Fake tech gear has infiltrated the U.S. government
November 8th, 2012
11:26 AM ET

Fake tech gear has infiltrated the U.S. government

By David Goldman

A record number of tech products used by the U.S. military and dozens of other federal agencies are fake. That opens up a myriad of national security risks, from dud missiles to short-circuiting airplane parts to cyberespionage.

Despite laws designed to crack down on counterfeiters, suppliers labeled by the U.S. government as "high risk" are increasing their sales to federal agencies. Their presence in government's supply chain soared 63% over the past decade, according to a new study released by IHS, a supply chain management consultancy.

Suppliers with the high-risk branding are known to engage in counterfeiting, wire fraud, product tampering and a laundry list of other illicit and illegal behaviors.

Last year, 9,539 banned businesses were found to have sold technology the government. Roughly 10% of those incidents involved counterfeit parts or equipment.

"What keeps us up at night is the dynamic nature of this threat, because by the time we've figured out how to test for these counterfeits, they've figured out how to get around it," said Vivek Kamath, head of Raytheon's supply chain operations. "It's literally on almost a daily basis they change. The sophistication of the counterfeiting is amazing to us."

The number of fake tech products floating around in the market quadrupled from 2009 to 2011, according to IHS - and they're sneaking into some high-profile places.

In September 2010, the Missile Defense Agency found that the memory in a high-altitude missile's mission computer was counterfeit. Fixing the problem cost $2.7 million. Had the bomb launched, it most likely would have failed, the agency said.

Two years earlier, the FBI seized $76 million of counterfeit Cisco routers that the Bureau said could have provided Chinese hackers a backdoor into U.S. government networks. A number of government agencies bought the routers from an authorized Cisco vendor, but that legitimate vendor purchased the routers from a high-risk Chinese supplier.

China continues to be the largest source for counterfeit and pirated goods found in the United States, accounting for 62% of the $178 million in products (with an estimated retail value of $1.1 billion) that the U.S. Customs and Border Protection agency seized last year.

Some in Congress have pushed for a crackdown.

"Counterfeit parts pose an increasing risk to our national security, to the reliability of our weapons systems and to the safety of our men and women in uniform," Sen. John McCain, a Republican from Arizona, said last year in support of anti-counterfeiting regulations.

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Filed under: Security Brief
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  26. ah

    stop out sourcing, problem solved.

    November 12, 2012 at 1:57 pm | Reply
    • jim22

      Exactly right. A chip can't be fully tested. Try to test a binary adder with 2 inputs, 64 bits each. You will be testing long time. Assuming you can test 10^9 additions per second. To exhaustively test will take approximately 2^128 = 10^40 tests. In other words about 10^23 years. This is to test only an adder with 2 inputs. There is most likely other functionality to test. 😉 This risk was stated by somebody about 15 years ago. Anybody listening? Or does somebody think the risk is too low or the cost of bad chip too low?

      November 12, 2012 at 9:38 pm | Reply
  27. Owen Peters

    The DoD recently MANDATED the use of botanical DNA provided from Applied DNA Sciences for all high-risk microchips, no doubt, other commodities will be added to the requirement in the near future. The technology has been tested over the last two years and has proved to be an effective solution to at least part of the problem. All attempts to copy the markings to date have failed. Hopefully counterfeits will be less of a problem once the program is fully incorporated into the various manufacturing and distribution channels.

    November 12, 2012 at 1:12 pm | Reply
  28. mercenary76

    in all things america gets just what it pays for .

    November 11, 2012 at 10:19 pm | Reply
  29. Stanton Verscay, Peterborough, Ontario

    Fake now means 'Chinese.' It began with Richard Nixon's trip to China. America went downhill ever since.

    November 11, 2012 at 10:56 am | Reply
  30. Jason Glugla

    Keep buying from China because they just love us.

    November 11, 2012 at 10:18 am | Reply
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  32. Domokun

    Food for thought, maybe we are already too late.

