airplane. the systems that manufacture the protection for boeing investigated the failure, discovering the parts that have fallen from the sock that. they were not new parts at all. rather, on closer inspection, they found that the parts had likely been sanded down and re-marked. the leads on many parts were bent, and parts that should have been virtually identical to one another were actually found to be of different sizes. in january 2010, pae notified boeing of suspect parts on a p8, calling them, quote, "unacceptable for use," and calling for them to be removed.

it took boeing more than 1.5 years to notify the navy or its other customers about the suspect, counterfeit parts. those notifications only came after our committee asked about why it took so long. why it took so long is something we will discuss with the program manager for the boeing program manager, mr. dabundo, who is a witness on our third panel. it was recently said that any material is nonconforming and shall be immediately reported. so where did the counterfeit parts come from in that case? there was a company in california. they bought the parts from another company in florida.

advocates, in turn, purchased the parts from an affiliate's of an electronics company in china and wired payment for the parts to the account at a bank in china. the three cases i just described are a drop in the bucket. there is a flood of canada permits -- counterfeits, and it is putting our military at risk and costing us a fortune. in terms of cost, just one example, to the government now. in 2010, the missile defense agency learned that missile defense computers contain a suspect counterfeit memory devices. according to the missile defense agency, if the devices had failed, the missile itself would likely have failed. the cost of that fix was nearly $2.70 million. and paid for it?

the american taxpayer. we must change our acquisition rules to ensure that the cost of replacing suspect counterfeit parts are paid by the contractor, not the taxpayer, no ifs, ands, or buts. so let's be clear though. the risk is not created by the contractors. the risk stems from the brazen actions of the counterfeiters. mr. kamath from raytheon, another one of our witnesses, told us that what keeps them up at night is the dynamic nature of the threat, because by the time they figured out how to test for the counterfeits, they have figured out how to get around it. even if they counterfeit is not

identified right away, the contractor testing process will weed out, terrific parts. if a system containing a counter that part passes that testing, they argue, then the counterfeit parts should work just like a new part, but that is not what the manufacturers of these parts tell us, and this is also not what our military leaders tell us. we rode into a large semiconductor manufacturer about the anomalies that bae had identified in part to intended for ice detection module. again, the parts were counterfeit. this is what the other company told us. "these cases posed a significant reliability risk. some of these could be catastrophic. though the devices may initially function, it may be next to impossible to predict what amount of life is remaining or

what damage may have been caused to the circuitry. in those cases, when d.o. date or a contractor needs a spare electronic parts, to fix a 10 or 20-year-old system, there is a good chance that that part may no longer be available from its original manufacturer, and there may be little choice but to go to the open market to find a replacement part." in other words, the parts that we buy are still supposed to be new, even if they are no longer being manufactured. contractors and distributors, too few file reports with the government industry exchange program, a dod 8 run system that provides a forum for them to report suspect counterfeit parts and the suppliers and sold them. that has got to change, too.

failure to report suspected counterfeits and suspect suppliers puts everybody at risk. we need to make sure that it requires contractors to discover suspect counterfeit parts in the military system to report that discovery to the military right away. we will hear today from three panels of witnesses. our first panel have three witnesses, now four witnesses, i believe. mr. bryan toohey is with the semiconductor industry, and we have the vice president of an affiliated test lab, liberty component, and we of the managing director for an investigative service at the u.s. government accountability office, the gao. mr. hillman is accompanied by the chief scientist from the

gao. the witness on our second panel is general patrick o'reilly, a member of the missile defense agency. our final panel has three witnesses. the vice president of supply chain operations at raytheon. mr. ralph nenino, with l-3 communications, and mr. charles dabundo from boeing. we appreciate their attendance. by the way, this is an important point. all of the agency's here today have cooperated with the investigation. we and the companies in the industry and the troops and their families, we are all on the same side of this battle.

the only people who benefit from counterfeits are people who are making money off of those counterfeits, and we have got to stop that. we also have to stop the attitude of the chinese who will not cooperate with this investigation and who will not act against counterfeiters. we wrote to the chinese ambassador last week and invited him to send an ambassador to testify today, but he declined. again, with my thanks, senator mccain. >> i think the witnesses for being here. we are talking about an issue that is a risk to national security. these counterfeit parts in our supply chain result in, as we all know, reduced reliability, availability, and, frankly, our ability to defend this nation's national security interest. as the chairman pointed out, much of the raw material for counterfeit electronic parts is salvaged electronic waste, e-

waste, shipped overseas, where things are disassembled by hand. there is an article in "businessweek" magazine, which i would like to quote from. it says much of that pollution is from the chinese hinterlands, counterfeit military components used in your made by bae systems. traders typically obtain supplies from recycled chip emporiums, such as electronics market outside one city in southeastern china. the garbage strewn streets there week of burning plastic, as workers in back rooms and open yards strip chips from old pc circuit boards, components

typically less than 1 inch long which are cleaned in the nearby river and then sold from the premises of businesses, such as electronics trade center. a sign for them it advertises in chinese that it sells, quote, military circuitry, meeting chips that are more durable than commercial components and able to function at extreme temperatures, but the proprietor admits that his are counterfeit. his employees sand off the markings on used commercial ships and relabel them as military. "everybody does this year," says. they are 100% think because the products from the computer boards from the 1980's and 1990's, while customers demand products from after 2000. the chairman has described the situation in detail.

i will not go on at length because we need to hear from the witnesses, but this is a serious issue. the chinese government can stop it. if the chinese government does not stop it, then it continues to pose a national security risk. there are other problems associated with the that that the chairman has outlined. defense contractors are often forced to purchase parts from independent brokers or dealers who may stock or have access to obsolete parts. there is a risks, which i hope the witness will explore a bit, in obtaining parts in a, quote, independent market. we know that some of these are people that are advertised as small business people. they are simply conduits' with a phone and a desk for some of

these parts, and the chairman outlined some of the various layers that these parts go through. we have to address that side of the issue. we all want the small business people to be able to obtain dod contractors, but not the kind of abuse that apparently also is practiced here. i want to thank you, mr. chairman and staff for the really along, many hours of hard work, and i look forward to hearing from the witnesses. thank you, mr. chairman. >> thank you, senator mccain. e.t's start with mr. sharp ordinarily, we would start with a gao witness, but we will start today with a very descriptive part. you have an investigation that you undertook, so we will start

with mr. sharpe. >> mr. chairman, mr. mccain, members of the committee, first, i want to thank you for allowing me to come in and testify. this is a big problem obviously and a big focus of our job. my company's job is to authenticate, sores, and supply parts to the defense and aerospace industry. we take this quite seriously, and i will explain to you exactly what i saw while i was in the city of shenzhen and then in another city as well as some of the counterfeits we're seeing out there today. in july 2008, i had an opportunity while traveling in to the city of hong kong on business to go into a nearby city of shenzhen, and the reason i wanted to go in was to visit the marketplace that has been mentioned here, that was

referenced on the screen. i had an interpreter go with me. we walked to 3 marketplace for the day, and while i was touring the marketplace, the interpreter told me that the marketplace district was the largest in the world of its kind. 30 to 40% of all parts sold here were counterfeit. that many of the booths that we passed were owned by counterfeiters that had offsite locations who did the counterfeiting and brought the product into the marketplace to sell. they shop here openly to receive the 7% cost saving on buying parts that are counterfeit as opposed to buying brand new parts, knowing full well that the fallout on these parts is up to 15% will not work. products sold to brokers outside, they are represented

as new and unused when they are sold into the united states and elsewhere. although most of the counterfeiting was performed in a nearby town -- i had never heard of that town prior to going tuitions and, so that was new to me. the next morning, we travelled there. we spent the day touring there, and we visited selected businesses that were known to the driver. while there, eyewitness scrap pile drug the buildings throughout large areas of the town throughout the outskirts of the town. use of electronic parts being washed in the river and lying on the riverbank to dry. components that were harvested being dumped on the sidewalks and sorted by women and children, laid out for the monsoon rains of july to wash naturally. plastic bins filled with expensive brand-name components and harvested from scrapped circuit boards -- i have lost my place here -- the process.

the actual counterfeiting processing of components actually taking place while i was there within some of the buildings. a wide variety of counterparts for sale with and the sales areas. some materials that come from most manufacturers that we know of for sale, and overall, a huge infrastructure of similar or supporting businesses in and around the city from harvesting components and processing them into account of electronic parts. it is interesting to note that counterfeiting performed in that city, from speaking to the people there, was not regarded as i.t. theft or wrong in any way whatsoever. it was seen more as a positive initiative for the repurchasing and we use of previously used products. in the past several years, we

have identified and documented several new countered that processes and threats, simply designed to evade the inspection processes known to be in use by our industry at the time. these include a new surface we coating material that is immune to it tests, but it looks just like the manufacturer topcoat. this was released to dod and prime contractors in 2009. a process to remove markings' with out surface coating. this was in june 2011, and the process to remove and recondition the top surfaces of ceramic components. this was released just yesterday to prime contractors and others. the counterfeiters are certainly monitoring our level of detection expertise, including

new processes to input into the supply chains. many counterfeit techniques are beyond the in house capabilities of most open market suppliers. over the last several years, the defense and aerospace industry have made steady progress in laning financial -- foundational groundwork for a plan. we hope to begin to see the fruits of this labor in 2012, and lastly, i personally believe that the work of this company is planning a significant role in the transformation needed to effectively mitigate the counterfeit threat within the department of defense. thank you. >> thank you very much, mr. sharpe. in your statement will be made part of the record, and that will be true for all of the witnesses. we know in some cases, they are reducing the length of the statement foretime purposes. >> i thank you for the

opportunity to discuss the preliminary operations of our investigation into the availability of counterfeit parts on internet trading platforms. counterfeit parts have the serious potential of negatively affecting the supply chain, affecting the integrity and ultimately endangering the safety of our military personnel. this committee cited the concern about the availability of parts from internet platforms and have their authenticity tested. i would like to briefly summarize how we are conducting this ongoing investigation and the results to date. in conducting this work, we created a fictitious company to gain access to internet platforms that sell military grade parts. our companies included a fictitious owner and employees, emailing and milling addresses, it website, and a listing on central contractor registration. we attempted access to platforms

and were granted membership to two. we then requested quotes from vendors on both platforms to purchase a total of 13 parts from the list of parts that this committee provided that fell into one of three categories. one, authentic part numbers for obsolete parts, two, those with a date kids after the late -- the last manufacture date, and three, bogus part numbers. we independently verified with the defense logistics agency that the authentic part numbers were used for military operations. we also confirmed and selected parts manufacturers that the bogus part numbers were not associated with actual parts. we requested from vendors parts that were near, in original packaging, not refurbished, and not with mixed date codes. we selected those from the lowest prices to make a

purchase. we then contract with the corporation for component of the vacation and analysis of the parts we have received. we are not disclosing the names of the internet platforms we are using, and there is due to the ongoing investigation. regarding our preliminary results, as shown in figure one on page of your of my prepared statement, as of today, we have purchased 13 parts, and none of the seven parts we have complete test reports or are authentic. according to the company, all three parts that we requested for legitimate, where, or obsolete parts were suspected counterfeits. these parts included two voltage regulators and one amplifier, the failure of which could pose a risk for failure.

