Chinese counterfeit chips causing military hardware crashes [Clinton-era laws: off-the-shelf OK]

arstechnica.com ^ | October 06, 2008 | Joel Hruska

[Mike Fieschko]

Over the past year, US citizens have become increasingly aware of the substandard consumer-level goods flowing out of China, but new reports indicate that the counterfeit products and dubious quality controls are not confined to the consumer sector. An increasingly large number of supposedly military-grade electronic components are turning out to be counterfeit commercial-grade hardware that, in some cases, is decades older than the manufacturing label indicates.

The problem, to be sure, is not entirely China's fault. Back in 1994 and 1996, the Clinton Administration passed two bills, the Federal Acquisition Streamlining Act (1994), and the Clinger-Cohen Act of 1996 (PDF, originally known as the Information Technology Management Reform Act). Collectively, these two bills were designed to streamline and simplify federal purchasing procedures, as well as allow for the use of commercial off-the-shelf hardware in certain areas. The concepts were sold to the public and Congress as a way to save a tremendous amount of money—rather than designing and implementing its own, custom products at tremendous manufacturing and R&D costs, the government would instead use (or modify) products that were readily available on today's market. That was the idea, anyway, but new reporting from BusinessWeek highlights how these two laws have had long-term unintended consequences.

One of the unintended consequences of both cutting the Pentagon's budget and encouraging low-cost, off-the-shelf procurement, has been a dramatic decline in the use of authorized resellers and/or parts purchased directly from the manufacturer. Under the new rules, government contractors were explicitly discouraged from designing systems that required the use of expensive, proprietary electronics or processors that would never be widely produced. This left the Pentagon largely unable to fund inefficient, small-scale production runs, and gave electronics manufacturers little reason to produce them.

Moving the acquisition and sourcing for these parts to China has opened security holes that haven't gone entirely unnoticed. As we covered earlier this year, the Department of Defense is aware that the processors it's acquiring are vulnerable to tampering, since some of them are complex enough to easily conceal trojan horses or backdoor circuitry installed by parties unknown. The DoD plans to launch a program designed to evaluate the best ways to detect circuit-level and chip-level tampering, but results are still years away.

Keeping China from advancing too far, meanwhile, is still a major concern of the United States. Intel is building a fab plant in Shanghai, but the new facility won't come online with anything like the cutting-edge technology the chip giant deploys in its other facilities. Even allowing Intel to build a facility in Shanghai at all is something of a bend in historical US policy. Current Chinese fabrication technology lags the US by multiple generations, and it's not in our best interest to hand a potential enemy the tools with which we build our own leading-edge equipment. 

The bad parts flowing into the military's hands now aren't being modified in clean rooms; rather, they're being stripped off old boards in China's back alleys, doctored cosmetically, and passed off as new, military-grade components. The difference between true military-grade parts and the commercial-grade chips that are actually shipping out is non-trivial.  In many cases, military-grade components are exposed to prolonged environmental stressors that commercial components are not designed to deal with, including extreme fluctuations in temperature and humidity. It's absolutely critical that components remain durable and functional under such conditions, as having the radar on one's F-15 suddenly fail is considered slightly more hazardous than, say, the failure of one's cellular phone.

Component failure reports from defense contractors worldwide, including Boeing, Raytheon, BAE, Northrop Grumman, and Lockheed, however, suggest that sufficient verification of part authenticity is no longer taking place, and investigations have turned up a significant number of counterfeit parts, sometimes installed in mission-critical systems. The culprit, in this case, is price. In the name of cost-cutting, the federal government has stripped away many of the authorization and authentication procedures that once defined federal purchasing and replaced them with a system that rewards the penny-pincher who can find the cheapest products. 

[Mike Fieschko]

Business Week's article Dangerous Fakes - How counterfeit, defective computer components from China are getting into U.S. warplanes and ships mentions

Potentially more alarming than either of the two aircraft episodes are hundreds of counterfeit routers made in China and sold to the Army, Navy, Air Force, and Marines over the past four years. These fakes could facilitate foreign espionage, as well as cause accidents. The U.S. Justice Dept. is prosecuting the operators of an electronics distributor in Texas—and last year obtained guilty pleas from the proprietors of a company in Washington State—for allegedly selling the military dozens of falsely labeled routers, devices that direct data through digital networks. The routers were marked as having been made by the San Jose technology giant Cisco Systems (CSCO).

