Imagine for a minute that you’re an Air Force pilot flying the fighter jet F-16CM Falcon and you’re returning to base after a nighttime training mission. While attempting to touch down on the runway, you discover that your landing gear is damaged. You execute a go-around and try to land again, this time by having the plane’s tailhook catch an arresting cable. That fails too, and the wing touches the runway. As the plane starts to crash, you reach down and pull the ejection handle, which releases the canopy. An explosive cartridge launches your seat over a hundred feet into the air. But your parachute fails to deploy, and you realize you’re about to slam into the ground, still strapped into your seat, with only a fraction of a second to go before your death. How could a scenario like this happen? Once an ejection handle is pulled, it triggers an almost instantaneous sequence of events aimed at getting the pilot safely to the ground. But in this real-life example of the potential dangers of product substitution, an Air Force investigation later revealed that the failure of the seat’s digital recovery sequencer (DRS) — which controls the timing of the ejection — contributed to the pilot’s death. Not only that, but the electronic components inside the sequencer were reportedly counterfeit, even though the F-16 manufacturer maintained the strictest quality controls over its subcontractors that built the ejection seat and the DRS.
This incident is based on the true story of First Lt. David Schmitz, an F-16 Fighting Falcon pilot, who died in June 2020 in a botched landing after his ejection seat failed to deploy its parachute. It underscores the need for strict enforcement of U.S. Department of Defense (DOD) standards for military parts. And an important part of that is the aggressive investigation of anyone suspected of prioritizing profits over safety by substituting subpar components to meet contract demands and passing them off as parts that meet the standards. (See “An F-16 pilot died when his ejection seat failed. Was it counterfeit?” by Rachel S. Cohen, Air Force Times, Sept. 13, 2022.)
Because of the enormous amount of government funding that goes into the defense sector, the U.S. military has long suffered its fair share of fraud. And counterfeit components/product substitution — which is really a category of procurement fraud all on its own — remains an ongoing problem.
With the U.S. government looking to replenish billions of dollars in military aid to Ukraine on the back of supply chain woes, fraud fighters are once again on high alert for signs of fraud and abuse. In fact, there are even more pressures and opportunities to commit this type of fraud, as people seek illicit sources for parts amid a global supply chain crisis that has created a rich environment for fraud and made the U.S. more vulnerable to threats from foreign adversaries.
Concerns about the use of Chinese components in U.S. military equipment are on the rise not only because they might be counterfeit but also for their potential use in sabotage and spying as military and economic competition between the two superpowers intensifies. Earlier this year, FBI Director Christopher Wray warned that the Chinese government “poses the biggest long-term threat” to the economic and national security of the U.S. and its allies. (See “Heads of MI5, FBI give joint warning of growing threat from China,” by Juby Babu, Reuters, updated July 7, 2022.)
Just last September, the Pentagon and Lockheed Martin suspended deliveries of F-35 fighter jets after discovering that a subcontractor had used a magnet made of cobalt and samarium alloy that came from China. Lockheed described the supplier of the alloy as a “fifth-tier” supplier amid concerns that the Chinese-sourced materials might have violated the Defense Federal Acquisition Regulation Supplement — requirements and regulations designed to maintain the integrity of sensitive government information that third parties might hold or use. [See “Pentagon suspends F-35 deliveries over Chinese alloy in magnet,” by Stephen Losey, Defense News, Air Warfare, Sept. 7, 2022 and “Defense Federal Acquisition Regulation Supplement (DFARS),” Security Encyclopedia.]
As a retired special agent for the Naval Criminal Investigative Service (NCIS), I spent many years investigating product substitution cases for the Navy. Here I look back on how the NCIS took a renewed interest in counterfeit parts, the latest cases of wrongdoing in this corner of the fraud world and how NCIS’s proactive approach can make all the difference in detecting and preventing product substitution.
Because of the enormous amount of government funding that goes into the defense sector, the U.S. military has long suffered its fair share of fraud. And counterfeit components/product substitution — which is really a category of procurement fraud all on its own — remains an ongoing problem.
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