FBI: Counterfeit Hardware Threatens IT Networks Counterfeit Cisco Systems equipment is finding its way into federal computer networks partly because of the government’s insistence on buying from the lowest bidder with minimal background checks, according to an FBI document. The FBI briefing paper, first reported by Nextgov.com, summarizes an international investigation into the sale of counterfeit Cisco hardware. Cisco, of San Jose, CA, controls 80% of the market for networking equipment. Since many of the counterfeits came from China, the FBI briefers questioned whether the purpose was “for profit or state-sponsored?” They noted that the equipment could be constructed “to gain access to otherwise restricted systems.” The FBI said procurement policies contribute to the government’s vulnerability to counterfeits by favoring the lowest bidder and using several layers of subcontractors that are hard to track. It said the pressure for low prices tempts vendors to substitute black- and gray-market products. After a two-year investigation called “Operation Cisco Raider,” the Justice and Homeland Security departments announced in February that federal agents had seized 77,500 counterfeit Cisco network components and labels valued at more than $76 million. The agencies said the ongoing investigation has led to the conviction of two businessmen and the indictment of two others for trafficking in counterfeit Cisco products. Another case is pending in Canada. “Crimes like these threaten international commerce, national security and the very safety of our citizens,” said Julie Myers, assistant secretary of homeland security for immigration and customs enforcement. The Justice Department said Cisco “provided exceptional assistance” to investigators.