[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]


  
                         [H.A.S.C. No. 116-56]

          DEPARTMENT OF DEFENSE'S ROLE IN COMPETING WITH CHINA

                               __________

                      COMMITTEE ON ARMED SERVICES

                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD

                            JANUARY 15, 2020


                                     
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT] 


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                    U.S. GOVERNMENT PUBLISHING OFFICE                    
40-508                       WASHINGTON : 2020                     
          
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                      COMMITTEE ON ARMED SERVICES
                     One Hundred Sixteenth Congress

                    ADAM SMITH, Washington, Chairman

SUSAN A. DAVIS, California           WILLIAM M. ``MAC'' THORNBERRY, 
JAMES R. LANGEVIN, Rhode Island          Texas
RICK LARSEN, Washington              JOE WILSON, South Carolina
JIM COOPER, Tennessee                ROB BISHOP, Utah
JOE COURTNEY, Connecticut            MICHAEL R. TURNER, Ohio
JOHN GARAMENDI, California           MIKE ROGERS, Alabama
JACKIE SPEIER, California            K. MICHAEL CONAWAY, Texas
TULSI GABBARD, Hawaii                DOUG LAMBORN, Colorado
DONALD NORCROSS, New Jersey          ROBERT J. WITTMAN, Virginia
RUBEN GALLEGO, Arizona               VICKY HARTZLER, Missouri
SETH MOULTON, Massachusetts          AUSTIN SCOTT, Georgia
SALUD O. CARBAJAL, California        MO BROOKS, Alabama
ANTHONY G. BROWN, Maryland, Vice     PAUL COOK, California
    Chair                            BRADLEY BYRNE, Alabama
RO KHANNA, California                SAM GRAVES, Missouri
WILLIAM R. KEATING, Massachusetts    ELISE M. STEFANIK, New York
FILEMON VELA, Texas                  SCOTT DesJARLAIS, Tennessee
ANDY KIM, New Jersey                 RALPH LEE ABRAHAM, Louisiana
KENDRA S. HORN, Oklahoma             TRENT KELLY, Mississippi
GILBERT RAY CISNEROS, Jr.,           MIKE GALLAGHER, Wisconsin
    California                       MATT GAETZ, Florida
CHRISSY HOULAHAN, Pennsylvania       DON BACON, Nebraska
JASON CROW, Colorado                 JIM BANKS, Indiana
XOCHITL TORRES SMALL, New Mexico     LIZ CHENEY, Wyoming
ELISSA SLOTKIN, Michigan             PAUL MITCHELL, Michigan
MIKIE SHERRILL, New Jersey           JACK BERGMAN, Michigan
VERONICA ESCOBAR, Texas              MICHAEL WALTZ, Florida
DEBRA A. HAALAND, New Mexico
JARED F. GOLDEN, Maine
LORI TRAHAN, Massachusetts
ELAINE G. LURIA, Virginia
ANTHONY BRINDISI, New York

                     Paul Arcangeli, Staff Director
                Matt Rhoades, Professional Staff Member
                  Kim Lehn, Professional Staff Member
                          Emma Morrison, Clerk
                            
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page

              STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

Smith, Hon. Adam, a Representative from Washington, Chairman, 
  Committee on Armed Services....................................     1
Thornberry, Hon. William M. ``Mac,'' a Representative from Texas, 
  Ranking Member, Committee on Armed Services....................     2

                               WITNESSES

Flournoy, Michele A., Co-Founder and Managing Partner, WestExec 
  Advisors, Former Under Secretary of Defense for Policy.........     3
Hunter, Andrew Philip, Director, Defense-Industrial Initiatives 
  Group, Center for Strategic and International Studies..........     7
McDevitt, RADM Michael, USN (Ret.), Senior Fellow, CNA...........     9

                                APPENDIX

Prepared Statements:

    Flournoy, Michele............................................    55
    Hunter, Andrew Philip........................................    68
    McDevitt, RADM Michael.......................................    76

Documents Submitted for the Record:

    [There were no Documents submitted.]

