China is dumping counterfeit electronic parts into the Pentagon's supply chain, two senior lawmakers alleged on Monday, putting U.S. troops at risk and undercutting the American economy.
One day before a Senate Armed Services Committee hearing on the issue, Sens. Carl Levin, D-Mich., and John McCain, R-Ariz., offered details of the panel's ongoing investigation and described a deceptive process in which parts are burned off old circuit boards, washed in rivers, dried on streets and sanded down to remove identifying marks. The salvaged parts, which can look brand new, are sold on the Internet or openly in the markets.
Reviewing more than 100,000 pages of Defense Department documents and material from more than 70 companies, the panel's investigators found about 1,800 cases of suspect counterfeit electronics being sold to the Pentagon. The total number of parts in these cases topped 1 million.
The committee hearing will examine three cases in which suspect counterfeit parts from China were installed in military systems made by Raytheon, L-3 Communications and Boeing.
"Now, a million parts is surely a huge number. But I want to just repeat this: We've only looked at a portion of the defense supply chain. So those 1,800 cases are just the tip of the iceberg," Levin, the committee chairman, told reporters at a Capitol Hill news conference.
The investigators found that counterfeit or suspect electronic parts were installed or delivered to the military for several weapons systems, including military aircraft such as the Air Force's C-17 and the Marine Corps' CH-46 helicopter, as well as the Army's Theatre High-Altitude Area Defence (THAAD) missile defense system.
The lawmakers indicated they would push for amendments to the defense bill to limit counterfeit electronics in the supply chain.
"We can't tolerate the risk of a ballistic missile interceptor failing to hit its target, a helicopter pilot unable to fire his missiles or any other mission failure because of a counterfeit part," said McCain, the top Republican on the committee.
Investigators traced more than 70 percent of the cases to China. Nearly 20 percent led to the United Kingdom and Canada, the lawmakers said. They said material in Hong Kong was trucked to cities in mainland China, specifically to the counterfeiting district of Shantou in Guangdong Province.
Levin said China could stop the deception if it wanted to.
"And they're going to have to stop it or else they're going to pay a heavy price if we start inspecting all of their parts that are coming into this country. Because the only way to separate the wheat from the chaff is through inspections, if they keep sending us chaff," he said.
The committee is expected to hear from Defense Department officials and company executives.