oversight

DOD Supply Chain: Suspect Counterfeit Electronic Parts Can Be Found on Internet Purchasing Platforms

Published by the Government Accountability Office on 2012-02-21.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                United States Government Accountability Office

GAO             Report to the Committee on Armed
                Services, U.S. Senate



February 2012
                DOD SUPPLY CHAIN

                Suspect Counterfeit
                Electronic Parts Can
                Be Found on Internet
                Purchasing Platforms




GAO-12-375
                                               February 2012

                                               DOD SUPPLY CHAIN
                                               Suspect Counterfeit Electronic Parts Can Be Found
                                               on Internet Purchasing Platforms
Highlights of GAO-12-375, a report to the
Committee on Armed Services, U.S. Senate




Why GAO Did This Study                         What GAO Found
Counterfeit parts—generally the                Suspect counterfeit and bogus—part numbers that are not associated with any
misrepresentation of parts’ identity or        authentic parts—military-grade electronic parts can be found on Internet
pedigree—can seriously disrupt the             purchasing platforms, as none of the 16 parts vendors provided to GAO were
Department of Defense (DOD) supply             legitimate. “Suspect counterfeit,” which applies to the first two categories of parts
chain, harm weapon systems integrity,          that were tested, is the strongest term used by an independent testing lab,
and endanger troops’ lives. In a               signifying a potential violation of intellectual property rights, copyrights, or
November testimony (GAO-12-213T),              trademark laws, or misrepresentation to defraud or deceive. After submitting
GAO summarized preliminary                     requests for quotes on both platforms, GAO received responses from 396
observations from its investigation into       vendors, of which 334 were located in China; 25 in the United States; and 37 in
the purchase and authenticity testing of       other countries, including the United Kingdom and Japan. Of the 16 parts
selected, military-grade electronic parts      purchased, vendors usually responded within a day. GAO selected the first of
that may enter the DOD supply chain.           any vendor among those offering the lowest prices that provided enough
As requested, this report presents             information to purchase a given part, generally within 2 weeks. Under GAO’s
GAO’s final findings on this issue. The
                                               selection methodology, all 16 parts were provided by vendors in China.
results are based on a
nongeneralizable sample and cannot             All Parts GAO Received Were Suspect Counterfeit or Bogus
be used to make inferences about the
extent to which parts are being
counterfeited.

GAO created a fictitious company and
gained membership to two Internet
platforms providing access to vendors
selling military-grade electronic parts.
GAO requested quotes from numerous
vendors to purchase a total of 16 parts
from three categories: (1) authentic
part numbers for obsolete and rare
parts; (2) authentic part numbers with
postproduction date codes (date codes
after the last date the part was
manufactured); and (3) bogus, or
fictitious, part numbers that are not
associated with any authentic parts. To
determine whether the parts received
were counterfeit, GAO contracted with          Specifically, all 12 of the parts received after GAO requested rare part numbers
a qualified, independent testing lab for
                                               or postproduction date codes were suspect counterfeit, according to the testing
full component authentication analysis
                                               lab. Multiple authentication tests, ranging from inspection with electron
of the first two categories of parts, but
not the third (bogus) category. Part
                                               microscopes to X-ray analysis, revealed that the parts had been re-marked to
numbers have been altered for                  display the part numbers and manufacturer logos of authentic parts. Other
reporting purposes.                            features were found to be deficient from military standards, such as the metallic
                                               composition of certain pieces. For the parts requested using postproduction date
GAO is not making recommendations              codes, the vendors also altered date markings to represent the parts as newer
in this report.                                than when they were last manufactured, as verified by the parts’ makers. Finally,
                                               after submitting requests for bogus parts using invalid part numbers, GAO
                                               purchased four parts from four vendors, which shows their willingness to supply
View GAO-12-375. For more information,         parts that do not technically exist.
contact Richard J. Hillman at (202) 512-6722
or hillmanr@gao.gov or Timothy Persons at
(202) 512-6522 or personst@gao.gov.
                                                                                          United States Government Accountability Office
Contents


Letter                                                                                                   1
              Suspect Counterfeit Electronic Parts Can Be Found on Internet
                Purchasing Platforms                                                                     3

Appendix I    Details of Authentication Analysis Tests                                                  17



Appendix II   GAO Contacts and Staff Acknowledgments                                                    19



