One platform granted us membership despite not receiving all  requested supporting documentation, the second granted us membership  after we supplied the requested documentation as well as fictitious  business references, and the third denied our request for membership  even after we provided all documentation and references. None of the  platforms contacted our references. We then requested quotes from  vendors on both platforms to purchase 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 codes  after the last date the part was manufactured); and (3) bogus, or fictitious,  part numbers that are not associated with any authentic parts. Using a list  of four authentic part numbers this committee provided, we purchased 7  parts from the first category and 5 parts from the second (for which we  altered only the date code). We independently verified with the Defense  Logistics Agency (DLA) that these part numbers were used for military  applications using DLA’s Federal Logistics Information System and by  interviewing DLA officials. We used three invalid part numbers provided  by the committee, which altered portions of existing part numbers that  identify certain performance specifications, to purchase the 4 bogus parts.  We then confirmed with DLA and selected part manufacturers that the  numbers we developed were invalid. We altered all part numbers for  reporting purposes.
We requested parts from vendors that were new in original packaging, not  refurbished, and had no mixed date codes. We selected the first vendor  among those offering the lowest prices that provided enough information,  such as name, addresses, and payment method, to make a purchase.  We attempted to avoid using the same vendor more than once unless no  other vendor responded to our request; however, vendors may operate  under more than one name. We did not attempt to verify the  independence of any vendor before we made our purchases. Finally, we  contracted with the SMT Corp. for full component authentication  analysis. For details on this analysis, see appendix I.
The results of this investigation are based on the use of a  nongeneralizable sample, and these results cannot be used to make  inferences about the extent to which parts are being counterfeited. We  conducted this investigation from August 2011 to February 2012 in  accordance with standards prescribed by the Council of the Inspectors  General on Integrity and Efficiency.
subsections: section_title: Suspect Counterfeit Electronic Parts Can Be Found on Internet Purchasing Platforms
paragraphs: As shown in figure 1, each of the 16 parts we purchased was either  suspect counterfeit or bogus. Specifically, all 12 of the parts we received  after requesting authentic part numbers (either with valid or invalid date  codes) were suspect counterfeit, according to SMT Corp. In addition,  vendors provided us with 4 bogus parts after we requested invalid part  numbers, which demonstrates their willingness to sell parts that do not  technically exist. The following sections detail our findings for each of the  three categories of parts we purchased.
Under our selection methodology, the 16 parts we purchased were  provided by 13 vendors in China. After submitting requests for quotes on  both platforms, we 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. All 40 of the responses we  received for the bogus part numbers were from vendors located in China  (6 of these vendors also offered to sell us parts for the authentic part  numbers we requested). We selected the first of any vendor among those  offering the lowest prices that provided enough information to purchase a   As such, 3 vendors each supplied 2  given part, generally within 2 weeks.parts and 10 vendors each supplied 1 part. We sent 13 payments to  Shenzhen, 2 payments to Shantou, and 1 payment to Beijing. Despite  operating under different company names, 2 vendors provided us with  identical information for sending payment (name of representative and  contact information). There could be a number of explanations for this,  ranging from legitimate (the vendors handle payments through the same  banker or accountant) to potentially deceptive (same individuals  representing themselves as multiple companies). Thirteen parts were  then shipped from Shenzhen and 3 from Hong Kong.
All seven of the obsolete or rare parts that SMT Corp. tested were  suspected counterfeits. Each part failed multiple component  authentication analyses, including visual, chemical, X-ray, and  microscopic testing. The parts were purchased from five different  vendors. Figure 2 provides photos and detailed test results for each part.
DAA6 (two parts purchased). Both purchases made using part number  DAA6 contained samples that failed multiple authentication analyses,  leading SMT Corp. to conclude that the parts were suspect counterfeit.
Both parts were purchased from different vendors using the same part  number, but were not identical, as shown in figure 2. An authentic part  with this part number is an operational amplifier that may be commonly  found in the Army and Air Force’s Joint Surveillance and Target Attack  Radar System; the Air Force’s F-15 Eagle fighter plane; and the Air  Force, Navy, and Marine Corps’s Maverick AGM-65A missile. If authentic,  this part converts input voltages into output voltages that can be hundreds  to thousands of times larger. Failure can lead to unreliable operation of  several components (e.g., integrated circuits) in the system and poses  risks to the function of the system where the parts reside.
