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ESPIONAGE THREATS AT 

FEDERAL LABORATORIES: 

BALANCING SCIENTIFIC COOPERATION WHILE 

PROTECTING CRITICAL INFORMATION 

HEARING 

BEFORE THE

SUBCOMMITTEE ON OVERSIGHT 

COMMITTEE ON SCIENCE, SPACE, AND 

TECHNOLOGY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

THURSDAY, MAY 16, 2013 

Serial No. 113–28 

Printed for the use of the Committee on Science, Space, and Technology 

( 

Available via the World Wide Web: http://science.house.gov 
(II) 

COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY 

HON. LAMAR S. SMITH, Texas, Chair 

DANA ROHRABACHER, California 

RALPH M. HALL, Texas 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

FRANK D. LUCAS, Oklahoma 

RANDY NEUGEBAUER, Texas 

MICHAEL T. MCCAUL, Texas 

PAUL C. BROUN, Georgia 

STEVEN M. PALAZZO, Mississippi 

MO BROOKS, Alabama 

RANDY HULTGREN, Illinois 

LARRY BUCSHON, Indiana 

STEVE STOCKMAN, Texas 

BILL POSEY, Florida 

CYNTHIA LUMMIS, Wyoming 

DAVID SCHWEIKERT, Arizona 

THOMAS MASSIE, Kentucky 

KEVIN CRAMER, North Dakota 

JIM BRIDENSTINE, Oklahoma 

RANDY WEBER, Texas 

CHRIS STEWART, Utah 

VACANCY 

EDDIE BERNICE JOHNSON, Texas 

ZOE LOFGREN, California 

DANIEL LIPINSKI, Illinois 

DONNA F. EDWARDS, Maryland 

FREDERICA S. WILSON, Florida 

SUZANNE BONAMICI, Oregon 

ERIC SWALWELL, California 

DAN MAFFEI, New York 

ALAN GRAYSON, Florida 

JOSEPH KENNEDY III, Massachusetts 

SCOTT PETERS, California 

DEREK KILMER, Washington 

AMI BERA, California 

ELIZABETH ESTY, Connecticut 

MARC VEASEY, Texas 

JULIA BROWNLEY, California 

MARK TAKANO, California 

ROBIN KELLY, Illinois 

SUBCOMMITTEE ON OVERSIGHT

HON. PAUL C. BROUN, Georgia, Chair 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

BILL POSEY, Florida 

DAVID SCHWEIKERT, Arizona 

KEVIN CRAMER, North Dakota 

LAMAR S. SMITH, Texas 

DAN MAFFEI, New York 

ERIC SWALWELL, California 

SCOTT PETERS, California 

EDDIE BERNICE JOHNSON, Texas 
(III) 

C O N T E N T S 

Date of Hearing 

Page 

Witness List ............................................................................................................. 2 

Hearing Charter ...................................................................................................... 3 

Opening Statements 

Statement by Representative Paul C. Broun, Chairman, Subcommittee on 

Oversight, Committee on Science, Space, and Technology, U.S. House of 

Representatives .................................................................................................... 9 

Written Statement ............................................................................................ 10 

Statement by Representative Dan Maffei, Ranking Minority Member, Subcommittee on Oversight, Committee on Science, Space, and Technology, 

U.S. House of Representatives ............................................................................ 11 

Written Statement ............................................................................................ 11 

Witnesses: 

Dr. Charles M. Vest, President, National Academy of Engineering 

Oral Statement ................................................................................................. 12 

Written Statement ............................................................................................ 15 

Dr. Larry Wortzel, Commissioner, U.S.-China Economic and Security Review 

Commission 

Oral Statement ................................................................................................. 30 

Written Statement ............................................................................................ 32 

Hon. Michelle Van Cleave, Senior Fellow, Homeland Security Policy Institute, 

George Washington University 

Oral Statement ................................................................................................. 43 

Written Statement ............................................................................................ 45 

Mr. David G. Major, Founder and President, The Centre for Counterintelligence and Security Studies 

Oral Statement ................................................................................................. 59 

Written Statement ............................................................................................ 62 

Discussion ................................................................................................................. 104

Appendix I: Answers to Post-Hearing Questions 

Dr. Charles M. Vest, President, National Academy of Engineering ................... 116 

Dr. Larry Wortzel, Commissioner, U.S.-China Economic and Security Review 

Commission ........................................................................................................... 120 

Hon. Michelle Van Cleave, Senior Fellow, Homeland Security Policy Institute, 

George Washington University ........................................................................... 125 

Mr. David G. Major, Founder and President, The Centre for Counterintelligence and Security Studies. .............................................................................. 133 

(1) 

ESPIONAGE THREATS AT FEDERAL 

LABORATORIES: 

BALANCING SCIENTIFIC COOPERATION 

WHILE PROTECTING CRITICAL INFORMATION 

THURSDAY, MAY 16, 2013 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON OVERSIGHT

COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY, 

Washington, D.C. 

The Subcommittee met, pursuant to call, at 3:00 p.m., in Room 

2318 of the Rayburn House Office Building, Hon. Paul Broun 

[Chairman of the Subcommittee] presiding. 
2 

LAMAR S. SMITH, Texas 

CHAIRMAN 

~ngrrns of the mnlted ~tatcs 

tlous£ of 'R£pftscntatiots COMMITIEE ON SCIENCE, SPACE, AND TECHNOLOGY 

2321 RAyeURN House OFFICE BUILDING 

WASHINGTON, DC 20515-6301 

{202) 225-6371 www.science.houSB.gov 

. Subcommittee on Oversight 

EDDIE BERNICE JOHNSON, Texas 

RANKING MEMBER 

Espionage Threats at Federal Laboratories: Balancing Scientific 

Cooperation while Protecting Critical Information 

Thursday, May 16,2013 

2:00 p.m. to 4:00 p.m. 

2318 Rayburn House Office Building 

Dr. Charles M. Vest, President, National Academy of Engineering 

Dr. Larry Wortzel, Commissioner, U.S.-China Economic and Security Review Commission 

Hon. Michelle Van Cleave, Senior Fellow, Homeland Security Policy Institute, George 

Washington University 

Mr. David G. Major, Founder and President, The Centre for Counterintelligence and Security 

Studies 
3 

U.S. House of Representatives 

Committee on Science, Space, and Technology 

Subcommittee on Oversight 

HEARING CHARTER 

Espionage Threats at Federal Laboratories: 

Balancing Scientific Cooperation while Protecting Critical Information 

Thursday, May 16,2013 

2:00 p.m. - 4:00 p.m. 

2318 Rayburn House Office Building 

On May 16, 2013, the Subcommittee on Oversight will hold a hearing titled Espionage Threats 

at Federal Laboratories: Balancing Scientific Cooperation while Protecting Critical 

Information. The goal is to gain an understanding of how federally-owned-or-operated 

laboratories balance scientific openness and international cooperation with the need to protect 

sensitive information from espionage. This hearing will focus on identifying potential 

deficiencies, best practices, and to ensure sensible federal policies. 

Witnesses 

• Dr. Charles M. Vest, President, National Academy of Engineering; 

• Dr. Larry WortzeJ, Commissioner, U.S.-China Economic and Security Review 

Commission; 

• Hon. Michelle Van Cleave, Senior Fellow, Homeland Security Policy Institute, George 

Washington University; 

• Mr. David G. Major, Founder and President, The Centre for Counterintelligence and 

Security Studies. 

Background 

The United States has long been the world leader in higher education, science and technology 

and a magnet for foreign-born scholars, scientists and engineers. Unfortunately, various actors 

have sought to exploit our openness to steal American ingenuity and innovation. Such thefts can 

enable nations to save themselves billions in research and development costs and make 

technological advances they would be unable to make on their own to gain a competitive 

industrial advantage or modernize their military and other national capabilities. 

Historically, restrictions focused mostly on technologies with obvious military applications such 

as nuclear material, cryptography and biological weapons. The goal of American 

counterespionage was to prevent a potential adversary from gaining such technological 
4 

advantage, and during the Cold War, it was generally clear what nations should be guarded 

against. However, the emergence of transnational terrorist actors and the means of 

communicating information, including technological innovation, via the Internet, has given rise 

to a far greater, more diverse and global espionage threat. 

In the United States, there has long been support for a policy of not restricting publication of 

federally supported research results, except where classified for national security reasons. This 

position was best expressed in 1985 by President Ronald Reagan in National Security Decision 

Directive 189 (NSDD-189), which remains the government policy regarding controls on 

federally-funded research results. The directive asserts that "to the maximum extent possible, 

the products of fundamental research remain unrestricted."l 

Fundamental research is defined within NSDD-189 as: 

" ... basic and applied research in science and engineering, the results of which 

ordinarily are published and shared broadly within the scientific community, as 

distinguished from proprietary research and from industrial development, design, 

production, and product utilization, the results of which ordinarily are restricted for 

proprietary or national security reasons. ,,2 

NSDD-189 acknowledges that there are risks associated with the open exchange of ideas within 

the scientific and academic communities, but it asserts that the benefits to security and other key 

national objectives outweigh the potential dangers.3 Nonetheless, the emergence of significant 

threats to national security has at times caused the pendulum to swing toward increased security 

and tighter controls at the cost of scientific openness and international collaboration. 

Benefits of International Scientific Cooperation 

Science is a worldwide endeavor. In 2008, American Association for the Advancement of 

Science (AAAS) Chief Executive Officer Alan I. Leshner testified before this Committee that, 

"Science is by definition global in scope and application - it knows no borders, is not constrained 

by geography, and no one country has a monopoly on it.,,4 

In March 2011, Bo Cooper, tonner General Counsel to the then-Immigration and Naturalization 

Service (INS), testified before the House Judiciary Committee that, 'Throughout our history, our 

country has operated on the principle that the more brain power we can attract from around the 

, White House, Executive Office of the President, "National Policy on the Transfer of Scientific, Technical, and 

Engineering Information," National Security Decision Directive-189, 1985, available at: 

http://www.aau.edulWorkArealshowcontent.aspx?id=1560; hereinafter NSDD 189. 

2 Ibid. 

3 Ibid. 

4 Written Testimony of Alan l. Leshner, House Committee on Science and Technology, Subcommittee on Research 

and Science, "The Role of Non-Governmental Organizations and Universities in International Science and 

Technology Cooperation," I 10th Cong., 2d sess., 2008. 

2 
5 

world, the more creativity, invention, and growth we can achieve here at home."s A Harvard 

Business School study found that the number of inventions, as measured by patents, increased 

when H-IB visa caps were higher due to "the direct contributions of immigrant inventors.,,6 

Though the numbers have declined during the current economic downturn, immigrants with 

advanced degrees still comprise a considerable percentage of U.S. workers in science and 

engineering occupations. At the doctoral degree level, about half of U.S. workers in computer 

and mathematical sciences and in engineering are foreign-born. 7 

Aside from sparking innovation and entrepreneurship, foreign scholars make significant 

contributions to the American economy. The Association of International Educators estimates 

that international students and their dependents contributed approximately $21.8 billion to the 

American economy during the 2011-2012 academic year. This figure is based on an analysis of 

tuition, enrollment figures, living expenses and other associated costs.8 

International scientific cooperation and openness to international students also serves 

longstanding and important U.S. foreign policy goals by fostering communication and 

cooperation among nations to promote greater global peace, prosperity and stability. 

Intelligence Threats to Science and Technology Community 

According to the Office of the National Counterintelligence Executive, foreign economic 

collection and industrial espionage is a significant and growing threat. Russia and China are the 

most aggressive and persistent perpetrators.9 While China's intrusions of U.S. computer 

networks has increased significantly in recent years, China's espionage continues to operate in 

the physical world as well. Chinese scientists and engineers permeate U.S. academic and 

industrial research sectors. While most are honest, hard-working individuals, here in the U.S. for 

legitimate reasons, a quick review of recent economic espionage and trade-secret theft cases 

involving Chinese scientists and engineers show a more systemic campaign to gain American 

know-how: 

In November 2012, Shanshan Du and Yu Qin were convicted for conspiring to steal 

hybrid technology from General Motors on behalf of a Chinese competitor. 

5 Written Testimony ofBo Cooper, House Committee on the Judiciary, Subcommittee on Immigration Policy and 

Enforcement, "HIB Visas: Designing a Program to Meet the Needs ofthe U.S. Economy and U.S. Workers," 1121h 

Cong., 1 sl sess., 2011. 

6 William R. Kerr and William F. Lincoln, "The Supply Side oflllnov.tion: H-IB Visa Refonns and Us Ethnic 

Invention," (Working Paper 09-005, Harvard Business School, 2008), available at: 

http://www.hbs.eduJfacultylPublication%20FiIes/09-00S.pdf(accessed May 6, 2013). 

7 "Science and Engineering Indicators 2012," available at: http://www.nsf.gov/statistics/seindI2/c3/c3s4.htm#s4 

(accessed May 6,2013). 

• NAFSA: Association of International Educators, "The Economic Benefit s of International Students to the U.S. 

Economy Academic Year 201 I - 2012", 2012, available at: http://www.nafsa.org!jFile/Jeis20J2/USA.pdf 

(accessed May 6, 2013). 

9 Office ofthe National Counterintelligence Executive, "Foreign Spies Stealing U.S. Economic Secrets in 

Cyberspace: Report to Congress on Foreign Economic Collection and Industrial Espionage, 2009-201 I," 2011, 

available at: http://www.ncix.gov/publications/reports/fecie _all/Foreign_Economic _ Collectio~ 20 I I.pdf (accessed 

May 6, 2013). 

3 
6 

In September 2012, engineer Sixing Liu stole files detailing the guidance systems for 

missiles, rockets, target locators and unmanned aerial vehicles from a division of L-3 

Communication. 

In March 2012, former DuPont scientist Tze Chao pleaded guilty to providing trade 

secrets to companies he knew were controlled by the government of China. 

[n February 20 10, former Rockwell and Boeing engineer Dongfan Chung was sentenced 

to prison for stealing restricted technology and trade secrets related to the Space Shuttle 

program and the Delta IV rocket. IO 

China is not the only threat. Former Cold War adversaries in Russia view the United States as a 

strategic competitor and are also aggressive and capable collectors of U.S. economic information 

and technology. I I In his book Comrade J: The Untold Secrets of Russia's Master Spy in 

America Ajier the End of the Cold War, Peter Earley chronicles the activities of Sergei 

Tretyakov, the head of political intelligence for Russia's foreign intelligence service, the SVR 

[the Sluzhba Vneshney Razvedki], in New York City from 1995-2000. "We often targeted 

academics because their job was to share knowledge and information by teaching it to others, 

and this made them less guarded than, say, UN diplomats," Earley quoted Tretyakov as. saying. 12 

Tretayakov also recounted an instance when an SVR agent provided unreleased medical data and 

proprietary information based on medical patents held by U.S. companies. While the underlying 

research reportedly cost the U.S. government $40 million to fund, the SVR agent refused to 

accept any payment. 13 

Terrorists can also clandestinely acquire the advanced technological information or materials 

needed to build a nuclear, biological, chemical or radiological weapon. In February 2011, 

Khalid Ali-M Aldawsari, a Saudi student studying chemical engineering at Texas Tech 

University, was charged with attempting to use a weapon of mass destruction. A journal found 

at Aldawsari's residence described how he sought and obtained a particular scholarship because 

it allowed him to come directly to the United States and helped him financially, which he said 

"will help tremendously in providing me with the support [need for Jihad.,,]4 

10 Ibid. 

11 Ibid. 

12 Cited in Daniel Golden, "American Universities Infected by Foreign Spies Detected by FBI," Bloomberg, April 

08, 2012, available at: http://www.bloomberg.com/news/20 12-04-08/american-universities-infected-by-foreignspies-detected-by-fbi.html (accessed May 6, 2013). 

1 Peter Earley, "Comrade J: The Untold Secrets of Russia's Master Spy in America after the End ofthe Cold War," 

(New York: G.P. Putnam's Sons, 2007), p. 274. 

14 U.S. Department of Justice, Press Release: "Texas Resident Arrested on Charge of Attempted Use of Weapon of 

Mass Destruction," February 24, 201 J. 

4 
7 

Mechanisms for Oversight 

Screening of Foreign Students and Scholars 

The United States has allowed foreign students to study in U.S. institutions on temporary visas 

since the Immigration Act of 1924.15 Each year, hundreds of thousands of international scholars 

and students participate in education and exchange programs at American colleges and 

universities. In the 2011-2012 school year, 764,321 students from abroad were enrolled at U.S. 

colleges and universities. 16 A visa system that is secure, timely, efficient, transparent and 

predictable is the first line of defense and permits both scientific exchange and enhances national 

security. 

Export Control Regulations 

The federal government controls the flow of information and materials through export control 

and arms trafficking regulations. Specifically, the Department of Commerce implements the 

Export Administration Regulations (EAR), whieh restrict the export of "dual-use" goods and 

technology - items with both civilian and military applications - found on the Commerce 

Control List. The Department of State implements the International Traffic in Arms Regulations 

(ITAR), which regulate the export of defense items and munitions enumerated on the U.S. 

Munitions List (USML). 

Technology export controls are vital to U.S. security and competitiveness, but they have also 

challenged the ability of industry, laboratories and academia to engage international partners. 

Many have argued that the regulations are outdated and unnecessarily complicated. In 2009, 

fonner National Security Advisor Brent Scowcroft and Lockheed-Martin CEO Norm Augustine 

co-chaired a National Academies committee which produced a report titled "Beyond 'Fortress 

America:' National Security Controls on Science and Technology in a Globalized World." The 

report bluntly stated: "The national security controls that regulate access and export of science 

and technology are broken. As currently structured, many of these controls undermine our 

national and homeland security and stifle American engagement in the global economy, and in 

science and technology.,,17 

In August 2009, the Obama Administration launched a comprehensive review of the U.S. export 

control system with the ultimate aim of creating a unified system with one licensing ageney, one 

control list, a single enforcement coordination agency and an integrated information technology 

" u.s. Library of Congress, Congressional Research Service, "Monitoring Foreign Students in dIe United States: 

The Student and Exchange Visitor Information System (SEVIS)," by Alison Siskin, RL32188, (Washington, DC: 

Office of Congressional Information and Publishing, January 14,2005). 

16 Institute ofInternational Education, "Open Doors 2012: Report on International Educational Exchange - Fast 

Facts," available at: http://www.iie.orgleniResearch.and-PublicationsiOpen-Doors (accessed May 6, 2013). 

17 Committee on Science, Security, and Prosperity; Committee on Scientific Communication and National Security; 

National Research Council. "Beyond 'Foliress America': National Security Controls on Science and Technology in 

a Globalized World," (Washington, DC: National Academies Press, 2009), p. ii. 

5 
8 

(IT) system. 18 As of April 2013, the Department of State and the Department of Commerce had 

issued the first set in a series of final rules that redefine how the U.S. government protects 

sensitive technologies and regulates exports of munitions and commercial items with military 

applications. 19 

Classification 

Classification is the most appropriate mechanism when it is required that certain information be 

maintained in confidence in order to protect American citizens and national security. NSDD-189 

states: 

"It is also the policy of this Administration that, where the national security 

require control, the mechanism for control of information generated during 

federally-funded fundamental research in science, technology and engineering at 

colleges, universities and laboratories is classification. Each federal government 

agency is responsible for: a) determining whether classification is appropriate 

prior to the award of a research grant, contract, or cooperative agreement and, if 

so, controlling the research results through standard classification procedures; b) 

periodically reviewing all research grants, contracts, or cooperative agreements 

for potential classification. No restrictions may be placed upon the conduct or 

reporting of federally-funded fundamental research that has not received national 

security classification, except as provided in applicable U.S. Statutes.,,20 

Proper use of the established national security information classification system will allow for 

clear distinctions between classified and unclassified research, help eliminate uncertainties 

among scientists and officials responsible for enforcing regulations and better prevent the loss of 

sensitive information. 

18 U.S. Library of Congress, Congressional Research Service, "The U.S. Export Control System and the President's 

Reform Initiative," by Ian F. Ferguson and Paul K. Kerr, R41916, (Washington, DC: Office of Congressional 

Information and Publishing, January 11,2013). 

19 Department of Stale, "Export Control Reform: First Final Rules Mark Major Milestone," available at: 

http://www.state.gov/ripaiprsipsi2013/04/207597.htm (accessed May 10,2013). 

20 NSDD 189, supra, note 1. 

6 
9 

Chairman BROUN. The Subcommittee on Oversight will come to 

order. Good afternoon, everyone. I appreciate you all’s patience. 

Every now and then we have votes that come into play that interfere with our schedule and we appreciate everybody’s patience. 

In front of you are packets containing the written testimony, biographies, and the truth-in-testimony disclosures for today’s witnesses. I now recognize myself for five minutes for an opening 

statement. 

The title for today’s hearing is, ‘‘Espionage Threats at Federal 

Laboratories: Balancing Scientific Cooperation while Protecting 

Critical Information.’’ I would like to extend a particularly warm 

welcome to our witnesses and to thank you all for joining us here 

today, and we are looking forward to your testimony. 

This hearing focuses on the intersection of two very important 

issues: one, ensuring that the United States remains the world’s 

leader in scientific research and technological innovation; and protecting our national security on the other hand. Both are extremely 

important. 

Finding the appropriate balance between scientific openness and 

security concerns is not new. But it is critical that we have this 

type of public discussion regularly so as to maintain open lines of 

communication and, if necessary, recalibrate our strategies to respond to new threats. 

Science is a global endeavor. International cooperation on science 

and technology and the open exchange of ideas has led to countless 

significant breakthroughs that have benefited all of mankind. Here 

in the United States, visiting foreign scientists and scholars sparks 

innovation and entrepreneurship. They make critical contributions 

to our economy, and they learn firsthand about American culture 

and values. But, we cannot afford to close our eyes to the reality 

that there are nefarious actors—scheming insiders, business rivals, 

criminals, even terrorists and foreign intelligence services—who exploit our free and open society to steal the results of American ingenuity and innovation. 

Russia and China have regularly topped the intelligence and law 

enforcement community’s list of the most aggressive and persistent 

thieves of our scientific and technological information that is very 

sensitive. Russia views the United States as a strategic competitor 

and its intelligence services are very capable and just as prolific as 

ever. 

And China continues efforts to gain access to advanced technology to fuel its military modernization program, according to the 

Pentagon’s latest report on the capabilities of the Chinese military. 

The report says China operates a large, well-organized network of 

companies and research institutes with both military and civilian 

R&D functions that enable the Chinese military to access sensitive 

and dual-use technologies or knowledgeable experts under the 

guise of legitimate civilian R&D. This raises the question: are 

American taxpayers’ dollars subsidizing the modernization of China’s military? Just last week, Chinese media reported that their 

military is ready to test-fly an armed stealth drone which looks remarkably like some American stealth aircraft. 

In addition to foreign intelligence services, terrorists could clandestinely acquire the advanced technological information or mate-
10 

rials needed to build a nuclear, biological, chemical, or radiological 

weapon. What if the Boston bombers had used their university ties 

to acquire radiological material to turn their bombs into dirty 

bombs? 

Our goal today is to gain a better understanding of how Federal 

laboratories and their partners in the broader academic and scientific communities balance international scientific cooperation 

with the need to protect sensitive information. I don’t have any 

prescriptions to put before you. As a doctor, I wish I did. But, I look 

instead to our witnesses to identify best security practices and sensible Federal policies that don’t allow the pendulum to swing too 

far in either direction. 

Thank you. 

Now, I recognize the Ranking Member, the gentleman from New 

York, Mr. Maffei, for an opening statement. My friend, you are recognized for five minutes. 

[The prepared statement of Mr. Broun follows:] 

PREPARED STATEMENT OF CHAIRMAN PAUL C. BROUN

Good afternoon and welcome everyone to this Subcommittee on Oversight hearing 

titled ‘‘Espionage Threats at Federal Laboratories: Balancing Scientific Cooperation 

while Protecting Critical Information.’’ I would like to extend a particularly warm 

welcome to our witnesses and thank them all for joining us here today. 

Today’s hearing focuses on the intersection of two very important issues—ensuring that the United States remains the world leader in scientific research and technical innovation, and protecting our national security. 

Finding the appropriate balance between scientific openness and security concerns 

is not new. But it is critical that we have this type of public discussion regularly, 

so as to maintain open lines of communication, and if necessary, recalibrate our 

strategies to respond to new threats. 

Science is a global endeavor. International cooperation on science and technology 

and the open exchange of ideas has led to countless significant breakthroughs that 

have benefitted all of mankind. Here in the United States, visiting foreign scientists 

and scholars spark innovation and entrepreneurship, make critical contributions to 

the economy and learn first-hand about American culture and values. 

