Failure to protect sensitive technology

Sensitive technologies in the private sector get little governmental protection from international espionage and theft

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The government’s ability to protect critical technology in the hands of the private sector has been repeatedly called into question, most prominently by the Government Accountability Office (GAO); in fact, the government’s performance in this area has been designated “high risk” by the GAO since 2007. “The technologies that underpin U.S. military and economic strength continue to be targets for theft, espionage, reverse engineering, and illegal export,” the GAO has warned. Among the problems the agency highlighted: inefficient programs, poor interagency coordination, and decades-old programs ill-equipped to weigh competing U.S. interests in the 21st Century. The various programs cover everything from monitoring arms exports to vetting foreign takeovers of U.S. firms whose work has national security implications. Part of the problem is rooted in the fact that these protection responsibilities are scattered across various agencies in the State, Defense, and Commerce departments. The Department of Defense (DOD)’s Defense Security Service, which oversees contractors across most of the government, was “broken across the board” when Director Kathleen Watson took over in 2006, according to Watson’s testimony before Congress in April 2008. And the situation hasn’t fared much better elsewhere; the GAO reported in 2008 that both the State Department and the Department of Commerce “have not managed their respective export licensing processes to ensure their effective operations.” In 2007, defense contractor ITT pled guilty to illegally sending classified military information to other countries — China among them — and agreed to pay a $100 million penalty. It was “the first conviction of a major defense contractor for a violation of the Arms Export Control Act,” according to a statement by then-U.S. attorney John Brownlee in Roanoke, Virginia. The government’s case against ITT documents numerous instances in which the firm, for several years, deceived or otherwise evaded oversight by State and DOD.

Follow-up:
Some progress has been made, including legislation to reform the Committee on Foreign Investment in the United States, which processes national security reviews of foreign acquisitions of U.S. companies. Additionally, President Bush in early 2008 issued a directive to reform export of defense equipment, services, and technical data in line with the country’s National Security Strategy. But gaps remain. The GAO stated in April 2008 that “despite dramatic changes in the security and economic environment, State and Commerce have not undertaken basic management steps to ensure their controls and processes are sufficient and appropriate for protecting U.S. interests.” The DOD press office did not respond to a request for comment, but Director Watson was frank in her April testimony to Congress: “It took a year to figure out where the problems were and design a transformation plan. We just got our resources six months ago. . . . We have a lot of work to do and, in my view, we’ve just started.”

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