Figures
              Figure 1: Status of Parts Purchased and Tested                                            4
              Figure 2: Authentication Analysis Results of Obsolete or Rare Parts                       6
              Figure 3: Authentication Analysis Results of Part with Invalid Date
                       Codes                                                                            12
              Figure 4: Photos of Parts Received Despite Request for Invalid Part
                       Numbers                                                                          15




              Abbreviations

              DLA               Defense Logistics Agency
              DOD               Department of Defense
              RTS               resistance to solvents
              SEM               scanning electron microscopy
              XRF               X-ray florescence



              This is a work of the U.S. government and is not subject to copyright protection in the
              United States. The published product may be reproduced and distributed in its entirety
              without further permission from GAO. However, because this work may contain
              copyrighted images or other material, permission from the copyright holder may be
              necessary if you wish to reproduce this material separately.




              Page i                                               GAO-12-375 Suspect Counterfeit Parts
United States Government Accountability Office
Washington, DC 20548




                                   February 21, 2012

                                   The Honorable Carl Levin
                                   Chairman
                                   The Honorable John McCain
                                   Ranking Member
                                   Committee on Armed Services
                                   United States Senate

                                   Counterfeit parts—generally the misrepresentation of parts’ identity or
                                   pedigree—have the potential to seriously disrupt the Department of
                                   Defense (DOD) supply chain, delay missions, affect the integrity of
                                   weapon systems, and ultimately endanger the lives of our troops. Almost
                                   anything is at risk of being counterfeited, from fasteners used on aircraft
                                   to electronics used on missile guidance systems. There can be many
                                   sources of counterfeit parts as DOD draws from a large network of global
                                   suppliers. 1

                                   In 2011, we reported that the increase in counterfeit electronic parts is
                                   one of several potential barriers DOD faces in addressing parts quality
                                   problems. 2 More recently, you asked about the availability of counterfeit
                                   parts on Internet platforms commonly used to buy hard-to-find military-
                                   grade electronic parts, including those used in weapon systems. In a
                                   November testimony, we summarized preliminary observations from our
                                   investigation into the purchase and authenticity testing of selected,
                                   military-grade electronic parts that may enter the DOD supply chain. 3 This
                                   report presents our final findings on this issue.

                                   In conducting this investigation, we created a fictitious company to gain
                                   access to Internet platforms that provide access to vendors selling


                                   1
                                     GAO, Defense Supplier Base: DOD Should Leverage Ongoing Initiatives in Developing
                                   Its Program to Mitigate Risk of Counterfeit Parts, GAO-10-389 (Washington, D.C.:
                                   Mar. 29, 2010).
                                   2
                                    GAO, Space and Missile Defense Acquisitions: Periodic Assessment Needed to Correct
                                   Parts Quality Problems in Major Programs, GAO-11-404 (Washington, D.C.: June 24,
                                   2011).
                                   3
                                     GAO, DOD Supply Chain: Preliminary Observations Indicate That Counterfeit Electronic
                                   Parts Can Be Found on Internet Purchasing Platforms, GAO-12-213T (Washington, D.C.:
                                   Nov. 8, 2011).




                                   Page 1                                             GAO-12-375 Suspect Counterfeit Parts
military-grade electronic parts. Our company included a fictitious owner
and employees, mailing and e-mail addresses, a website, and a listing on
the Central Contractor Registration. 4 We attempted to purchase
memberships to three Internet platforms that were of interest to this
committee. One platform granted us membership despite not receiving all
requested supporting documentation, the second granted us membership
after we supplied the requested documentation as well as fictitious
business references, and the third denied our request for membership
even after we provided all documentation and references. None of the
platforms contacted our references. We then requested quotes from
vendors on both platforms to purchase a total of 16 parts from three
categories: (1) authentic part numbers for obsolete and rare parts;
(2) authentic part numbers with postproduction date codes (date codes
after the last date the part was manufactured); and (3) bogus, or fictitious,
part numbers that are not associated with any authentic parts. Using a list
of four authentic part numbers this committee provided, we purchased 7
parts from the first category and 5 parts from the second (for which we
altered only the date code). We independently verified with the Defense
Logistics Agency (DLA) that these part numbers were used for military
applications using DLA’s Federal Logistics Information System and by
interviewing DLA officials. 5 We used three invalid part numbers provided
by the committee, which altered portions of existing part numbers that
identify certain performance specifications, to purchase the 4 bogus parts.
We then confirmed with DLA and selected part manufacturers that the
numbers we developed were invalid. We altered all part numbers for
reporting purposes.

