1. Counterfeit, Fraudulent & Suspect Items Awareness Training

2. ONR Initiative
The nuclear industry has seen increasing levels of supply chain related events related to Counterfeit, Fraudulent & Suspect Items (CFSI), some of which have impacted significantly on plant operations. The ONR requires nuclear site licence holders to have adequate Supply Chain Management (SCM) arrangements & Processes / Procedures in place to ensure the delivery of nuclear plant and equipment and services are ‘right first time’ This presentation promotes awareness within Magnox and its Supply Chain
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3. Definition of CFSI from the ONR
Counterfeit – Items that are intentionally manufactured or altered to imitate a legitimate product in order to pass themselves off as genuine. Counterfeit products can be deficient materially or inability to reliably function to the specified conditions.
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4. Definition of CFSI from the ONR
Fraudulent - Items that are misrepresented with intent to deceive, including items with incorrect identification or false certifications. They may also include items sold by entities that have acquired the legal right to manufacture a specified quantity of an item, but produce a larger quantity than authorised and sell the excess as legitimate inventory.
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5. Definition of CFSI from the ONR cont.
Suspect – An item about which there is an indication by visual inspection, testing or other preliminary information that it may not conform to accepted standards, specifications and technical requirements and that the item may be counterfeit, fraudulent or nonconforming. Item – Although I stands for item, it can be a service. Items include components, assemblies, vessels, civil structural components, structures and facilities. Whilst services include design, inspection, technical support and peer review.
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6. Industry CFSI awareness: Electrical / Electronic
BEAMA’s – Counterfeit Kills Campaign
Annually around £30 million worth of electrical counterfeit enters the UK market
Fakes never comply with British or European Safety Legislation and pose a real danger of electrocution, explosion or fire when installed
Mainly electrical accessories – plugs, sockets, switches, plus circuit protection devices such as fuses and circuit breakers
Electronic Obsolescence – unknown supply chain / provenance, premature equipment failure, equipment mal-function, potential Cyber Security issues
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7. Industry CFSI awareness: Cables
Approved Cables Initiative (ACI)
Millions of meters of sub-standard cable has been discovered and some already installed
Non-compliant earthing cable, sold as 10mm2 – only suitable as 6mm2
Non-compliant armoured cables, sold as 35mm2 – only suitable as 25mm2
Non-compliant fire resistant cable, insulation and sheath fail within 2 minutes instead of 30 minutes
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8. Industry CFSI awareness: Steel for Concrete Construction
UK Certification Authority for Reinforcing Steels (CARES)
Prior to CARES supply of reinforcing steels to the UK suffered by:
Steel failed to meet the required British Standard
Misleading and falsification of test certificates
Excessive variability's in mechanical properties
Certification by CARES can be used by the manufactures in support of Construction Products Directive CE Mark
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9. Industry CFSI awareness: PPE
The British Safety Industry Federation (BSIF) has warned that “never before” has it seen such widespread evidence of Health and Safety product failures to meet performance standards.
Recent examples have been on safety footwear with toe cap compression tests and leather glove failings. These examples come on top of previous instances of failures in safety hats and hi-vis clothing
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10. Industry CFSI awareness: CE Marking
The use of the CE Mark implies that the manufacturer has complied with all Directives relating to the product.
The person or legal entity (e.g. a company) who affixes the CE marking on the product is legally responsible for the claimed compliance with the appropriate Directives.
Where CE marking arrangements have not been properly applied, prosecution can follow.
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11. Typical CFSI in the wider nuclear community (IAEA TECDOC-1169)
South Korea & Canada – fraudulent test certificates for control valves.
UK – suspect lifting bolts potentially used for 500t lift of vessel
UK – counterfeit circuit board chips used for obsolescence replacement
USA – counterfeit bolt/fasteners used to secure loads, including hazardous wastes and radioactive materials.
USA – multiple examples of counterfeit valves, replacement parts and circuit breakers installed at sites
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12. ONR requirements for CFSI arrangements (TAG-77)
Robust Procurement & SCM arrangements including oversight, assurance including inspection & testing
Competent staff from procurement to receipt of items
Material or component traceability back to source supplier
Use of positive material identification and destructive testing methods during product inspection, testing & receipt as part of assurance sampling of high risk proprietary items
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13. ONR requirements for CFSI arrangements (TAG-77) cont.