Referring to the seizure of more than 400 fake routers so far, Melissa E. Hathaway, head of cyber security in the Office of the Director of National Intelligence, says: "Counterfeit products have been linked to the crash of mission-critical networks, and may also contain hidden 'back doors' enabling network security to be bypassed and sensitive data accessed [by hackers, thieves, and spies]." She declines to elaborate. In a 50-page presentation for industry audiences, the FBI concurs that the routers could allow Chinese operatives to "gain access to otherwise secure systems" (page 38).

There's another article here at FR about this, China-sourced fake chips used in US military, says BusinessWeek.

Rep. William F. Clinger, Jr. and Sen. William Cohen were/are both GOP.

[uncbob]

Damn Nixon and Kissinger for opening up China

Damn all the USA companies running to China

[Travis T. OJustice]

Damn all the USA companies running to China

Damn government interference and artificially high labor costs for making the USA less competetive on a global scale.

[Tunehead54]

Here's my worry in print:

Referring to the seizure of more than 400 fake routers so far, Melissa E. Hathaway, head of cyber security in the Office of the Director of National Intelligence, says: "Counterfeit products have been linked to the crash of mission-critical networks, and may also contain hidden 'back doors' enabling network security to be bypassed and sensitive data accessed [by hackers, thieves, and spies]."

---

:-(

[Future Snake Eater]

Anyone who criticizes “off-the-shelf” in the military has absolutely no clue how slow and cumbersome the fielding of new equipment is in the military. If it weren’t for using COTS (commercial off-the-shelf) equipment, our military would be SEVERELY hampered in many ways. Personally, I’m biased toward what we accomplish in the communications side of the house using COTS. The equipment is cheaper, easier to get support for, and more reliable than the government procurement crap.

[uncbob]

Damn government interference and artificially high labor costs for making the USA less competetive on a global scale.

No excuse for running to commie countries We are now hooked into them for our products and debt financing --just great

[Dick Bachert]

Hey, if you don't EAT any of these chips, ya should be OK.

(And before someone asks, I will post this until the idiots in government alter this insane and now dangerous UNILATERAL trade policy with China and the fools in the multinationals STOP exporting the production of EVERYTHING to China and bring those jobs home.

As you think about that, recall that in ancient times, the Romans and others would catapult disease-riddled corpses over the walls of cities they besieged to sicken and kill the enemy. The Chinese know that history even if we obviously have forgotten it. Get my drift there?

On a recent visit to China, a friend spotted this ad in a Beijing newspaper. He sent me the photo with a translation of the ad copy.

BECOME AN ENTREPRENEUR AND JOIN CHINA’S NEW MONIED ELITE!

Yes, you can now join the millions of happy and prosperous Chinese citizens taking advantage of the growing numbers of American and Western multinational corporations “outsourcing” their production to the hard-working and industrious people of China. This outsourcing has now spread to their food supplies and ingestible items. Since these firms pay us for gross weight – and this new weight will be pretty gross – and the stupid American government only spot-checks imported items in these categories (they just got lucky on the anti-freeze thing), it has opened an entirely new opportunity which our beloved Chairman is offering to any Chinese citizen willing to do a little of what the foolish Americans call “grunt work.”

Installing one of these state-of-the-art food additive production facilities behind YOUR hovel is as simple as clipping the coupon below and sending it to the address shown. Your production plant will be shipped to you in 4 to 6 weeks. Supplies are limited so don’t fart around. ACT NOW!!

These silly Americans have an expression we have “borrowed” and modified to describe this new and exciting venture: “Don’t give me any s**t.”

Our motto will be “We won’t GIVE you any s**t. But we’ll SELL it to you fools at a really great price.”

Better yet, we convince them to COME HERE to pick it up and save us the shipping costs.

AND LOOK FOR A NEW DROP-DEAD MONEY-MAKER COMING SOON. SOYLENT YELLOW PROMISES TO BE BIG!!

AND YOU MIGHT BE INTERESTED TO KNOW THAT THE “CHERY” PERSONAL VEHICLE TO BE IMPORTED BY CHRYSLER IS SIMPLY A HORIZONTALLY MODIFIED VARIATION OF THE VERTICAL UNIT SHOWN ABOVE. WE SIMPLY SLAP AN ENGINE AND SOME WHEELS ON THAT PUPPY AND OFF SHE GOES! AMERICA’S VAST ILLEGAL POPULATION OUGHT TO SNAP THEM UP LIKE TACOS.