Companies continue to report finding counterfeit parts in their supply chain at a record pace, a new report from industry analyst IHS shows. The group says there was an average 107 counterfeit incident reports from January through August this year, on par with record reporting rates recorded in 2011—rates that had quadrupled in just two years.
The data reflects the growing awareness of the counterfeit problem in light of recent government action to curb the flow of counterfeit electronic components into the defense supply chain. It also comes at a time when the Department of Defense is scheduled to release new guidelines for acquiring electronic parts.
In its most recent report, IHS said there were more than 1,300 separate counterfeit-part incidents reported over the last 12 months involving a minimum of more than 830,000 purchased parts. IHS gathers data from two primary reporting agencies: the Government-Industry Data Exchange Program (GIDEP) and its partner firm, ERAI, an industry group that monitors, investigates, and reports on counterfeit electronic components. As was the case in 2011, ERAI represents the majority of reports made, with 88 percent of year-to-date 2012 totals coming from that group.
DoD is scheduled to update its Defense Federal Acquisition Regulation (DFAR) Supplement to the Federal Acquisition Regulation (FAR) this week. The updates are part of measures intended to regulate the detection and avoidance of counterfeit electronic parts as part of the National Defense Authorization Act (NDAA) of 2012, which President Obama signed into law last year. The NDAA includes an amendment—Section 818—that directly addresses the counterfeit threat to the defense supply chain, outlining detection and prevention methods organizations must take and shifting the cost burden for testing and rework associated with counterfeits onto defense contractors.
“Counterfeit parts represent a serious and growing risk to the electronics supply chain in general and to the aerospace and defense industry in particular,” said Rory King, director, supply chain product marketing at IHS. “Each month that passes, more than a hundred counterfeit incidents comprised of thousands of suspect parts are reported. That’s why the spotlight is shining squarely on tighter policies and procedures aimed at counterfeit detection and avoidance.”
Counterfeit electronic parts are dangerous in both military and commercial applications, as they can cause products and systems to fail—in the worst case putting lives in danger.