Tag Archives: GAO

Michele Bachmann's Chinese Chips Comment Ignored

Photo courtesy of Zephyris

While Rick Perry’s “Oops” moment is one of the most reported from Wednesday night’s debate, Rep. Bachmann dropped a bomb on the stage that seems to have largely been ignored by the media – Chinese counterfeit computer components are showing up in U.S. defense weapon systems.

As long ago as 2005, Bloomberg reported that fake computer components were causing failures in multiple military systems. Some reports say that as much as 15% of the spare and replacement components the military buys are counterfeit.

While reliability and safety are prime concerns, national security must also be considered. If it is such an easy matter to get a non-conforming component into a U.S. Department of Defense weapon system, it would be even easier to hide code in those components that might cause failure on command or under a certain circumstance.

Senator Carl Levin spoke at a hearing on Tuesday relaying that his committee had investigated 100 cases of suspected counterfeiting. More than 70% of the couterfeit components came from China.

One weapon system reported to have been impacted by Chinese knock-off chips is the P8-A Poseidon military patrol aircraft.  A chip in the de-icing system failed and upon inspection it was discovered that the system had a counterfeit chip.

Counterfeit transistors have also been found in the Navy’s SH60-B helicopter by Levin’s committe. Raytheon, the defense contractor responsible for the components, did not know about the fake circuits until the investigation by the committee revealed them.

The GAO has also reported that the Navy had purchased counterfeit routers that have a high rate of failure, the Air Force had bought counterfeit chips for use in F-15 flight control systems and unreliable oscillators had been bought from a “prohibited supplier” for use in Air Force and Navy navigation systems seemingly for use in unmanned vehicles.

Sen. Levin testified that the use of counterfeit Chinese components in an Air Force missile cost American taxpayers $2.7 million to repair. Sens. Levin and John McCain are working on legislation preventing Pentagon reimbursement when counterfeit components cause problems. “There’s no reason on earth that the replacement of a counterfeit part should be paid for by American taxpayers instead of by the contractor who put it on the system.”

Defense contractors Raytheon, BAE and Northrop all purchased counterfeit components through brokers such as VisionTech who, despite not employing a single engineer or quality control expert, was able to sell components to defense contractors.

GAO:TARP Has Done Two Things, “Jack and Squat”

In the GoverGAO Logonment Accounting Office’s October “Report to Congressional Committees” on TARP, it is apparent that TARP’s success.. isn’t that apparent.

The report recommends filling important positions with permanent staff instead of the consultants currently manning them, but what really stands out is when the GAO attempts to quantify the success of the program.  The report states that, “isolating and estimating the effect of TARP programs remains a challenging endeavor… and that a number of anticipated effects of TARP have not materialized”. Billions of dollars of taxpayer money and not only can’t we estimate any effects, the GAO flat out says that the positive effects we expected.. never happened.
The report goes on to show that TARP is seemingly operating with little oversight, no transparency, and next-to-zero measurements of it’s success or failures.  This sounds eerily like cash-for-clunkers where dealers were unable to get rebate money due to an understaffed and disorganized government program.

Almost $364 Billion has been disbursed to financial agencies and those agencies aren’t using the money to make more loans, their shoring up their financials and buy their warrants back from the government.  Surprise, I know.  From that money, the government has receives a little over $9.2 Billion in dividend and other securities payments.  Unfortunately, since the Treasury had to borrow the money (deficit spending) to give it to the financial institutions and that borrowed money is funded by Treasury instruments that the government pays interest on, no one can figure out if any of that $9 Billion was a profit, a loss or a wash.

Just wait until health care is funded, implemented and measured this way.  We’ll hate it, not know how much it costs, and have no clue how to fix it..  just like TARP.