U.S. Senate Panel Targets Counterfeit Electronic Parts

The U.S. Senate Armed Services Committee is planning to crack down on counterfeit electronic parts, which more often than not originate in China and eventually make their way to U.S. military weapon systems.

Raytheon notified the U.S. Navy on Sept. 8 that counterfeit transistors had been found on a night vision or FLIR system used on the Navy's SH-60B helicopters. If the FLIR system were to fail, the Navy said the helicopter would be unable to conduct su (GETTY IMAGES)

The committee, led by Sen. Carl Levin, D-Mich., and Sen. John McCain, R-Ariz., released the results of a months-long investigation on Nov. 7. As part of the investigation, committee staff traced the DoD supply chain back to its start for more than 100 counterfeit parts and found that 70 percent of them originated in China.

"Nearly 20 percent of the remaining cases were tracked to the U.K. and Canada - known resale points for counterfeit electronic parts from China," a background memo from the committee said.
According to a January report from the Commerce Department, counterfeit electronics in the defense industry are on the rise. In 2005, there were 3,868 incidents detected, compared with 9,356 in 2008, according to the report.
Levin and McCain want the Pentagon to better enforce laws that protect the DoD supply chain, but they also admit those laws don't go far enough.
The Senate panel is considering adding language to the defense authorization act for 2012 that would hold contractors responsible for the costs of replacing a part that is discovered to be counterfeit, Levin said at a Nov. 7 press briefing.
Levin said that under cost-plus contracts it is difficult to make the contractor pay for a replacement part unless the government can prove the contractor bought the part knowing that it was counterfeit. Today, the multimillion-dollar price tag of replacing these parts more often falls to the government and the taxpayer, he said.
He would like to see the Pentagon use fewer cost-plus contracts and more fixed-price ones, where bargaining above the negotiated price is limited. Levin said this could help motivate companies to take stronger steps to avoid buying counterfeit parts.
The life of a counterfeit electronic part is long, with many stops along the way. It often begins as electronic waste, shipped from the United States and the rest of the world to Hong Kong. From there, the raw material makes its way to China, where it is broken down, "burned off of old circuit boards, washed in the river, and dried on city sidewalks," according to the Senate report. Part of this process includes removing any indentifying marks, including date codes and part numbers.
Once the old part is made to look brand new, it is shipped to the Chinese city of Shenzhen, which Levin described as the "epicenter" of counterfeit electronics. There, the part can be sold openly in the markets or on the Internet.
From China, the counterfeit part makes its way through the DoD supply chain, often passing through four or five subcontractors before a prime contractor has integrated it onto a weapon system.
The committee found that the Defense Department is particularly vulnerable to counterfeit electronics, because the life of a weapon system long outdates the production of a specific commercial electronic part.
"An electronic part may be manufactured for two years, while a defense system it is used on may be in service for more than two decades," according to the Senate report.
Quoting the director of DoD's Microelectronics Activity Unit, the Senate report says, "The defense community is critically reliant on a technology that obsoletes itself every 18 months, is made in unsecure locations and over which we have absolutely no market share or influence."
During the Nov. 7 press briefing, committee staff highlighted three examples of counterfeit parts making their way into and through the DoD supply chain.
In the first instance, Raytheon notified the U.S. Navy on Sept. 8 that counterfeit transistors had been found on a night vision or FLIR system used on the Navy's SH-60B helicopters. If the FLIR system were to fail, the Navy said the helicopter would be unable to conduct surface warfare missions using Hellfire missiles.
The committee traced the transistors back to Huajie Electronics in Shenzen. From there, the part passed through five different companies before it got to Raytheon.
The second example involved the Air Force's C-27J aircraft, for which L-3 Communications is the prime contractor.
On Sept. 19, L-3 told the Air Force that 38 video memory chips installed on the plane's display units were suspected to be counterfeit. Again, the part originated in Shenzhen with a company called Hong Dark. From there, it was sold to Global IC Trading Group, which sold them to L-3 Displays, a business unit of L-3 Communications.
According to the Senate investigation, L-3 first learned that Hong Dark was the source of counterfeit parts in October 2009.
"In total, the committee identified nearly 30 shipments, totaling more than 28,000 parts from Hong Dark to Global IC Trading Group that were subsequently sold to L-3," the report says.
The final example the committee gave to reporters was on the Navy's P-8A Poseidon, a Boeing 737 airplane that has been modified to include anti-submarine capabilities.
On Aug. 17, Boeing alerted the Navy program office that an ice detection module contained a "reworked part that should not have been put on the airplane originally and should be replaced immediately."
After a failure of that subsystem on the flight line, BAE Systems, which makes the ice detection modules, discovered many of the system's parts were not new.
This time, the committee traced the part to A Access Electronics in Japan, a company affiliated with A Access Electronics in Shenzhen. The company in Japan sold it to Abacus Electronics in Florida, which wired payment to a bank in Shenzhen. Abacus sold the part to Tandex Test Labs, which BAE had hired to "source the parts and screen them for signs of counterfeiting," according to the Senate report.
The Senate committee staff found that Tandex screened the first 50 and sent the remaining 250 to BAE without inspecting them.
In the case of the C-27J and the P-8A, the committee found the companies in question did not notify the government early enough about the suspected parts.
The Senate committee is schedule to hold a hearing on the subject Nov. 8, when three different panels of witnesses will testify, including the head of the Missile Defense Agency and several industry officials.