We requested parts from vendors that were new in original packaging, not
refurbished, and had no mixed date codes. We selected the first vendor
among those offering the lowest prices that provided enough information,
such as name, addresses, and payment method, to make a purchase.
We attempted to avoid using the same vendor more than once unless no
other vendor responded to our request; however, vendors may operate
under more than one name. We did not attempt to verify the


4
 The Central Contractor Registration is the primary contractor registrant database for the
U.S. federal government. The Central Contractor Registration collects, validates, stores,
and disseminates data in support of agency acquisition missions.
5
  DLA’s Federal Logistics Information System via the World Wide Web provides general
information about more than 8 million supply items used by the U.S. government and
North Atlantic Treaty Organization (NATO) allies.




Page 2                                               GAO-12-375 Suspect Counterfeit Parts
                       independence of any vendor before we made our purchases. Finally, we
                       contracted with the SMT Corp. for full component authentication
                       analysis. 6 For details on this analysis, see appendix I.

                       The results of this investigation are based on the use of a
                       nongeneralizable sample, and these results cannot be used to make
                       inferences about the extent to which parts are being counterfeited. We
                       conducted this investigation from August 2011 to February 2012 in
                       accordance with standards prescribed by the Council of the Inspectors
                       General on Integrity and Efficiency.


                       As shown in figure 1, each of the 16 parts we purchased was either
Suspect Counterfeit    suspect counterfeit or bogus. Specifically, all 12 of the parts we received
Electronic Parts Can   after requesting authentic part numbers (either with valid or invalid date
                       codes) were suspect counterfeit, according to SMT Corp. In addition,
Be Found on Internet   vendors provided us with 4 bogus parts after we requested invalid part
Purchasing Platforms   numbers, which demonstrates their willingness to sell parts that do not
                       technically exist. The following sections detail our findings for each of the
                       three categories of parts we purchased.

                       Under our selection methodology, the 16 parts we purchased were
                       provided by 13 vendors in China. After submitting requests for quotes on
                       both platforms, we received responses from 396 vendors, of which 334
                       were located in China; 25 in the United States; and 37 in other countries,
                       including the United Kingdom and Japan. All 40 of the responses we
                       received for the bogus part numbers were from vendors located in China
                       (6 of these vendors also offered to sell us parts for the authentic part
                       numbers we requested). We selected the first of any vendor among those
                       offering the lowest prices that provided enough information to purchase a
                       given part, generally within 2 weeks. 7 As such, 3 vendors each supplied 2
                       parts and 10 vendors each supplied 1 part. We sent 13 payments to
                       Shenzhen, 2 payments to Shantou, and 1 payment to Beijing. Despite
                       operating under different company names, 2 vendors provided us with


                       6
                         We selected SMT Corp. as the independent, full component authentication testing
                       laboratory based on its (1) ability to conduct 100 percent component inspection with
                       transmission X-rays, (2) use of a patented heated solvent test, and (3) use of scanning
                       electron microscopy to detect surface abnormalities as well as doing spectroscopic
                       analysis of surface material on the components.
                       7
                           These vendors usually responded to our initial requests for quotes within a day.




                       Page 3                                                 GAO-12-375 Suspect Counterfeit Parts
                                        identical information for sending payment (name of representative and
                                        contact information). There could be a number of explanations for this,
                                        ranging from legitimate (the vendors handle payments through the same
                                        banker or accountant) to potentially deceptive (same individuals
                                        representing themselves as multiple companies). Thirteen parts were
                                        then shipped from Shenzhen and 3 from Hong Kong.

Figure 1: Status of Parts Purchased and Tested




                                        Page 4                                    GAO-12-375 Suspect Counterfeit Parts
Category 1: Authentic Part   All seven of the obsolete or rare parts that SMT Corp. tested were
Numbers for Obsolete or      suspected counterfeits. Each part failed multiple component
Rare Parts                   authentication analyses, including visual, chemical, X-ray, and
                             microscopic testing. The parts were purchased from five different
                             vendors. Figure 2 provides photos and detailed test results for each part.




                             Page 5                                      GAO-12-375 Suspect Counterfeit Parts
Figure 2: Authentication Analysis Results of Obsolete or Rare Parts




                                         DAA6 (two parts purchased). Both purchases made using part number
                                         DAA6 contained samples that failed multiple authentication analyses,
                                         leading SMT Corp. to conclude that the parts were suspect counterfeit.



