DLA Shifts DNA’s Role in Anti-Counterfeiting Efforts

| September 15, 2015

DNA (300x225)Many semiconductor manufacturers and distributors breathed a sigh of relief last December after the Defense Logistics Agency (DLA) discontinued a controversial anti-counterfeiting requirement that suppliers mark all chips sold to the agency with ink containing plant-based deoxyribonucleic acid (DNA), which is virtually impossible to replicate or copy.

The DLA – which procures parts and equipment for the U.S. military – has continued the program, and expects to mark approximately 85,000 chips during 2015. But after three years of struggling to persuade leading chip manufacturers and distributors to help ensure the authenticity of the electronic components it buys by tagging them with DNA-based ink, the process has now been moved “in-house,” where it is being done by technical staff at the agency’s Electronics Product Test Center in Columbus, Ohio.

DLA officials had high hopes for the program in August 2012, when they directed suppliers of Federal Stock Class (FSC) 5962 microcircuits to begin using “SigNature DNA” technology, developed by Applied DNA Sciences, Inc. of Stony Brook, N.Y. The company’s proprietary DNA-marking process generates a nearly unlimited number of unique botanical DNA sequences that, when mixed with ink and applied to products known to be authentic, give users a highly reliable way to identify genuine products. This emphasis on component traceability is also at the core of anti-counterfeiting efforts among distributors that sell to both the commercial and military industries.

Industry objections

Chipmakers and authorized distributors, however, loudly objected to the mandate’s additional cost, which included $49,000 to license the DNA ink (which the DLA initially reimbursed) and $500 for each unique DNA sequence used to mark different batches of parts.

Trade groups such as the Semiconductor Industry Association (SIA) also argued, in effect, that their members were not the ones at fault for the growing problem of counterfeit chips (see Counterfeit Chips are Getting Better, Despite Arrests), which can cause system failure or degraded performance when substituted for the actual specified components. In a November 2012 letter to the DLA, the SIA insisted that original component manufacturers (OCMs) and authorized distributors shouldn’t have to use the DNA marking process “because they do not produce or ship counterfeit products.”

When the DLA rolled out the DNA-marking program despite their protests, most of the industry’s largest chipmakers and authorized distributors simply refused to participate. And that, says Lee Mathiesen, operations manager at Lansdale Semiconductor, Inc. in Phoenix, Ariz., caused the DLA to shift most of its chip purchases away from OCMs and authorized distributors. “After the DNA marking requirement,” he says, “80 percent of what they were buying came from brokers and the non-authorized channel – which is where counterfeits come from.”

Art Beauchamp, a technical quality analyst who manages the counterfeit prevention program at the DLA’s headquarters at Fort Belvoir, Va., takes issue with that. “We do not buy from unauthorized brokers,” he says, explaining that all OCMs and distributors are carefully reviewed before being allowed onto the agency’s qualified suppliers list of distributors (QSLD).

Worth the investment?

Beauchamp, a retired Air Force colonel and former director of supply chain risk management for the DLA, contends that the DNA-marking program, which thus far has produced more than 400,000 DNA-marked parts for the agency, has been “well worth the investment.” The in-house marking program costs $3 to $3.50 per part, he says. And “if you consider the additional cost on a multi-million-dollar F-16, it’s worth it to protect those critical systems.”

Even without participation from the chip industry’s major players, quite a few smaller component makers and distributors have gotten certified to use the technology. “We basically stood up – in terms of the technical certifications and the funding – about 35 new suppliers,” says Beauchamp. “We grew the industry.”

One of those suppliers is SMT Corp., a Sandy Hook, Conn.-based independent distributor that’s one of the few vendors certified to DNA-mark other companies’ authenticated chips. SMT Vice President Tom Sharp concedes that, in hindsight, the DLA might have been better off launching its DNA marking program in-house from the start. Yet he applauds the agency for taking a “bold step” to improve the quality of the military’s parts supply.

Sharp says that a sometimes overlooked aspect of the DNA-marking program is its ability to identify and link each batch of chips to databases that can track a host of product data throughout the parts’ lives. “The general view was that DNA marking was going to stop counterfeits,” he says. “But DNA is also going to provide a lot of important provenance information.”

Janice Meraglia, Applied DNA’s vice president for government and military programs, still believes that DNA marking works best when incorporated by the original manufacturer. “Without a doubt, we’ve always proposed it that way,” she says. “But when that wasn’t happening [with the semiconductor industry] we kind of had to regroup.”

Meantime, the DLA was impressed enough with Applied DNA’s DNA-marking technology that it awarded the company an additional $2.97 million contract last year to evaluate the technology’s feasibility for reducing counterfeiting in as many as 67 other FSC product categories, including electrical connectors, engine accessories, abrasives, fasteners, fittings, hoses and even bearings. The company also announced a $975,000 counterfeit-avoidance contract last year with the U.S. Missile Defense Agency.

“We offer a solution that could have benefits for lots of the supply chain,” says Meraglia. “It won’t solve world hunger, but it will give people a lot better ability to mitigate counterfeits.”

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Category: News Analysis

About the Author ()

EPS contributor Russ Arensman is an award-winning freelance writer and editor whose work has appeared in numerous U.S and international business and technology publications over the past three decades. He covered the semiconductor industry for nearly a decade as both a staff and freelance contributor to Electronic Business magazine. During most of the 1990s he worked as a journalist in Hong Kong, where he helped to launch Electronic Business Asia magazine and later the monthly business magazine Asia Inc. Previously, he worked as a reporter and editor for several newspapers in Colorado. His professional honors and awards include a National Silver Award in the American Society of Business Press Editors’ annual Editorial Excellence Competition for an October 1998 Electronic Business article profiling Idaho-based Micron Technology and its CEO Steve Appleton. Russ earned a bachelor’s degree in technical journalism from Colorado State University in 1981 and lives in Glenwood Springs, Colo. He is available for freelance writing and editing assignments, as well as corporate editorial projects, including articles, press releases, white papers, case studies, speeches, blog posts and market research. He can be reached at: arensman@rof.net