|Military aircraft like this U.S. Navy P-8A Poseidon multi-mission maritime patrol aircraft from Boeing, may be endangered by new government procurement policy. |
Washington, DC — The latest twist in the counterfeit war — and make no mistake, it is a war — has been an August 2012, notification posted by DLA (Defense Logistics Agency) DIBBs board that all FSC 5962 product sold directly to DLA would require DNA marking beginning November 15, 2012. That's right, DNA, good old Deoxyribonucleic acid, the stuff that is the building block of genetics, the same stuff that's used by law-enforcement agencies in favor over fingerprints.
The DNA markings come from Applied DNA Sciences, Inc., Stony Brook, NY, a highly specialized company. The idea is to apply totally unimpeachable identification for genuine semiconductor products, thus assuring the reliability and safety of products made for the DoD.
The Semiconductor Industry Association sent a 12 page response to the DLA. DLA did not respond.
In October 2012, the JEDEC JC13 committee sent a letter with two pages of questions attached for both DLA and Applied DNA Sciences. JEDEC also officially requested that DLA postpone the implementation of the mandate.
DLA-HQ did respond, issuing a FAQ document which was to answer many of the questions. The FAQ did not address any of the technical questions about the material. The DLA also stated that they would not postpone implementation of the mandate.
DNA Task Group
In January 2013, DLA-HQ made a presentation at the JEDEC DNA marking task group. It was stated that DLA buys approximately 12 million dollars of 5962 product from over 200 sellers; that a directive from the DLA director required that all 5962 product being procured by the DLA have DNA marking on it; and that DLA was researching ways to fund the high cost for suppliers to "buy in" to the DNA marking. There were representatives of 21 of the affected manufacturers at this task group meeting. A straw poll was taken, and of the suppliers represented, 19 were not pursuing DNA marking. Of those 19 companies, 13 stated they would not do DNA marking at all. Applied DNA Sciences made a technical presentation to the JEDEC JC13 and TechAmerica G-12 committees. The company presented information about its "SigNature® DNA" and the results of many of the tests requested by JEDEC. There are still some questions which JEDEC would like answered.
|Original genuine ICs like these could have their cost to end users inflated many times.. |
So what is the cost of procuring truly compliant product with DNA marking? For Lansdale, it would be performed as a remark at the end of line. We would need to document the flow as a rebranding operation to generate a modified product for a customer (DLA) — a product which still meets all of the QML requirements.
Rebranding Is Reworking
Per MIL-PRF-38535, rebranding is considered an allowable rework if it conforms to the requirements of A 3.6.13. Note 19 of table IA of MIL-PRF-38535 requires that fine and gross leak be 100 percent retested. A3.6.13 also requires that the product receive electrical testing per group A of 5005 or internal visual and mechanical test per 2014 (DPA), and the following tests per 5005 — resistance-to-solvents testing per 2015, thermal shock per 1011, moisture resistance per 1004, and salt atmosphere per 1009. So what is the cost of doing all of this? Just to procure the DNA marking ink, etc., to do the marking, the initial cost is $68,000. This cost is going to be paid directly to the OCM by DLA. Next is the cost of auditing a marking subcontractor. This can vary but a nice round number is $10,000. Then there is the cost to change the QM Plan; we'll use $2000 for this example. So before we have ever touched a part we have spent $80,000.
DLA generally does not buy large quantities; the average is less than 20 pieces. For this example, let's say these 20 parts are normally $50.00 each. Don't forget, we need to pull not only the 20 pcs to be delivered to DLA but also the 33 pcs that will be used as destructive samples and have them all marked. The minimum lot charge to have the product marked is $500. The product then goes through the screening requirement, group A electrical test, resistance to solvents testing, and qualification testing, all at a cost of about $5000. This also adds 3-5 weeks to the lead time.