the company also made the same determination for another operational amplifier we received after requesting a legitimate part number with a post production date code. in this case, the park fell four, and it was represented as new whereas -- than the date last produced. in addition, we received three bogus parts with invalid parts numbers, because no legitimate parts in this final category exist, and we did not send them for authentication testing. we are also waiting testing on additional parts and have not yet received another four purchases. we will report results for these and additional parts we plan to purchase in the future process. what we sent request to both domestic and international companies, all of the parts we received to date were provided by vendors in china. more specifically, all of the

parts that were tested were suspected counterfeits. they were subject to authentication analysis, including chemical, x-ray, and microscopic testing. figures two and three on pages 6 and 10 of my prepared statement provide photographs and detailed test results for each part. overall, each was a suspected counterfeit because it was reflected that they were likely used parts harvested from older equipment and then presented as new. for example, it was found that some parts were having scratches, similar to those others, and this was due to scanning microscopic analysis. tooling marks were also found on the bottom of some, suggesting that the components were pulled from a working environment. further testing of the top and bottom of lead found inconsistencies in chemical composition, leading them to

believe that there was the intention to deceive. different revision number is on the die markings were found on some parts, even though the samples were advertised to be from the same part number and production date. commonly, this has the same revisions. finally, the manufacturer of certain parts -- it was concluded that certain parts or represented as being newer than the actual parts could possibly be. as previously stated, as of today, we have received three bogus parts after submitting requests with invalid parts numbers. the fact that they filled our requests means that they were willing to step products with the bogus part numbers for a profit. there are photographs of the fictitious parts we have

received to date. in conclusion, preliminary observations from the ongoing investigation indicate that counterfeit electronic parts can be found on internet purchasing platforms. i will be pleased to report to you the full results of our work once the investigation is complete. i was also like to extend my appreciation to the entire investigation team for their commitment and delivering this interim report. with the combined assistance of people, we are pleased to provide these investigative services to the congress. chairman leaven and ranking member of mccain and members of the committee, this concludes my prepared remarks, and i'll be happy to answer any questions you may have. >> thank you so much, mr. hillman, for your work here and the other good work that the gao does. >> i appreciate the opportunity to justify about the

counterparts in the supply chain and about the dangers these threats posed to national security and public safety. the issue is of more and more importance, as semiconductors are key components to an increasing number of mission critical civilian applications, such as lifesaving medical devices, airplanes, but even more alarmingly, countered that semiconductors have integrated the equipment that our military is using today. by way of brief background, a semiconductor is the foundation or brain of an electronic device. the popular term is microelectronics, integrated circuits, and computer chips. they are synopsis -- synonymous with semiconductors. there is a $1.10 trillion technology industry that supports a work force of nearly 6 million. the semiconductor industry is a

great american innovation story, and we still lead the world in global market share. we consider our industry and model for the economy of the future, and our industry still does the vast majority of manufacturing and design here in the u.s. and sells more than 85% internationally. a first note on how legitimate semiconductors are manufactured. they invest billions of dollars in order to create these and ultraclean rams. -- in ultraclean rooms. these are designed and tested to withstand high temperatures and to meet the performance necessary for combat and military situations. in contrast, as the chairman and

ranking member noted, abroad, they rummaged through e-waste, and in some circumstances, it is from older technology from the 1980's and 90's, and they try to conceal the true purpose of the chip, already weakened and at great risk of failure. they are then relabeled using digital laser etching and packaged for sale for international brokers. recently, counterfeiters have begun getting more advanced equipment, making it increasingly difficult to identify fake semiconductors. our members have also found factories that manufacture blankey chips on which markings are added later on a made to order basis, even if the specifications do not match. as a result, more and more may get across our borders and into a wide range of products.

this places our citizens and our military personnel in unreasonable apparel. this is a ticking time bomb. a prime example of candidates making their way into the military supply chain is a case that recently resulted in the first felony conviction for counterfeit trafficking. the counter that semiconductors sold included ships destined for naval vessels and land-based systems, memory chips for a testing system used by f-16's to track hostile radar systems, ships intended for the cobra replacement program, and chips that control the braking system in high-speed trains. this is a very real and very alarming problem. american lives are at risk, anytime one of these makes its way into the mission critical systems. experts have said that at least 15% of all parts purchased by

the pentagon are counterfeit. overall, as the chairman noted, we estimated that u.s.-based semiconductor companies, it translates into nearly 11,000 lost american jobs. our industry takes this very seriously, and we are committed to doing everything within our power to stop candidates from entering the u.s. and being used in our military and civilian supply chains. we believe this is a multifaceted problem that will require a multipronged approach, with a coordinated effort from government and industry. while i understand this is primarily an investigative program, we have five steps to combat this clear and present danger. first, we should continue our successful partnerships with dod, doj, and the semiconductor industry and others to develop the of the navigation systems. second, dod should implement strengthen procedures for

mission-critical components, including for resellers. third, we should strengthen our ability, the industry ability, to partner with customs officials to stop countered that semiconductors at the border. in 2008, but they stopped a successful practice of sharing information and began redacting or crossing out critical manufacturing goods, making it virtually impossible to determine if they were counterfeit. returning to these practices would significantly improve our nation's ability to stop counterfeits at the border. four, we should aggressively prosecute counterfeit traffickers, and we should have every trade tool at our disposal to encourage stronger enforcement of intellectual property rights, especially trademarks, internationally. thank you for your opportunity to testify, and i welcome any of

your questions. >> thank you so much, mr. toohey. let's try a seven-minute first round, and if we need a second one, we will have one. let me start first with you. mr. hillman, this action of the gmt tester this market produce some relief stunning parts. the idea that you can make up a part number or give any part number, and you can find someone to act as if they are responding to that order on the internet's is an amazing results, and they are all coming from china so far. this fits with what our investigation shows. china is the source of the counterfeiting. now, when you set out to buy

parts, and ngo's set out to buy parts, you did not specifically aimed at any particular country, right? you went on to a global marketplace, the internet. >> that is right. we did not target any region such as asia or north america. what we looked at was individual parts numbers requested by this committee. we added those numbers on the internet trading platforms. the vendors then offered quotations for us, and we selected quotations that were among the lowest prices that had available information to allow us to make the purchase. it just so happens that the results of our tests show that of the 13 purchases but we have made to date, 12 have come from shenzhen china and one from beijing. >> now, how much time elapsed between the time of the gao fake

company that you created requested the parts with these bogus part numbers and the time that you actually received the bogus parts? was that a matter of days, months, weeks? >> it was a matter of days, senator. we made purchases and wait for approximately 24-hour period, sometimes longer, to obtain quotations of individuals willing to supply as these part numbers. upon receiving information from the lowest price bidders, on available information with which to make payment for these purchases, it could have taken from several days to a little over a week for the purchases to actually arrive. >> how did you pay for the parts? >> we contracted with the vendors through western union services to supply the funds for the purchases. >> they were wire transfers?

>> wire transfers. >> and did you find that there were any counterfeiters working more than one company? in other words, did one person, as far as you could say no. tell, have more than one company? was it like a boiler room? >> it appeared from our discussions over the internet that there were individuals with similar names that were supporting multiple vendors that we're willing to supply as these parts. >> mr. sharp, -- sharpe, you do independent testing. >> yes, we do. >> when you were testing the parts, did you know who you were testing the parts for? >> we only knew that we were

testing them on behalf of the gao. >> but you did not know for this committee? >> no, sir. >> and you sell parts, too. >> the biggest part of our business. >> can you compare the way you saw parts being handled in china compared to the parts here? >> there is really no words to describe it. washing parts literally being washed into rivers and dropped on river banks, dropped into cardboard boxes, there was nothing done whatsoever to protect the component at any phase of what we saw going on over there. if anything, the entire process would serve to ruin the component. the processes that are followed began wet stripped controlled rooms and areas, clothing by our employees.

the areas are dehumidifier, kept at a relative committed to level between 25% and 45%, not only while we work on them but where we store them. all packaging is compliant and tested. it is a completely different world. >> what impact does the way parts are handled impact reliability? >> well, what we saw in china, either on the sidewalks or in the river, for instance, and one of the biggest enemies of the electronic component is moisture, so there is absolutely no safeguards whatsoever to stop moisture aggression into the components. moisture aggression into the components leads to things that begin to become the beginning of the end. when we look at parts from an

acoustical microscope, we can see the evidence of that moisture aggression, and on parts that are counterfeit, that is a very prevalent thing for us to say. >> in other words, the life span of the parts is dramatically affected by the way they are handled. >> absolutely. >> while you were there, did there appear to be any steps taken by the chinese government to stop the sale, the marketing of these parts? the chinese tell us they act about camp -- act against counterfeiters. that is what they tell us. we got a statement from the chinese that they issued to the press that they are always taking actions against counterfeiters. did you see any evidence while you were there of any action about what was openly being sold as counterfeit? >> no, i did not. when i was in the shins and marketplace, the interpreter was reading jimmy carnes inside of

the showcases, where it was describing what level of refurbishment had taking -- had taken place. this was all right out in the open. when we got into the other city, the entire business purposes of everything we saw their was very obviously to harbors components and go through complete refurbishment right there in the open. there was nothing that was hidden. >> at thank you. senator mccain? >> thank you, mr. chairman. i think the witnesses. mr. hillman, how serious do you think this problem is? >> the results of our worked to date is based on a sample of parts that we were requested to purchase. therefore, we are unable to discuss the prevalence of this activity.

