Taking a playbook from cocaine dealers who cut their product with sugar or baking powder, certain elements are supposedly able to slip counterfeit weapons components into the Pentagon's supply chain. The practice, known as 'sprinkling', mixes the fake parts in with the real deal, the hope being that the weapon itself won't begin to malfunction until after it's been tested, approved, purchased and distributed amongst the troops. Such was the claim made to the Senate Armed Services committee hearing examining the problem.
During the proceedings, the Government Accountability Office, according to representative Richard J. Hillman, reported that they have been able to create a fictional company through which they purchased weapons components on the Internet. An analysis confirmed seven of these parts were counterfeits. Experts also testified that the potential damage to U.S. military interests could be measured in billions of dollars, as well as lives. Scary stuff to be sure, but a closer look at the proceedings indicates, however, that the threat is at this point largely conjectured.
No actual evidence of any sprinkling was provided during the hearing. The committee claims to have discovered 1700+ instances of possible - but still not fully confirmed - instances of counterfeit components in weapons purchased by the Military, involving more than a million individual parts. However, the DoD released a fact sheet claiming to have a QA process that reviews the authenticity of component parts, which employs more than 2000 people. They also add that there has been "no loss of life or catastrophic mission failure" resulting from such counterfeits.
Despite this, witnesses, including defense contractor representatives, a DoD officials and a government investigator, are claiming that such counterfeiters operate openly in China, and that the Chinese government does little if anything to stop them. Thomas Sharpe, VP of SMT Copr, which distributes electronic components, gave a presentation that claimed, among other things, that "Counterfeiting performed in Shantou was not regarded as IP theft or improper in any way. It was seen as a positive 'green initiative' for the repurposing of discarded electronic component material." Conspicuously absent from the proceedings was a representative of China.
These accusations, though serious, are part of a recent escalation in rhetoric from the United States regarding China. A U.S. intelligence report recently called China the "world's largest perpetrator" of industrial espionage, and U.S. trade representatives have taken issue with China's 'great firewall". Whether such rhetoric will be followed by an examination of U.S. trade agreements that enable countries like China to undercut their rivals using a combination of slave (like) labor and tarrifs is unclear. Likely the U.S. will continue to pursue a policy of having their cake and eating it too when it comes to whatever economic challenges China poses.