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AS6081 Counterfeit Avoidance Standard: Protecting Your Supply Chain and Reducing Cost

Posted by Jesse Silverman, Esquire on Jan 16, 2014 9:27:00 AM

With most anything new questions, uncertainties and misperceptions are bound to occur. The introduction and implementation of the AS6081 Counterfeit Avoidance Standard is no different. One objection or umbrella_riskmisperception that I hear most often centers on the testing requirements called out in the standard. Similarly, I’ve encountered questions regarding why a buyer would ever engage an AS6081 certified independent distributor when there are manufacturers out there who specialize in the manufacture of otherwise obsolete components.

The goal of this blog is to address these two legitimate concerns and to shed a bit more light on the AS6081 process. Prior to engaging in an analysis of these two issues though let’s examine the reasons why we are talking about counterfeit avoidance. Note, for the purposes of this blog I am focusing on the mitigation of counterfeit electronic components. Counterfeiting of hardware is certainly a problem too – here is a link to a recent story highlighting an example of this exact thing – but AS6081 focuses exclusively on electrical, electronic and electromechanical parts. AS6174 addresses the procurement and counterfeit mitigation of materiel (all other products other than electronic parts).

Why is counterfeit avoidance such a hot-button issue? A 2012 report released by the Senate Armed Services Committee highlights the reasons. The report includes the startling disclosure that there are over 1 million suspect counterfeit parts in the defense supply chain. Senator John McCain (R-Arizona) was quoted in the report, stating:

“Our committee’s report makes it abundantly clear that vulnerabilities throughout the defense supply chain allow counterfeit electronic parts to infiltrate critical U.S. military systems, risking our security and the lives of the men and women who protect it. As directed by last year’s Defense Authorization bill, the Department of Defense and its contractors must attack this problem more aggressively, particularly since counterfeiters are becoming better at shielding their dangerous fakes from detection.”

One of conclusions reached by the committee singled out unvetted independent distributors. Specifically, Conclusion 6 of the report reads:

Conclusion 6:  The defense industry’s reliance on unvetted independent distributors to supply electronic parts for critical military applications results in unacceptable risks to national security and the safety of U.S. military personnel.  The Committee identified approximately 1,800 cases of suspect counterfeit parts in the defense supply chain.  Those parts were supplied by more than 650 companies, each of which relied on their own network of suppliers.  DOD and defense contractors are dod1frequently unaware of the ultimate source of electronic parts used in defense systems.  The suspect counterfeit parts that were used in Electromagnetic Interference Filters (EIF) destined for the Navy’s SH-60B helicopters, for example, changed hands five times before the parts were bought by the Raytheon subcontractor who built the EIFs.  Those parts originated with Huajie Electronics in Shenzhen, China, a fact that neither DOD nor Raytheon was aware of prior to the Committee’s investigation. “

Taken as a whole, the report paints a frightening picture of the defense supply chain.Contrary to popular opinion, qualified independent distributors do play an important role in the supply chain. Our military and defense programs rely heavily on legacy and obsolete systems. Parts for these systems are no longer manufactured. As a result, qualified independent distributors who specialize in procuring obsolete and hard-to-find parts play a vital role in ensuring that older systems continue to function. I italicized and bolded the word qualified because there is a significant difference between an independent distributor who has been audited and certified by recognized independent third-party auditors and an anonymous independent distributor who simply sets up a website and consistently shows up on the first few pages after searching Google for a particular part number.

If we can agree that qualified independent distributors do fill an important void in the supply chain then we can move on to discuss one of the objections I mentioned at the beginning of this post – namely, why would a buyer engage an independent distributor when there are manufacturing houses out there who specialize in the manufacture of legacy or obsolete electronic components? My answer is that a buyer should not simply engage an independent distributor – they should engage a qualified independent distributor. How do you know if an independent distributor is qualified? The Defense Logistics Agency’s Qualified Testing Supplier List list is a good place to start.

