[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



 
                         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

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              COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY

                   HON. LAMAR S. SMITH, Texas, Chair
DANA ROHRABACHER, California         EDDIE BERNICE JOHNSON, Texas
RALPH M. HALL, Texas                 ZOE LOFGREN, California
F. JAMES SENSENBRENNER, JR.,         DANIEL LIPINSKI, Illinois
    Wisconsin                        DONNA F. EDWARDS, Maryland
FRANK D. LUCAS, Oklahoma             FREDERICA S. WILSON, Florida
RANDY NEUGEBAUER, Texas              SUZANNE BONAMICI, Oregon
MICHAEL T. McCAUL, Texas             ERIC SWALWELL, California
PAUL C. BROUN, Georgia               DAN MAFFEI, New York
STEVEN M. PALAZZO, Mississippi       ALAN GRAYSON, Florida
MO BROOKS, Alabama                   JOSEPH KENNEDY III, Massachusetts
RANDY HULTGREN, Illinois             SCOTT PETERS, California
LARRY BUCSHON, Indiana               DEREK KILMER, Washington
STEVE STOCKMAN, Texas                AMI BERA, California
BILL POSEY, Florida                  ELIZABETH ESTY, Connecticut
CYNTHIA LUMMIS, Wyoming              MARC VEASEY, Texas
DAVID SCHWEIKERT, Arizona            JULIA BROWNLEY, California
THOMAS MASSIE, Kentucky              MARK TAKANO, California
KEVIN CRAMER, North Dakota           ROBIN KELLY, Illinois
JIM BRIDENSTINE, Oklahoma
RANDY WEBER, Texas
CHRIS STEWART, Utah
VACANCY
                                 ------                                

                       Subcommittee on Oversight

                   HON. PAUL C. BROUN, Georgia, Chair
F. JAMES SENSENBRENNER, JR.,         DAN MAFFEI, New York
    Wisconsin                        ERIC SWALWELL, California
BILL POSEY, Florida                  SCOTT PETERS, California
DAVID SCHWEIKERT, Arizona            EDDIE BERNICE JOHNSON, Texas
KEVIN CRAMER, North Dakota
LAMAR S. SMITH, Texas



                            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


               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.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    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 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. 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 identify 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 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 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 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:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    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 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:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    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 became 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:]

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    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 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.
    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:]

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               Slides shown during Mr. Major's testimony

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    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 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.
    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 
espionage-related activities since 1945, all but--all of those 
cases, there was only one case involving the Department of 
Energy, one involving 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 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 reflections 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 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 
high-performance 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 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 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 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.]
                               Appendix I

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                   Answers to Post-Hearing Questions

Responses by Dr. Charles M. Vest

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Responses by Dr. Larry M. Wortzel

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Responses by Hon. Michelle Van Cleave

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Responses by Mr. David G. Major

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