II 

116TH CONGRESS 

1ST SESSION S. 2316 

To require a plan for strengthening the supply chain intelligence function, 

to establish a National Supply Chain Intelligence Center, and for other 

purposes. 

IN THE SENATE OF THE UNITED STATES 

JULY 30, 2019 

Mr. CRAPO (for himself and Mr. WARNER) introduced the following bill; which 

was read twice and referred to the Select Committee on Intelligence 

A BILL 

To require a plan for strengthening the supply chain intelligence function, to establish a National Supply Chain 

Intelligence Center, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Manufacturing, Invest5 ment, and Controls Review for Computer Hardware, Intel6 lectual Property, and Supply Act of 2019’’ or the 

7 ‘‘MICROCHIPS Act of 2019’’. 


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1 SEC. 2. FINDINGS AND SENSE OF CONGRESS. 

2 (a) FINDINGS.—Congress makes the following find3 ings: 

4 (1) Fifth generation telecommunications tech5 nology (commonly referred to as ‘‘5G’’), as well as 

6 other emerging technologies, will revolutionize the 

7 technology industry, becoming a vital part of day-to8 day business and life, and requires secure supply 

9 chains for the national security of the United States. 

10 (2) An insecure supply chain for products sup11 plied to the United States Government can lead to 

12 a degradation of critical infrastructure and tech13 nology items that are essential to the defense of the 

14 United States. 

15 (3) The United States Government confronts 

16 adversaries who seek to offset the military strength 

17 of the United States through asymmetric, nonkinetic 

18 actions that compromise and neutralize the decision19 making systems, processes, and warfighting capabili20 ties of the United States. 

21 (4) These adversaries take advantage of the 

22 open and democratic system of the United States 

23 that prioritizes governmental transparency to con24 nect citizens with the actions of the Government. 


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1 (5) The National Defense Strategy identified 

2 Russia and China as primary strategic competitors 

3 of the United States. 

4 (6) Russia and China seek to steal sensitive de5 fense information from the United States through 

6 the use of blended espionage operations in the sup7 ply chain, supply chain activities, and cyberspace, 

8 and through insider threat human actors. 

9 (7) The actions of Russia and China go well be10 yond theft of critical military technology, threatening 

11 the integrity and readiness of information and weap12 ons systems and potentially enabling key elements of 

13 the strategies of an adversary to defeat the Armed 

14 Forces of the United States across the spectrum of 

15 conflict. 

16 (8) According to some estimates, cybersecurity 

17 spending in the United States from 2017 to 2021 

18 will exceed $1,000,000,000,000 among the public 

19 and private sectors. 

20 (9) Even with these large investments in cyber21 security, the United States remains vulnerable to ad22 vanced cyber actors like Russia and China. 

23 (10) Since 2013, more than 6,000,000 indi24 vidual data records have been compromised every 


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1 day through data breaches, with nearly half of these 

2 losses occurring in the Government sector. 

3 (11) Large expenditures of resources and a pro4 tective strategy that relies on firewalls and bound5 aries that can be breached by a persistent actor are 

6 clearly insufficient and completely ignore the supply 

7 chain vector. 

8 (12) Military weapons systems are not immune 

9 to cyber vulnerabilities. 

10 (13) An October 2018 Government Account11 ability Office report found that nearly all weapons 

12 systems of the United States have cyber 

13 vulnerabilities the scale of which the Department of 

14 Defense is ‘‘just beginning to grapple with’’. 

15 (14) Furthermore, the report stated that de16 spite multiple warnings since the early 1990s, ‘‘cy17 bersecurity has not been a focus of weapon systems 

18 acquisitions’’. 

19 (15) There have been numerous press stories 

20 about data breaches and theft of United States sen21 sitive technology that prove that cyber vulnerabilities 

22 are real and not theoretical. 

23 (16) The Department of Defense will spend 

24 more than $1,600,000,000,000 to develop and field 

25 its current portfolio of weapons systems. 


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1 (17) Conducting acquisitions without making 

2 security resiliency a key discriminator in capability 

3 development and contract award decisions could po4 tentially lead to additional losses of technological ad5 vantages of the Armed Forces and negate efforts to 

6 improve the capabilities of the Armed Forces to 

7 meet the National Defense Strategy. 