But we can’t afford to close our eyes to the reality that there are nefarious actors—scheming insiders, business rivals, criminals, terrorists, and foreign intelligence services—who exploit our free and open society to steal the results of American ingenuity and innovation. 

Russia and China have regularly topped the intelligence and law enforcement 

community’s lists of the most aggressive and persistent thieves of sensitive scientific 

and technical information. 

Russia views the United States as a strategic competitor and its intelligence services are very capable and just as prolific as ever. 

And China continues efforts to gain access to advanced technology to fuel its military modernization program, according to the Pentagon’s latest report on the capabilities of the Chinese military. The report says China operates a large, well-organized network of companies and research institutes with both military and civilian 

R&D functions that enable the Chinese military to access sensitive and dual-use 

technologies or knowledgeable experts under the guise of legitimate civilian R&D. 

This raises the question, are American taxpayer dollars subsiding the modernization 

of China’s military? Just last week, Chinese media reported that their military is 

ready to test-fly an armed, stealth drone which looks remarkably like the American 

MQ-9 Reaper. 

In addition to foreign intelligence services, terrorists could clandestinely acquire 

the advanced technological information or materials needed to build a nuclear, biological, chemical or radiological weapon. What if the Boston bombers had used their 

university ties to acquire radiological material to turn their bombs into dirty bombs? 

Our goal today is to gain a better understanding of how federal laboratories and 

their partners in the broader academic and scientific communities balance international scientific cooperation with the need to protect sensitive information. I don’t 

have any prescriptions to put before you, but look instead to our witnesses to iden-
11 

tify best security practices and sensible federal policies that don’t allow the pendulum to swing too far in either direction. 

Mr. MAFFEI. I want to thank the Chairman of the Committee 

and I want to thank particularly the witnesses and audience today 

for your patience given these—the voting schedule and the logistics 

of getting back here. 

I want to associate myself with the comments of the distinguished Chairman from Georgia and I would only add that the 

challenge at our national labs and our scientific facilities is controlling access to information and innovations that are truly highly 

sensitive without obstructing the positive interaction that occurs 

between scientists. 

So, as we see on a routine basis, other nations and foreign corporations regularly are attempting to steal, siphon, or subtly acquire U.S. Government secrets or other kinds of proprietary data 

that has highly technical and scientific value for the economy or 

national security. So identifying specific espionage threats, developing safeguards against them, and warning American scientists 

about them is certainly an important task. But it is a task that has 

to be balanced against the cost of overreacting and inhibiting the 

advance of scientific understanding and positive international cooperation. 

So this hearing will help illuminate those tradeoffs. And I am 

very grateful to the Chairman for calling it. I look forward to hearing from our witnesses today about how to strike the right balance 

between these both very necessary goods. And I hope that our witnesses can offer key and, if possible, specific recommendations that 

could be followed by us in Congress and the Federal Government 

as a whole, as well as inform action by our universities, private corporations, and the laboratories. 

I yield back the balance of my time. 

[The prepared statement of Mr. Maffei follows:] 

PREPARED STATEMENT OF RANKING MEMBER DAN MAFFEI

Thank you Chairman Broun for holding this hearing today. 

The challenge at our national labs and other facilities is controlling access to the 

information and inventions that are truly deemed to be highly sensitive without obstructing the positive interaction that occurs between scientists. Still, as we see on 

a routine basis, other nations and foreign corporations regularly attempt to steal, 

siphon or subtly acquire U.S. government secrets or proprietary data that has high 

technological and scientific value for their economy or national security. 

Identifying specific espionage threats, developing safeguards against them and 

forewarning American scientists about these expanding and evolving threats is an 

important task. But it is a task that has to be balanced against the costs of overreacting and unnecessarily inhibiting the advance of scientific understanding. This 

hearing will help illuminate the tradeoffs. 

I look forward to hearing from our witnesses today about how to strike the right 

balance between international scientific cooperation and ensuring the protection of 

critical key data or research. I hope that our witnesses can offer key recommendations that could be followed by the Federal government as well as inform actions 

by our Universities and private corporations. 

Yield back. 

Chairman BROUN. Thank you, Mr. Maffei. We have these huge 

problems with cyber attacks upon business and national labs and 

cyber security should be at the forefront of what all of us here in 

Congress focus upon because we have a tremendous potential of 
12 

economic espionage and scientific espionage, and thank you so 

much for your opening remarks. 

If there are any other Members who wish to submit additional 

opening statements, your statements will be added to the record at 

this point. 

Now, at this time I would like to introduce our panel of witnesses. Our first witness is Dr. Charles Vest, President of the National Academy of Engineering and President Emeritus of the Massachusetts Institute of Technology. 

Our second witness is Dr. Larry Wortzel, the Commissioner of 

the U.S.-China Economic and Security Review Commission. Dr. 

Wortzel is a former Army Counterintelligence Special Agent. 

Thank you for your service in the Army, sir. I am a Marine and 

I appreciate your service. You are a former Marine, too? Oorah. 

Our third witness is Ms. Michelle Van Cleave, Senior Fellow at 

the Homeland Security Policy Institute at the George Washington 

University. Ms. Van Cleave is also the first national counterintelligence executive and has previously served as counsel on this 

Committee. Welcome back. We are glad to have you. Welcome, Ms. 

Van Cleave. 

Our final witness is Mr. David Major, Founder and President of 

the Centre for Counterintelligence and Security Studies. Mr. Major 

is a veteran FBI Special Agent and experienced counterintelligence 

educator. 

As our witnesses should know, spoken testimony is limited to 

five minutes each if you could please try to restrain yourselves. I 

know this is a big topic, but if you can, please keep it within the 

five minutes. I am not going to gavel you down if you go over, but 

if you could, please limit it to five minutes and after which the 

Members of the Committee will have five minutes each to ask 

questions. Your written testimony will be included in the record of 

the hearing. 

Now, it is the practice of this Subcommittee on Oversight to receive testimony under oath. If you would all please stand. I should 

ask you, do any of you have an objection to taking an oath? 

Okay. Let the record reflect that all of the witnesses indicated 

they have no objection to taking the oath. 

Now, if you would raise your right hand. 

Do you solemnly swear or affirm to tell the whole truth and 

nothing but the truth, so help you God? 

Thank you. You may be seated. Let the record reflect that all the 

witnesses participating have taken the oath. 

Now, I recognize our first witness, Dr. Vest, for five minutes. You 

are on, sir. 

TESTIMONY OF DR. CHARLES M. VEST, PRESIDENT, 

NATIONAL ACADEMY OF ENGINEERING 

Dr. VEST. Openness of research and education accelerates discovery, contributes to worldwide advancement of knowledge and 

technology, and enhances American leadership, economy, diversity, 

and values. I also understand the importance of security. I served 

on the independent Intelligence and Weapons of Mass Destruction 
13 

Commission appointed by President George W. Bush, and I am a 

trustee of In-Q–Tel. 

Here are three things I believe in: the ‘‘Leaky Bucket Theorem.’’ 

It is far more important to keep filling our bucket of science and 

technology than it is to obsessively plug every little leak; second, 

high fences around the small areas of scientific results and technology that truly must be denied to others through classification; 

and finally, competing and cooperating with other nations and institutions. 

Export control and visa policy remain somewhat rooted in the 

Cold War when we had a single enemy. Our dominant security 

asset was technology superiority; the Soviet Union’s was a huge 

military. Secrets were more easily maintained and military technologies were mostly separate from consumer products. That ended 

in 1989. Today, we face diffuse threats like terrorism. We no longer 

singularly dominate the world’s science and technology. We are 

subject to the instant and open communications of the Internet and 

the World Wide Web. Our military and intelligence agencies are 

very dependent on commercial products, our companies have global 

supply chains, open innovation, manufacturing facilities, customers, suppliers, and research laboratories all over the world. 

In 1982, Executive Order 12356 broadened the government’s authority to classify defense-relevant information that stated basic research information not clearly related to national security may not 

be classified. However, the government soon forced last-minute 

withdrawal of the 150 technical conference papers on the subject 

of cryptography. 

President Ronald Reagan responded to the resulting vigorous debate by issuing National Security Decision Directive 189 that stated, ‘‘It is the policy of this Administration that, to the maximum 

extent possible, the products of fundamental research remain unrestricted.’’ 

The horrific 9/11 attacks raised new questions about our openness. Globalization of modern industries complicated these questions. Visas denied to many foreign students, visitors, and conference participants in the United States reflected legitimate concerns, overreaction, bureaucratic foibles, risk aversion, antiquated 

systems, good intentions, bad policies, heart-rending personal experiences, and, finally, slow-but-steady improvement. 

My views on scientific technological and educational openness 

are based on five considerations: America’s traditional values and 

strengths, the nature of basic science and technology, U.S. science 

and engineering workforce, the value of a well-educated world, and 

national security writ large. America’s economic and military 

strength and leadership are made possible by our unique combination of democracy, market economy, investment in research and advanced education, and diversity. There is no longer a singular 

threat like the Soviet Union or an economically surging Japan, and 

our world is integrated by digital communication and expanding 

talent base from new markets everywhere, so we must compete and 

cooperate. 

Here is a specific example. In 2011, the U.S. and Chinese Academies of Engineering held a joint meeting of experts to discuss the 

future of the Global Navigational Satellite Systems. We discussed 
14 

applications to consumer products, transportation, agriculture, and 

science. It was noted that the codes enabling civilians to use the 

U.S. GPS signals are openly published whereas the codes for the 

non-defesnse new Chinese system called Compass are closed and 

unavailable. If both systems could be used, accuracy, coverage, reliability, and safety would be improved for all. 

The CEO of one of our largest U.S. GPS companies explained 

that in our country, the government launches and maintains the 

satellites and provides open codes for their use. Entrepreneurs then 

bring useful applications to market. Soon after this joint meeting, 

the Chinese made the codes for Compass openly available. Perhaps 

we contributed to this decision by cooperating as well as competing. 

In summary, openness is very important to the United States in 

the 21st century, but our policies have a long and continuing history of sometimes getting unnecessarily in the way. When this occurs, there are three simple guidelines my colleagues and I follow 

at MIT: one, obey the law; two, reject grants or contracts incompatible with institutional values; three, analyze and give voice to needed reforms in Federal policy or its implementation. 

Finally, I commend to you our 2009 National Academies report 

titled ‘‘Beyond Fortress America: National Security Controls on 

Science and Technology in a Globalized World,’’ that was authored 

by a highly experienced committee co-chaired by retired General 

Brent Scowcroft and Stanford University President John Hennessy. 

Mr. Chairman, I would be pleased to respond to questions. 

Thank you. 

[The prepared statement of Dr. Vest follows:] 
15 

Testimony of 

Charles M. Vest 

President, National Academy of Engineering 

The National Academies 

beforetbe 

Committee on Science, Space, and Technology 

Subcommittee on Oversight 

U.S. House of Representatives 

"Espionage Threats at Federal Laboratories: Balancing Scientific Cooperation whlle 

Protecting Critical Information" 

May 16,2013 
16 

1 

Chainnan Broun, Ranking Member Maffei, I am Charles Vest, president of the National 

Academy of Engineering (NAB) and president emeritus of the Massachusetts Institute of 

Technology (MIT). I have spent my career in higher education and research, and have 

served on the boards of major corporations. I am a proponent of openness in education 

and research, and I hope to explain the value of such openness. 

I also understand the importance of security, having served on the independent 

Complission on the Intelligence Capabilities of the United States Regarding Weapons of 

Mass Destruction appointed by President George W. Bush, and I am a trustee of In-QTel, that identifies, adapts, and delivers innovative technologies to support the missions 

of the CIA and the broader intelligence community. 

I believe in openness of education and research to accelerate discovery, contribute to the 

worldwide advancement of knowledge and technology, and to enhance America's 

leadership, economy, diversity, and values. 

My views support what is called in the vernacular "the Leaky Bucket Theorem," that 

when it comes to research and technology, it is far more important to keep filling our 

bucket than it is to obsessively plug leaks. I also believe in high fences around the small 

area of scientific results and technology that truly must be denied to others, i.e. critically 

important secrets should be classified, and we should minimize security mission creep 

and the bureaucracy that wastes time on over-classification and grey areas such as socalled Sensitive but Unclassified Research. 

Openness is highly valued throughout the science and technology communities; it has 

three major dimensions: 

1. Open flow of ideas, i.e. scientific and engineering knowledge; 

2. Open flow of people, i.e. international students, faculty, and employees; and 

3. Open flow of technology products and devices. 
17 

These three flows are frequently stemmed by counterproductive or unduly applied 

policies that many believe will harm our national security, technological leadership, and 

our economic competitiveness in the long run. 

HISTORICAL POLICY CONTEXT 

2 

The basic point is this: Our policies regarding export controls and visas are rooted in the 

Cold War when two superpowers faced off against each other. The dominant security 

asset of the U.S. was our technological superiority; that of the Soviet Union was a huge 

military. It was more or less possible to maintain secrets from each other, and military 

technologies were more or less separate from consumer products. 

The Cold War ended in 1989. Today, a quarter century later, we face very different 

diffuse threats such as tem~rism; we no longer singularly dominate the world's science 

and technology; we are subject to the instant and open communications of the Internet 

and World Wide Web; our military and intelligence agencies are very dependent on 

commercial products; and our companies have global supply chains, open innovation, 

manufacturing facilities, customers, suppliers, and research laboratories all over the 

world. 

Three world-changing events have driven the development or reexamination of U.S. 

policies regarding the flow of scientific and technical knowledge, non-U.S. citizens, and 

commerce: 

1. The Cold War, 

2. The advance of Japanese consumer manufacturing, and 

3. Post 9/11 terrorism. 
18 

The Cold War Era 

Cold War policy regarding the balance between openness and security began soon after 

the end of World War II. Even in that early context, in 1947, President Truman's 

Scientific Research Board stated: 

3 

Strict military security in the narrow sense is not entirely consistent with the 

broader requirements of national security. To be secure as a Nation we must 

maintain a climate conducive to the full flowering of.free inquiry. However 

important secrecy about military weapons may be. the fundamental discoveries of 

researchers must circulate freely to have full beneficial effect. Security regulations 

therefore should be applied only when strictly necessary and then limited to specific 

instruments, machines or processes. They should not attempt to cover basic 

principles of fundamental knowledge. 

In 1982 Executive Order 12356 broadened the authority of the government to classifY 

defense-relevant infonnation, but the order stated that Basic scientific research 

information not clearly related to national security may not be classified. There was 

much debate about the interpretation of this sentence, and great uncertainty about how it 

would be applied. An answer soon came. As an optics researcher, I attended a meeting 

of the Society of Photo-Optical Instrumentation Engineers, in San Diego in August 1982. 

Under government pressure, and with less than ten days notice, scientists and engineers 

withdrew presentation of more than 150 teclmical papers on the subject of cryptography. 

The vigorous debate that was launched by the quashing of basic cryptography papers was 

more or less settled in September 1985 when President Ronald Reagan issued National 

Security Decision Directive 189 (NSDD 189) that stated: 

It is the policy of this Administration that, to the maximum extent possible, the 

products of fundamental research remain unrestricted ... that where the national 

security requires control, the mechanism for control of iliformation generated 
19 

duringfoderally fimdedfUndamental research in science, technology, and 

engineering at colleges, universities and laboratories is classification. 

4 

Each foderal government agency is responsible for: a) determining whether 

classification is appropriate prior to the award of a research grant, contract, or 

cooperative agreement and, if so, controlling the research results through standard 

classification procedures; b) periodically reviewing all research grants, contracts, 

or cooperative agreements for potential classification. 

No restrictions may be placed upon the conduct or reporting of federally fonded 

fUndamental research that has not received national security classification, except 

as provided in applicable US. Statutes. " 

Japanese Competition 

The issues of export controls and visa policy gained currency again in the very late 1980s 

and the 1990s. This time around, the issues were even more complicated because they 

were driven as much by industrial competitiveness as they were by traditional military 

security issues. The rise of Japan in particular as a major economic power was driven by 

their sudden dominance in high-quality, high-throughput manufacturing of consumer 

products such as electronics and automobiles. 

There were strong pushes to bar international students from university research programs 

because it was believed by many that foreign countries, especially Japan, would send 

students and visitors to our universities and laboratories to master our technology in order 

to return horne and use it against us economically. It certainly is true that during this 

period the Japanese created a playing field that was unfairly tilted by their import 

restrictions. But they also completely outpaced us through their quality movement and 

through their advantage of building new "greenfield" manufacturing facilities. However, 

the fundamental problem was that much of American industry had become fat and lazy 

through the days in which we totally dominated. Eventually, they woke up and did the 
20 

terribly hard but effective work to become competitive again. This coupled with a huge 

thrust forward of American entrepreneurship in new fields like information technology 

and biotechnology got our economy moving again. I conjecture that our manufacturing 

sector gained more value from learning about high-quality production from the Japanese 

than they gained from learning about our technology. I also am confident that U.S. 

openness to foreign citizens and the open flow of iuformation were, and are, dominant 

forces in our success as high tech entrepreneurs. 

Post 9/11 Terrorism 

5 

The horrific attacks on our nation on 9/11 quite naturally raised many new questions and 

perspectives about our traditional openness to those from other nations and about the 

open flow of scientific and technological knowledge. This was compounded by the rising 

realities of the Internet and World Wide Web, and by the globalization of modem 

industries and their supply chains. It accelerated after the dot-com economic bubble 

burst, and a national paranoia about leaking technological knowledge and mild 

xenophobia recurred. This played out particularly in the blocking of visas to foreign 

students, visitors, and participants in conferences held in the U.S. Since 9/11, this has 

been a complicated mixture of legitimate concerns, overreaction, bureaucratic foibles, 

risk aversion, antiquated systems, good intentions, bad policies, heart-rending personal 

experiences, and, fmally slow but steady improvement. During this period, in November 

2001, then National Security Advisor Condoleezza Rice, .acting on behalf of the 

President, stated that pending further review and updating of export control policies, " ... 

the policy on the transfer of scientific, technical, and information set forth in NSDD-189 

shall remain in effect, and we will ensure that this policy is followed." Unfortunately, at 

the working level, this statement frequently did not appear to be implemented. 

Starting in the late 1990s, universities began to be told that the conduct of basic scientific 

research that utilized satellite systems, and in some cases computer systems, were offlimits to foreign students and to collaborative efforts with other countries, even close 

friends like Japan. lfnon-U.S. citizens worked on projects and came into contact with 
21 

certain specialized equipment, the knowledge they gained was considered a deemed 

export of sensitive technology and they were either barred from the contact, or required 

6 

to pass certain security reviews. Quiet, but essentially fruitless, discussions between 

university leaders and federal officials ensued, and in several instances universities turned 

down such contracts rather than accept restrictions on their students. 

In my view, the application at the working level of policies regarding visas and deemed 

exports were and are, cases of policy schizophrenia. Both before and after 9/11, the 

dominant reason for rejecting students applying for visas to study in the U.S. appears to 

have been immigrant intent, i.e. the government was afraid that these prospective 

students would stay in the u.s. after they completed their studies. On the other hand, 

many policy makers simultaneously decried the fact that increasing numbers of 

international students who had studied here were returning to their countries of origin to 

contribute to the development of their economies and universities rather than to ours. 

The traditional American welcome mat was withdrawn after 9/11. Although the situation 

has slowly improved, damage has been done and continues. The matters discussed here, 

together with larger geopolitical considerations, have created a far less favorable opinion 

of the United States in much of the world than that to which we are accustomed. For 

example, in 2005, the Pew Research Center asked 17,000 people from 16 countries 

"Suppose a young person who wanted to leave this country asked you to recommend 

where to go to lead a good life - what country would you recommend?" In o~y one of 

the 16 countries (India) was the U.S. the most frequently recommended country. 

WHY OPENNESS IS OF GREAT NATIONAL VALUE 

My views on the critically important value to U.S. national interests of maximizing the 

flow of scientific and technological knowledge and people are driven by five 

considerations: 

1. America's traditional values and strengths, 
22 

7 

2. The nature of basic science and technology. 

3. U.S. science and engineering workforce, 

4. The value of a well-educated world, and 

5. National Security writ large. 

It is my belief that America's modem economic and military strength and leadership have 

been made possible by our unique combination of democracy, market economy, 

investment in research and advanced education, and diversity. As fundamental as these 

factors are, they are threatened or damaged by bureaucratic restrictions on openness 

beyond those classified areas that truly must be maintained as national secrets. 

Simultaneously, we are disinvesting in the research universities and scientific 

infrastructures that make our success possible, even as many other countries have learned 

from us and are implementing the policies and making the investments in which we used 

to lead. As I noted at the beginning ofilis testimony, it is more important to keep filling 

our scientific and technological bucket than to obsessively plug the leaks. 

Here is an example of what our openness has brought to America: At MIT we are very 

proud of the Nobel Laureates who teach and work on our campus. Those who received 

their Nobel Prizes in recent decades were born in the United States, India, Germany, 

Italy, Mexico, and Japan. Similarly, the recent Laureates from the University of 

California were born in the United States, Taiwan, Poland, France, Hungary, Germany, 

Austria, and Norway. 

These scientists, as well as countless others, came to the U.S. because of our openness 

and investments, and because American colleagues understand that science thrives in 

unfettered communication among scientists everywhere. Indeed, the conduct of science 

requires criticism and testing of the repeatability of experiments by other scientists. 

Scholarly pursuits more broadly require access to knowledge and artifacts, and are 

strengthened by criticism and exploration from different vantage points. One need only 

look back to the history of the Soviet Union to understand that science, even science 

practiced by brilliant and well-educated scholars, cannot flourish in isolation. In a similar 
23 

vein, advancing and improving commercial technology benefits by open discussion and 

pre-competitive cooperation. 

8 

Let me tum to my deep concern about the future of the U.S. engineering workforce. This 

is the Knowledge Age, and to be able to compete and lead in the global marketplace, we 

need people with knowledge - especially engineering knowledge. But here is the reality: 

Across Asia, more than 21 percent of university graduates today are engineers. Across 

Europe, about 12.5 percent of university graduates are engineers. In the United States, 

only 4.5 percent of our university graduates are engineers. The primary reason that we 

haven't already been economically steamrollered is obvious: we import engineering 

talent. Talented immigrants now comprise a large percentage of our engineering and 

scientific faculties, and just over 50 percent of our engineering PhD students are non-U.S. 

citizens. And in 1998, Chinese and Indian CEOs alone were running around one quarter 

of the companies in Silicon Valley, accounting for $16.8 billion in sales and more than 

58,000 jobs. In 2005, immigrants founded 25 percent of U.S. startups and the fraction of 

immigrant-founded Silicon Valley startups was 52.4 percent. These figures are now 

declining as individuals find improving opportunities in other countries and as we 

squeeze our institutions. From 2009 through 2012, the number of applications to U.S. 

graduate schools from overseas increased about 10 percent annually; for 2012-13, these 

applications grew by less than 2 percent. And from 2009 through 2012, the number of 

applications to U.S. graduate schools from China increased about 20 percent annually; for 

2012-13, these applications declined by about 5 percent. 

These warning signs about our future engineering and technical workforce must be taken 

seriously. They reflect many things, particularly the deep problems of STEM education 

in our K-12 system and a popular culture that broadly does not value science and 

engineering. But they also reflect the impact of policy and negative perception about 

declining openness and opportunity at a time when opportunity is rising elsewhere in the 

world. In the long run, if these trends continue, it is likely that loss of scientific 

leadership and decline in the talent base available to us will cause serious economic and 

security damage. 
24 

9 

Another important topic regarding openness is education, not only on our campuses, but 

also through the Internet and World Wide Web. As I have indicated, damaging 

restrictions on access to our universities and research institutions were threatened or 

implemented in the 1990s. Post 9111, pressures for restriction on foreign students and 

scholars intensified, and discussions in Washington considered barring non-U.S. citizens 

from even studying certain subjects in our universities. Fortunately, many of these 

pressures and considerations subsided. Today, initiatives such as MIT's 

OpenCourseWare and MOOCS (Massively Open Online Courses) offered by both nonprofit and for-profit university consortia like edX and Coursera represent another form of 

openness valued by the academic community. 

In many ways, these movements were initiated by MIT's OpenCourseWare program that 

makes the basic course materials such as detailed lecture notes, course syllabi, reading 

lists, problems sets, examinations, etc. available on the web at no cost for anyone who 

wishes to use them. They have been used by millions of teachers and self-learners all 

over both the developed and developing worlds. The materials can be used in whole or in 

part, added to or modified, and tuned to local needs and contexts. This and other open 

courseware programs have brought value to students and teachers around the world and 

have created very positive images of the United States as a generous nation. 

