New rules aimed at exposing foreign influence over companies the Pentagon does business with potentially conflict with Defense Department efforts to collaborate with more startups. Security experts suggest that the Department of Defense (DOD) could successfully balance these two goals by changing its approach to risk.
Matthew Redding, the assistant director for industrial security at the Defense Counterintelligence and Security Agency, noted at a Potomac Officer’s Club event in Virginia that U.S. efforts to protect classified weapons information have prompted China to increasingly focus on unclassified data to gather intelligence on potential capabilities. Redding emphasized the importance of scrutinizing unclassified information, explaining, “What about that unclassified storefront? What about that unclassified research outside of your classified research areas?”
The 2020 National Defense Authorization Act mandated increased vetting of defense contractors to identify potential foreign influences, particularly from China. Any Defense Department contract exceeding $5 million will undergo enhanced scrutiny, with companies required to submit forms outlining possible foreign investments or influences. Redding remarked, “I’ve been in the federal government for 35 years. This is the largest defense acquisition reform I have seen in 35 years.”
For established defense contractors, declaring possible foreign investment exposure is straightforward; however, it becomes more complex for newer tech companies in consumer markets. Chinese investment in Silicon Valley is significant, and Chinese researchers are active in advanced fields such as artificial intelligence and quantum computing. This situation poses a risk that the Pentagon may inadvertently push away the innovative tech firms it wishes to engage.
To address this issue, DARPA has developed the Countering Foreign Influence Program, which employs a data-centric approach to analyze potential foreign influence at various levels within companies. Scott Myers, the program lead at DARPA, shared that the initiative faced initial resistance from academic research partners, who perceived it as a form of McCarthyism. However, they later recognized that the model was not designed to prevent collaboration with top foreign researchers but to enable safe engagement.
Myers stated, “We believe that we can get to ‘yes’ even if the risks are very, very high.” The program emphasizes risk mitigation and ensures that partners have a vested interest in safeguarding sensitive information. In one instance, a university proposed isolating a researcher from China by implementing strict physical and communication protocols to protect sensitive information related to their project.
Lisa Sanders, director of science and technology at U.S. Special Operations Command (SOCOM), suggested an alternative approach based on SOCOM’s experience of collaborating with partner militaries lacking access to classified info. She shared an example of a 2022 workshop with Norwegian military members, which resulted in fruitful discussions on electromagnetic spectrum operations in the Arctic Circle in a completely open, unclassified setting.
While this unclassified sharing of information could lead to potential adversaries gaining insights, Sanders argued that in some instances, it is more beneficial to quickly provide information to operators than to withhold it due to concerns about information theft. The challenge lies in maintaining an innovation advantage after such knowledge sharing.