>> it is a serious problem, not so serious, a waste of your time? >> no, senator, not at all. we consider this to be a very serious one, possibly affecting the lives of our military personnel and the capabilities of the systems that they utilize. >> mr. toohey, do you agree? >> yes, this is a very serious and growing problem, senator. >> so what do we need to do? >> well, senator, i outlined a number of steps briefly that i think we ought to continue and expand. certainly working to strengthen the authentication procedures, and we are working in a cooperative way with dod officials, to ensure that that is strengthened and makes sense, to assure that the procurement system is strengthened, for these mission curtainwall components, they are only

purchased through dod certified resellers. that would be critical. >> we are doing that now. people are getting certified to be a reseller, but, obviously, there is very brittle scrutiny or examination of the people who are getting the certification. would you agree, mr. hillman? >> there are certainly, on the internet platforms we observed, there is a lack of testing for the parts being made available for sale. >> mr. sharpe, we have been told by many independent testing laboratories that more often than not, semiconductor companies refuse to assist them in determining an electronic parts. is that the case? >> we see it both ways. we generally tried to reach out to the component manufacturers

to get information, die markings, things on absolute cards. >> sometimes you do not get the cooperation of the manufacturer. >> sometimes we do not. >> mr. toohey, you do not agree with mr. sharpe's assessment? do you agree or disagree with his assessment? >> senator, i think our industry has a standing record of working cooperatively with both private- sector and government officials to authenticate chips. as a matter of fact, one of the steps i indicated was changing to allow us to cooperate, because in many cases at the border, only the manufacturer can authenticate the chip, and right now, given the policy in place, we are not allowed to do that. we do cooperate, and we would like to strengthen that cooperation.

>> well, we would certainly like to help you do that. have you been involved in this issue that people are not given assistance by the semiconductor manufacturers? >> the results of our investigation to date have not lead us into that area. >> which means to you, in terms of your investigation? >> in terms of our investigation, we have shown that it is possible to purchase counterfeit parts on internet purchasing platforms. we have not as part of this ongoing work delved into the potential issues that exist currently within those platforms or cross the supply chain but hope to be doing additional work. it is possibly a continuation of our work. >> mr. toohey, mr. sharpe and

others have suggested that some are not helping, and i suggest you get on that and get on that quickly. legislative changes, but if manufacturers are not cooperating, it makes the problem even worse, so i hope you will look at these allegations, find out if they are true, and if they are true to get to work on it. >> we will do that. >> thank you. mr. sharpe, how long has this been going on, in your view? >> i have been in the business for 15 years, and i have spoken to people that have been around since the 1960's, and they say they have seen it since the 1960's. >> is it getting worse? >> it is getting worse. the counterfeiters are changing the process to get in front of the processes that they know that we are currently doing to

detect their processes, so the process is evolving, and it is getting harder to detect. >> so it would be extremely difficult to stop this unless we get the assistance of the chinese government. >> i would agree. >> and there is no doubt that the chinese government is aware that this significant industry is taking place. >> absolutely no doubt. >> have you heard anything from the chinese government about this? >> no, sir, i have not. >> have you, mr. hillman? >> no, i have not. >> mr. toohey, i am a great admirer of your association and the great contributions that they make to the american economy, but i suggest you give this some priority so that members of this committee and the american people can be assured that there is active

cooperation on your part, ok? >> yes, senator. >> mr. hillman, i have read reports of the person and the telephone, the person who is just a pass-through, and our encouragement of the small business people being able to be involved in dod procurement, how serious is that part of the problem? >> well, we all value be participation by businesses. in this instance though, in this investigation, what we have learned what several purchases we have made is that individuals are proposing -- posing as the representatives of multiple companies and are willing to supply parts to us that are not authentic. where no actual part numbers

exist. >> i thank you, witnesses. thank you, chairman. >> thank you, senator mccain. senator udall? >> one of the best things i have heard is that this is a serious and growing problem. i would like to add on to what the chairman and senator mccain asked, and i think senator mccain really put his finger on this. the government and industry have to work together. mr. toohey, afford to hearing the results of your increased focus in this area, as you acknowledged this morning. we are not here to pick on you, per se, but this has gotten the attention of the committee. the border control, manufacturers, and suppliers

alike, it seems that there are a number of relatively simple solutions that we could provide and that would, in turn, provide a screen to get at the heart of this. if i could, let me get into even more detail. i think there is something called be trusted foundry program, and it is a joint program with dod that says that only certified chips and processors are allowed into the supply chain. as i recall, we do not have to have certified components. i would like to ask the industry experts here, would there be any benefit to requiring electronic components as being compliant before they are allowed into the dod supply chain? would a certification requirement protect manufacturers and the dod alike, and then given that we are spending millions on the fake components, with the investments such as in a certification

program paid for itself in a relatively short period of time? mr. sharpe, maybe we can start for you, and mr. toohey, in turn. >> i would send parts to this program to have them certified before i was to send them into dod? >> i think that is in part what i am getting at. basically, we take suppliers at their word for the authenticity of the parts they provide, even though it seems the suppliers cannot always say where those chips come from, but we do not know how many other systems, whether they are in vehicles or part of the radio in an aircraft weapons system, there could be a risk of failure, so it seems we have to go the extra mile here, and, again, i am searching, as the committee is, to get at this quickly. >> as far as i understand it,

this is a group of foundries where material can be built directly or the government would no brokers in between, so this would be an area that an independent distributor would not have any access to, as far as i know, unless we were to ask them to do it for us, but generally, this is direct from them to you. as far as products from the independent channel, we all know that due to the huge amount of obsolescence that becomes part of weapons systems, lots and lots of material has to come from our industry, meaning the independent sector. i personally believe that the way into this to mitigate it properly is for having requirements on testing being done by the supplier, and i am talking about documented proof of all of this. i will not run through the whole

list, but there is a lot that can be done, including full electrical. this is being done now currently by many of the firms we deal with. >> mr. toohey, your comments. >> this is a multipronged problem and will require a multifaceted solution, and in that regard, part of the submission is continuing the work we are doing with dod for the authentication process and showing that the process works so that manufacturers can very easily authenticate chips that are in the supply chain. the foundry plays a role for a relatively minor part of what the dod procures, but from what i understand, that process is being re-evaluated, as well, so there may be parts of the submission that we may need to implement to understand which parts are going into the dod supply chain. >> could i turn to the chinese government?

what more can we do, what should we be doing to encourage them, shall i say, to stop the flow of these components into the united states. i would welcome any of you on the panel to comment. >> since the chinese government is so well aware of the counterfeiting going on in the country, it would seem to me that they could get a handle on this rather quickly if they were to make that effort to do so. since everything is out in the open. i believe that china could put the right restrictions and penalties in place within their own country and stop an awful lot of this in the bud quickly. that is the way i would see it. >> mr. toohey, do you have further thoughts? >> certainly, more can be done in china to stop this but

intellectual property, but our association has been working with our chinese government officials, both at the state level and the provincial and local level, for some time about this problem. for example, part of our work was the establishment of a legitimate market in chanson, -- shinzo and, -- shins and, china. this has demonstrated that when it focuses, it can have real results. semiconductors were not part of that campaign. it was indicated that there was strong progress. i think having our trade officials and others having stronger enforcement, that is the way to go. >> mr. hiollm -- hillman, are

they simply turning a blind eye, or is there evidence of complicity? >> that is nothing that our investigation has uncovered to date. we will be continuing our investigation and reporting our findings later this year. >> did your investigation determined that any of our service members had been injured or that there was loss of life tied to these counterfeit chips? >> the parts that we purchased the into many applications. the results of our application today suggest that those parts can be purchased on a counter bid basis.

we have not gone to the extent to determine whether counterparts have actually been placed into those systems. therefore, whether or not lives have been in danger. >> with this comment tied to your answer to our question. i think that is what this committee is so concerned. our servicemen and women face enough payroll, putting their lives on a mine, day in and day out, and if there is a danger tied to the electronics on which we depend, this is a very dangerous situation. so, again, we have work to do, and we will have to work on it as a team, the dod, and the chinese have a role to play, so thank you for your appearance. mr. chairman, thank you. >> thank you, senator udall.

senator brown. >> indicated in your statement that we are paying for product, and then we are determining that we are being supplied with defective materials. not only are we paying for it the first time, but did you say we are also paying for the replacement and repair? >> it depends on the contract, and we will hear more about that in the second panel, but, yes, and we have to pay for it unless you can say that something is intentionally counterfeited and with knowledge. we end up paying for it. >> the amendment that does that, as a co-sponsor -- it only makes sense -- mr. chairman, the idea that we're paying top dollar for a product, and then we get the product, and it is built with

sometimes defective components is mindboggling. >> you can direct and on capitol hill, but the problem is the contracts that they enter into our the cost plus contracts, requiring that the pentagon paid for replacement unless you can prove that the defective part is put in knowingly. >> we should not have to make that proof. we should have it that everything we purchase is of the highest quality. >> that is what we would do. >> when you went out and do your research and your sting operation, and he provided them with numbers that were not real, in fact, that came back with some fictitious product, is that a fair statement? >> yes. >> what has been done with those people? have they been let go? are you not doing business with them anymore? what does it take to stop doing business with them in washington? >> we will be referring the

results of our investigation to the department of defense for review for potential action. >> determining the actions and recouping payments, is that a fair statement? >> yes, senator. >> thank you. this is another reason to buy american, so we know where the supply chain is going, and other entities that you described, mr. sharpe. how did you get into the country to do that when we had representatives that were denied? an opportunity to buy some more product? how did that occur? i am just curious. >> we did not go to buy any products, senator, but the trip began as a trip to visit a customer in hong kong, then turned into a vacation in

beijing. it was two weeks before the olympics, and when i got into the city, i did not know i would be traveling the next day to the other city. it was just a matter of paying something more to the driver and hiring someone to take me out there. there seemed to be no issues whatsoever. nobody questioned me. there were just areas where i could not take photographs. >> a share the chairman and ranking member chairman -- and ranking member mccain's concern. and the manufacturing, the testing requirements, do you think that is a reason? >> yes, that is a reason, sir. >> and a lot of the recommendations that you have made, and i think, mr. toohey, you are making, to change that?