MOOCs and other advanced on-line learning tools are in their infancy. But already it is 

clear that they reach very large numbers of students throughout the world and directly 

provide actual education to them, often with mechanisms for feedback on homework 

assignments and exams. While these initiatives and organizations deliver aspects of what 

is best in American higher education to massive numbers of students who might or might 

not be able to come to the U.S., most of us believe that a well-educated world is a better 

world in the long run. They reflect U.S. leadership despite the fact that they contribute 

knowledge, learning, and opportunity to those who will compete with us in the future. 
25 

10 

Our national security is no longer a straightforward matter of dominance in weapons 

technology over a well-defined threat such as the Soviet Union during the Cold War. Our 

national security now and in the future is primarily a matter of science- and technologydriven economic strength in a highly competitive and thoroughly integrated world 

economy. While recognizing that a narrow segment of truly critical technologies needs 

to be protected by well-enforced classification, I believe our national security generally is 

best served by maximizing openness of scientific discourse and knowledge, precompetitive technologies, and education. 

COMPETING AND COOPERATING: THE 21 ST CENTURY REALITY 

Finding the right balance between openness and security of our citizens and institutions is 

not always easy. And it plays out as much, or perhaps even more, in the industrial and 

economic domains than in traditional national security domains. Just as there no longer 

is a singular military threat from the Soviet Union, there also is not a singular economic 

threat such as a surging Japan. The world and its institutions are now connected and 

integrated by instant digital communication, readily shared knowledge, an expanding 

talent base, and the accelerating emergence of new markets in every comer of the world. 

Just as there is a modest slice of technology secrets that must be classified, so too must 

industry expect effective patent systems to protect truly valuable intellectual property. 

But in general, the response of our companies to this new age has been to become far 

more open. First, in recognition of growing markets and capabilities, they have moved 

many of their operations to countries where the new consumer bases and talent are. No 

matter where they produce goods or deliver services, their supply chains are now global 

networks. For example, it is reported that the new Boeing 787 is assembled from 

132,000 engineered parts manufactured in 545 locations around the globe. Furthermore, 

companies have moved dramatically to Open Innovation, Le. they no longer do 

everything themselves; rather, they acquire technology from wherever it is found in the 

world, including sometimes from their own competitors. These interactions have also led 

to situations in which some intellectual property (lP) is not held as closely as in the past. 
26 

11 

Some elements oflP are readily shared and frequently even given away. In other words, 

the world of business and industry is becoming more open, and what have emerged are 

new balances in which companies, and indeed nations both compete and cooperate. 

A powerful example of global openness by businesses is found with Apple's 

development of the iPad. By openly sharing the necessary infonnation about its 

computational codes and promUlgating standards, Apple created a worldwide industry of 

"App" developers, most of them creative young individual entrepreneurs. 

So in many ways, competition and cooperation are the yin and yang of the 21st century. 

We must do both, and federal policy surely affects our ability to do so 

Let me give a specific example: In 2011, the U.S. National Academy of Engineering 

(NAE) and the Chinese Academy of Engineering (CAE) held a joint meeting of experts 

in Shanghai to discuss the future of Global Navigational Satellite Systems (GNSS). This 

is the system of satellites and ground-based facilities that make possible the GPS systems 

on which we are very dependent today. The Chinese are building a navigational satellite 

system called Compass that will be their equivalent to the U.S. GPS system. The NAE 

brought a delegation of our top experts from universities, business, DOD, and the State 

Department, including the individual who led our original project to deploy the GPS 

system. The Chinese delegation was equivalent in stature and included the government 

official in charge of Compass. Unfortunately, experts from NASA had to withdraw from 

our meeting at the last minute because of Congressionally imposed restrictions on NASA 

interactions with the Chinese. 

In our meetings, we discussed applications to consumer products, transportation, 

agriculture, and science. It was noted in particular that the codes that enable civilians to 

access and use the non-defense U.S. GPS signals are openly published and available to 

anyone, whereas the Chinese codes that would make possible similar uses of COMPASS 

were closed and unavailable. If we could make commercial and scientific use of both the 

U.S. and Chinese systems, the redundancy would improve accuracy, coverage, reliability, 
27 

12 

and safety for all. A highlight of the meeting was when the founder and CEO of one of 

our largest GPS companies explained that in the U.S. the role of the government is to 

launch and maintain the satellite system and provide open codes for its use. Entrepreneurs 

and others in the private sector then find useful applications and bring them to market. I 

believe that such open discussion and cooperation, as well as market-based competition, 

should characterize interactions in the 21 st century. 

Although I have no basis to claim direct cause and effect, soon after this joint meeting, 

the Chinese made the codes for Compass openly available. This is what I mean by both 

competing and cooperating. 

CLOSING COMMENTS 

It has been my intent to present a case for maximizing openness in science, teclmology, 

and education, as well as to present both historical and current policies that sometimes 

get in the way. How should universities and other research institutions respond to 

outdated or misapplied federal policies? I believe the answer has three simple parts, and 

my colleagues and I tried in my years as MIT's president to follow them: 

1. Obey the law. 

2. Reject grants or contracts incompatible with institutional values. 

3. Analyze and give voice to needed reforms in federal policy or its implementation. 

The views I have expressed here are mine, but they are very consistent with recent work 

by the National Academies. In particular, I commend to you our 2009 report. Beyond 

Fortress America: National Security Controls on Science and Technology in a 

Globalized World. The highly experienced committee that drafted that report was cochaired by Gen. (ret) Brent Scowcroft and Stanford president Jolm Hennessy. Its opening 

passage makes its general fmdings clear: 
28 

13 

The export controls and visa regulations thai were crafted to meet conditions 

the United States faced over five decades ago now quietly undermine our 

national security and our national economic well-being. The entire system of 

export controls needs to be restructured and the visa controls on credentialed 

foreign scientists and engineers should be forther streamlined to serve the 

nation's current economic and security challenges. 

Beyond Fortress America, presents four specific findings and three recommendations, 

each with several specific action items that would be required for its implementation. 

The recommendations themselves are: 

Recommendation 1. The President should restructure the export control 

process within the federal government so that the balancing of interests can be 

achieved more efficiently and harm can be prevented to the nation~ security and 

technology base, in addition to promoting U.S. economic competitiveness. 

Recommendation 2. The President should direct that executive authorities 

under the Arms Export Control Act and the Export Administration Act be 

administered to assure the scientific and technalogical competitiveness of the 

United States, which is a prerequisite for both national security and economic 

prosperity. 

Recommendation 3. The President should maintain and enhance access to the 

reservoir of human talent from foreign sources to strengthen the U.S. science 

and technology base. 

As I noted, the Scowcroft-Hennessy report contains details of many specific actions to 

implement these broad recommendations. 

Mr. Chairman, thank you for the opportunity to present this testimony. I would be 

pleased to entertain questions. 
29 

Charles M. Vest 

Charles M. Vest is President of the National Academy of Engineering and President Emeritus of the Massachusetts 

Institute of Technology. 

Dr. Vest earned a BS in mechanical engineering from West Virginia University in 1963 and MSB and PhD degrees 

in mechanical engineering from the University of!l.fichigan in 1964 and 1967 respectively. In 1968, he joined the facmty 

of the University of lYlichigan as an assistant professor; he taught in the areas of heat transfer, thermodynamics, and fluid 

mechanics, and conducted research in heat transfer and engineering applications of Jaser optics and holography. He and 

his graduate students developed techniques for making quantitative measurements of various properties and motions 

from holographic interferograms, especially the measurement of three-dimensional temperature and density fields using 

computet tomography. He became an a!;sociate professor in 1972 and a full professor in 1977. In 1981~ he turned much 

oflits attention to academic administration, and served as the university's associate dean of engineering (1981-1986) and 

dean of engineering (1986-1989) before becoming provost and vice president for academic affairs. 

In 1990, Dr. Vest was elected president of ti1e Massachusetts Jnstitute of Technology (MIT) and served tt1 that 

position until December 2004, when he became professor and president emeritus,.As president ofl\flT~ he was active in 

sciencc1 technology, and innovation policy; building partnerships among academia, government, and industry; and 

championing the importance of open) global scientific communication, travel. and sharing of intellectual resources, 

During his tenure, MIT launched its OpenCourscWare (OCW) initiative; cofounded the Alliance for Global 

Sustainability; enhanced the racial, gender, and cmtural diversity of its students and faculty; established major new 

institutes lfl neuroscience and genomic medicine; and redeveloped much of its campus. 

In 2007, Dr. Vest was elected to serve as president of the US National Academy of Bngineering (NAB) for six 

years. Under his leadership, the NAB promoted the Grand Challenges for Engineering, a set of 14 critical chaUenges for 

engineers in the 21st century, which, if achieved, will inaprove the quality of life for humankind. This effort spawned a 

number of Gnnd Challenges Summits at universities around the Ul1ited States and has contributed to improved public 

understanding of the value and importance of engineering advances to the well-being of the nation and the world. 

Dr. Vest presided over the international expansion of the NAE's Frontiers of Engineering (FOE) program to 

include partnerships with China and thc European Union. In 2009, he launched the annual NAE Frontiers of 

Engineering Education symposium series, aimed at identifying and propagating innovative approaches to engineering 

teaching and learning. He also initiated a major new NAB effort to understand and address changes in global 

manufacturing-design-innovation value chains and their implications for US employment, education, and 

competitiveness. And under his leadership, the NL\E in 2011 undertook a novel partnership with the US fnstitute of 

Peace to consider how the application of technology and of knowledge and methods from engineering and science can 

serve the goals of conflict prevention, peacemaking, and peacekeeping. 

In addition to strengthening and augmenting the strategic programs of the NAB, Dr. Vest exercised his visibility as 

NL\E president to great effect during his tenure, playing a prominent role nationally and internationally in illuminating 

forces reshaping the landscape of engineering research, practice, and education, and tt1 defining the attributes future 

engineers will lequire to compete and lead 1n the emerging global economy. 

Dr. Vest was a director of DuPont for 14 years and oflBM for 13 yeats, and vice chair of the US Council on 

Competitiveness for 8 years. lie also served on various federal COllunittees and commissions, including the President's 

Committee of Advisors on Science and Technology (pCAST) during the Clinton and Bush administrations, the 

Commission on the Intelligence Capabilities of the United States Regarding Weapons of Mass Destruction, the Secretary 

of Education's Comm.ission on tllt.: Future of Higher r:.ducation~ the Secretary of State's Advisory Committee on 

Trallsformational Diplomacy, and the Rise-Chertoff Secure Borders and Open Doors Advisory Committee. He serves 

on the boards of several nonptofit organizations and foundations devoted to education~ scicnce~ and technology, He has 

aucllOred a book on hOlographic interferometry and two books on higher education. He has received honorary doctoral 

degrees from 17 universities. He was awarded the 2006 National Medal of Technology by President Bush and received 

the 2011 Vannevar Bush Award from the National Science Board. 
30 

Chairman BROUN. Thank you, Dr. Vest. I appreciate your testimony. 

Now, I will go to my fellow Marine. We can talk about why you 

left the best service to go to the Army later on offline. But now, 

Dr. Wortzel, you are recognized for five minutes. 

TESTIMONY OF DR. LARRY M. WORTZEL, COMMISSIONER, 

U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION 

Dr. WORTZEL. Chairman Broun, Ranking Member Maffei, Members of the Committee, thanks for the opportunity to appear before 

you today. 

China is putting in somewhere in the area of $1.5 trillion in its 

2006 Medium to Long-Term Plan for the Development of Science 

and Technology, and the expenditure will go from 1.7 percent of 

GDP to about 2–1/2 percent of GDP by 2020. That is still less than 

we spend. 

But for the purpose of this hearing, it really doesn’t matter what 

they are spending. We should be focusing on the fact that China 

is saving an incalculable amount of time, money, and research effort through espionage and intellectual property theft. And that 

science and technology cooperation programs certainly are vital to 

China and help foster better cooperation between China and the 

United States, but there remains a substantial espionage threat 

posed by Chinese nationals that are working at U.S. labs. 

The U.S.-China Economic and Security Review Commission in its 

annual reports have reviewed how China acquires foreign technology through traditional espionage and through cyber espionage, 

and we have recommended that Congress provide additional funding and emphasis on export control enforcement and counterintelligence efforts to detect and prevent espionage. 

I have to say there is sort of a natural tension between maintaining scientific openness and preventing espionage. Dr. Vest talked 

about National Security Decision Directive 189 and that was in 

1985, but in 2010 and 2012, the Office of the Secretary of Defense 

in two other reviews really reaffirmed that decision, that fundamental research, basic and applied research has to remain open, 

and anything else is probably going to cripple our universities, cripple our companies, and cripple our graduate education. 

So if there is one place you might focus, it is on this dividing line 

between fundamental research and applied technology development. Where is that? It is a little opaque to me. And second, you 

might look at specific new or emerging technologies that require 

additional protection. The Army argues that developments in biological agent research, robotics, information and cyber systems, 

nanotechnology, and explosives or energetics should get a little bit 

more attention. And other services want to look at integrated circuit technology, new materials and processes. So I think there is 

room for that. 

I also think there is a lot of room for better education in the labs 

and in universities because you have to know what the cover organizations are that these researchers come in under. Some of 

them—almost all of the intelligence collection organizations I have 
31 

had familiarity with in China have cover organizations, and most 

people don’t know them, including a number of new FBI agents. 

The other thing to think about when you look at China is you 

really have to consider the political environment in the home country of a particular researcher. You are dealing with a citizen of an 

authoritarian state that is ruled by a single party. The Chinese 

Communist Party runs the country, runs the police, the intelligence 

agencies, and the judiciary. They are all members of the Communist Party. And any resident that applies to study overseas or 

for a visa is essentially a potential hostage to party dictates. And 

that is in a country that has no rule of law. 

People in China that apply for these passports are often interviewed by the security services. Their future employment, where 

their relatives live, their relatives’ employment is subject to a great 

deal of pressure. So—and there is no right of refusal for citizens 

of China if a government asks them to gather information. 

Thank you for the opportunity to make this testimony and I am 

happy to answer any questions you have. 

[The prepared statement of Dr. Wortzel follows:] 
32 

"Espionage Threats at Federal Laboratories: Balancing Scientific Cooperation while 

Protecting Critical Information" 

Testimony of Larry M. Wortzel 

before the House of Representatives 

Committee on Science, Space and Technology Subcommittee on Investigations and 

Oversight 

May 16,2013 

Chainnan Broun, Ranking Member Maffei, members ofthe sub-committee, thank you for 

the opportunity to testify today. I will discuss balancing scientific cooperation, the protection of 

critical infonnation, and the espionage threat from China. As a member of the U.S.-China 

Economic and Security Review Commission, I will present some of the Commission's findings 

on China's science and technology policy and its goals, priorities and strategies with respect to 

the United States. The views I present today, however, are my own. 

A report prepared for the U.s.-China Economic and Security Review Commission makes 

it clear that China's 2006 Medium to Long-term Plan for the Development of Science and 

Technology sets goals "of becoming an innovative nation by 2020 and a global scientific power 

by 2050."l In order to achieve this goal, the Chinese government has invested a great deal of 

money and effort in subsidizing industry, insisting on transfers of science and technology to 

China when approving foreign investment, and funding over fifty nationally directed science and 

technology parks." It looks as though China will invest about $1.5 trillion in strategic emerging 

sectors in the next five years with research and development spending expected to increase from 

1.7 percent ofGDP in 2007 to 2.5 percent ofGDP by 2020. For the purposes of this hearing, 

1 
33 

however, we should be focused on the fact that China saves incalculable amounts of time, money 

and research effort through espionage and intellectual property theft. 

The Chinese Academy of Sciences operates 100 research institutes and there are more 

than 45,000 other research institutes and laboratories in China responsive to Beijing's direction 

and planning.3 This nationally directed infrastructure seeks to obtain technology from foreign 

finns in key scientific areas that often have military application. Many of China's researchers 

and scientists have trained at U.S. institutions or have worked in U.S. finns, also adding to the 

transfer of American technology. 

Science and technology cooperation programs are vital to China's own long-term goals, 

but they also help foster bilateral cooperation between China and the United States. However, 

there also is a substantial espionage threat posed by the large number of Chinese nationals 

working at U.S. laboratories and academic institutions. The counterintelligence education web 

site maintained by the Federal Bureau ofInvestigation highlights the "insider threats" posed by 

foreign intelligence collection to research, technologies, and intellectual property ostensibly 

protected by export controls.4 Indeed, of the ten incidents of"insiderthreat" espionage cited by 

the FBI, six cases are related to China. Three fonner U.S. officials, Mike McConnell, fonner 

Director of National Intelligence; Michael Chertoff, fonner Secretary of Homeland Security; and 

William Lynn, fonner Deputy Secretary of Defense, said in a January 27,2012 Wall Street 

Journal opinion piece that: "The Chinese government has a national policy of espionage in 

cyberspace, pointing out that "it is more efficient for the Chinese to steal innovations and 

intellectual property than to incur the cost and time of creating their own." This cyber espionage 

takes place alongside or in conjunction with other fonns of espionage. 

2 
34 

The U.S.-China Economic and Security Review Commission's annual report of 2007 

reviews how China acquires foreign equipment and technology to support its defense industrial 

base and documents six espionage prosecutions related to China.s That annual report 

recommended that Congress provide additional funding and emphasis on export control 

enforcement and counterintelligence efforts to detect and prevent espionage. In 2009, the 

Commission's annual report to Congress addressed espionage conducted by Chinese statecontrolled research institutes and commercial entities.6 In 2012, the Commission recommended 

that Congress ask the National Academy of Sciences for an assessment of Chinese strategies to 

acquire technology and to identify the extent to which industrial espionage has been used as a 

tool to advance China's interests. 

According to the National Counterintelligence Executive, "of the seven cases that were 

adjudicated under the Economic Espionage Act (18 USC 1831 and 1832) in Fiscal Year 2010, 

six involved China." An article in a March 2012 manufacturing newsletter notes that "there have 

been at least 58 defendants charged in federal court related to Chinese espionage since 2008.,,7 

China's targets have included are stealth technology, naval propulsion systems, electronic 

warfare systems for our ships and aircraft, and nuclear weapons. 

There is a certain natural tension between the goal of preventing espionage by China (or 

any other country) and maintaining scientific openness. National Security Decision Directive 189 

(NSDD 189), of September 21, 1985, makes it clear that U.S. national policy is that "to the 

maximum extent possible, the products of fundamental research remain unrestricted;" when 

restrictions are needed, the answer is that the products be classified as national security 

infonnation according to U.S. statute.s The directive went on to define "fundamental research" 

as "basic and applied research, the results of which ordinarily are published and shared broadly 

3 
35 

within the scientific community, as distinguished from proprietary research from industrial 

design, production, and product utilization, the results of which are restricted for proprietary or 

national security reasons." In a 2010 memorandum to defense agency heads and military 

department secretaries, then Under Secretary of Defense for Acquisition, Technology and 

Logistics Ashton B. Carter restated Department of Defense policy on fundamental research to 

ensure that it followed NSDD 189. He also instructed the Department of Defense that where 

controls are needed, classification of the product is the "only appropriate mechanism.,,9 

This tension between what needs to be protected for national security and openness in 

scientific research is not new. In 1984, when I was a credentialed counterintelligence special 

agent for the Anny and an investigator for the Counterintelligence and Security Policy 

Directorate of the Office of the Secretary of Defense, I had personal experience with this issue. 

In the interest of scientific cooperation and openness, a U.S. government computer data base 

containing oceanographic data such as bathymetric readings, undersea currents, and salinity was 

linked to computers in the Academy of Sciences of the Union of Soviet Socialist Republics. 

Some of these data were collected by U.S. Navy oceanographic research ships. The Department 

of the Navy approached the Oftice of the Secretary of Defense and the National Seeurity Council 

expressing concern that although the information was fundamental research, sharing it with 

Moscow presented a national security concern. According to the Navy, the stored data sets 

provided a great deal of infonnation critical for submarine navigation and could support the 

launch of ballistic missiles from submarines. Members of Congress got quite upset about Navy 

and DOD attempts to restrict fundamental research and I was called upon to testify before the 

Oceanography subcommittee of the House Committee on Merchant Marine and Fisheries about 

the entire matter. 10 Ultimately, research results that needed protection had to be classified. Now 

4 
36 

here we are, thirty years later, still wrestling with the potential national security implications of 

foreign access to fundamental research. 

I can suggest a few approaches that our nation might take. Obviously, perhaps it is time 

to once more evaluate the distinctions among basic, applied research and advanced technology 

development. What was true in 1985 may need to be updated to remain true today. To be 

candid, however, I think the scientitic community and the country would come down in about 

the same place. A report on basic scientific research by the Defense Science Board last year did 

not suggest more controls on research, but instead recommended that the Department of Defense 

develop a technology strategy and remain involved in cutting edge basic research. I I There are 

many threats to our security today, China included, but if we could live with open fundamental 

research during the Cold War, we can probably live with it today. After all, U.S.-China relations 

are substantially different than were U.S.-Soviet relations. 

Instead of trying to restrict scientific research and experimentation, we ought to look 

more carefully at the institutions where research is being conducted and who is involved in the 

research. Also. some types of research may require more controls. In his May 24, 2010 

memorandum on fundamental research, then Under Secretary Carter said that '"there will be 

compelling reasons for DOD to place controls on some research that is performed on campus at a 

university, but such occasions should be rare and each must be scrutinized.,,12 

If laboratories or academic institutions are engaged in fundamental research and at the 

same time are involved in research on proprietary, export-controlled or classified matters, it is 

incumbent on the government or industry to ensure that foreign nationals do not get unauthorized 

access to export controlled or classified research. Also, the information systems of institutions 

5 
37 

involved in controlled or classified research should be separate from those that are open to all 

researchers. 

Ifa strong case can be made that there are some new or emerging technologies that 

require additional protection, that argument must stand up to public and scientific scrutiny. 

Leaders of the U.S. Army are most worried about developments in the areas of biological agent 

research, robotics, information and cyber warfare systems, nano-technology, and explosives or 

energetics. Other military services expand this list to include directed energy systems, chip and 

integrated circuit technology, and new materials and processes. At what point does research on 

these issues move from basic or applied research, which is "fundamental," to research that 

requires export controls or classification? And does that standard of open fundamental research 

apply to every country in the world? 

The FBI and the Defense Security Service, which administers the Defense Industrial 

Security Program, make the point that foreign nationals from some countries seem to have a 

higher track record of engaging in espionage. But they don't give academia a list of those 

countries. 

When you look at China, you must consider the political environment in the home 

country of a particular researcher. You are dealing with a citizen of an authoritarian state that is 

ruled by a single political party. The Chinese Communist Party runs the country, the police, 

intelligence agencies, the university heads, as well as members of the judiciary, who are all 

members of the Communist Party. All residents are potential hostages to party dictates in a 

nation that has no rule of law. People in China applying for passports and permission to study or 

conduct research overseas may be interviewed by the security services. The future employment 

of these individuals, their place or residence, and the residences and employment of their family 

6 
38 

or loved ones is subject to Party dictates. A foreign national from China, or a state like China, is 

vulnerable to coercion and to having his or her loved ones held hostage. And there is no right of 

refusal for citizens of these states when the government asks them to gather information. 

No policy on fundamental research will resolve this problem, however. It is up to 

American government security services and the FBI to appropriately administer programs that 

involve classified or export controlled infonnation. And it is up to the government to ensure that 

foreign nationals do not get access to infonnation that should not be disclosed to them. 

In my personal view, Congress should direct the executive branch to maintain a classified 

list of countries, people and companies that pose a serious espionage threat to our government 

and industry. Such a listing could be validated across the intelligence community. When 

nationals from those countries are involved in research at places that also have programs 

involving classified or export-controlled infonnation, it is up to the government to develop 

security and risk mitigations measures. 

In 2012, a news article in Bloomberg used the attention-grabbing headline "American 

Universities Infected by Foreign Spies.,,13 The story here is compelling, but the headline may be 

a little exaggerated. Certainly there are cases of foreign researchers attempting to gather exportcontrolled infonnation or even engaging in economic espionage. But the infection is not a fatal 

one, nor is it so serious that we need to completely revise how we understand fundamental 

research. If we attempted to do that, we would probably cripple undergraduate and graduate 

education in the United States. However, some of the examples cited in this article are 

instructive. A Chinese researcher, Yu Xiaohong, allegedly attempted to conceal her academic 

background and make a visit to a researcher on celestial bodies and navigation at the University 

of Michigan. It turned out that she was from a Chinese People's Liberation Anny advanced 

7 
39 

educational and research institution and had written an earlier paper on anti-satellite warfare. 

