[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]


                                     

                         [H.A.S.C. No. 115-111]

                     MILITARY TECHNOLOGY TRANSFER:

                    THREATS, IMPACTS, AND SOLUTIONS

                     FOR THE DEPARTMENT OF DEFENSE

                               __________

                      COMMITTEE ON ARMED SERVICES

                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD

                             JUNE 21, 2018


                                     
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT] 


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                    U.S. GOVERNMENT PUBLISHING OFFICE                    
33-384                      WASHINGTON : 2019                     
          
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                      COMMITTEE ON ARMED SERVICES
                     One Hundred Fifteenth Congress

             WILLIAM M. ``MAC'' THORNBERRY, Texas, Chairman

WALTER B. JONES, North Carolina      ADAM SMITH, Washington
JOE WILSON, South Carolina           ROBERT A. BRADY, Pennsylvania
FRANK A. LoBIONDO, New Jersey        SUSAN A. DAVIS, California
ROB BISHOP, Utah                     JAMES R. LANGEVIN, Rhode Island
MICHAEL R. TURNER, Ohio              RICK LARSEN, Washington
MIKE ROGERS, Alabama                 JIM COOPER, Tennessee
BILL SHUSTER, Pennsylvania           MADELEINE Z. BORDALLO, Guam
K. MICHAEL CONAWAY, Texas            JOE COURTNEY, Connecticut
DOUG LAMBORN, Colorado               NIKI TSONGAS, Massachusetts
ROBERT J. WITTMAN, Virginia          JOHN GARAMENDI, California
DUNCAN HUNTER, California            JACKIE SPEIER, California
MIKE COFFMAN, Colorado               MARC A. VEASEY, Texas
VICKY HARTZLER, Missouri             TULSI GABBARD, Hawaii
AUSTIN SCOTT, Georgia                BETO O'ROURKE, Texas
MO BROOKS, Alabama                   DONALD NORCROSS, New Jersey
PAUL COOK, California                RUBEN GALLEGO, Arizona
BRADLEY BYRNE, Alabama               SETH MOULTON, Massachusetts
SAM GRAVES, Missouri                 COLLEEN HANABUSA, Hawaii
ELISE M. STEFANIK, New York          CAROL SHEA-PORTER, New Hampshire
MARTHA McSALLY, Arizona              JACKY ROSEN, Nevada
STEPHEN KNIGHT, California           A. DONALD McEACHIN, Virginia
STEVE RUSSELL, Oklahoma              SALUD O. CARBAJAL, California
SCOTT DesJARLAIS, Tennessee          ANTHONY G. BROWN, Maryland
RALPH LEE ABRAHAM, Louisiana         STEPHANIE N. MURPHY, Florida
TRENT KELLY, Mississippi             RO KHANNA, California
MIKE GALLAGHER, Wisconsin            TOM O'HALLERAN, Arizona
MATT GAETZ, Florida                  THOMAS R. SUOZZI, New York
DON BACON, Nebraska                  JIMMY PANETTA, California
JIM BANKS, Indiana
LIZ CHENEY, Wyoming
JODY B. HICE, Georgia
PAUL MITCHELL, Michigan
(Vacancy)

                      Jen Stewart, Staff Director
                         Tim Morrison, Counsel
                      William S. Johnson, Counsel
                          Justin Lynch, Clerk
                            
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page

              STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

Smith, Hon. Adam, a Representative from Washington, Ranking 
  Member, Committee on Armed Services............................     2
Thornberry, Hon. William M. ``Mac,'' a Representative from Texas, 
  Chairman, Committee on Armed Services..........................     1

                               WITNESSES

Bingen, Hon. Kari A., Deputy Under Secretary of Defense for 
  Intelligence, Department of Defense............................     8
Chewning, Eric, Deputy Assistant Secretary of Defense for 
  Manufacturing and Industrial Base Policy, Department of Defense    10
Griffin, Hon. Michael D., Under Secretary of Defense for Research 
  and Engineering, Department of Defense.........................     4
Schinella, Anthony M., National Intelligence Officer for Military 
  Issues, Office of the Director of National Intelligence........     5

                                APPENDIX

Prepared Statements:

    Griffin, Hon. Michael D., joint with Anthony M. Schinella, 
      Kari A. Bingen, and Eric Chewning..........................    42
    Smith, Hon. Adam.............................................    40
    Thornberry, Hon. William M. ``Mac''..........................    39

Documents Submitted for the Record:

    Chart: China's Technology Development Strategy...............    55

Witness Responses to Questions Asked During the Hearing:

    [There were no Questions submitted during the hearing.]

Questions Submitted by Members Post Hearing:

    Ms. Rosen....................................................    60
    Ms. Speier...................................................    59
                     
                     
                     
                     MILITARY TECHNOLOGY TRANSFER:

                  THREATS, IMPACTS, AND SOLUTIONS FOR

                       THE DEPARTMENT OF DEFENSE

                              ----------                              

                          House of Representatives,
                               Committee on Armed Services,
                           Washington, DC, Thursday, June 21, 2018.
    The committee met, pursuant to call, at 10:01 a.m., in Room 
2118, Rayburn House Office Building, Hon. William M. ``Mac'' 
Thornberry (chairman of the committee) presiding.

  OPENING STATEMENT OF HON. WILLIAM M. ``MAC'' THORNBERRY, A 
    REPRESENTATIVE FROM TEXAS, CHAIRMAN, COMMITTEE ON ARMED 
                            SERVICES

    The Chairman. The committee will come to order. In his 
January 19, 2018, remarks on the National Defense Strategy, 
Secretary Mattis warned that, quote, ``our competitive edge has 
eroded in every domain of warfare, air, land, sea, space, and 
cyberspace, and it is continuing to erode,'' end quote.
    Now much of that erosion has been caused by things we have 
done to ourselves; sequestration and continuing resolutions 
come to mind. But part of the erosion in our competitive edge 
is the result of adversaries and competitors obtaining American 
technology and intellectual property by legal and often illegal 
means.
    In its January 2018 report, China's Technology Transfer 
Strategy, DIUx [Defense Innovation Unit Experimental] found 
that the People's Republic of China, for example, uses a 
variety of methods to obtain U.S. technology, including 
industrial espionage, where China is by far the most aggressive 
country operating in the United States; cyber theft on a 
massive scale, deploying hundreds of thousands of Chinese Army 
professionals; academia, since 25 percent of U.S. STEM 
[science, technology, engineering, and math] graduate students 
are Chinese foreign nationals; China's use of open-source 
information, cataloging foreign innovation on a large scale; 
Chinese-based technology transfer organizations; U.S.-based 
associations sponsored by the Chinese government to recruit 
talent; and technical expertise on how to do deals learned from 
U.S. firms.
    That report noted that the cost of stolen intellectual 
property has been estimated at $300 billion a year. Most 
alarming, DIUx found that--again, I will quote--``[t]he U.S. 
does not have a comprehensive policy or the tools to address 
this massive technology transfer to China,'' and ``[t]he U.S. 
government does not have a holistic view of how fast this 
technology transfer is occurring, the level of Chinese 
investment in U.S. technology, or what technologies we should 
be protecting.'' That is the end of the quote.
    Now I understand that the DIUx report is just one report, 
but based on everything this committee has learned and heard 
about over the course of this year, those conclusions sound 
right to me, and it should be alarming. There are several 
provisions in the upcoming NDAA [National Defense Authorization 
Act] conference which relate to this issue, including the 
modernization of CFIUS [Committee on Foreign Investment in the 
United States] and export control regime. This hearing will 
better equip us to make important decisions in the days ahead.
    Let me yield to the ranking member for any comments he 
would like to make.
    [The prepared statement of Mr. Thornberry can be found in 
the Appendix on page 39.]

STATEMENT OF HON. ADAM SMITH, A REPRESENTATIVE FROM WASHINGTON, 
          RANKING MEMBER, COMMITTEE ON ARMED SERVICES

    Mr. Smith. Thank you, Mr. Chairman. I think the most 
important part of your statement was at the end there, is that 
we do not have a strategy to counter what is happening. I think 
the chairman is right and the Secretary of Defense is correct. 
Our advantage in a number of different areas has been eroding.
    Now the biggest reason for that, I believe, is that the 
rest of the world is catching up. I mean, there was a 
substantial period of time there when it was really just the 
Soviet Union and us who were building, on a significant level, 
our military capacity. And we dominated the world economically 
and militarily post-World War II for a long period of time.
    That was never going to last forever. The rest of the world 
was going to develop ways to grow their economies, grow their 
technology, and eventually turn towards growing their defense, 
and that is what has happened. But what has not happened on our 
end is we have not responded to that. Our strategy still seems 
to be based on the notion that we are still dominant, so we do 
not have to worry about these details, and I think that is 
dangerous and that we need to develop.
    And I will just mention a couple of key areas, most of 
which the chairman mentioned. But to begin with, the CFIUS 
process of protecting our technology has long needed reform. 
Items that were not thought of as being national security are. 
Technology; how do we protect that? How do we make sure that 
adversaries are not purchasing those companies and taking away 
our technology?
    I think what the Senate added to the defense bill is a 
great opportunity for us to update that process to help protect 
our technologies through the CFIUS process. And we have to get 
that right, and we are going to try to do that in the next 5, 6 
weeks, so we definitely want to be in touch, make sure the 
language is right, make sure what we are doing in that part is 
correct.
    The second piece of this is on the cyber piece, and we had 
a briefing yesterday on a cyber breach, and it was shocking how 
disorganized, unprepared, and quite frankly, utterly clueless 
the branch of the military was that had been breached. Even in 
this day and age, we still have not figured out how to put 
together a cyber policy to protect our assets. In particular, 
with our defense contractors, who we work with, who store our 
data, but do not have adequate protection. But even within the 
DOD [Department of Defense], we do not have a clear, cohesive 
policy to put in place.
    And the third area of policy we do not have is we do not 
have an industrial policy. And again, I think this is a legacy 
of our dominance. We did not have an industrial policy because 
we were dominant. In fact, an example from my own neck of the 
woods, Boeing. Why is Airbus able to be subsidized and 
competitive? Well because decades ago, we agreed to allow them, 
in many instances, to do that. And we did that because at the 
time, we had like 85 percent of the global aircraft 
manufacturing market, and we thought, well, is it not cute? 
Airbus wants to compete, whatever, it does not really matter to 
us. Well, here we are with that flipped. They have stepped up 
and competed.
    And now, we have not come through with a sensible idea of 
what technologies, what industries do we need to protect for 
our own national security. As the chairman will relate, I do 
not think it is flatware, but that seems to be the one thing 
that we wind up debating in the NDAA every year. While, 
meanwhile--no offense to those in the part of the world who 
consider that important--but, you know, meanwhile, we are 
losing core technologies that are critical to defense and no 
one really understands exactly why.
    The last piece of it, I will say, that I think is 
important, is trade. Now, we have a somewhat--I do not know 
what the word would be--unfocused approach right now to how we 
combat a competitive trade environment. The one thing we 
definitely should be doing is figuring out how to get on a more 
level playing field with China.
    It is not just our trade deficit with China, but it is the 
strategies that they have put in place to capture core 
technologies, to steal them in some instances. But, a lot of 
it, they are doing within the WTO [World Trade Organization] 
framework. Some of it, they are doing outside of the WTO 
framework. But, we have not put together a comprehensive 
strategy for changing that equation, whether it is bringing 
trade actions against them, whether it is trying to get them to 
change their policies. It is sort of a reactionary approach 
right now. So, we need a strategy on this.
    And, I think this hearing is incredibly important. I look 
forward to the testimony of witnesses. And I thank the chairman 
for convening it. I yield back.
    [The prepared statement of Mr. Smith can be found in the 
Appendix on page 40.]
    The Chairman. I thank the gentleman. I am pleased to 
welcome our witnesses today: the Honorable Michael Griffin, 
Under Secretary of Defense for Research and Engineering; 
Honorable Kari Bingen, Deputy Under Secretary of Defense for 
Intelligence; Mr. Eric Chewning, Deputy Assistant Secretary of 
Defense for Manufacturing and Industrial Base Policy; and Mr. 
Anthony Schinella, National Intelligence Officer for Military 
Issues. Thank you all for being here.
    Without objection, your written statement, it looks like 
there is just one to me, will be made part of the record. And 
we will turn it over to you-all for comments you would like to 
make.
    Mr. Schinella, I--or, you are starting first, is that? Oh, 
you all figure it out.
    Secretary Griffin. I----
    The Chairman. Mr. Secretary. Go ahead if you would like.
    Secretary Griffin. I believe the earlier agreement was that 
I would start, sir.
    The Chairman. Great.