>> yes, senator. we believe that will help, to strengthen the authentication procedures, the procurement, to make sure we are stopping these at our border and making sure we have all tools, and to measure our law enforcement community, as well. >> are you giving recommendations to the chairman and ranking member on what you need in terms of legislation to get that >> we would be happy to follow up with a more detailed proposal. >> i would like to be included on that because i find this is unbelievable. thank you both for pursuing this. it kind of came out of left field.

what is your thought that everything has been done and it is a malicious and terms of trying to breach the dod equipment trying to get some sort of tactical advantage -- are they just going out to make money? that's my first question. my second question is why don't we go to the source? is there a way to process this waste internally? don't we have the ability to do this in our country and -- it makes no sense we're sending this stuff over there in barges and are able to do what they're doing. did anyone send over this investigation and say can you explain what's going on here? >> is there any malicious intent

to deliberately breach the equipment? is there a different way we can do it to stop the supply chain from going over there in the first place? i can't believe america, one of the greatest countries in the world and one of the most innovative countries and let the world, we can't do more with this waste. anyone can take a shot at that. >> in terms of understanding any malicious intent, that was out of the scope of our particular investigation which is still going on. g.a.o. has done reports on electronic waste and recycling. i believe the core issue -- or one of the core issues has to do

with who wants that to happen in their proverbial backyard and to pays for it? >> it seems like the american taxpayers are paying for it in the sense we are double paying for equipment. should be top of the line. we are paying for the potential breaches in our security in the way we are providing equipment to our men and women who are serving. my time is up. >> thank you. >> thank you, mr. chairman myriad do you know of any chinese company or government agency that makes any products through research, design and product to market that no other country does right now or no other company outside of china

-- to you know of anything they brought to market in your realm of business? >> i am not aware of any, senator. >> there are a number of semiconductor manufacturers and companies. >> do you know of any thing -- >> there are some specific applications that have been designed in china. there are a couple of good foundries that manufacture quality products. some even in china. the domestic industry is very small and in world standards, there are examples of research. i should add that the chinese government has singled out the semiconductor industry as one that they want to build because they know what it means to our country. they are putting a lot of

investment in developing domestic semiconductor companies. >> how many of your members have presence in china? >> several of our members have a presence in china. >> would to be concerned about their protection and ability to do business there? are they there because of [unintelligible] >> china is the largest market for semiconductors globally. that drives many of our international global companies that have presence in china. >> are we still purchasing these products as a government? are we still as the united states government, are we still doing business with these people? >> the parts we have been purchasing as far as the ongoing

investigation are rare, hard to find. conscious -- subcontractors are in need of finding these rare and obsolete parts have an outlet to acquire these parts. concern is that the intense -- >> are we still purchasing? i asked a very simple question. are we still purchasing from counterfeiters putting out these products? >> the internet trading platforms have 40 million, 60 million that are doing that.

>> so they are purchasing from people making inferior products. >> your company basically does this after market? do you know of other companies like yourselves that are able to produce the quality products needed for our service people? >> yes, there are other companies in the united states, like ours. >> so we would not have to go through china if we did not want to because of price? >> we would absolutely not have to. >> who in the world rights the specs and does not follow up? is it written stringent enough that if you basically do not

meet those specs, of that you should be banned? if you are found to be in a collective doing what is done -- who want to answer that? >> and the context of our work, there is a dod specification that, in terms of the contests week ran that are required in our undercover operation, there are specs -- >> who writes the specs? -- is it that government? >> this was a department of defense specification. >> who follows up on that? we brought you all in here to basically check and see if this type of scam was going on. it still is afforested -- still

is flourishing right now. if we are writing the suspects -- you can shut that down in a heartbeat. >> i'm not aware who is supposed to follow up. >> have you brought your report to anyone in the dod? >> no, sir. >> it was basically this committee? >> can i just interrupt for one second? this is a very specific report we asked very recently to try to go on the internet and see which parts showed up. the cheapest parts that showed up are all from china and turned out to be counterfeit. some of the numbers were totally fake numbers. they have been working for us very recently and we will have a third panel was contractors --

>> mr. chairman, this is not rocket science. i don't know if they have brought a product to market that would benefit mankind. anything from handbags to watches to mining equipment, everything has been stolen by them as far as property rights and those types of things. i just can't figure out of forgetting bad product and we'd know where it's coming from, why don't we shut down? why didn't the department of defense jump in? we are buying and paying for it twice. we're putting people in harm's way, especially our military people. why wouldn't the department of defense have an internal audit asking for this? you are not asked by the department of defense to check

this out? did they know they were getting inferior products? >> we are releasing preliminary results of our ongoing investigation this morning and have not contacted any outside party associated with these products other than the defense logistics agency did -- to determine whether the parts we were purchasing were being integrated into major weapons systems and determine the bogus parts numbers we were attempting to purchase were not an authentic part. >> thank you. >> thank you, mr. chairman. i wanted to follow up -- as i understand it, you said in your view that we don't need to go to china. can you explain that? >> there is an awful lot of product in china that's not counterfeit. going to china to buy from non-

authorized sources is a sure way as far as we can see right now to get ourselves into trouble. there are authorized sources in china that get products from the offer price component manufacturers. i would not say dealing with those folks, as long as they are selected and audited would not be a reason why we could not buy from them. but the open market is not the place to go. >> one thing i certainly appreciate we have a need to trade and to trade with china, however, they seem to be flaunting our intellectual property laws. in this instance, the counterfeit products, let's just be clear that it's a matter of life and death. when i see some of these counterfeit products, if you are a navy helicopter pilot and you

cannot trust your flight system or your night vision and capability, this could be a matter of life and death for our soldiers, couldn't it? >> yes. >> when we know there is a particular area of china that is openly producing these counterfeit products, why would we allow those products to come across our borders and into our supply system? >> that is a very good question. >> in my view, we need to send a stronger message to china and rather than try to talk when the response we get back as we are taking care of it and clearly they are openly allowing this to happen and it's a matter of life and death for our soldiers, i hope we will take stronger actions to cut off. as a follow up, one of this

concerns i have had since i have been a member of this committee -- chairman leavened talked about cost plus contracts and how they could expose taxpayers to the cost of replacing counterfeit or fraudulent goods. we are basically paying both ways for this. that is one of the reasons senator mccain and i have introduced legislation to minimize the use of cost plus contracts. can you tell me why shouldn't the contractors bear the risk here within the supply chain for counterfeit products? >> from our perspective, everything ought to be done that can be done to insure legitimate product is going into these products. while i am not very familiar with the details of defense contracting, it seems like a reasonable approach to expect

contracts to do everything they can to make sure these products are legitimate. >> so you would agree taxpayers should not have to pay twice for the goods and the important military equipment we are paying quite a bit of money for? >> when measures can be done and policies can be put in place to better insure the authentication of these products, i would agree. >> you mentioned the case of the vision tech, a prosecution in federal court to aggressively prosecute counterfeiting traffickers. you identified it as the first case of its kind. why is that? why aren't we prosecuting more of these cases? if we prosecute people who are putting these products in the

line and obviously no they are trafficking in counterfeit products, that would be -- >> i cannot agree more. we ought to be prosecuting these criminal entities. they're putting the lives of our soldiers at risk. my understanding is this goes back to the first felony condition. the -- they have been the single handedly forcing these prosecutions board and it has been extraordinary. we need to do more of it as a country. >> i could not agree more. i would like to see more felony prosecutions because we are talking about life or death decisions here. these cases, the more we aggressively prosecute these individuals, particularly if we

find out there is a contractor or company in the united states that knows they are trafficking in counterfeit goods to our military that go into important parts or equipment they have to rely upon, that will be a way to stop them. >> we cooperated very closely with the u.s. attorney on those cases. we stand ready to strengthen that. it needs to be a partnership to authenticate which chips are counterfeit. we have every strong relationship with law enforcement here and we would like to straighten that out. >> i believe senator brown asked a question -- one of the things that leaps to mind is now it seems to be a profit motive. it seems the chinese trying to make money off of us, the other companies who are primarily chinese are participating in

this. if it's that easy, couldn't this become a way to force sabotages to be conducted on our military? is this something we should be concerned about not only as something that is undermining and putting our troops at risk, but in other contexts for our national security? >> there certainly is the possibility there could be counter motives other than the financial benefits associated with the counterfeiting and harvesting of old parts and put into a fashion they appear to be in new. vendors that we have supplied these parts from appear to be more of a boiler room operation where they are willing to supply parts of unknown authenticity

for the reiteration provided from those parts. >> certainly this represents a vulnerability that could be far- reaching if we don't address that? >> i agree. >> thank you. >> we will have a chance in the next few weeks when the bill comes to the floor bid to take some statutory steps which i hope we will all be able to support. we will have that opportunity, so i think you for that. >> thank you. mr. chairman, let me thank you for conducting such an in-depth investigation into such an important problem. i would point out that this

problem is not a new one. i recall back in 2004, looking into this issue of the security supply chain. at that time, in 2004, the department of defense initiative that trusted foundry program which senator udall referred to. the program was intended to ensure mission critical national defense systems have access to trusted parts and assured supplies. under this program, dod credit suppliers to provide micro electronic design, manufacturing, and assembly services to meet certain standards and reliability of the product.

i happen to be familiar with this program because one of a trusted foundry's is in south portland, maine. it's now operated by texas instruments. it used to be national semiconductor. what happened to this program? has it not worked as well as was hoped back in 2004 when launched by the pentagon? should the owners and operators of critical of the structure be making better use of these trusted foundries? what is your assessment? >> the trusted foundry program is a very important system that allows certain mission critical items to go into the defense

department's supply chain in a very assured way. what we're talking about here are parts that are no longer manufactured and replacement parts for systems that have been in place for many, many years. that's a place where the program does not deal with. given the increasing amount of semiconductor content and 70 products, civilian products and defense products, a single solution is not going to do it. there is to be a broader solution to authenticate in partnership with the trust of foundry program. >> my reaction to that is similar to the point senator brown raised, which is maybe we should look at where we are buying these parts and reconsider the manufacturer of those parts in that united states. we do have the capability, and

of the problem of counterfeiting is that high, and if it is causing us to pay twice for the same part, perhaps we should look at not only the integrity of the supply chain, but whether we are dealing with reputable countries as sources for vital equipment. >> in many cases, they are remarking these products so would appear they are made in the united states. that's clearly part of the problem. these criminal enterprises present these products as certified military spec products, and that is all fake. that's a big part of the problem. >> that leads me into my next question. i still want to hear the panel's assessment of a trusted foundry program, but let me first go to

my next question. in your written testimony, you noticed customs and border patrol agents see plays an important role in anti- counterfeiting efforts by notifying trademark owners of suspected shipments coming into our ports. previously, this effort by customs and border protection included sending photographs of seized chips to the original industry manufacturer. they could assess whether or not they were legitimate chips or whether they were counterfeit. i understand customs and border patrol officers have now been given revised guidance to redact the identifying marks on the chips in the photographs, except for the trademark. i have to say that makes no

sense to me whatsoever. there there -- they are redacting information that allow the manufacturer to assess whether the chip is legitimate not. what is your judgment on that change in policy? >> you articulate it very well. for years, the system worked well. especially now, where counterfeiters have very advanced techniques. it's almost impossible to tell whether a chip is counterfeiter not by visual inspection. the only way is with the code on the chip. our companies can instantly identify whether it is a counterfeit or real chip. the process worked well for many years. as a result of the interpretation, they have a change that practice and we have been working hard to encourage them to revert to the practice