The U.S. professor she wanted to visit became suspicious of her intentions and stopped the 

exchange. In other cases, Chinese researchers have engaged in economic espionage or have 

taken trade secrets. The FBI has been pretty successful at prosecuting such cases. This suggests 

that Congress might provide more resources to the FBI and other federal agencies charged with 

protecting classified and export-controlled information to conduct more investigations and to 

increase education about the foreign intelligence collection threat. It is fair to assume that most 

of the researchers who apply for and undertake scientific and technical research for the 

govemment have the best interests of the United States at heart. If trained to be observant, they 

may report suspicious activity. 

There is probably some utility to asking scientists to further develop concepts of the 

distinctions between applied fundamental research and developmental research. My sense is that 

the distinction is a little opaque, like the definition of "national security.,,14 Executive Order 

13526 or December 29,2009, "Classified National Security Information," says that "scientific 

technological, or economic matters relating to the national security" may be classified, and it 

goes on to define national security as "the national defense or foreign relations of the United 

States.,,15 That still is rather ambiguous. It is clear, however, that if a university or laboratory is 

conducting research for the govemment, it is up to the govemmen! to set the standards for who 

may have access to the research, how the research is to be protected (if at all), and how 

fundamental research is to be segregated from developmental research with national security 

applications. 

Those distinctions cannot be left to the security or intelligence community alone, because 

generally the experts there are not involved in advanced scientific research. Any effort at 

8 
40 

determining when or if to restrict access to scientific research must involve members of the 

scientific community and industry. Some things, however, may be self-evident. We probably 

might want to take a harder look at graduate students from Iran or North Korea working on 

advanced explosive research or applied nuclear physics. 

One example for ways to better-identify potential espionage threats to our national 

security and to screen nationals ofthe countries posting such threats is provided by some of the 

language in S. 884, the "Deter Cyber Theft Act." In this bill, the Director of National 

Intelligence is directed to compile and report to Congress a list of foreign countries that engage 

in economic or industrial espionage and, among other things, a list of targeted technologies. 

Applying that approach to laboratories and universities engaged in advanced research would help 

oversight programs to be more cognizant of which foreign researchers get access to what 

government research projects. It would facilitate screening of foreign nationals working on 

government projects, and if the most critical technologies and processes for defense or national 

security application were prioritized, tell us where to be more discriminating in allowing foreign 

nationals access to research. 

Finally, if there are new emerging technologies that require export controls to protect 

U.S. national security Congress should inquire as to what they are and oversee how such new 

controls are imposed. 

1 Micah Springut, Stephen Schlaiker, and David Chen, China's Programfor Science and 

Technology Modernization: Implications for American Competitiveness, A report prepared by 

Centra Technology Inc., Arlington, VA (Washington, DC: U.S.-China Economic and Security 

Review Commission, 20 II), 6. 

2 Susan M. Walcott, "Chinese Industrial and Science Parks: Bridging the Gap," I. ProfeSSional 

Geographer 54:349-364 (2002), http://libres.uncg.edufir/uncglf/S_Walcott_Chinese _ 2002.pdf 

9 
41 

3 Springut, Schlaiker and Chen, China's Program for Science and Technology Modernization, 

18. 

4 Federal Bureau oflnvestigation, Counterintelligence, "Higher Education and National 

Security: The Targeting of Sensitive, Proprietary, and Classified Infonnation on Campuses of 

Higher Education," http://www.fbi.gov/about-us/investigate/counterintelligence/highereducation-and-national-security 

5 U.S. China Economic and Security Review Commission, Annual Report 2007 (Washington, 

DC: November 2007), 104-106. 

6 U.S. China Economic and Security Review Commission, Annual Report 2009 (Washington, 

DC: November 2007), 158-59. 

7 http://www.manufacturing.netlarticles/2 0 12/03/let -me-count -the-wa ys-china-is-stealing-oursecrets 

8 The White House, National Security Decision Directive 198: The National Policy on the 

Transfer of Scientific, Technical and Engineering Information, September 21,1985. 

9 The Undersecretary of Defense, Memorandum on Fundamental Research, The Pentagon, 

Washington, DC, May 24, 2010. 

to Subcommittee on Oceanography, Committee on Merchant Marine and Fisheries, House of 

Representatives, 98th Congress, Second Session, "U.S. Marine Scientific Research Capabilities 

Oversight," September 26,1984, Serial 98-54. 

11 Office of the Under Secretary of Defense for Acquisition, technology and Logistics, Report of 

the Defense Science Board Task Force on Basic Research (Washington, DC: Department of 

Defense, January 2012. 

12 The Undersecretary of Defense, Fundamental Research, p. 2. 

13 Daniel Golden, "American Universities Infected by Foreign Spies Detected by FBI," 

Bloomberg, April 8, 2012 http://www.bloomberg.comlnews/2012-04-08/american-universitiesinfected-by-foreign-spies-detected-by-fbi.html 

14 See Executive Order 13526 of December 29, 2009, "Classified National Security 

Information," Federal Register, 75:2, January 5,2010, Part I, Section 1.4 (e). 

15 Ibid, Part 6, (cc). 

10 
42 

Larry M. Wortzel, Ph.D. 

Dr. Larry M. Wortzel has decades of experience in intelligence, international trade and 

economics. foreign policy, national security, and military strategy. He had a distinguished 32-year 

military career, retiring as an Army colonel in 1999. His last military position was as director of the 

Strategic Studies Institute of the U.S. Anny War College. Dr. Wortzel spent four years an Anny 

counterintelligence special agent and investigator assigned to the Office of the Secretary of Defense. 

After his retirement from the Army, he was director of the Asian Studies Center of The 

Heritage Foundation and then vice president for foreign policy and defense studies at Heritage. Dr. 

Wortzel is a commissioner on the congressionally-appointed U.S.-China Economic and Security 

Review Commission. 

Following three years in the Marine Corps and attending college, Wortzel enlisted in the U.S. 

Army in J 970. His first assignment with the Army Security Agency took him to Thailand, where he 

focused on Chinese military communications in Vietnam and Laos. Within three years he had 

graduated Infantry Officer Candidate School, as well as both the Airborne and Ranger schools. 

Atler serving four years as an infantry officer, Wortzel shifted to military intelligence, assigned 

to the Intelligence Center Pacific, part of the U.S. Pacific Command, from 1978 to 1982. He then 

attended the National University of Singapore where he studied advanced Chinese and traveled in Asia. 

Wortzel was next assigned to the Office of the Secretary of Defense, developing counterintelligence 

programs to protect America from foreign espionage as well as investigating suspected espionage. He 

also managed programs to gather foreign intelligence for the Anny Intelligence and Security 

Command. 

From \988-1990, Wortzel was Assistant Anny Attache at the U.S. Embassy in China, where he 

witnessed and reported on the Tiananmen Massacre. After assignments as an Anny strategist and as an 

intelligence personnel manager, he returned to the American Embassy in China in J 995 as the Army 

Attache. 

In December 1997, Wortzel became a faculty member of the U.S. Anny War College, serving 

as director of the Strategic Studies Institute. He retired from the Anny as a colonel. 

Dr. Wortzel's books include Class in China: Stratification in a Classless Society (Greenwood 

Press, 1987); China's Military Modernization: International Implications (Greenwood, 1988); The 

Chinese Armed Forces in the 2 J'" Century (Carlisle, P A, 1999); and Dictionmy (j{ Contemporary 

Chinese Military History (Greenwood, \999). He has edited six other books on China and contributed 

chapters to books on Chinese military history, war-fighting doctrine, and Asia-related strategy issues. 

His expert views on China and Asia have been sought by such publications as The Wall Journal. The 

Washington Times, The New York Times, Tribune Newspapers, National Journal, Asahi Shimbun, and 

Sankei Shimbun. Wortzel has appeared on The PBS News Hour, The History Channel, Fox News, 

CNN, MSNBC, BBC, and Al Jazeera. He is a member of the Council on Foreign Relations and the 

International Institute of Strategic Studies. 

Wortzel's newest book, The Dragon Extends it Reach: Chinese Military Power Goes Global 

will be published by Potomac Books, Inc. next month (www.potomacbooksinc.com). 

A graduate of the U.S. Anny War College, Wortzel earned his B.A. from Columbus College, 

Georgia, and his M.A. and Ph.D. in political science from the University of Hawaii. He resides in 

Williamsburg, VA. 
43 

Chairman BROUN. Thank you, Dr. Wortzel. 

Now, Ms. Van Cleave, you are recognized for five minutes. 

TESTIMONY OF HON. MICHELLE VAN CLEAVE, 

SENIOR FELLOW, HOMELAND SECURITY POLICY INSTITUTE, 

GEORGE WASHINGTON UNIVERSITY 

Ms. VAN CLEAVE. Thank you, Mr. Chairman and Members of the 

Committee. It is, as you say, a pleasure for me to be here because 

it is like old home week being back in the old Committee hearing 

room for me. 

Chairman BROUN. Do you feel like you need to sit back up here 

somewhere? 

Ms. VAN CLEAVE. Yes, sir. That is fine. 

Chairman BROUN. Go ahead. Sorry. 

Ms. VAN CLEAVE. But what I would like to do is just to take a 

second to tell you about another job that I had, which was in the 

last Administration as the National Counterintelligence Executive 

of the United States. I have to say it is the most fascinating job 

that no one has ever heard of and very relevant to the subject of 

today’s hearing. 

There were two major currents that led to its creation. One was 

in the wake of the Rick Ames espionage case. Ames had been spying for then the Soviet Union and later Russia for nine years deep 

within CIA and it was quite a shock to U.S. intelligence to discover 

that there had been such a damaging and horrible penetration into 

U.S. intelligence. So there were studies in the wake of that asking 

what had we missed? Why did we miss it? What were the seams 

that needed to be plugged? 

And out of those studies came a recommendation from President 

Clinton that there should be created a National Counterintelligence 

Executive to head up all of U.S. counterintelligence. We had not in 

decades past since the inception of our current intelligence infrastructure ever had any individual position where all parts of U.S. 

counterintelligence would come together. So President Clinton, in 

an Executive Order, created this position, which was later put into 

law in 2002 by the Counterintelligence Enhancement Act passed by 

this body. 

Second, in the wake of the end of the Cold War, there were a lot 

of other actors involved in intelligence activities against the United 

States. That included not only the more traditional targets of espionage of our national security secrets, but broader interests in the 

U.S. science and technology, our economic base, the riches of this 

country as well; and we didn’t have a way within the U.S. Government to bring together policy and strategy to deal with this kind 

of threat broadly to the U.S. economy and society. So that was another current that led to the creation of the position of the NCIX, 

as the job is called. 

And thirdly, I would observe—and this is from my experience 

with the job—that intelligence is an asset, a technique, resources, 

a set of tools that foreign powers use to advance their interests and 

disadvantage ours. And there is a question about how we think 

about those kinds of threats to the United States from the perspective of how we develop national strategy and policy. And that be-
44 

came yet another responsibility of the office of the NCIX: to provide 

these kinds of policy options to the President and his national security team. 

With that lengthy explanation, it brings me to why I think today’s hearing is so important and the fact that the Oversight Subcommittee is taking on this subject. 

The United States invests more in R&D on an annual basis than 

all of the G–8 combined. We are everybody in the world’s number 

one target for collection because of that. This is where everything 

is. All the goodies of our R&D capabilities are resident here in the 

United States in the things that we do, and so we are everyone’s 

number one target with the possible exception of some of our closest allies, and in that case, even some of those would find us their 

number one target. 

And they are interested in virtually everything in our economy, 

in our economic activity, including, of course, our science and technology. This is not a new threat, but the point I want to convey 

to you is that these numbers are growing in terms of actors and 

reach and costs. It is true that during the Cold War we had a core 

unitary threat, and the fact that we had a unitary threat made it 

easier to deal with that. Today, the multiplicity of threat, multiplicity of actors makes it vastly more difficult to deal with. And 

these numbers have frankly overwhelmed our ability to deal with 

those kinds of threats given the current apparatus that we have. 

Mr. Chairman, the report that you mentioned that the Pentagon 

released on Chinese military activities is significant for many reasons, but one of those reasons is that it is the first official acknowledgement that the Chinese have a dedicated program to acquire 

U.S. technology that is sophisticated, highly resourced, tasked, and 

very, very active and successful against us and they are not the 

only ones. 

So how do we understand the costs of this? Well, the FBI estimated in the last Fiscal Year that economic espionage costs us 

about $13 billion a year, but I would say that figure substantially 

underestimates the potential cost, first, because there is underreporting. You don’t see firms coming forward and saying we have 

been hit, so it is difficult to estimate all of that. Second, there is 

a dynamic cost in estimating—dynamic scoring if you will in understanding real economic costs. You know, what is the cost when we 

lose competitive ideas in our R&D base. And then thirdly, the 

whole cyber dimension, which is a hearing unto itself— ‘‘the largest 

transfer of wealth in history’’ as the Director of NSA has called 

cyber attacks against us. 

So when you put all of those things together, we have a serious 

problem and it is growing worse every year, and reports out of government are worse every year. And so we talk every year about the 

need to balance. So the question back to this Committee is if things 

continue to grow worse at what point is it genuinely a terribly serious problem for the United States that there is this hemorrhaging 

of our technology? 

I welcome your questions. 

[The prepared statement of Ms. Van Cleave follows:] 
45 

Michelle Van Cleave 

Senior Fellow, Homeland Security Policy Institute 

George Washington University 

Statement before the 

House Committee on Science, Space, and Technology 

Subcommittee on Oversight 

May 16, 2013 

Espionage Threats at Federal Laboratories: 

Balancing Scientific Cooperation while Protecting Critical Information 

Mr. Chairman, 

Thank you for the opportunity to appear today to discuss the foreign intelligence threats 

to America's science and technology enterprise. Having served as head of U.S. 

counterintelligence under President George W. Bush, I can tell you that foreign 

intelligence services are far more active against us ... and far more successful ... than 

most Americans would ever imagine possible. 

The most intense and dangerous foreign espionage efforts are directed against what we 

might call traditional targets, e.g., the secrets of our weapons laboratories, or the 

operational specifications of our intelligence satellites, or our military plans and 

capabilities, or the sensitive decision making apparatus of our government. But it doesn't 

stop there. 

In fact, foreign collectors are interested in virtually all aspects of U.S. economic activity 

and technology, and their numbers are growing. According to Battelle's Congressional 

R&D Caucus brief, America invests some $420 billion annually in R&D, more than all of 

the G-8 combined. So it is little wonder that we are the world's candy store for other 

powers looking to gain advantage on the cheap: by stealing it. 

While some of this illicit activity may be oppOltunistic, the larger threats are purposeful 

and strategically directed and coordinated. As I will explain, this is hardly a new 

phenomenon but it is growing in significance and scope. Some of the very factors that 

historically have contributed to U.S. economic growth and technological progress have at 

the same time facilitated foreign entities' technology acquisition efforts against 

us. Human collection is integrated with cyber operations in ways that magnify the reach 

of both. And it is far from clear that our intelligence insights are deep enough, or our 

policies effective enough, to address the strategic implications of these threats. 

This is a reality that is sharply at odds with the free and open values that underpin the 

world of science and research and the expansion of knowledge. As the National 

Research Council wrote in its 2007 study on science and security, 

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The task of achieving the appropriate balance between the need for rapid, 

open communication among scholars and the safeguarding of infonnation 

that could be used to do us hann is a challenging one, and it is one that 

requires the continual and sustained attention of the scientific community. 

The ... nation can and must strike this balance so that our extraordinary 

creativity and productivity can continue to flourish and propel us into a 

prosperous future.! 

The question is, is the current balance "appropriate"? And how would we know if it was 

not? 

Russia 

Let me begin by telling you a success story out of the Cold War. At their very first 

meeting, newly elected French President Francois Mitterrand brought President Reagan a 

very special gift. Mitterrand confided that French intelligence had a source, deep inside 

the KGB, who was providing unparalleled information about Soviet technology 

acquisition from the West. Thanks to this source, codenamed "Farewell," western 

intelligence gained invaluable insights into Soviet intelligence tasking and collection 

operations directed against our R&D and technology base. 

"Farewell" revealed that the Soviet Union had built an intricate network of state 

organizations to carry out focused and wide-ranging technology acquisition activities to 

support its military buildup. [n addition to the KGB and the GRU (military intelligence), 

these included the State Committee for Science and Technology, the Ministry of Foreign 

Trade, and the State Committee for Foreign Economic Relations. The Soviet Academy 

of Sciences also played a role in obtaining documents and facilitating contacts. 

Among other things, "Farewell" was able to provide the central Soviet "shopping list" for 

U.S. technologies. We learned that Soviet weapons production planning included express 

requirements for the acquisition of Western technologies or parts, as an integral feature in 

their weapons development work. So in effect, the U.S. was subsidizing the Soviet 

economy and in particular its military buildup. 

The insights provided by "Farewell" - whose real name was Vladimir Vetrov -- played a 

significant role in our winning the Cold War. The Soviet economy was stretched thin and 

they depended on access to western technologies to support their military aims. With 

their "shopping list" in hand, the U.S was able to join with NATO and other allies to 

control the export and sale of dual use technologies, as well as to undercut KGB "Line 

X" collection efforts through other creative means. For his part, after landing in jail for 

other reasons, Vetrov later was convicted of espionage by the Soviet authorities and 

executed. 

I National Research Council of the National Academies of Sciences Committee on a New GovernmentUniversity Partnership for Science and Security, Committee on Science, Technology, and Law Policy and 

Global Affairs, Science and Security in a Post 9111 World: A Report Based on Regional Discussions 

Between/he Science and Security Communities (Washington DC: The National Academies Press) 2007, p5. 

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Why dwell on this story from the Cold War Past? Well, (as that fonner U.S. President 

might have begun), because today, everything old is new again ... but with a better public 

relations campaign. Mikhail Fradkov, the current head of the SVR (the successor to the 

KGB) helpfully explains, "Intelligence aims at supporting the process of modernization 

of our country and creating the optimal conditions for the development of its science and 

technology." 

Translation: "Farewell" may be out of business, but the old KGB Line X (technology 

acquisition) practices are not. 

In fact, the numbers of Russian intelligence officers and operations in the United States 

today are easily at Cold War levels. The time and effort and treasure Russia devotes to 

these activities provide some indication of the rate of return Moscow gets from that 

investment. And with long practice, they know what they are doing - with the added 

advantage that, in the aftermath of the Cold War and with so many other demands on 

U.S. national security, we are perhaps not watching as closely as we once did. 

China 

Still, when it comes to stealing western technology, China is giving Russia a run for its 

money. China's intelligence services employ a full range of collection methodologies, 

from the recruitment of well-placed foreign government officials, senior scientists, and 

businessmen to the exploitation of academic activities, students populations, and private 

businesses. These Chinese intelligence efforts take advantage of our open economic 

system to advance China's technical modernization, reduce the US military advantage, 

and undermine our economic competitiveness. 

According to the Defense Department's 2013 report on PRC military activities, 

The Chinese utilize a large, well-organized network to facilitate collection of 

sensitive information and export-controlled technology from U.s. defense 

sources. Many of the organizations composing China's military-industrial 

complex have both military and civilian research and development functions. This 

network of government-affiliated companies and research institutes often enables 

the PLA to access sensitive and dual-use technologies or knowledgeable experts 

under the guise of civilian research and development. The enterprises and 

institutes accomplish this through technology conferences and symposia, 

legitimate contracts and joint commercial ventures, partnerships with foreign 

firms, and joint development of specific technologies. In the case of key national 

security technologies, controlled equipment, and other materials not readily 

obtainable through commercial means or academia, China has utilized its 

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intelligence services and employed other illicit approaches that involve violations 

of U.S. laws and export controls. 2 

So in a manner reminiscent of the old Soviet practices, China has an extensive 

government apparatus and highly coordinated tasking and collection activities targeting 

U.S. technologies. Consider also that these same tasking and collection operations can be 

and are put to use in acquiring intellectual property and other proprietary information of 

commercial value. And business is booming, thanks in part to growing employment of 

Chinese nationals in U.S. facilities as well as the off-shoring of U.S. production and R&D 

to facilities in China. 

During the Cold War, we understood Soviet objectives to be adversarial to our own; and 

there was a western alliance of free nations working closely together to protect and 

preserve our collective security and advance our common prosperity. The United States 

had a carefully developed strategy concerning the Soviet Union, articulated in such 

seminal Presidential directives as Truman's NSC-68 and Reagan's NSDD-75. This 

strategic guidance also ordered our response to identifying and disrupting illicit 

technology acquisition activities by the USSR. 

No such clarity of purpose exists with respect to US. interactions with China. In my 

view, some of the deficiencies in U.S. policy toward Chinese economic espionage and 

other illicit activities targeting U.S. R&D derive in no small measure from the absence of 

a larger strategic framework guiding U.S.lChinese relations. 

Disturbing Trends 

By far the vast majority of foreign acquisition of U.S. technology is open and lawful, as 

are the transactions of individuals and businesses involved in international commerce, as 

well as the free exchange of ideas in scientific and academic forums. But let me tum to 

the cases that fall outside the bounds of what is open and lawful - a category that is 

growing in scope and import. 

The last year I was in office, we tracked efforts by foreign businessmen, scientists, 

academics, students and governmcnt entities from almost toO countries to acquire 

sensitive U.S. technologies protected by export control laws or other means. Of those, 

the top 10 countries accounted for about 60% of the suspicious foreign collection efforts 

against cleared defense contractors. The two countries that always rank at the top of the 

list are of course Russia and China, which have particularized interests especially in dual 

use technologies with military application. But the top ten also included certain of our 

allies, who sometimes exploit their easy access to push the envelope into areas where 

they have not been invited. 

In recent years, U.S. counterintelligence has observed more interaction among collectors 

from different countries and different regions. As the Pentagon's Defense Security 

2 Department of Defense, Annual Report to Congress; Military and Security Developments Involving the 

People's Republic of China 20/3, pp ll-12. 

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Service (DSS) explained last year, "Whether working with each other, working through 

each other, buying from each other, or attempting to throw suspicion on each other, these 

convoluted pathways make it more difficult to ascribe collection attempts to a particular 

country, region, or collector affiliation.,,3 

In other words, it's a crowded field. And the prognosis is not good. According to the 

same DSS report, the total number of incident reports from industry in 2012 went up 75% 

over the past two years, continuing a relentless upward trend at roughly the same pace for 

the past decadc. 

In fact, each year the reports out of U.S. counterintelligence and security reflect figures 

that are worse than the year before. Losses are growing. Numbers of collectors are 

growing. Vulnerabilities are growing. And the erosion of U.S. security and economic 

strength is also growing. [t reminds me a little of Senator Dirksen's famous remark, "A 

billion here and a billion there and soon you're talking about real money." 

Mr. Chairman, we're talking about real money. For fiscal year 2012, the FBI estimated 

that losses to the United States from economic espionage totaled more than $13 billion. 

Other analyses suggest that figure may significantly understate the true costs: 

• Underreporting. As difficult as it is to track foreign efforts to acquire military 

and dual-use technologies-where defense contractors are required to report 

suspicious targeting incidents-it is far more challenging for the CI Community 

to monitor foreign targeting of purely commercial technologies. The FBI has 

outreach programs that are geared to encouraging US firms to report suspicious 

targeting incidents but, even so, such reporting is uneven at best. US firms have 

sometimes been reluctant to raise alarms about possible technology theft out of 

concern for the potential impact on investor and consumer confidence and stock 

prices. 

• Dynamic costs. The National Science Foundation calculates that the U.S. invests 

about 2.8% of our GDP annually in R&D ... or some $436 billion in 2012. R&D 

is the engine for new ideas and concepts and products and wealth. How much of 

that national treasure is targeted by foreign collectors to fuel their business and 

industry (and government programs)? What are the dynamic costs to the U.S. 

economy (in lost competitiveness, jobs, market share, etc.) as a result? 

When one adds in cyber collection, the estimates of real losses skyrocket. The Director of 

the National Security Agency, General Keith Alexander, has called cyber espionage "the 

greatest transfer of wealth in history." I would say that cyber exfiltration is of a piece 

with a global rats nest of technology and intellectual property theft. 

