Counterfeit Electronic Parts Avoidance for EMS Companies

What the Requirements Say, in Plain Terms

246-7007 applies to contractors subject to the Cost Accounting Standards, and it expects a system that includes training, inspection and testing, traceability, use of trusted suppliers, reporting and quarantine of suspect parts, and flow-down to subcontractors. 246-7008 generally directs buyers toward original manufacturers, authorized distributors, or suppliers that obtain parts from them, with limited exceptions requiring additional assessment. AS5553 covers fraudulent and counterfeit electronic parts risk mitigation for purchasers, while AS6081 addresses distributors.

If you are an EMS subcontractor, expect these clauses to arrive as flow-downs in purchase orders from primes, and have your quality manager review them against your procedures.

Source Control: The Cheapest Defense

The most effective control is buying from original component manufacturers and authorized distributors, and recording that choice in your approved supplier list. When shortages push you toward independent distributors or brokers, the process should require approvals, risk assessment, and additional testing, rather than a buyer making a call on a phone. Your ERP should make source type visible on the purchase order and the receiving record, and prevent receipts from unapproved sources without a documented exception.

Quoting matters here as well: if estimators price from broker stock without noting the source risk, the shop commits to a build that may later require costly testing.

• Maintain an approved supplier list tied to purchasing in the ERP
• Flag purchase orders to independent or broker sources for review
• Require certificates of conformance and original manufacturer traceability
• Record source type on the receiving transaction

Receiving Inspection and Test Escalation

Inspection should scale with risk. For parts from authorized sources, standard receiving checks of labels, packaging, quantity, date codes, and moisture barrier bag condition are typical. For higher risk parts, shops add external visual inspection under magnification, marking permanency tests, X-ray, decapsulation, or electrical testing, often through accredited labs working to AS6081 or IDEA-STD-1010 methods.

Document what was done and the results, including negative results. Suspect parts must be quarantined, reported through the channels your contracts require, which may include GIDEP, and never returned to stock or to the supplier without a documented disposition.

Traceability and Records That Hold Up in an Audit

Auditors and primes ask the same questions: where did this part come from, who handled it, what was done to verify it, and which assemblies contain it? Answering requires receiving records tied to purchase orders, lot and date code data, inspection reports, and issue transactions to jobs and serial numbers. Spreadsheets and paper travelers make this slow and error-prone.

Retention periods are set by contract, and defense work often demands longer retention than commercial. Test your system by picking a component lot and timing how long it takes to list every shipped serial number that contains it.

Where AI Helps, and What It Should Not Decide

AI can screen incoming purchase orders for source type, scan receiving paperwork for missing certificates, and answer traceability questions from ERP and quality records. Netray builds this privately, so defense-related data stays on your network, and keeps it read-only with a human making every disposition. It should never decide whether a suspect part is acceptable or release quarantined stock.

For shops doing only commercial work with no counterfeit-related contract flow-down, a simpler approved-supplier policy and good receiving discipline are usually enough.