Work Instructions No. 0621P2 Rev: AG Counterfeit Parts Risk Mitigation Date: 09/07/12 Procedure Page: 1 of 13

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1 Procedure Page: 1 of PURPOSE This procedure provides guidelines to avoid the risks associated with counterfeit or substandard parts. 2.0 SCOPE This procedure applies when L-3 Communications Systems Inc. (hereafter L-3 AS) procures parts and materials from independent distributors, subcontractors, or contract manufacturers. L-3 AS is required to procure materials directly from the Original Component Manufacturer (OCM) or from a distributor that is authorized and franchised for the specific manufacturer of the device being procured. Only in cases where the product is unavailable from these sources or cannot be supplied by them in support of critical schedules may parts be procured from the Independent Distributor marketplace. The process controls described in this procedure are required when parts cannot be procured from the Original Component Manufacturer (OCM) or the franchised distributor of the product being procured because of obsolescence or schedule, and the use of an approved alternate component or a redesign of the subassembly or assembly to use an approved alternate part has been investigated and deemed unfeasible by L-3 AS engineering personnel. 3.0 REFERENCES L-3 Corporation Policy 602, Counterfeit Parts Risk Mitigation, Revision - L-3 AS Standard Operating Procedure SOP1611Q, Control of Records (Quality and EHS) 4.0 DEFINITIONS Active Component A component that relies on a source of energy and is able to inject power into a circuit. This includes amplifying components such as transistors, triode vacuum tubes, diodes, and integrated circuits. Aftermarket Manufacturer An authorized producer of replacement parts. Parts may be manufactured through an agreement with the OCM to use their tooling, die, and/or intellectual property, or may be reverse engineered, redesigned, or emulated without violating the OCM intellectual property. The aftermarket manufacturer must label or otherwise identify its parts to assure that the as shipped aftermarket manufactured part is not mistaken for the part made by the OCM. Counterfeit Part A part that either is (a) an illegal or unauthorized copy or substitute of an OEM item; (b) an item that does not contain the proper external or internal materials or components required by the OEM or that is not constructed in accordance with OEM specification; (c) an item or component thereof that is used, refurbished or reclaimed but the Seller represents as being a new item; (d) an item that has not successfully passed all OEM required testing, verification, screening and quality control but that Seller represents as having met or passed such requirements; or (e) an item with a label or other marking intended, or reasonably likely, to mislead a reasonable person into believing a non-oem item is a genuine OEM item when it is not. Parts that have been modified pursuant to a specific L-3 purchase order requirement, such as refinished, up-screened, or up-rated parts that are properly identified as such are not considered suspect or counterfeit. Electronics Resellers Association International (ERAI) ERAI is an information services organization that monitors, investigates and reports issues affecting the global supply chain of electronics. Franchised Distributor A distributor with whom the OCM has a contractual agreement to buy, stock, repackage, sell and distribute its product lines. Franchised distributors normally offer the product for sale with full manufacturer s warranty. Franchising contracts may include clauses that provide for the OCM's marketing and technical support, failure analysis and corrective action, and exclusivity of inventory. Government-Industry Data Exchange Program (GIDEP) A cooperative data exchange between Government and Industry participants for sharing engineering and failure data

