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G-12 Counterfeit Parts Activity. Prepared for PSMC Meeting San Diego, CA October 25, 2007 Presenter Boeing G-12 Committee Vice Chair. Background. Task Group formed May 2006 Decision was made to generate a Standard Admittedly, a comprehensive Standard is outside of our charter

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g 12 counterfeit parts activity
G-12 Counterfeit Parts Activity

Prepared for PSMC Meeting

San Diego, CA October 25, 2007

Presenter

Boeing

G-12 Committee Vice Chair

background
Background
  • Task Group formed May 2006
  • Decision was made to generate a Standard
    • Admittedly, a comprehensive Standard is outside of our charter
    • Evolved into an Engineering Bulletin (EB)
  • Meetings held to investigate problem
  • Draft EB out for ballot “imminently”
findings 1
Findings, 1
  • Scope of counterfeit activities not widely appreciated
    • In 2004 estimate was 5-7% of sales = $512B
    • Counterfeit goods seized by DHS = $140M
      • 70% originated in China
    • In 1991, 192,000 people in China died from consuming counterfeit medicine.
    • 750,000 jobs lost in US due to counterfeiting
    • Problems with wine, consumer goods, and software overshadow other items
    • Searching for “Counterfeit Parts” on Yahoo yields over 1.65M hits
    • Counterfeit parts usually sell for 50% or less of genuine parts, creating intense pressure
    • ITAR restrictions have increase the demand for counterfeit parts
    • 46% of suppliers on the DKSP are “independent distributors” i.e. “brokers”
findings 2
Findings, 2
  • Multiple ways to Counterfeit
    • Reclamation (Citiraya)
    • Joint ventures (make more than license allows)
    • Remarking (100MHZ part becomes 200MHZ)
    • Reverse counterfeiting
    • Underground (literally) and mobile operations
    • Theft (and threats)
  • Organized Crime and Terrorist links not publicized
findings 3
Findings, 3

Case Study

  • 2004 J S Enterprise in Philipines
    • Over 10M ICs seized
    • Many (Most? All?) were stolen
    • Semiconductor manufacturer manager(s) targeted for assassination
    • More details on G-12 website, January 2007 minutes: http://66.34.169.103/sstc/G12/g12p/#minutes
      • (Login = G12, Password = EIA5962)
engineering bulletin draft
Engineering Bulletin draft

DEFINITION:

A counterfeit item is one whose identity or pedigree has been deliberately altered or misrepresented by its supplier.

  • Identity: Original manufacturer, part number, date code, lot number, testing, inspection, documentation, or warranty, etc.
  • Pedigree: Origin, ownership history, storage, handling, physical condition, previous use, etc.
engineering bulletin draft7
Engineering Bulletin draft

Three Sections:

  • 1. Prevention:
    • Actions recommended for procuring parts and materials with a full warranty.
    • Actions recommended for minimizing risks and protecting your Program from counterfeiting.
    • Actions recommended when buying from a non-authorized supplier.
  • 2. Detection:
    • Actions recommended when procuring parts from an unauthorized supplier or otherwise suspect that a part or material at risk of being counterfeit has been procured.
  • 3. Risk Mitigation
    • Actions recommended when no reasonable alternatives exist (e.g. a redesign is required, an unacceptable schedule delay will result, the program or customer cannot bear the additional cost) and the decision has been made to procure from a non-authorized supplier.
slide8

Engineering Bulletin draft

  • The Team’s Recommendation:
  • The G-12 Counterfeit Task Group has unanimously agreed that:
  • The only control or safeguard is to only procure from the Original Equipment Manufacturer (OEM) or their designated franchisees. All other procurement approaches offer significant risk.
  • Any part or material that has been out of the OEM’s authorized supply chain has some risk of not fulfilling its intended mission objectives.
future
Future
  • FAR problems
    • Ownership and return
    • (removed) offered to help
  • GIDEP Reporting in its infancy
  • Engineering Bulletin in ballot
  • G-12 has no intention of continuing effort
  • G-12 willing to support other anti-Counterfeit efforts and rescind EB when replaced by an Industry Standard