of sharing those codes. it is virtually the only way customs officials can stop a suspect chip and know whether it is counterfeit at the border. we've been asking anyone who will listen to us about how we can work with customs to change the policy to allow us to stop these chips at the border. we stand ready and have been eager -- eagerly asking government officials to let us help them. it is a policy change that needs to happen to protect our borders. we need to close at our front door. >> mr. chairman, i would just know that they baffling policy change and one i hope we can remedy. i would like to very quickly ask the rest of our panel to comment on those issues -- the trust of foundry program and the change

by customs and border patrol. >> as part of our ongoing investigation, the parts we are purchasing our reporter, obsolete, hard to find parts that would not be included in the trust of accreditation program. although, it is very clear the department of defense continues to rely on parts that have old manufacturer dates as something similar to what's being done for newer parts would be a possibility that could be considered for these older, obsolete parts. we also, regarding the customs activities, for one of the purchases we have received, there was evidence the customs department did open up our package and view the part that was there. there is no evidence as to what

actually occurred as a result of the review, but it was stamped as being opened by our customs department. >> thank you. >> in terms of the trust and foundry, we are aware of the program. in the scope of this investigation, the analysis of whether would be appropriate and so on is beyond the scope of our current work. we do not have any information to share with you at this time. >> it seems like it is a good model. >> sure. we did not evaluate the cp process as well. >> the trust and foundry program, as i mentioned a four, is not something that's part of what is available to independent distribution. that would be where the government is dealing directly with trusted foundries. i really would not have much to say there. in regards to your there

redaction, i completely agree with being able to divide the company manufactures -- to provide component manufacturers with as much information as possible. the most recent report we have released had a part in it that if the date code was correct, instead of being incorrectly stated, it would have most likely passed the scrutiny have a photograph from the manufacture as well. that is the level of difficulty they are currently facing. as far as the word trusted, with regard to independent distribution, what we need to do is get a group of trusted distributors who are required to do over and above a significant amount of testing and have the ability to do so. that is one of the biggest problems we have right now, that there are lots of people who are

in business and need to be in business but did not have the capabilities required to mitigate counterfeit parts as we see them today. there are some that do, but we need to identify them and let the of the ones who do not have the ability know what they need to do to get to that level as well. >> thank you. >> thank you, mr. chairman. if anyone has a comment, i would appreciate it. what indication do we have the chinese government is complicity in this counterfeiting operation? >> as part of our investigation, we have contract with vendors to supply us part numbers, sometimes legitimate, sometimes totally bogus. we found they were willing to supply those parts. the extent to which the chinese government itself is complicity

in this activities has not them part of our investigation, though it appears clear from the presentation that those activities are being undertaken in the open. >> i assume from what you have said and was just stated that you said about 40% of the parts you saw in the marketplace are estimated to be counterfeit. we notify the chinese of and they basically have done nothing. is that your indication that the chinese government is composite? >> i would have to say the local businessmen who accompanied me, i'm working off of what he said. i have heard this information float around from other folks.

that's as good as my information gets as far as what the actor percentage number is. regarding the chinese government knowing about this, it would be basically impossible for them not to know what is taking place in this marketplace and in the nearby areas. it cannot be missed. >> your report was focused on the defense industry and all of you have spoken in reference to that. i am assuming this is prevalent in every other agency of the federal government as well? >> yes. carry a parts and other items produced is something that impact all industries. >> that would be the same for individuals going on the internet and purchasing items, correct? >> >> anybody that goes on the internet who buys these products will be subject to the same

potential for purchasing counterparts? >> absolutely. this is an enormous problem that affects a broad range of industries and individuals from health-care to automotive systems to airplanes, mission critical and non-mission critical. unfortunately, the biggest incentive is to sell to the most mission critical systems because that's where the highest markup is. it is a broad problem affecting many industries and it is a growing one. >> in january, 12 -- january 2008, a counterfeit trip was sound and a f-15 flight controller at edwards air force base. fink goodness, it was found before was ever installed. subsequently, there were three or four chips found to be counterfeit. do any of you have information relative to that particular issue?

what other resources out there other than the chinese that we know are counterfeit operators? what other countries? >> we have seen dead dod, department of commerce report that shows there are many other countries involved. there certainly is. the vast majority is coming out of china. we have counterfeiters right here in the united states without a doubt right now who are remarking product. that is scary to know that. s >> for the purchases we may as part of this ongoing investigation, we did that analysis of vendors that were made available willing to supply the parts we requested. 79% of the responses came from east asia. the remaining 21% or from

central asia, europe, north america and the pacific islands. >> staggering. i listen to your description of what i guess you'd call a sting operation that you set up. i also noted in a press report last month about a lady and her mom -- lady and her mother in bakersfield, calif. just creating a company that built it out of nowhere and got on some approved list and started delivering parts to the department of defense and over three or four years sold $2.7 million worth of parts were purchased and sold to the department of defense and they just got them off the internet. they got numbers and a number of them were counterfeit. action has been taken, but i am astounded you could carry out

that operation with the department of defense. i'll look at it as a problem on the other end, but there is obviously a problem on our and with respect to how these companies like the one you created are able to get on that list. what sort of recommendation would have to think about how we address that issue? >> in our investigation, we attempted to obtain membership on three different internet trading platforms. each of the three platforms appear to have a varying degree of validation in order to determine the authenticity of our company. in one instance, simply talking to that individuals, we were able to gain access with very little background information. in another instance, we were asked to provide references,

addresses, web sites and information and based upon the results of our work to date, there was no indication any of our references were checked for determined whether or not we were an authentic company doing a valuable service. in the third instance, we were denied access to the website and they did not explain their reasons. >> were you asked to give any financial references? >> yes. we were asked to provide bank references as well. >> how many transactions did you negotiate with the department of defense in that operation? >> the department of defense has not been made aware of our investigation. we are releasing preliminary results as morning. >> thank you.

we have a brief second round. some of the numbers on these parts were real numbers. you were checking out -- some of the more phone numbers. you got responses for both, but on the real numbers, those were for real systems, correct? >> that is correct. while they needed replacement parts, those are systems that still need parts. >> that's correct. what weapons systems were those parts for? >> if i may, on the voltage regulators we purchased, that is a part that goes into the case c-130 hercules aircraft. also, the navy's super hornet fighter plane, the v-22 osprey aircraft and the los angeles

class nuclear-powered attack submarines. >> those parts made abbey currently manufactured but must be currently acquired, correct question are >> that is correct. our staff looked at millions of parts for the 1800 cases daylit that which is just a sliver of the problem. even though these are rare, these are very important current requirements, correct? >> that is correct. you said 21% of the responses you got were not from asia, correct? but most do come from asia and we know from other testimony the vast majority comes from china and they are openly sold in china. but of the 21% not from asia, many of them could be

transshipment points for chinese counter for parts? >> that is correct. >> you don't know the origin of the parts by the fact you got a response from a particular country? once that's correct. even for the parts we purchased, negotiating with individuals in certain cities in china at the time we receive payment of formation, the addresses may have changed considerably, pointing to the source for the payment as opposed to the manufacturing. >> mr. sharp, you made references to three new processes released by the department of defense. i think they were testing processes, but i'm not sure what you were referring to.

can you explain that? >> yes. i was referring to 3 test processes that were identified that were new counterfeit processes we had not seen before. >> to try to determine what is counterfeit? >> processes we do the chinese were using on the parts themselves. we did extensive reports on these, showing what they look like, what the evidence is of the man was being used to create them. >> we are going to act. we cannot rely on the chinese to act. i think that has been proven for longtime. the chinese say they have an effort going on to act against counterfeits, and it is baloney. they are openly sold and the growing problem.

on the other hand, they have some of our manufactured reasons you -- some of our manufacturers in china, so we cannot put into place a certification system that the supplier of these parts has been certified to be a legitimate supplier, whether -- whatever country might have the manufacturing in china, there's a lot of counterfeiting going on and it is a clear and present danger as one of the put it. it is a threat to our troops and we are not going to let it go on. to bes what i'm going trying to do. we could try to put into place a requirement that the department of defense adopt of certification program for parts suppliers. while they are doing that, we have got to defend ourselves.

we cannot rely on the chinese to take action against counterfeiters. it's been going on too long, it has been pointed out for too long. they won't even let our staff in and so forth. we just cannot rely on them. while we are telling the department of defense, which i intend to do in an amendment by will offer to require the department of defense to put in a certification for parts suppliers -- these are reliable suppliers. at the border, we have to put in an inspection system for parts coming from china. we do this with agricultural products. if we have a product coming from a particular place that we think will endanger our health, we have a ban on those products or inspection system.

we do it with dairy products. we have limits to a dairy products can come and so forth. what i would be offering is while we get a certification program in place, we require inspection of all parts, a electronic parts coming in from china. it is a proven, known source of the problem. it is an epicenter of counterfeits coming into the country. the third thing which we can do is put some pressure on our contractors to go back up the chain are down the chain to make sure the people supplying the suppliers and the people supplying the supplier just going all playdown are legitimate people. the only way i know of to do that other than requiring contractors to so notify folks is to make our contractors

responsible to replace the parts. we cannot any longer have the government paying for the replacement of these parts, no matter what kind of contract. if the contractors are going to be responsible to replace parts determined to be counterfeit, i believe they will take significant steps to make sure those folks down the chain are not buying counterfeit parts. if we can try to stop this flood, and it is a growing flood, according to testimony in two ways. first we can try to get it up the source. i think we are determined and i know senator mccain has spoken on this. we are going to try to stop this at the source. we cannot rely on it. we've got to take all the steps we can to put our fingers in the dike while we are building the

dike at the same time. we are going to build our wall against counterfeits. we are at the same time going to have to put our fingers in the dike by doing what we can, working with our contractors, using the systems which we have to notify that government and other contractors through the system we have put in place to make sure -- more often. my last question -- while we are asking the dot to resign -- to design a system of certification and help design a requirement for inspection at our border of these parts that are coming in. we're only talking about the parts that are coming in. we would need the assistance of the industry in trying to figure out how to do that.

i want to do it quickly because i would like to offer an amendment and i know i would have a lot of cosponsor ship. i would like to do it on this defense bill. within the next week or so, would you be willing to help us with the actual wording of those provisions? can your organization help questor >> we would enthusiastically be willing to work with you and let me just say we have been working with dod to begin the process of obligation. we would be enthusiastic to work with the committee and customs and border protection to ensure we are catching the parts that are coming in at our border. we want and have for many years been a partner and we want to strengthen the partnership. >> we will be calling on you.

in said gao, i think is fairly clear your mission was fairly recently given to you and it is a mission which is a very important one but a limited one. this is not a broader investigation or you look at a lot of things she might have been asked about. what would be the response, if you went on the internet to buy parts? so far, every single one where you have had a response is counterfeit and every single one of the seven you know the origin of comes from china. that is pretty strong, clear testimony. i was just wrapping up with this panel. >> they are going to be working with us to try to design a man of language which we may be able

to offer in the defense authorization bill to build some kind of certification system for parts suppliers so we can have real authenticity assured and have an inspection requirements for parts coming in from china just the way we would from certain vegetables or dairy products coming in from certain places where we know there is a problem. we do it with agricultural products and the mission of our troops and the lives of our troops are important just the way the good healthy agricultural products are important as well. >> i eagerly await the opportunity to put it on the defense authorization bill. >> there is a double meaning in that statement by the way which i share totally. we thank this panel. thank you very much.