   STATEMENT OF HON. MICHAEL D. GRIFFIN, UNDER SECRETARY OF 
  DEFENSE FOR RESEARCH AND ENGINEERING, DEPARTMENT OF DEFENSE

    Secretary Griffin. So thank you first of all, Chairman 
Thornberry, Ranking Member Smith, members of this committee. We 
appear before you to discuss the very real Chinese adversarial 
behavior to which you have referred. And this is not about the 
threat of such behavior; this is real behavior.
    We are here to underscore the urgency with which all of us 
must focus our actions to maintain our technological and 
military dominance. I thank you for the trust you have placed 
in myself and my fellow witnesses to discuss this topic in this 
open setting as carefully as we can.
    We did--yes, sir, we did submit a single joint statement 
because we wanted to be together rather than separate. I think 
we have a common view of this topic. But our conversation today 
is only a handful of pixels in the entire picture of what we 
face. It is my and I believe, our deep belief that we must act 
now. But, at the same time, it is my duty to limit my comments 
to those of a strictly unclassified nature. So, as we go 
forward, I welcome, expect, and encourage more detailed 
discussions in a more restricted environment. I believe this 
will be necessary in the months and years ahead. This is not a 
problem with a short-term fix, sir.
    We are here, in part, to recognize that this is a whole of 
government, indeed, a whole of society problem. And we are 
here, in part, to recognize and draw distinctions between 
adversaries and allies according to the behavior of the actor. 
No one believes more strongly than I, in the value of 
international partnerships and alliances, and in the value of 
international commerce and fair exchange.
    But the Chinese theft of technology and intellectual 
property through the exfiltration of the work of others is not 
unlike the Chinese construction of islands to encroach upon the 
geographic domains of international waters and those of other 
sovereign nations. It circumvents the autonomy of nations in a 
departure from a rules-based global order. It is adversarial 
behavior and its perpetrator must be treated as such.
    The breadth and depth of Chinese malfeasance with regard 
not only to our technology but also to our larger economy and 
our Nation is significant and intentional. As referenced in our 
written testimony, we are taking steps to counter it.
    You, as the Congress, have established my office in 
particular to regain and maintain the technological dominance 
that we as a Nation have depended upon in the past. We pledge 
to you to do that; and, with your help and support, we will.
    Thank you and I look forward to your questions. And I yield 
to my colleagues.

   STATEMENT OF ANTHONY M. SCHINELLA, NATIONAL INTELLIGENCE 
OFFICER FOR MILITARY ISSUES, OFFICE OF THE DIRECTOR OF NATIONAL 
                          INTELLIGENCE

    Mr. Schinella. Mr. Chairman Thornberry, Ranking Member 
Smith and all members of this distinguished committee, good 
morning and thank you for welcoming me here to discuss this 
important topic.
    As the DNI's [Director of National Intelligence's] National 
Intelligence Officer for Military Issues, I am regularly tasked 
with reporting on threats to the U.S. military. There are, of 
course, the visible threats from foreign military forces and 
weapons systems. But the U.S. intelligence community also sees 
a less visible but dual threat from adversaries and competitors 
that are deliberately working to acquire U.S. research, 
technologies, and talent, to improve their own military 
programs and erode the effectiveness of ours.
    More broadly, the IC [intelligence community] assesses that 
foreign countries' acquisition of U.S. technology through licit 
and illicit means, as well as cheating on trade agreements, 
joint ventures, and exploiting scientific collaborations, have 
the potential to erode the U.S. competitive edge. Foreign 
countries, most notably China, are able to acquire and transfer 
critical U.S. technology through their intelligence services, 
foreign direct investments, joint ventures, open-source science 
and technology acquisition programs, use of insiders, front 
companies, and scientific and business collaborations.
    This has potentially far-reaching consequences. As we have 
highlighted in the DNI's annual threat testimony, persistent 
trade imbalances, trade barriers, and a lack of market-friendly 
policies in some countries probably will continue to challenge 
U.S. economic security. Some countries almost certainly will 
continue to acquire U.S. intellectual property and proprietary 
information illicitly to advance their own economic and 
national security objectives.
    China, for example, has acquired proprietary technology and 
early-stage ideas through cyber-enabled means. At the same 
time, some actors use largely legitimate legal transfers and 
relationships to gain access to research fields, experts, and 
key enabling industrial processes that could, over time, erode 
America's long-term competitive advantages.
    Foreign actors, notably China and Russia, recognize that 
investing in and acquiring technology is absolutely essential 
to achieve their strategic goals. They want to develop weapons 
systems that strike farther, faster, harder, and more precisely 
as a means to erode the traditional pillars of U.S. military 
strength and challenge the United States in all warfare 
domains.
    This pursuit of advanced weapons systems could lead to new 
means of warfare, especially robotic and autonomous systems 
operating across land, sea, air, and space domains. In this 
capacity, the U.S. intelligence community has long monitored 
foreign countries' acquisition of technology outside of their 
own indigenous development programs.
    Analysis of technology transfer most intuitively includes 
tracking a country's acquisition of a key technology or 
component, openly or illicitly, but also includes understanding 
of how actors assess technical specifications, design or 
engineering skills, and manufacturing and production 
techniques. These kinds of technology transfers can allow a 
country to speed up or lower the cost of development projects 
because they can bypass or trim the costly research and 
development stages. These acquisitions can not only improve 
foreign military capabilities, but can also accrue to them 
economic benefits.
    In this course, China is the embodiment of the military 
technology transfer challenge. The Chinese government has a 
comprehensive strategy for technology and modernization to 
bolster China's international image, foster its national 
economic growth, and improve its military modernization.
    And technology acquisition from the United States is 
definitely part of that comprehensive strategy. For some time, 
Beijing has articulated industrial policies and long-term 
objectives contained in a number of comprehensive national 
development plans, such as its well-known 5-year plans and its 
Made in China 2025 initiative.
    In these plans, Beijing has shown that it is interested in 
acquiring technology and expertise that is of critical economic 
or national security importance to the United States. In its 
most recent 5-year plan, Beijing identified its most critical 
technology priorities, including clean energy, aerospace and 
deep sea research, computer and information technology, and 
manufacturing.
    China is therefore prioritizing investment in and 
acquisition of critical future technologies that will be 
foundations for future innovations, both for commercial and 
military innovations like artificial intelligence, robotics, 
autonomous vehicles, augmented and virtual reality, financial 
technology, and gene editing. These technologies are inherently 
dual use, making it difficult to draw a line between commercial 
versus military applications. These technologies are also 
likely to be foundational to future innovations and essential 
to the next wave of competitive high-technology products.
    China's development strategy is multifaceted and its 
supporting infrastructure is robust. China uses multiple 
vectors to acquire the skills and know-how it seeks, and I 
would like to highlight a few of these for you.
    One is joint ventures, mergers, and acquisitions. Tech 
transfer to China is occurring in part through increased levels 
in investment and acquisitions of U.S. companies, which hit a 
record level in 2016 before dropping somewhat in 2017 and again 
in the first half of 2018. China's aggregate investment in U.S. 
technology over the past decade, from 2007 to 2017, totaled 
approximately $40 billion and was about $5.3 billion last year. 
And because the Chinese Communist Party is intimately involved 
in planning economic activity and supporting companies, there 
is a great deal of coordinated investment, along with other 
vehicles of technology transfer, to accomplish China's larger 
stated goals.
    Another vehicle are research partnerships and academic 
collaborations. Foreign governments often use every means at 
their disposal to secure an advantage in technological areas, 
and their exploitation of academics and researchers at U.S. 
colleges, the National Laboratories, and other institutions is 
one of those means. China actively seeks partnerships with 
government laboratories to learn about and acquire specific 
technology and the soft skills necessary to run such 
facilities. China also uses collaborations and relationships 
with universities to acquire specific research and access to 
high-end research equipment.
    Another vector are science and technology investments. 
Beijing has made sustained, long-term state investments in its 
S&T [science and technology] infrastructure, and China 
leverages international collaborations with key pieces of this 
S&T infrastructure to gain technology and know-how. In 2017, 
China's spending on research and development was estimated at 
$279 billion, up more than 70 percent from 2010.
    Another mechanism are talent recruitment programs. Beijing 
runs multiple talent recruitment programs specifically focused 
on recruiting global experts who can facilitate the transfer of 
foreign technology, intellectual property, and know-how to 
advance China's science, technology, and military modernization 
goals. China uses these programs, such as its Thousand Talents 
Program, to recruit Western-trained experts to work in China on 
key strategic programs.
    Beijing also has employed Western-trained returnees to 
implement important changes in its science, engineering, and 
math curricula that foster greater creativity and applied 
skills at China's top-tier universities.
    Another mechanism that it exploits is the legal and 
regulatory environment. China consciously uses its laws and 
regulations in ways that can disadvantage U.S. companies and 
advantage its own companies. The Chinese government uses 
foreign ownership restrictions, such as formal and informal 
restrictions, to require or pressure technology transfer from 
U.S. companies to Chinese entities.
    The Chinese government also uses its administrative 
licensing and approvals process to force technology transfer in 
exchange for the numerous administrative approvals needed to 
establish and operate a business in China.
    We also assess China will use cyber espionage and bolster 
its cyberattack capabilities to support national security 
priorities, which include technology acquisition. The IC and 
private sector experts continue to identify ongoing cyber 
activity from China. Most detected cyber operations against 
U.S. private industry are focused on cleared defense 
contractors or IT [information technology] and communications 
firms whose products and services support government and 
private sector networks worldwide.
    And China's technology transfer mechanisms are paired with 
Beijing's parallel strategy of military-civilian fusion that 
expands civil-military integration of defense and industrial 
bases to facilitate the construction of a national 
infrastructure connecting the PLA [People's Liberation Army], 
state-owned defense research, development, and manufacturing 
enterprises, and government agencies under the state council, 
universities, and private sector firms. We assess that these 
collaborative partnerships have well supported Beijing's rapid 
military modernization.
    What are the possible long-term consequences? Well, while 
the most immediate and visible effects may be related to 
particular military technologies, the long-term consequences 
could be much broader.
    A decline of the United States advantage in key technology 
could affect our ability to set global norms and regulations 
for technology, control access to technology for military 
purposes, and reap the economic benefits we derive from 
commercialization. If the United States were to lose its 
technological edge, the associated loss of influence would have 
far-reaching implications beyond scientific disciplines to 
include economic, social, political, and security dynamics.
    Within the ODNI [Office of the Director of National 
Intelligence] we are facilitating the information exchange 
among the organizations responsible for the analysis of 
technology transfer because this issue is global and 
multifunctional in reach and nature. We collaborate closely 
across the intelligence, counterintelligence, and law 
enforcement communities, as well as other national agencies in 
multiple ad hoc groups and formal groups working on specific 
technology transfer issues. We regularly develop collection 
requirements and provide warning in the form of intelligence 
products of threats associated with technology transfer.
    This concludes my overview of the threats posed by military 
technology transfers. And, I will now turn to my colleagues to 
continue with remarks on the impacts of these foreign 
activities on the United States and measures we are taking to 
thwart and deter them. Thank you very much.