Inflated Cost to DoD
So what is the per unit cost? Before the DNA marking requirement, the cost would have been 20 X $50.00 = $1000.00 total. Now with the cost of test and qualification included, the cost is 53 units X $50 = $2650 parts + $500 marking + $5000 requalification, and don't forget to amortize the $12000 to set up the process. So the total cost to procure that $1000 worth of parts now becomes at least $8150.00 or $407.50 each. It has been suggested that DLA could add this mark themselves for product that has been procured directly from the OCM or authorized distributor and save millions of dollars per year. The DLA director has flatly rejected this idea. Since the January 2013 meeting, independent distributors listed on the QSLD are pursuing DNA marking. The question becomes, if these independent distributors buy product thru authorized channels and then modify the product, voiding the warranty, traceability and qualification requirements of a MIL-PRF-38535 product and the requirements of JESD-31, then sell the modified product with the OCM logo, part number, and certification mark on the product, are they trafficking in counterfeit goods? They are certainly not selling virgin product.
DLA in its most recent FAQ on DNA marking stated that their "Top priority is Warfighter support". This is not reflected in the actions being taken. DLA has stopped buying from OCMs and their authorized distributors because their parts do not have DNA marking. All DLA procurements are currently coming from independent distributors or the GEM program.
This creates a dilemma. Should we condone the DLA's wasting of taxpayer money for the DNA marking? This marking will not keep counterfeit product out of the supply chain. It is our commitment at Lansdale to help the customer procure the product they truly want and need. For the first time we have a customer who says, "Yes, I know it will be more expensive. Yes I know it will probably not fix the problem, but it is what my management wants me to buy." How can we say No? How can we as the OCM deny DLA the highest quality, most reliable product? How can we stand by as they procure product through the third party market because they will not admit that the requirement is flawed?
The Real Solution
The problem that the DLA is trying to solve is counterfeit products in the supply chain. So what is the real solution to the procurement of counterfeit 5962 products? It is very simple: "Don't buy Counterfeits". And how can DLA or an OEM keep from buying counterfeit product? Again, the answer is simple, "Only buy thru the OCM or authorized distributors".
DLA needs to embrace the significance of warranty, because warranteed product is the highest quality, most reliable authentic product available. If they buy direct from the OCM or authorized distributor they receive a full warranty with the product. If they buy from any other channel, the warranty is void. JESD-31 states that product procured from an independent distributor shall not be claimed to be covered under the manufacturer's warranty. Section 3.5 sub paragraph 5, also in JESD-31, states that if the product has received extra processing, the product cannot be sold as virgin product.
To support purchasing only from authorized sources, DLA needs to define an AVL (Approved Vendors List). Once they have an AVL they need to "push" RFQs to those vendors that can supply that product. If the product is not available from the OCM or their authorized distributor and must be sourced on the open market, they should be very careful of what they are buying.
As a manufacturer, I believe we need to generate a system to authenticate product for the government.
We have all seen the shocking pictures of parts being removed from E-Waste circuit boards over an open flame, with product then washed in the river, new leads soldered on and being resold. If they don't change the marking, the parts are still "Authentic", but they are in no way new virgin product. The OCM validation would only be done if the product was truly obsolete and has a date code less than 10 years old.
If the DLA fixed its procurement system, it would prevent the procurement of 95 percent of the counterfeits currently being purchased. The OCM and authorized distributor supply authentic product so they don't need to mark product with DNA to validate its authenticity.
The solution for the remaining 5 percent is validation testing to determine if in fact the product is authentic, remembering that authentic does not mean reliable and this should be the last resort. The DNA provenance mark would be required for independent distributors so that if it is determined that the product is not authentic, it would be clear where the product came from. DNA marking is an expensive "solution" for a problem the government claims to be trying to solve. Unfortunately, the solution doesn't solve anything at all. Authentic product comes from authentic suppliers, not from DNA dots.
Contact: Lansdale Semiconductor, Inc., 5245 South 39th Street, Phoenix, AZ 85040-9008 602-438-0123 fax: 602-438-0138 Web: http://www.lansdale.com