1. By Joining Forces the Procurement of
Counterfeit Parts can be Avoided
Kristal Snider
Vice President, ERAI
3899 Mannix Drive
Ste. 421-422
Naples, FL 34114
(p) 239-261-6268
(e) ksnider@erai.com
(w) www.erai.com
© 2012 ERAI Inc. 1

2. Come together for united work or
action
Collaborate
Cooperate
Get together
Team up
What does joining forces mean?
© 2012 ERAI Inc. 2

3. The United States Government
Department of Defense (DOD) agencies
Systems Integrators
Government Prime Contractors
The Contractor’s Subcontractors
Original Component Manufacturers (OCM)
Authorized Suppliers that ONLY sell OCM Stock
Authorized Suppliers that Sell OCM and Open Market Stock
Aftermarket Manufacturers
Independent Distributors with in-house inspection
Independent Distributors without in-house inspection
Brokers with no stock and no in-house capabilities
Test Facilities with ISO17025 Certification and DSCC Approval
Test Facilities with no certifications
Trade Groups
Standards Development Organizations
The Players
© 2012 ERAI Inc. 3

4. November 8, 2011 the SASC held a hearing to “explore the problem
of counterfeit electronic parts infiltrating critical defense systems
and the risk those parts pose to such systems.”
November 17, 2011- A bipartisan amendment to the NDAA FY’12 was
introduced to “stop the importation of counterfeit electronic parts
into the United States”, address weaknesses in the defense supply
chain and promote the adoption of counterfeit avoidance practices
by DOD and the defense industry.
December 31, 2011- President Obama signed a revised version of the
amendment which was passed as Section 818 of the NDAA which
specifically seeks to avoid, detect and mitigate the effects of
counterfeit electronic parts.
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5. Section 818- A Holistic Approach
Sourcing
Supplier Debarment
Personnel Training
Product Traceability
Inspection & Testing
Reporting
Material Control & Disposition
Toughen Enforcement of Anti-counterfeiting Laws
Empower CBP (unredacted data)
Assign Financial Responsibility
Toughen Criminal Penalties
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6. No clear definition
No clear path given to achieve “trusted supplier”
status
Potentially an unreasonable burden will be placed
upon “trusted suppliers” if there is an escape.
“Trusted Supplier”
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7. ARP6178
1.) Desktop check list saves your company time and
money.
2.) On site inspection check list ensures auditors are
consistent during evaluation and supplier rating.
ERAI Recommendation –
How to Identify “Trusted” Open Market Suppliers
© 2012 ERAI Inc. 7

8. Identify recommended standards
No supply chain intermediary is immune to
counterfeit parts
Specify approved accreditation bodies
Industry Standards
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9. 9
Material Control
1. Definition: “Counterfeit” & “Suspect Counterfeit”
2. Objective evidence required is unclear
3. Need more guidance relative to how and how long to
control suspect material
4. Third party verification process

10. DoD should look to AS5553 and AS6081
DoD should provide guidance to strengthen these
existing, published standards in order to meet its
objective
DoD should consider how it can protect organization’s
that follow its directives (e.g. Safe Harbor)
© 2012 ERAI Inc. 10
ERAI Recommendation-
Material Control

11. © 2012 ERAI Inc. 11
Reporting

12. 9-18-2002- VisionTech joined ERAI
11/16/2004 - 09/25/06- 11 complaints lodged by 10 different distributors
Faulty Product = 6
Substandard Product = 3
Suspect Counterfeit = 2
January 2007 – Policies strengthened
Multiple complaints
Misrepresentation of origin of goods
© 2012 ERAI Inc. 12
Reporting

13. Between January – October 2007
10 Complaints filed by 7 different suppliers
Complaints Dismissed = 4
Complaints Reported = 6
VisionTech’s membership was revoked
© 2012 ERAI Inc. 13
Reporting-
Learning from mistakes

14. 3,082 out of 3,263 orders placed were with known
counterfeit suppliers in China.
Sales exceeded $15.8 million.
70% of the goods stored in VisionTech’s warehouse at the
time of the raid were counterfeit.
876 customers in the US – 234 Non-US based- DOJ
estimates 70-95% of the product bought from VisionTech
by these businesses may have been counterfeit.
59,000 parts marked as military-grade.
© 2012 ERAI Inc. 14
VisionTech Sales
January 1, 2007 - June 7, 2010

15. If you see something, say something!
© 2012 ERAI Inc. 15
Reporting

16. Stay Informed
Join- ERAI: Counterfeit Part Avoidance, Detection,
Disposition and Reporting
Follow ERAI on Twitter (@ERAI_Inc)
Like ERAI on Facebook
© 2012 ERAI Inc. 16