2 Procedure Page: 2 of 13 Independent Distributor A distributor that purchases parts with the intention to resell them. Independent Distributors may be franchised for selected, but not all, product lines. For purposes of counterfeit risk mitigation, a distributor is considered independent when not franchised for the item to be procured. Original Component Manufacturer (OCM) An organization that designs and/or engineers a part and is pursuing or has obtained the intellectual property rights to that part. Original Equipment Manufacturer (OEM) An organization that designs and/or engineers equipment and is pursuing or has obtained the intellectual property rights to that equipment. This term is synonymous with OCM. Passive Component A component that cannot introduce net energy into the circuit it is connected to. They are unable to amplify (increase the power of a signal), although they may increase a voltage or current such as is done by a transformer or resonant circuit. Among passive components are two-terminal components such as resistors, capacitors, inductors, and transformers. Suspect Counterfeit Part A part in which there is an indication by visual inspection, testing, or other information that it may have been misrepresented by the supplier or manufacturer and may meet the definition of a counterfeit part. 5.0 RESPONSIBILITIES 5.1 The President of L-3 AS has identified the Supplier Quality Engineer as the Counterfeit Parts Mitigation Point of Contact for the division. 5.2 L-3 Corporate Vice President, Quality a) Managing the corporate counterfeit part prevention and mitigation program b) Ensuring that divisions are provided with training and support to address this topic c) Serving as the point of contact between the divisions and corporate as regards counterfeit part prevention and mitigation d) Maintaining a database of counterfeit part mitigation activity based upon information supplied by the divisions 5.3 L-3 AS Counterfeit Part Mitigation Point of Contact a) Ensuring division compliance with this policy b) Coordinating the division s interaction with ERAI and GIDEP c) Serving as a member of the L-3 Counterfeit Parts Interdivisional Team d) Reporting confirmed counterfeit parts to the L-3 Corporate VP, Quality via Counterfeit Part Incident Report (Figure 4) and providing ongoing updates through closure 5.4 L-3 AS Director, Quality a) Conducting independent quality audits that assess compliance with this policy as part of the division s quality system b) Providing support of Material Review Board actions and related activities that ensure the identification, segregation, and disposition of counterfeit parts c) Reviewing and concurring with division purchases from independent distributors 5.5 L-3 AS Director, Materials a) Ensuring that other options are deemed unfeasible before making purchases on the independent market (Figure 1) b) Ensuring that all purchases on the independent market are placed with L-3 approved Independent Distributors c) Reviewing and concurring with division purchases from independent distributors.

3 Procedure Page: 3 of PROCUREMENT REQUIREMENTS (Reference Procurement and Inspection/Test Flowcharts, Figure 1 and Figure 2) Procurement from an independent distributor requires the approval of the L-3 AS Procurement manager or director and Quality manager or director prior to issuance of a Purchase Order. Copies of such Purchase Orders (PO) are to be provided to the L-3 Corporate Vice President, Quality when the PO is issued to the independent distributor. a) L-3 AS shall only use the L-3 Corporate approved Independent Distributors for the purchase of obsolete components or part authentication testing. The list of approved Independent Distributors is located at on the Corporate Intranet site: b) L-3 AS Procurement is to engage Engineering and Quality to assess the need for a design change to specify a component currently available from the OCM or through franchised distributors. If a design change is not feasible, then the decision to remanufacture the part from a qualified approved remanufacturer shall be assessed. Design change or remanufacture assessments shall be documented in the procurement records. c) When procuring active components from an Independent Distributor, the purchase order clause and testing defined in Exhibit A shall be used. L-3 AS may add but not diminish testing requirements listed Exhibit A. d) When procuring passive components and connectors from an Independent Distributor, the purchase order clause and testing defined in Exhibit B shall be used. L-3 AS may add but not diminish testing requirements listed in Exhibit B. e) When procuring assemblies from contract manufacturers or subcontractors, and when components are procured by the subcontractor or contract manufacturer, the clause referenced in Exhibit C shall be used. f) L-3 AS Counterfeit Part Mitigation Point of Contact is to ensure that Authenticity Testing Reports received from the Independent Distributors are thoroughly reviewed upon receipt. L-3 AS Counterfeit Part Mitigation Point of Contact is to confer with the leader of the L-3 Counterfeit Parts Team when a report indicates that a part is deemed suspect counterfeit. 7.0 RECORDS AND REPORTING REQUIREMENTS NOTE: All reporting to L-3 Corporate shall be done through L-3 AS Vice President of Operations. a) L-3 AS shall request and retain original Certificates of Conformance (C of Cs) for all purchases from OCMs and Authorized Franchisees of OCMs. Record retention requirements shall be in accordance with contract and L-3 AS SOP1611Q. b) All documentation received with products from Independent Distributors is to be retained by L-3 AS. This includes test reports, certificates of conformance/compliance, attribute and variables data, and invoices. Record retention requirements shall be in accordance with L-3 AS SOP1611Q. c) When L-3 Corporate-approved Independent Distributors are contracted for suspect counterfeit parts screening/testing only, the distributor is required to report counterfeit experiences they identify to L-3 AS. L-3 AS is required to report suspect counterfeit components to the L-3 Corporate Vice President, Quality and proceed as depicted in Figure 3. d) L-3 AS is required to notify the L-3 Corporate Vice President, Quality before sending parts in inventory for authenticity testing. e) L-3 AS is required to immediately report any discovery of a suspect or counterfeit part to the L-3 Corporate Vice President, Quality and proceed as depicted in Figure 3. f) L-3 Corporate approved Independent Distributors are required to impound suspect and counterfeit parts identified during the screening process and quarantine/destroy them per their company procedures. Suspect