The part we received from one vendor failed four of seven authentication  analyses. Visual inspection found inconsistencies, including different or  missing markings and scratches, which suggested that samples were re- marked. Scanning electron microscopy (SEM) analysis revealed further  evidence of re-marking. X-ray fluorescence (XRF) testing of the samples  revealed that the leads contain no lead (Pb) instead of the 3 percent lead  (Pb) required by military specifications. Five samples were chosen for  delidding, which exposes parts’ die, because of their side marking  inconsistencies. While all five samples had the same die, the die  markings were inconsistent. According to SMT Corp., die markings in  components manufactured within the same date and lot code should be  consistent. Finally, the devices found in the first lot tested went into “last  time buy” status in 2001, meaning that the parts were misrepresented as  newer than they actually were. The manufacturer confirmed this status  and added that the part marking did not match its marking scheme,  meaning that the date code marked on the samples would not be  possible.
The part received from the second vendor failed five of seven  authentication analyses. Visual inspection again found inconsistencies,  including additional markings on about half the samples. Further,  scratches and reconditioned leads indicated that the parts were removed  from a working environment—that is, not new as we requested. SEM  analysis corroborated these findings. As with the other DAA6 part, XRF  testing revealed that the leads contain no lead (Pb). X-rays revealed  different sized die, and delidding revealed that the die were differently  marked.
IHH1 (one part purchased). The purchase made using part number  IHH1 contained samples that failed five of nine authentication analyses,  leading SMT Corp. to conclude that the part was suspect counterfeit. An  authentic part with this part number is a multiplexer, which allows  electronic signals from several different sources to be checked at one  location. It has been used in at least 63 different DOD weapon systems,  including the Air Force Special Operations Forces’ AC-130H Gunship  aircraft, the Air Force’s B-2B aircraft, and the Navy’s E-2C Hawkeye  aircraft. If at least one of the specific signals is critical to the successful  operation of the system, then failure could pose a risk to the system  overall.
Visual inspection revealed numerous issues, including color differences in  the top and bottom of the part’s surfaces, suggesting resurfacing and re- marking. Large amounts of scuffs and scratches, foreign debris, and  substandard leads were also found. The part also failed resistance to  solvents (RTS) testing when it resulted in removal of resurfacing material.  Further, Dynasolve testing (additional RTS testing) revealed remnants of  a completely different manufacturer and part number. SEM showed  evidence of lapping, which is the precise removal of a part’s material to  produce the desired dimensions, finish, or shape. Finally, delidding  showed die that were similar but insufficiently marked to determine  whether they matched the authentic part number. However, because of  the failure of the Dynasolve testing, the die cannot be correct.
MLL1 (two parts purchased). Both purchases made using part number  MLL1 contained a number of samples that failed three of seven  authentication analyses, leading SMT Corp. to conclude that the parts  were suspect counterfeit. Both parts were purchased from different  vendors using the same part number, but were not identical, as shown in  figure 2. An authentic part with this number is a voltage regulator that may  be commonly found in military systems such as the Air Force’s KC-130  Hercules aircraft, the Navy’s F/A-18E Super Hornet fighter plane, the  Marine Corps’s V-22 Osprey aircraft, and the Navy’s SSN-688 Los  Angeles Class nuclear-powered attack submarine. If authentic, these  parts provide accurate power voltage to segments of the system they  serve. Failure can lead to unreliable operation of several components  (e.g., integrated circuits) in the system and poses risks to the function of  the system where the parts reside.