Export Rules for U.S. Military Aircraft Proposed

The Obama administration has released new draft rules for the export of U.S. military aircraft and associated parts, taking one more step in its ongoing reform effort.
In July, the White House introduced draft rules that outlined how the administration plans to move items off the U.S. Munitions List (USML), which is administered by the State Department, and onto the Commerce Control List (CCL), overseen by the Commerce Department.

Items on the USML - from aircraft to generic parts and components - are all subject to the same controls. However, the CCL's controls are tailored to what the item is and where it is being exported.
This summer, the Obama administration also released details for the first category - Category VII: tanks and military vehicles - as a test case to demonstrate how such transfers could take place.
The Nov. 7 announcement about aircraft is the second category to be released, while the administration continues to work out the transfer details for the remaining categories. Military aircraft and associated parts make up category VIII of the USML.
The Aerospace Industry Association, a leading advocate for export control reform, described the announcement as a "major milestone in the ongoing effort to control more appropriately exports to our allies of sensitive technology.
"The proposed revisions to Category VIII replace vague regulatory language with greater specificity for items remaining on the USML and the creation of new, stronger controls for items moved to the CCL - a proposal that AIA made early in the Obama administration," a statement from the aerospace lobby said.
The draft rules will now be open to a public comment period during which the White House will accept feedback from industry and Capitol Hill.

Austria Reinstates Sacked Chief of General Staff

VIENNA - The Austrian army's chief of general staff, who was dismissed in January after criticizing reform plans for the army, will be reinstated, the defense ministry said Nov. 7.
Defence Minister Norbert Darabos had relieved General Edmund Entacher after he criticized a plan to scrap compulsory military service.

But an appeals commission within the chancellery ruled Nov. 7 that Darabos's arguments for the dismissal were insufficient and quashed the decision, the ministry said in a statement. Darabos had said he sacked Entacher because the army chief of general staff had publicly "undermined (his) confidence."
In an interview with the weekly magazine Profil, Entacher had questioned whether Austria had enough funds or enough applicants to be able to conscription and create a professional army.
"From a legal point of view, my arguments about a loss of trust were obviously insufficient," Darabos said Nov. 7.
But he insisted: "For me, the need for army reforms is not open to discussion." The Austrian army has shrunk dramatically since the fall of the Iron Curtain, and politicians have struggled to define its new role.

Pentagon Looks for Weapons to Wage Cyberwarfare

WASHINGTON - The Pentagon's researchers plan to bolster their efforts to create offensive weapons for use in cyberwarfare, reflecting a growing concern over digital threats, U.S. officials said Nov. 7.
The U.S. government needed "more and better options" to safeguard the country from assaults on sensitive computer networks and had to invest in both offensive and defensive tools, said Regina Dugan, director of the Pentagon's research arm, the Defense Advanced Research Projects Agency (DARPA).

"Malicious cyberattacks are not merely an existential threat to our bits and bytes. They are a real threat to our physical systems, including our military systems," Dugan told a conference.
"To this end, in the coming years we will focus an increasing portion of our cyber research on the investigation of offensive capabilities to address military-specific needs," she said.
DARPA has proposed boosting funding in cyber research in the proposed 2012 budget from $120 million to $208 million and the Defense Department leadership has called for $500 million in funding for cybersecurity over the next five years, she said.
With other countries pursuing cyberwarfare capabilities and the danger from digital attacks growing by the day, the United States had to look at developing "offensive" arms to protect national security, said Dugan, without specifying what weapons could be employed.
"Our first goal must be to prevent war. We do so in part by being prepared for it. Failing prevention, however, we must accept our responsibility to be prepared to respond," she said.
Even while preparing for possible digital war, U.S. policy makers must protect civil liberties and the "peaceful shared use of cyberspace," she added.
A recent DARPA analysis of cybersecurity over several months concluded that the U.S. government had to rethink how it defends cyberspace to keep up with a threat evolving at lightning speed.
"Why is it that despite billions of dollars in investment and the concerted efforts of many dedicated individuals, it feels like we are losing ground?" she asked.
The DARPA study found that security software had grown more and more complex over the past two decades - involving up to 10 million lines of code- while various viruses and other digital assaults required an average of 125 lines of code for malware, according to Dugan.
"This is not to suggest that we stop doing what we are doing in cybersecurity. On the contrary, our existing efforts are necessary," she said. "These efforts represent the wisdom of the moment. But if we continue only down the current path, we will not converge with the threat."
DARPA organized the "cyber colloquium" in the Washington suburb of Arlington to help find better ways to address the digital threat, inviting members of industry, government and academia - including "white hat" hackers, she said.
At the same event, the head of the National Security Agency, the secretive intelligence agency that carries out eavesdropping on foreign communications, and the U.S. military's newly created cyber command, Gen. Keith Alexander, proposed one way to improve the country's cyber defenses - cloud computing.
By shifting to a "cloud architecture," the United States would save money and be better placed to protect vital computer networks, Alexander said.
The current complex web of government and military networks is unwieldy and intelligence agencies cannot easily monitor for intrusions or attacks, he said.

Russian Planes Spark NATO Scramble in Baltics

VILNIUS - NATO jets were scrambled Nov. 7 as four Russian air force planes flew near the territory of the Baltic states, Lithuania's defense ministry said, adding that the unusual number was a cause for concern.
Defense ministry spokeswoman Ugne Naujokaityte said that four Danish F-16fighters, which currently police the skies of Lithuania, Latvia and Estonia, took to the air twice to escort the Russian planes.

Two AN26 transport aircraft and a TU134 bomber flew in succession from Russia's Baltic territory of Kaliningrad to Russia itself, and an IL20 intelligence-gathering plane flew in the opposite direction.
While their path over neutral waters did not ultimately encroach on the Baltic states' airspace, the flurry of flights was unusual in an area that normally sees only a few Russian aircraft transit every few weeks.
"The intensity of these Russian planes' flights raises concern. It proves once again the importance and necessity of the NATO air police mission in Baltic states," Naujokaityte said.
The Baltic states broke away from the crumbling Soviet Union in 1991 after five decades of communist rule and joined NATO in 2004. They have had rocky ties with Moscow since independence and are jittery about Russian military moves in the region.
With a total population of 6.5 million and a professional military of 20,500, they lack sufficient aircraft to police their own skies.
As a result, other members of 28-nation NATO take turns patrolling the trio's airspace on rotations lasting several months, out of a base in Lithuania. Denmark took over from France in September. Russian aircraft bound for Kaliningrad - sandwiched between the Baltic Sea, Lithuania and fellow ex-communist NATO member Poland - have at times strayed into the Baltic states' skies without permission.
The line between navigational error and Russian "buzzing" of the Baltics can be hazy, experts say. While the planes involved in Monday's incident did not actually cross into the Baltic states' airspace, it comes amid growing disquiet about a Russian build-up in the region.
The Baltic states have stressed repeatedly that improving ties with their resurgent former master is by far their preferred option. But their concerns increased after Russia's 2008 war with ex-Soviet Georgia, as well as Moscow's affirmation in its military doctrine that NATO's expansion is a threat, and by military exercises with scenarios including cutting off the Baltic states from the rest of NATO.
Worries have been stoked by the bolstering of a brigade of marines in Kaliningrad, and reported Russian deployment there of a new anti-aircraft missile system sweeping the Baltic states and Poland.

Kuwait Minister: No Plan for More U.S. Troops

KUWAIT CITY - The Kuwaiti defense minister has denied reports about plans to bolster U.S. troops in the Gulf emirate after their withdrawal from Iraq by year's end, local media reported on Monday.
"Not at all. We have [no plan] to relocate U.S. troops to Kuwait or increase their numbers," Sheikh Jaber Mubarak Al-Sabah was cited as saying by Al-Watan newspaper. "They [U.S. troops] will only pass through Kuwait from Iraq [on their way] to the United States. Their presence is governed by the U.S. Kuwait [defense] pact and nothing will surpass this agreement," the minister said.

The 10-year defense pact expires next year.
Around 23,000 U.S. troops are permanently stationed at Arifjan in Kuwait, one of the largest military bases in the Gulf. The emirate has been used as a transit point for U.S. troops both to Iraq and Afghanistan.
The Kuwaiti minister's comments came in response to reports that Washington was studying options to relocate some of the 39,000 U.S. troops due to leave Iraq to neighboring Kuwait apparently due to concerns over the perceived Iranian threat.
"We will not allow or accept for our country to be used as a launching pad for attacks on any state, not Iran or others," Sheikh Jaber said.

Mossad, IDF Websites Online After 'Server Crash'

JERUSALEM - The websites of Israel's military, Mossad and the Shin Bet intelligence services were back online on Monday after being unavailable the previous day due to what officials said was a "server crash."
The three sites, along with numerous other government websites, crashed on Sunday, two days after the international hackers' group Anonymous apparently threatened to take action after Israel blocked two boats of pro-Palestinian activists from reaching the blockaded Gaza Strip.

All three sites appeared to be working normally on Monday after being unavailable all day on Sunday. A spokesman for the office of Prime Minister Benjamin Netanyahu, whose website was not affected, blamed the outage on a "server malfunction" technical glitch rather than an attack by hackers.
"Israeli government websites crashed today because of a server malfunction, not as a result of a cyber attack," Ofir Gendelman wrote in a posting on Twitter late on Sunday.
The sites went down shortly after a video was posted on YouTube, allegedly by "hacktivist" group Anonymous, in which they threatened the Israeli government with retaliation after Friday's interception of two activist vessels that had been hoping to run Israel's naval blockade on the territory.
An earlier attempt to run the Gaza blockade in May 2010 had ended in bloodshed when Israeli naval commandos stormed the lead vessel of a six-ship flotilla, killing nine Turkish activists and sparking a wave of international condemnation - and a flurry of new attempts to reach the coastal enclave.
Entitled "An open letter from Anonymous to the Government of Israel," the video accused the Jewish state of "piracy on the high seas" and warned that if it continued to block ships heading to Gaza "then you will leave us no choice but to strike back," it said. It was not immediately possible to confirm whether the video was posted by Anonymous, which has been involved in scores of hacking exploits, many of them targeting governments. Last year, hackers associated with Anonymous launched retaliatory attacks on companies perceived to be enemies of the anti-secrecy website WikiLeaks.