Witness Responses to Questions Asked During the Hearing:

    Mr. Courtney.................................................    91
    Mr. Turner...................................................    91

Questions Submitted by Members Post Hearing:

    Mr. Mitchell.................................................    95
    Mr. Waltz....................................................    95
    
.        
          DEPARTMENT OF DEFENSE'S ROLE IN COMPETING WITH CHINA

                              ----------                              

                          House of Representatives,
                               Committee on Armed Services,
                       Washington, DC, Wednesday, January 15, 2020.
    The committee met, pursuant to call, at 10:00 a.m., in room 
2118, Rayburn House Office Building, Hon. Adam Smith (chairman 
of the committee) presiding.

  OPENING STATEMENT OF HON. ADAM SMITH, A REPRESENTATIVE FROM 
       WASHINGTON, CHAIRMAN, COMMITTEE ON ARMED SERVICES

    The Chairman. I call the meeting to order. I thank you all 
for being here for our first public hearing of the new year. 
Welcome the committee back. I look forward to a productive 
year.
    And to kick it off, we are going to have a hearing talking 
about the threat that China poses and, most specifically, how 
we can best counter that threat and deter what China is trying 
to do and what--you know, what should the Department of 
Defense's plan be for meeting the threats that China poses.
    And to discuss that question we have three excellent 
witnesses with us this morning. I want to welcome back Michele 
Flournoy, who is the former Under Secretary of Defense for 
Policy; Andrew Philip Hunter, who is the Director of Defense-
Industrial Initiatives Group for CSIS [Center for Strategic and 
International Studies]; and Rear Admiral Michael McDevitt, U.S. 
Navy retired, a senior fellow at CNA--all eminently qualified 
for this discussion.
    And the bottom line is China is a threat to the basic 
international order. They don't play by the rules and they 
attempt to set their own rules.
    They really threaten international institutions and 
international norms, and we need to figure out how best to 
contain that threat and help, you know, get back onto the rules 
that we think that the world should be following.
    China's approach is autocratic to begin with. They don't 
believe in democracy. They do not, obviously, protect 
intellectual property and they have a very detailed plan for 
expanding their influence in the world.
    And there is nothing per se wrong with that. They are a 
rising power. They are going to have greater influence in the 
world. But the way they are doing it is a fundamental threat to 
global stability.
    Just take the businesses example. They steal intellectual 
property. They do all manner of different things to try to 
undermine any sort of rules-based trade or business system.
    Then, of course, most notably, they are claiming territory 
that is not theirs throughout the Asian region and coming into 
conflict with, you know, more than a half dozen countries in 
their neighborhood and resisting any sort of international sort 
of normal system of resolving those differences.
    Now, for the purposes of this committee, obviously, we have 
jurisdiction over the Department of Defense and the military, 
and what role does the military play in containing that threat.
    And one of my concerns as we look at this is we war-game a 
lot of things out for how we would be able to win a war with 
China if it came to that, and I understand the utility from a 
deterrent standpoint.
    But in all likelihood we are not going to be going to war 
with China. It is going to be more a battle on other planes, 
and if we are spending all of this money and all of this time 
and effort focused on that, what are we missing?
    You know, what are we missing in terms of being able to 
build the alliances to stop the land grabs that they are doing 
down there; to, you know, protect intellectual property.
    And also there is the simple matter of, you know, we have 
scarce resources and I know I talk about that a lot on this 
committee. I think it is a mistake to look at a problem and say 
we can't be constrained by resources, we have to address the 
problem in any way we can.
    Everybody is always constrained by resources, and if we get 
into a very expensive arms race with Russia and China while we 
are also trying to contain very real threats from Iran and 
North Korea and transnational terrorist groups, can we do that 
or does that undermine our ability to actually be an effective 
power in setting a different example than China has.
    So there is a lot of difficult questions here and I have a 
lot to learn--I can't speak for other members of the 
committee--and I am very pleased that we have three 
knowledgeable witnesses that will help lead that discussion and 
help educate us on what the best way for the Department of 
Defense to operate, what we should fund and how we should go 
forward in terms of deterring Chinese aggression and dealing 
with the challenge and the competition that China poses to us.
    And with that, I will yield to the ranking member, Mr. 
Thornberry, for any opening statement that he has.