                                         Page 6                                   GAO-12-375 Suspect Counterfeit Parts
Both parts were purchased from different vendors using the same part
number, but were not identical, as shown in figure 2. An authentic part
with this part number is an operational amplifier that may be commonly
found in the Army and Air Force’s Joint Surveillance and Target Attack
Radar System; the Air Force’s F-15 Eagle fighter plane; and the Air
Force, Navy, and Marine Corps’s Maverick AGM-65A missile. If authentic,
this part converts input voltages into output voltages that can be hundreds
to thousands of times larger. Failure can lead to unreliable operation of
several components (e.g., integrated circuits) in the system and poses
risks to the function of the system where the parts reside.

The part we received from one vendor failed four of seven authentication
analyses. Visual inspection found inconsistencies, including different or
missing markings and scratches, which suggested that samples were re-
marked. Scanning electron microscopy (SEM) analysis revealed further
evidence of re-marking. X-ray fluorescence (XRF) testing of the samples
revealed that the leads contain no lead (Pb) instead of the 3 percent lead
(Pb) required by military specifications. 8, 9 Five samples were chosen for
delidding, which exposes parts’ die, because of their side marking
inconsistencies. While all five samples had the same die, the die
markings were inconsistent. 10 According to SMT Corp., die markings in
components manufactured within the same date and lot code should be
consistent. Finally, the devices found in the first lot tested went into “last
time buy” status in 2001, meaning that the parts were misrepresented as
newer than they actually were. The manufacturer confirmed this status
and added that the part marking did not match its marking scheme,
meaning that the date code marked on the samples would not be
possible.




8
  XRF analyzers quickly and nondestructively determine the elemental composition of
materials commonly found in microelectronic devices. Each of the elements present in a
sample produces a unique set of characteristic x-rays that reveals the chemistry of the
sample in a manner analogous to a fingerprint. A lead is an electrical connection
consisting of a length of wire or soldering pad that comes from a device. Leads are used
for physical support, to transfer power, to probe circuits, and to transmit information.
9
 DOD, DOD Performance Specification for Integrated Circuits (Microcircuits)
Manufacturing, MIL-PRF-38535J (Dec. 28, 2010).
10
   A die is a small wafer of semiconducting material on which a functional circuit is
fabricated.




Page 7                                                 GAO-12-375 Suspect Counterfeit Parts
The part received from the second vendor failed five of seven
authentication analyses. Visual inspection again found inconsistencies,
including additional markings on about half the samples. Further,
scratches and reconditioned leads indicated that the parts were removed
from a working environment—that is, not new as we requested. SEM
analysis corroborated these findings. As with the other DAA6 part, XRF
testing revealed that the leads contain no lead (Pb). X-rays revealed
different sized die, and delidding revealed that the die were differently
marked.

IHH1 (one part purchased). The purchase made using part number
IHH1 contained samples that failed five of nine authentication analyses,
leading SMT Corp. to conclude that the part was suspect counterfeit. An
authentic part with this part number is a multiplexer, which allows
electronic signals from several different sources to be checked at one
location. It has been used in at least 63 different DOD weapon systems,
including the Air Force Special Operations Forces’ AC-130H Gunship
aircraft, the Air Force’s B-2B aircraft, and the Navy’s E-2C Hawkeye
aircraft. If at least one of the specific signals is critical to the successful
operation of the system, then failure could pose a risk to the system
overall.

Visual inspection revealed numerous issues, including color differences in
the top and bottom of the part’s surfaces, suggesting resurfacing and re-
marking. Large amounts of scuffs and scratches, foreign debris, and
substandard leads were also found. The part also failed resistance to
solvents (RTS) testing when it resulted in removal of resurfacing material.
Further, Dynasolve testing (additional RTS testing) revealed remnants of
a completely different manufacturer and part number. SEM showed
evidence of lapping, which is the precise removal of a part’s material to
produce the desired dimensions, finish, or shape. Finally, delidding
showed die that were similar but insufficiently marked to determine
whether they matched the authentic part number. However, because of
the failure of the Dynasolve testing, the die cannot be correct.

