Technology Sectors
National security and the counterfeit economy
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Dr. James A. Hayward |
Counterfeiting has become a problem too big and too serious to ignore. Its impact is now felt directly throughout the world economy -- even in the United States military supply chain where we now know that “military capable” technologies have been counterfeited. Counterfeiting was easier to overlook, despite the enormous economic and security implications, when it was seen as a luxury problem, an affliction affecting the manufacturers of designer handbags and outfits. Luxury or not, it is clear that it is a problem that we cannot ignore.
The growing counterfeiting problem has not escaped the notice of Congress. The Senate Farmed Services Committee, headed by Chairman Carl Levin (D-Mich) and ranking Republican John McCain (R-Ariz), is investigating the subject. At hearings last week, Senator Levin said, "There is a flood of counterfeits and it is putting our military men at risk and costing us a fortune.” We learned that there have been 1,800 cases, involving 1 million counterfeit parts sold to the Pentagon. According to the semiconductor industry, each year counterfeiting costs $7.5 billion in revenue and a loss of 11,000 U.S. jobs.
In a case that is likely to be just the tip of an iceberg, federal prosecutors succeeded last month in gaining convictions in a case against VisionTech, a small Florida operation with only nine employees. In just a four-year period, the company brokered sales of more than $15.8 million in computer parts, the vast majority of them fakes, to government agencies and other clients. The investigation began when BAE Systems and other defense contractors complained after having received faulty parts from VisionTech.
And this does not contemplate the risk exposure to counterfeit chips for medical devices, automobiles, commercial aircraft, ships, safety equipment and other industries.
VisionTech is now closed and one employee is in prison. There is ample evidence that VisionTech was not an isolated case. A GAO study published in 2010 found that the number of counterfeit parts sold to defense contractors in 2008 was more than two times what it had been in 2005. Among the findings were counterfeit routers sold to the Navy, counterfeit microprocessors used in the Air Force’s F-15 flight controllers, and oscillators with a “high failure rate” used in unmanned aircraft by the Navy and Air Force.
Despite the specter of widespread counterfeiting there is good news and it is much closer than the horizon. My company, Applied DNA Sciences, has developed a process that proves the origins of authentic chips, and we are already working closely with the military to prove its efficacy in practice. Using DNA codes derived from plants we are able to mark components as small as microchips with customized codes that are capable of authentication. And it has performed as a 100 percent effective solution in military pilot projects to-date.
We were all quite fortunate in the VisionTech case that none of the counterfeit parts passed into the supply chain appear not to have caused a catastrophic failure. Yet if this one small company could succeed, there are undoubtedly many more out there, as yet undiscovered, and perhaps much more sophisticated. The time to act is now. We may not be so lucky the next time.
James A. Hayward, Ph.D., is the CEO of Applied DNA Sciences. He can be reached at:
