1. Rick Roelecke Director, Corporate Quality Management July 26 th, 2016 L-3 Communications DoD Policy Implementation

2. 1 1. Implement A Strict DMSMS Program 2. Manage your End of Life notices 3. Control ID Purchases, OEM/OCM or Franchised sources only, make it hard to purchase from IDs 5. Control Your Independent Distributors and Suppliers 6. Define state of the art authenticity inspection and test requirements 7. Track and Document Lessons Learned 4. Assure engineering change and remanufacturer assessments are conducted prior to authorizing ID purchases 8. Impound and Report any Counterfeit Parts 9. Influence Your Customers To Support Re-Design Efforts 10. Educate Your Workforce And Subcontractors L-3’s Counterfeit Program

3. 2 l A strict DMSMS program must monitor and measure the obsolescence management process n Number of open End of Life (EOL) actions n Cycle time to close EOL actions n Cost avoidance for closing EOL actions n Integration of EOL status in design tools at part selection n Use of EOL data during the proposal stage l Making it hard to purchase parts from Independent Distributors (IDs) n Mandating use of original manufacturers and their Authorized Distributors (ADs) and/or Resellers (ARs) n Procedures to validate ADs, ARs, and After-market Manufacturers n Processes to document engineering rational for no design changes, alternate parts, or after-market options prior to approving all P.O.s to IDs n A comprehensive set of inspection and test requirements for authenticity of parts that exceed current SAE standards –100% Visual inspection –100% X-Ray –SEM Analysis Highlights of DoD Policy Implementation

4. 3 l Supplier Controls n Limiting the number of approved IDs to less than 4 n Physical audits of IDs –Assuring degreed engineers run lab operations –Trained technicians performing the inspections and tests (e.g. ICE-3000 certifications) –Process proofing n Physical audits of Contract Manufacturers (CMs), Maintenance Repair and Overhaul (MRO) services, and major/critical suppliers for counterfeit mitigation programs n Not allowing any suppliers to purchase parts from IDs without approval l Training n Automated and interactive training course, addresses all departments n Providing supplier training courses and materials l Monitoring Industry Counterfeit Information and Reporting Incidents n Automated process that screens GIDEP reports to each division’s BOMs and requires division to disposition impact, responsiveness measured and reported n Assuring all incidents are reported to ERAI and GIDEP, including incidents identified at the IDs Highlights of DoD Policy Implementation

5. 4 l Concerns and Loopholes n Concerns with current definition of trusted suppliers that allows IDs with mitigation processes to be “trusted” –Allows wiggle room for IDs to be approved to procure parts from ADs and IDs –Concerned with recent trend on IDs die mining parts to remanufacture them using approved/proven processes and then being categorized as trusted/authorized After-market Manufacturers n Unsure what constitutes the documentation necessary for “a government approved counterfeit mitigation program” n Concerned with impact on proposed rule on reporting all nonconformances –GIDEP reporting and monitoring is costly l Additional Policy n None DoD Policy Concerns