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Anti-Counterfeiting DNA Marking Gets a Boost

Applied DNA Sciences Inc. announced today that the Defense Logistics Agency will subsidize APDN's SigNature DNA marking for defense suppliers who provide designated, high-reliability electronics to the Agency.

This news is extremely significant because it lowers the cost-of-doing-business threshold for DNA marking technology. The announcement explains further:

The text of the DIBBS announcement, which also appeared on DLA's on line Supplier Information Resource Center (SIRC) explains that the Agency will 'reimburse trusted sources who receive awards for the direct costs of the annual DNA marking license that must be obtained from Applied DNA Sciences.'

'Effective immediately, only trusted sources who comply with Deoxyribonucleic Acid marking requirement in DLAD 52.11-9074 are eligible to receive FSC 5962 awards from DLA. There are no exceptions.'

As we have read in numerous previous posts, DNA marking of semiconductors and other materials is a method for combating counterfeiters who, at this point in time, can reverse engineer an OEM's semiconductor down to the wafer level.

The marking mandate comes from the Defense Logistics Agency, which has been plagued with the incursion of counterfeit parts and materials into the supply chain. In some cases, deaths have occurred because counterfeit parts were the root cause of critical systems failures in medical equipment.

Semiconductors are the main types of devices that are meant to be protected with DNA authentication, but other inventory parts, like ball bearings, O-rings, fasteners, and brake shoes have recently been faked as well. In recent news, helicopters and heads-up displays were also built with counterfeit components.

Now, with the potential for major cost offsets via the reimbursement program and the “no exceptions” clause noted in the DLA's statement, we should expect to see widespread adoption and deployments of this particular DNA technology.

DNA marking also has incredible crime-fighting potential, since for some time now, Applied DNA's technology has been marking copper and other key materials to protect against theft.

As an ex-soldier, I appreciate the added degree of safety and security knowing that this method of marking parts and authenticating sources will be an absolute requirement for critical components. It is not just the components that are critical, but the systems in which they are installed. In that sense, any component in a mission-critical system is, by definition, critical, so even the parts that are not “mark worthy” at this time will eventually become marked, as any upstream or downstream failure of an unmarked component may cause a marked component to fail.

Speculatively, I believe that in the near future, we will see not just individual semiconductors marked, but entire subassemblies like power supplies, cooling apparatus, cable harnessing, and a myriad of other higher-level assemblies included in the DNA marking mandates. In fact, mass-marking programs will lead to cost-saving efficiencies due to volume production discounts, efficient processing, and increased management skill proficiencies. I also believe that the cost of marking and authentication will come down as more R&D money is invested to perfect techniques and materials.

Let the counterfeiters come on strong with DNA counterfeiting attempts. They will only help “harden” the DNA marking market by stimulating anti-counterfeiting research and investment.

Eventually, I believe DNA marking will be almost as common as paper labels, RFID, or standard ink printing. Authentication techniques and software tools will fit in handheld devices connected to the cloud. This means that the practice of marking goods with DNA is headed for a very soft landing, and ubiquitous adoption across many industry sectors.

11 comments on “Anti-Counterfeiting DNA Marking Gets a Boost

  1. prabhakar_deosthali
    February 12, 2013

    DNA marking seems to be a promising technology to fight counterfeiting.  But we have to be careful about software and systems that will be used to authenticate the DNA marking as counterfeiters will be smart enough to infiltrate these very systems to regain the entry of counterfeit parts back into the mainstream supply chains.

  2. _hm
    February 12, 2013

    How much time is allowed for compliance of this technology? In meantime, counterfeit parts will proliferate. One more question – how much counterfeit is done by China and how much counterfeit is done by US vendors/persons?

     

  3. owen
    February 12, 2013

    I couldn't agree more Douglas, and I can only hope that the 2013 NDAA (National Defense Authorization Act), section 807 and section 818 of the 2012 NDAA, which address part marking and anti-counterfeiting, will someday soon incorporate such technology. It would, in my opinion, be a giant leap forward.  

    Semper Fi

  4. Ariella
    February 12, 2013

    @douglas do you have the figures for the cost of adding the DNA marking to prevent counterfeiting? Is it economical enough for larger markets?

  5. ddeisz
    February 12, 2013

    Douglas,

    While DLA has offered money toward the costs of Applied DNA, it does not cover all the costs. The mandated methodology is ink-based whereas most OCM's have gone laser marking and have no ink in their manufacturing flow. True, counterfeit components have found their way into the DLA supply chain. How exactly did that happen? Could it be that a fair percentage of those are from a wide-open purchasing strategy (lowest bidder) implemented more than a decade ago and only now being addressed? There are logistics yet to be worked out if Authorized sourced product is to be marked with DNA. Marking parts from fully Authorized sources does NOTHING to thwart counterfeit. It only adds cost and delay to the most reliable warrantied product available to our warfighter.