The QTSL list, which can be found here, represents a group of distributors who have successfully undergone an on-site audit conducted by representatives from DLA Land & Maritime. You can read more about the Qualified Testing Suppliers List program here (PDF) including the criteria they use to audit vendors, which includes JEDEC standard JESD31 and AS6081. 

Going back to the original objection, why would a buyer engage a qualified independent distributor instead of a manufacturing house who specializes in the reproduction of obsolete components? The three main reasons are cost, lead time and minimum quantities. Independent distributors are often called on by clients when there is an emergency situation. A typical scenario is when an OEM or contract manufacturer needs 50 pieces of an obsolete semiconductor right away. They cannot afford to wait a long lead time. Qualified independent distributors can often procure, test and authenticate parts in a relatively short manner. In contrast, a manufacturing house may take weeks or months to ramp up production.

Moreover, defense and aerospace clients often require a relatively small quantity of components. It is not cost-effective or reasonable for an end-of-life manufacturer to fire up their lines and do a production run for 50-100 pieces of a particular component. Qualified independent distributors are accustomed to, and in fact specialize in, this exact sort of requirement.

One critical feature of the AS6081 standard is the authentication testing protocol, which brings up the other objection I hear most often – that the minimum testing requirements outlined in AS6081 do not include destructive testing. This is not true. Here is a chart detailing the minimum tests required under the AS6081 standard.

AS6081Table 

As you can see, the solvent test for remarking, solvent test for resurfacing, EDS/EDX and delid/decapsulation are all considered destructive tests under AS6081. Remember, additional testing is available. The chart above simply details the minimum tests required. A qualified independent distributor who is AS6081 certified (as is Secure Components) and who procures parts from other than authorized sources (sources that are not authorized to distribute the product by the original manufacturer) will work with you to ensure that the proper testing is done prior to shipping the components to you.

electronicAnother important facet of AS6081 is the disclosure of the source of supply. Per section 4.2.1.3 of AS6081 the distributor “shall disclose in writing at the time of each individual quotation, the source of supply (by company name and location), if the Organization is or is not authorized (franchised) for the item(s) being quoted and is or is not providing full manufacturer’s warranty on the quoted material. If the Organization considers that the name of the source of supply is proprietary to the Organization, the Organization and Customer shall negotiate an appropriate non-disclosure agreement.”

The days of an independent distributor refusing to reveal their source of supply are over. Yes, the qualified independent distributor can insist on an NDA being signed, but the important underlying policy here is that the mitigation of counterfeit components is a joint effort. The company buying the parts should partner with the independent distributor to openly and collaboratively address the risk of counterfeit head-on.

I’d be remiss if I did not encourage you to follow the ongoing DFARS Case 2012-D055. A final action is expected in February 2014. To summarize, “DoD is proposing to revise the DFARS to partially implement section 818 (paragraphs (c) and (f)) of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2012”. In part, Paragraph (c) addresses Regulations (including Contractor Responsibilities, Trusted Suppliers and Reporting Requirements. Paragraph (f) contains definitions for “covered contractor” and “electronic part”.

If you are an OEM or contract manufacturer and are reading this you are likely wondering if there is a counterfeit avoidance standard that applies specifically to you as a manufacturer. The answer to that is yes. AS5553A provides a framework for “organizations that procure electronic parts and/or assemblies”. As an OEM or contract manufacturer how you can comply with AS5553A without absorbing the burdensome cost of auditing each and every supplier?

AS5553A specifically addresses this issue.  See Section B.1.3.2 below.  AS5553AIn other words, working with an AS6081 certified distributor or a distributor who has been approved by the Defense Logistics Agency via their Qualified Testing Suppliers List (“QTSL”) program will most likely satisfy this requirement.

In closing, we have a shared responsibility to prevent counterfeits from entering the supply chain. Adoption of and adherence to these standards benefits you, your end user and ultimately the men and women who rely on the plane, helicopter, ship, radar, etc. to function properly each and every time they need it. If you have any questions please do not hesitate to contact me. Similarly, I encourage you to leave a comment and to contribute to the conversation.

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