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22 SMT Magazine • July 2017 manufacturer or current design activity, includ- ing an authorized aftermarket manufacturer. Un- lawful or unauthorized substitution includes used electronic parts represented as new, or the false identification of grade, serial number, lot number, date code, or performance characteristics. 1 Highlights for the DFARS Case 2012-D055 final rule include: • Applying requirements to the acquisition of electronic parts and assemblies containing electronic parts, including commercial items (COTS) • Defining "Counterfeit" and "Suspect counterfeit", is limited to electronics, including embedded software and firmware • The costs of counterfeit electronic parts or suspect counterfeit electronic parts and the cost of rework or corrective action that may be required to remedy the use of inclusion of such parts are unallowable (unless electronic parts were provided as GFE and timely notice of discovery was provided by contractor) Based on the highlights for the ruling and the impact that counterfeit parts could have on the performance of fielded systems, it should be ob- vious in terms of the importance of understand- ing, identifying and addressing suspect counter- feit parts in the aerospace and defense industry. Although the current definition and ruling ap- plies to electronics, the expectation is the defi- nition will eventually broaden to include non- electronics (i.e. optics, mechanics, MEMs, and materials). Therefore, a robust process to ensure parts that are received and used in systems to support the aerospace and defense industry is paramount to not only the business and indus- try, but to the users of the products that rely on these systems, especially the warfighter. Counterfeit Parts Business is a Multibillion Dollar Industry The discussion of recognizing that counter- feit parts have been introduced into the supply chain is not new, with various companies, and technical journals publishing as early in 2002 2,3 . In a 2006 article published by Pecht and Tiku 4 and noted in the UK Electronics Alliance (UKEA) position paper, "UKEA Position on Counterfeit Electronic Components": Alliance for Grey Market and Counterfeit Abatement (AGMA), based in the USA, estimates that, in 2006, up to 10% of technology products sold worldwide are counterfeit, which amounts to $100 billion of sales revenues. However, this does not take into account consequential losses. In 2007, the US Patent and Trademark Office es- timated that total 'counterfeiting and piracy (ac- tivity) drains about $250 billion out of the US economy each year and 75,000 jobs' 5 . A primary driver of counterfeit parts has been part scarcity, or diminishing manufactur- ing source and material supply (DMSMS). Real- izing that as the consumer market began to grow exponentially in the 1980s and 1990s, the sup- ply base for manufacturing parts rated for mil- itary and high-reliability applications was hav- ing a difficult time keeping up with demand, and part availability was becoming more diffi- cult. These market forces drove the opportuni- ty to introduce counterfeit parts into the supply chain through 'gray market electronics brokers'. According to a 2001 article on fake parts, "One U.S. independent distributor, which asked to re- main anonymous, said it paid a broker in Chi- na $70,000 for 1206 case-size ceramic capaci- tors about three months ago. The 90-cent parts, which under less-constrained market condi- tions would have cost 20 cents, slipped through two quality inspections before arriving on the OEM's production floor" 6 . Bad Parts are not Always Counterfeit It is important to recognize that, just be- cause there are anomalies identified on elec- tronic parts, it does not signify that the parts are counterfeit. It does, however, require the in- coming inspection organization to assume the responsibility to make initial determination as to whether there is enough evidence to suggest the parts from a lot or shipment should be eval- uated for additional anomalies. Three impor- tant points to consider when creating a system to screen for counterfeit parts are: COUNTERFEIT ELECTRONIC COMPONENTS IDENTIFICATION: A CASE STUDY

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