Anti-Counterfeiting Bill Passes Senate

Last month, after a heated Senate Armed Services Committee hearing, the Senate approved an amendment that requires large defense contractors to establish systems for detecting and avoiding counterfeit parts, among many other strict provisions. The hearings identified specific missile systems, aircraft, and combat support systems that have been infiltrated by counterfeit parts.
Last week Senator Carl Levin (D-MI) and John McCain (R-AZ) introduced bi-partisan legislation, "S.AMDT.1092: to bolster the Detection and Avoidance of Counterfeit Electronic Parts," into the FY'12 National Defense Authorization Act (S.1867). The amendment was accepted and the legislation passed in the U.S. Senate by a 97-3 margin. Next, the bill goes on to be voted on in the House.

The Levin-McCain amendment includes new provisions that:

• Require large defense contractors to establish systems for detecting and avoiding counterfeit parts, and it authorizes reductions in contract payments to contractors who fail to do so;
• Require contractors for the first time to absorb the costs of fixing the problem when counterfeit parts are discovered, rather than deferring such costs to the Defense Department;
• Require the Secretary of Homeland Security to establish enhanced inspection of electronic parts;
• Require DoD to adopt policies and procedures for detecting and avoiding counterfeit parts in its direct purchases, and for assessing and acting on reports of counterfeits;
• Require military officials and contractors who learn of counterfeit parts in the supply chain to provide written notification to the contracting officer, the Department of Defense Inspector General and to the Government-Industry Data Exchange Program.

In response to the new proposed legislation, providers of security technologies are hoping to get the attention of government contractors. One vendor, Applied DNA Sciences Inc., is piloting anti-counterfeiting technology funded by the Defense Logistics Agency. The system marks microchips with unique DNA codes, which can then be used to authenticate the originality of chips anywhere along the supply chain.

Dr. James A. Hayward, President and CEO of Applied DNA Sciences commented: "I applaud the U.S. Senate for their aggressive action to address this national security crisis. If this legislation becomes law, it will cause everyone in the electronics industry to adhere to an aggressive time frame to put in place anti-counterfeiting detection.”

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