3 Defense Security Service, Targeting Us. Technologies 2012: A Trend Analysis of Reporting From 

Defense Industries, p6 

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Why are things getting worse? 

Globalization has been wonderful for business and commerce and the free flow of ideas 

and information, bringing greater opportunities for trade, investment, growth, cultural and 

personal exchange and the expansion of knowledge.4 It has also been wonderful for 

spies. 

Our general culture of openness has provided foreign entities easy access to sophisticated 

technologies. Each year, recognizing the mutual benefits of an unhindered exchange of 

information, we allow tens of thousands of official foreign visitors into US Governmentrelated facilities such as military bases, test centers, and research laboratories. For 

example, NSF statistics show that 60% of postdocs employed at Federally Funded R&D 

Centers are foreign born nationals on temporary work visas. And each year, the 

counterintelligence community receives incident reports about foreign experts wandering 

into restricted areas, peppering U.S. researchers or scientists with questions well outside 

the range of issues they are supposed to discuss, and taking photographs of sensitive 

equipment that the foreign experts are not supposed to see. 

The losses that result from such visits can be significant. Such foreign visitors are often 

among their nations' leading experts and, as such, may be much more effective at 

extracting sensitive information than would be traditional foreign intelligence 

officers. Specialists know their countries' or companies' specific technological gaps and 

can focus their collection efforts directly on the critical missing information. Finally, 

such experts are also in a position to recognize and exploit information that may be 

inadvertently exposed during visits. 

And the technology losses to long-term foreign visitors can be even more significant than 

those to foreign experts making shorter visits. For one thing, overseas specialists who 

stay on site for extended periods of time become familiar with security procedures meant 

to limit their access to sensitive technologies. The insights thus gained may enable them 

to circumvent those security practices. This is particularly true of cyber security 

procedures. A long-term presence may allow visitors time to acquire passwords and to 

learn where on hard drives sensitive information is stored. Whereas short-term visitors 

are viewed as strangers on sensitive sites, long-term visitors become part of the 

landscape. Their activities naturally receive less notice, which enables them to wander 

into sensitive areas without attracting undue attention. 

4 According to the U.S. Travel Association, there were over 62 million international arrivals into the United 

States in 2011. Between 2004 and 2011 (the most recent Commerce Department statistics) the number of 

Russian visitors to the U.S. more than doubled, with most of the increase in business and professional 

travel. The number of Chinese visitors over the same period more than quadrupled. 

http://tinet.ita.doc.gov/outreachpages/download data table/20 II Russia Market Profile. pdf 

By 2016, DoC forecasts that Russian visitors will be up another third, while the number of Chinese visitors 

will nearly triple again. 

http://www.ustravel.org/sites/defaultfftJes/page!2009/09/US Travel Answer Sheet Jan2013.pdf 

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Similarly, American colleges and universities, centers for high-tech development, employ 

large numbers of foreign born facuIty and train large numbers of foreign students, many 

of whom will return to their home countries. The vast majority of these are legitimately 

studying and advancing academic pursuits. But some are not. 

Globalization has also mixed foreign and U.S. companies in ways that have made it 

difficult to protect the technologies these firms develop or acquire, particularly when that 

technology is required for operations overseas. Foreign direct investment in the United 

States currently stands at $3.1 trillion - the highest on record, according to the Commerce 

Department. The Committee on Foreign Investment in the United States (CFlUS), which 

advises the President on the national security implications of proposed foreign 

investments and acquisitions, has seen its workload grow75% in the last few years.s 

Having had responsibility for providing intelligence assessments to the CFIUS when I 

served as the National Counterintelligence Executive (NCIX), I am concerned that our 

insights into the nexus of foreign business, industry and government programs fall short 

of satisfying those requirements. 

And then there is the Internet. The information revolution is enabling once unimagined 

processing, transmission and storage of data, empowering the individual and opening our 

world to extraordinary new horizons. It has also altered the face and prospects for 

espionage, in scope and scale. The "Wikileaks" postings are but the tip of the iceberg of 

the challenge facing the government in protecting U.S. national security secrets, or 

industry protecting its proprietary information, or individuals protecting their privacy. 

As this Committee is keenly aware, sophisticated information systems that create, store, 

process, and transmit sensitive information have become increasingly vulnerable to cyber 

exploitation. Many nations have formal programs for gathering our networked 

information, and foreign competitors are developing and employing the capability to 

exploit those vulnerabilities, interjecting a whole new dimension of national security 

threat and risk. The jury is out whether proposed legislative or other remedies will help 

better protect our nation's information systems or deter or defeat cyber exploitation or 

attack. 

What are they interested in? 

Our national laboratories are the guardians of some of our nation's most closely held and 

vital secrets. As such, they are targets of extreme interest by foreign powers seeking to 

acquire those secrets. The first time our nuclear weapons secrets were stolen, it led to a 

50-year Cold War with the Soviet Union. In the late 19905, the Cox Commission 

revealed that China acquired through espionage design information on all nuclear 

weapons currently in the U.S. inventory ... and we still don't know how they did it. 

Other sensitive areas of federally funded R&D are clearly of great interest to our 

adversaries as well - as are the propriety secrets and intellectual property of American 

business and industry. The latest NCIX report on economic espionage assesses that the 

5 Committee on Foreign Investment in the United States, Annual Report to Congress 2012, p3. 

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greatest foreign interest is in infonnation technologies, military technologies, and 

civilian/dual use technologies in sectors likely to experience fast growth such as clean 

energy, health care, and phannaceuticals. 

In 2012, DSS found that the top four most targeted technology categories were 

unchanged from the year before: information systems, lasers, optics and sensors; 

aeronautics systems; and electronics. Annaments and energetic materials came in fifth, 

with a growing interest in technologies for processing and manufacturing, directed 

energy, and space systems. 

I would invite the Committee's attention to the prominent position of aeronautics and 

space systems on the list of foreign interest. The launch of Sputnik some 56 years ago, 

which led to the creation of this Committee, was a technology challenge and a national 

security shock that profoundly changed the way the U.S. government approached science 

and technology. From that point forward, it did not require much of a visionary to 

understand that space would be critical to national defense - or that its enabling 

technologies would be coveted by adversaries and competitors. 

The Chinese, in particular, are keenly interested in space technology, in which America is 

still the world's unquestioned leader. Just ask 3D-year spy Dongfan Chung (Orange 

County, Calif.) or Shu Quan-Sheng (Newport News, Va.) or Lian Yang (Seattle), now 

serving time for passing inter alia space-shuttle communication technologies, spacelaunch cryogenic fuels data and satellite semiconductor devices, respectively. And that's 

just the tip ofthe iceberg. 

Collection activities 

There are significant intelligence gaps in understanding how foreign nations collect 

against U.S. technology. However, we do know that a number of the major foreign 

intelligence agencies have: 

• Dedicated programs whose primary task is technology acquisition. These 

programs often involve the use of front companies, which operate surreptitiously. 

• Laundry lists of targeted technologies and specific strategies for 

acquisition. Where an entire system cannot be acquired, foreign intelligence 

services may attempt to steal component parts. 

• Arrangements to share technology that has been both legally and illegally 

acquired with other countries' intelligence and security services, even when the 

sharing of that technology is itself illegal. 

• Programs that provide funding for students and businessmen who assist in 

collecting intelligence infonnation. 

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In other words, foreign targeting of the U.S. science and technology base is driven by 

purposeful collection, tasking and exploitation by foreign nations who employ the full 

reach of their intelligence capabilities to that end. Moreover, the techniques used to 

acquire sensitive US technologies go beyond those traditionally associated with 

espionage. The rich network of human interaction, business and commerce that is 

innocent and open and above-board provides excellent cover for the sliver of activity that 

is none of that. Let me review some of these techniques. 

In a majority of cases, foreign collectors simply ask, via e-mail, phone call, FAX, letter 

or in person - for the infonnation or technology of interest. When a foreign request for 

U.S. technology is either refused by a US company or the US finn asks the foreign finn 

to apply for an export license, the foreign company often simply breaks off 

communication and looks for another possible US seller. With search costs extremely 

low, the foreign finn can afford to continue looking until it locates a US company that 

either does not understand the export licensing requirements or is willing to ignore them 

in order to make the sale. 

U.S. businessmen, scientists and academics traveling abroad provide another valuable 

source of information for foreign countries. Foreign governments and businesses also 

acquire sensitive US proprietary infonnation from all types of electronic storage devices, 

including laptop computers, personal digital assistants (PDAs) and cell phones carried by 

US businessmen traveling abroad. Foreign businesses and security services gain access 

to such infonnation by using clandestine entry to hotels and business establishments or 

by electronically downloading infonnation during routine security inspections at airports 

or other ports of entry. In addition, technology weaknesses in some PDAs make it easy 

for foreign entities to extract infonnation without directly accessing the storage devices. 

In some cases, foreign entities seeking to acquire sensiti~'e US technologies fil1d that 

the easiest route to acquisition is to eitiler purchase outright or form a joint venture 

with a US firm that has access to that tecilnology. Even joint venture negotiations 

where no agreement is reached can yield proprietary infonnation valuable to foreign 

entities. The negotiation process often includes plant tours and inspections of 

manufacturing processes, and the US finns may provide proprietary infonnation on 

customers and marketing plans in an effort to secure the deal. 

One indirect method used to acquire U.S. technology is for foreign firms to offer their 

services or technology - particularly IT-related support - to U.S. finns that have access 

to sensitive items. Marketing pitches can elicit useful information. Sales can get foreign 

tirms (and foreign collectors) inside the U.S. concern ... which may be all they need to 

walk off with sensitive proprietary information ... or to facilitate remote access to 

computer systems for future exploitation. Such deals, at a minimum, have provided 

foreign visitors access to facilities where trade secrets or proprietary infonnation are 

stored. In their most dangerous fonns, however, these deals can result in foreign 

companies subverting U.S. tirms' supply chains by selling tainted products. These 

subversions could give foreign companies long-tenn, remote access to significant 

proprietary information and trade secrets. Well-executed supply chain subversions are 

almost impossible to detect, even years after implantation. 

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Foreign collectors may exploit joint research undertakings or visits to U.S. businesses, 

military bases, national laboratories, and private defense suppliers, to extract protected 

information. In particular, DSS noted that "[p]lacing academics at U.S. research 

institutions under the guise of legitimate research offers access to developing U.S. 

technologies and cutting-edge research" in such areas as information systems, lasers, 

aeronautics and underwater robots. 

Foreign students, scientists, and other experts who come to the United States to work 

or attend conferences also serve as a funnel for sensitive U.S. technologies. For 

example, a student may seek a postdoctoral position or other job with a cleared 

contractor, thereby gaining access to sensitive or classified technologies to support 

parallel R&D efforts in their home countries. China, in particular, seems to be benefiting 

from the access its experts have here. The Chinese press explicitly recognizes the role of 

the overseas community in increasing China's technological prowess. Moreover, Beijing 

has established a number of outreach organizations in China to help maintain contact 

with its overseas community and facilitate technology transfer, groups such as the 

Overseas Chinese Affairs Office, the Chinese Overseas Exchange Association, the State 

Administration of Foreign Expert Affairs, etc. China also supports a number of USbased advocacy groups that facilitate its interaction with its experts here, including the 

Association of Chinese Scientists and Engineers, the China Association for Science and 

Technology, and the Chinese Institute of Engineers. 

According to the FBI,foreign intelligence targeting of u.s. colleges and universities in 

on the increase. For example, in 2009 Michigan State University was approached by a 

Dubai based concern offering to fund their extension campus in Dubai - which (as 

reported in the press) later turned out to be a front for Iran; MSU said "no thanks.", 

Attempts by countries in East Asia, including China, to obtain classified or proprietary 

information by "academic solicitation," such as requests to review academic papers or 

study with professors, jumped eightfold in 2010 from a year earlier (as reported by DSS); 

such approaches from the Middle East doubled. 

The late Sergei Tretyakov, the highest ranking Russian intelligence officer ever to defect 

while stationed in the United States, managed Russian intelligence operations out of New 

York from 1995 through 2000. In his words, "We often targeted academics because their 

job was to share knowledge and information by teaching it to others, and this made them 

less guarded than, say, UN diplomats,,,6 This included satisfying collection taskings from 

Moscow such as "a study of genetically engineered food being done at New York 

University.,,7 

Increasingly, foreign entities need not even come to the United States to acquire 

sensitive technology but, instead, can work within their own borders, There, US firms 

6 Former Deputy Rezident Sergei Tretyakov quoted in Pete Earley, Comrade J: The Untold Secrets of 

Russia's Master Spy in America After the End of the Cold War (New York: G.P. Putnam's Sons, 2007) 

196. 

7 Ibid at 194. 

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have difficulty securing their secrets and have few legal protections once proprietary 

information has been lost. Globalization is forcing US companies toward a more 

diversified business model that includes foreign outsourcing and external 

partnerships. These arrangements, while making US firms more competitive by 

providing a source of inexpensive inputs, at the same time make sensitive US 

technologies more vulnerable. 

Conducting due diligence on foreign partners is difficult, but the problem becomes far 

more complicated when the foreign partners themselves increasingly outsource to other 

firms. These trends not only leave U.S. firms more exposed to a direct outflow of 

technology but also make it difficult to guarantee that the foreign-provided inputsparticularly IT hardware and software-are free from Trojan horses or back doors that 

could be used later to extract sensitive technology. 

It is difficult to determine how much of the theft of U.S. sensitive technology and 

intellectual property is being directed by foreign governments, rather than self-initiated 

by companies or academics or unscrupulous entrepreneurs. But the more we learn about 

illicit technology collection, the more we see patterns that reveal the hand of foreign 

government involvement. So for example the 2012 DSS report attributed a large number 

of cases to government entities which would likely have been designated "unknown 

affi Hation" in the past. 

Even where there may not be central government direction and control, most foreign 

governments that are involved do not discourage such theft and themselves benefit from 

the transfers. For example, Chinese universities and research institutes in particular have 

associations with their nation's militaries, which means that students and academics are 

likely to contribute to military R&D following completion of their studies or research 

fellowships. Think of it as part of the study abroad experience to bring back something 

useful when you come home. 

u.s. National Strategy and Policy 

The history of technology security policy debates is long and contentious, and marked by 

a lack of clear authority or uniform practices, despite volumes of outside commissions, 

recommendations for improvement, and internal substantive reviews. Yet technology 

protection regimes are only as strong as their weakest link. Inconsistent practices among 

government agencies and especially the divide between national security departments and 

agencies on the one hand, and at-risk agencies not within the national security community 

on the other, are a persistent problem. 

In my view, government policy is most effective when we coordinate the full range of 

public policy instruments so they are applied to strategic effect. Stopping the illicit 

foreign acquisition of sensitive U.S. technologies requires a combination of national 

security tools, including export control laws, diplomatic measures, industrial security 

arrangements, limits on foreign investment in strategic U.S. industries, and 

counterintelligence. Each of these merits scrutiny, to ask whether they are properly 

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conceived, resourced and implemented in light of the growing threats to the U.S. science 

and technology base and the fundamental values they are meant to protect. 

It is also worth exploring what gaps may exist in national policy and strategy. For 

example, there are no post-employment restrictions on federal employees from going to 

work for foreign firms, even firms with close ties to the military. Accordingly, Huawei 

has been hiring key U.s. talent... including (according to press reports last year) the 

former head of the cybersecurity division of the Homeland Security Department. Former 

U.S. government employees are barred by law from disclosing classified information, to 

be sure; but they walk off the job with specialized knowledge and understanding 

informed by their intimate familiarity with sensitive programs and operations. When I 

stop to think what we could learn if the roles were reversed - if senior Chinese 

government employees were to be hired away by US companies secretly employed by the 

USG to penetrate Chinese markets or critical infrastructure - I find myself wondering if 

we shouldn't take a closer look at this particular revolving door. 

Among other things, Congress has a vital role to play in advancing awareness of foreign 

intelligence activities directed against our R&D base, including such activities as today's 

hearing. Awareness begins with educating the S&T community and the public - as well 

as our national leadership -- about the threat. In that regard, the National Research 

Council Report, which I cited earlier, was occasioned in part at the urging of this 

Committee. The time may be ripe for the National Academies to commission a fresh 

look. Certainly in the six years since their last report was issued, foreign targeting and 

exfiltration of sensitive U.S. R&D and technology have risen sharply. Perhaps there is 

more that the S&T community could be doing to help. 

The larger solutions fall to national policy leadership and the security disciplines. How 

do we weigh the risks of foreign visitors and researchers at our federal R&D 

establishments against the benefits of scientific exchange and the value of collaboration? 

Are existing vetting and security procedures well designed and enforced? How do we 

protect information of value in all its forms, from paper to digital to conversations in 

person or at a distance? Do security and awareness training enable personnel to 

understand why they are being asked to take safeguards, or are they just handed a set of 

rules? 

And most significantly, do we have a national capability to counter foreign intelligence 

operations that threaten our economic prosperity and national security? The scorecard of 

America's counterintelligence enterprise falls short of the growing strategic foreign 

intelligence threats directed against us, to include the extraordinary creativity of our S&T 

enterprise. We need better insights into what foreign intelligence services are doing and 

how they are doing it, and a genuine national strategic counterintelligence program, so 

that we might stand a better chance of stopping them. 

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Conclusion 

This is likely not the first time the members of this Committee will have heard that we 

are facing growing foreign intelligence threats targeting U.S. science and technology; 

indeed, I am sensitive to the fact that such warnings may sound like a broken record 

which, in time, loses its appeal. But I have endeavored today to provide some of the 

reasons why I believe you should take that warning to heart. 

In closing, I want to say that it is a special honor for me to be here, having served as 

minority counsel to this Committee in 1989. Accordingly, I am familiar with the unique 

jurisdictional responsibilities of HSS&T, and I commend the Oversight subcommittee for 

taking on the difficult questions raised by today's hearing. I hope it will give you a 

starting point for more detailed inquiry into the security practices of our federal 

laboratories and related national policies affecting America's science and technology 

enterprise. Thank you and I look forward to your questions. 

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Michelle Van Cleave served as the National Counterintelligence Executive 

under President George W. Bush. As the head of U.S. counterintelligence, 

she was responsible for providing strategic direction to and ensuring the 

integration of counterintelligence activities across the federal 

government. She has also held senior staff positions in the Congress 

(including staff director, Senate Judiciary Subcommittee on Technology, 

Terrorism and Government Information; Minority Counsel, House Science, 

Space and Technology Committee; and professional staff member, House 

Appropriations Subcommittee on Foreign Operations), at the Pentagon 

working homeland defense policy in the aftermath of 9/11, and in the 

White House Science Office, where she served as Assistant Director and 

General Counsel under Presidents Ronald Reagan and George H.W. Bush. 

A lawyer and consultant in private life, she is a also a Senior Fellow at 

George Washington University and a principal with the Jack Kemp 

Foundation, helping to establish and manage programs to develop, 

engage and recognize exceptional leaders. 
59 

Chairman BROUN. Thank you, Ms. Van Cleave. And that point 

is well-taken. And we would very much like to hear some prescription from all of you about how we should go forth legislatively to 

try to make sure that the tension between openness and security 

is met. As a physician, as a medical doctor, and as a scientist, I 

understand the importance of openness of research and development, but this is a tremendous tension. And thank you, Ms. Van 

Cleave. And if you all do have some ideas, we would like for you 

to present them to us later on, maybe answers to questions for the 

record. 

Now, you look like an FBI agent. Mr. Major, you are recognized 

for five minutes. 

Please turn on your microphone. 

TESTIMONY OF MR. DAVID G. MAJOR, 

FOUNDER AND PRESIDENT, 

THE CENTRE FOR COUNTERINTELLIGENCE 

AND SECURITY STUDIES 

Mr. MAJOR. Yes. I have been studying espionage for 43 years, 

which makes me one of the oldest people in this room looking at 

this particular problem. Michelle and I were at the White House 

together in the Reagan Administration trying to put counterintelligence at the policy table, and since that time I have formed this 

company called CI Centre. It is a little red schoolhouse that tries 

to train people on the significance of counterintelligence, and we 

have trained over 100,000 people in the intelligence community on 

espionage and counterespionage. 

And we take our information, we put it on an empirical basis, because what we have created is a thing called SPYPEDIA, and 

SPYPEDIA is a way we track espionage around the world every 

day and make it available to members who are a member of our— 

what is a membership webpage. 

And if I would look at the United States, espionage is a big issue. 

In the United States from 1945, the end of Cold War to today, I 

can put some numbers on that and explain exactly the size of espionage as we see it today. Don’t forget that during the Cold War, 

the Russians had 531 Americans who were their clandestine agents 

operating for them during the Cold War. 

And since that time, how many cases have we had? Well, what 

we do is we track these cases based on these laws, economic espionage, and national security laws, classified information, and the 

private sector, and we use this—these criteria to track it, and 

where right now the big talk is about the insider threat, and that 

is what this hearing is about. The fact of the matter is the insider 

threat has always been with us and will be with us. 

We say how many espionage cases have we had which has been 

legal action taken against the people who have acquired the information in the last 68 years? The answer is 564 people. Now, we 

look at espionage cases, technology transfer where they take the 

material itself, and technology acquired through—in the private 

sector. And if you notice, last year, we had 64 cases, the largest we 

have had. Notice the last ten years since 2000 there is an expansion, a growth, exactly as Michelle was talking about. The reality 
60 

of what we have on this issue, 564 cases, an average of 8.1 over 

that time period but not in the last 10 years. 

Where are they coming from? Now, they are coming from the private sector. Over 260 people have been charged from the private 

sector and the government section also we see it. How are we doing 

catching spies? Well, one good news is one of these cases where a 

case related to national security information in which they were 

trying to acquire classified information were interdicted by the FBI 

before the person ever actually passed it. That is the good news. 

These two were at the National Laboratories and they were trying 

to acquire information for Venezuela. We have—and also three 

cases of Foreign Agent Registration Act. That is the good news. 

Here is another bad news message. If we look at every case 

someone was an agent of a foreign power operating in the United 

States but hadn’t been caught yet, we said how many agents are 

out there each year? Well, our average turns about to at least 25 

who eventually get caught. And for 33 years the average has been 

above 25. The biggest we had is 53. Compare that to how many we 

caught and we are using catch to get the best of the years, 25 percent. So it is—continues to be a problem. It continues something 

we have to invest in. 

Now, the average spy will last about 1 to five years, but they can 

do significant damage during that period. We say what countries 

are conducting espionage against the United States, and it turns 

out that obviously Russia, the Soviet Union is the largest, but 

China is coming up really quickly. Between 1949 and 2000 there 

were only five Chinese cases. Now, there are 100 cases. There have 

been 95 new cases in the last 13 years and they are the largest 

growth area has in Chinese cases that have led to legal action 

against the individuals. You can see the other countries. 

But what is interesting here, we have tracked the countries. The 

dark blue represents national security cases, in other words, classified material; and the light blue represents private sector or corporate espionage, and you notice that China is a very large profile 

in the private sector espionage cases even though they have attacked classified information. Notice that Iran has never—has— 

they are only using diversion—or there is no national security Iran 

cases but they are the largest diverter of material. And if we look 

at Chinese cases, the 100, you notice what the trend line has been 

since the year 2000. If we also look at that compared to Russia, you 

can see how many cases that we have seen here in the United 

States. 

We talk about foreign entities and declassified information. This 

shows you that it has been the Soviet Union and Cuba and China 

and Iraq and so forth. On economic espionage cases, what the target is, we have talked about—this is a great thing; it comes from 

scientific America and it shows you between research papers, patents, issues, expenditures, and higher education, the United States 

is number one. But if you go down to China, number three, and you 

go way over to the right-hand side, they are not even on the higher 

education side because they get here to get their education. And 

some of them stay and then steal information and pass it on to 

China. 
61 

If you look at cases of economic espionage, you can see the trend 

line. The red line is the number of cases. The blue line is the number of people. Because of economic espionage cases, you are normally looking at 1 to 1.8 per case. It is more of a conspiracy than 

it is an individual by themselves. But the company benefitting from 

economic espionage cases have been China, Taiwan, South Korea, 

India, Japan. Eighty-five percent of all these cases come from Asia. 

That is where the majority of these kinds of cases are coming from. 

If you look at domestic and foreign cases, you can see China, 

Iran, Russia. These are the actors in this side of the issue. Why— 

what are they targeting? I think very revealing that the number 

one target is information systems. They are targeting our information systems to get the technology to do external targeting of our 

information. So they do cyber warfare by using our information to 

then attack us externally. So they internally acquire it and then 

use that to externally target us. And it is across the board the 

kinds of information they are targeting. 