8 (18) Software, hardware, and services supply 

9 chains have proven to be major means through 

10 which adversaries seek to gain access to weapons 

11 systems and information and communications tech12 nology platforms and systems of the United States. 

13 (19) Vulnerabilities in these critical areas intro14 duce unacceptable risks to human life and the ability 

15 of the Armed Forces to execute the missions the 

16 public of the United States expects of them. 

17 (20) The establishment of the Protecting Crit18 ical Technology Task Force of the Department of 

19 Defense and the Information and Communication 

20 Technology Supply Chain Risk Management Task 

21 Force of the Department of Homeland Security is a 

22 welcome first step, but the United States Govern23 ment requires a fundamental security culture 

24 change. 


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1 (21) The innovative technologies that will help 

2 the Armed Forces, economy, and industry of the 

3 United States maintain competitive advantages over 

4 the competitors of the United States are developed 

5 in private industry and in academia. 

6 (22) Engagement to find solutions with indus7 try stakeholders and allied countries to mitigate the 

8 clear, present, and rapidly evolving threats to the 

9 national security of the United States is necessary. 

10 (23) A national center to unify efforts across 

11 the whole of government to strategically warn of and 

12 support the mitigation of threats to supply chains 

13 and supply chain activities is vital to the cybersecu14 rity, critical infrastructure, and national security of 

15 the United States. 

16 (b) SENSE OF CONGRESS.—It is the sense of Con17 gress that— 

18 (1) the United States Government should en19 deavor to deliver warfighting capabilities to oper20 ational forces without having critical information or 

21 technology wittingly or unwittingly lost, stolen, or 

22 modified; 

23 (2) the Department of Defense and the whole 

24 of the United States Government should adapt to 

25 the challenges presented by adversaries while mainVerDate Sep 11 2014 00:52 Aug 08, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S2316.IS S2316

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1 taining as much transparency with the people of the 

2 United States as possible; 

3 (3) stronger effort should be placed on securing 

4 the vast supply chains of the contractors responsible 

5 for developing and producing the defense related ca6 pabilities of the United States; 

7 (4) the efforts of the Department of Defense, 

8 the Department of Homeland Security, and the Fed9 eral Acquisition Security Council to protect critical 

10 technologies should be action oriented with clear out11 come expectations and chains of accountability; 

12 (5) technology protection should begin long be13 fore a contract is signed between a contractor and 

14 the United States Government; 

15 (6) the United States Government should im16 prove its ability to collaborate to protect both the 

17 open research environment and emerging military 

18 technologies; and 

19 (7) the United States Government should focus 

20 on supply chain security to ensure that military sys21 tems and systems required for sensitive activities are 

22 not acquired or operated in a compromised state. 


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1 SEC. 3. PLAN FOR STRENGTHENING THE SUPPLY CHAIN IN2 TELLIGENCE FUNCTION. 

3 (a) IN GENERAL.—Not later than 180 days after the 

4 date of the enactment of this Act, the Director of the Na5 tional Counterintelligence and Security Center, in coordi6 nation with the Director of the Defense Counterintel7 ligence and Security Agency and other interagency part8 ners, shall submit to Congress a plan for strengthening 

9 the supply chain intelligence function. 

10 (b) ELEMENTS.—The plan submitted under sub11 section (a) shall address the following: 

12 (1) Such recommendations as the Director of 

13 the National Counterintelligence and Security Cen14 ter may have with respect to— 

15 (A) the appropriate workforce model, in16 cluding size, mix, and seniority, from the ele17 ments of the intelligence community and other 

18 interagency partners; and 

19 (B) the appropriate governance structure 

20 within the intelligence community and with 

21 interagency partners. 

22 (2) The budgetary resources necessary to imple23 ment the plan. 

24 (3) The authorities necessary to implement the 

25 plan. 


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1 (c) DEFINITION OF INTELLIGENCE COMMUNITY.—In 

2 this section, the term ‘‘intelligence community’’ has the 

3 meaning given such term in section 3 of the National Se4 curity Act of 1947 (50 U.S.C. 3003). 