MLL1 (two parts purchased). Both purchases made using part number
MLL1 contained a number of samples that failed three of seven
authentication analyses, leading SMT Corp. to conclude that the parts
were suspect counterfeit. Both parts were purchased from different
vendors using the same part number, but were not identical, as shown in
figure 2. An authentic part with this number is a voltage regulator that may
be commonly found in military systems such as the Air Force’s KC-130
Hercules aircraft, the Navy’s F/A-18E Super Hornet fighter plane, the


Page 8                                         GAO-12-375 Suspect Counterfeit Parts
Marine Corps’s V-22 Osprey aircraft, and the Navy’s SSN-688 Los
Angeles Class nuclear-powered attack submarine. If authentic, these
parts provide accurate power voltage to segments of the system they
serve. Failure can lead to unreliable operation of several components
(e.g., integrated circuits) in the system and poses risks to the function of
the system where the parts reside.

The parts received from both vendors failed the same authentication
analyses. Visual inspection was performed on all evidence samples from
both purchases. Different color epoxy seals were noted within both lots,
according to SMT Corp., which is common in suspect counterfeit devices
because many date and lot codes are re-marked to create a uniform
appearance. Moreover, XRF testing of the samples revealed that the
leads contain no lead (Pb); according to military performance standards,
leads should be alloyed with at least 3 percent of lead (Pb). 11 Further,
XRF data between the top and bottom of the lead revealed
inconsistencies in chemical composition, leading SMT Corp. to conclude
that the leads were extended with the intention to deceive. Microscopic
inspection revealed that different revision numbers of the die and
differences in various die markings were found even though the samples
were advertised to be from the same lot and date code. Commonly,
components manufactured within the same date and lot code will have
the same die revisions. According to SMT Corp.’s report, the
manufacturer also stated that “it is very unusual to have two die runs in a
common assembly lot. This is suspicious.” Finally, the devices found in
the first lot tested went into “last time buy” status—an end-of-life
designation—on September 4, 2001, meaning that the parts were
misrepresented as newer than they actually were. The manufacturer
confirmed this status and added that the part marking did not match its
marking scheme, meaning that the date code marked on the samples
would not be possible.

YCC7 (two parts purchased). Both purchases made using part number
YCC7 contained samples that failed several authentication analyses,
leading SMT Corp. to conclude that the parts were suspect counterfeit.
Both parts were purchased from different vendors using the same part
number. An authentic part with this part number is a memory chip that



11
  DOD, DOD Performance Specification for Integrated Circuits (Microcircuits)
Manufacturing.




Page 9                                             GAO-12-375 Suspect Counterfeit Parts
has been used in at least 41 different DOD weapons systems, including
the ballistic missile early warning system, the Air Force’s Peacekeeper
missile and B-1B aircraft, the Navy’s Trident submarine and Arleigh Burke
class of guided missile destroyer, and the Marine Corps’s Harrier aircraft.
Failure of the chip, if not redundant, could pose risk to the overall system.

The part we received from one vendor failed four of seven authentication
analyses. Visual inspection identified numerous issues, including bent or
misshapen leads and lead ends and deformed, less-detailed logos of the
claimed manufacturer. X-ray analysis revealed that various parts in the
samples contained different sized die. SEM analysis showed that surface
material had been precisely removed to allow for re-marking. Finally,
delidding of two samples revealed die that were marked from a
competitor manufacturer with a different part number than the one we
requested. In addition, one die was marked with a 1986 copyright, while
the other was labeled 1992.

The part received from the second vendor failed four of nine
authentication analyses. Visual inspection showed evidence of re-
marking, with the color of the top surfaces of samples not matching the
color of the bottom surfaces. Some samples displayed faded markings
while others were blank and had heavy scuff marks to suggest
resurfacing. The markings were also not as clear and consistently placed
as manufacturer-etched markings would be. Leads were substandard in
quality, had been refurbished, and were not as thick as specified. Further,
SEM showed evidence of lapping. Finally, the samples responded
inconsistently to Dynasolve testing.




Page 10                                      GAO-12-375 Suspect Counterfeit Parts
Category 2: Authentic Part   Similarly, all five of the parts we received and tested after requesting
Numbers with                 legitimate part numbers but specifying postproduction date codes were
Postproduction Date          also suspected counterfeit, according to SMT Corp. By fulfilling our
                             requests, the four vendors that provided these parts represented them as
Codes                        several years newer than the date the parts were last manufactured, as
                             verified by the part manufacturers. Figure 3 provides photos and detailed
                             test results.