  STATEMENT OF HON. KARI A. BINGEN, DEPUTY UNDER SECRETARY OF 
        DEFENSE FOR INTELLIGENCE, DEPARTMENT OF DEFENSE

    Ms. Bingen. Thank you. Chairman Thornberry, Ranking Member 
Smith, and members of the committee, it is a privilege to be 
back although it is a bit of a different viewpoint from down 
here. I was really honored to support you in all the vital 
national security work you do, and was fortunate to see 
firsthand the bipartisan approach that you took to national 
security and providing for our military. So, thank you.
    In my new role, I support the Under Secretary of Defense 
for Intelligence [USDI] as he carries out his lead 
responsibilities within the Department on behalf of the 
Secretary for both intelligence and security, executing the 
National Defense Strategy, including its direction to protect 
the National Security Innovation Base. As you heard from my 
ODNI colleague, the Department of Defense is facing 
unprecedented threats to its technological and industrial base, 
putting at risk the capabilities critical to maintaining our 
military advantage.
    China, in particular, has made it a national goal to 
acquire foreign technologies to advance its economy and to 
modernize its military. It is comprehensively targeting 
advanced U.S. technologies and the people, the information, 
businesses, and research institutions that underpin them. It is 
playing the long game, using a variety of different methods to 
steal our information, circumvent our processes, and exploit 
our seams.
    Across the defense intelligence and security enterprise 
that the USDI oversees, we are making significant changes in 
our approach to industrial and to information security, as well 
as to counterintelligence. I welcome the opportunity to follow 
up with you in classified session to discuss additional 
initiatives we are undertaking that will provide you with a 
more holistic picture.
    In our unclassified forum today, I will touch briefly on 
four key lines of effort. First, we are elevating the private 
sector's focus on security, through an initiative called 
Deliver Uncompromised. We must have confidence that industry is 
delivering capabilities, technologies, and weapon systems that 
are uncompromised by our adversaries, secure from cradle to 
grave.
    It is no longer sufficient to only consider cost, schedule, 
and performance when acquiring defense capabilities. We must 
establish security as a fourth pillar in defense acquisition 
and also create incentives for industry to embrace security not 
as a cost burden, but as a major factor in their 
competitiveness for U.S. government business.
    Second, through the Defense Security Service, we are 
implementing a more comprehensive approach to industrial and 
information security. We are transitioning from a compliance 
checklist-based national industrial security program to a risk-
based approach, informed by the threat and the Department's 
technology protection priorities.
    However, safeguarding our cleared defense contractors only 
protects part of our defense industrial base. The increasing 
ease of access to large amounts of unclassified and 
nongovernment data in the defense industrial base offers 
opportunities for exploitation which, in aggregation, can be as 
damaging as a breach of classified information. To narrow this 
gap between protecting classified information and that 
unprotected unclassified information, we are developing a 
program protection plan to cover controlled unclassified 
information, including identifying the policy and resources 
necessary to do this.
    Third, using authorities provided by this committee, 
including section 806 of the fiscal year 2011 NDAA and section 
1696 of last year's NDAA, we are strengthening the integrity of 
the supply chain as well as establishing a pilot program to 
enhance information sharing with cleared defense contractors.
    And, fourth, we are enhancing our counterintelligence 
capabilities to better address the nontraditional collection 
methods being employed by our adversaries. We are adding 
security and counterintelligence personnel resources to the 
Defense Security Service, NCIS [Naval Criminal Investigative 
Service], Air Force Office of Special Investigations, and the 
Army CI [Counterintelligence]. Our defense intelligence 
components are augmenting their collection and analysis 
capabilities to gain a more comprehensive understanding of 
threats to our technologies, which will improve our 
intelligence support to export control reviews and CFIUS 
transactions.
    Lastly, we are increasingly relying on our partnerships 
with FBI [Federal Bureau of Investigation]--not just 
increasingly, but we must rely on our partnerships with the 
FBI, Homeland Security, and other departments to actively 
leverage both our individual and our collective authorities to 
protect the Nation's critical technologies. Through these four 
lines of effort, we can help mitigate the threats to our 
technology and information critical to our military advantage. 
And, by doing so, deliver uncompromised capabilities to our 
warfighters.
    We recognize that strong relationships with industry across 
the interagency, with our allies and partners and with Congress 
are essential to that success. We thank you for your continued 
focus on the threat, your understanding of the impacts to our 
warfighters and their capabilities, and your commitment to 
support our policies, programs, and the resources necessary to 
maintain our advantage. I look forward to your questions.

   STATEMENT OF ERIC CHEWNING, DEPUTY ASSISTANT SECRETARY OF 
     DEFENSE FOR MANUFACTURING AND INDUSTRIAL BASE POLICY, 
                     DEPARTMENT OF DEFENSE