      STATEMENT OF HON. WILLIAM M. ``MAC'' THORNBERRY, A 
 REPRESENTATIVE FROM TEXAS, RANKING MEMBER, COMMITTEE ON ARMED 
                            SERVICES

    Mr. Thornberry. Thank you, Mr. Chairman.
    I agree with you that this is an excellent panel and I 
appreciate all our witnesses being here today. I have learned 
from them and from the organizations they--with which they are 
affiliated or have been affiliated for a number of years.
    I also agree that a hearing on China is a good way to start 
the year. We have a National Security Strategy, a National 
Defense Strategy, National Military Strategy that places 
greater emphasis on great power competition.
    And I think what that means is we have to pay more 
attention to countries like Russia and China. Not that they are 
the only thing that we have to pay attention to, as events of 
the past week or two remind us. But if China is indeed the 
pacing threat, then part of the responsibility of this 
committee is think about the personnel and equipment and 
training that is needed to deal with that pacing threat, and 
the assumption I guess would be if we can deal with that we can 
deal with other lesser threats as well.
    So I think this is a good way to start. And one other 
point. I have read all the witnesses' testimony. I think they 
have a number of specific items that this committee and this 
Congress can act upon this year that will help put us in better 
position to deal with the challenges coming from China.
    And so I hope that we can follow up on a number of the 
suggestions that they have. It is not just a theoretical thing. 
It is work for us in fulfilling our job under the Constitution 
this year.
    So, again, I appreciate them being here and look forward to 
their testimony.
    The Chairman. Thank you.
    Ms. Flournoy, we will start with you.

   STATEMENT OF MICHELE A. FLOURNOY, CO-FOUNDER AND MANAGING 
 PARTNER, WESTEXEC ADVISORS, FORMER UNDER SECRETARY OF DEFENSE 
                           FOR POLICY

