Transparent Supply Chain Helps SGI
Emerging concern over counterfeit electronic parts
Since the mid-2000's, concerns have grown about how counterfeit electronic parts might cause safety hazards or failure of business critical applications. These concerns are described in the October 13, 2008 BusinessWeek cover story "Dangerous Fakes." Current supply chain practices start with trusting the source, but processes are limited for screening out counterfeits, particularly for products containing many subsystems. As such, many companies may be unaware of counterfeit IT equipment infiltrating their data centers. This is problematic on multiple levels – companies fund "bad actors" when they pay for counterfeits, and there is no way to ascertain reliability (mean time between failure) for counterfeits. This results in more downtime, higher support/maintenance costs, and even safety concerns.
Like in many countries, the U.S. government is trying to close the holes. In 2011, U.S. Congress passed and President Obama signed into law new legislation requiring purchases controlled by Cost Accounting Standards (CAS) to "Detect and Avoid Counterfeit Electronic Parts." In 2015, the Defense Federal Acquisition Regulation Supplement (DFARS) extended these requirements beyond "CAS" contracts to include the small businesses set-asides.