Imagine purchasing a computer at a discount. Two months later, your computer crashes, wiping out your hard drive and erasing two months’ worth of work, pictures and purchased songs. When you get it checked out, you find out that the cause of the crash was a fake chip.

Thinking back, the fact that you had gotten such a good deal would make sense, and you would likely avoid such dubious discounts again. Lesson learned.

Now imagine the same scenario on a much larger scale. Instead of the chip going in your personal computer, it was installed on a F-15 jet fighter, or a Seahawk helicopter, or even an aircraft carrier. A computer failure from a counterfeit chip in midflight or in mid-sea would cause greater damage than it would to just your average PC.

Now if this really happened, you would think the Pentagon would void such discounted merchandise and pay the price for proper parts. Lesson learned, right?

Well, the problem with this scenario is that it actually is happening, and the Pentagon has not learned its lesson.

According to BusinessWeek, a confidential Pentagon program that tracks counterfeit parts issued an alert in November 2005 that linked fake microchips to military equipment malfunctions (October 2). The report revealed that counterfeit computer parts are a growing threat to our military, making it susceptible not only to equipment failure but also espionage.

The Pentagon needs parts for aging equipment as it tries to keep costs down, as it’s much cheaper to replace worn-out parts than build a new piece of equipment. After the collapse of the Soviet Union, the military’s efforts to save money also meant that instead of purchasing equipment from manufacturers and authorized distributors, the Pentagon began to purchase parts from smaller brokers that offered them at much lower prices.

Congress used to require brokers to certify that they were original manufacturers or authorized distributors, but now brokers only have to obtain a contractor code, with little or no oversight. This has led to hundreds of brokers popping up in suburban basements and bedrooms.

BusinessWeek tracked one broker down to a 40-year-old lady, with no college education, and her mother working in their house. Since 2004, the broker had won contracts worth $2.7 million by plugging in part codes into Google and buying them off websites for low prices. BusinessWeek quoted the broker as saying she didn’t even know what the parts were or what they were for. After the broker, owner of IT Enterprise, was investigated for a counterfeit transistor used in a Marine Corps Harrier fighter jet, her company was banned from selling parts, but only for three years.

These dubious brokers continue to receive business because the Department of Defense is required to make 22 percent of its purchases from small contractors, including those run by women, military veterans and ethnic minority groups. This affirmative action toward “disadvantaged” business has patently increased the threat to the U.S. military.

BusinessWeek also investigated the origin of the parts the Pentagon purchases through these brokers. The magazine independently traced four counterfeit parts and all of them originated from China. Their investigation led them all the way to traders in Shenzhen. These traders typically obtain supplies from recycled-chips emporiums such as the Guiyu Electronics Market outside the city of Shantou in southeastern China. There, in back rooms and open yards, workers strip commercial-grade computer parts, like microchips, from old PC circuit boards. After being cleaned in the nearby river, the components are then sold from the premises of businesses such as Jinlong Electronics Trade Center.

At Jinlong Electronics, the chips are relabeled military grade. The proprietor admitted that his supplies were counterfeit. “Everyone in Guiyu does this, he says: ‘The dates [on the chips] are 100 percent fake, because the products pulled off the computer boards are from the ’80s and ’90s, [while] customers demand products from after 2000’” (ibid.). BusinessWeek found that this kind of operation is typical of the suppliers to dubious discount dealers, including the residential ones, which then sell the counterfeits to major defense contractors. The problem is big.

According to the head of research for Naval Air Systems Command’s Aging Aircraft Program, Robert Ernst, up to 15 percent of all spare and replacement microchips purchased by the Pentagon are counterfeit.

The alert from the Government-Industry Data Exchange (gidep) found counterfeit chips had been supplied to contractors including bae Systems, Boeing Satellite Systems, Raytheon Missile Systems, Northrop Grumman Navigation Systems, and Lockheed Martin Missiles & Fire Control.

The counterfeit problem isn’t just limited to microchips and the risk of equipment failure. The U.S. military has also procured hundreds of counterfeit routers from China. These fake routers, devices that direct data through digital networks, not only can cause malfunction in equipment, they also can provide new methods of espionage.

“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],” said head of cybersecurity in the Office of the Director of National Intelligence, Melissa Hathaway (ibid.). Hathaway was referring to the seizure of more than 400 fake routers.

A separate report from the fbi presented to industry audiences in January 2008 stated that Chinese operatives could “gain access to otherwise secure systems” through fake routers.

This problem has only recently escalated into a serious threat to U.S. security. According to Brian Hughitt, a manager of quality assurance for nasa, “Everyone believes the gidep reports are the tip of the iceberg” (ibid.). The Pentagon, however, has so far done very little to respond to the security threat. Ernst told BusinessWeek, “I am very frustrated with the leadership’s inability to react to this issue” (ibid.).

The threat is even more dangerous when one considers that the parts are from China, a nation openly developing ways to cripple the technology that gives the U.S. military an incredible advantage over its enemies.

Back in 2007, the U.S. said China had attempted to spy on the Pentagon and defense contractors by hacking defense-industry networks. China demonstrated its ability to shoot down U.S. satellites when it destroyed one of its old weather satellites by shooting a ballistic missile into space on Jan. 11, 2007.

Trumpet editor in chief Gerald Flurry has written about how technological dependence is the Achilles heel of the U.S. military. It looks like any Paris has a quiver full of arrows to choose from to take down its Achilles giant. For more information on this subject, read “America’s Achilles Heel.”