SMT007 Magazine

SMT-Sept2015

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98 SMT Magazine • September 2015 by stephan Halper Secure coMponenTS inc. 50 sHADes OF tHe Grey mArKet DoD's First pass at Grey market regulation Column more vendors, more problems The government acquisition process is a complex one. It is not set up to be nimble, nor is it structured to keep pace with the commer- cial sector, of which the majority of grey market material is supplied by. The U.S. government gets a great deal of heat for many things, includ- ing fostering the introduction of counterfeit components into the supply chain, but when you really study how their procurement process is setup, when you break down the layers, it's not hard to see how a counterfeit component or suspect material can find its way in. Think about it this way: AVL management is often considered the first line of defense in protecting the supply chain. Now consider how vast and far reaching the government's AVL is, and it's easy to see how what passes as quality control can vary from agency to agency. Over One million Counterfeit semi- conductor Devices in DoD supply Chain The reliance of DoD's supply chain on the global grey market as it pertains to lifecycle management for semiconductor devices can be traced back to the Perry Memo written in 1994 by Secretary of Defense William J. Perry. The re- lease of the Perry Memo increased the procure- ment of commercial items (COTS) and systems, in addition to an increase in the use of com- mercial practices and specifications. The rapid change in key technology sectors and the mili- tary's new-found dependence on COTS items have had an adverse effect on the supply chain, influencing the decisions of the PEOs and PMs responsible for the acquisition of components and equipment in the sustainment phase of a weapon system. Additionally, the burden is also felt by the OEMs and Integrators in the construction phase of a weapon system. For example, it is not un- common to have a fleet of subs or surface ships constructed by the same prime contractor to have different components installed in the same control panel in ship 1 compared to that of ship 2, manufactured just one year later. The control panel design did not change, but the electronic components used in the design of ship 1 may have become obsolete in the building of ship 2, leading to the possibility of the semiconductor in ship 2 to be superior to that in ship 1. Cir- cling back to the sustainment responsibilities for ship 1 and ship 2, the sustainment team is faced with different parts used for the same ap-

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