    Ms. Flournoy. Great. Thank you so much, Chairman Smith and 
Ranking Member Thornberry, distinguished members of the 
committee. It is really an honor to be here, particularly to 
talk about this topic.
    I can't think of a more--an issue that is more important to 
U.S. economic prosperity and national security over the coming 
decades than the question of the competition with China.
    As you all know, the strategic competition with China has 
many dimensions. I think primarily it is economic, 
technological, but there are also political, ideological, and 
military dimensions and any successful strategy has to address 
all of those dimensions in an integrated way. We need a whole-
of-government approach, a whole-of-nation approach, not just a 
defense approach, to China.
    As we craft that strategy, we also have to remember that 
China will remain an important partner for us in key areas 
where we are trying to achieve our objectives, whether it is 
nonproliferation or climate change or North Korea.
    So we have to think about how do we compete while also 
maintaining possible areas of cooperation in areas of mutual 
interest.
    So I want to start by just highlighting three principles 
that I think should guide how we approach the strategic 
competition with China.
    The first and most important is that I think the number one 
thing we can do as a nation is to invest in the drivers of our 
own domestic competitiveness: research and development, science 
and technology, incentives to get private sector--the private 
sector to increase their investment in key technology areas, 
higher education, STEM [science, technology, engineering, and 
math] education--broader access to that--21st century 
infrastructure like 5G, smart immigration policy.
    So my point is there is a lot we can do here at home that, 
frankly, I think the American people would welcome, that would 
do the most to position us well to compete against China.
    I think this is a moonshot moment. I think we need the 
national leadership, the call to action, and smart investment 
plans by this body to enable America to compete and win.
    Second, I think we have a huge strategic advantage in the 
network of allies we have around the world, not only in Asia 
but in Europe and elsewhere. The best way to deal with the 
challenges posed by China is to do that--do so by making common 
cause with our allies and partners wherever possible. We are 
infinitely stronger when we confront China together when they 
violate the rules-based order or norms, et cetera.
    Third, I think we should still maintain our leadership role 
in protecting and adapting the rules-based international order 
that has served us and so many so well for so long, adapting 
that for the 21st century.
    We need to be at the forefront of upholding norms like 
freedom of navigation and peaceful resolution of disputes in 
order to ensure that a might-makes-right approach does not take 
hold in the Indo-Pacific.
    Turning to the military, though, because I think that's 
where this--obviously, this committee is focused, I think the 
challenge for the military is that we have to rethink 
fundamentally how we deter and, if necessary, fight and prevail 
in a conflict with China.
    America's military advantage is rapidly eroding vis-a-vis 
China in light of their modernization efforts. In fact, if we 
just stay the current course, a rising China will likely 
achieve overmatch in a number of key capability areas, 
undermining or at least calling into question our ability to 
deter effectively, to defend our interest, to protect our 
allies and partners, and, ultimately, to prevail at acceptable 
levels of cost and risk.
    So the number one military objective, in my view, is 
figuring out how to reestablish credible deterrence and, as 
Representative Smith said--Chairman Smith said--also figure out 
how we are going to compete below the level of conflict.
    So in doing this, DOD [Department of Defense] faces several 
key challenges. I have laid them out in much more detail in the 
testimony but I will just highlight them here.
    China's substantial investment in anti-access/area denial 
capabilities, which means that the United States can no longer 
expect to achieve airspace or maritime superiority early in a 
conflict. We will have to fight our way to gain it and maintain 
it as we have faced constant efforts to disrupt and degrade our 
battle management networks.
    Second, China's policy of civil-military fusion. They don't 
have something comparable to the gap between Washington and 
Silicon Valley in their system. They have civil-military 
fusion, which mean any technology development of interest to 
the PLA [People's Liberation Army] goes to the PLA.
    We have to figure out what our answer to that is. It is not 
going to look like their answer but we need to do a better job 
bridging that gap.
    And then finally, doctrinal innovations. They have come up 
with this idea of system destruction warfare, which means they 
will be looking to cripple our battle management networks, to 
use cyberspace attacks to keep us from ever leaving port, 
projecting power, basically, keep us from ever reaching the 
theater, and so forth.
    So in the face of these challenges, we have to do a better 
job of really prioritizing what do we need to develop, acquire, 
and demonstrate and we need to think in two timeframes. In the 
near term, how do we think creatively about what we already 
have and use it in new ways, new concepts, to reestablish 
