Standards help companies deal with the problem of counterfeiting

And these measures are being codified into standards, with the SAE – the US-based standards organisation - and the International Electrotechnical Commission (IEC) taking a leading role. Jo Vann is convenor of the IEC's TC107 Working Group 3, which is developing standards addressing the avoidance, detection, mitigation and disposition of counterfeit electronic parts in avionics applications. She said the SAE developed one of the first anti counterfeiting standards. "But the first draft of SAE AS5553 used phrases that were legally inaccurate and which merged the concept of 'fraudulent' and 'counterfeit'." The standard, which has since been updated to AS5553A, is recommended for use by organisations that procure and/or integrate electronic parts and/or assemblies. SAE says the standard's requirements are generic and can be applied through the supply chain to all organisations that procure electronic parts and/or assemblies, regardless of type, size and product provided. 'The mitigation of fraudulent/counterfeit [electronic] parts in this standard is risk based and will vary, depending on the desired performance or reliability of the equipment/hardware', it says. Whilst this revision was in progress, the US FBI was targeting various component brokers who were buying parts from the Far East that had been 'glob topped' and remarked with false information. The impact of counterfeit parts has convinced the US government to take action. Following lobbying by various parties, the government amended the National Defense Authorization Act (NDAA), which, inter alia, sets policies on how money will be spent. What happened was that a new section was added to the NDAA addressing counterfeiting. Called Section 818, the amendment aimed to make all suppliers in the US military supply chain responsible for counterfeit parts. Vann noted: "OEMs said the punitive charges called for by Section 818 were massive and unfair. So it has been modified to say that, if you have an anti counterfeiting plan in place, you won't be as liable. There has since been more public consultation and lots of comments, but we're still waiting for further revisions." One of the issues with Section 818 is its use of the phrase 'trusted supplier'. "What it doesn't use," Vann noted, "is 'franchised distributor', which has confused some people." Mark Shanley, international business manager for Astute Electronics, noted: "From our perspective, there are traceable parts and non franchised parts; anything that isn't traceable has to go through the test lab." One impact of the new found spotlight on counterfeiting is the narrowing of the focus from suppliers to individuals. "The rules don't just target business, they are now targeted at individuals and component buyers," said Vann, who noted EU consumer law is evolving in the same direction. "This is likely to affect distributors who serve general markets, with the importer legally liable; someone will need to have their name on the paperwork." Shanley added: "One of the key points in NDAA is individual responsibility; can anyone afford to place an order for non traceable parts?" As far as standards are concerned, there appears to be a geographic split, with the SAE focused more on North America and the IEC focused more on Europe and the rest of the world. Vann added that SAE standards are more concerned with components brought into a business and their return, while the IEC standards cover this and the outflow from a company. "Europe is taking things a bit further," she contended. IEC has written TS62668-1, which is intended to help avionics OEMs to avoid the use of counterfeit, fraudulent and recycled electronic components. "This takes account of AS5553A," Vann said, "but has further control on product spares, rework and so on." Both approaches are intended to keep products out of the so called 'grey market'. An interesting political slant is that whilst the SAE isn't working that closely with China, IEC is. And this is bringing a significant benefit, in Vann's opinion. "A lot of avionics OEMs are doing business in China and often have to establish manufacturing operations there. They need to beware of poor buying practises and this relationship is helping to establish best practise." The standards – whether written by the SAE or by the IEC – are there to protect companies as far as possible from bringing counterfeit parts into the supply chain. Standards from both bodies are being used in the UK – 'there is a lot of support in the UK for the SAE because avionics companies have lots of US customers' said Vann. One way in which the standards can be used is to create an anti counterfeiting plan. "Doing so will help companies to protect themselves from liability if they are involved in a US supply chain." This might apply to a contractor or small UK based distributor, she added. Another confusing factor is the growing reliance of military OEMs on COTS parts. "With a custom design," Vann explained, "you have to apply for a license, but COTS parts can be used in many programmes and the supplier may not know that parts are headed for US military use. Everyone in the supply chain has to write a plan to protect themselves." Talking to the role of distribution, Shanley said: "SAE6081 addresses what distributors should do. It's a set of standards drawn up by the SAE's G19 committee, with emphasis on controlling the supply chain for non traceable products. Distributors also need to bear SAE6171 in mind. This standardises practices to detect suspect counterfeit parts, to maximise the use of authorised parts and to ensure consistency across the supply chain when it comes to test." Another difference between SAE and IEC is that, while the latter body is focused on avionics, the SAE is trying to be more broad brush. "But there is a problem in getting the right balance between the needs of the avionics and space sectors, on the one hand, and general industry on the other," Vann said. Vann, a senior component technologist with a large UK avionics OEM, said her employer's buyers are tightening their procedures and pointing out to suppliers that they won't get much business in the future if they don't have a franchise. Shanley said: "We have had to update our process controls completely to make it as clear as possible what is a traceable part. Distribution should take responsibility for ensuring there is a transparent trading model. We've opened our processes and it's the only model you can use – you partner and share the risk. It's not where you buy from any longer," he pointed out, "it's where the parts come from." Vann concluded: "It's all about best practise and getting this invoked in contracts. My employer is big enough to put contracts in place with anti counterfeiting requirements and, to a certain extent, protect its suppliers. Smaller companies are having all kinds of troubles." * SAE has a range of standards addressing the issue of counterfeiting and this list can be found at counterfeitparts.sae.org/standards. For more on IEC standards, go to www.iec.ch.