counterfeits

Counterfeit Parts

Apr. 20, 2017 -- Our military, government and commercial customers count on Lockheed Martin’s products to work each and every time. Whether it is a satellite, airplane, weapon system or security system, our customers trust that our products will achieve their mission. The inclusion of sub-standard and unreliable parts in a Lockheed Martin product presents a serious threat to our goal of producing mission critical hardware our customers rely on. One cause of sub-standard and unreliable parts is counterfeit components. Industry reports have increased over the past several years of counterfeit electronic parts infiltrating the aerospace and defense supply chain.

Lockheed Martin requires its suppliers to take steps to eliminate the risk of introducing both counterfeit electronic parts as well as non-electronic parts and materials. We define Counterfeit Work as items that are or contain unlawful or unauthorized reproductions, substitutions or alterations that have been knowingly mismarked, misidentified or otherwise misrepresented to be an authentic, unmodified part from the original manufacturer or a source with the express written authority of the original manufacturer or the current design activity, including an authorized aftermarket manufacturer. Unlawful or unauthorized substitution includes used items represented as new or the false identification of grade, serial number, lot number and date code or performance characteristics.

Industry reports the most common type of counterfeit electronic parts are used, but then modified under uncontrolled conditions and made to appear new. The longevity of aerospace and defense products often exceed the life cycle of commercially available parts. The aerospace and defense industry is particularly vulnerable to this type of counterfeiting scenario. Needed parts may be out of production and no longer available directly from the manufacturers.

With an increasingly complex supply chain, extra diligence must be given to identification, tracking, inspection and management of parts throughout the supply chain to ensure the authenticity of critical parts and materials is not compromised. Lockheed Martin depends on you, our supply base, to be partners with us in our efforts to combat counterfeit part infiltration into our products. Suppliers must have robust counterfeit part control plans that meet and or exceed industry and any applicable government standards. Always reference your Lockheed Martin purchase order for your specific requirements.

The regulatory landscape in regard to counterfeit part prevention continues to evolve. Based on the National Defense Authorization Act of 2012, Section 818, the United States Department of Defense (DOD) released a regulation dictating requirements for counterfeit electronic part detection and avoidance systems. Currently, the DOD Federal Acquisition Regulation Supplement (DFARS) requires that contracts with prime contractors and their subcontracts contain provisions requiring counterfeit prevention processes for DOD suppliers of electronic parts address the following elements:

  • Training for the detection and prevention of counterfeit parts.
  • Risk based processes for inspection and test to aide in the detection of
    counterfeit items.
  • Processes to abolish the counterfeit parts proliferation.
  • Processes that ensure traceability of procured items back to their manufacturer.
  • Procurement processes that utilize original component manufacturers or their
    authorized distributors.
  • Reporting to the Government Industry Data Exchange Program suspected
    counterfeit part incidents and processes to keep suspect or confirmed counterfeit
    parts quarantined.
  • Methodologies to identify suspect counterfeit parts and to work toward
    confirmation of the counterfeit condition.
  • The design, operation and maintenance of systems to detect and avoid
    counterfeit electronic parts.
  • The flow-down of counterfeit detection and avoidance requirements to sub-tier
    suppliers.
  • Processes for keeping continually informed of current counterfeiting information
    and trends.
  • Processes for monitoring GIDEP or other credible sources of counterfeiting
    information to avoid the purchase or use of counterfeit electronic parts.
  • Processes to control and address obsolescence issues.

On Aug. 2, 2016, the DOD issued a final rule under DFARS Case 2014-D005 making
further changes to the DFARS to address the detection and prevention of counterfeit
parts. The focus of the new rule is on establishing rules for sourcing electronic parts to
mitigate the risk of introducing counterfeit parts in the defense supply chain. The rule
modifies the existing clause at DFARS 246-7007 Contractor Counterfeit Electronic Part
Detection and Avoidance System and adds a new clause at 252.246-7008 Sources of
Electronic Parts, both are mandatory flow-down provisions. As have past rules on this
subject, the rule will impact Lockheed Martin in how it selects suppliers and actions it
must take to mitigate counterfeit parts risk and became effective upon its publication.

For the full text of these requirements and changes, we urge our suppliers to review the
DFARs 252.246-7007 clause in its entirety on the Defense Procurement and Acquisition
Policy
website.

Greater than 95 percent of reported counterfeit issues are the result of procuring parts
from distributors or brokers who are not authorized by the Original Component
Manufacturer. The simplest and most effective way of combating counterfeit items is to know you are using a manufacturer-authorized supply chain. If you “buy the parts right,” your risk of receiving counterfeit product is minimized. We require Lockheed Martin suppliers to ensure strict procurement policies are in place and ensure traceability for all items that you incorporate into our products back to the manufacturer. Always refer to your Lockheed Martin purchase order terms and conditions, also called “CorpDocs” and the quality clauses for your specific requirements.

Thank you for helping us prevent counterfeit items from infiltrating our supply chain and thank you for the role that you play in helping us jointly be successful in meeting our most important missions.

Click here for more information on counterfeits prevention and frequently asked questions.