Targeting U.S. Technologies
Executive Summary

The Defense Security Service (DSS) proudly presents its 12th annual “Targeting U.S. Technologies” report in response to cleared industry’s desire for analysis concerning the foreign collection threat against U.S. technologies resident in cleared industry. Through analyzing reports concerning cleared industry’s contacts with foreign entities, DSS is uniquely positioned to provide an essential and valuable perspective on how foreign collectors are attempting to acquire access to sensitive or classified Department of Defense (DoD) information and technologies resident in cleared industry.

These reports from industry, known as suspicious contact reports (SCRs), illustrate the methods foreign collectors use to illicitly obtain information, the common affiliations or surrogates they use to avoid raising suspicion, and foreign collection requirements and targeting. Our key findings are based on DSS analysis of fiscal year 2009 (FY09) data compared to the previous year’s reporting.

KEY FINDINGS

  • For the past decade, entities from the East Asian and the Pacific region have been, and continue to be, the most active collectors targeting cleared industry. East Asian and Pacific collectors continued to aggressively target cleared industry for classified and restricted technology and information. This pervasive threat exploits relationships with industry, circumvents export control laws, and boldly uses cyber attacks to target U.S. information resident in cleared industry.

  • The use of the commercial sector, with the intent to make contacts more innocuous when targeting industry, continued to dominate more traditional, government-affiliated collection attempts. For the fourth year in a row, commercial entities’ contact with cleared industry surged, with these purported private sector entities seeking an unprecedented number of privatized research and development (R&D) ventures with U.S. cleared industry. Analysis suggests that while some of this increase is no doubt a reflection of increased globalization of the marketplace, this likely represents, in part, an apparent shift on the part of foreign governments to mask officially-sponsored collection efforts as seemingly less-alerting inquiries.

  • Exploitation of the Internet to illicitly acquire technology and information, both through direct email requests and also through the medium of cyber operations, continued to dominate industry reporting. The Internet continued to offer foreign intelligence entities a low-cost, high gain method to target cleared industry for sensitive or classified technology and information. The exponential growth of the Internet allowed for increased connectivity for legitimate global business and also as a means for surreptitious access to cleared contractor facility networks.

  • Marine sensors technology has increased as a priority target. In FY09, foreign entities increased overt targeting and collection of cleared contractor-developed marine sensors technology and information. Accelerated by increasing maritime trade competitiveness and an aggressive regional marketplace for marine-related technology, foreign entities increased collection of naval R&D initiatives in efforts to modernize naval arsenals and increase maritime-based capabilities.

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REGIONAL TRENDS

DSS examined SCRs received from cleared industry in FY09 to determine which reports represented matters of confirmed or probable counterintelligence (CI) concern. Where possible, analysts affiliated relevant reports with specific regions of origin, assessing the geographic or ethnic association of the requestor.

The FY09 hierarchy of top regional collectors of origin did not change dramatically in comparison to the previous year’s rankings. As has been the case since DSS first began to compile comparative statistics, East Asian and Pacific entities continued to dominate as the most prolific regional collectors of U.S. technology and information, most likely reflecting the dual imperatives of prominent regional actors to pursue accelerated military modernization efforts and achieve regional dominance.

Regional Trends

In a slight change to last year’s reporting, South and Central Asian collectors supplanted European and Eurasian entities as the third most prolific requestors of U.S. defense technology and information. European and Eurasian collectors were relegated to placement as the fourth-most prolific collectors, but this decline was more attributable to modest increases in reported collection attempts from South and Central Asian and Near Eastern collectors as opposed to any real decrease in the number of contacts emanating out of Europe and Eurasia.

However, the relative paucity of industry reports related to European and Eurasian collection efforts remains somewhat of a paradox. While U.S. Intelligence Community (IC) assessments continue to document a significant level of foreign success in exploiting U.S.-developed technologies, the lower volume of FY09 industry reporting corresponding to European and Eurasian efforts does not fully correlate to the presumed level of success attributed to individual countries in this region. This analytic disconnect underscores that cleared contractor employees should remain vigilant against this threat and continue to report any improper attempts to collect export-controlled or classified technology and information.

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COLLECTOR AFFILIATIONS

DSS analyzes each SCR to determine the collector’s affiliation and ascertain which foreign entity category is targeting U.S. technology.

Once again, commercial entities were the top collectors of U.S. technology in FY09, representing nearly a third of the contacts with U.S. industry. The emergence of a globally integrated marketplace offers commercial affiliates an efficient and frequently logical avenue of approach to initiate contact with U.S. industry and may represent a conscious effort on the part of foreign governments to mask official interest using commercial surrogates to obtain information.

Collection attempts by unknown affiliates also increased in FY09, primarily attributable to illicit cyber activity affecting defense industry where analysis identified the region of origin but could not specifically attribute end-user affiliation.

Collector Affiliations

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METHODS OF OPERATION

Once DSS identifies the requestor’s region of origin as well as their probable affiliation, DSS assesses the methods of operation (MOs) that the requestor employs to acquire information or technology. Our analysis of these MOs assists cleared contractor personnel in recognizing suspicious attempts to acquire sensitive or classified information and aids in the application of appropriate countermeasures to mitigate or negate their effectiveness.

Utilization of direct requests for information continued to be, by far, the most common technique foreign entities used in attempting to acquire U.S. technology or information.

Methods of Operation

In FY09, DSS analysis also noted significant increases in the use of the foreign visits and targeting technique, especially targeting public venues where cleared contractor technology was on open display. Industry reporting showed that some nations used surrogates, or front companies, to circumvent U.S. export control laws or perceived trade restrictions in efforts to collect information or technology inconspicuously.

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TARGETED TECHNOLOGIES

DSS analyzes foreign interest in U.S. cleared industry technology in terms of the 20 categories detailed in the Developing Science and Technologies List. Identifying the technologies suspicious entities are targeting is a critical analytic objective and allows U.S. cleared industry to establish appropriately focused security countermeasures to help mitigate the loss of technology and classified information.

This listing is generally consistent with previous years’ assessments. Foreign entities continued to target information systems technology most frequently, primarily focusing on modeling and simulation software for military modernization programs.

The remaining technical categories retained their relative hierarchical positions, but interest in sensors technology, primarily as they relate to marine sensors and programs, saw the largest increase, owing to growing interest in the acquisition of information and technologies identifiable with sonar buoys, autonomous underwater vehicles, and sensors for the U.S. Navy’s Littoral Combat Ship program.

Targeted Technologies

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SPECIAL FOCUS AREA: MARINE SENSORS TECHNOLOGY

This report contains a section focused on the increasing prominence of marine sensors technology as an emerging collection target. Not only do the world’s oceans offer a major thoroughfare for global shipping and economic endeavors, but they also offer a wide platform for naval military modernization, weapons procurement and proliferation. In FY09, industry reporting of foreign contacts indicated increased attempts to acquire marine sensors technology and information.

Foreign targeting of these capabilities was wide-based, but concentrated among actors from East Asia and the Pacific, the Near East, and South and Central Asia. Collectors likely targeted emerging marine technology in efforts to transform their capabilities from brown-water to blue-water. Because the United States is a world leader in naval R&D and naval defense technologies, cleared contractor employees should be aware of this burgeoning threat and continue to take precautions to secure marine systems technologies in their custody.

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