5 SEC. 4. ESTABLISHMENT OF NATIONAL SUPPLY CHAIN IN6 TELLIGENCE CENTER. 

7 (a) ESTABLISHMENT OF CENTER.—Title IX of the 

8 Intelligence Authorization Act for Fiscal Year 2003 (50 

9 U.S.C. 3382 et seq.) is amended by adding at the end 

10 the following: 

11 ‘‘SEC. 905. NATIONAL SUPPLY CHAIN INTELLIGENCE CEN12 TER. 

13 ‘‘(a) ESTABLISHMENT OF CENTER.—There is within 

14 the National Counterintelligence and Security Center in 

15 the Office of the Director of National Intelligence a Na16 tional Supply Chain Intelligence Center. 

17 ‘‘(b) DIRECTOR OF NATIONAL SUPPLY CHAIN INTEL18 LIGENCE CENTER.—There is a Director of the National 

19 Supply Chain Intelligence Center, who shall be appointed 

20 by the President, in consultation with the Director of Na21 tional Intelligence and other interagency partners as the 

22 President considers appropriate. 

23 ‘‘(c) CENTER PERSONNEL.— 

24 ‘‘(1) SENIOR MANAGEMENT.—The Director of 

25 the National Supply Chain Intelligence Center shall 


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1 ensure that the senior management of the Center in2 cludes one or more detailees from each of the fol3 lowing: 

4 ‘‘(A) The Department of Defense. 

5 ‘‘(B) The Department of Justice. 

6 ‘‘(C) The Department of Homeland Secu7 rity. 

8 ‘‘(D) The Department of Commerce. 

9 ‘‘(2) DETAIL OR ASSIGNMENT OF PER10 SONNEL.— 

11 ‘‘(A) IN GENERAL.—With the approval of 

12 the Director of the Office of Management and 

13 Budget, and in consultation with the congres14 sional committees of jurisdiction, the Director 

15 of the National Supply Chain Intelligence Cen16 ter may request of the head of any department, 

17 agency, or element of the Federal Government 

18 the detail or assignment of personnel from such 

19 department, agency, or element to the National 

20 Supply Chain Intelligence Center. 

21 ‘‘(B) DUTIES.—Personnel detailed or as22 signed under subparagraph (A) shall assist the 

23 National Supply Chain Intelligence Center in 

24 carrying out the primary missions of the Cen25 ter. 


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1 ‘‘(C) TERMS.—Personnel detailed or as2 signed under subparagraph (A) shall be as3 signed or detailed to the National Supply Chain 

4 Intelligence Center for a period of not more 

5 than 2 years. 

6 ‘‘(D) REGULAR EMPLOYMENT.—Any Fed7 eral Government employee detailed or assigned 

8 under subparagraph (A) shall retain the rights, 

9 status, and privileges of his or her regular em10 ployment without interruption. 

11 ‘‘(d) PRIMARY MISSIONS.—The primary missions of 

12 the National Supply Chain Intelligence Center shall be as 

13 follows: 

14 ‘‘(1) To aggregate all-source intelligence relat15 ing to supply chains, including— 

16 ‘‘(A) classified and unclassified informa17 tion; 

18 ‘‘(B) threat information; and 

19 ‘‘(C) proprietary and sensitive information, 

20 including risk and vulnerability information, 

21 voluntarily provided by private entities. 

22 ‘‘(2) To share strategic warnings relating to 

23 supply chains or supply chain activities, as the Di24 rector of the National Supply Chain Intelligence 

25 Center considers appropriate and consistent with seVerDate Sep 11 2014 00:52 Aug 08, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S2316.IS S2316

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1 curity standards for classified information and sen2 sitive proprietary information, among— 

3 ‘‘(A) the elements of the intelligence com4 munity (as defined in section 3 of the National 

5 Security Act of 1947 (50 U.S.C. 3003)), com6 ponents of the Department of Justice and the 

7 Department of Defense, the Federal Acquisition 

8 Security Council, and other Federal agencies; 

9 ‘‘(B) at-risk industry partners; and 

10 ‘‘(C) governments of countries that are al11 lies of the United States. 