deterrence in the next 5-year timeframe.
    Over the long term, we have to think more about how do we 
transform the force for a very different type of challenge in 
the future to dramatically increase the cost that any 
aggression would have. So investing in fundamentally 
transformational technologies.
    In terms of how we are doing, I think we are underinvesting 
still even though--you know, hats off to this committee for 
getting your bill passed, for really starting to move the 
needle towards the future, but still we are underinvesting in 
the new technologies that will ultimately determine our success 
in deterrence and we are still overinvesting in legacy 
platforms and weapon systems that we will not need or will not 
be as relevant.
    While we have made substantial progress in tech scouting 
and bringing some of those cutting-edge technologies in from 
Silicon Valley and elsewhere, there is still what I call the 
valley of death between the successful prototype and getting to 
be in the program of record for some of these new technologies.
    We are still lacking the technology--the technological 
talent that we need to be smart buyers and developers and 
fielders of new technologies, nor have we--you've given the 
acquisition workforce tremendous new flexibilities in 
procurement authorities, but the Department has not yet 
adequately trained that workforce or incented them to actually 
use those authorities fully and at scale.
    Mr. Chairman, I see the flashing light flashing at me. I 
have made seven very concrete recommendations to Ranking Member 
Thornberry's point. I would urge you to look at those. I am 
happy to walk through those if there is a question along those 
lines in the future.
    The Chairman. Actually, it would be helpful, actually.
    Ms. Flournoy. Okay. Let me just do----
    The Chairman. If you could do the Reader's Digest condensed 
version I think that is----
    Ms. Flournoy. Two--a few minutes on recommendations.
    The Chairman. Yes.
    Ms. Flournoy. What do we actually do? So the first is I do 
think the Department needs to implement a series of reforms in 
terms of acquisition, investment, and workforce development to 
really create the innovation ecosystem that we need to maintain 
the military's technological edge.
    Huge focus on training the acquisition cadre and incenting 
them differently. Huge effort needs to be taken to actually 
attract the technical talent that we need to do that. Lots of 
things that are already in place like scholarships and debt 
relief for--to attract cyber talent. We need to broaden that to 
cover a much broader range of emerging technologies. Reforming 
the security clearance process is also a key part of that. I 
know that is a big windmill to tilt at. But we've got to do 
that if we are going to get tech talent in the door to help.
    Second, ramping up our efforts to develop and test service-
specific operational concepts to drive the rapid fielding of 
game-changing technologies.
    We have the concept of multi-domain operations. The 
services are starting to put meat on those bones. But this will 
require a continuous cycle of war gaming, prototyping, 
experimentation. Congress could help by providing the services 
with more robust funding to be able to field small numbers of 
emerging capabilities prototypes to develop early-stage 
concepts and to actually do robust fleet and field 
experimentation.
    Third, the Department needs to be pushed to adopt best 
practices and lessons learned from the commercial technology 
sector in terms of how to do agile development.
    This is a new thing for the Department of Defense and they 
need to get much better at doing that. There are ways to incent 
that.
    Fourth, budget realities, as you noted, are going to 
require some hard choices, both from the Department and this 
body, to make the urgent tradeoffs we need. One way I like to 
think about it, and I would offer it for you, is we need to be 
thinking about in every major platform area where is the knee 
in the curve.
    Where does it make sense to forgo the next fill in the 
blank--aircraft carrier, tank battalion, you know, whatever--
amphibious ship--and instead take that money for that major 
investment in legacy system and plow it into the emerging 
technologies that will make the legacy systems we have that are 
going to stay in the force for 20, 30, 40 years, that will make 
them survivable again, relevant again, effective again.
    The knee in the curve is where I think those tradeoffs need 
to be made and we need the analytic work to do that and the 
political courage to do that.
    Fifth, we need to continue to adapt and enhance our 
overseas posture to shore up ally and partner capability in a 
more contested environment. We can talk about what that might 
look like.
    Sixth, we need to shore up our near-term vulnerabilities. 
This is, again, not just focus on the emerging technologies 
that will help us in 10 years but what are we going to do today 
and tomorrow with what we have in creative new asymmetric 
concepts to deter better today.
    Finally, the Department needs to be much more active in 
setting norms and standards for emerging technologies and 
participating in security dialogues that set the new rules of 
the road.
    So let me stop there and again thank you for the extra time 
and look forward to the discussion.
    [The prepared statement of Ms. Flournoy can be found in the 
Appendix on page 55.]
    The Chairman. Thank you.
    Mr. Hunter.