4 Procedure Page: 4 of 13 or counterfeit parts identified by L-3 AS shall be impounded pending direction from the L-3 Legal department. 8.0 GENERAL a) L-3 AS is required to periodically review the information on the Counterfeit Parts Team webpage on the L- 3 Corporate Intranet. This web page includes industry information to support risk mitigation, lessons learned and Counterfeit Part History Cards, inspection and test methods and procedures, training programs, and Counterfeit Part Team member contacts and team meeting logistics. 9.0 EXCEPTIONS Any exceptions from this procedure requires the advance written approval of the L-3 Corporate Vice President, Quality.

5 Procedure Page: 5 of 13 Figure 1 Part Procurement Process through the intranet switchboard. Copies of this document are uncontrolled when printed. Copy printed 09/17/12.

6 Procedure Page: 6 of 13 Figure 2 Inspection/Test Counterfeit Parts Detection Flow-Down Inspection/Test Requirements through the intranet switchboard. Copies of this document are uncontrolled when printed. Copy printed 09/17/12.

7 Procedure Page: 7 of 13 Figure 3 Process for Counterfeit Part Mitigation through the intranet switchboard. Copies of this document are uncontrolled when printed. Copy printed 09/17/12.

8 Procedure Page: 8 of 13 Type Unknown in field if information is unavailable. Type N/A if information is non-applicable L-3 Intranet / Material Management / Teams / Counterfeit Parts / CP Incident Report Use or disclosure of the information contained herein is subject to ITAR and Proprietary Data Restrictions. Figure 4 Counterfeit Part Incident Report

9 Procedure Page: 9 of 13 Exhibit A Independent Distributor Purchase Order Clause Active Components Independent Distributor's procedures shall meet the requirements of IDEA STD 1010 & SAE AS5553 and have a Quality Management System certified to AS9120:2002. The requirements of AS6081 shall be in effect upon industry release of this standard. The original manufacturers Certificate of Conformance (C of C) and all traceability documentation shall be included with each shipment of parts. It shall include the manufacturer s name, part number, date codes, lot codes, serializations, and / or any other batch identifications. Seller is to contact Buyer in the event that the original OEM/OCM C of C and traceability documentation is not available. All inspecting and testing shall be performed to the original manufacturer s specifications and parameters. Recorded evidence of all testing performed shall be included with each shipment. The following inspections and tests are required: b) Visual Microscopy Inspection of all parts in the order under 10X minimum magnification (100% of the lot) c) X-Ray inspection (100% of the lot) d) XRF/RoHS (2 parts per lot date code) e) Resistance to Solvents testing (2 parts per lot date code) f) Heated Solvent testing (Dynasolve Immersion) (2 parts per lot date code) g) Scrape testing (2 parts per lot date code) h) Solderability testing per IPC/EIA J-STD-002 (2 parts per lot date code) i) De-lid, Die Penetrate, Die Verification (2 parts per lot date code) j) Scanning Electron Microscopy (1 part per lot date code) If suspect/counterfeit parts are furnished under this subcontract and are found in any of the goods delivered hereunder, such items will be impounded by Buyer. The Seller shall promptly replace such suspect/counterfeit parts with parts acceptable to the Buyer and the Seller shall be liable for all costs relating to the removal and replacement of said parts as specified in the subcontract requirements or Distributor s insurance policies. Buyer reserves all contractual rights and remedies to address grievances and detrimental impacts caused by suspect/counterfeit parts. All occurrences of Suspect Counterfeit and/or Counterfeit parts will be immediately reported to ERAI.

