Counterfeit electronics embedded in missile guidance systems and hundred-million-dollar aircraft have become a serious problem for the U.S. military and its contractors. Unlike a knockoff Gucci purse or Rolex watch, however, it takes more than misspelled brand labels, altered logos or suspiciously low prices to spot a bogus microprocessor being passed off as the real thing.

Phony components create safety and security problems because little is known about who actually made them and, therefore, whether they might have been programmed with malicious software that could be used to disable flight, radar or weapons controls, or enable hackers to intercept communications. And, malefic intent or not, if they don't meet military specs, they could simply fail prematurely—and possibly catastrophically.

Sound like an unlikely problem? Hardly. Between November 2007 and May 2010, U.S. Customs officials seized 5.6 million counterfeit microprocessors destined for military contractors and the commercial aviation industry.

Aerospace and defense contractors tend to develop their technologies to last a long time. The parts used to repair these systems, however, often become obsolete during the life of the system, forcing the military and its suppliers to find components from alternative and in some cases disreputable manufacturers and distributors. For example, between September 2007 and August 2009, MVP Micro in Irvine, Calif., made more than $140,000 selling at least 13,000 knockoff integrated circuits to 420 buyers in the U.S. and abroad, including the U.S. Navy and companies in the transportation, medical services and aerospace industries.

Markings on computer chips indicate whether they are commercial-, industrial- or military-grade, the latter signifying that the part has been specially tested to withstand extreme temperature ranges and high vibration. The U.S. Department of Justice in February sentenced MVP owner Mustafa Abdul Aljaff and former MVP operations manager Neil Felahy to 30 months and 20 months in prison, respectively, for conspiring to sell chips mislabeled "military grade." The two were caught in a joint sting operation called Chain Reaction, which included investigators from U.S. Customs and Border Protection, the Federal Bureau of Investigation, the Naval Criminal Investigative Service (NCIS), the Defense Logistics Agency (DLA) and at least five other federal agencies.

Turning to nature
DLA, based in Fort Belvoir, Va., buys most of the military's electronic components and has over the past few years been testing authentication technologies the agency hopes can crack down on counterfeiting. One of the more promising approaches involves marking microchips with plant DNA. Applied DNA Sciences, in Stony Brook, N.Y., isolates strands of botanical DNA, breaks them down into segments and then shuffles those segments to make a custom DNA marker that qualified manufacturers can embed into a number of different substances, including ink, varnish, thread, laminates and metal coatings.

DNA yields a false positive less than one in a trillion times, whereas even the most complex labeling, serialized code, etched or inked symbols, or microdot application may be copied or mimicked, says James Hayward, president and CEO of Applied DNA. The company's SigNature DNA markers are small enough to be placed at various locations on an integrated circuit chip or other component, all the way down to the silicon wafer. If the authenticity of a component or batch of components is questioned, Applied DNA performs forensic analysis to determine whether the hardware is tagged with one of the company's DNA markers.

Applied DNA and microchip maker Altera Corp. completed a successful six-month pilot program with DLA last year, earning an 18-month phase 2 test initiated in February. During the initial test, Applied DNA marked Altera microchips with plant DNA embedded in ink at an Altera production facility. The second phase includes both Altera and chip distributor SMT Corp., who will test Applied DNA's technology on a larger scale and at multiple steps through the supply chain, including existing chips already in circulation.

DLA's efforts to find more accurate authentication technologies coincided with congressional hearings late last year that revealed the surprising extent of the U.S. Department of Defense's counterfeit detection problem. The hearings prompted President Obama in December to sign the National Defense Authorization Act (NDAA), one provision of which requires the secretary of defense, by the end of June, to devise a training, testing and tracking plan to drastically cut down on the use of counterfeit parts. The NDAA also authorizes Defense to punish suppliers that knowingly push counterfeit parts or are not doing enough to ensure that their parts are authentic. By the end of September government contractors will also have to have a system in place that can identify, intercept and report any counterfeit parts they find in their supply chain.

The NDAA also sets penalties for trafficking counterfeit parts. Individuals found to be doing this intentionally face fines of up to $2 million and 10 years in prison. If a counterfeit part causes someone to be seriously injured or killed, the guilty party faces up to a life sentence.

China's role
Curtailing the source of counterfeit parts could also help. Companies in China are often cited as the worst offenders. At the request of the Senate Armed Services Committee, the Government Accountability Office (GAO) last year created a fictitious company to buy electronic parts over the Internet (pdf). The GAO received responses from nearly 400 vendors—334 located in China—to its requests for quotes. The faux firm ultimately bought 16 parts from 13 Chinese vendors, and all of them were either counterfeit or suspected to be so. The committee's investigation also uncovered "dozens" of instances of suspect counterfeit electronic parts installed or delivered to the military for use on thermal weapons sights, missile-control computers and military aircraft, including the Boeing C-17 Globemaster III and Lockheed Martin C-130J Super Hercules military transport.

A January 2010 counterfeiting report from the U.S. Department of Commerce's Bureau of Industry and Security provided some insight as to how some of these forged Chinese electronics are made. Much of the raw material is salvaged electronic waste shipped from the U.S. and the rest of the world to Hong Kong. From there waste is trucked to cities in mainland China, where electronic parts may be burned off of old circuit boards, washed in a river and dried on city sidewalks. In other instances, parts may be sanded down to remove the existing part number, date code (which indicates when a part was made) and other identifying marks. Sometimes the tops of the parts are recoated to hide the sanding marks. Printing equipment may then be used to add false markings to make the parts appear new.

Detection technologies such as embedded plant DNA are an important step toward disrupting supplies of knockoff parts. Future manufacturers might also be able to embed tiny microprocessors into their wares that can proactively track the progress of a shipment or individual items, says Benjamin Jun, chief technology officer at Cryptography Research (CRI), a security company developing just such a technology. "A microchip with some data storage can easily capture information about everywhere it's been in the supply chain," he says. This would allow manufacturers, distributors and customers to track a part's journey through the supply chain. If it is missing stops along the way, a part might have been introduced to the supply chain by someone other than the manufacturer.

Jun notes that neither CRI nor Applied DNA's technologies alone will be the answer. Instead, he says, anticounterfeiting measures will rely on some combination of proactive tracking and forensic investigation.