[Congressional Record (Bound Edition), Volume 156 (2010), Part 13]
[Senate]
[Pages 18208-18209]
[From the U.S. Government Publishing Office, www.gpo.gov]




                  COMBATING MILITARY COUNTERFEITS ACT

  Mr. WHITEHOUSE. Mr. President, I rise to speak about a bill I 
recently introduced: S. 3941, the Combating Military Counterfeits Act 
of 2010. This bill will help protect America's Armed Forces from the 
risk of defective equipment by enhancing the ability of prosecutors to 
keep counterfeit goods out of the military supply chain.
  The safety of our servicemembers and the success of their missions 
depend upon the proper performance of weapon systems, body armor, 
aircraft parts, and countless other mission-critical products. 
Unfortunately, America's military faces a significant and growing 
threat: the infiltration of the military supply chain by counterfeit 
products. These counterfeit products do not meet military standards, 
putting troops' lives at risk, compromising military readiness, and 
costing taxpayers millions in replacement costs. In the case of 
microelectronics, counterfeit parts also provide an avenue for 
cybersecurity threats to enter military systems, possibly enabling 
hackers to disable or track crucial national security applications.
  Let me give you a few examples from a recent report by the Government 
Accountability Office:
  The Defense Department discovered in testing that it had procured 
body armor that was misrepresented as being ``Kevlar.'' Think about 
that: a criminal sold fake body armor to the military, putting our 
troops' lives at risk just to make a buck. The law must provide strong 
deterrence and harsh sanctions for such conduct.
  And in another example, a supplier sold the Defense Department a 
personal computer part that it falsely claimed was a $7,000 circuit 
that met the specifications of a missile guidance system. As my 
colleagues may know, military grade chips are required to withstand 
extreme temperature, force, and vibration. Chips that don't meet those 
specifications are prone to fail--for example, when a jet is at high 
altitude, when a missile is launching, or when a GPS unit is out in the 
field. The possible tragic consequences of such equipment failing are 
unthinkable.
  And the increasing number of counterfeits has broad ramifications for 
our national security. A January 2010 study by the Commerce Department, 
for example, quoted a Defense Department official as estimating that 
counterfeit aircraft parts were ``leading to a 5 to 15 percent annual 
decrease in weapons systems reliability.'' And the risk is growing. The 
Commerce Department study, which surveyed military manufacturers, 
contractors, and distributors, reported approximately two and a half 
times as many incidents of counterfeit electronics in 2008 as in 2005. 
It is only going to get worse as the high prices of military grade 
products attract more and more counterfeits. Consider, for example, 
that before fleeing the country, the supplier that sold a counterfeit 
$7,000 circuit for a missile guidance system had been paid $3 million 
as part of contracts worth a total of $8 million.

[[Page 18209]]

  We should also evaluate this bill in the context of the relentless 
cyber attacks America weathers every day. The chip might not only be 
counterfeit, it might be the carrier for dangerous viruses and malware 
that may create windows for enemies to enter to sabotage our military 
equipment to steal our military secrets.
  I applaud those of my colleagues who have been working with the 
Department of Defense to ensure that it does everything it can to keep 
counterfeits out of its supply chain. And I am pleased the 
administration, and particularly the intellectual property enforcement 
coordinator, Victoria Espinel, is taking on this issue.
  But I also believe that Congress needs to give the executive branch 
more tools to address these problems. As a former U.S. attorney, I know 
the significant deterrent effect criminal sanctions can provide. To 
that end, the Department of Justice has a vital role to play in using 
criminal investigations and prosecutions to identify and deter 
trafficking in counterfeit military goods.
  Current law is insufficient. The existing counterfeit trafficking 
statute, 18 U.S.C. Sec.  2320, provides for heightened penalties for 
trafficking in counterfeits that result in bodily injury or death. But 
unlike cases of counterfeit pharmaceuticals, it may not be possible to 
prove that a military counterfeit caused bodily injuries or death, 
since the faulty part may never be recovered from a battlefield. As a 
result, traffickers in military counterfeits are likely to face 
penalties that do not reflect the unacceptable risk that counterfeits 
impose on our troops, our military readiness, and our national and 
cyber security.
  We must address this flaw in our laws and we must do so soon. 
Traffickers should face stiff penalties if they knowingly sell the 
military a piece of counterfeit body armor that could fail in combat, a 
counterfeit missile control system that could short-circuit at launch, 
or a counterfeit GPS that could fail on the battlefield.
  The Combating Military Counterfeits Act of 2010 will make sure that 
such reprehensible criminals face appropriate criminal sanctions. It 
creates an enhanced offense for an individual who traffics in 
counterfeits and knows that the counterfeit product either is intended 
for military use or is identified as meeting military standards. It 
doubles the statutory maximum penalty for such offenses. The bill also 
directs the Sentencing Commission to update the Sentencing Guidelines 
as appropriate to reflect Congress's intent that trafficking in 
counterfeit military items be punished sufficiently to deter this 
reckless endangerment of our servicemembers and weakening of our 
national security.
  The bill is narrowly crafted. It adds to an existing offense so that 
it only targets particularly malicious offenders--those who already are 
guilty of trafficking in counterfeit goods and know that the goods in 
question are intended for military use. As a result, this bill will not 
affect legitimate military contractors who might be unaware that a 
counterfeit chip has made its way into one of their products. Nor will 
it apply to makers of products that unintentionally fall short of 
military specifications as a result of innocent mistakes. Indeed, this 
bill will help military suppliers by deterring criminals from selling 
counterfeits to them or to their subcontractors. Manufacturers will 
benefit from the protection of their intellectual property.
  To that end, I have received a letter of support from the U.S. 
Chamber of Commerce which explains that ``[t]his legislation would . . 
. provide an important deterrent to those seeking to profit from the 
sale of counterfeit parts to the military.'' The Semiconductor Industry 
Association has similarly weighed in with their support, explaining the 
irresponsible manner in which counterfeit chips are made and the harm 
that counterfeit chips, most of which are imported into the United 
States, can cause to the military and to their industry. I am grateful 
for their early support and I welcome the comments of other 
stakeholders as I work to make the legislation as effective as possible 
in its deterrence of this shameful criminal activity.
  I of course also very much look forward to working with my colleagues 
on what I expect to be bipartisan legislation that we can act on 
promptly. We all have had the privilege of visiting with our troops. We 
all know the sacrifices they make for our country. We all want to do 
everything we can to ensure that their equipment functions properly and 
that counterfeits do not compromise our nation's military readiness or 
security. By deterring trafficking in counterfeit military goods, the 
Combating Military Counterfeits Act of 2010 is a vital and necessary 
step towards these important goals.

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