Product samples of known precision and authenticity for comparison with purchased items
Training and awareness within the purchasing organisation
Processes and procedures to identify, record, and share lessons learnt
Benchmarking with other purchasers
Requirements clearly defined in contract T&Cs
The destruction of non-conforming items to prevent re-entry into Supply Chain as genuine items
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14. Risk Reduction – Risk and Confidence Model for the Supply Chain
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15. Recognising ‘At Risk’ Procurements
Typical examples of ‘at risk’ procurements:
Product is known to be susceptible to counterfeiting
OPEX had identified receipt suspected CFSI of similar type
Product has long been considered unavailable on open market
Scrapping and/or rework of non-conforming product will be extremely costly for the supplier
Supplier is not the Original Equipment Manufacturer (OEM), an authorised distributor or is new / unknown
Supplier takes exception to anti CFSI clause
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16. Recognising ‘At Risk’ Procurements
Supplier is dismissive or nonresponsive to Magnox concerns regarding supplier protections against and experience with CFSIs
Supplier in poor or declining financial position
Cost per unit is significantly lower than other quotes or previous purchase prices
Procurement process is on an expedited schedule (e.g. critical path for an outage or major project)
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17. Procurement, Supply Chain & Programme Management
Recognise and identify any ‘at risk’ procurements
Consider enhanced inspections or testing for ‘at risk’ procurements
Ensure procurement requirements related to CFSIs are passed down to the Supply Chain (i.e. Works Information)
Screen / audit suppliers to determine if they are aware of and take precautions against CFSIs and manage their supply chain accordingly (i.e. PQQs, Tenders and Audits)
Communicate concerns about CFSIs to every supplier
Request that suppliers provide information about known incidents of CFSIs involving products they provide
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18. Procurement, Supply Chain & Programme Management
Preferentially award procurements to authorised distributors or OEMs whenever possible
Look for signs that suppliers may be providing CFSIs, such that bids are significantly lower than other bids or historical average unit costs
Review technical changes to and deviations from procurement documents
Evaluating and characterising Suspect Items
Participating in audits, inspections and tests to verify the performance of items or suppliers
Provide technical support to product receipt and acceptance
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19. Procurement, Supply Chain & Programme Management
Performing technical work associated with part substitution or plant modifications / design changes including obsolescence management
Documenting CFSI occurrences and ensuring the Chief Engineers Office is informed for wider dissemination
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20. Inspection, Installation and Acceptance Testing
General:
Early identification of CFSI is essential to minimise the impact on safety, environment, costs and work schedule.
Generally Quality and Inspection personnel are most likely to identify suspect items.
When identification of an abnormal condition occurs, then the item should be considered suspect until a subsequent investigation demonstrates the item to be Genuine, Counterfeit, Fraudulent or Non-Conforming.
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21. Inspection, Installation and Acceptance Testing
Factory Inspections:
These inspections occur at various major manufacturing steps and Factory Acceptance Tests prior to shipment
More detailed inspection of components can also be considered including destructive and non-destructive tests of materials to conform tractability and material properties
Inspections should be conducted based on the complexity of the product and its importance for safety and reliability
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22. Inspection, Installation and Acceptance Testing
Factory Inspections:
Inspections need to check that traceability records are kept accurately and that unique identification numbers are properly transferred to the products as they proceed through manufacturing
Inspection checks are based on observation of manufacturing steps but also on certification documentation, as CFSI can hide behind fraudulent documentation
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23. Inspection, Installation and Acceptance Testing
Receipt Inspections:
Receipt inspections can cover such items as confirming the identity of the incoming item, conforming documentation and look for potential signs of CFSI
If discrepancies are noted, the Suspect Items should be physically separated / quarantined to prevent inadvertent use until the issue can be resolved
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24. Inspection, Installation and Acceptance Testing
Pre-Installation Checks / Site-Acceptance Testing:
Once an item is withdrawn from stores for installation, as a minimum the items are visually inspected, prior to some sort of testing or commissioning process
The staff involved in these activities are the final barrier to CFSI being installed and they should also look for potential signs of CFSI including things like:
Poor fit up with other items
Discrepancies between the installed item and its replacement
Failure to meet the operating requirements
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25. Counterfeit household products can cause injury, fire and can KILL
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26. Counterfeit household products can cause injury, fire and can KILL
Remember the 3 Ps
Person
Place
Price
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27. Questions?
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