    Mr. Chewning. Mr. Chairman, Ranking Member Smith, and 
members of the committee, thank you for the opportunity to 
speak with you all this morning. I serve as the principal 
adviser to the Under Secretary of Defense for Acquisition and 
Sustainment on DOD policies for the maintenance of the U.S. 
defense industrial base. This includes assessing the national 
security impact of foreign investments.
    Our National Defense Strategy outlines a handful of 
critical technologies necessary for maintaining U.S. military 
dominance in an era of great power competition. For those 
capabilities with unique military applications, like missile 
defense and nuclear forces, the Department of Defense will 
continue to act as our Nation's sole developer and 
technological first mover.
    But, for those emerging technologies with both military and 
commercial uses, like artificial intelligence, we will also 
need to be a fast follower and adapter of commercial sector 
innovation. Therefore, force structure modernization requires 
support from both our heritage and legacy, and commercial 
defense industrial base.
    Chinese industrial policies of economic aggression, such as 
investment-driven technology transfer and illegal intellectual 
property theft, pose a multifaceted threat to our entire 
national security innovation base, a threat with the potential 
to create both long- and short-term impacts. In the short term, 
their attempts to steal intellectual property, compromise our 
defense supply chain, and create economic dependence within the 
sub-tier of our industrial base chips away our relative 
military technological advantage.
    Over the longer term, spurred on by strategic initiatives 
like One Belt, One Road, Civil-Military Fusion, and Made in 
China 2025, this potential for China to erode our underlying 
innovation and industrial advantage. The engine of our national 
defense has always been the strength of our economy.
    Chinese policies seek to extract technologies from Western 
institutions, leverage our educational system to develop its 
own workforce, and use subsidies and nontariff barriers to 
prevent competition and to enable the creation of national 
champions. These national champions enjoy a protected domestic 
market, which they will use to their relative advantage and 
enable them to grow at speed and scale. And then, use all the 
elements of the communist state to place their national 
commercial champions at the top of critical markets and 
industries globally.
    These commercial national actors are then directed to 
compete globally against United States and Western firms, while 
being given every subsidy and benefit the authoritarian 
communist government can devise, with the goal of marginalizing 
U.S. companies. Combating these predatory economics require a 
whole of nation approach to both protect and promote American 
industry, as well as our like-minded allies and partners.
    From a defense industrial policy perspective, this includes 
modernization of the complementary protection measures of CFIUS 
and export controls, as well as increasing the private sector's 
focus on cybersecurity. On the promote side of the ledger, we 
need to make sure the Department is a customer of choice for 
emerging technology providers. This will require acquisition 
processes that operate at the speed of relevance, as well as 
budget stability so we can send a clear demand signal to 
industry.
    Thank you very much for the opportunity to testify on this 
important topic, and I look forward to answering your 
questions.
    [The joint prepared statement of Secretary Griffin, Mr. 
Schinella, Ms. Bingen, and Mr. Chewning can be found in the 
Appendix on page 42.]
    The Chairman. Let me just ask, as I mentioned at the 
beginning, one of the issues with which we will deal in 
conference is a modernization of the CFIUS process. That has 
been added to the Senate Defense Authorization Bill. There is 
an effort in the House to not only update CFIUS, but also the 
export control regime, which may be considered fairly soon in 
the House floor.
    But, regardless, this issue is before us. And, what 
guidance can you, any of you, give us as far as the updating of 
CFIUS and export controls?
    Mr. Chewning. I am happy to take that first, Mr. Chairman, 
and I am sure my colleagues would also like to add on. But we 
think of CFIUS and export controls as complementary tools for 
protecting national security.
    The Secretary has identified three gaps in the current 
regime, specifically around tech transfer through joint 
ventures, access to technology through non-controlling 
investments, and expanded review of leases and real estate 
purchases so we can protect investments near sensitive military 
sites. What I would suggest to you is that recognizing that 
both CFIUS and export controls need to work in concert to 
address these three gaps.
    Secretary Griffin. The comment that I would like to make, 
sir, is that in the CFIUS process historically, we look at one 
deal at a time. We do not look at the overarching pattern of 
such purchases or investments. I think it is the broader 
pattern which is actually of greater concern.
    We also do not look at CFIUS investments or investment 
candidates from the perspective of, let me just say, the 
intelligence gathering opportunities it offers. For example, 
every firm today, which even if it is not in a technology-
critical sector--so, let me go to that extreme, but yet such 
firms all have highly networked software systems controlled by 
commercial operating systems.
    Every time that there is a software update to such an 
operating system, it affords another intrusion path into 
domestic networks. We do not look at Chinese investments from 
the perspective of the mischief that might be made simply by 
having foreign ownership and, in some cases, control of such 
avenues. So I will leave it that. I believe that is as far as I 
would want to go at this point.
    The Chairman. So my conclusion from that is, we need to 
update CFIUS and export controls but it does not fix all the 
problems?
    Secretary Griffin. It does not remotely stop there, sir, in 
my opinion.
    The Chairman. Okay. Mr. Smith.
    Mr. Smith. Thank you. I mentioned in my opening remarks, 
the idea of, you know, having an industrial policy as to what 
key technologies we should protect. That is very easy to say; 
it is incredibly complicated to implement in terms of how you 
would do that.
    But, just what ideas would you have in terms of what an 
industrial policy would look like if we basically geared our 
trade policy and our internal investments to make sure that we 
were protecting certain core technologies? I realize you could 
write a book in answer to this question; please do not.
    But, if you could, just give us a little bit of a framework 
of what an intelligent industrial policy would look like. 
Because I do not think the President has the vague idea of the 
problem, and then it is just like all over the place in terms 
of how to solve it. What would a more coherent approach look 
like?
    Secretary Griffin. Well, I am not going to address any of 
the back-and-forth chatter in the current environment because 
we are talking about a long-term strategy here. We need to 
recognize that whether they are specific defense products or 
not, many things underlie our industrial base.
    I might, from a large list, as you said, sir, I might pick 
out, for example, microelectronics. We worry about that from 
the point of view of having a trusted supply. Kari mentioned 
that in her comments. We want to know that we have an end-to-
end supply of defense equipment, and I would also say 
commercial equipment, that we can trust.
    The difficulty in the microelectronics arena is that, an 
area in which the United States once reigned supreme, thanks to 
now 20-some years of Chinese investment, domestic U.S. 
manufacturers no longer, in all cases, make the best 
microelectronics. So we should be unsurprised when others 
elsewhere or anywhere in the world no longer seek to buy from 
us, but seek to buy the best.
    Mr. Smith. Can I shift focus on my question a little bit--
--
    Secretary Griffin. Yes, sir.
    Mr. Smith [continuing]. To help with that. As I mentioned 
early on, some of this is inevitable. I mean, the rest of the 
world was going to catch up.
    I think a lot of people underestimate the impact that World 
War II had on, you know, several decades of us--the entire 
industrialized world got blown off the face of the map and we 
were the last ones standing, basically. If you are going to 
fight a war, it is always good to win; it is even better to win 
on the road. And, that left us in a very, very strong position 
for several decades.
    But that was highly unusual. So even if China was not doing 
all this nefarious stuff--and I agree with the chairman, we 
have got to go after the CFIUS possibly, we are going to have 
to compete. And we are also--I think, part of our industrial 
policy is some of what we are going to need, we are going to 
have to get from someplace else.
    So would you say that--in my conclusion, that is we need 
allies. We need people who have--the--I do not think there is 
anything built in America anymore that is entirely made of 
American parts, or anything built anywhere, for that matter, 
that does not rely on some sort of supply chain. What could we 
do better to make that aspect of it work? To have part--you 
know, countries that we can trust and work with?
    Secretary Griffin. Well then I will get off that previous 
path and refer to my opening remarks, where we are today not 
drawing distinctions in our industrial policies between friends 
and allies and partners, and people who behave in an 
adversarial manner.
    Mr. Smith. Yes.
    Secretary Griffin. It is in our interest to make it easy 
for our allies and partners to cooperate and collaborate with 
us as opposed to making it easy for them to collaborate with 
China, and it is in our interest, in my opinion, for us to make 
it more difficult for the Chinese to work with us.
    During the Cold War, there was a whole of nation policy, 
such that the idea of doing a commercial deal with the Soviet 
Union were words that did not fit in one sentence. We do not 
have such policies today.
    Mr. Smith. Yes, I will stop there, because--well, keep it 
quickly, I have gone on too long. Go ahead.
    Mr. Chewning. Well--just very quickly, just to maybe give a 
tactical example of where that collaboration is taking place. 
You know, the NDAA enshrined the NTIB, the National Technical 
Industrial Base, which is a partnership between the United 
States, Australia, Canada, and the United Kingdom.
    We are using that to do a couple of things. One, 
collectively, how can we work together to create a foreign 
direct investment screen so we can work in concert against 
predatory economics from unallied nations? But then also to 
identify areas where we can do industrial-based collaboration 
to benefit us more broadly.
    Mr. Smith. Okay. Thank you. Sorry, Ms. Bingen.
    Ms. Bingen. Mr. Smith, if I can also tackle that, is from 
the foxhole where I sit, I see it as my job to not make it easy 
for China to get this technology. And so in my remarks, I hit 
on four key pieces. Security has got to be a fourth pillar in 
acquisition, in addition to cost, schedule, performance. And it 
is not right now. And it will be incredibly complex to do. We 
have got to put it into the regulations, into the contract 
mechanisms, et cetera.
    Second, DSS [Defense Security Service] in transition--and I 
will hit on that in a moment, integrity of the supply chain, 
and increasing our CI resources. DSS in transition: it was 
amazing to me to see the approach we take to industrial 
security today is very much checklist-based. You go into a 
cleared defense contractor, ``Do you have the alarms, the 
locks, the safe?'' It was not looking holistically at what is 
the technology or capabilities that you are providing to the 
government? What is the threat? What are your vulnerabilities?
    And so they are now, based off of DOD's critical technology 
priority list, going into these companies that work in these 
areas to look more holistically at all those different pieces; 
it is probably going to be uncomfortable for industry, but we 
need them as a partner to do this if we are going to be able to 
deliver on compromise.
    Mr. Smith. Okay. Thank you very much, Mr. Chairman, I yield 
back.
    The Chairman. Mr. Wilson.
    Mr. Wilson. Thank you, Chairman Mac Thornberry, for holding 
this hearing on such an important topic. Establishing and 
maintaining our military's technological edge is imperative in 
order to increase their effectiveness and lethality on the 
battlefield while protecting our troops.
    The Department must encourage and protect research and 
innovation from being stolen by state and non-state actors. I 
am concerned by the assessments provided today, but hopeful by 
the attention being provided by Chairman Thornberry and the 
House Armed Services Committee.
    First I would like to welcome back Secretary Kari Bingen as 
an alumna of this committee, and we appreciate your service and 
wish you the best. And so appropriately the first question 
begins with you. And the question is, is additional legislation 
needed to protect particular technologies and associated 
intellectual properties with military applications? If so, what 
technologies are in the greatest need of protection, why would 
legislation be necessary to protect them, and how should such 
legislation provide such protections?
    Ms. Bingen. Thank you, Mr. Wilson. Good to be back here. A 
couple areas I would highlight, there--there is section 806 
this year on extending the authority for us to strengthen the 
supply chain. We think that is a very good measure, and we are 
implementing those processes now to be able to do that and 
excise out of supply chain vulnerabilities.
    On the resource front--and we will have to work with the 
committee on the specifics of this, but on the 
counterintelligence areas that I talked about, the greater 
analysis that we will have to do with our industry partners to 
understand where their threats and vulnerabilities are, that 
will require additional resources.
    With these CFIUS reforms, whatever final legislation comes 
out of that, that will place an increasing demand signal on our 
intelligence capabilities, so that will require additional 
resources. But then also, as we go through this delivering 
uncompromised and DSS in transition, as we look at how we 
implement control--how we implement protections on controlled, 
unclassified information, we may need to come back to you with 
specific legislative proposals, and we will work with you on 
that.
    Mr. Wilson. Thank you. And if anyone else would like to 
respond?
    If not, a general question for everybody again. Is this 
primarily a nation-state problem? What about transnational 
criminal organizations, multinational corporations, or 
terrorist groups? What risk do non-state actors pose in 
transfers of U.S. intellectual property and technology?
    Secretary Griffin. Well sir, those are important issues as 
well, but the bulk of all the information we have gathered is 
that China is the big problem. And I think we need to focus our 
efforts on first taking care of the big problems and then 
absolutely we cannot afford to neglect other areas, such as you 
suggest. But we have to prioritize.
    Mr. Wilson. And then in particular, identified in China, 
the Confucius Institutes that are located at 103 colleges and 
universities across the United States. Many of these are 
located adjacent to research facilities. Is anyone familiar 
with the Confucius Institutes, which has been identified by a 
member of the--of the Central Committee of the Communist Party 
of China as a very important propaganda arm? Is anybody 
familiar with what is being done to try to identify these 
institutes as to their motives?
    Mr. Schinella. Speaking to your original and second 
question generally, I would agree with colleagues that this is 
predominantly a state actor problem, or at least that is 
certainly the largest and most looming problem. Within that, 
China is the most pressing threat.
    With the slight additional amplification that in the case 
of a country like China, you asked about multinational 
corporations. When you have state-owned enterprises, you know, 
our framework does not necessarily capture the--that blurred 
line between a multinational corporation and state actor 
itself.
    I--we are familiar with the Confucius Institutes as one 
more visible representation of China's global presence, 
including in the United States, and consistent with my earlier 
remarks, I would just note that that is just one of many, many 
footprints that Beijing has in, near, and on our campuses and 
research institutes that it uses as ways to overtly and less 
overtly collect on and maintain awareness of what is happening 
on those campuses and institutions. Thank you, sir.
    Mr. Wilson. And thank each of you, and we appreciate your 
service to our country.
    The Chairman. Mr. Gallego.
    Mr. Gallego. Thank you, Mr. Chair. And thank you, to our 
witnesses. Even before getting to Congress, I have been hearing 
about this, reading about this, and now, even more sitting in 
Congress, I am dismayed that I am hearing about the diagnosis 
but not necessarily the way to fix this.
    You know, in the Marine Corps, you have a couple options, 
right? You know, to protect yourself, you have your Kevlar or 
your body armor, more importantly though, you have your rifle. 
And the best way to stop somebody from trying to attack you is 
to look tougher and make sure they know the consequences if 
they do attack you.
    I feel when we are dealing with this issue that we are 
talking about how to only play defense. But what are, actually, 
are our offensive options to actually make our quote/unquote 
enemy understand that if they do these types of actions that it 
is going to be painful? And, obviously to a certain degree--I, 
you know, I do not want to trigger a war--but we need to be 
able to have some level of deterrence.