    This is not a magic pill that will stop all counterfeiting. Marking parts only tells you who marked the parts and not the handling history or long-term reliability.

    It's the details to this….the real logistics….the true implementation…..the purchasing practices…..that need to be brought in to fight counterfeit. At least 40% of the reported counterfeits for 2012 were available from Authorized sources based on GIDEP and ERAI data. That is a procurement problem and the single biggest problem enabling counterfeit.

    As a society, we love the idea of an easy quick pill to swallow that cures our ails. Just take this! Quick fix to your problem here! The real work in changing our habits is much tougher and the only real long-term solution.

    Dan

  6. owen
    February 12, 2013

    If, on the other hand, the industry were to accept it, the DLA would know the part is from a non-authorized/trusted supplier if it was unmarked.

  7. bolaji ojo
    February 12, 2013

    Dan, I think you put your finger on the shortcoming to DNA marking or any other type of markings for that matter. The real challenge and problem is in the purchasing and procurement. That's where supply chains get compromised. Those who purchase components in an environment that enhances counterfeiting are to blame and no amount of marking will solve that problem.

  8. ddeisz
    February 12, 2013

    Owen,

    They could know that now if they would simply put DNA on non-authorized product. Instead, they are putting different kinds of DNA on differently sourced product. It is being made more complicated that it needs to be and it's not fully thought through. Then again, I have never seen a government program where this wasn't the case. All this can be worked out over time, but it is not right now.

    Dan

  9. ddeisz
    February 12, 2013

    Bolaji,

    In reality, a vast majority (way over 90% of 5962 product) of DLA purchases come through distribution and not the OCM's. DLA is too small from a revenue perspective. This mandate is aimed at the OCM's but squarely on top of the distribution channel to implement because they sell to DLA, not the OCM's. The logistics of this is a mess. Fully Authorized distribution (Arrow, Avnet, Landsdale, Rochester, etc…) have never sold counterfeit into DLA yet are being mandated to implement something that does nothing for their products or the warfighter. In fact, the good guys are being penalized because bad actors have been enabled through purchasing practices in the past. It's a head-scratcher.

    It scares me to think of all the DNA bandwagon-pumping going on when the logistics of implementation and lack of real purchasing change has happened first when it comes to semiconductor purchases. Expand the mandate to other products before any successful implementation in this industry? Why?

    Legislation (NDAA) should have been immediately followed by purchasing changes that FAVORED FULLY AUTHORIZED before any wiz-bang DNA thing. Traceability is not the same as Authorized. Traceability plus any testing is not the same as Authorized. You can't make Authorized product from non-Authorized sources much less mark it with DNA and hope it doesn't have any handling/reliability issues.

    We can work through all these issues, but the mandate happened before purchasing changes and has yet to be accepted with all the details worked out.

    Dan

  10. dalexander
    February 12, 2013

    @ddeisz…I agree that there is no magic pill that will solve all issues. Procurement disciplines, supplier qualification partly based upon counterfeit detection capabilities, and logistics tracking from origin to destination are three more pills that must be taken as a “cocktail” solution. Enhancing any of these key areas will make some improvements. Enhancing two at a time will provide more security. All three together with a robust incoming inspection, will be about the best we can hope for until the DNA tech proves itself in multiple real world cases where the cost benefits outweigh the cost penalties…consistently. Then, and only then, will we see widespread adoption for the same reason as any other field-proven, well-seasoned, ubiquitous supply chain service……The bottom line. 

  11. obsbuyer
    March 26, 2013

      

    I believe DNA marking is the future. Not so much now verifying traceability from authorized distributors and manufactures is no big deal. Down the line  when those parts end up in the non-franchised market it will serve a great purpose. The last 6 or 7 years Manufactures and distributors have really step up in the fight against counterfeit . That has not always been the case when doing research and diligence on incoming inspection verify certs lot numbers,  7 or 8 years ago or beyond the first thing the mfg's asked was where did you buy ? If you gave them a name of non-franchised distributor they simply replied we do not help with any non-franchised and hung up. DNA marking seemed like a great solution, now all the mfg's are saying wait stop to expensive not proven. Well you should of gotten in the game sooner and help come up with better solutions. DNA does have its faults but many will and can be worked out and what is the solution if not DNA. Eventually all parts end up in the non-disty market or brokers. The statement was  40% of all counterfeit parts were available in the franchised market. Probably true but what was the lead-time  , simply making the statement don't buy from non-franchised is not realistic when it comes down to no shipments this quarter. ” we are waiting for parts” The DNA will work itself out when more competitive sources come available and more techniques.   

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