[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> the committee will come back

to order and we will move to our third panel and receive the opening statements. then we will break for about an hour for lunch. before i call on you, let me thank each of you for being here today and thank you for your cooperation. we very much appreciate that cooperation with this committee and we give you credit for doing that because i know some of these questions may be difficult to answer. but the fact you are cooperative is something that stands in your favor. and i pronouncing your name correctly? you are the vice-president of supply chain operations for raytheon. we will start with you. >> thank you. mr. chairman, raytheon appreciates the opportunity to

work with you on this important inquiry into counterfeit electronic parts into the supply chain. these birds making their way into military equipment pose a real threat to our national security. mitigating the risks posed by a suspect and counterfeit electronic parts is an issue raytheon takes very seriously. our business and reputation of demand this approach, which is why raytheon spent a great deal of time, resources and efforts tackling this problem on a daily basis. as in any market, counterfeit electronic parts and to the dod supply chain because of supply and demand. rapid turnover in high technology items provide a steady source of used materials that can end up as powerful parts. in addition, obsolete parts pose a challenge because original club manufacturers may not -- may have stopped making these

parts but let auric -- or left the industry altogether. despite these challenges, the dod and suppliers must obtain the authentic parts needed to build, maintain, and refurbished defense systems. across raytheon, our supply chain covers thousands of programs and contracts involving a vast number of suppliers. we issue hundreds of thousands of purchase orders every year. purchase orders for electronics parts, where the risk of counterfeiting is the highest, may cover multiple lots and comprise thousands of individual parts. as a company, raytheon is committed to providing genuine electronic parts to our customers. like others in that industry, raytheon mandates partners certify in writing electronic parts they are providing the best tendered in the purchase order, including requirements for authentic parts from authorized sources. in 2009, raytheon formed a

cross-business trip -- process business team to form a counter- counterfeit policy. this was introduced in july of this year and will be fully implemented by february of 2012. our counterfeit parts mitigation policy assigns specific policies to raytheon functions. the policy also focuses attention on aspects of our supply chain most likely to present risks such as procurement of electronic parts for -- from independent distributors. to further reduce the possibility of counterfeit parts that might find their way into our products, raytheon is developing a preferred supplier list for brokers and will mandate its usage across our country. we will also consolidate purchasing to a centralized

procurement organization. in addition, raytheon is a member of the government industry data program. the reporting system provides a means for manufacturers and suppliers to alert other members when they identify potential counterfeit parts and suppliers. this kind of information sharing and help suppliers of -- can stop suppliers of counterfeit parts in their tracks. raytheon treats this as mandatory. our new policy will reinforce this practice. in conclusion, given the scope and dynamic nature of the threat, counterfeit items will remain a challenge. the policies, practices and measures raytheon has put into place will further protect our supply chain for our customers and company. we will further define industry best practices and improve

information sharing while avoiding costly or time- consuming solutions that provide little protection for the war fighter. we thank the committee for focusing its attention on this challenging issue. i would be happy to answer questions when we return and i would like to ask the entire statement be made part of the record. >> thank you. the entire statement will be made part of the record and that's true of the minister today. you are the vice-president forl3 communications. thank you. >> good afternoon. on behalf of l3 communications, i appreciate the opportunity to be here today to address the issue of canada's electronic parts in the u.s. military supply chain. l3 is a prime contractor in command control communications, intelligence, surveillance and reconnaissance systems, aircraft

modernization and maintenance, and government services. l3 is the leading provider of a broad range of electronic systems used on military and commercial platforms that has served a wide range of customers, most notably the u.s. department of defense and its prime contractors. the reality l that3 and the entire defense industry faces is that components are increasingly said -- increasingly susceptible to to risks -- obsolescence and counterfeiting. with the significant levels of counterfeit -- these issues are exacerbated by the service lives of fielded defense weapons systems being extended well beyond their original plant life cycle. furthering the challenge of the ever shortening life cycles of electronic components being driven by commercial technology changes. l3 has been proactive in

managing obsolescence and risk mitigation. procedures and processes are in place to manage both of these areas with improvements being driven to use date counterfeit threats. supply chain management techniques have been implemented to limit the number of distributors seconds sell parts to l3. significant methodologies are emplace and training and education of personnel as ongoing. l3 will continue to improve its mitigation programs through strict adherence to corporate procedures and policies across the entire enterprise. controlling independent streator purposes and providing training and education to our personnel. additionally, we will continue to work with our government and industry partners and professional associations to develop and incorporate best practices throughout the supply chain. in any case, if any part is identified as counterfeit, we

will, as we have the past, promptly notify all affected customers and work with them to immediate problem in whatever way the customer determines is needed at no cost to the government. finally, while we have made significant efforts to address the counterfeit parts challenge, the committee's examination of the issue has been important in underscoring the seriousness and depth of the problem and the need to rapidly develop an effective solution. look forward to working with other companies in the committee in achieving this goal and we will be pleased to answer any questions the committee may have. >> thank you. you are the vice-president for the poseidons program manager of boeing? please proceed >> thank you for

the opportunity to appear before this committee. this is a serious issue that has commanded the attention of a boeing. unlike my counterpart on this panel, i do not have supply chain responsibilities for my company. boeing requests detail the polis and initiatives. >> that will be made part of the record. >> thank you. i can say boeing is committed to the quality of our products and that they are able to accomplish this. as an aircraft manufacturer, they installed thousands of parts from suppliers. we require them to deliver a conforming part. addressing nonconforming parts is essential.

the program has had a longstanding track record of successful execution. it leverages the 737 production system and utilize isutilizes we federal regulations in the contract between the u.s. navy and the defense base and security. these have been key to enabling them to meet their record milestones below cost projections. boeing has built six of flight aircraft to date. 6 are at the naval air station. two additional will be delivered on february 2012. the first has completed the

maiden flight and is in the final stages of checkout at the facility prior to delivery in feburary. it remins on track in 2013. leveraging the commercial system has been key to the system. separate divisions of bca are required to contract employees with the commercial items. the aircraft is manufactured in accordance with the approved quality system and once delivered is completed. both sets are based on many years of experience with a wide range of customers and strict focus.

addressing not conforming products is essential. we require it to identify parts that have been identified as such. bowing out to some of the stigma of the debt level of concern to oeing requires allingh level of high quality. suspect counterfeit parts require a subset as a prototype of nonconformances and are covered with in this process these. and none are encountered, the processes utilized are 9100 compliance under production to of a kit 700. faa afterued bty the

a demonstration that they have adequate facilities in quality- control systems to ensure it meets the liability requirements. if nonconformances are encountered, the process these utilized -- processes utilized [unintelligible] to my knowledge, there have been three instances of powder fence -- counterfeits. the third uses bds quality. did the safety of the people operate it or not address -- not at risk.

suspect countered that parts are a series industry-wide issue. boeign has utilize this to address the suspect how the fed parts. while they are slightly different, they are both under government regulatory control and underside. it ensures the integrity of the people who operate it. the pedigree is based on many years of application of commercial products which have set this. that concludes my statement. >> thank you. we won our recess until 2:00 -- recess until 2:00. there is a cafeteria in the

basement of this building you are free to use. we will stand and recess until 2:00. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> every day on "washington journal," this week we're taking a look at the u.s. military. we were at the arlington national cemetery talking about budget overhaul efforts. this is one hour. >> if you have been joining us, we were devoting this to take a look at issues regarding the military. we looked at the role of the mission of the u.s. air force.

on monday we talked about marines. on thursday, we will focus on the coast guard. on friday, we will look at other aspects of the armed forces. today we're hoping to learn about arlington national cemetery and its reform efforts. arlington national cemetery is located in virginia. this is where guest joins us. joining us is the army national cemetery program. she served as their executive director. welcome. hello. guest: hello. how are you? host: >> goods. he serves as their superintendent. guest: good morning. host: if you wish to join in, you can do so by calling these numbers.

tell us about the process that took place at arlington man there were bodies brought. what was going on before you arrived as far as their catheterization? what has changed since then? guest: we started in june of 2010. from the first day that we started in cemetery, we worked to put in the changes that were necessary to bring arlington to this century. we have completely changed from paper records to having a completely digitized cemetery. he has worked on the operational side. i do not know if you like to add anything. guest: since our rival, based on

what has happened in the past, it was extremely important and imperative that we put in place a strict chain of custody so that when it arrives -- a casket arrives, we can track it through the entire process to the completion of the burial. host: what was happening a year ago as far as finding out the location as some people? guest: prior to our arrival, the issues that came out -- it is a well-known fact that the assignment of grave sites and some remained being placed at improper grave sites are being in accurately assign. some of the ones we encountered and we needed to move swiftly to put it in a strict chain of custody and strong operating

procedures that are the equivalent or if not stronger than private industry and work very diligently to restore the trust and confidence of the american people. the problems have been fixed. it is in good hands. host: walk as briefly through the chain of custody and what happens when the body arrives. guest: that is one that, if i could, i think this would be something out with what pat to discuss on the chain of custody. guest: it is extremely important on these hallowed grounds. the chain of custody begins with the arrival of cremated remains or the casket. the family members and bring it in -- the gun members bring it in. there is a 60 process. a cemetery rep is assigned.

