The Senate panel’s probe determined the “city of Shenzhen in Guangdong Province, as the primary source of counterfeit electronic parts,” Levin said.
Government auditors and industry officials said “criminal enterprises” inside China often strip electronic components off decades-old computer systems, then doctor them to resemble new parts. Those counterfeit items are then purchased by firms that supply such niche components to major defense contractors that work on U.S. military systems.
The counterfeit parts — usually designed for commercial purposes — often are unfit for intense military use, meaning they can fail and render the platform in which they have been placed inoperable.
Such a situation quickly can become “a life-and-death” matter for American troops, Sen. Kelly Ayotte (R-N.H.) said during a hearing. Levin called unreliable fake parts inside military systems “a clear and present danger” and a “threat to our troops.”
The counterfeit part issue also comes with a financial angle because when an unreliable fake component fails or is detected before use, DoD must buy yet another replacement component — doubling the price to replace pricey items like electronics parts.
Many of the components for which counterfeit parts are passed off are no longer produced, but are part of U.S. military platforms. Fake parts have been found on workhorse military platforms like a variant of the C-130 aircraft, an F/A-18E/F fighter, a V-22 tilt rotor aircraft and a nuclear attack submarine.
While out of mass production, these components sometimes fail, and the Pentagon goes shopping for replacements. Enter what Brian Toohey, Semiconductor Industry Association president, called Chinese “criminal enterprises” that pass off fake parts as those components.
To combat what the Senate panel and several industry officials call a growing trend, Levin said he and Sen. John McCain (R-Ariz.) plan to offer an amendment to the upper chamber’s Defense authorization bill with a plan to clamp down on the flow of fake parts into the defense supply chain.
The envisioned Levin-McCain plan likely would, if included in a final version of the bill, mandate that the Pentagon put in place a new certification process that would scrutinize the suppliers of components for military systems, Levin said.
It also would replicate aspects of existing inspection programs for agricultural items — with a specific order to closely examine items coming from China, Levin said.
“This has been going on for too long,” Levin said.
Both chambers of Congress should approve the coming amendment because “we can’t rely on the Chinese to do anything about this.”
Levin and McCain hinted the Pentagon authorization bill could be on the Senate floor before Thanksgiving.
The SASC leaders also want military hardware contracts written in a way that would force weapon manufacturers to foot the bill for all costs of replacing fake parts that they failed to detect before they were placed on combat platforms.
Missile Defense Agency (MDA) chief Lt. Patrick O’Reilly told the panel his organization found 800 fake parts on one missile interceptor system, and paid over $2 million to replace them.
Levin gave MDA high marks for moves it has made on counterfeit parts, asking O’Reilly to provide the panel data on its supplier certification system and a contracting tactic it uses to place the burden for replacing bad parts on contractors.