The parts received from both vendors failed the same authentication  analyses. Visual inspection was performed on all evidence samples from  both purchases. Different color epoxy seals were noted within both lots,  according to SMT Corp., which is common in suspect counterfeit devices  because many date and lot codes are re-marked to create a uniform  appearance. Moreover, XRF testing of the samples revealed that the  leads contain no lead (Pb); according to military performance standards,  leads should be alloyed with at least 3 percent of lead (Pb). Further,  XRF data between the top and bottom of the lead revealed  inconsistencies in chemical composition, leading SMT Corp. to conclude  that the leads were extended with the intention to deceive. Microscopic  inspection revealed that different revision numbers of the die and  differences in various die markings were found even though the samples  were advertised to be from the same lot and date code. Commonly,  components manufactured within the same date and lot code will have  the same die revisions. According to SMT Corp.’s report, the  manufacturer also stated that “it is very unusual to have two die runs in a  common assembly lot. This is suspicious.” Finally, the devices found in  the first lot tested went into “last time buy” status—an end-of-life  designation—on September 4, 2001, meaning that the parts were  misrepresented as newer than they actually were. The manufacturer  confirmed this status and added that the part marking did not match its  marking scheme, meaning that the date code marked on the samples  would not be possible.
YCC7 (two parts purchased). Both purchases made using part number  YCC7 contained samples that failed several authentication analyses,  leading SMT Corp. to conclude that the parts were suspect counterfeit.  Both parts were purchased from different vendors using the same part  number. An authentic part with this part number is a memory chip that  has been used in at least 41 different DOD weapons systems, including  the ballistic missile early warning system, the Air Force’s Peacekeeper  missile and B-1B aircraft, the Navy’s Trident submarine and Arleigh Burke  class of guided missile destroyer, and the Marine Corps’s Harrier aircraft.  Failure of the chip, if not redundant, could pose risk to the overall system.
The part we received from one vendor failed four of seven authentication  analyses. Visual inspection identified numerous issues, including bent or  misshapen leads and lead ends and deformed, less-detailed logos of the  claimed manufacturer. X-ray analysis revealed that various parts in the  samples contained different sized die. SEM analysis showed that surface  material had been precisely removed to allow for re-marking. Finally,  delidding of two samples revealed die that were marked from a  competitor manufacturer with a different part number than the one we  requested. In addition, one die was marked with a 1986 copyright, while  the other was labeled 1992.
The part received from the second vendor failed four of nine  authentication analyses. Visual inspection showed evidence of re- marking, with the color of the top surfaces of samples not matching the  color of the bottom surfaces. Some samples displayed faded markings  while others were blank and had heavy scuff marks to suggest  resurfacing. The markings were also not as clear and consistently placed  as manufacturer-etched markings would be. Leads were substandard in  quality, had been refurbished, and were not as thick as specified. Further,  SEM showed evidence of lapping. Finally, the samples responded  inconsistently to Dynasolve testing.
subsections: section_title: Category 2: Authentic Part Numbers with Postproduction Date Codes
paragraphs: Similarly, all five of the parts we received and tested after requesting  legitimate part numbers but specifying postproduction date codes were  also suspected counterfeit, according to SMT Corp. By fulfilling our  requests, the four vendors that provided these parts represented them as  several years newer than the date the parts were last manufactured, as  verified by the part manufacturers. Figure 3 provides photos and detailed  test results.
DAA6 (one part purchased). The purchase made using part number  DAA6 contained samples that failed four of seven authentication  analyses, leading SMT Corp. to conclude that the part was suspect  counterfeit. Surfaces on the parts in the evidence lots were found to have  scratches similar to suspect counterfeit devices that have been re- marked, as confirmed by both visual inspection and SEM analysis. In  addition, the quality of exterior markings, including a lack of consistency  between the manufacturer’s logo, was lower than would be expected for  authentic devices. Tooling marks were also found on the bottom of all  components within the evidence lot; these marks suggest that the  components were pulled from a working environment. Further inspection  led SMT Corp. to conclude that many samples with refurbished leads  were extended with the intention to deceive. Moreover, XRF analysis  revealed the leads contain no lead (Pb) instead of the 3 percent lead (Pb)  required by military specifications. Delidding revealed that the die, while  correct for this device, were inconsistent. As previously stated, multiple  die runs are considered suspicious. Finally, some of the samples went  into “last time buy” status in 2001, despite the fact that we requested  parts from 2005 or later and the vendor agreed to provide parts from 2010  or later.
