Slide 1: Counterfeit Avoidance and Detection
Counterfeit Avoidance and Detection What Does It Mean For Suppliers? Bob Bodemuller Supplier Quality Principle Engineer 1
Slide 2: Agenda
Agenda • Introduction • Supply Chain Vulnerabilities • Legislative/regulatory • Using industry standards • LMCO Requirements 2
Slide 3: Can You Tell the Difference?
Can You Tell the Difference? 3
Slide 4: Source by Manufacturer's Suggested Retail Price
Source by Manufacturer’s Suggested Retail Price FY 2015 Percent Trading Partner MSRP of Total China and Hong • China $ 697,083,700 52% Kong made up • Hong Kong $ 472,331,251 35% 87% of 2015 • Singapore $ 10,267,324 Less than 1% seizures • India $ 6,409,028 Less than 1% • United Kingdom $ 4,358,128 L
Slide 5: Sources of Counterfeit Parts
Sources of Counterfeit Parts This flow illustrates how counterfeit parts can be sourced and eventually sold. *Stacks of Scrapped Circuit Boards **Components Being Removed *Components Being Washed in From Boards River *Market Place for Components *Components Being Sorted * Bags of Various Components
Slide 6: Why is this issue so difficult?
Why is this issue so difficult? • Aging systems resulting in obsolescence – Diminishing Sources for parts – Short life cycle for electronics • Economic – Cost – Schedule pressures – Minimum buys • Sources of parts – E-commerce – Profitable and growing capability to counterfeit – Can not always easil
Slide 7: Regulatory Defined Supply Chain
Regulatory Defined Supply Chain 7
Slide 8: DFARS Electronic Supply Chain Model
DFARS Electronic Supply Chain Model IP Holder Fabless OCM Category 1 Manufacture Original Mfg. Contractor OEM Contract Mfg. Counterfeiter Authorized Suppliers Clones/Mimics Contractor- Category 2 approved Supplier Obsolescence Grey Market Unapproved Supplier Category 3 8
Slide 9: Electronic Supply Chain Sources
Electronic Supply Chain Sources • Original Manufacturers – Original Component Manufacturer (OCM) – Original Equipment Manufacturer (OEM) – Contract Manufacturer • Authorized Supplier Contractual arrangement with the original manufacturer to sell or distribute the part. – Authorized Distributor – Aft
Slide 10: Legislative Climate
LEGISLATIVE CLIMATE Laborer de-soldering circuit boards over a coal- fired grill. Rock in the box is where boards are hit to remove solder, Pliers are used to pluck off chips which go into various buckets. The boards are then tossed into a pile for open burning. © BAN 10
Slide 11: Legislative Actions
Legislative Actions • Section 818 of the 2012 NDAA – Congressional law inserted into the National Defense Authorization Act Dec 2012 – Modified in each new NDAA legislation • DFARS 252.246-7007 Published May 2014/Revised Aug 2016 – Implements section 818 • DFARS 252.246-7008 – Published Aug 2016 – D
Slide 12: Regulatory Information Resources
Regulatory Information Resources • DPAP DFARS Case Status link • http://www.acq.osd.mil/dpap/dars/case_status.html • DPAP FARS Case Status Link • http://www.acq.osd.mil/dpap/dars/far_case_status.html • Federal Register • https://www.federalregister.gov/documents/search?con ditions%5Bterm%5D=counterf
Slide 13: Industry Standard Approach to Compliance
Industry Standard Approach to Compliance 13
Slide 14: SAE Technical Writing Committees
RAB1 SAE Technical Writing Committees • G-19 – G-19A Testing AS6171 – G-19AD Authorized Distribution AS6496 – G-19C Compliance Various – G-19CI OCM, System Integrators, etc. AS5553* – G-19D Independent Distribution AS6081 – G-19T Definitions AIR6283 • G-21 Materials AS6174* * Referenced in the PO te
Slide 15: Do they care about G-19/G-21?
Slide 14 RAB1 Do they care about G-19/G-21? Bodemuller, Robert A, 9/6/2016
Slide 16: Standards Architecture
Standards Architecture Tier 0 – Aerospace & Defense Supply Chain QMS Verification Certification Regulatory AS9100 Certification Schema SCMH ISO9001 AS9100 (QMS A&D) DFARS 252.246-11 ICOP (AB / CB) (QMS) (QMS) AS9104 Recognized FAA 14 CFR-21, 145 ISO9001 AS9101 AS9111 EASA-21,145 Move guidance (QMS G
Slide 17: LMCO Approach
LMCO APPROACH 16
Slide 18: Counterfeit Prevention Elements
Counterfeit Prevention Elements Aligned with the DFARS criteria Applicable to ALL parts (electrical and mechanical) including COTS – Training of Personnel – Inspection and Testing – Process to Avoid, Detect, and Abolish Counterfeit Work Proliferation – Processes for Traceability of Work – Sourcing –
Slide 19: Supplier Requirements
SUPPLIER REQUIREMENTS 18
Slide 20: Three Ways LM Flows Counterfeit Prevention Requirements
Three Ways LM Flows Counterfeit Prevention Requirements • CorpDocs – Terms & Conditions • Text notes – Placed on each Purchase Order • Specific program requirements – PO note – Statement of work – Parts, Materials and Process specifications – Drawings – Others Ask Your Buyer 19
Slide 21: Terms & Conditions
Terms & Conditions • Section 6 (or 7) addresses counterfeit mitigation depending on the CorpDoc version • General provisions support the FAR/DFARS implementation compliance • CorpDocs typically come in pairs, i.e., 3 and 3A – The base version is the general provision – The “XA” version contains the
Slide 22: General Provisions
General Provisions • There are 8 general provisions for counterfeit prevention – a) Definitions – b) Delivery of suspect/confirmed counterfeit work – c) Sources – d) Counterfeit risk mitigation process – e) Notification of suspect/confirmed counterfeit work – f) Applicability – g) Liability – h) Flo
Slide 23: Definitions
Definitions • "Counterfeit Work" means Work that is or contains unlawful or unauthorized reproductions, substitutions, or alterations that have been knowingly mismarked, misidentified, or otherwise misrepresented to be an authentic, unmodified part from the original manufacturer, or a source with th
Slide 24: Source Selection and Mitigation Processes
Source Selection and Mitigation Processes • SELLER shall only purchase products to be delivered or incorporated as Work to LOCKHEED MARTIN directly from the Original Component Manufacturer (OCM)/Original Equipment Manufacturer (OEM), or through an OCM/OEM authorized distributor chain. SELLER may use
Slide 25: Flowdown
Flowdown • SELLER shall include paragraphs (a) through (f) and this paragraph (h) of this clause or equivalent provisions in lower tier subcontracts for the delivery of items that will be included in or furnished as Work to LOCKHEED MARTIN. It is required to flow down the DFARS clause 252.246- 7007
Slide 26: Summary
Summary Traditionally industry systems and methods were not designed to detect deliberate and deceptive product alterations Systems based on trust are not necessarily trustworthy any longer… Trust but verify! Continue to Evolve Educate, Communicate & Enforce Prevention Measures Government requ
Slide 27: Resources
Resources • IAQG Supply Chain Management Handbook – Section 3.5 – http://www.sae.org/servlets/registration?PORTAL_CODE=IAQG&OBJECT_PKG=iaqg.businessClas ses&OBJECT_TYPE=SCMHGeneral&PAGE=gotoSCMH • Training – NASA Academy of Aerospace Quality (AAQ) - Counterfeit Awareness - http://aaq.auburn.edu/coun
Slide 28: Questions
Questions 27