Ayman Cheta - SGSUSAPI CRE Meeting, April 18, 2007 Counterfeit Parts /Materials Why should we care?

Ayman Cheta - SGSUSAPI CRE Meeting, April 18, 2007 Agenda 1. Why Should we care? 2. Can it happen to us? 3. Types of counterfeit. 4. What can we do to reduce vulnerability?

Ayman Cheta - SGSUSAPI CRE Meeting, April 18, 2007 Why should we care? Project: Huadian Datong 2x300 MW - China Operation: In commissioning for six weeks at the time of failure. Date of failure: 10/31/06 Fluid conditions: Steam at 2538 psig (175 barg), 1006 ºF(541ºC) Material: ASTM A335 P91 – 18” OD, in (43mm) wall (seamless pipe) Result: two people died, others are still listed as critical, and many were injured.

Ayman Cheta - SGSUSAPI CRE Meeting, April 18, 2007 Why should we care? … Continued Counterfeit kills. Undetected counterfeit items can cause electrical or mechanical failure that may lead to death, personnel injury, or property damage. Victims include nuclear power plants, aircraft manufacturers, airlines, petroleum companies, … Numerous recent incidents are reported in industry and government websites. Industrial items that are commonly counterfeited include high- strength mechanical fasteners (e.g., bolts, washers, and nuts), lifting equipment (e.g., slings, shackles, and clevises), valves, pipe-fittings, flanges, batteries, extension cords, electrical circuit breakers, relays, connectors, and other electronic components, lubricants, and adhesives.

Ayman Cheta - SGSUSAPI CRE Meeting, April 18, 2007 Why should we care? … Continued Examples of locations in which counterfeit items have been discovered include: cranes, elevators, and fork lifts: critical load paths of lifting equipment; aircraft: engines and attachments, wings, tails, or landing gear; vehicles: engines, brakes, or steering mechanisms; and facilities: valves, compressors, and vessels used to contain radioactive fluids, high temperature or high-pressure steam or fluids, or other hazardous material or safety systems supporting safe operation or shutdown of a facility or process.

Ayman Cheta - SGSUSAPI CRE Meeting, April 18, 2007 Can it happen to us?

Ayman Cheta - SGSUSAPI CRE Meeting, April 18, 2007 Can it happen to us? … Continued It did happen in petrochemical companies, no one is immune. Incidents are not widely publicized because of lack of awareness as well as for legal reasons. Additionally, there is no formal process for reporting/tracking such incidents. Level of vulnerability differs from one part of the world to another and from one company to another.

Ayman Cheta - SGSUSAPI CRE Meeting, April 18, 2007 Types of counterfeit 1.Large scale manufacturing of counterfeit items fraudulently marked or labeled as being manufactured by a well-known, reputable company – Typically originates in low-cost countries and exported globally. Typical target is major projects. Sometimes exported “unlabeled”, and then fitted with fraudulent nameplate and certification in the country where it will be sold. 2.Resale of used/refurbished/modified items fraudulently as new – Typically takes place in developed countries 3.Sometimes counterfeit parts are sold to equipment manufacturers to become part of an assembled products (e.g., studs/bolts becoming parts of valves, pumps, compressors, heat exchanges … etc.)

Ayman Cheta - SGSUSAPI CRE Meeting, April 18, 2007 What can we do to reduce vulnerability? This is a global threat, and should be addressed at global level. The petroleum industry should learn from the DOE, nuclear industry, aircraft and airline industries. These industries see “undetected counterfeit items” as a serious threat to safety. Safety manuals of the DOE facilities as well as FAA have sections on prevention / control of counterfeit items. DOE and FAA have training programs for employees and contractors involved with receiving or installing items commonly counterfeited, on how to recognize suspicious items.

Ayman Cheta - SGSUSAPI CRE Meeting, April 18, 2007 What can we do to reduce vulnerability ? …. Continued. Examples of what other industries are doing: 1.The Government-Industry Data Exchange Program The GIDEP (Government-Industry Data Exchange Program) is a cooperative activity between Government and Industry participants seeking to reduce or eliminate expenditures of time and money by making maximum use of existing knowledge. 2.The Federal Aviation Administration has an “Unapproved Part Notification” (UPN) system that notifies all the potential end users in the aviation industry when a suspect unapproved part is identified. The Suspected Unapproved Parts (SUP) Program is the FAA's focal point for the investigation of suspect aviation parts. Despite vigilant surveillance and enforcement by the FAA, some parts circumvent the regulatory controls stated in Title 14 of the Code of Federal Regulations and enter the aviation stream of commerce. When such parts are discovered, they are regarded as "suspect." The SUP Program coordinates the investigations of these suspect parts. In addition, the program provides SUP-related policy, training, and technical information and analyses.