    So, that way, they actually have to make a rational 
calculation of whether or not they are going to engage in this 
type of conduct. If not, I feel like this is just going to 
continue to happen. Every year, I am going to have the same 
briefing and all we are going to be talking about is what 
happened and not what we can do to stop them.
    So, I do not know who wants to take the question first, but 
I would like to hear some ideas. Or, if we have to take this to 
a classified setting, that is fine, too. But, I would love to 
hear it. And, welcome back, too.
    Ms. Bingen. Sir, thanks. If I can start, again, from an 
industrial security perspective and that is what I am here to 
represent, my focus is on cleared defense contractors. And I 
outlined the four areas, security fourth pillar, DSS and 
transition, supply chain integrity, counterintelligence. Two 
other areas; we are branching out and, as Mr. Schinella 
highlighted, there is a deep concern with the cyber data 
exfiltration issue. And it is one that the Chinese in 
particular are targeting.
    So, one of the directions that my boss, the Under 
Secretary, has given to Defense Security Service is to come up 
with that program protection plan, come up with the policies 
for how we control within industry that unclassified 
information, yet still may potentially have some sensitive 
technical information or personal information. So that is one 
of the areas that we are hitting.
    The other one is I absolutely agree with you on we are 
playing defense right now, particularly in the cyber domain. 
And we need to be playing more offense. We need to be working 
with the FBI, leveraging their authorities on the law 
enforcement front. But that will require a further conversation 
with you, largely at the classified level, on some of the 
authorities and resources that we might need to do that.
    Secretary Griffin. At the unclassified level, I will say 
that it is through CFIUS, and possibly FIRRMA [Foreign 
Investment Risk Review Modernization Act] in the future and 
other mechanisms, it is our choice as a nation as a matter of 
national policy as to whether or not we allow investments of 
any magnitude and scope by China in this country. It is our----
    Mr. Gallego. And I apologize, not to cut you off, but my 
point--the point that I guess I have made is that you are all 
describing defensive protocols and methods, right? And it does 
not really matter to the Chinese or to our foreign adversary if 
they know that, you know, they can get around our defenses and 
there is no consequences.
    So, what are we actually doing to change the rationale, the 
calculations that they are going to actually do these types of 
things that ostensibly are illegal? What is our pushback?
    Mr. Chewning. Well, I mean, obviously the administration's 
Section 301 investigation into Chinese intellectual property 
theft would be an example of that. I think more broadly, if we 
think about the offensive measures we can take from an 
industrial base perspective, what are we doing to promote our 
own industrial base capabilities, right?
    I think that, from a DOD perspective, starts with the 
recognition that going forward we are going to have to not only 
remain the sole developer for certain bespoke military 
applications, but reform our acquisition processes in a way we 
can leverage the benefit of our entire broader economy, right? 
And, become a customer that is able to attract the best of both 
the heritage defense industrial base as well as emerging 
commercial technology providers.
    Mr. Gallego. Thank you, I yield back.
    The Chairman. Mr. Lamborn.
    Mr. Lamborn. Thank you, Mr. Chair, and thank you for having 
this important hearing. Thank you all for being here.
    This is an occasion where I am going to agree with Mr. 
Gallego 100 percent, which is not a typical, not a daily 
occurrence necessarily. But, something on this important issue 
I wanted to point out. And I was going to ask, and will ask the 
same exact question. What are we doing offensively?
    You have talked a lot about some great defensive measures, 
and where we are buttoning up, and then making airtight the 
secure and vital research and technology that our defense 
contractors, our government has. And I applaud you 100 percent 
for doing that. But I would like to see more in the way of 
consequences to the Chinese when they do this adverse behavior.
    I will just make an editorial comment here. I think for too 
long, administrations of both parties have been rather passive 
in light of what is going on. I want to applaud the Trump 
administration that, at least in the area of trade, that there 
is pushback going on now with talk of tariffs. I do not know 
how that is all going to play out; but I am glad that that is 
being discussed and made a serious issue in Washington. I think 
that is an example of pushback that needs to happen.
    Let me throw out an idea, if you want to comment on this, 
you can. You do not have to if you do not want to. I think it 
might be interesting to have a widespread and concerted policy 
in our defense to put out wrong information, pretend like it is 
great information, great technology, and they steal it and it 
will not work for them. Or they go down a dead end and they 
waste money, or it actually backfires somehow.
    I think it would be an interesting thing to pursue, where 
we start poisoning some of the technology that is ostensibly 
vital, and healthy, and good, but it messes them up when they 
start to pursue it. Any thoughts on that?
    Mr. Chewning. Maybe I could answer the first part of the 
question, then defer to my colleagues around that particular 
issue specifically. But, just to elaborate, so the Section 301 
investigation the USTR [Office of the United States Trade 
Representative] led into Chinese theft of U.S. intellectual 
property does have some offensive measures to it. And as was 
publicly articulated in a memo from the White House on the 29th 
of May, there is obviously the tariff action that has been 
associated with that. There is potential for investment 
restrictions into the U.S. economy. And then, there is the WTO 
case that we have taken forward, specifically to dispute----
    Mr. Lamborn. Okay, good.
    Mr. Chewning [continuing]. What the Chinese are doing. So--
--
    Mr. Lamborn. Good.
    Mr. Chewning [continuing]. Just to be clear, there are 
offensive measures that are being done in response to Chinese 
economic aggression. I will defer about----
    Mr. Lamborn. Thank you, I am glad to hear that.
    Mr. Chewning [continuing]. About the second question.
    Mr. Lamborn. I am glad to hear that.
    Ms. Bingen. And, Mr. Lamborn, I would love to follow up 
with you in a classified session to talk more holistically, at 
the classified level, about all the different things that we 
are doing or looking to do.
    Mr. Lamborn. Okay. Okay, good. And lastly, I will finish 
up, there was an article in The Wall Street Journal today or 
yesterday about some detected Chinese hacking on our space 
operations. And it was on not research and development, but on 
the operations side, which indicates that there is an intent in 
the future perhaps to use that information to disrupt--to be 
disruptive, to disrupt operations in an offensive way, possibly 
in a time of conflict. Does that concern you?
    Secretary Griffin. Sir, that is a topic that I really do 
not want to discuss in a public setting. Broadly speaking, your 
comment, taken on its face, is very concerning. It is, for me, 
very concerning to have read about it in the papers. I would--
as my colleague, Kari Bingen, just said, I would welcome the 
opportunity to discuss this stuff in a more closed setting.
    Mr. Lamborn. Thank you. Well, with that, Mr. Chairman, I 
will yield back the balance of my time. Thank you for being 
here.
    The Chairman. Ms. Davis.
    Mrs. Davis. Thank you, Mr. Chairman. Thank you all for 
being here. While we have raised the issue of trade policies, I 
am wondering if you could comment and you know, I am not trying 
to make this into a debate here in terms of trade, but we 
mentioned a number of areas, particularly related to China. So 
was it a real missed opportunity to have not moved forward on 
the Trans-Pacific Partnership when it comes to national 
security?
    Secretary Griffin. I am unable to offer you an opinion on 
that, ma'am. I am sorry, I am not familiar--I just do not have 
the expertise to comment on the Trans-Pacific Partnership 
versus national security.
    Mrs. Davis. Okay, because in many ways--maybe you would 
like to comment, I think we lost that opportunity to have China 
be more disruptive when it comes to that. Go ahead, did you 
want to comment?
    Mr. Chewning. I agree with the Under Secretary. That is not 
an issue we have looked at specifically yet, so I do not have 
any further comments.
    Mrs. Davis. Really. Okay, maybe that is one of the 
problems. I mean, I think that we were aware that national 
security was an issue in this regard, and it is I guess sort of 
surprising to me that there was not that kind of weigh-in when 
it came to those issues.
    So I wanted to ask you further, we talk about a whole of 
government approach, we are often doing that, and yet when it 
comes to the concerns that you are raising here, how important 
is it, and are you monitoring that? Are we engaging those 
elements of governance and government that historically or 
traditionally we do not think of in this area of intellectual 
property or endeavors?
    Where do you think that is, I mean, and how do the 
Department of State, Treasury, Justice, Homeland Security 
contribute to technology protections, and are there other roles 
that the Department of Education, Health and Human Services 
could be playing in this regard?
    I mean, it is a complex issue and I am just looking to 
see--to what extent do you think that that is important?
    Secretary Griffin. Well, I will start. I do think it is 
important. I have said publicly, actually I believe in an 
earlier hearing before this committee, that we somehow in the 
years since the Berlin Wall came down and the Soviet Union 
dissolved, we believed that great power competition was behind 
us. The National Defense Strategy released this past January 
makes a very clear set of points that we have returned to an 
era of great power competition and we must treat it as such.
    When we believed, throughout the, you know, several decades 
of the Cold War, when we believed we were in a great power 
competition for not only the hearts and minds of the world, but 
possibly our very existence, we treated such all the matters 
that you are talking about, State, Education, Commerce, the 
Treasury, we treated all of that as if it were of existential 
importance, which it was.
    Today, we treat these individual matters as if they were 
individual matters, and I think what you are hearing from us is 
that they are not isolated issues, that they need to be treated 
in the large.
    As I was starting to answer to Mr. Gallego's question 
earlier, we as a nation have choices. Do we wish to admit, as 
we have today, 30,000 Chinese PhD students in STEM areas? Do we 
wish to do that? Do we think the benefits outweigh the gains? 
There is not a national decision in that regard as there was 
when we were competing against the Soviet Union. We did not do 
those things.
    It us not for me to say whether we should or should not. I 
am trying to put on the table that these apparently isolated 
decisions in fact when taken together comprise a whole of 
government strategy that we do not have.
    Mrs. Davis. Yes, I do not know if anyone wants to comment 
[inaudible]. Is there one particular example that you think 
creates best practices in a more non-traditional way of working 
together that we ought to be looking at more seriously?
    Guess not. Thank you. Thank you.
    Ms. Bingen. I would be happy to follow up, ma'am.
    The Chairman. Dr. Abraham.
    Dr. Abraham. Thank you, Mr. Chairman. A huge problem, 
national security issue, and the mentality of, why build it 
when you can steal it? So we get that, and I was listening to--
Ms. Bingen, you had your four pillars, and one of those was a 
program called ``delivery uncompromised,'' I think was what it 
says.
    And my question is, for these contractors and 
subcontractors, is there an MBO, a management by objectives 
policy, that if they do not meet objectives they are penalized 
or punished, or if they do not reach that security level they 
are kicked out of the system? Is there any accountability 
today?
    Ms. Bingen. Well sir, you have actually hit on the 
challenge and why we are taking this different approach. When a 
contract is awarded to a company, it is based on cost, 
schedule, performance. It is not based on security.
    And so part of this delivery uncompromised initiative is 
working through all the details of what would that look like, 
what are the standards, is there an independent verifier that 
does the--you know, the good housekeeping seal of approval on 
it, how do we work with our acquisition colleagues on infusing 
security into acquisition policies, into the regulations, into 
the actual--in the COTRs [Contracting Officer's Technical 
Representatives], the contracting officials that help drive 
those decisions?
    So those are all the details that we are working through 
now. But then also, industry cannot look at it the way they do 
today, which is, this is a cost center and it is a loss to my 
bottom line. They have to be incentivized to look at security 
as, this is actually going to help me make more profit.
    Dr. Abraham. But are they held to that standard now?
    Ms. Bingen. They are not.
    Dr. Abraham. Okay, and I will just go to a quick second 
question. Classified versus unclassified, we understand that 
today's classified data is yesterday's outdated data, or vice 
versa, but it--this data evolves so quickly and this technology 
evolves so quickly that it is hard to keep up with. And that, 
if you take two unclassified pieces of data and perhaps marry 
them together, then it becomes a classified document.
    My question, just for my understanding, who actually has 
the authority to make the call as to whether a piece of data or 
a piece of technology is classified. Is it the project 
managers? Is it somebody in DOD? Is it somebody--what 
wheelhouse makes that decision on a daily basis?
    Ms. Bingen. The Under Secretary for Intelligence has the 
policy responsibilities. So, we set the framework and the basic 
standards for what those differentials are.
    Dr. Abraham. So you have the responsibility. And you have 
the authority. But do others under you also have the authority? 
I understand the responsibility, and that is where the bullet 
does stop there. But the authority can be delegated out to 
other people. Is that a lot of fingers going out, or is it two 
or three people, how does that work?
    Secretary Griffin. Well, in the technology arena, for 
example, I have original classification authority, should I 
make a determination that a particular set of technologies upon 
which we're working needs to be protected. And many others do 
as well. Those authorities can be delegated and are delegated 
downward. I know there have been breaches, we had reference to 
that earlier on today, of actual classified information.
    But I will go on record, sir, as saying that I believe this 
hearing, and our witness statements and responses to questions, 
are more about the amalgamated effect of the industrial base 
and technology levels as a whole, not whether or not a 
particular exfiltration attempt by the Chinese was successful 
in a particular case. But rather, the whole pattern of Chinese 
investment in our industrial base, extraction of data, 
predatory joint ventures, predatory trade practices, the whole 
spectrum of Chinese adversarial behavior with respect to our 
economic and industrial base, I believe that is--actually the 
larger concern, sir.
    Dr. Abraham. Oh, I understand the 30,000-foot view. But, I 
also understand the ground-level view, that if we have that one 
breach on a national security issue, it can certainly parlay 
into something much bigger, so.
    Secretary Griffin. Absolutely, sir.
    Dr. Abraham. I yield back, Mr. Chairman. Thank you.
    The Chairman. Mr. Larsen.
    Mr. Larsen. Thank you, Mr. Chairman. So, on the debate 
about whole-of-government approach, I am just concerned that 
you throw the term around like it is candy at a parade. Because 
at the same time, you have testified that--someone, one of you 
did--that the Belt Road Initiative is problematic for U.S. 
policy.
    At the same time, you testify that our Department of 
Commerce is holding bimonthly meetings with U.S. companies and 
the U.S. embassy in China to figure out ways for those U.S. 
companies to access projects in the Belt Road Initiative, at 
the same time you talk about whole of government approach.
    I am not asking you to be experts on trade or TPP, but to 
have some concept of how--what the argument was on Trans-
Pacific Partnership, how it fit into leveraging U.S. economic 
policy and strength in Asia vis-a-vis China. Just that basic 
understanding would be helpful for you all.
    And so, I do not think you are talking about a whole of 
government approach. I think you are talking about--you may be 
talking about a whole of Pentagon approach. So, if there is a 
whole of government approach, I would like to know--and not 
from you today.
    But, just another example, if we are in an era of great 
power competition, you talk about the last one we had and we 
are not doing those things we--today that we did in the last 
one. Well, in the last one we had, we fought for open markets. 
We put human rights near the top of the list when we talked to 
North Korea. And we are not doing that today, so does that not 
apply to this era of great power competition?
    So, again, I think you are throwing the term around to try 
to make it sound like you are doing it. But I do not think you 
are. And you need to get on it. If you have--you need to have 
a, you know, a mechanism. If we only had a National Security 
Council mechanism that could develop the whole of government 