-- there is a sixth day process. a said rep is assigned. we me with the funeral director. the remains of the transplanted -- will be transported out. the service will be conducted. the of representatives will look at the schedule. we instituted a process or repaint a great number on a grave liner and also on the ledge. they will verify the numbers. they will verify what is on the schedule. they will attach a non- biodegradable casket tag, section and grave number and date of death. the representative will check to make sure the information is correct. a subsequent interment -- they

will check the information on that had some. this is just from the day of interment. there is a beginning and end to this process prior to the interment with the layout maps, at the assignment of the grave sites are checked by supervisors before its begins and also at the conclusion of the day to make sure they're properly identified. host: talk a little bit about your role in this process. guest: i am in charge of the administration of both arlington and the soldier airman's home. i like to tell people that my job is to make sure he has the right equipment, the right people, the right training, and the right resources to get the day to day operations done. host: as far as what you have brought, what has changed as far

as resources? guest: in terms of resources, we have an increased the number of employees by 50%. we have changed and brought in new state of the art equipment for the work force to do their job. we have trained in the work force to not only operate that equipment, but to do the missions that they are directed to do here at arlington. we have put in the standards and procedures necessary to administer every research here at the cemetery. host: is everybody properly categorized today ? guest: we have an accountability task force that is a place to do exactly that. we do have a report due to congress in december 22 of this

year for that. we are 86% through that process of looking for every record. host: our guest will join us until 10:00. there is a lot of background. if you can speak as loudly as you can so they can hear you. the numbers will be on your screen. we set aside a special line for veterans this morning. louisiana is up first. republican line. go ahead. caller: thank you for your service. i would like a little answer to this, please. it may seem corny to some people. i can remember years that he over always see crawfiscrosses the fallen comrades. i never see that anymore. has and there been any

movement to remove crosses from the fallen graves? i see them all the time of our brave men and women. guest: i am not aware of arlington ever using crosses at this national cemetery. i am aware of the american battle monuments commission cemetery using them overseas. if they do use the white marble crosses. i do not believe there's ever been a history of the crosses being at arlington national cemetery. host: falls church, virginia. caller: i am from the u.s. marine corps. i am also a business owner. out whotrying to find would be the point of contact to sell some [unintelligible]

i am sure glad to hear that has been taking care of. i am wondering of other solutions that can help the operation. it would help the loved ones to find their locations easier. i found a solution to improve the operation. who would be the point of contact to bring those ideas that i suggest? guest: i will take that one. one of the efforts that we are doing in in cemetery is to truly the cemetery. we're working on a smart phone application where you can literally locate your loved one was buried in the cemetery and to get directions to get there. we are a few months away. we are already well aware of the dressing or concerns. host: how many soldiers are

there? either one of you. guest: i would like to answer. currently, as part is the accountability, we have to under 59,000 gravesite as of june. -- to under 59,000 gravesite as of june 6 2 did59,000 -- 259,000 gravesite. host: montana. democrat line. caller: what is arlington going to look like in 50 years? are you ever going to run out of room? guest: right now the projections currently for running out of 2024. is for

we have expansion projects that we are working on in the cemetery that well extended the life of the cemetery well beyond torn the -- billing -- extended beyond 2015. we are looking at each and every design and all of the available space. host: as far as upkeep is concerned, how many visitors are there at the site? what does that do for the notion of upkeep? guest: we're probably the second most visited site in the washington, d.c. area. we estimate we get over 4 million visitors a year. as for the upkeep, there is nothing more important than up keeping the hallowed grounds for our loved ones are buried. to the more visitors we get to

share the history of arlington, the war we welcome each and every day. host: mount pleasant, a texas. caller: [inaudible] since the cemetery was taken from robert e. lee after the civil war, i wondered if they had ever compensated? guest: i would like to respond. i believe his immediate next of kin did take the issue to court and was compensated financially for the seizure of the property during the american civil war. he turned around. he relinquished the property back to the united states government'. host: maryland, don, independent

line. caller: thank you for taking my call. i am a retired army noncommissioned officer. i was wondering. i do not have a private burial plot. when my time comes, is there certain criteria that has to be met? guest: there is stricter criteria at arlington. you are eligible if you are retired and served honorably. you are indeed eligible for burial at arlington national cemetery. i thank you for your service. host: how many calls like that do you get a wii? guest: we average over 200 calls a day. they are not always about eligibility. a good majority are about the

ability to be buried at arlington or repair for arrangements. we work with the families. we assist them. the the need to provide documentation -- they need to provide documentation. the burden of proof is on the family to bring that information forward. we have an obligation to determine eligibility. host: what the issues that came up was one of customer service . what changes have been made? guest: one of the major changes has been we now have a consolidated call center and can track each and every phone call that comes into the cemetery. as mr. hallinan stated, we averaged 43 of those callers are family members who are calling in to schedule a service for the

cemetery. our focus from the beginning has been to focus on our veterans and their loved ones who are the ultimate customers here at arlington national cemetery. host: about $45.8 million. 624 acres. 5700 internments a year. 27-32 in all services a day. tell us about that. guest: there is no cost that is too high to honor our veterans and their family. we have had the support of the department of defense and congress to provide the resources that are necessary to upkeep arlington national cemetery. guest: if i may add, up from a customer service standpoint, we

now operate six days a week. we are the only national cemetery to open six days a week. the family, if they wish to do it on a saturday, the idea is to flexibility and allow other family members. host: joining us this kathryn condon and hallinan. >> good morning. my question is for mr. hallinan. i am a young veteran. what percentage of reserve components soldiers as far as national guardsmen and reservists do you have in the

cemetery? has there been no budget cuts or congressional actions that have reversed the effect the effect of the cemetery? guest: he has to questions. one is about how many reserve components are very in arlington. i do not have an accurate number. i do not want to get the information i am not sure of. if you do retire or you were injured while on active duty and you did i as a result or you receive retirement pay, you would be eligible.

justify ourjudg budget. if we justify the need, we're confident that congress will be there to support us. host: how many people unstaffed? guest: >> we currently have 143 civilians on board. we also have been supplemented by 200 contractors who provide these services, mainly landscaping services. host: maryland. thank you for waiting. the democrat line. caller: good morning. thank you for taking my phone call. i will try to make my questions fast. i have been to the cemetery.

my taxpayer money goes to a great cause. they went out of business of october this year. i am concerned that my family members to our elderly who want to come to the cemetery will not be able to come on to the cemetery because most of the tour buses parked outside the facility. only the tour's mobile was able to come onto the facility and the resources no longer there. they are not able to walk around the cemetery. what is in the works to get another contractor to suggest that mobility issue, especially for our seniors who cannot walk around? guest: i will answer that one. first of all, on behalf of the cemetery, we apologize for the fact that the tour mobil went

out of existence. i'm glad to announce that we are in the process of getting another contract to reinstate the tour mobile. there is nothing that we are more concerned about than to make sure that our veterans and their loved ones who may not be ambulatory are able to visit the hallowed grounds of arlington national cemetery. host: south carolina. good morning. veterans line. good morning. caller: i am a veteran since 1968-1972. i was arrested at the arlington cemetery outside the cemetery on the walkway. i was selling water. there are no statutes governing be selling of water and fish.

the d.a. dismissed it. i sold it on memorial day. i had no problem. then i came back and was handcuffed by the park police. where do you find permits to sell or have a vendorship around the cemetery? guest: you would have to do that through the national park service, because memorial drive is part of the jurisdiction of the national park service. host: behind the we can see the headstones. what information is on their? gu-- there? guest: emblems of belief, their name, date of birth comment date of death, rank, service, and

some may have a term of endearment by request of the family. host: how often are they cleaned and maintained? we tried to do it on a yearly cycle. we use just soap and water to protect them. we are very successful with the headstones that out in the sunlight. it is very challenging for those underneath the trees. the mold has a tendency to come back. we have to spot treat those. guest: if i could add, you are looking at just one of 70 sections of the 600 credit for acres we have here. just to the numbers. host: are the headstones made on site? guest: they are not.

they are made by a contractor and shipped and installed on the grave site. host: is the contractor within the united states? guest: yes. host: republican line. caller: my husband was buried at arlington seven years ago. the service that they afforded my husband and family was the most magnificent service that i have ever participated in. the caring and the chaplain that take care of us, and the military people that participated, there was so much honor conveyed to us and respect that our whole family will never forget what everyone at arlington did for us that day. it was a terrible experience but

a wonderful experience in that it was so care for. i want to thank you. host: what kind of things went nto the service tax calle? caller: there was a 21 gun salute and a chairman from the army that presented us with a card. i am sure she does this probably so many times, but she looked me in the eye and it was so personal and the intent was so caring. the chaplain called me at home a few weeks before the service and talk to me about my husband and wanted to make it as personal as he could. he spent an hour on the phone with me talking about my husband. and the service he performed was just wonderful.

another relative of mine he was very high up in the navy had died and had a service there at arlington and his daughter came to me and said that this service was even more meaningful than the higher officer's service. it was just beautiful. it really was. we fought like we were in a cocoon of care. host: thank you. if you could respond or expand to that. guest: i would like to thank the caller and offer my condolences on her loss as she spoke. more than one family member surge in the military. i experience that a lot here. generations of family members who have served this country. we are very happy that she was pleased. you only get one chance to do it right. we believe there are no do overs. these are memories that last for ever. i am really happy that she was treated with respect and

compassion. that is the expectation we have. i like to say that the service and honors that her loved one received were burned. the current that on behalf of service to this nation -- were earned. that onarned behalf of service to this nation. host: we have set aside a special line for veterans to call in. you can also send us e-mail as well or a tweet. you addressed the land issue. i will ask you to respond to a tweet. is the only burial site in the united states? guest: it is not. they have a 133 national

cemeteries throughout the united states. a number of states have state cemetery is that also have it with their independence. -- with their dependents. host: there are some key site. can you talk about people that come to the tomb of the unknown soldier? what other sites do people visit when they are there'd? guest: i will begin with the tomb of the unknown. the tomb of the unknown is probably the most visited sites spoke up.nacondon many come to pay their respects to our fallen. it is very emotional and striking of a ceremony. the tomb is guarded. it is an army post. the sins and ends -- the

sentinels and changing of the guards is every hour. in the summer months is as on the half hour. the soldiers of the old guard do such a fantastic job here. bebel pace that tomb 21 steps as a symbol of a 21 gun salute, the highest honor a citizen can recede. they will hold for 21 seconds and then began to march again for another 21 steps. as i stated, if you have come and witnessed it, you cannot help but believe with a lasting impression. host: you also have a memorial to those from 9/11. guest: we do. at the memorial to 9/11 commemorates all of those who were killed either on the plane or in the pentagon that day. the significance of that memorial is that it literally