                             Page 11                                    GAO-12-375 Suspect Counterfeit Parts
Figure 3: Authentication Analysis Results of Part with Invalid Date Codes




                                         DAA6 (one part purchased). The purchase made using part number
                                         DAA6 contained samples that failed four of seven authentication



                                         Page 12                                GAO-12-375 Suspect Counterfeit Parts
analyses, leading SMT Corp. to conclude that the part was suspect
counterfeit. Surfaces on the parts in the evidence lots were found to have
scratches similar to suspect counterfeit devices that have been re-
marked, as confirmed by both visual inspection and SEM analysis. In
addition, the quality of exterior markings, including a lack of consistency
between the manufacturer’s logo, was lower than would be expected for
authentic devices. Tooling marks were also found on the bottom of all
components within the evidence lot; these marks suggest that the
components were pulled from a working environment. Further inspection
led SMT Corp. to conclude that many samples with refurbished leads
were extended with the intention to deceive. Moreover, XRF analysis
revealed the leads contain no lead (Pb) instead of the 3 percent lead (Pb)
required by military specifications. 12 Delidding revealed that the die, while
correct for this device, were inconsistent. As previously stated, multiple
die runs are considered suspicious. Finally, some of the samples went
into “last time buy” status in 2001, despite the fact that we requested
parts from 2005 or later and the vendor agreed to provide parts from 2010
or later.

IHH1 (one part purchased). The purchase made using part number
IHH1 contained samples that failed seven of nine authentication
analyses, leading SMT Corp. to conclude that the part was suspect
counterfeit. The part we received was supplied by a different vendor than
the one that supplied the IHH1 part shown in figure 2. Visual inspection
revealed numerous issues, including mismatching surface colors, many
scratches and scuffs, foreign debris, and leads that were not uniformly
aligned. SEM also showed evidence of lapping. RTS testing resulted in
removal of resurfacing material, and surfaces faded when exposed to
Dynasolve, which should not occur. Further, samples did not solder
properly. Finally, X-rays indicated that different die were used within the
samples. This was confirmed in delidding, which revealed inconsistencies
in size, shape, and date markings. Of the two types of die found in the
sample, one does not match the authentic part number.

MLL1 (one part purchased). The purchase made using part number
MLL1 contained samples that failed four of seven authentication
analyses, leading SMT Corp. to conclude that the part was suspect



12
  DOD, DOD Performance Specification for Integrated Circuits (Microcircuits)
Manufacturing.




Page 13                                            GAO-12-375 Suspect Counterfeit Parts
counterfeit. The part we received was supplied by a different vendor than
the ones who supplied the MLL1 parts shown in figure 2. Visual
inspection revealed scuffs and scratches indicative of re-marking, which
was also seen in SEM analysis. Different colored epoxy seals and
variegated sizes and colors of the center mounting slug were also seen.
Leads also showed evidence of being refurbished with the intent to
deceive. XRF testing of the samples revealed that the leads contain no
lead (Pb); according to military performance standards, leads should be
alloyed with at least 3 percent of lead (Pb). 13 Delidding revealed that die,
though similar, had markings indicating different revisions, which is
uncommon for die manufactured in the same date code. Finally, the
devices went into “last time buy” status in 2001, whereas the tested parts
showed a date code indicating they were made in 2008. The
manufacturer confirmed this status.

YCC7 (two parts purchased). The two purchases made from different
vendors using part number YCC7 contained samples that failed several
authentication analyses, leading SMT Corp. to conclude that they were
suspect counterfeit. The part we received from one vendor failed three of
eight authentication analyses. Visual inspection identified numerous
issues, including different colored surfaces that suggest re-marking and
unknown residues that indicate improper handling or storage. SEM
analysis showed that surface material had been precisely removed to
allow for re-marking, similarly to a YCC7 part with legitimate date codes
tested above. Further, according to the manufacturer, the legitimate
version of this part was last shipped in 2003, whereas the tested part
showed a manufacturing date code of 2006. RTS testing resulted in
removal of the part marking.

The part received from the second vendor failed three of nine
authentication analyses. Visual inspection detected numerous issues,
including different colored surfaces that suggest re-marking. The
markings were also substandard, lacking clarity and consistency in
placement. RTS testing removed part markings, further suggesting re-
marking. SEM showed evidence of lapping. Delidding revealed die that
were consistent with the authentic part, but the date code showed
evidence of re-marking to make them appear as if they had come from a



13
  DOD, DOD Performance Specification for Integrated Circuits (Microcircuits)
Manufacturing.




Page 14                                            GAO-12-375 Suspect Counterfeit Parts
                         homogenous lot. Finally, the manufacturer verified that it last shipped this
                         part in 2003, whereas our samples were marked 2007, which according
                         to SMT Corp., could not be possible.


