Why is the US military procuring Cisco equipment from any retailer other than Cisco itself? Even if the devices weren’t counterfeit, the seller could install implants in them.
If it's a part of an "official" system/package from a big defense contractor there's little chance it's counterfeit. There's quite of bit of scrutiny there, unless the contractor providing that system is buying these off Amazon which seems the lest likely scenario. But maybe a small company setup with the sole purpose of winning the bid for an F-15 simulator bids so low that they do buy this stuff, it's possible.
As others mentioned, there are layers of rules about justification if you don't go for the lowest price, preference for small business, and getting bids.
Finally, if you just need something, the person ordering the item isn't the person buying the item. The IT professional orders a Cisco router, provides some possible places to source it and turns that into contracting/procurement. The procurement team will then actually go buy it and often they will go try to find the cheapest option and they're not experts so they'll often buy the wrong damn thing entirely. Want a 500ft roll of yellow shielded Cat6? Here's 1000ft of blue UTP Cat3 because "it was cheaper".
Sometimes IT isn't even consulted. The engineers with no IT background will just buy equipment and shove it in without a second thought. Lord knows where they get the equipment at that point.
I had a network guy I know at another defense contractor once tell me he just came back from a IT freakout because engineering was just finishing a classified project and they literally never told IT about all the internal networking it contains. Apparently the IT guys themselves spent a weekend even installing steel plates over the network panels to the networking in a hurry to cover their bases. Lol
Just one procurement officer with the slightest doubt, and calling up someone at Cisco HQ to double check a serial number, would have discovered this scam almost instantly.
Unless they are already part of a well established contractor. And even then at least a few dozen sets of eyeballs are going over the paperwork from my understanding.
Probably the other seller offered a lower price.