Why target the United States? As I said, information technology, 

industrial information, military information, and business, it is 

across the board on what United States manufacturers. That is 

who is targeting us during this period. 

On illegal exports, the exports are obviously increasing, primarily 

coming from Iran. And if we look at these cases benefitting China, 

Iran, Russia, Taiwan for illegal export cases. 

So that is what we are finding in SPYPEDIA as we track this, 

and excuse me for going a minute over on that. I will answer any 

questions you have on this material. 

[The prepared statement of Mr. Major follows:] 
62 

"Espionage Threats at Federal Laboratories: 

Balancing Scientific Cooperation while Protecting Critical Information" 

Subcommittee on Oversight 

Committee on Science, Space & Technology 

Thursday, May 16'2013 -2 to 4 pm 

2318 Rayburn House Office Building 

Opening Statement of David Major 

President and Founder of the CI Centre and SPVPEDIA® 

My name is David G. Major and I am a retired FBI Supervisory Special Agent. During my career in the 

bureau from 1970 to 1994 I specialized in counterintelligence and counterterrorism. I was the first FBI 

agent to be appointed to the National Security Council, advising the President of the United States on 

counterintelligence policy and issues. Prior to joining the FBI I spent 5 years in the US Army as an officer 

in the Armor Branch. As a result of my experience at the White House, I recognize the need to establish 

a center of excellence to train personnel on the strategic importance of the counterintelligence 

discipline. From 1994 to 1997 I was a subject matter expert to the USIC on counterintelligence. In 1997 I 

established The Centre for Counterintelligence and Security Studies" (CI CENTRE) as a veteran-owned 

small business with its facility in Falls Church, VA. We provide over 55 commercial, off-the-shelf 

unclassified training courses and briefings for the US Intelligence Community and corporate clients on: 

-Counterintelligence Strategy, Tactics & Skills 

-Security Awareness Training & Briefings 

-Interviewing & Investigations 

-Counterterrorism Strategy, Tactics & Skills 

-Area/Country Studies; Foreign Intelligence Services 

Our training is designed to enhance an organization's mission and to protect their information, facilities 

and personnel from foreign intelligence collectors, global terrorists and competitor threats. 

We have trained over 100,000 Intelligence Community, Military, law Enforcement, Homeland Security, 

Government and Corporate employees over the past 15 years. 

To ensure we remain current and relevant for OUf classes, the CI Centre has maintained a highly robust 

research and analyst capability of worldwide espionage, economic espionage, cyber security, and 

terrorist events and cases. In 2011 we began to make our database available via a membership site, 

SPYPEDIA®. This is a one of kind open source database that provides it members a rich source of 

counterintelligence, counterterrorism, and security-related information that is updated daily. We collect 

worldwide government documents, reports, analysis, case studies, in a deep digital library. The 

SPVPEDIA® staff reviews this material daily to produce original analysis that highlights trends, issues, 

lessons learned and key information essential to assist our customers to enhance their security posture. 

1 
63 

US Government agencies and personnel, corporations, universities and private citizens are members of 

SPYPEDIA® to meet a variety of their individual diverse needs and interests. 

We have studied espionage extensively and have come to some empirical conclusions that provide both 

a big picture and micro study of espionage. In our study of the Espionage threat to our nation and more 

specifically the Federal laboratories we have made some observations that I would like to highlight for 

the committee. 

We collect espionage data for the period of 1945 to the present looking at the following individual 

charges to draw our conclusions. 

Foreign Nationals charged 

"Espionage" related arrests for violation of 

o US Code Title 18, Section 793 and Section 794 

o FARA US Code 18, Section 951 

o Economic Espionage, US Code 18, Section 1831 and Section 1832 

o Violation of US Code Title 18 SectionlO01 

Individuals who defected pending arrest 

Individuals who committed suicide pending arrest 

Individuals who diverted technology for foreign governments in violation of International Traffic 

in Arms Regulations (ITAR) 

We have identified at least 555 individuals that meet these criteria. ~-.~-~-~-------~".~~-~---,""-",-~,-

Individuals identified in Espionage-Related Activities 

2 
64 

The vast majority these individuals are from the private sector with 252 cases and 78 foreign nationals. 

DIA III 4 

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Employment of individuals Identified in 

Compromises of Classified or 

I'roprietarylnformatlon 

1945 - 2013 

100 

There are 31 countries identified in the public record as responsible for conducting the "espionage 

related cases" with the USSR/Russian and the People's Republic of China (PRe) having the largest 

number of cases. 

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65 

The largest increase by country has been the PRe which has been associated with a total of 96 cases 

with only 5 cases between 1949 to 1999 (50 years) and 91 cases from 2000 to 2013. There have been 

more PRe cases than Russiaflcasesitl~out of thepast.l~ 'f"ears~.n.d <lrl.e.CI.lIal number the other 4 years. 

,s 

There have been 70 Economic/Trade Secret theft cases involving 113 people since 1996. Thirty (30) of 

the 70 cases were domestic US cases, while in the remaining 40 cases the beneficiary of the theft was a 

The PRe 40 ... =~,~_ ...... . 

4 
66 

Is it the insider or outsider, us citizen or Foreign national who are stealing economic/trade secret 

information? The average industrial/economic spy is in their mid-40s. There are very few cases of the 

impulsive 20 year old we see in traditional espionage cases. Instead they are often relatively 

accomplished professionals who make calculated, deliberate efforts. They are majority male. 

If a person is an insider, they use their natural access to proprietary material. There are cases where 

insiders provided information for reasons of nationalistic loyalty or ideological reasons, a significant 

number are looking for personal economic benefit: to either sell the information directly, to bring that 

information to a firm with the promise of a better position, or to help start their own business in 

competition with their previous employer. 

There were 46 people who worked alone and 66 who worked with conspirators who were eventually 

indicted. Forth-six (46) cases were perpetrated by individuals working alone and 24 mUlti-person cases. 

The number of domestic espionage cases and foreign economic espionage cases are roughly equal. 

There are slightly more individuals involved in the foreign cases. The domestic cases are perpetrated 

largely by US citizens, whereas the foreign cases involved Naturalized US legal residents and foreign 

nationals. People who provide information to foreign firms and governments are likely to have foreign 

attachments. Individuals with foreign attachments also make up a disproportionately large size of the 

workforce in the most heavily targeted industries. Portions of the world's scientific, math, and 

engineering talent is being produced in other parts of the world, so US tech firms naturally draw talent 

from overseas. 

As for how this information is stolen, the majority of the subjects' simply downloaded protected files 

onto an external hard drive and other personal devices, or forwarded it via email. There are a few 

interesting cases where individuals traveled to foreign locations and gave lectures at 

univerSities/business conferences, and in doing so verbally disclosed protected information. There is 

only one case where a computer genius actually built "a computer within a computer" to have two 

separate -functioning hard drives within his work computer, and then used one of the hard drives to 

steal. 

Some things to look out for from insiders: if the person is downloading an unusually large amount of 

information; if the person is accessing data that does not directly relate to their job requirements; if the 

person is undertaking a lot of travel to foreign countries, particularly if they are not reporting it. This is a 

problem since many of the naturalized US/foreign nationals have legitimate reason to travel and visit 

family; if the person is accessing data after work hours. 

Some baSic security procedure should be implemented and enforced in the Federal laboratories: 

• Foreign nationals in labs -- they need extremely robust real-time 100% computer monitoring 

• Foreign nationals need to be sealed off from physical access to senSitive areas. 

• The labs need vigorous and realistic training of cleared personnel regarding loose chatter to uncleared personnel. 

5 
67 

There have been SS technology diversion cases involving 117 individuals 

cases being 

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68 

David Major Narrative Biography 

David Major, a retired FBI Supervisory Special Agents (1970-1994) has made a life-long 

commitment to the practice and study of counterintelligence and its subsets, counterterrorism, 

security making him one of the nation's top experts on the subject. His views and advice are 

sought after by the government, private companies and national and international media. A 

1965 graduate of Syracuse University with a degree in the life sciences, after graduation Mr. 

Major served in the US Army as a Captain in Armor Branch for 5 years before being appointed 

an FBI Special Agent. He served in Sarasota Florida, Newark New Jersey, Washington DC, and 

Baltimore FBI as Field Offices as well as two assignments at FBI Headquarters in the Security 

Office, the Counterintelligence Division and the Inspection office. 

Major's skills and abilities propelled him to being named by the FBI to being the first FBI official 

to be assigned to the National Security Council as a staff officer. He served as the Director, 

Intelligence and Counterintelligence Programs in 1985 and 1986, and briefed and advised 

President Reagan on counterintelligence matters and security policy and programs. 

Upon retiring from the FBI, Major founded the Centre for Counterintelligence and Security 

Studies to provide high-quality counterintelligence, counterterrorism, investigative skills, area 

studies and security training for the government, academic and corporate sectors of our 

society. The Centre has trained nearly 100,000 people in these topics since 1995 and has 

developed over 55 COTS seminars and courses. 

SPYPEDIA®," the CI Centre's, robust counterintelligence, counterterrorism, cyber-attack and 

security database, is an excellent resource of cases, latest news, podcasts, videos, CI calendar 

events, quotes, reports, and more. SPYPEDIA'" was in research and preparation for 15 years. It 

is continually updated, rich, open source database provides exclusive access for professionals 

in the counterintelligence, security, and counterterrorism disciplines; educators; authors; 

researchers; academia; students; and all who hold an interest in CI and CT. 
69 

SLIDES SHOWN DURING MR. MAJOR’S TESTIMONY
70 
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104 

Chairman BROUN. You could go on with that longer. You didn’t 

have to talk that fast. That was a lot of information. I appreciate 

it, Mr. Major. It is excellent. I thank you all for your testimony. 

Now, reminding Members that the Committee rules limit questions to five minutes. The Chair at this point will open the first 

round of questions, and I recognize myself for five minutes. 

Now, Dr. Vest, in your testimony you used the analogy of a leaky 

bucket and suggested that it would be better to keep filling the 

bucket rather than to obsess over plugging the holes, but reports 

from the U.S. intelligence community, the Pentagon, and testimony 

that we have heard today seem to suggest that at least one of those 

holes are pretty big and continues to grow. If we don’t do something about China, we may not have much water left in our bucket. 

Would it be possible and acceptable within the academic and scientific communities to implement a targeted approach to address 

the growing threat from Chinese espionage while still generally adhering to the principle of keeping basic, fundamental research open 

and unrestricted? 

Dr. VEST. It is obviously a complicated question, and I go back 

to something that Ms. Van Cleave said, which is they are interested in virtually everything. And I do not think that we can keep 

virtually everything secret from the Chinese or anyone else, so I 

would still contend that we should focus on two things: one is really protecting those things that the national security community believes to be the most important—weapons systems, et cetera—and 

secondly, I very much agree with what has been said by you, Mr. 

Chairman, and others that we really have to do something about 

making ourselves more secure against cyber intrusion. Stealing is 

different than openness of the academic community. 

Precisely where that line is I don’t know, but given the speed 

with which science and new technology move forward these days, 

we simply cannot keep absolutely everything closed and secret, nor 

do we want to. So I still contend that the leaky bucket approach 

is correct today even though the numbers are getting larger and 

the areas of interest are getting larger. We have to focus on the 

things that are critical and help our laboratories and our universities to remain as open as possible so that we transmit our values, 

learn from each other. 

Every company I know anything about now does research, serves 

markets virtually everywhere in the world. I gave in my testimony 

an example of the new Boeing aircraft that is built in 535 different 

places. We can’t just keep everything on our shores totally closed 

up. And I think it is up to the universities, by the way, to do some 

of their own drawings of lines and simply not do research that they 

believe needs to be classified or thought of in some different way. 

Chairman BROUN. Well, Dr. Vest, I hope that the bucket still has 

a bottom to it and it is not just a sieve, but I agree with you. 

Communication between the science and security communities to 

deal with the questions raised by this hearing is critical. What are 

the examples of effective methods for conducting such a dialogue, 

Dr. Vest? 

Dr. VEST. Well, I think that after 9/11, there was actually some 

very productive dialogue back-and-forth between the universities, 

the National Academies, the security establishment, and some of 
105 

those things went pretty well, things such as defining the so-called 

select agents, the biological materials that everybody agreed needed to be restricted in their use on campuses and under secure facilities and so forth. But on the other hand, during that period we 

also saw things like technology alert lists that didn’t want to let 

people in the country who had studied fields like landscape architecture. So we got a little bit over the map. 

I think the dialogue is the important thing because in my relatively modest forays into engagement with the intelligence community, these—as we know from the table—are very intelligent, 

very thoughtful, very patriotic people, and so are most of us in universities and independent research laboratories. So to me, ongoing 

dialogue is the key to trying to find somewhere where that fuzzy 

line that Dr. Wortzel referred to is. And then I think universities 

need to adhere to it. 

Chairman BROUN. Well, my time is expired, but if any of you all 

have any suggestions about creating more dialogue between the 

communities, I would appreciate it. 

Now, I will recognize Mr. Maffei for five minutes. 

Mr. MAFFEI. Mr. Chairman, thank you. I want to thank again 

this panel for your testimony. I haven’t been on this Committee 

very, very long yet, but we have—already had a lot of distinguished 

witnesses. But I think this is probably the most distinguished 

panel that we have had. 

Nonetheless, only one of you, Mr. Major, actually has a degree 

from Syracuse University, so I am going to start with you, Mr. 

Major. 

Chairman BROUN. But we have a Marine. 

Mr. MAFFEI. Well, that is good. That is—they are—that is very 

important. But what advice would you give scientists, people working at these labs in order to ward off these practices? And I don’t 

know—we don’t have a lot of time here but is there a best practices 

that could be followed? Does your company ever do that kind of 

training? And if they are not being followed, why not or how can 

we get a better—are there simple things that maybe can be done 

to at least ward off some of these intrusions, these espionage efforts? 

Mr. MAJOR. Well, thank you for your question. First of all, it is 

Syracuse University in biochemistry and I—go Orangemen. And I 

was in the United States Army, I should tell you also, but I am 

not a Marine. 

We—— 

Chairman BROUN. Thank you for your service. 

Mr. MAJOR. Thank you, sir. 

You know, this idea of education of espionage is not a new problem but some of the hardest targets are trying to—targets to educate are academics and people in laboratories. Department of Energy has been struggling with this problem for many, many years, 

as is anybody who ever deals with the universities. When I was a 

supervisor in Baltimore, I had trouble with the universities up 

there to explain to them the reality of what was happening with 

some of their students that were coming there, because we know 

that students represent a particular problem when they come in 

there. 
106 

We actually had a dean go in and tell the Chinese students—he 

said the FBI may come in here to talk to you. If they do, come to 

me because you have no obligation in this country to talk to the 

FBI. Well, I went in and had a discussion with him and I said it 

is my responsibility to worry about this regardless of what you say, 

Mr.—as the dean there. So this is always a long, long problem. It 

is an education problem and you have to do it in a creative way. 

You have to be very realistic. You have to be pithy. You have to 

let them know the facts. You can’t just go in and say there is a 

problem. 

And I will tell you this in follow-up to the last discussion is that 

we can sometimes make a mistake and we said the problem is primarily in classified national security information, but our empirical 

evidence shows us that across the board the United States is being 

targeted, and some corporations are having them on themselves to 

create meaningful protection programs because it can be worth an 

awful lot of money. I mean DuPont had a major case where they 

were trying to steal titanium oxide, which is worth billions of dollars, this white paint. But that is worth a lot of money, and yet 

we have espionage cases trying to steal those kinds of information. 

So you have to really educate people on it. You have to be realistic, but you have to invest in it. And this is a problem. It is a 

problem in a government and it is a problem in corporations. Corporations—there is a movement in some corporation to create their 

own internal counterintelligence cells to do a better job of educating them on this, probably the single-best thing you can do. And 

then there is a lot of other things you have to do that have to do 

with cyber security and the failures—mistakes people make. 

When we go through and talk in our courses and we do that as 

one of the products that this company does is that we try to explain 

what has happened in the past and where it broke down and where 

it failed and what you can do, and the people are very shocked 

when they realize that despite the policies that were set up, the 

human errors that allowed someone to come in there and still operate. 

There was a man—there was a Chinese student who was stealing just recently information on cancer research and they fired 

him. He went home and they never took him off the server and he 

went back in the server and got information. Well, he should have 

been taken off the server immediately after that took place. 

So you see these kind of human failures that can—that break in 

on a repeated basis when you are trying to create an environment 

that is both open but realizing there are a lot of collectors out 

there. And as I said, this is a bigger problem from corporate America today than it has historically, partly because the House passed 

the law on economic espionage. And that was an issue that we 

couldn’t—we didn’t have a way to deal with when that law was 

passed in ’96. We are dealing with it and that is the growth area 

in espionage in the United States. 

Mr. MAFFEI. Good. And I do note that in your written testimony 

you mention that 555 individuals that have engaged in espionagerelated activities since 1945, all but—all of those cases, there was 

only one case involving the Department of Energy, one involving 
107 

NASA, six cases involving university employees, but 252 cases involving the private sector, so I think that is interesting. 

I do—I know that Ms. Van Cleave mentioned sort of the cost of 

this. Do you have any estimates of it? You said that $12 billion was 

probably too low. Do you have any reliable estimates of how much 

this is costing us every year? 

Ms. VAN CLEAVE. It really is not possible to calculate how much 

this in fact is costing us because it depends on the assumptions 

that you build into that. The Bureau’s estimate of $13 billion in 

2012 was based on the cases that they had an economic espionage 

and what was involved in those particular losses and their estimates of what they may have missed. But my concern is—and I 

think there is with you, too—that there is a great deal of underreporting in that area and that the real cost to the economy is 

something far beyond that because what you are talking about is 

loss of the basic idea factory. R&D is the idea factory and so what 

happens with the ideas that are lost competitively to others? 

Mr. MAFFEI. All right. Thank you. Well, Mr. Chairman, my time 

is up but the only thing I might observe is that so much of this 

is economic in that we do have a trade deficit problem with the 

People’s Republic of China in addition to some of the other countries out there, but this actually could be one of the major factors 

since they are not paying for it. They are stealing it or their companies are stealing it or particular individuals are stealing it. And 

that could be one of the major factors why we are not selling more 

to China. It may not just be a security issue. 

Chairman BROUN. Well, the gentleman’s time is expired. And I 

think that is a good point and that is part of the reason for this 

hearing. 

Now, the Chairman recognizes Mr. Posey. 

Mr. POSEY. Thank you very much, Mr. Chairman. And thank all 

four of you for your excellent presentations, very interesting. You 

know, if Americans focused more on the many, many threats to 

their futures, we would be, I think, a much more united country. 

You know, unfortunately, we are only united like we should be for 

a short period of time following 9/11, a short period of time following Boston, and completely another subject. But anyway, sometimes the best defense is an offense, and so, you know, any of you 

feel free to answer whether or not we have an offensive program 

toward those who are threats to us. 

Ms. VAN CLEAVE. Sir, if I might take that one, I think that is 

a superb question. Really, the efforts that we have made to try to 

protect our technology and science base have been largely defensive 

in nature, which is to say we promulgate security regulations. We 

have export controls over the things that we permit to go out. We 

have classification protection around sensitive information. But 

what we don’t have, as much as we need to have, is an offensive 

capability that can go inside the foreign intelligence service that is 

targeting us in order to be able to actively defeat their activities 

against us. 

One of the reasons we don’t have that hearkens back to my opening explanation today, which is we have never had really a unified 

counterintelligence strategic capability in the United States. We 

have done things defensively to protect certain operations abroad 
108 

against foreign intelligence attacks. We have enforced espionage 

laws here at home, but offensively, to get inside that foreign intelligence service to understand how they operate, how they are 

tasked, what their liaison relationship are, the things that may 

make them vulnerable to us, that is what we really need. So I 

think it is a great question. 

Mr. POSEY. Well, I am really sad about the answer. I mean I 

thank you for the frank answer but I am sad about it. I mean I 

was hoping you would say, yeah, we have all kinds of those programs but we can’t talk about them. I am sad to learn that we 

don’t. I mean there is one reason this country hasn’t been overtly 

attacked and that is because people who might attack us realize 

the cost of retaliation and it is unbearable to them. That doesn’t 

seem to be the case in cyber warfare. 

Ms. VAN CLEAVE. When it comes to cyber warfare, that is an interesting and challenging calculation in and of itself, and I think 

that there are lots of conversations, studies underway to try to better understand what we can do consistent with, you know, our values and the laws of war in offensive cyber operations, so that is a 

great question in and of itself. 

But beyond that, there are all of the other operations of foreign 

intelligence services against us where again having capability to 

get inside those services and to degrade what they are doing would 

be of great benefit to us. 

Mr. POSEY. And doesn’t it seem like it makes an awful lot of good 

sense to you to unilaterally disarm when you make agreements 

with these countries that are robbing you blind in the left pocket 

and you are going to voluntarily disarm any defense you have in 

the right pocket? I mean is there something wrong with that theory 

that—or something right about that theory that we don’t see? 

Ms. VAN CLEAVE. I am not sure what you mean by unilaterally 

disarm but I know I don’t like it. 

Mr. POSEY. Yeah, well, you know, supposedly friendly countries, 

you know, don’t hack you, don’t rob you. You know, they don’t go 

into your Pentagon, they don’t go into your banks, they don’t—you 

know, they don’t cause the havoc that they have caused. 

Mr. Major, you are waving your pencil there. 

Mr. MAJOR. Yeah, I did. The Bureau in the last few years has 

a very aggressive program to try to educate the private sector in 

economic espionage. They have reached out significantly to try to— 

they have even made bulletin boards to tell people about this particular problem. So taking an offensive standpoint they have. 

On the other side, the FBI can speak from them is—has always 

had an aggressive program to target foreign intelligence services 

that operate in the United States to penetrate them to try to find 

out what they are doing. And one of the things you see reflected 

in the numbers I showed you, you don’t just find an espionage case. 

Almost always when you find an espionage case that I showed you, 

it is because you have penetrated that service in some manner either from a technical standpoint or a human standpoint. They have 

told you about the fact that you have been under attack. 

The first target of the Chinese was made by the CIA in 1982. It 

was the first western service to ever penetrate the MSS. We didn’t 

understand what China did for many, many years. One of the re-
109 

flections we have seen with the 100 cases is two things: you are 

seeing a more aggressive service, a better understanding of how 

they are operating, and I would suggest also a better penetration 

of some of these services that you can’t talk about in this environment because the counterpart of no more espionage cases is more 

understanding of espionage cases usually through operations being 

done by the intelligence community. And I know at least in my experience I spent most of my career running offensive operations 

against intelligence services that operated here. 

Mr. POSEY. Mr. Chairman, I would like sometime maybe we 

could have a closed hearing and have some of the discussions about 

things we can’t have in an open public hearing like this. 

Chairman BROUN. Mr. Posey, that may be a very good idea and 

we will see about looking into that. 

One quick question, Mr. Major, are you suggesting more human 

and counterintelligence, more boots on the ground? 

Mr. MAJOR. Oh, yes. I mean the more you do this, the more aggressive you operate this, it is successful. One downside is happening right now, however, is that a lot of education programs are 

being cancelled because when you have a sequestration problem, 

the first thing you cancel are training and travel and that is what 

is happening across the board right now. 

Chairman BROUN. Thank you, Mr. Major. 

Mr. Swalwell, you are recognized for five minutes. 

Mr. SWALWELL. Thank you, Mr. Chair. And thank you, Ranking 

Member Maffei, for holding this hearing. 

And Mr. Major, I think you make a great point. We are talking 

about important threats that are facing our country right now and 

the need to protect and defend against them, especially against 

outside actors and nation states who are very aggressive in going 

after our intellectual property, going after our government networks. But on the other hand, we have the sequester and that, I 

can imagine, you would agree makes it difficult. I mean it is nice 

to hold a hearing and say, you know, these are the threats. We 

need to, you know, be more secure, but there is no money to pay 

for doing that. It is just, you know, we need to do that. And would 

you agree? 

Mr. MAJOR. One of the first things that is always cut is that. I 

have been around long enough to see this happening over and over 

again. It is a trend and it is happening right now. 

Mr. SWALWELL. Also, I think we can agree that international collaboration has served our country well, and I for one want to emphasize the role that scientists of Asian and Middle Eastern descent have played at our National Laboratories. I have two National Laboratories in my Congressional District—Lawrence Livermore labs—Laboratory and Sandia Laboratory. And also we know 

the role that immigrants have played in our country. Forty percent 

of the largest companies in our country were founded by immigrants or the children of immigrants. So I think it is important 

that we balance the need to protect against espionage against the 

role and understanding that immigrants come here and they create 

jobs, they participate and engage in the type of innovation we need. 