12 ‘‘(3) To serve as the central and shared knowl13 edge resource for— 

14 ‘‘(A) known and suspected threats to sup15 ply chain activities or supply chain integrity 

16 from international groups, companies, coun17 tries, or other entities; and 

18 ‘‘(B) the goals, strategies, capabilities, and 

19 networks of contacts and support of such 

20 groups, companies, countries, and other enti21 ties. 

22 ‘‘(4) To perform tasks assigned to the National 

23 Supply Chain Intelligence Center by relevant Gov24 ernment supply chain task forces, councils, including 


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1 the Federal Acquisition Security Council, and other 

2 entities. 

3 ‘‘(e) ANNUAL REPORTS REQUIRED.—The Director of 

4 the National Supply Chain Intelligence Center shall annu5 ally submit to Congress a report, with classified annexes 

6 as appropriate, on the state of threats to the security of 

7 supply chains and supply chain activities for United States 

8 Government acquisitions and replenishment as of the date 

9 of the submittal of the report. 

10 ‘‘(f) FUNDING.—Amounts used to carry out this sec11 tion shall be derived from amounts appropriated or other12 wise made available for the National Intelligence Program 

13 (as defined in section 3 of the National Security Act of 

14 1947 (50 U.S.C. 3003)).’’. 

15 (b) CLERICAL AMENDMENT.—The table of contents 

16 in section 1(b) of such Act is amended by inserting after 

17 the item relating to section 904 the following new item: 

‘‘Sec. 905. National Supply Chain Intelligence Center.’’. 

18 (c) SENSE OF CONGRESS.—It is the sense of Con19 gress that the Director of the National Supply Chain In20 telligence Center should implement the recommendations 

21 submitted under section 3(b)(1). 


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1 SEC. 5. INVESTMENT IN SUPPLY CHAIN SECURITY UNDER 

2 DEFENSE PRODUCTION ACT OF 1950. 

3 (a) IN GENERAL.—Section 303 of the Defense Pro4 duction Act of 1950 (50 U.S.C. 4533) is amended by add5 ing at the end the following: 

6 ‘‘(h) INVESTMENT IN SUPPLY CHAIN SECURITY.— 

7 ‘‘(1) IN GENERAL.—The President may make 

8 available to an eligible entity described in paragraph 

9 (2) payments to increase the security of supply 

10 chains and supply chain activities, if the President 

11 certifies to Congress not less than 30 days before 

12 making such a payment that the payment is in the 

13 national security interests of the United States. 

14 ‘‘(2) ELIGIBLE ENTITY.—An eligible entity de15 scribed in this paragraph is an entity that— 

16 ‘‘(A) is organized under the laws of the 

17 United States or any jurisdiction within the 

18 United States; and 

19 ‘‘(B) produces— 

20 ‘‘(i) one or more critical components; 

21 ‘‘(ii) critical technology; or 

22 ‘‘(iii) one or more products for the in23 creased security of supply chains or supply 

24 chain activities. 

25 ‘‘(3) REGULATIONS.— 


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1 ‘‘(A) IN GENERAL.—Not later than 90 

2 days after the date of the enactment of the 

3 Manufacturing, Investment, and Controls Re4 view for Computer Hardware, Intellectual Prop5 erty, and Supply Act of 2019, the President 

6 shall prescribe regulations setting forth defini7 tions for the terms ‘supply chain’ and ‘supply 

8 chain activities’ for the purposes of this sub9 section. 

10 ‘‘(B) SCOPE OF DEFINITIONS.—The defini11 tions required by subparagraph (A)— 

12 ‘‘(i) shall encompass— 

13 ‘‘(I) the organization, people, ac14 tivities, information, and resources in15 volved in the delivery and operation of 

16 a product or service used by the Gov17 ernment; or 

18 ‘‘(II) critical infrastructure as de19 fined in Presidential Policy Directive 

20 21 (February 12, 2013; relating to 

21 critical infrastructure security and re22 silience); and 

23 ‘‘(ii) may include variations for spe24 cific sectors or Government functions.’’. 

Æ 


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