bases the pentagon. that is one of the visited site here at the cemetery. one of the other most notable site here that the visitors come to is the grave of president john fitzgerald kennedy. when jacqueline kennedy onassis decided to bury president kennedy here at the cemetery and to light the eternal flame, that has become one of the most visited sites. jacqueline kennedy is now buried there along with the president and two of their infant children as well as president kennedy's two brothers. president kennedy is not the only president we have here. president taft is also buried here along with his wife helen was be ridiculous the first first lady to be interred here -- buried here along with his wife helen he was the first

first lady to be entered here. guest: good morning. caller: i am calling just to tell you that cemeteries are very nice. i have been there about three times in in lifetime. that changing of the guard, i mean, that is an awesome thing to see. the upkeep, every time i come here, the upkeep looks very wonderful. whatever they say you are not doing, i think you're doing a fantastic job commandeer. -- job there. guest: when we look at our role and our mission here for the service personnel and our military families, we treat their family members with respect and compassion. when it comes to maintaining these grounds, we need to maintain these hallowed grounds

that in the service and sacrifice of all of those here. that is our mission. everything dries on that whether it is budget issues or questions of eligibility. that is the focal point of our mission. guest: you stated that you visited this lovely cemetery three times. i hope that everyone gets an opportunity in like time to visit an arlington said that they can honor and explore these hallowed grounds that have such a rich history of our nation. host: if anyone was coming because of the veterans day holiday, what kind of activities are going on? guest: the services start at 11:00 in the morning. i would want people to get here much earlier that day so that they get here prior to 10:00. with a public to

ceremony at the tomb of the on non followed by a ceremony that is hosted by the veterans affairs. host: massachusetts. a line for veterans. go ahead. caller: i have ancestors who served in the civil war. he is buried at arlington. he has a rather large gravestone, not a white one in the background. his wife is buried there. he passed away in 1911. i want to make a comment on the type of greats as you have there now. thank you. -- gravestones that you have there now. thank you. guest: the government headstones are the upright marble. there are times where we use marble flagstones on gravesite. the answer you speak of is a private marker.

there 17 sections when private markers were alive. the family decided to utilize a private marker that is not a government marker and inscribed the information of the veteran. host: how can a married couple of retired veterans get buried side-by-side? guest: i also answered that. but eligible and military members are entitled to a gravesite. some family members just want to be with their loved ones. they are entitled. when we have arrangements for double interments, but members are eligible, we will ensure they are side by side and each has their own grave site and had some. host: republican line. good morning. caller: i would like to know if the headstones are made in the

united states. guest: they are made in the united states. they are made of granite and marble companies in the united states. host: democrat's line. caller: you are on. i wanted to state that i have been to arlington quite a few times with my sons. my father is a veteran of world war ii. he fought at the battle of the bulge. i respect him and thank him for what he did. when i went to arlington, my heart just was -- i was so proud but some moves at the same time. i come from the vietnam era.

i love going to the wall. you know, the gray wall there. what i wanted to ask was i heard there was a veteran's program. i do not know whether this is part of your area or not that you service or take care of where you can get the bricks with your family members name on it as, you know, a service person in the military serving in the army. is that program going? i heard rumors about it. do you take care of the great wall their? host: we will leave it there. guest: that is most likely the park service. we are not involved with the vietnam wall. our responsibility is to take

care of the grave sites. there are military members who remains have not been recovered. they have been lost at sea are donated to science. we can put a marker in memory. did those of the services that are provided here when it comes to more realization. host: what is the process in terms of time and having someone buried at arlington? guest: as we stated before, we get an average of 43 people calling a day to schedule a service for their loved ones to be buried. weekend at an average of 27-30 services per day. -- weekend got an average of 27-30 services per day. it all depends on the honors that are rendered. the use of the chapel, and a chaplain.

it is conducting only 30 a day. the average wait time depends on the services that the better and and their family desired to have at a time. host: could you give a sense of how long that takes? guest: i can answer that question. we are currently averaging full military honors, based on their wishes and desires, escort units and possible flyovers, the average wait time and the 73-74 days. that is the current time frame. we like to reduce it. we like to be careful that we do not impact the families by rushing them. we have the matrix. we know the number. we are looking at improvement.

we're always be mindful of the processes. guest: as he stated previously, we are now conducting services on saturday for those families who want to just replacement only and not have the honors. that is helping us reduce the weight time to bury a loved one. -- wait time to bury a loved one. caller: i have a question with the process dimensions. houle easy is a free to misplaced the remains? guest: one of the things we have is a new chain of custody. since we have started in june of 2010, we can say that with the

procedures we put in place that it will not happen in the future. guest: just to follow. it is about the wait time for the military to provide the honors of that person. reducing that.t when it comes to the placement of remains accurately, that is different from the wait time. that is an operation and professionalism issue. we operate that closely. host: there is a story on the front page of the "washington post" of mishandling at dover air force base. what would you say about the process you see their? would you comment on it? guest: i am very confident that the air force is handling that incident properly and looking

into the procedures of that need to be corrected at dover. guest: i will follow on her comments. it is disturbing. there is a concern. to the information is out there. the office of special counsel have investigated and taken corrective action. i am confident they are aware of the problem. they had taken the correct steps to ensure the remains are being properly handled. host: did either you get contacted by officials about this tax gues? guest: we have not been contacted. arlington is our primary mission. i read that the united states air force has that issue under control. guest: what did the things that the air force did is the day

immediately did put in new procedure of a call center. that is what we did here. host: south carolina. veterans line. go ahead. caller: good morning. i would like to sincerely thank mrs. condon and mr. hallinan for your efforts. tomorrow is marine corps day. thank you. guest: happy birthday to my fellow marines. host: south carolina. caller: good morning. i would like to thank each and every one of you that works at arlington as was the other national cemeteries. my brother has recently been in turn at one in pennsylvania. if they did a wonderful job.

my first and only visit to arlington occurred just prior to my going into the service. i ended up serving in desert storm. i was taken aback by the amount of -- worth 60 me sometime -- the sacrifice -- words escape me some time, the sacrifice. one thing i did want to say, when i was there, it was a real quick tour they took us into this place. there is not enough time to see all of the sites on this particular tour. is there anything being are ranged to fully tour the facility in -- arranged to fully tour the facilities so people can fully understand the sacrifice that takes place? guest: 1 in the things we are

putting in place is to enhance the visitor experience through not only a new tour mobile but also there are visitors center. we do realize the value of this hallowed ground to not only our veterans but for future generations to learn and explore about arlington and military service and all of those that sacrifice for our nation and our freedoms. host: north carolina. the democrats line. caller: i was -- are there any other well-known sports actors their? -- sports and actives there? guest: there are many notable americans to have contributed significantly. this goes back to what mrs.

condon mentioned. to explore these grounds, i come out here every day. every day i see something i did not realize. i look at a headstone in see the history. i learn a little bit more about my country. the with the veterans day coming up, we will pause here to remember our soldiers and servicemen and women who have fallen. it is a day to honor those who are with us. to show our appreciation and spend time with us. when you come to arlington and you walk on these grounds, it tugs at your heart. you really do know when the price of freedom is. you do know about the service and sacrifice that rests here. we are mindful of that every day. guest: we have a new website

arlingtoncemetery.mill where you can explore the rich history of his is buried here by going online at our new web site. host: is the website searchable? guest: it is. it is arlingtoncemetery.mil host: will digital pictures be available? guest: that is what the future applications we will put in place as well as an application for any of your smart phones where you can literally in digitally okayed or a loved one is buried here in the cemetery. we are a couple months away from that. you will soon be able to look at your smartphone and locate anyone who is buried here in cemetery. host: south carolina. democrat line. beautifulall got a

cemetery. i have several family members better in the military, marines, representing all four branches. my question is that i have seen it on tv, the cemeteries in the movies. the headstones play a part. do you still leave them? and do you take them up when the scene is shot? guest: if they use what you described one of the nature headstone. they normally will pan so you will see the actual headstones. if they do a scene as a grave sites and it is for a movie, that's done would be removed. that would just be a replica of a government headstone. it will not be left out there. guest: we respect the privacy of

each and every loved one who is buried here. host: are reservists able to gain access to arlington? guest: they are eligible and they are on a retired list and receiving retirement pay. everyone has access to arlington. to the cemetery belongs to the american people. host: virginia. independent line. caller: i been touring the cemetery since 1959. i they ogle buried there. i used to hear the bridge i haven't and -- i have an uncle buried here. [unintelligible] has the bell been disabled the? does is still running? guest: i am not aware of any issues or problems.

as i wonder these grounds, i've heard them bringing across the fields. guest: i heard them rining yesterday. host: if someone to visit, what would you advise as far as this strategy? guest: one of the first things i would advise them is to put on very comfortable walking shoes. we have 624 acres of the cemetery. every headstone has a story. do not just explore the site said the tourist normally go to. what amongst the 70 sections. that is where the true history is. host: massachusetts. good morning. veterans line. caller: good morning. i am convinced of your device

devotion to duty. i appreciate c-span giving the american people a chance to be involved. my question is regarding our territories such as qualm and pr. -- guam and pr? are they allowed to be in turned? guest: if they are eligible and a surge honorably, -- and served honorably, they do come back and are here. host: what did the operating hours? guest: visitors hours, depending on season, 8:00 a.m. to 4:00 p.m. in the wintertime, later in the summertime based on the time

of the season. operationally, we have different tours of duty for our staff. host: going back to how we started as far as making sure people are categorized correctly, what thosgoes on from here? guest: as i stated previously, we have completely digitized the operation at arlington. our accounting will carry that forward where we will have a photo of each and every gravesides which will be digitally attached to the records that are buried of the individuals here. we are also working to expand the cemetery grounds for the future at arlington. host: you talked about having a

process. who oversees that t? guest: everyone at arlington is responsible. myself, and the deputy, the supervisors, a senior members, that responsibility lies with all of us. she spoke to digitizing the records. we're also going to leverage that technologies that we can operate effectively into the 21st century. people bury people. all about technology. we do wanted to improve to help us track and do a better job of maintaining these grounds. host: the louisiana. we are just about to go to an event. go ahead. i can for second everyone's opinion that this is

a great, awesome, a very stimulating discussion. it is a worthy institution. the question i have is are there any reports, a history of -- are there any instances where the paranormal or supranatural or what can be considered just downright out of the ordinary? have there been any instances of that? guest: not that i am aware of. i've no personal experience of that. i am not aware of it. i am sure walking around here at night with the leaves falling and the various sounds, one can literally wonder about such things. host: our guests are patrick hallinan, the