approach that is used by the White House, then we might have 
one.
    So that is--I usually do not give speeches. I usually ask 
questions in my 5 minutes. But, it has just been--frustrating 
to hear this term being thrown around, again, like candy at a 
4th of July parade; and I do not think you are living up to it.
    So, Ms. Bingen, I wanted to ask you about a couple 
questions on your five--you made four points on what you are 
doing. Specifically on, I think it was your third or second 
point, about section 806 and 1696 authorities and strengthening 
supply chain security in the Defense Department. That is great, 
that might favor larger contractors. And so, because they have 
the capacity to, you know, absorb the costs, if you will.
    How are you going to ensure that smaller companies, smaller 
businesses that maybe have more innovative ideas, can bring 
more flexibility to the table at the Pentagon, how are you 
going to ensure that they do not get tossed aside because they 
do not have that capacity to do the kinds of things perhaps on 
supply chain security that you might be asking them to do?
    Ms. Bingen. Yes, Mr. Larsen, that is a great question and 
that is something that we will have to work through. We are 
really just at the front end of that. And on 1696, we are 
putting together the plan for right now. I think it was--it 
is--the pilot has to be established by next--I think early next 
year, 2019. So, that is something that we absolutely will have 
to consider. I do not know that I have a good answer for you 
today. But, it is something that we are looking into and I 
would be happy to follow up with you.
    Mr. Larsen. Yes, if you could. Your staff and the committee 
when we did a tour around the country with small businesses, 
Chairman Schuster, at the time, and I went around the country 
and tried to find ways that we could bring small business more 
into Pentagon contracting. So, I just would ask you to watch 
that.
    Ms. Bingen. And then, we will also have to work with them 
as we do the delivering uncompromised pieces. They do not--you 
are right, they do not have the capacity that a lot of these 
large folks do. So, it is, how do we incentivize them, and, 
also, how do we work the liability issues to encourage them to 
report and to make these fixes, when they just do not have that 
big capital that the large folks do.
    Mr. Larsen. Yes, and, again, for me, the crux of it is that 
this is where some of that innovation that we need to have 
happen, and that Dr. Griffin wants to have happen, a lot of 
this is going to take place in smaller companies. But we do not 
need be building hurdles to make it more difficult for them to 
do that. So I just would ask you guys to watch that. Thank you. 
And I yield back.
    The Chairman. Mr. Gallagher.
    Mr. Gallagher. Thank you, Mr. Chairman. This a great 
hearing to have. I think sometimes we overlook the issue of 
technology transfer. And just to follow up on what was said 
about the need to go on offense: as we are considering a few 
initiatives, obviously the need to strengthen CFIUS, but I 
would also like to call your attention to section 217 of the 
Senate NDAA, which provides the USD(R&E) [Under Secretary of 
Defense for Research and Engineering] with the authority to 
establish or fund a nonprofit entity to help facilitate 
research and technology development in critical hardware-based 
technologies that the private sector has tended to 
insufficiently support and could help meet emerging security 
needs.
    And I know it is a long bill, but have you all, maybe 
starting with Mr. Griffin, been able to take a look at this 
provision? And from your initial read, do you support it?
    Secretary Griffin. Yes, sir, I have read that section. I 
have worked with some of the folks that are promulgating that 
initiative, and I support it.
    Mr. Gallagher. And Mr. Chewning, I know we have had 
discussions on this. I would just be interested in your 
thoughts on sort of that angle of the need to invest in 
hardware. I mean, we spent so much time talking about software 
and not the hardware angle.
    Mr. Chewning. Yes, sir, it is a great point. And--and to 
build on it, about 92 percent of our venture capital investment 
is in software. And as we think about our need for 
modernization roadmaps, we know hardware and company formation, 
in particular, hardware technology is going to be critical. And 
so I think taking that language in addition to exercising the 
authorities given to us by Congress in section 1711 in last 
year's NDAA, we can pull together a response.
    Mr. Gallagher. Great. I appreciate that. I could not agree 
more. I look forward to helping this provision get over the 
line. I think one of the biggest challenges we face is that 
those of us in the room here today may understand the scope of 
the challenge, but much of the broader society does not.
    And in fact, I think our competitive edge in many cases 
hinges on more people just getting it from--you know, the 
promising researcher who takes a second look at an attractive 
offer to join a state-connected Chinese firm, or a graduate 
student who decides maybe they should not conduct PhD STEM 
research in China.
    And I know this hearing's about solutions for DOD, but I 
would be fascinated to hear your thoughts on how we can better 
communicate the story we are hearing today to the broader 
population. And reading sort of the DIUx report on technology 
transfer, I mean, one of the key proposals is outreach to the 
private sector and academia.
    And so I guess maybe a question--let us just go down the 
panel that way. I mean, how can we more effectively conduct 
that outreach to the private sector, to academia, and to 
society more broadly? I know it is a big question, but.
    Mr. Chewning. Well, I think--and it is a great question. I 
think increasingly through our industry association engagement, 
and not just with the types of folks who you think we would be 
talking to, but more broadly, increasingly we are hearing those 
concerns from the industry associations.
    And I think it is the need to begin to separate the need 
for an incremental revenue opportunity, where you may be going 
into a new market, to the longer lens necessary, recognizing 
that you are going to be doing business with someone who 
eventually wants to put you out of business, and the need to 
get that message across.
    Mr. Gallagher. Yes. And can I just put a finer point on it. 
I mean, we have had these recent stories about certain Silicon 
Valley companies not wanting to do business with DOD because of 
sort of the intersecting with lethal drone operations, right? I 
mean, that is a huge problem, if at the time when we need to be 
working more closely with the Googles or the Amazons, with the 
Facebooks of the world, that is sort of the cultural reaction 
to working with DOD.
    I am just wondering if you could just comment on that 
briefly, and how do we turn that conversation around? If that 
makes any sense. Yes?
    Ms. Bingen. Absolutely, sir.
    Mr. Gallagher. Yes?
    Ms. Bingen. We are disappointed in that, but we also know, 
in particular in artificial intelligence, that is where the 
talent, that is where the technology is. The government is not 
leading in this area, so we need to be able to leverage that. 
You know, when I think about the numbers of transactions, the 
data sets that they have--some of our problems may be pretty 
straightforward for them, given what they do in the commercial 
sector, and we have got to be able to leverage that.
    So for us, from an intelligence perspective, you know, we 
have a clear mission imperative, we have manual, labor-
intensive processes that our analysts undertake every day. We 
have got to make it better for them and use their brainpower 
more effectively. But Department-wide, there are a lot of other 
challenges that we have, you know, logistics, business reforms, 
et cetera, that would benefit from them, and we have got to 
believe that there are folks there that, you know, bleed red, 
white, and blue and want to participate in hard national 
security--well, want to participate and support national 
security, but also that the engineers like our problems and we 
have got good ones for them to work on.
    Mr. Gallagher. Sure. Sure. Well, I have run out of time. I 
have a bunch of other questions that we will not get to, but 
thank you for what you are doing. This is an important subject. 
I yield the balance of my time, Mr. Chairman.
    The Chairman. Mr. Langevin.
    Mr. Langevin. Thank you, Mr. Chairman. And I want to thank 
our witnesses for your testimony here today. Like many of my 
colleagues, I believe a comprehensive, whole of government 
approach is really needed to maintain U.S. technological 
superiority, as you have heard from many of my colleagues.
    And there is the problem we have run into is that less 
democratic states have no trouble marshalling their collective 
resources to their advantage. So what are your recommendations 
to Congress for policies that maintain our technological edge 
in critical areas by countering activities of other nations 
while also fostering a culture of innovation in the United 
States?
    Secretary Griffin. Well, I am fond of saying that the best 
way to get ahead and stay ahead is to work harder, run faster. 
We believe that our free-market, capitalist system, capitalist-
based system, is the seed of innovation to a far greater extent 
than any command economy can achieve. And indeed, the entire 
topic of this hearing is about China stealing from us, not 
about us stealing from China.
    So if we can provide the kinds of incentives that my 
colleagues have been talking about, we just mentioned 217 for 
new authorities for hardware-based venture companies. If we, in 
the DOD, can, using the authorities that you have given us, 
learn to deal with our industrial base on a more commercial 
basis, on a quicker and more responsive manner that is not so 
burdensome to our companies, I think those actions will help us 
stay ahead.
    The mere recognition that we are in a competition and that 
we should not be making it easier for our adversary will help 
us. My colleague Kari Bingen outlined and our statement 
outlines four broad areas that we are very serious about.
    So other than those and more general statements, I do not 
know that I have any very specific things to recommend to you.
    Mr. Langevin. Okay, thank you. Ms. Bingen, do you have 
anything to offer?
    Ms. Bingen. I think I would just echo what Dr. Griffin just 
highlighted.
    Mr. Langevin. Okay, let me----
    Ms. Bingen. But my job, sir--I look at my job as slowing 
the Chinese and others down from getting our stuff. You know, 
his job is to push the envelope on that, our own technology 
investment and our own R&D [research and development].
    And my fear right now, or my big concern is what is being 
taken from us now, the R&D that we are both--and that S&T--we 
are both competing for, we are both interested in the same 
things right now; that is what is going to show up on the 
battlefield 5 to 10 years from now. And that is what we--we 
need to slow down our adversaries and then speed up our own 
capabilities.
    Secretary Griffin. Let me amplify my comments, sir, with 
just one short statement. One of the best assets we have is, in 
fact, the openness of our society and our alliances and 
partnerships with our Western--with our Western allies. The 
more that we can find ways to do things jointly with them and 
binding them to us, that will--that is a positive step we can 
take, sir. Thank you.
    Mr. Langevin. Thank you. So, let me ask you this. There--
there are many promising ideas that the Department has invested 
intellectual equity in, only to see those ideas and programs 
end up in the valley of death.
    So, recognizing the remaining utility, other entities 
certainly can swoop in and swoop up any gains made at that 
point and move forward from there. So, I find this troubling. I 
am sure you do as well.
    You know, with programs like hypersonics and directed 
energy, where we invested but our competitors have taken our 
ideas and our investments and continue to innovate. So, do you 
deem it a risk when we worked on and developed a technology but 
failed to fund the transition? And--or, also, are there policy 
impediments that slow technology transfer to our own forces?
    Secretary Griffin. Well, sir, the National Defense Strategy 
released in January, frankly, makes a big deal out of the point 
you have just raised. And has specific modernization--force 
modernization goals for the future fight that are outlined in 
that strategy. And we are working today, this week, this month, 
next month to enshrine these and to codify these in the 
upcoming budget preparation.
    We have done groundwork, important groundwork in directed 
energy, especially, and hypersonics, especially--that we have, 
if you will, let lie for a while when we should have been 
turning it into actual force. We are trying to reverse that 
trend. We are working with all deliberate speed to do that.
    The two areas that you mentioned, hypersonics and directed 
energy, are our major candidates for re-vectoring. I am working 
on that as we speak.
    Mr. Langevin. Thank you, well the sooner the better. I know 
my time is expired----
    Secretary Griffin. Yes, sir. Thank you.
    Mr. Langevin. So I will yield back. Thank you for your 
testimony.
    The Chairman. Mr. Hice.
    Mr. Hice. Thank you, Mr. Chairman. Dr. Griffin, in the 
written testimony earlier it was discussed and brought up the 
need to better balance risk with speed when it comes to 
prototyping. Can you expound on that a little bit and explain 
why that is so important?
    Secretary Griffin. My favorite topic, sir. That is because, 
in my more useful years, I did that for a living. I now hope to 
enable others to do it for a living.
    I think the key point that I would make is that if we can 
return to what used to be this country's ace in the hole, our 
ability to try out new ideas, cobble them together in prototype 
fashion, take them to the test range, fly them off, see how 
they work, fix them where they break and plump them up where 
they are doing good, then, let operators interact with them 
because designers and operators need to work together.
    When we can develop new things in that fashion, that is the 
best of this country. We have left our processes get in our 
way; and by that I mean our legal and contracting processes. 
The Congress has bent over backwards to offer broader 
permissions by which we might undertake these developments.
    And if I have a single mission in life as the new Under 
Secretary in this area, it is to get our guys in the field 
working, again, on these new ideas and let nature tell us which 
ones are good. The key point is, it is important to recognize 
that a test failure is not a failure. The failure is when we do 
not stick to the goal and get the product to the finish line.
    Mr. Hice. Very good. Well, I am glad to hear that. And, 
secondly, I would like to kind of follow up on where Dr. 
Abraham was going a little bit earlier. And I am not sure 
exactly who this would be addressed to, so maybe even a couple 
of you have an answer. But, how do we incentivize companies to 
comply with the Deliver Uncompromised?
    Ms. Bingen. Sir, that is something we are working through 
right now. We have had actually FFRDC [federally funded 
research and development centers] come onboard and do a study 
for us. And we are working through those recommendations.
    But, some of this is going to be outside our area, too. 
Where it comes back to, you know, how do they look at this so 
it is not a cost, but--but it is a profit for them. How do we 
get them to--encourage them to self-report, but not think that 
there is going to be a liability or penalty associated with 
that?
    So, are there tax incentives we can pursue, regulatory 
incentives, safe harbor ideas? So, we are working through all 
of those right now. But, we do think that there are some 
concrete ideas that we can explore to do those incentives.
    Mr. Hice. Well, and I think that is extremely important to 
solidify this, would you agree?
    Ms. Bingen. Absolutely, sir, and the sooner the better.
    Mr. Hice. Does anyone else have a comment?
    Secretary Griffin. Yes, sir. I mean, we need, through 
combination of public policy, tax code, selection criteria for 
our procurements, we need to make it in the interests of our 
industrial base to protect their own intellectual property from 
theft. When it is in their interest to do so, when it is a 
profit center rather than a cost center, when they care about 
it is much as we do, then that will turn around.
    Mr. Hice. Okay, well while you are going on that, how--how 
well integrated is the executive branch on the whole threat 
here?
    Secretary Griffin. That might be above all of our pay 
grades put together, sir.
    Mr. Hice. I mean, but you all are dealing with this, just 
from your observation.
    Secretary Griffin. Well, it depends upon who you talk to, 
really. The primary interest of the Commerce Department is to 
promote commerce. The primary interest of the intelligence 
community, I will not speak to that, we have intelligence 
community representatives. But, as Kari has said a couple 
times, their goal is to protect what we have. Those two 
interests can be in conflict.
    Mr. Hice. So is DOD and the intelligence community 
cooperating, at least?
    Secretary Griffin. We, I think we are, sir.
    Ms. Bingen. Daily, weekly, monthly basis.
    Mr. Hice. Okay.
    Ms. Bingen. I go to all those meetings.
    Mr. Hice. All right. And thank you, Mr. Chairman, I yield 
back.
    The Chairman. Ms. Hartzler.
    Mrs. Hartzler. Thank you very much. Thanks for being here 
on this very, very important topic. There was a recent article 
in Foreign Policy magazine that discussed how China has created 
a sophisticated state surveillance system with facial 
recognition technology, specifically to target minorities and 
what they call anti-China behavior. And they developed the 
system with the help of Chinese surveillance firms like 
Hikvision.
    Now, Hikvision is about 42 percent owned by the Chinese 