And so that leads me to my question, which is in Livermore we 

have what is called the Livermore Valley Open Campus. This is a 
110 

collaboration between Lawrence Livermore National Laboratory 

and Sandia National Laboratory working to create an open, unclassified research and development space. And the challenge right 

now, of course, is you have laboratory workers who—inside the laboratory they have to be cleared to work there. It is a largely inaccessible place for the public, and because of shrinking budgets, the 

laboratories are having a hard time continuing to meet the needs 

and demands of their clients, principally, the NNSA for Lawrence 

Livermore. And so they are looking at using outside contractors 

very often. But getting those outside contractors screened and 

cleared is often a challenge. 

But we know the role that private industry can make, and I have 

never been one to believe that the government should be the only 

one at the table when it comes to innovation. I think we have to 

partner with private industry. 

So is there a way that we can continue to see these open campuses thrive and work in an unclassified manner on perhaps highperformance computing and cyber security research and development while still keeping us safe from espionage, Mr. Major? 

Mr. MAJOR. First of all, let me say that of the 565 people that 

we know have been indicted and arrested, the vast majority have 

been Americans; they are not immigrants. But we are all immigrants in one way or another, but that is the vast majority committing espionage. 

However, we have both sides of the gamble taking place. What 

you do have in your environment is you have a mix and match. You 

have one person who is working in a totally open environment 

that—when you are working a material, you don’t care where it 

goes and who has access to it. That is one thing. But if what that 

same person is working on a sensitive program or a classified program and they start interfacing, it is very easy to lose the 

connectivity; who am I speaking to right now? And that is really 

an education problem and it is also an organization problem. Do I 

want to have people that are working in these sensitive programs 

also interfacing with these people in these totally open programs? 

Because very quickly, that line will blur between the—that individual and who is my friend and who do I talk to and what can 

I say? So that is an organizational issue. Yeah, sure, they can exist 

separately but it has to be done I think in a calculated way. 

Mr. SWALWELL. So you believe if the open campuses are able to 

have that bright line that distinguishes between the classified work 

and the unclassified work and knowing that in the unclassified 

areas we can still make great strides and progress in energy security and national security without giving the individuals working 

in those areas anything that would be sensitive or compartmentalized, do you think that is possible? 

Mr. MAJOR. You look at it and you say I am going to—if you color 

it gone and said soon after we do it, it going to go someplace else, 

then it—you don’t have a problem. But then the people that are 

working on it, they also have information that you don’t want to 

have color gone. And you got to figure out is that the same people 

or is that different people? 

By the way, in your comment about economics, let me just—one 

other thing. We often say to corporations, however, that if they are 
111 

going to go to China and you are going to open up a business in 

China, this is an economic issue, color it gone because it won’t take 

long before whatever you have there will be copied by that society 

and you will be out of business there. And so corporations have to 

look very carefully because it is a big market, but they are not— 

it is a Delta T, a period of time in which you can operate there before you will now have—build your own competitor. 

Mr. SWALWELL. Great. Thank you, Mr. Chairman. I yield back. 

Chairman BROUN. Thank you, Mr. Swalwell. 

My good friend from Arizona, Mr. Schweikert, you are recognized 

for five minutes. 

Mr. SCHWEIKERT. Thank you, Mr. Chairman. 

Is it proper to say Professor Vest? 

Dr. VEST. Chuck is fine. 

Mr. SCHWEIKERT. Well, okay, if you say so. Professor Chuck, if 

this were the 1980s—if I remember the language we used back 

then—it was called the run-fast theory very similar to your bucket. 

If anyone goes back that long, the old—we were going to produce, 

particularly in military technology—this much faster than the Soviet Union. In today’s world where everything is ultimately sitting 

out there on a server somewhere, can you ever run fast enough 

that our technological value, both—whether it be military, whether 

it be economic, data research—is produced in a way where you can 

truly have, you know, something—at MIT or other fine universities 

a truly open platform? 

Dr. VEST. That is a really good question, and it seems to me that 

when it comes to the distinction you made, I suspect that under today’s contracting laws and everything else, literally military technology could not run fast enough to stay ahead if it were as you 

have said. 

I do think, however, that basic advances in information technology and life sciences and manufacturing and so forth, in new 

chip design, new materials, bioinformatics and so forth, these 

things in fact do move fast enough that we ought to be able to 

claim them for a significant period of time, perhaps start initial 

manufacturing in the United States, and then it is probably going 

to drift off. 

Dr. VEST. But if you don’t try to stay out ahead of the curve, then 

you know you are dead. 

Mr. SCHWEIKERT. Well, what is the United States ultimately resource? 

Dr. VEST. It is our free market. 

Mr. SCHWEIKERT. I will make the argument it is our entrepreneurship. 

Dr. VEST. It is our free markets and entrepreneurship. 

Mr. SCHWEIKERT. Yes, it is that we do creative destruction really 

well, really fast. 

Ms. Van Cleave, I have sat through a series of these hearings on 

sort of the banking finance side and learning, you know, the networks that are attacking bank accounts and collecting credit cards 

number and these—and fascinating and I am not breaking any 

rules because a couple of those were inside the tank—that we literally have criminal organizations, criminal entrepreneurs that are 

not nation states. They are literally—they collect the data and it 
112 

is up for sale for whoever will pay for it. Are we now seeing that 

in the science and technology and military espionage world where 

I am not a state actor; I am in it for the money and I am going 

to collect the data and put it up, and whoever is willing to buy it? 

Ms. VAN CLEAVE. Congressman, I don’t have specific insights 

into the kinds of entrepreneurial criminal organizations that might 

be going against our S and T base in that way, but I can tell you 

that I do know that there is a third country market if you will in 

things that get stolen by other governments. 

Mr. SCHWEIKERT. Well, that was going to be—well, in—— 

Ms. VAN CLEAVE. So it wouldn’t surprise me to learn that there 

could be entrepreneurs who are also taking advantage of that market to be out pedaling their wares. 

Mr. SCHWEIKERT. Mr. Major, in that same thread, I have heard 

lots of stories out there where—whether they be entrepreneurs but 

also literally engineers, scientists saying you—if you can steal the 

equipment, we will reverse it for you. We will reverse engineer it. 

Mr. MAJOR. There are specific cases of that. Of the ones we have 

been tracking in SPYPEDIA we find that happening. Someone may 

be a foreign national but they see the technology and say, hey, I 

can compete against this. I can take this out and set up my own 

competitive business or buy someone to do that. So yes, we have 

empirical cases that feature it exactly. I would like to add one 

thing to your fast run—run-fast strategy that we had during the 

Reagan Administration is that that run-fast didn’t work very well 

because we found out through a source called farewell manmade 

vitriol that the—as we develop new technology, immediately it was 

being stolen by the Russians. So they were not three generations 

behind us; they were about one or two generations because their 

espionage network was so large and so successful, it really 

shaped—reshaped our defense thinking as a result of that. And 

there is one source who told us that. 

But yes, there are examples like you are talking about. In this 

business, you have to look at this and say whatever the—whatever 

someone is stealing, you know, you can’t keep anything secret forever. You have to keep it what I call a Delta T. It is a period of 

time before it will eventually become public, but you only have to 

define how long and how much you want to invest in that Delta 

T. How long do you want to keep that secret for that period of time, 

and that is where you put your efforts and so forth. 

Mr. SCHWEIKERT. Thank you, Mr. Major. Well, being for all of us 

as Members of Congress, we all know what it is like to be in an 

environment where there are no secrets. 

With that, I yield back, Mr. Chairman. 

Chairman BROUN. Thank you, Mr. Schweikert. 

I want to thank the witnesses for you all’s valuable testimony 

and I want to thank Members for you all’s great questions. 

Members of the Committee may have additional questions for 

you guys, and we will present those for you for you to respond in 

writing. And if you will do those please expeditiously. The record 

will remain open for two additional weeks for comments, for written questions by Members. 

Thank you all so much, very informative, great testimony from 

all four of you. We really appreciate your effort. As I said in my 
113 

opening statement, I don’t have a prescription to balance between 

openness and security, and I believe very firmly if—that property 

rights, whether it is real property or intellectual property, is absolutely critical for a free society. And if we have private entities or 

government entities that are stealing our property, whether it is 

military property, real or intellectual, whether it is research and 

development or what have you, that we are not a free people anymore and it is absolutely critical. 

So if you all have a prescription of how we can balance this and 

how we can go about making sure that our national labs and our 

businesses and any other entity here in this country can remain secure but be as open as possible, I would welcome you all’s suggestions for any kind of legislation that we can go forward. So please 

let us know. 

Thank you all so much for coming today and I appreciate your 

valuable time. And again, I appreciate your patience and we will 

look forward to hearing your written answers back. If you would, 

please do so as expeditiously as possible. 

The witnesses are excused and this hearing is now adjourned. 

[Whereupon, at 4:02 p.m., the Subcommittee was adjourned.] 

(115) 

Appendix I 

ANSWERS TO POST-HEARING QUESTIONS
116 

ANSWERS TO POST-HEARING QUESTIONS

Responses by Dr. Charles M. Vest 
117 

DRAFT RESPONSES 

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2. I understand that certain countries like China, Russia, Iran 

and North Korea require additional scrutiny because of what 

we know about their interests and attempts on our 

technologies and information. Keeping that in mind, how do 

we implement policies that protect our assets while avoiding 

accusations of profiling? 

To the greatest extent possible, we should treat every individual who 

has been admitted to the U.S. to study or perform R&D the same. Sadly, 

Timothy McVeigh was just as evil, and his acts just as horrendous, as 

those of any foreign terrorist might be. Critical industrial IP and truly 

essential security information should be protected from domestic 

criminals and noncitizens alike. The criteria should be the same. 

On the other hand, when things like cyber intrusions occur, we must 

counter where the source wherever it is. If the source is dominantly in 

one of the countries mentioned in your question, I don't consider that to 

be profiling. At the same time, we don't want to blindly shut our doors. 

Many of our best researchers and entrepreneurs have come here from 

China, Russia, and Iran. 

3. Do you have any recommendations on what steps our 

academic institutions and labs can take to defend attacks 

directed specifically at our cyber infrastructure, and can we 

share or apply those suggestions to American businesses and 

government agencies which are constantly bombarded by 

cyber-attacks from foreign nationals? 

This is a very important matter, but the specific answer to your question 

is a technical matter beyond my expertise. However, there are a couple 

of points I would like to make: 

First, cyber attacks and intrusions are simply facts of modern life. They 

can be, and are, effectively carried out by individuals with widely 

varying motivations as well as by state actors. Second, for the 

foreseeable future, there will be a continuous escalation in the nature 

and sophistication of such attacks, and therefore, countermeasures 

must also advance dynamically; there will be no one-time fix. 
118 

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There is a lot of cyber security expertise in our universities and in small 

companies. My colleagues and I would be glad to point your staff 

toward some of these if that would be helpful. 

4. The classification system is an important tool to keep truly 

sensitive information safe and secure. But overclassification 

can jeopardize national security by preventing federal 

agencies from sharing information internally, with other 

agencies or with non-governmental organizations. How can 

we prevent overclassification and ensure that classifiers 

comply with existing criteria for c1assifiying documents? 

I believe that we have serious problems of overclassification and 

mission creep. According to a 2011 report by the Director of National 

Intelligence, over 4 million people held security clearances, and of this 

group, 1.2 million held Top Secret or TSjSCI clearances. Beyond that, 

there is an unnecessary and confusing proliferation of categories like 

"sensitive but unclassified," and an overly broad and badly outdates 

export control regime. 

In a technological world that moves as fast as today's, it seems very 

clear that we need to narrow the scope of classification by narrowing 

the criteria which classifiers apply to better represent those things that 

are truly critical to our security. In my view, it would be good practice 

to do periodic post audits of representative samples of classified 

materials and activities to honestly assess whether the initial decision to 

classify was justified in retrospect. The system could then be 

continuously improved and narrowed over time. 

My experience observing and working with private industry suggests 

that they are much better and more focused than the government about 

what I P really needs to be protected. Their domains of interest are 

often quite different than that of the national security community, but I 

think the federal sector could learn from the business sector. 

Finally, especially in the commercial context, I continue to believe that it 

truly is more important to fill our proverbial bucket of new knowledge 

and technology than to obsessively plug leaks. If we can reduce 
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unnecessary bureaucracy and security, we can get new things into the 

hands of our entrepreneurs to create jobs and get them to market. 

Speed is really important today. 
120 

Responses by Dr. Larry M. Wortzel 

H..w. Of THE STATU. SUl'T'! 602 

444 NoJtTH CAPrroL SnEn. N.W. 

WASHINGTON, D.c' 20001 

U.S.-CHINA EcoNOMIC & Sl!CURflY REvIEw CoMMISSION 

Wll.l.lAM A. Jb!n.lSOf. CHAnUdhN 

DENNIS C. SHEA, VICE CHAIRMAN 

Representative Paul Broun, M.D. 

Chainnan 

Subcommittee on Oversight 

Committee on Science, Space and Technology 

U.S. House of Representatives 

2321 Rayburn House Office Building 

Washington, DC 20515-6371 

Dear Chainnan Broun, 

PHON'" 20262-l1407 

FAlO 202.624.1406 

&MAft.: contact@uscc..gov 

www.uscc.gov 

I am pleased to respond to your questions regarding my testimony before the Subcommittee on May 16, 

2013. These responses represent my own views and not those of the U.S.-China Economic and Security 

Review Commission. 

1. Does the U.S. have a comprehensive strategy of its own to counter China's robust, nationallydirected strategy to steal American techuology and ingen uity? If uot, what more should we be 

doing? 

The United States has a comprehensive national counterintelligence strategy as provided for in the 

Counterintelligence Enhancement Act of 2002 (Public Law 107·306 of November 27, 2002). The 

National Counterintelligence Executive (NCIX) serves as the head of counterintelligence for the United 

States Government and reports to the Director of National Intelligence. The law also infonned the 

Director of National Intelligence that it is the sense of the Congress that the DNI should seek the views of 

Attorney General, the Secretary of Defense, and the director of the Central Intelligence Agency in 

selecting the National Counterintelligence Executive. 

The NCIX is responsible for producing a strategy for the counterintelligence programs of the United 

States, and that strategy must be updated every three years. The last update I was able to locate was dated 

2009 (although it does not seem to have been published until 2010); therefore a new strategy may be in 

development. The 2009 counterintelligence strategy does not mention China specifically. However, I 

have met with the staff of the NCIX section responsible for China and East Asia a number oftirnes. They 

are highly competent counterintelligence professionals drawn from aCross the intelligence community. In 

general, the strategies and reports to Congress from NCIX identiJY, characterize, and seek to address 

pervasive and global threats. Internally, and in classified strategies inside the intelligence community, the 

NCIX develops strategies specific to China. Some examples ofNCIX documents are: 

The U.S. for the first time published the Counterintelligence National Strategy in 2005 to focus 

resources on the most serious current and emerging threats to U.S. technology and ingenuity. The 

strategy has several goals, one of which is to protect "U.S. advanced technologies and sensitive 

information in the defense, intelligence, economic, financial, public health, and science and 

technology sectors." 

In 2007 and 2009, the NCIX developed National Counterintelligence Strategies. 
121 

• [n May of 2010 the National Counterintelligence Executive released the 2009 National 

Counterintelligence Strategy that identified the ''protection of U.S. economic advantage, trade 

secrets and know-how" as a key component of the strategy. 

• The Office of the National Counterintelligence Executive publishes a biannual report to cungress 

titled Foreign Spies Steal U.S. Economic Secrets in Cyberspace: Report to Congress on Foreign 

Economic and lndustrial Espionage, 2009-20 I L 

China's espionage has become a far greater threat to the United States since the mid-I990s. This 

expanded threat is a result of Beijing's increasing demand for strategic intelligence, its reliance on 

technical intelligence collection to support its national industrial development and science and technology 

plans, and expanding collection capabilities. As the number of Chinese students, researchers, academics, 

and businessmen working in the United States increases, it will become more difficult to discern a 

Chinese traditional or nontraditional collector from a legitimate entity due to the openness and ease with 

which academic and commercial business is conducted in the United States. Therefore. it is imperative 

that the U.S. develop a comprehensive and dynamic classified list of nations and actors that pose the most 

serious espionage threat to the U.s. govermnent and industry. 

Development of this list would require input and maintenance from throughout the U.S. Department of 

Defense and Intelligence Community. It almost certainly would include China, which was identified in 

the 2009 NCIX report on the theft of U.S. Economic Secrets as "the world's most active and persistent 

perpetrators of economic espionage." From this list, additional limitations on access to sensitive research 

or technology could be imposed on foreign individuals from those nations of concern. Though the entire 

document should remain classified, its key conclnsions and recommendations should be released to the 

public when such release would not compromise intelligence sources and methods. Releasing as much of 

the document to the public as possible would help educate the staffs at academic institutions and 

laboratories and ensure they are aware of the threat posed by China. 

I note that in the Reagan Administration, the lnteragency Groups designed to coordinate national policy 

operated directly under the National Security Advisor. At that time there was an lnteragency Group, 

Counterintelligence (IGfCI) with a full time director on the National Security Council (NSC). So far as 1 

know, at the present time, there is no full-time NSC official with responsibility for U.S. 

counterintelligence (although there is a full-time cyber security director on the NSC). 

Finally, Congress might want to eXlllIline the budget elements of the Foreign Counterintelligence Program 

(FCIP), which is under the budgetary control of the ON! to see if enough attention is devoted in the 

Program to China. 

2. Concerning U.S. efforts to balance scientific cooperation and security, how would you defiue 

sensible polieies vs. bad polic:ies? 

Sensible policies must promote open and collaborative academic and scientific research and exchange 

while protecting information that is moving from fundamental research into defense or industrial 

applications. If laboratories or academic institutions are engaged in fundamental research and at the same 

time are involved in research on proprietary, export-controlled or classified matters, it is incumbent on the 

govermnent or industry to ensure that foreign nationals do not get unauthorized access to export 

controlled or classified research. Also, the information systems of institutions involved in controlled or 

classified research should be separate from those that are open to all researchers. Also, sensihle policies 

should recognize that certain nations have targeted programs to steal foreign technology. 

2 
122 

Bad policies place 100 much weight on arguments that all scientific exchange must be open and do not 

recognize that there may be new, cutting edge innovations or research that has near-immediate application 

in the defense or national security sector. Finally, in my experience, bad policies often are associated 

with a bureaucratic approach by administrators who have no practical experience in the production of 

materials or systems and who do not understand the transition from fundamental ideas and research into 

applied experimental development. 

3. How does the U.S. implement policies that protect onr technologies and information while 

avoiding accnsations of profiling? 

In general, U.S. policy should focus on protecting teclmologies and information. For example, the U.S. 

could take the following measures: 

• Ensure U.S. businesses are fully aware and compliant with laws and regulations pertaining to the 

release of export-controlled technologies to foreign nationals in the United States. 

• Clearly codifY distinctions between different levels of research, and then defme security 

requirements - with consequences for negligence - for each level. With respect to China, and 

other countries with strong records of economic espionage, cyber espionage, theft of intellectual 

property, reverse engineering, and the proliferation of weapons, the U.S. should expand and 

refine the export-control system to refine the licensing and export of materials, equipment, and 

forms of technology, including dual-use technology. My view is that if a particular technology is 

ubiquitous, there is Iiule reason to try to protect it under license. Whereas, if the U.S. or U.s. 

allies are far ahead in a technology area with direct military application, or a dual-use technology, 

then that technology may deserve protection. 

However, I have no philosophical problem with profiling in counterintelligence programs. Indeed, 

decades of experience in intelligence collection and counterintelligence lead me to conclude that it is 

pretty dmnb not to profile. If a nation has an established record globally of stealing intellectual property, 

abusing its citizens. coercing its citizens to steal property, and has no strong rule of law, it is fair to pay 

more attention to the nationals of that country. 

Also, in intelligence collection. for decades the preferred method of operation for China's intelligence 

services has been to target Chinese nationals, ethnic Chinese in foreign conntries, and the citizens of 

foreign countries with a strong auachment to China because of family counections, business investments, 

cultural interest, or academic interest. However. China's intelligeoce services recently has shown 

increased willingness to target individuals without ties to China who have access to information Beijing 

wants to collect. Therefore, in counterintelligence programs, it makes no sense to ignore these traditional 

methods of operations. 

The U.S. should increase the public's awareness of China's use of students, scientists, and scholars 

attending U.S. universities and research universities as collectors on behalf of China, whether witting or 

unwitting. Beijing likely eoconrages Chinese students to study specific technology areas in the United 

States that support China's national research and development objectives. Any Chinese organizations 

associated with intelligence activities that sponsor academic research activities, social development, or 

international exchanges should he monitored and investigated. 

4. What steps can onr academic institntions and labs take to defend from attacks direc:ted 

specifically at their cyber infrastructure, and can we share those snggestions to American 

businesses and government agencies? 

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Implementing security "best practices" almost certainly would reduce the effectiveness of Chinese cyber 

efforts. While not ensuring perfect security. such practices would make it more difficult for cyber actors 

to gain an initial foothold and maintain persistent access in the networks of academic institutions and labs. 

In particular, information systems housing research and development data that is likely destined for use in 

classified or unclassified national security programs (such as weapons) should be encouraged. or even 

required, to implement these best practices. 

• Placing sensitive information on stand-alone networks rather than Internet-connected 

computers would cut off the most common method used by intruders to compromise and 

steal data from computer systems. 

• Using multifilctor authentication - generally a password in combination with a piece of 

hardware of biometric identifier - makes using stolen passwords difficult or impossible 

without also stealing or copying the physical authentication token. 

• Encrypting data at rest and disabling unused ports and computer media would make it 

more difficult for intruders to conduct cyber-attacks. 

• Enhancing user awareness of common social engineering tactics would help lessen the 

number of successful compromises. 

China probably has the technical capability to compromise and extract data from closed academic and 

scientific institution networks by exploiting users who transfer files between Internet-connected and 

closed networks with removable media devices. China could face challenges conducting these "air gap 

attacks" against closed U.S. networks that have strong policies and procedores for moving data via 

removable media and examining it for malicious content. 

Academic institutions and labs could cancel or limit their interactions with Chinese institutions and labs 

that are linked with Chinese cyber actors or who are known to have benefited from Chinese cyber activity 

or intellectual property theft. 

The U.S. Government should publish and make available to laboratories and academic institutions a list 

of the known cover or proprietary organizations used by Chinese intelligence services as places of 

employment or study for intelligence collectors. 

S. How can we prevent over cJassification and ensure that classifiers comply with existing criteria 

for classifying documents? 

President Obama's 2009 Executive Order No. 13526 acknowledges the need to prevent over 

classification. Nevertheless, there remains a significant gap between written guidelines on proper 

classification and the actual practice of classification. In recent reports addressing the issue, both the 

Brennan Center for Justice at New York University School of Law and the Public Interest 

Declassification Board suggest this gap is attributable to an environment that incentivizes risk-avoidance 

and over classification and provides no incentive to refrain from or challenge over classification. These 

reports make a number of recommendations, of which I believe the following are the most important: 

• Introducing a minimal administrative burden upon original and derivative classifiers, such as a 

brief questionnaire asking these individuals to justifY their classification, to counteract the 

tendency of rote classification. 

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124 

• Incorporating occasional audits by the agency's Office of the Inspector General and stronger 

training programs to increase accountability into the accounting process. 

• Implementing "safe harbor" or "hold harmless" rules for derivative classifiers who fail to follow 

original classification decisions when those decisions are not clearly conveyed. Distinguishing 

under classification in these instances with willful or negligent unauthorized disclosures. This 

recommendation could alter the tendency for such an individual to avoid the risk of and sanctions 

associated with under classification. 

• As a corollary to the above, clarifY the specific protections afforded intelligence sources and 

methods, particularly to derivative classifiers. 

Thank you for the opportunity to respond to these questions. If I can be of any more assistance in matters 

regarding espionage threats against federal laboratories of federally funded research in academia please 

contact me. 

Sincerely, 

~"::'D!(/o¥ Commissioner 

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Responses by Hon. Michelle Van Cleave 

House Science Committee, Subcommittee on Oversight 

Hearing on "Espionage Threats at Federal laboratories: Balancing Scientific 

Cooperation while Protecting Critical Information" 

May 16, 2013 

Michelle Van Cleave 

Answers to Questions for the Record to Dr. Broun 

la. In as much detail as you can provide without compromising classified information, what 

actions are the counterintelligence and law enforcement communities taking to detect, deter 

and neutralize intelligence threats to the science and technology communities? 