Category 3: Bogus Part   We received offers from 40 vendors in China to supply parts using invalid
Numbers                  part numbers, and we purchased four parts from four vendors to
                         determine whether they would in fact supply bogus parts. (See fig. 4.)
                         These were different vendors than the ones that supplied us with the
                         suspect counterfeit parts. The invalid numbers were based on actual part
                         numbers, but certain portions that define a part’s performance
                         specifications were changed. For example, one of our invalid numbers
                         was for an actual voltage regulator but that operated at bogus
                         specifications. None of the invalid part numbers were listed in DLA’s
                         Federal Logistics Information System and, according to selected
                         manufacturers, none are associated with parts that have ever been
                         manufactured. As such, we did not send the parts to SMT Corp. for
                         authentication analysis.

                         Figure 4: Photos of Parts Received Despite Request for Invalid Part Numbers




                         We received the four bogus parts after requesting invalid part numbers
                         DAA5, GDD4, and 3MM8. We made two orders using DAA5, one from
                         each Internet purchasing platform, which were fulfilled by different
                         vendors. The parts we received from each vendor appeared similar, as
                         shown in figure 4. The similarity may be due to a number of factors. For
                         example, the vendors could have simply ignored the invalid portion of the



                         Page 15                                         GAO-12-375 Suspect Counterfeit Parts
part numbers we requested (they did not contact us to inform us that the
numbers were invalid). Another possible explanation could be that the
parts happened to be fulfilled by the same vendor operating under two
different names.

In furtherance of our investigation to determine the willingness of firms to
provide us bogus parts, we created a totally fictitious part number that
was not based on an actual part number and requested quotations over
one Internet platform. We received an offer to supply the part from one
vendor, but did not invest the resources to purchase the bogus part.


As agreed with your offices, unless you publicly announce the contents of
this report earlier, we plan no further distribution until 30 days from the
report date. At that time, we will send copies to the appropriate
congressional committees, the Acting Under Secretary of Defense for
Acquisition, Technology, and Logistics, and other interested parties. In
addition, the report will be available at no charge on the GAO website at
http://www.gao.gov.

If you or your staff have any questions about this report or need additional
information, please contact Richard Hillman at (202) 512-6722 or
hillmanr@gao.gov or Timothy Persons at (202) 512-6522 or
personst@gao.gov. Contact points for our Offices of Congressional
Relations and Public Affairs may be found on the last page of this report.
Other key contributors to this report are listed in appendix II.




Richard J. Hillman
Managing Director
Forensic Audits and Investigative Service




Timothy Persons
Chief Scientist
U.S. Government Accountability Office




Page 16                                      GAO-12-375 Suspect Counterfeit Parts
Appendix I: Details of Authentication
               Appendix I: Details of Authentication Analysis
               Tests



Analysis Tests

               This appendix provides details on each of the tests that constitute the
               authentication analysis SMT Corp. conducted for the parts we purchased.

               Visual inspection: Visual inspection is performed on a predetermined
               number of samples (usually 100 percent) to look for legitimate
               nonconformance issues as well as any red flags commonly found within
               suspect counterfeit devices.

               Resistance to solvents (RTS): A mixture of mineral spirits and isopropyl
               alcohol is used to determine the part marking resistance and pure
               acetone is used to remove any resurface material. This test is not
               performed on all parts. In some cases, resurfacing material would not be
               used by counterfeiters to re-mark a part; in others, the solvents would
               remove markings even on legitimate parts.

               X-ray florescence (XRF) elemental analysis: The XRF gathers and
               measures the elements within a target area. This is used specifically for
               testing components for RoHS or Hi-Rel conformance, which refer to
               dangerous substances such as lead (Pb), cadmium (Cd), and mercury
               (Hg) that are commonly used in electronics manufacturing. For suspect
               counterfeit devices, it helps determine if a component has the correct
               plating for the specification it supposed to adhere to.

               Package configuration and dimensions: This test measures key areas
               of the device to see if they fall within industry specifications.

               Real-time X-ray analysis: X-ray analysis is performed on a
               predetermined number of samples (usually 100 percent). The internal
               construction of components is inspected (depending on the component
               package type) for legitimate issues such as broken/taut bond wires,
               electrostatic discharge damage, broken die, and so forth. For suspect
               counterfeit devices, the differences in die size/shape, lead frames, bond
               wire layout, and so forth are inspected.

