DLA Reimburses Trusted Suppliers for SigNature DNA Marking of High-Reliability Electronic Parts

STONY BROOK, NY--(Marketwire - Jan 28, 2013) -  Applied DNA Sciences, Inc. (OTCBB: APDN), (Twitter: @APDN), a provider of DNA-based anti-counterfeiting technology and product authentication solutions, today welcomed the announcement by the U.S. Defense Logistics Agency (DLA) that the Agency would subsidize APDN's SigNature DNA marking for defense suppliers who provide designated high-reliability electronics to the Agency. The announcement, published as an "Update" on the DLA Bid Board System (DIBBS) web site on January 24, 2013, also emphasized that "effective immediately, only trusted sources who comply with Deoxyribonucleic Acid marking requirement in DLAD 52.11-9074 are eligible to receive FSC 5962 awards from DLA. There are no exceptions."

The text of the DIBBS announcement, which also appeared on DLA's on line Supplier Information Resource Center (SIRC), explains that the Agency will "reimburse trusted sources who receive awards for the direct costs of the annual DNA marking license that must be obtained from Applied DNA Sciences..."

The announcement also notes that "trusted sources will be reimbursed through a CLIN for 'Contractor DNA Marking' in the award document. Those companies will be reimbursed for one license per year." The acronym 'CLIN' pertains to the DLA Contract Line Item Number system. The "license" to which DLA refers includes the costs for the creation and archiving of an annual mark specific to a single trusted supplier.

Since November 15, 2012, SigNature DNA marking from APDN has been required for use by suppliers who are awarded contracts to provide electronic parts in the FSC 5962 category, a mandate written into the DLAD clause noted above. 

The January 24 announcement is the first time that the subsidy and trusted sources details have been released.

Janice Meraglia, Vice President for Government and Military Programs at APDN, said, "By subsidizing the cost of the DNA program to those trusted suppliers who win awards, DLA continues to stand firm in its commitment to our service men and women."

Applied DNA Sciences CEO and President, Dr. James A. Hayward commented:

"DLA has lowered any barrier to compliance with the DNA mandate by implementing subsidized costs and safe procurement through trusted sources. It is a formula that could be powerfully applied to other high-risk categories of parts provided to DLA, and to other government agencies.

"For electronics businesses, the cost/benefit ratio is significantly enhanced. Return-on-DNA-investment will one day be measured in market share recovered by original manufacturers, and in equipment and lives saved from the hazards of counterfeit electronics."

High-risk categories in the military supply can include load-bearing parts like ball-bearings, and other critical parts such as O-rings, fasteners, and brake shoes. These parts are thought to be widely counterfeited. In the commercial sector, fake medical and automotive parts are reported to be common, creating a comparable threat. DLA addressed these issues in a press release on October 31, 2012, stating, in a FAQ about SigNature DNA marking:

"DLA is initially targeting microelectronics, but the technology is used with other commodities commercially and has broad implications for other DLA products and equipment at risk for counterfeiting."

DLA Director Mark Vice Admiral Mark Harnitchek has called the mandate requiring SigNature DNA marking for all FSC 5962 electronics, one of "four big things" that the Agency is doing to stem the tide of counterfeit parts flowing into the military supply.

Meanwhile, in recent weeks, APDN has taken more steps concerning its SigNature DNA marking and authentication platform and bolstering its plant and staff.

• A new "third party marking" option for suppliers has been announced, whereby APDN has agreed with well-known companies to apply DNA marking, for ease in ramp-up, logistics, training, and support. This includes the well-known testing and inspection house Premier Semiconductor, and the noted independent distributor SMT.
  
  
• Extensive testing for stability and impact has been performed on SigNature DNA electronics marking platform by well-known laboratories. The platform has passed all tests with complete success and made results available to interested parties.
  
  
• Personnel have been added, and plant capacity increased by over 50%.
  
  

Dr. Hayward commented, "We stand ready to respond to all industry inquiries. Our recently announced third-party marking alliances will allow trusted suppliers a rapid response team to facilitate contract awards."

About Applied DNA Sciences

APDN is a provider of botanical-DNA based security and authentication solutions that can help protect products, brands and intellectual property of companies, governments and consumers from theft, counterfeiting, fraud and diversion. SigNature® DNA and smartDNA, our principal anti-counterfeiting and product authentication solutions that essentially cannot be copied, provide a forensic chain of evidence and can be used to prosecute perpetrators. 

The statements made by APDN may be forward-looking in nature. Forward-looking statements describe APDN's future plans, projections, strategies and expectations, and are based on assumptions and involve a number of risks and uncertainties, many of which are beyond the control of APDN. Actual results could differ materially from those projected due to our short operating history, limited financial resources, limited market acceptance, market competition and various other factors detailed from time to time in APDN's SEC reports and filings, including our Annual Report on Form 10-K, filed on December 20, 2012 and our subsequent quarterly reports on Form 10-Q. APDN undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date hereof to reflect the occurrence of unanticipated events.

Text of announcement appearing on DLA Internet Bid Board System (DIBBS) and DLA Supplier Information Resource Center (SIRC) on January 24, 2013:

DNA Authentication Marking on Items in FSC 5962 - UPDATE

DNA Marking requirements are unique to FSC 5962 and are being instituted for the safety of our service men and women.  Effective immediately, only trusted sources who comply with Deoxyribonucleic Acid (DNA) marking requirements in DLAD 52.211-9074 are eligible to receive FSC 5962 awards from DLA. There are no exceptions.

Trusted sources are defined as either an original component manufacturer (OCM), a supplier on the qualified suppliers list of distributors (QSLD), an original equipment manufacturer (OEM), an authorized distributor, a manufacturer on the qualified manufacturers list (QML), a supplier on the qualified testing suppliers list (QTSL), or the manufacturer of generalized emulated parts (SRI).  All trusted sources except those listed on the QTSL must have full traceability documentation for the item being procured.

DLA recognizes there are situations where small businesses and other trusted sources of FSC 5962 are not prepared to comply with the new DNA marking requirements within the cost constraints and time frames required for product deliveries.  Therefore, DLA is implementing a strategy to reimburse trusted sources who receive awards for the direct costs of the annual DNA marking license that must be obtained from Applied DNA Sciences (unique DNA mark, ink, authentication program, monthly reports, detector set (UV and IR), and training).  Trusted sources will be reimbursed through a CLIN for "Contractor DNA Marking" in the award document.  DLA will track reimbursements to ensure that trusted sources are only reimbursed for one license per year. 

Posted: 1/24/2013