From my past experience, I can tell you that foreign intelligence threats to the U.S. science and 

technology base are a serious concern to u.s. counterintelligence and law enforcement. 

Security awareness training is routinely practiced at federal laboratories and among cleared 

personnel. Technology control laws and regulations are properly enforced. The FBI maintains 

outreach programs to bring threat information to U.S. business and industry and academia 

engaged in S& T activities that may be of interest to adversaries or competitors. 

For a more complete answer, I would urge the Committee to request a briefing from the 

incumbent National Counterintelligence Executive. I think the Committee will find that, under 

the current case-by-case business model, counterintelligence and law enforcement are 

performing at very high levels of professionalism, under the resource constraints imposed by 

competing national priorities. It is the business model itself that is the limiting factor, as I 

explain below. 

lb. Do we have a comprehensive strategy of our own to counter China's robust, nationally 

directed strategy to steal American technology and ingenuity? 

No. In the first place, to my knowledge there is no national strategy governing our overall 

relations with China. Nor do we have broad policy guidance to integrate the instruments of 

state power - intelligence, law enforcement, diplomatic, economic, military and others - to 

address Chinese S& T acquisition activities. 

In the second place, the u.S. counterintelligence enterprise is not postured globally to detect, 

deter or neutralize the intelligence activities of China or any other foreign power, or to execute 

strategic counterintelligence operations. Indeed, we know surprisingly little about adversary 

intelligence services relative to the harm they can do. Under the current business model, there 

is no national level system that enables the integration and coordination of the diverse 

activities of u.s. counterintelligence to achieve common strategic objectives. No single entity 

has a complete picture to provide warning of possible foreign intelligence successes, to support 

operations, or to formulate policy options for the president and his national security leaders. 
126 

MICHELLE VAN CLEAVE ANSWERS TO QUESTIONS FOR THE RECORD 

le.l! not, what more should we be doing? 

In my opinion, it would be extremely helpful to have a clear national strategy to bring 

coherence to U.S. policies and programs concerning China. If President Obama follows the path 

of his predecessors and fails to issue one, the Congress could undertake to do so at least for the 

purpose of providing standards against which authorization, appropriations and other 

legislative matters might be measured. For example, here is a sample bill, which I offer for the 

Committee's consideration: 

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MICHELLE VAN CLEAVE ANSWERS TO QUESTIONS FOR THE RECORD 

",H",.R"e",s,,-. __ U.S. RELATIONS WITH CHINA 

Setting forth a strategic policy framework for U.S. relations with the People's Republic of 

China to guide matters before the House of Representatives~ 

Whereas 

There is a time-honored bond of friendship betw"een the American and Chinese peoples, but the GO'vcmmcnt 

of China has continued to oppress the people of China by denying basic human rights, such as freedom of spec.eh and 

religion, and suppressing minority groups; 

The U,s. has a historic commitment to fteedom of the seas, strategic partnerships with Japan and Taiw<lt1, 

strong defense alliances and cooperation with regional aHies, but the PRe is pursuing a rapid military buildup that 

challenges U.S. defense capabihties and the stability and security of friends and allies in East Asia and the Pacific 

Successi\'c U.S. administrations have worked to ilchieve more transparency and confidence in China's 

relationship with 

Therefore be it Resolved, that House of Representativt,s shall measure such bills and resoJutiOt1S as may be considered 

by U.S. retatlo!1S with China against these gtlidjng 

security of U $. friends and allies; 

To exert internal pressure on the Chinese government to support liberalization, transparency, democratization 

and human rights; 

To engage 'Unth the Chinese government to eliminate, on the basis of strict reciprocity, outstanding 

gains; 

To ensure a robust economy and self-sufficiency at home as the surest means of providing leverage to deal with 

China on all fronts. 

Resolved timher, Apl)mr"iatiom Bills reported to the Full House for consideration 

rhesc principles. 

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MICHELLE VAN CLEAVE ANSWERS TO QUESTIONS FOR THE RECORD 

The u.s. government also needs to establish a strategic counterintelligence program to 

integrate and coordinate U.S. counterintelligence assets to achieve strategic objectives - not to 

supplant current case-by-case operations but to add a new strategic dimension to the national 

CI enterprise. While the creation of such a program goes beyond the jurisdiction of this 

Committee, the Oversight Subcommittee might consider addressing their concerns over the 

vulnerability of u.s. S&T to the House Permanent Select Committee on Intelligence (HPSCI) for 

follow up. I am unaware of a precedent for a sister Committee of the House referring a matter 

to the HPSCI, but the logic behind its creation suggests that the Chairman should be receptive 

to such a request. 

2) As suggested by the title of the hearing, our ultimate goal is to develop sensible policies 

that balance sCientific cooperation and security. How would you define sensible policies vs. 

bad policies? Further, how would we know what constitutes an appropriate balance between 

scientific cooperation and security? 

As I see it, in this context security is a risk management function that exists to support the goals 

of scientific cooperation. Part of the answer to developing sensible policies includes educating 

S& T personnel about security in order to give them a true understanding of the several security 

disciplines, how they work and why they matter, rather than just handing them a list of rules to 

follow. 

Secondly, if we had better insights into foreign intelligence threats and better means of dealing 

with those threats (i.e., more effective counterintelligence programs and capabifities), then the 

risks associated with international S& T cooperation would go down. The former Administrator 

of NASA Mike Griffin and I co-authored an article on the subject of US-Chinese cooperation in 

space, which speaks to this question. I am providing the text so that it might be included in the 

record: 

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MICHELLE VAN CLEAVE ANSWERS TO QUESTIONS FOR THE RECORD 

GRIFFIN & VAN CLEAVE: Working with China opens 

door to espionage 

Cooperating in space: Time for a timeout 

By Michael Griffin and MicheIle Van Cleave JulY7j 2011 

It was an awkward moment, to say the least. Testifying before a House Appropriations 

subcommittee, President Obama's science adviser, .John P. Holdreu, was describing the Ohama 

administration's ongoing discussions with China to develop joint space project,. 

Problem is, a law Mr. Obama had signed just weeks before prohibits NASA or Mr. Holdren's 

Office of Science and Technology Policy (OSTP) from engaging in any bilateral activities with 

China. 

When challenged ("Do you understand the meaning of the word 'prohibits'?") Mr. Holdren 

asserted on advice of counsel that the president was construing the law as consistent with his 

inherent constitutional authority to conduct negotiations (lawyer-speak for "You can't tell us 

what is off limits"). 

Mr. Holdren may pay the price (literally) for this uovel interpretation. Now Frauk R. Wolf, 

chairman ofthc subcommittee on commerce, justice, science and related agencies is threatening 

to force compliance with the law by cutting OSTP's budget when his subcommittee meets today 

to mark up next year's appropriations bill. 

Leaving aside the "who's-in-charge" issue, the larger question is: Is this a good law or a bad law? 

As the former head of NASA and the first to ,isit China, and the former head of U.S. 

counterintelligence, we might he expected to reach different answers. Yet we are hoth in the 

realist camp_ There are two schools of thought about space cooperation with China, each with its 

own self-fulfilling prophecy: 

o The Chinese are determined to steal our technology and get ahead militarily at our expense, 

so any cooperative space projects are a lose-lose for us. (The national security realists.) 

o Chinese espionage will sncceed no matter what we do, so we might as well get what we can out of cooperative projects. (The science and technology "realists.") 

We think hoth of these views are overly simplistic. 

As America prepares to box up the last space shuttle for museum display, China is on a 

trajectory of explosive growth in space - under a highly disciplined veil of secrecy. We have 

precious few insights into what the Chinese are doing or why. Based on our experience with the 

Soviets during the Cold War and with Russia since, we think carefully managed cooperative 

space projects - not putting partners into the critical path, just selective joint efforts on 

interesting things - could be the single hest window into Chinese plans and capahilities in space. 

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MICHELLE VAN CLEAVE ANSWERS TO QUESTIONS FOR THE RECORD 

At the same time, the Chinese have a far-reaching, multilayered program for illicit technology 

acquisition from the United States. They are keenly interested in space technology, in which 

America is still the world's unquestioned leader. Just ask 30-year spy Dongfan Chung (Orange 

County, Callf.) or Shu Quan-Sheng (Newport News, Va.) or Lian Yang (Seattle), now serving 

time for passing inter alia space-shuttle communication technologies, space-launch cryogenic 

fuels data and satellite semiconductor devices, respectively. And that's just the tip of the iceherg. 

We want to open channels that allow the possibility that in the long run, a potential adversary 

can become a partner and ally. Joint space projects characterized by transparency, reciprocity 

and mutual benefit can be an excellent way to begin. Is it possible to manage the inherent risks 

while pursuing onr larger goals? 

If we had an effective counterintelligence capability to identify and disrupt Chinese collection 

activities, this would be an easier call. Timely tripwires that signal when the other side is 

stepping across the line would enable us to manage the risk of close interaction and gain the 

advantage of rare insights into China's space program. Unfortnnately, U.S. efforts to bnild such 

a strategic capability against foreign intelligence threats have fallen by the wayside, while 

Chinese espionage continues to grow. 

We believe the United States is paying an opportunity cost by walking away from possible joint 

space projects with China, but without a more robust counterintelligence capability, we stand to 

lose more than we would gain. Nor does it make sense to venture into cooperative activities that 

may contribute to China's military modernization or global strategic ambitions. 

The statutory prohibition against bilateral space projects wisely puts the brakes on a downhill 

rush to engage with the Chinese. In the absence of a larger strategy guiding policy and programs 

on China, it is unclear whether cooperative space projects would advance or hinder U.S. 

interests. The Obama administration should use this timeout to take stock and then return to 

Congress with a coherent approach to space cooperation with China that is more than a raw 

assertion of the president's authority to conduct foreign affairs as he may please. 

Michael Griffin was the administrator of NASA under p"esident George W. Bush. Michelle Van 

Cleave was the national counterintelligence executive under President Bush and assistant 

director of the White House Office of Science and Technology Policy under Presidents Reagan 

and George H. W. Bush. 

© Copyright 2011 The Washington Times, LLC. 

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MICHElLE VAN CLEAVE ANSWERS TO QUESTIONS FOR THE RECORD 

3) I understand that certain countries like China, Russia, Iran and North Korea require 

additional security because of what we know about their interests and attempts on our 

technologies and information. Keeping that in mind, how do we implement policies that 

protect our assets while avoiding accusations of profiling? 

China's intelligence services routinely target overseas Chinese for recruitment; they are the 

ones doing the profiling, not the U.S. government. I am unaware of the other countries cited 

following similar practices. 

4) Do you have any recommendations on what steps our academic institutions and labs can 

take to defend from attacks directed specifically at our cyber infrastructure, and can we share 

or apply those suggestions to American businesses and gavernment agencies which are 

constantly bombarded by cyber-attacks from foreign nationalists? 

Academic institutions and research facilities can begin by understanding that they are targets 

for foreign collection, and protect their information systems accordingly. Business and 

industry have additional commercial incentives for protecting their proprietary information, 

and our entrepreneurial society is responding by provided ever more and better cybersecurity 

solutions. The legal system and the insurance industry also have an increasingly significant role 

to play in allocating risk for cyber-related losses ("who pays, protects"). But history has shown 

that the offense will always have an advantage over the defense, which means that security 

measures alone will never be enough. At the national level, the United States also needs robust 

capabilities to identify, assess and defeat cyber operations directed against us. 

5) The classification system is an important tool to keep truly sensitive information safe and 

secure. But overclassification can jeopardize national security by preventing federal agencies 

from sharing information internally, with other agencies or with non-governmental 

organizations. How can we prevent overclassification and ensure that classifiers comply with 

existing criteria for classifying documents? 

One of the most-cited lessons coming out of the September 11 terrorist attack was a failure to 

"connect the dots" - i.e., to bridge what was known from foreign intelligence sources with law 

enforcement or other domestic information about potential threats. The hurried conclusion 

was "we need to share more" when the conclusion should have been "we need dedicated, 

discrete intelligence fusion capabilities" as well as assigned responsibilities to take action. As a 

result, the current system for protecting intelligence sources and methods and other sensitive 

national security information has become distorted in two ways. 

First, the move from a standard of "need to know" (pre-9/ll) to "need to share" (post 9/ll) 

has resulted in an exploding population of people with security clearances, overwhelming the 

resources of the personnel security system to keep up. I have seen statistics showing that 5 

million people - one in every 50 American adults - now hold security clearances. Security 

challenges are close to impossible to meet with a population that large; at best, there will 

serious gaps, indiscriminate enforcement and escalating risk. Among other things, we see the 

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MICHELLE VAN ClEAVE ANSWERS TO QUESTIONS FOR THE RECORD 

emergence of destructive individuals like Bradley Manning and Edward Snowden -- bit players 

on a quest to prove their own importance, taking advantage of their overly broad access to 

sensitive information. 

Second, all of the incentives are to "dumb down" classification standards, i.e., to classify more 

and broader categories of information as "secret," reserving "top secret" for what was 

previously"secret." In turn, more people need security clearances to access mundane "secret" 

information to do their jobs, putting them in line for moving up the ladder to higher levels of 

clearance. Along the way, it's not difficult to imagine how individuals who see relatively 

innocuous information labeled "secret" may acquire a casual disregard for the weighty 

responsibilities that adhere in protecting information which, if disclosed, in fact would cause 

serious harm to the nation's security. 

A far better approach would be to decide what truly needs to be protected and to protect that 

extremely well, including returning to clear "need to know" standards that can be responsibly 

implemented while facilitating the operations they exist to support. 

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133 

Responses by Mr. David G. Major 

House Committee on Science, Space and Technology 

Subcommittee on Oversight 

Answers by David Major, President of CI Centre and SPVPEDIA® 

1) What should the Science and Technology Community (STe) be on the look for? Are there 

specific cases you can reference that clearly demonstrate the methods used by foreign 

entities to acquire sensitive information? 

The first part of this question is extremely broad and thus difficult to provide a definitive 

response and it is unclear what specifically is being asked. Indications of espionage and loss of 

information can sometimes be reflected in observable actions on the part ofthe intelligence 

collector. In the intelligence and counterintelligence profession there is an axiom that states 

"the worst situation is not to have a source but the second worst situation is to have a source". 

This is true because if sensitive (classified) information is collected and it is of value the 

collector is faced with the need to take action on the collected information. This is actionable 

intelligence. If the collector takes action it must do so in a way that does not reveal the 

information in is the possession of the collector. Sometimes the information is so important it 

must be acted upon and when this action takes place the "owner/originator/victim" observers 

that action and knows the information has been compromised. When the STC becomes aware 

information is compromised they know it has been lost because of technical collection (SIGINT) 

or someone has compromised the information (the HUMINT betrayer). When the STC becomes 

aware of this they will (must) take action to look for the source of the compromise and change 

their procedures, thus resulting in the loss of the sources by the collector. Thus the conundrum 

that faces intelligence collectors "the worst situation is not to have a source but the second 

worst situation is to have a source". The prevention formula for the security professional is the 

creation and staffing of a "what's going wrong center" to monitor apparent compromises. 

The second question addresses the method used by foreign entities to acquire sensitive 

information. This is also a very broad question as the heart and soul of the counterintelligence 

community is to answer this question for every foreign entity that collects against the STC. The 

correct answer is, it depends on the foreign entity conducting the collection. There are some 

broad answers to the question. Information is lost because of technical collection (Te) directed 

against the STC including but not limited to internet mistakes. Technical collection operations in 

the USA, in third countries and in the home country of the foreign collection entities will vary 

significantly. Access to buildings, individuals, and transportation methods all carry their own 

vulnerabilities and opportunities. Any technical device is the potential target of a collection 

operation from a telephone, cell phone, computer, tablet, copy machine. The key is access to 

the device and how aggressive and risk taking the collector is will to be in gaining access to 
134 

devices. An axiom of the counterintelligence community is the farther the target is from the 

domestic base the higher the threat level. The threat is lowest in the USA, it increases when 

TOY or PCS overseas in a third country and still higher when the target is in the collectors 

country. While TC is always present as a threat the second threat and collection method is the 

insider human source. The human source (betrayer) is either recruited to be a "spy" or 

volunteers to the foreign entity to betray trust and provided information. The ability of a 

foreign entity to obtain and handle the betrayer will vary greatly and thus the method used to 

conduct this collection is varied. Every case has its own unique method of operation (MO) but 

some generalizations are universal. Everything being equal the foreign collection entities will try 

not to meet the betrayer often and when they do meet with the human source (betrayer) in 

will occur in the following preference: 

1. In the foreign collection entities home country. 

2. In a friendly third country (foreign to the collector entity). 

3. In any third country. 

4. In a USA city where the collection entity has a diplomatically protected facility and 

the collector has diplomatic immunity. 

5. In a USA city the betrayer and the diplomatically protected collector can both travel 

to. 

6. In a USA community in which the betrayer lives and the diplomatically protected 

collector can travel to. 

7. In any city the betrayer can travel to and a non-diplomatic protected foreign 

collector entity and travel to. 

Any collection operation requires the passage of information. Currently this is almost 

completely conducted digitally with the betrayer e-mailing information out from the place of 

employment or placing the information on a foreign storage device such as a thumb drive and 

taking the material out of the facility in which the material is stored. The information today is 

often e-mailed to the collector or placed in a draft e-mail account used by the betrayer and the 

collector. 

We track this daily in detail on SPVPEOIA@, our open source membership data base, 

www.spvpedia.net 

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135 

2) As suggested by the hearing, our ultimate goal is to develop sensible policies that 

balance scientific cooperation and security. How would you define sensible policies vs. 

bad policies? Further, how would we know what constitutes an appropriate balance 

between scientific cooperation and security. 

The core of this question involves the question "what scientific information should be 

protected, why it should be protected, how should the information be protected and how long 

should it be protected". Clearly this is a judgment decision that requires professional oversight 

experience. During the hearing the concept of "the leaky bucket theory" to security surfaced. I 

do not and never have ascribed to this halfhearted approach to security. It assumes information 

will always be lost so just create new information of greater value faster than you are losing it. 

It also assumes you will lose old information (bottom ofthe bucket) and keep secure the "new" 

information being added to the bucket. No assurance of this magnitude could or should be 

assumed to established policies and procedures. New (more important) information can be lost 

just as easily as old (bottom of the bucket) information. This problem needs to be approached 

with the concept that nothing needs or can be keep secure indefinitely. In essence everything 

will become public eventually; the key to this really is how long before this occurs. Trying to 

keep everything secure indefinitely will lead the keepers of the secret information to lose 

vigilance. Appropriate balance between scientific cooperation and security revolved around 

ensuring real secrets are kept secret with the full cooperation of those tasked with having 

access to the protected information. Policies that ensure appropriate resources are provided to 

protect this information and continued education of the keepers of the secret and the import of 

the culture surrounding the secret are an appropriate balance. A leaking bucket culture for 

protection of information will create a work force that does not take the protection seriously. 

3 
136 

3) I understand that certain countries like China, Russia, Iran and North Korea require 

additional security because of what we know about their interest and attempts on our 

technology and information. Keeping that in mind, how do we implement policies that 

protect our assets while avoiding accusations of profiling? 

Between 1989 and 1991 the FBI reassessed its strategies in defending national security, now no 

longer defined as the containment of communism and the prevention of nuclear war. As the FBI 

sets forth in its history 

"By creating the National Security Threat List (NSTL), which was approved by the 

attorney general in 1991, it changed its approach from defending against hostile 

intelligence agencies to protecting U.S. information and technologies. It thus identified 

all countries-not just hostile intelligence services-that pose a continuing and serious 

intelligence threat to the United States. It also defined expanded threat issues, including 

the proliferation of chemical, biological, and nuclear weapons; the loss of critical 

technologies; and the improper collection of trade secrets and proprietary information." 

The FBI's foreign counterintelligence mission is set out in a strategy known as the National 

Security Threat List (NSTL). The NSTL combines two elements: 

• First is the Issues Threat List -- a list of eight categories of activity that are a national 

security concern regardless of what foreign power or entity engages in them. 

• Second is the Country Threat List -- a classified list of foreign powers that pose a 

strategic intelligence threat to U.S. security interests. The activities of these 

countries are so hostile, or of such concern, that counterintelligence or 

counterterrorism investigations are warranted to precisely describe the nature and 

scope of the activities as well as to counter specific identified activities. 

Accordingly, the national counterintelligence strategy has already addressed the essence of this 

question. The DOJ and FBI require evidence of aggressive intelligence collection against the USA 

before a country can be placed on the NSTL Country Threat List. Responding to this collection 

threat is not driven by profiling but by facts. 

As of June 2013 the number of espionage, economic espionage and technology diversion cases 

directed against the USA that have led to legal indictments are set forth in the charts below 

which included 159 USSR/Russian, 121 PRC, and 105 Iran. The majority ofthe PRC cases are in 

the private sector, and all of the Iranian cases are private sector economic espionage or 

technology diversion cases. 

4 
137 

5 
138 

Beneficiary Country in Illegal Export Cases 

0r-__ .-__ ~1,O ____ '-~~ ____ T7~~~~~40~-r ____ 50~r-__ ~60 

North Venew India China Iran 

Country 35 52 1 

Korea ela Other 

1 2 3 14 

Industry Targeted by Case 

6 

Information Technology 

II! Manufacturing 

II! Defense/defense contractor 

II! Financial 

Pharmacueticals 

Packaging & Consumer Products 

Bio and Medical Technology 

Service Sector Consulting 
139 

4) Do you have any recommendation on what steps or academic institutions and labs can 

take to defend from attacks directed specifically at our cyber infrastructure and can we 

share or apply those suggestions to American business and government agencies which 

are constantly bombarded by cyber-attack from foreign nationalists? 

A significant number of successful cyber-attacks are made possible by two realities. Betrayers 

on the inside of our companies and institutions are stealing information technology to support 

external cyber-attacks. Thirty-five percent (35%) of all the corporate economic espionage cases 

involving theft of information technology is by insider betrayers many of whom are foreign 

nationals working within the companies. This reality is a call for enhanced security to protect 

this type of information and evaluating the policies of hiring foreign nationals for this type of 

specialized technology regardless of how gifted or competent they may be. You would not 

allow foreign nationals to work on classified national projects and this policy should be 

extended to our information technology, academic, labs and business sectors. Failure to 

monitor access and use of information on sensitive servers by employees (especially foreign 

national employees) has allowed betrayers to access servers to steal information while the 

employee was illegally working for a competitor or in their home country. The PRC has gained 

access to US based servers unnoticed using this method while offering employment in China to 

Chinese nationals employed in the USA while visiting the PRe. 

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Æ 

5) The classification system is an important tool to keep truly sensitive information safe 

and secure. But over classification can jeopardize national security by preventing federal 

agencies from sharing information internally, with other agencies or with nongovernment organizations. How can we prevent over classification and ensure that 

classifiers comply with existing criteria for classifying documents? 

This is an age old question and has repeatedly surfaced for years when government entities 

review US security policies and procedures. Since the September 11, 2001 terrorist attack a 

new culture of sharing classified information has been adopted by the entire federal 

government and pushed by both the Bush and Obama administrations. There are few examples 

of government agencies failure to share information because the information was incorrectly 

over classified. There have been judgment calls made not to share essential information but 

that was driven by an agency's cultural difference not by over classification. In addition to a 

new culture of "push information out" with the executive branch a new culture of "push the 

classification down" has also been adopted. Neither of these cultural shifts has resulted in 

creating a mandate to classify less. Within the bureaucracy it is easier for an employee to be 

criticized or disciplined for not classifying information than deciding to classified information. 

Thus a culture of when in doubt classify exists in all agencies and at all levels. This was true 20 

and 30 years ago and remains true today. You can predict that in the future a major espionage 

case like Robert Hanssen (FBI spy), Aldridge Ames (CIA spy) or John Walker (Navy spy) will 

surface and the response will be why that betrayer had access to so much information. The 

push down and push out culture will surface again and calls will again be made to change the 

culture. 

The espionage law does not address classified information. It states that "protected" national 

security information transferred to a foreign entity with intent to harm the US or aide that 

foreign entity is prosecutable espionage. The classification system is established by the 

President under his constitutional power of conducting foreign affairs and can be changed with 

a new executive order. In simple terms it is an established procedure to protect national 

security and a way of informing individuals with legal access to the information that this 

information needs to be protected. It is no more less than a coded way of alerting people that 

this information is special. 

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