government. And, the chairman of Hikvision's board was quoted 
as saying that the board must ensure the company, quote, 
creates a state-owned enterprise, and that it remains quote, 
under direct control of the Communist Party's Central 
Committee. In fact, Hikvision received a $3 billion line of 
credit from the state-owned China Development Bank and this is 
one of the three so-called policy banks whose financing 
objectives follow political motives.
    And I am sure you can imagine that I was alarmed when I 
learned that Hikvision cameras were operated at a military 
installation in my district. The cameras have since been 
removed, but I am disturbed that the Federal Government 
willingly purchased these cameras knowing that China is 
actively engaged in espionage against the United States.
    So my question is, I am deeply concerned that video 
surveillance and security equipment sold by Chinese companies 
exposes the U.S. government to significant vulnerabilities due 
to potential built-in back doors, creating a video surveillance 
network for China purchased by the taxpayer and installed 
courtesy of the U.S. government.
    I would like each of you to discuss the security 
vulnerabilities posed by Chinese surveillance cameras, and 
whether or not you believe it is a security risk to have them 
operating at U.S. government facilities.
    So Mr. Schinella, you want to start?
    Mr. Schinella. Sure, everything you have laid out there is 
consistent with some of the threats which we tried to point the 
flashlight at in our opening statement. You have got 
essentially a state-owned, or a certainly state-invested 
company, and you have got an example of the sort of--you could 
characterize it as an insider threat, if you will, but the 
Chinese government's relationships with these kinds of 
companies, which have a worldwide commercial presence, poses 
exactly the sort of threat you have identified.
    And as my colleague articulated, it is also an indication 
of the different kind of world we had. We were not buying 
surveillance cameras from the Soviet Union in those days, but 
when you have got Chinese companies making world-class 
equipment on a global market, they pose a threat that is 
different than we faced during the Cold War.
    Mrs. Hartzler. Okay, thank you.
    Mr. Chewning. And ma'am, if I might. It is obviously a 
concern, and something that we are actively working. There are 
other additional examples like that, that we would be happy to 
take you through in a classified setting to discuss similar 
vulnerabilities that we have identified and then what we are 
doing to remediate them.
    Mrs. Hartzler. That would be great.
    Ms. Bingen. And Ms. Hartzler, if I could also just add, 
going back to the supply chain discussion we had and the 
policies associated with that and the congressional engagement 
and the direction that you have all provided us. You know, 
there are three areas of the supply chain I worry about. It is 
going through the front door, the cyber exfiltration and us 
making it easy for them.
    It is--two, exactly what you highlighted, it is the 
backdoor piece. But then third, there is also the counterfeits 
part piece, and we need to be able to look holistically at all 
of those and mitigate threats along all three of those vectors, 
which the authorization you provided us helps us to start 
doing.
    Mrs. Hartzler. Okay. Mr. Griffin, you have anything to add?
    Secretary Griffin. Shockingly for me, I have nothing useful 
to add. Thank you, ma'am.
    Mrs. Hartzler. You bet. Mr. Schinella, and also Mr. 
Griffin, you mentioned in your comments concerns about the 
universities and the Chinese using the universities. That is 
something I am very concerned as well. The National 
Intelligence Council, you have provided us with this chart that 
shows the different programs that China has in talent 
recruitment, and of the snapshot that is provided here, 
approximately two-thirds of these individuals worked or studied 
in the United States and are employed in China in areas such as 
defense, research, technology, state-owned enterprises, 
academia, and things.
    Now, Mr. Griffin, you said it is not up to me to give a 
recommendation, so I will ask Mr. Schinella. Do you think we 
should change our visa system to deny Chinese students being 
able to participate in PhD programs?
    [The chart referred to can be found in the Appendix on page 
55.]
    Mr. Schinella. Well, as part of the U.S. intelligence 
community, it is even less my mandate to make policy 
recommendations, but as the intelligence product you have 
illustrates, and as my opening remarks indicated, China, 
through a state-directed policy, absolutely is trying to make 
the most licit and illicit, but often through absolutely legal 
mechanisms, exploitation of their ability to take advantage of 
the U.S. university system.
    Mrs. Hartzler. Thank you.
    The Chairman. Mr. Bacon.
    Mr. Bacon. Thank you very much. We appreciate your-all's 
time today. I wanted to ask you a question about some of the 
areas that we are seeing bigger advances with technology. Of 
course, we keep seeing advances in stealth, we are seeing 
higher capacity computing power, which is changing a lot of our 
weapon systems, hypersonics, robotic type of investments, but 
also nanotechnology.
    So a few of these--I just want to ask you a question--how 
did we fall behind, in your mind, in the hypersonics side? 
Because that is what I keep reading. And what can we learn from 
that? And I just open it up to anybody.
    Secretary Griffin. Well, let me take that one first. We 
fell behind because while this nation was pioneering in that 
era, we decided some years back that we did not face a 
significant threat requiring the delivery of force by means of 
hypersonic weapons.
    Mr. Bacon. Yes.
    Secretary Griffin. So we--as an earlier questioner asked, 
we did not transition this.
    Mr. Bacon. Right.
    Secretary Griffin. We could have. We just chose not to. Our 
adversary, China, has gone on to develop a very, very startling 
capability in that area. We certainly can match and exceed that 
capability, and we are setting about that task. But we fell 
behind because we elected to make other choices, sir. I----
    Mr. Bacon. And it was probably focused on the Middle East I 
would assume. Afghanistan, Iraq probably preoccupied our 
bandwidth.
    Secretary Griffin. There is always the tyranny of the 
urgent----
    Mr. Bacon. Right.
    Secretary Griffin [continuing]. Versus the long term, and 
truly, I lived through all of this.
    Mr. Bacon. Yes.
    Secretary Griffin. Cold War competition and such. One of my 
political adversaries once labeled me as an unreconstructed 
cold warrior. It was not offered as a complement, but I took it 
as such. So we have, for 25 years, believed----
    Mr. Bacon. Right.
    Secretary Griffin [continuing]. That the era of Great Power 
competition was over, and it is not.
    Mr. Bacon. Well, let me ask you--I have been reading about 
robotic technology, and that Russia's investing a lot into 
that. Would you say that we are--where are we at with that 
compared to the Russians? If you can elaborate? If anybody 
wants to?
    Secretary Griffin. I do not believe that I know. I can give 
you an assessment for the record later, sir. I will say that in 
the area of autonomy, machine learning, robotics generally, 
that as my colleague said earlier, and quite well, deserves 
emphasis, the DOD is a small player with regard to where 
commercial industry is. Now, that is not bad. Our commercial 
industrial base is the biggest single asset----
    Mr. Bacon. Right.
    Secretary Griffin [continuing]. That we have for national 
security. But we need to make it attractive for them to 
continue work in this area, and we need to make it attractive 
for them to partner with us so that we can reap those 
advantages.
    Mr. Bacon. Right. One last question in this line, unless 
some--and I will give somebody else a chance to answer any of 
these, but on nanotechnology. I keep reading of the importance 
that maybe 23 years from now what miniaturization will be able 
to do to the battlefield. Can you all talk about that at all? 
Because it fascinates me that we will be able to maybe have 
weapons systems that are quite a bit smaller and harder to 
detect, and perhaps just as lethal as what we have today.
    [Laughter.]
    Mr. Bacon. Yes.
    Mr. Chewning. I mean, I think the innovations you are 
describing are exciting on a lot of fronts because of the 
warfighting applicability that they have. I also think it draws 
on an important distinction that we have talked a lot about the 
type of innovation that we are expecting industry to push to 
us.
    There is also a pull effect. And, the innovation of our 
warfighters to take technologies like you are describing, 
experiment with them so we can determine how they will impact 
doctrine going forward, and then providing that feedback to 
industry. And so, I think this push-pull concept around how we 
divine this innovation, we take commercial insight, figure out 
what the military applicability are is an important part of the 
equation.
    Mr. Bacon. Anybody else want to jump in on any of those 
questions?
    Ms. Bingen. Mr. Bacon, I will go outside my line a bit. No, 
that is probably dangerous. You know, I do want to bring this 
back to China a bit as well. And when I look at some of the 
trends out there, and frankly it is less about us protecting 
ours, but this is really us making it a national priority in 
some of these technology areas.
    They have got 16 megaprojects; these are Manhattan-style 
projects. Their global share of R&D expenditures, the U.S. 
dropped 11 percent between 2000 and 2015, China increased 21 
percent. STEM degrees, this is 2014 data, but Chinese 
universities are putting out 1.3 million students with STEM 
backgrounds; we are 525,000.
    So, just when I think of those numbers and what that 
portends for the future, you know, the onus is on us to really 
make these challenges and these technologies a national 
priority.
    Mr. Bacon. Okay. Well, thank you so much. And, Mr. 
Chairman, if we have got time at the end, I have got about one 
more minute of question if you come back around. But I yield.
    The Chairman. Mr. Banks.
    Mr. Banks. Thank you, Mr. Chairman. Dr. Griffin, I, along 
with 25 Members of Congress, this week sent a bicameral and 
bipartisan letter to the Secretary of Education on--earlier 
this week on Tuesday that expressed our concern about Huawei's 
links to the Chinese government.
    Huawei has so-called quote, research partnerships, with 
over 50 U.S. universities and is likely using these 
relationships to exploit the open and transparent culture of 
our schools and communities as well as gain access to critical 
next-generation technologies. We know that China has used 
relationships like these for spying, conducting cyber attacks, 
and committing industrial and economic espionage.
    Meanwhile, the DOD policy that governs technology transfer 
is dated back to 1999. At that point, we had no idea what an 
iPhone was, we were worried about Y2K, and the USB flash drive 
was not even invented. The world, as I am sure you would 
acknowledge, is very different technologically now than it was 
19 years ago.
    So, Dr. Griffin, considering the emerging nature of 
strategic competition with China and the increasing need to 
protect our critical investments in both academic and private 
partnerships, what is the DOD doing to protect the DOD-funded 
research from foreign threats and unvetted members with 
uncertain loyalties? And, what specifically are you doing to 
assist the Secretary of Education in mitigating risk to 
universities and other schools, and help the Federal Government 
to protect and advance the United States technological 
advantage?
    Secretary Griffin. Sir, that is a bigger question than I 
believe I can answer here for, the record. I think Eric might 
be more capable than I. I share your concern. I have several 
times alluded in this hearing to the number and, in fact, the 
existence of so many Chinese STEM students in the United 
States.
    I completely share your concern. And, it is well documented 
that this is an avenue of access for the Chinese that we would 
not want them to have. Beyond that, I do not have any detail 
for you. Eric----
    Mr. Banks. Aside, before we move to Eric, are you, too, 
concerned about the dollars that fund academic research on 
universities in America that, on our behalf, are engaged in 
classified research for DOD?
    Secretary Griffin. I am concerned that we----
    Mr. Banks. That have ties to Huawei and other----
    Secretary Griffin. I am concerned that we are not yet as 
vigilant as we should be about making sure that that research 
does not go to places that have those ties. Certainly, 
universities have a very long, multi-decade history of 
collaboration with the national security community writ large 
on problems of national interest. It is one of our greatest 
strengths. But doing so in an environment that can be 
penetrated by adversaries is not wise. And we are looking more 
closely at that.
    Mr. Banks. So, Mr. Chewning, you would agree that we are 
not as vigilant as we should be, as Dr. Griffin said?
    Mr. Chewning. Yes. No, I agree 100 percent. We are 
concerned. We are reviewing the contract language associated 
with those research projects at the universities. And I think 
more broadly, this hits on the hard issue of we have an open 
innovation model.
    And, we have an adversary that is within that model, and 
operates a closed model on their own side. And that we need to 
experiment to find what structural fix is for that without 
breaking what makes our system work the best in the world.
    Mr. Banks. Are either of you aware, at all, of any interest 
by the U.S. Department of Education in these ties or this 
subject at large? Have you had any conversations with any 
leaders at the Department of Education?
    Secretary Griffin. I have not. I would be happy to do so; 
but I personally have not. And, of course, another difference 
between now and 1999, which you cited, was that China had not 
been admitted to the World Trade Organization in 1999. And I 
might make the point that that was truly a seminal branch point 
that allows many of the types of intrusions of which you speak.
    Mr. Banks. Thank you very much. I yield back.
    The Chairman. Let me follow up with just one question for 
Mr. Schinella and probably Ms. Bingen. As a practical matter 
for our purposes is should we see any distinction between a 
Chinese company and the Chinese government? So, if a Chinese 
company is investing in some technology, some business, 
something going on--for our, as a practical matter, for our 
purposes is that--should we see that as the Chinese government 
doing it?
    Mr. Schinella. I would say there is a gradation. But 
whether you have got a wholly owned state-owned company that 
essentially is an element of the Chinese government, or largely 
a genuinely private company that the Chinese government still 
has leverage over back within China, there may be a spectrum of 
risk. But, I would say, that at no point on that spectrum is 
the risk zero.
    The Chairman. Okay. Ms. Bingen, do you have anything to 
add?
    Ms. Bingen. Mr. Chairman, I would just add the China 
National Intelligence Law from 2017 says that all organizations 
and citizens shall support, cooperate with, and collaborate in 
national intelligence work.
    The Chairman. Yes, that is kind of what I thought. Mr. 
Bacon, you had a quick question?
    Mr. Bacon. One quick follow-up. I know CFIUS has a very 
important role, and we need to protect our technology and make 
sure it is not being, you know, sold or exported, particularly 
prematurely.
    But, I have a concern. I have heard from a couple of 
companies where they thought there was some--they were unfairly 
limited. So, when I have asked CFIUS about this, they go, well, 
``we are our own appeal authority.''
    I am wondering, from the DOD perspective, should we not 
have an appeal authority somewhere in the DOD to say--in case 
CFIUS gets it wrong once or twice on whatever company that they 
hold back. You got any thoughts on that?
    Mr. Chewning. Well, Congressman, if there is any specific 
case, of course, we are always able to provide briefings to 
members explaining the rationale and the logic behind why a 
decision occurred the way it did. I will say, as the 
representative for the Department on--on the interagency 
committee, companies may not be aware of the full fact-base 
that we have because----
    Mr. Bacon. Right.
    Mr. Chewning [continuing]. We conduct the RBAs [risk-based 
assessments] as they are informed by the intelligence 
community. And so, I could see why certain companies may not 
think we got it right because they do not have the picture that 
we do, based on the work from the intelligence community.
    Mr. Bacon. But--and, I got that. I think--and I would say 
99 percent of the time, that is probably the case. But, should 
there not be a one--some kind of recourse, outside of CFIUS, 
because it is--because what I am hearing is you are your own 
appeal authority. And granted, I am sure you get it right 99 
percent of the time.
    But I still think from a, just a fairness, that there has 
got to be some kind of board at the DOD-level. Just to--and it 
gives you a chance to say, this is why we made that case. And 
people could agree or disagree. But I think some of the 
companies would say, they do not--there is no other appeal 
authority other than CFIUS itself.
    And I just--it seems to me there needs to be a check and 
balance there. And I just--I throw that out as a suggestion.
    Mr. Chewning. Sure, no. Thanks. No, well, I am certainly 
happy to take that feedback back to the committee and discuss 
it.
    Mr. Bacon. Thank you.
    The Chairman. As luck would have it, votes have been 
called. So this worked out just right. Thank you all for being 
here, and for your insights. We will obviously continue to have 
conversations on this topic.
    The hearing stands adjourned.
    [Whereupon, at 11:45 a.m., the committee was adjourned.]

