Hearing of the House Armed Services Committee - National Industrial Security Program; Globalization and Foreign Ownership of the Defense Industrial Base
Interview
Copyright ©2008 by Federal News Service, Inc., Ste. 500, 1000 Vermont Ave, Washington, DC 20005 USA. Federal News Service is a private firm not affiliated with the federal government. No portion of this transcript may be copied, sold or retransmitted without the written authority of Federal News Service, Inc. Copyright is not claimed as to any part of the original work prepared by a United States government officer or employee as a part of that person's official duties. For information on subscribing to the FNS Internet Service at www.fednews.com, please email Carina Nyberg at cnyberg@fednews.com or call 1-202-216-2706.
BREAK IN TRANSCRIPT
REP. CONAWAY: Thank you, Mr. Chairman. I appreciate that.
We've had some discussions about ownership of companies. Have we had instances where the owner of a company breached the agreement, the classified agreement within the company and took access to classified data that shouldn't have? I mean, has there been a -- has there been a problem with ownership in terms of violation?
Okay. I actually have a copy of the last Technology Trends that's -- well, you just laughed. You couldn't care less -- in the deal and the biggest trend is they simply asked for the information.
MS. WATSON: Yes, sir. It's a standard operating procedure.
REP. CONAWAY: Yeah, they -- how successful are they at asking and getting classified information, by just asking?
MS. WATSON: I think they're fairly successful. And it wouldn't just be classified information --
REP. CONAWAY: Well, I'm talking -- we're talking about classified. But this is -- I think this is just for classified information.
MS. WATSON: Right.
REP. CONAWAY: So the most successful intelligence gathering facility about classified information is people just ask the folks who have it. And they give it to them?
MS. WATSON: The reason we know that is because the companies are reporting that back to --
REP. CONAWAY: Those are the attempts.
MS. WATSON: The attempts, yeah.
REP. CONAWAY: Half of the attempts of that.
How successful were those attempts at getting classified information? In other words, 50 percent of the -- we know that, say, 50 percent of the attempts were just simply asking for it. The company said that looks like a probe of some sort, and they stopped it. How often -- can we tell? If half of it's -- are they successful 1 percent of the time at getting classified information, 2 percent?
MS. WATSON: I can't give you a percentage. What I can tell you is that when the companies report that information back to us, we don't just hold it at DSS. We disseminate it throughout the counterintelligence and law enforcement community. And the number of suspicious contacts reports we're receiving in the last couple of years has exploded.
REP. CONAWAY: All right. This is 2004 data.
MS. WATSON: Yes.
REP. CONAWAY: When will we get the new one of these?
MS. WATSON: We are aiming for this fall. We have changed the methodology we use to prepare and coordinate that document. It will be coordinated within DSS and then throughout the community. In terms of dissemination of the document, I do want to note that it goes to the national counterintelligence executive, and they generally incorporate much of our annual report in their annual report to Congress on espionage.
REP. CONAWAY: Right. But in terms of your dealing with the companies -- and I'll get the phraseology wrong -- in terms of the cleared or whatever you call it, you've got an individual who has a security clearance appropriate for the level of classified information that they have.
MS. WATSON: Yes.
REP. CONAWAY: And that's our basic last line of defense, is that person's watching how the program works within the company, making sure that new employees don't just come trick-trotting in and get access to it, to the information. And that's the person that you work the most with?
MS. WATSON: The facility security officer, yes, sir.
REP. CONAWAY: Okay. And how good are they?
MS. WATSON: They're very good. They're trained. They're well compensated in industry. They have robust programs. We have a robust relationship with them. Most of the bigger companies have annual conferences with all their facility security officers. We are invited to participate in them. And we have ample opportunity to do so.
REP. CONAWAY: Sure. We had a suggested violation from a hedge fund -- sub-owner in a hedge fund that we've talked about this morning. Any instances where one of the facility security officers has said, "You know, a hedge fund bought 10 percent of the company, and some minion from the hedge fund came tricky-trotting in here one day and asked to see classified information"? (Pause.) You better say --
MS. WATSON: I'd make the general comment -- I wouldn't know that it would be from a hedge fund, but certainly we have seen instances where the foreign ownership interest is represented with visitors and they do try to seek access. And that's one of the guards that are in place in the company.
REP. CONAWAY: Okay. But the securities facility -- security officer would know that that's a risk that he or she should be guard on.
MS. WATSON: Absolutely.
REP. CONAWAY: Have we had instances where the new owners have attempted to bully that officer into doing something that he or she knows is not right? Have we had instances where that new owner has fired or tried to replace someone in a position that was not letting them get access?
MS. WATSON: I cannot today speak to a specific instance that comes to mind. But in a situation like that, the government security committee, the outside directors, if you will, are in a position to monitor that type of activity as well and to --
REP. CONAWAY: And protect that officer from undue influence.
MS. WATSON: Yes.
REP. CONAWAY: Okay.
Thank you, Mr. Chairman. I yield back. Looking forward to getting this new report.
BREAK IN TRANSCRIPT
Source