IHH1 (one part purchased). The purchase made using part number  IHH1 contained samples that failed seven of nine authentication  analyses, leading SMT Corp. to conclude that the part was suspect  counterfeit. The part we received was supplied by a different vendor than  the one that supplied the IHH1 part shown in figure 2. Visual inspection  revealed numerous issues, including mismatching surface colors, many  scratches and scuffs, foreign debris, and leads that were not uniformly  aligned. SEM also showed evidence of lapping. RTS testing resulted in  removal of resurfacing material, and surfaces faded when exposed to  Dynasolve, which should not occur. Further, samples did not solder  properly. Finally, X-rays indicated that different die were used within the  samples. This was confirmed in delidding, which revealed inconsistencies  in size, shape, and date markings. Of the two types of die found in the  sample, one does not match the authentic part number.
MLL1 (one part purchased). The purchase made using part number  MLL1 contained samples that failed four of seven authentication  analyses, leading SMT Corp. to conclude that the part was suspect  counterfeit. The part we received was supplied by a different vendor than  the ones who supplied the MLL1 parts shown in figure 2. Visual  inspection revealed scuffs and scratches indicative of re-marking, which  was also seen in SEM analysis. Different colored epoxy seals and  variegated sizes and colors of the center mounting slug were also seen.  Leads also showed evidence of being refurbished with the intent to  deceive. XRF testing of the samples revealed that the leads contain no  lead (Pb); according to military performance standards, leads should be  alloyed with at least 3 percent of lead (Pb). Delidding revealed that die,  though similar, had markings indicating different revisions, which is  uncommon for die manufactured in the same date code. Finally, the  devices went into “last time buy” status in 2001, whereas the tested parts  showed a date code indicating they were made in 2008. The  manufacturer confirmed this status.
YCC7 (two parts purchased). The two purchases made from different  vendors using part number YCC7 contained samples that failed several  authentication analyses, leading SMT Corp. to conclude that they were  suspect counterfeit. The part we received from one vendor failed three of  eight authentication analyses. Visual inspection identified numerous  issues, including different colored surfaces that suggest re-marking and  unknown residues that indicate improper handling or storage. SEM  analysis showed that surface material had been precisely removed to  allow for re-marking, similarly to a YCC7 part with legitimate date codes  tested above. Further, according to the manufacturer, the legitimate  version of this part was last shipped in 2003, whereas the tested part  showed a manufacturing date code of 2006. RTS testing resulted in  removal of the part marking.
The part received from the second vendor failed three of nine  authentication analyses. Visual inspection detected numerous issues,  including different colored surfaces that suggest re-marking. The  markings were also substandard, lacking clarity and consistency in  placement. RTS testing removed part markings, further suggesting re- marking. SEM showed evidence of lapping. Delidding revealed die that  were consistent with the authentic part, but the date code showed  evidence of re-marking to make them appear as if they had come from a  homogenous lot. Finally, the manufacturer verified that it last shipped this  part in 2003, whereas our samples were marked 2007, which according  to SMT Corp., could not be possible.
section_title: Category 3: Bogus Part Numbers
paragraphs: We received offers from 40 vendors in China to supply parts using invalid  part numbers, and we purchased four parts from four vendors to  determine whether they would in fact supply bogus parts. (See fig. 4.)  These were different vendors than the ones that supplied us with the  suspect counterfeit parts. The invalid numbers were based on actual part  numbers, but certain portions that define a part’s performance  specifications were changed. For example, one of our invalid numbers  was for an actual voltage regulator but that operated at bogus  specifications. None of the invalid part numbers were listed in DLA’s  Federal Logistics Information System and, according to selected  manufacturers, none are associated with parts that have ever been  manufactured. As such, we did not send the parts to SMT Corp. for  authentication analysis.