     
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                            A P P E N D I X

                             June 21, 2018
      
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              PREPARED STATEMENTS SUBMITTED FOR THE RECORD

                             June 21, 2018

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                   DOCUMENTS SUBMITTED FOR THE RECORD

                             June 21, 2018

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              QUESTIONS SUBMITTED BY MEMBERS POST HEARING

                             June 21, 2018

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                   QUESTIONS SUBMITTED BY MS. SPEIER

    Ms. Speier. Our adversaries see academia as a soft target for 
recruitment, collection, and influence, as indicated by countless cases 
where college campuses were used to acquire sensitive information and 
influence sensitive conversations. What role can and is DOD playing to 
help develop a strategy that protects our intellectual property and 
sensitive technology on college campuses when many of China and 
Russia's activities are considered par-for-the-course, normal 
activities in an academic setting?
    Secretary Griffin. I am personally concerned that we are not as 
vigilant as we should be about making sure that that our research 
doesn't go to into the hands of our adversaries. Academic institutions 
specifically have a very long, multi-decade history of working on some 
of our nation's most interesting research challenges and in that 
environment our research is currently open to all students of those 
institutions. We are building an information campaign to educate our 
academic institutions on the potential threats to national security 
being pursued by our adversaries. We are establishing forums with 
Universities to discuss how best to mitigate these threats and yet 
retain access to the bright minds of students and researchers from 
around the world.
    Ms. Speier. Who oversees dealing with technology transfer and 
technology protection within the Intelligence Community? How do the DOD 
and IC roles and responsibilities with respect to technology transfers 
and protections fit within a whole-of-government approach to protect 
sensitive technology?
    Mr. Schinella. [Response recorded elsewhere.]
    Ms. Speier. Our adversaries see academia as a soft target for 
recruitment, collection, and influence, as indicated by countless cases 
where college campuses were used to acquire sensitive information and 
influence sensitive conversations. What role can and is the ODNI 
playing to help develop a strategy that protects our intellectual 
property and sensitive technology on college campuses when many of 
China and Russia's activities are considered par-for-the-course, normal 
activities in an academic setting?
    Mr. Schinella. [Response recorded elsewhere.]
    Ms. Speier. Who oversees dealing with technology transfer and 
technology protection within the Department of Defense? How do the DOD 
and IC roles and responsibilities with respect to technology transfers 
and protections fit within a whole-of-government approach to protect 
sensitive technology?
    Ms. Bingen. Oversight of technology protection is a shared 
responsibility the Department, including the Under Secretary of Defense 
for Intelligence (USD(I)), the Under Secretary of Defense for 
Acquisitions and Sustainment (USD(A&S)), the Under Secretary of Defense 
for Research and Engineering (USD(R&E)), and the Under Secretary of 
Defense for Policy (USD(P)). The Military Departments and the 
individual program managers also play a key role in safeguarding 
critical technologies. Specifically, the Office of the USD(I), oversees 
a number of efforts to protect the Department's critical technologies. 
Through the ``Deliver Uncompromised'' effort, the OUSD(I) is working to 
elevating the private sector's focus on securing its capabilities, 
technologies, and weapons systems from our adversaries. OUSD(I) also 
plays a role in cross-DOD efforts, such as the Joint Acquisition 
Protection and Exploitation Cell (JAPEC). JAPEC seeks to integrate 
intelligence, counterintelligence, security, law enforcement, and 
acquisition efforts across the Department. We also leverage interagency 
partnerships with the FBI, Commerce, Homeland Security, and the Office 
of the Director for National Intelligence. These collaborative 
partnerships are necessary not only to increase the Department's 
understanding and awareness of the threat, but also to leverage 
additional authorities that are external to the Department. The Defense 
Security Service (DSS) is central to protecting DOD technologies that 
are developed under classified contracts by our industrial partners. 
The ``DSS in Transition'' initiative is an effort to shift DSS from a 
compliance-based approach to a risk-based approach of industry 
oversight. Through an understanding of a company's technologies and our 
adversaries' methods to acquire that technology, DSS is facilitating 
and collaborating with private industry to develop tailored security 
plans.
    Ms. Speier. Our adversaries see academia as a soft target for 
recruitment, collection, and influence, as indicated by countless cases 
where college campuses were used to acquire sensitive information and 
influence sensitive conversations. What role can and is DOD playing to 
help develop a strategy that protects our intellectual property and 
sensitive technology on college campuses when many of China and 
Russia's activities are considered par-for-the-course, normal 
activities in an academic setting?
    Ms. Bingen. From a counterintelligence perspective, the Office of 
the Under Secretary of Defense for Intelligence (OUSD(I)) is involved 
in three major efforts to protect DOD's critical technologies and 
intellectual property that are being targeted by our adversaries 
through collection on college campuses. First, OUSD(I) is adjusting 
security and counterintelligence resources and approaches to strengthen 
our ability to apply counterintelligence protections, conduct outreach, 
and carry out fieldwork. Second, we are focusing on engaging our 
interagency partners to leverage a whole-of-government response against 
such efforts by our adversaries. Third, OUSD(I) is working with 
Congress to explore additional authorities and programs that would 
strengthen DOD's capabilities to respond to the threat. One such 
example is to prohibit foreign students and researchers who have taken 
part in foreign talent recruitment programs (such as China's Thousand 
Talents Program) from participating in DOD-funded or sponsored research 
programs on college campuses.
    Ms. Speier. Our adversaries see academia as a soft target for 
recruitment, collection, and influence, as indicated by countless cases 
where college campuses were used to acquire sensitive information and 
influence sensitive conversations. What role can and is DOD playing to 
help develop a strategy that protects our intellectual property and 
sensitive technology on college campuses when many of China and 
Russia's activities are considered par-for-the-course, normal 
activities in an academic setting?
    Mr. Chewning. It is imperative that U.S. academic institutions and 
research and development (R&D) labs are made aware of the serious 
threat posed by the widespread collection of sensitive U.S. science and 
technology (S&T) information through open academic and recruitment 
channels. Academic and R&D stakeholders must understand that this 
threat potentially erodes broad swaths of our society, including our 
academic and S&T excellence, economic vitality, industrial base, and 
national security. DOD's Manufacturing and Industrial Base Policy 
(MIBP) office recently initiated a campaign to inform S&T universities 
nationwide of the relentless tactics aimed at acquiring information, 
transferring critical technologies, and recruiting top talent to 
ultimately apply this knowledge to advance their own foreign interests, 
to include military and dual-use capabilities. MIBP's academic outreach 
campaign, which is coordinated with the Office of Under Secretary of 
Defense for Intelligence, will include discussions with researchers to 
identify over-the-horizon technologies that would be of great interest 
to our adversaries. An informed U.S. academic and research body at 
large will be more disposed to consider DOD and U.S. Government (USG) 
solutions to the pervasive threat of foreign collection. Solutions 
range from guidelines on restricting and monitoring access to 
information and facilities to oversight, protection, and support of 
select programs. Positive, proactive engagements with academics and 
others at the leading edge of U.S. technology R&D will be paramount to 
DOD's success in constantly modernizing and protecting the defense 
industrial base and, ultimately, future warfighting capabilities.
                                 ______
                                 
                    QUESTIONS SUBMITTED BY MS. ROSEN
    Ms. Rosen. The National Security Strategy of December 2017 states 
that ``The United States will reduce the illicit appropriation of U.S. 
public and private sector technology and technical knowledge by hostile 
foreign competitors.'' How can we use blockchain--or other encryption/
verification technology--to improve our cybersecurity and identify how 
foreign actors are illicitly acquiring U.S. intellectual property?
    Secretary Griffin. The Department continues to investigate methods 
of encryption technology to improve our cybersecurity and identify how 
foreign actors are illicitly acquiring U.S. intellectual property. The 
use of blockchain to improve our cybersecurity is still in its early 
stages and is not a guaranteed solution. Blockchain is built on widely 
understood and sound cryptographic principles that may help improve 
identity access and management/trusted credentials. However, there are 
issues with blockchain and similarly with current encryption/
verification technology that must be considered as we continue to 
improve our cybersecurity and identify how foreign actors are illicitly 
acquiring U.S. intellectual property. These include how to deal with 
malicious users, how controls are applied, and the limitations of any 
encryption/verification technology implementation Technological 
advancements promise the development of computers that process 
information not according to the rules of classical physics and 
probability, as they today, but according to the rules of quantum 
mechanics. While quantum information itself is not yet developed to a 
high technology readiness level, neither are the defenses against the 
algorithms that quantum computation promises. Both are subjects of 
active research and may show interesting developments in the next 
decade.
    Ms. Rosen. The National Security Strategy of December 2017 states 
that ``The United States will reduce the illicit appropriation of U.S. 
public and private sector technology and technical knowledge by hostile 
foreign competitors.'' How can we use blockchain--or other encryption/
verification technology--to improve our cybersecurity and identify how 
foreign actors are illicitly acquiring U.S. intellectual property?
    Mr. Schinella. [Response recorded elsewhere.]
    Ms. Rosen. The National Security Strategy of December 2017 states 
that ``The United States will reduce the illicit appropriation of U.S. 
public and private sector technology and technical knowledge by hostile 
foreign competitors.'' How can we use blockchain--or other encryption/
verification technology--to improve our cybersecurity and identify how 
foreign actors are illicitly acquiring U.S. intellectual property?
    Ms. Bingen. Blockchain is one of many evolving encryption/
verification technologies that the Department is exploring to improve 
the protection of our critical technologies. We recognize the value of 
technology to improve our cybersecurity posture. However, technology 
alone does not sufficiently address the threat posed by our 
adversaries. To properly address this threat, DOD must employ a number 
of different approaches, including enhanced counterintelligence 
resources, collaboration with interagency partners, and outreach to our 
partners in industry.
    Ms. Rosen. The National Security Strategy of December 2017 states 
that ``The United States will reduce the illicit appropriation of U.S. 
public and private sector technology and technical knowledge by hostile 
foreign competitors.'' How can we use blockchain--or other encryption/
verification technology--to improve our cybersecurity and identify how 
foreign actors are illicitly acquiring U.S. intellectual property?
    Mr. Chewning. The Department is aware of foreign countries' efforts 
to exploit vulnerabilities in our networks to access information about 
U.S. technology and intellectual property and is evaluating innovative 
ways to secure critical information and avoid compromise or 
manipulation of cyber-enabled systems. Blockchains are public ledgers 
that securely store records of transactions in a way that is permanent 
and unalterable. Blockchain technology provides strong protection from 
malicious data tampering, and can be used to validate provenance of 
items within complex supply chains. Blockchain's distributed and 
decentralized network architecture is inherently resilient. When every 
node has a complete copy of the ledger there is no single point of 
failure, which means network operations can proceed even if some nodes 
are under attack. Although this technology is relatively new, 
blockchains with sound underlying cryptographic algorithms and adequate 
protocol implementation could be a successful tool to help secure DOD 
information, limit the impact of cyber-attacks, and facilitate the 
identification of the foreign actors trying to acquire U.S. 
intellectual property. This year the Chief Information Officer 
submitted a briefing to Congress, as requested in Section 1646 of the 
2018 NDAA, highlighting potential uses of blockchain to protect DOD as 
well as commercial data and transactions. Across the Federal 
government, identified opportunities include citizen services, identity 
management, benefits management, contract management, regulatory 
compliance, and disaster recovery.

                                  [all]