    November 10, 2012 at 3:02 am | Reply
  33. nokidding

    Stop buying stuff from China. The government is behind much of this, so simply choose not to buy from them. I make beaded jewelry, and I'll buy nothing I know was made in China, because they use known carcinogens in many of their products. They don't care about life, and I choose to limit them from touching my life as much as I can.

    November 10, 2012 at 1:26 am | Reply
  34. Tom

    If the counterfeit parts are so difficult to test for, perhaps it doesn't matter that they are counterfeit?

    November 9, 2012 at 8:28 pm | Reply
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    November 9, 2012 at 3:08 pm | Reply
  36. I know

    This is just like the oxycontin. Everyone knows what's going on but has been bought off. Each of these parts and devices could be marked with a device that leaves an indelible mark that can never be replicated. But if the people in the supply chain are bribed then no one even looks for the mark.

    November 9, 2012 at 12:28 pm | Reply
  37. Justin

    Heres an idea... MAKE OUR OWN! Create U.S. jobs!..... But how many people in the U.S. can afford the education to get the jobs?

    November 9, 2012 at 12:12 am | Reply
    • Conrad Shull

      OK, but put the blame where it's deserved – the gluttonous, bloated, dollar feeding tough hog staffs and departments of our colleges and universities. Cut the fat there, and they are corpulent, and the price of education would drop precipitously.

      November 9, 2012 at 10:53 am | Reply
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    Oh my! This is terrible! I just hope the government would do something about this right away. Thanks for sharing this very informative article!

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    November 8, 2012 at 8:41 pm | Reply
  39. shrinktofit

    Buyer beware. The consumer is responsible of validating the source of whatever they buy, but oftentimes that's impossible to do with any confidence because the seller can lie and there's no way to know different. But the source is on the label, right? Well, it lies too. The only way to change this is to codify labeling into law – and enforce it with stiff penalties for violations by the supplier for not doing whatever is necessary to provide the confidence to the buyer. Sure this will increase costs, there's no free lunch here. Purchasing your Cisco gear from someone other than Walmart would be a good start.

    November 8, 2012 at 7:20 pm | Reply
  40. History Bear

    If they are a risk, why the heck are we buying from them. This system is truly messed up.

    November 8, 2012 at 7:01 pm | Reply
  41. livingonlandfills

    When NAFTA was signed, as an Engineer I saw the US born Engineering enrollments shrinking to ~ 1%, I argued that technology outsourcing was going to create a national security risk. I have been observing this since 1993, and have been shouted down by humanities majors when I suggest this. I did not want to be "correct". I wanted to correct the situation of no Science grads. Now, few Science Grads, counterfeits, a growing Asian Military, dramatic reduction in US Military Spending, things are looking more dire. I pray I am wrong, but why did we let this happen?

    November 8, 2012 at 2:01 pm | Reply
    • writingmomma

      The problem is the greed in America and China. People want cheap parts so they can pad their pockets. I would rather pay higher prices for good equipment than cheaper prices for poor equipment.
      There is also a problem with being able to attend school that would be affordable. Science majors have to pay so much for college, that they are choosing other careers they can afford. College tuition has gotten outragious. Well, that goes back to greed as well.

      November 8, 2012 at 3:41 pm | Reply
  42. fiftyfive55

    Fake tech gear and illegal aliens in the service,a big homer simpson D'OH

    November 8, 2012 at 1:39 pm | Reply
  43. Jay

    bite the bullet and start manufacturing at home become less dependent on China. But no the big business would lose serveral million and have a hard time posting multibillion dollar quarters with no acatull money in the bank.

    November 8, 2012 at 12:21 pm | Reply
    • Joe

      It would seem to be common sense, wouldn't it...

      November 8, 2012 at 12:49 pm | Reply
      • Lagos

        Common sense until you realize that we can't pay people 2 dollars a day and people start crying about the government paying 3x the cost for their equipment.

        November 8, 2012 at 1:21 pm |

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