We received the four bogus parts after requesting invalid part numbers  DAA5, GDD4, and 3MM8. We made two orders using DAA5, one from  each Internet purchasing platform, which were fulfilled by different  vendors. The parts we received from each vendor appeared similar, as  shown in figure 4. The similarity may be due to a number of factors. For  example, the vendors could have simply ignored the invalid portion of the  part numbers we requested (they did not contact us to inform us that the  numbers were invalid). Another possible explanation could be that the  parts happened to be fulfilled by the same vendor operating under two  different names.
In furtherance of our investigation to determine the willingness of firms to  provide us bogus parts, we created a totally fictitious part number that  was not based on an actual part number and requested quotations over  one Internet platform. We received an offer to supply the part from one  vendor, but did not invest the resources to purchase the bogus part.
As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to the appropriate  congressional committees, the Acting Under Secretary of Defense for  Acquisition, Technology, and Logistics, and other interested parties. In  addition, the report will be available at no charge on the GAO website at  http://www.gao.gov.
If you or your staff have any questions about this report or need additional  information, please contact Richard Hillman at (202) 512-6722 or  hillmanr@gao.gov or Timothy Persons at (202) 512-6522 or  personst@gao.gov. Contact points for our Offices of Congressional  Relations and Public Affairs may be found on the last page of this report.  Other key contributors to this report are listed in appendix II.
section_title: Appendix I: Details of Authentication Analysis Tests
paragraphs: This appendix provides details on each of the tests that constitute the  authentication analysis SMT Corp. conducted for the parts we purchased.
Visual inspection: Visual inspection is performed on a predetermined  number of samples (usually 100 percent) to look for legitimate  nonconformance issues as well as any red flags commonly found within  suspect counterfeit devices.
Resistance to solvents (RTS): A mixture of mineral spirits and isopropyl  alcohol is used to determine the part marking resistance and pure  acetone is used to remove any resurface material. This test is not  performed on all parts. In some cases, resurfacing material would not be  used by counterfeiters to re-mark a part; in others, the solvents would  remove markings even on legitimate parts.
X-ray florescence (XRF) elemental analysis: The XRF gathers and  measures the elements within a target area. This is used specifically for  testing components for RoHS or Hi-Rel conformance, which refer to  dangerous substances such as lead (Pb), cadmium (Cd), and mercury  (Hg) that are commonly used in electronics manufacturing. For suspect  counterfeit devices, it helps determine if a component has the correct  plating for the specification it supposed to adhere to.
Package configuration and dimensions: This test measures key areas  of the device to see if they fall within industry specifications.
Real-time X-ray analysis: X-ray analysis is performed on a  predetermined number of samples (usually 100 percent). The internal  construction of components is inspected (depending on the component  package type) for legitimate issues such as broken/taut bond wires,  electrostatic discharge damage, broken die, and so forth. For suspect  counterfeit devices, the differences in die size/shape, lead frames, bond  wire layout, and so forth are inspected.
Scanning electron microscopy: A scanning electron microscope is  used to perform an exterior visual inspection—more in depth than the  previous visual inspection. This is usually performed on a two-piece  sample from the evidence lot. Depending on the package type,  indications of suspect counterfeit devices are sought, including surface  lapping, sandblasting, and sanding with regard to part marking removal.
Solderability: This test is usually for legitimate components to determine  if they will solder properly when they are used in production.
Dynasolve: Dynasolve is a chemical used to break down epoxies in an  effort to remove resurfacing material that is impervious to the standard  RTS test.
Decapsulation/delidding and die verification: The die of a component  is exposed with either corrosive materials or a cutting apparatus. This is  done to inspect the die or “brain” of a component to determine its  legitimacy. This process is performed on numerous samples to look for  differences between samples, such as die metallization layout, revisions,  part numbers, and so forth—all of which are red flags for suspect  counterfeit parts.
section_title: Appendix II: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: Cindy Brown Barnes, Assistant Director; Gary Bianchi, Assistant Director;  Virginia Chanley; Dennis Fauber; Barbara Lewis; Jeffery McDermott;  Maria McMullen; Kimberly Perteet, Analyst in Charge; Ramon Rodriguez;  and Timothy Walker made key contributions to this report.