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SASC warns about fake electronic components

DoD's vendors must bear the cost when they or military officials discover their products include fake electronic components, Sen. Carl Levin demanded Tuesday.

Levin, chairman of the Senate Armed Services Committee, charged out of the gate this week on a campaign to stop the flood of fake parts finding their way into military electronics. By forcing the Raytheons and Lockheed Martins of the world to eat the costs of replacing faulty parts, the companies will have an incentive to crack down on their suppliers and ensure they're buying only new, good-quality components, Levin said.

Although the problem of fraudulent electronic components has been broached before in media reports, Levin's committee has been investigating them on its own and it uncovered fresh problems. He detailed how fake microprocessors and other electronic parts had made their way into equipment aboard Navy SH-60B Seahawk helicopters; the Air Force's C-27J Spartan cargo plane; and the Navy's new P-8 Poseidon anti-submarine patrol plane. Plus a committee witness described buying fake voltage regulators that are used in Air Force C-130s; Navy F/A-18E Super Hornets; the Marines' MV-22 Osprey; and Navy Los Angeles-class attack submarines.

Defense industry witnesses told Levin's hearing they were doing what they could to screen the quality of parts coming in from their sub-suppliers. Raytheon vice president Vivek Kamath said his company would mandate a "trusted vendor list," to eliminate companies that passed along counterfeits. Raytheon also promised to share information when it discovered fakes, he said.

Brian Toohey, president of the U.S. Semiconductor Industry Association, said his members would help senators draft legislation to stem the tide of fake parts. "American lives are at risk every time a counterfeit semiconductor makes its way into one of these highly complex and mission critical systems," he said.

But everyone involved acknowledged there would be no simple solution to this problem. Ralph DeNiro, vice president of L-3 Communications, said one major problem is the age of many of the military's ships, vehicles and aircraft, which, in some cases, need parts no longer made by their original manufacturers. That means the services must broaden the base of third-party companies from which they buy replacements, increasing the risks of fakes.

Tuesday's hearing represented the dark side of DoD's acceptance of a "globally sourced" supply chain: Chinese officials would not permit Senate investigators to visit the counterfeit chip shops of Shenzhen, Levin said, and they were taking no action to crack down on them. So although DoD and Congress can try to throw up better screens to try to filter out the bad components in its supply chain, they apparently can do nothing about the source.

Lawmakers and witnesses made it sound as though the counterfeit parts were just local criminal fraud with new global ramifications, not a deliberate campaign of sabotage. But the stories Tuesday did raise more questions about the integrity of DoD's computers and electronics. North Carolina Sen. Kay Hagan asked rhetorically how the Pentagon could be sure it wasn't buying computer equipment it believed was secure, but which included fake or even malicious chips to help China with espionage or cyber-attacks.

Government Accountability Office investigator Richard Hillman said he believed Shenzhen's counterfeiters were mostly "boiler room" operations, but he said he couldn't rule out the possibility that malicious fake chips could be part of this poisoned well.

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