               Scanning electron microscopy: A scanning electron microscope is
               used to perform an exterior visual inspection—more in depth than the
               previous visual inspection. This is usually performed on a two-piece
               sample from the evidence lot. Depending on the package type,
               indications of suspect counterfeit devices are sought, including surface
               lapping, sandblasting, and sanding with regard to part marking removal.

               Solderability: This test is usually for legitimate components to determine
               if they will solder properly when they are used in production.


               Page 17                                          GAO-12-375 Suspect Counterfeit Parts
Appendix I: Details of Authentication Analysis
Tests




Dynasolve: Dynasolve is a chemical used to break down epoxies in an
effort to remove resurfacing material that is impervious to the standard
RTS test.

Decapsulation/delidding and die verification: The die of a component
is exposed with either corrosive materials or a cutting apparatus. This is
done to inspect the die or “brain” of a component to determine its
legitimacy. This process is performed on numerous samples to look for
differences between samples, such as die metallization layout, revisions,
part numbers, and so forth—all of which are red flags for suspect
counterfeit parts.




Page 18                                          GAO-12-375 Suspect Counterfeit Parts
Appendix II: GAO Contacts and Staff
                  Appendix II: GAO Contacts and Staff
                  Acknowledgments



Acknowledgments

                  Richard J. Hillman, (202) 512-6722 or hillmanr@gao.gov
GAO Contacts      Timothy Persons, (202) 512-6522 or personst@gao.gov


                  Cindy Brown Barnes, Assistant Director; Gary Bianchi, Assistant Director;
Staff             Virginia Chanley; Dennis Fauber; Barbara Lewis; Jeffery McDermott;
Acknowledgments   Maria McMullen; Kimberly Perteet, Analyst in Charge; Ramon Rodriguez;
                  and Timothy Walker made key contributions to this report.




(192386)
                  Page 19                                    GAO-12-375 Suspect Counterfeit Parts
GAO’s Mission         The Government Accountability Office, the audit, evaluation, and
                      investigative arm of Congress, exists to support Congress in meeting its
                      constitutional responsibilities and to help improve the performance and
                      accountability of the federal government for the American people. GAO
                      examines the use of public funds; evaluates federal programs and
                      policies; and provides analyses, recommendations, and other assistance
                      to help Congress make informed oversight, policy, and funding decisions.
                      GAO’s commitment to good government is reflected in its core values of
                      accountability, integrity, and reliability.

                      The fastest and easiest way to obtain copies of GAO documents at no
Obtaining Copies of   cost is through GAO’s website (www.gao.gov). Each weekday afternoon,
GAO Reports and       GAO posts on its website newly released reports, testimony, and
                      correspondence. To have GAO e-mail you a list of newly posted products,
Testimony             go to www.gao.gov and select “E-mail Updates.”

Order by Phone        The price of each GAO publication reflects GAO’s actual cost of
                      production and distribution and depends on the number of pages in the
                      publication and whether the publication is printed in color or black and
                      white. Pricing and ordering information is posted on GAO’s website,
                      http://www.gao.gov/ordering.htm.
                      Place orders by calling (202) 512-6000, toll free (866) 801-7077, or
                      TDD (202) 512-2537.
                      Orders may be paid for using American Express, Discover Card,
                      MasterCard, Visa, check, or money order. Call for additional information.
                      Connect with GAO on Facebook, Flickr, Twitter, and YouTube.
Connect with GAO      Subscribe to our RSS Feeds or E-mail Updates. Listen to our Podcasts.
                      Visit GAO on the web at www.gao.gov.
                      Contact:
To Report Fraud,
Waste, and Abuse in   Website: www.gao.gov/fraudnet/fraudnet.htm
                      E-mail: fraudnet@gao.gov
Federal Programs      Automated answering system: (800) 424-5454 or (202) 512-7470

                      Katherine Siggerud, Managing Director, siggerudk@gao.gov, (202) 512-
Congressional         4400, U.S. Government Accountability Office, 441 G Street NW, Room
Relations             7125, Washington, DC 20548

                      Chuck Young, Managing Director, youngc1@gao.gov, (202) 512-4800
Public Affairs        U.S. Government Accountability Office, 441 G Street NW, Room 7149
                      Washington, DC 20548




                        Please Print on Recycled Paper.