10 Procedure Page: 10 of 13 Exhibit B Independent Distributor Purchase Order Clause Passive Components and Connectors Independent Distributor's procedures shall meet the requirements of IDEA STD 1010 & SAE AS5553 and have a Quality Management System certified to AS9120:2002. The requirements of AS6081 shall be in effect upon industry release of this standard. The original manufacturers Certificate of Conformance (C of C) and all traceability documentation shall be included with each shipment of parts. It shall include the manufacturer s name, part number, date codes, lot codes, serializations, and / or any other batch identifications. Seller is to contact Buyer in the event that the original OEM/OCM C of C and traceability documentation is not available. All inspecting and testing shall be performed to the original manufacturer s specifications and parameters. Recorded evidence of all testing performed shall be included with each shipment. The following inspections and tests are required: k) Applicable electrical testing (resistance, capacitance, continuity) for the devices procured (1% AQL Level II) l) Visual Microscopy Inspection of all parts in the order under 10X minimum magnification (100% of the lot) m) X-Ray inspection for non-glass diodes and tantalum capacitors (100% of the lot) n) XRF/RoHS (2 parts per lot date code) o) Resistance to Solvents testing (2 parts per lot date code) p) Heated Solvent testing (Dynasolve Immersion) (2 parts per lot date code) q) Scrape testing (2 parts per lot date code) r) Solderability testing per IPC/EIA J-STD-002 (2 parts per lot date code) s) Scanning Electron Microscopy for metal packaged parts only (1 part per lot date code) If suspect/counterfeit parts are furnished under this subcontract and are found in any of the goods delivered hereunder, such items will be impounded by Buyer. The Seller shall promptly replace such suspect/counterfeit parts with parts acceptable to the Buyer and the Seller shall be liable for all costs relating to the removal and replacement of said parts as specified in the subcontract requirements or Distributor s insurance policies. Buyer reserves all contractual rights and remedies to address grievances and detrimental impacts caused by suspect/counterfeit parts. All occurrences of Suspect Counterfeit and/or Counterfeit parts will be immediately reported to ERAI.

11 Procedure Page: 11 of 13 Exhibit C Purchase Order Clause for Subcontractors and Contract Manufacturers Only new and authentic materials are to be used in products delivered to Buyer. No counterfeit or suspect counterfeit parts are to be contained within the delivered product. Parts shall be purchased directly from the OCMs/OEMs, or through the OCM/OEMs Franchised Distributor. Documentation must be available that authenticates traceability to the applicable OCM/OEM. Independent Distributors (Brokers) shall not be used without written consent from Buyer (L 3). Definitions Counterfeit A part that is an illegal or unauthorized copy or substitute of an OEM item; an item that does not contain the proper external or internal materials or components required by the OEM or that is not constructed in accordance with OEM specification; an item or component thereof that is used, refurbished or reclaimed but the Seller represents as being a new item; an item that has not successfully passed all OEM required testing, verification, screening and quality control but that Seller represents as having met or passed such requirements; or an item with a label or other marking intended, or reasonably likely, to mislead a reasonable person into believing a non OEM item is a genuine OEM item when it is not. Parts that have been modified pursuant to a specific L 3 purchase order requirement, such as refinished, up screened, or up rated parts that are properly identified as such are not considered suspect or counterfeit. Suspect Counterfeit A part in which there is an indication by visual inspection, testing, or other information that it may have been misrepresented by the supplier or manufacturer and may meet the definition of a counterfeit part. OCM Original component manufacturer OEM Original equipment manufacturer Franchise Distributor A distributor with whom the OCM has a contractual agreement to buy, stock, re package, sell and distribute its product lines. Franchised distributors normally offer the product for sale with full manufacturer s warranty. Franchising contracts may include clauses that provide for the OCM's marketing and technical support, failure analysis and corrective action, and exclusivity of inventory. Independent Distributor (Broker) A distributor that purchases parts with the intention to resell them. Independent Distributors may be franchised for selected, but not all, product lines. For purposes of counterfeit risk mitigation, a distributor is considered independent when not franchised for the item to be procured.

12 Procedure Page: 12 of 13 REVISION HISTORY Rev AA Original Issue 08/12/10 Rev AB Rewrote to incorporate Corporate MQOP-001 Rev B 09/07/11 Rev AC Update to incorporate Corporate MQOP-001 Rev C 01/16/12 Rev AD Removed World Micro, Roswell, GA from 5.0 as a L-3 Corporate approved Independent Distributor 02/02/12 Rev AE Update to incorporate Corporate Policy /24/12 Rev AF Figure 4: Updated Counterfeit Parts Incident Report to match Corporate Policy 602 Sect 6.0: Removed bullet for ERAI screening, Dock to Stock and Notification to Quality Engineer; not required by Corp Policy 602 Sect 7.0: Updated record retention policy to reference compliance with SOP 1611Q Removed D. Duyser from the approval page 08/10/12 Rev AG Sect 6.0: updated to clarify submittal of POs to Corporate VP Quality 09/07/2012

13 Procedure Page: 13 of 13 APPROVALS Lina Spross Director of Quality Cindy Goeckel Director of Materials