STATEMENT OF ANDREW PHILIP HUNTER, DIRECTOR, DEFENSE-INDUSTRIAL 
   INITIATIVES GROUP, CENTER FOR STRATEGIC AND INTERNATIONAL 
                            STUDIES

    Mr. Hunter. Well, thank you very much, Chairman Smith and 
Ranking Member Thornberry, for the opportunity to testify 
today. It is nice to come home to the House Armed Services 
Committee.
    I applaud your decision to approach the topic of this 
hearing, what my colleagues at CSIS have called meeting the 
China challenge, broadly.
    China is challenging the world and the United States 
militarily and economically, and while DOD's role is most 
significant in military domains, it has a significant role to 
play in the broader competition, especially in the key 
technologies that will form the commanding heights of future 
global markets.
    I am going to focus my remarks on the ways in which the 
defense acquisition system can support success in competition 
with China. We very much agree with the remarks that both the 
chairman and the ranking member made and Ms. Flournoy made 
about many other aspects of the competition with China that are 
incredibly significant, and I would be happy to get into those 
in the questions.
    For the acquisition system, a lot of the roles that are 
going to be critical are very familiar. So the system will 
still need to be able to develop systems that meet exacting 
specifications that are required to operate in the most 
challenging conditions, and by that I mean examples such as 
nuclear weapons systems and long endurance undersea systems, 
large submarines and unmanned systems, among others, where the 
defense requirements are so challenging that an off-the-shelf 
solution is not going to get the job done and we need to 
develop systems unique to the military.
    That is a very traditional role for the acquisition system. 
The system also needs to be able to pioneer breakthroughs in 
fields such as artificial intelligence, quantum computing, 
directed energy, and hypersonic systems where fundamental 
challenges that relate directly to defense requirements remain.
    DOD can play a critical role not just on defense 
requirements, though, but also in support of the broader 
economy that is advancing these technologies, particularly in 
the art of testing and evaluation where there are some 
fundamental limitations right now with these technologies.
    But in addition to these familiar roles, the acquisition 
system is going to need to be able to perform new roles in this 
competition. It must allow the U.S. to follow fast, 
understanding and catching up to breakthroughs achieved by the 
Chinese in key areas. The scale of their effort on their 
investment means they will get ahead of us in certain areas if 
they continue on course.
    But perhaps the most critical role for the defense 
acquisition system is building a strong connection to 
commercial technology providers so that DOD remains in touch 
with the cutting edge of technology.
    The competition with China features a struggle to shape and 
master global supply chains across a range of today's key 
industrial sectors such as semiconductors; networking 
technologies, including 5G; advanced materials; data analytics; 
big data; as well as key industrial sectors of tomorrow such as 
quantum-based systems, intelligence systems, and synthetic 
biology.
    The defense acquisition system will need the ability to 
manage supply chains in a more complex business and security 
environment than ever before and it will need to do so in a 
manner that does not divorce DOD from commercial suppliers.
    Now, China has developed structures for providing all of 
the defense acquisition capabilities I have described. China's 
progress in defense technology, however, is not supernatural.
    The U.S. and Chinese timelines for developing new purpose-
built defense systems appear to be quite similar. China's 
advantages in growing defense resources, lower costs, access to 
technology shortcuts is offset by weaknesses in corporate 
structure, manufacturing quality and sophistication, and 
experience.
    But the size and growth of the overall Chinese markets 
serves as a key reinforcement function for its efforts, 
allowing China to progress despite sometimes deep flaws in the 
design and implementation of its programs and to capture market 
power over key supply chains.
    This is why DOD's role must go beyond the purely military 
dimensions of the competition.
    As to what we are doing, DOD's acquisition--Adaptive 
Acquisition Framework appropriately creates multiple pathways 
to achieve the many objectives for the acquisition system I 
have described. But a key test would be DOD's ability to field 
and deploy capabilities developed through alternative pathways, 
something which has not yet been demonstrated at scale, 
especially for software acquisition.
    Something that I call an adaptable systems approach, which 
I can describe in more detail later, within the current 
Adaptive Acquisition Framework would especially help DOD 
accelerate the deployment of new capabilities to fielded 
systems.
    Another key is the national security innovation base 
identified in the National Security Strategy. While the overall 
situation with commercial technology firms is one of increasing 
engagement, workforce issues are a challenge, as has been 
demonstrated multiple times, and the research university 
component of the national security innovation base is deeply 
engaged with DOD but has many challenges with foreign students 
and foreign researchers.
    This shows that management of human capital is one of the 
key issues in the strategic competition with China. The U.S. 
and DOD and our competition for talent and industry as well--
are in a competition for talent and must protect access to the 
best technical talent as a core asset.
    The clarity on key technologies provided in the National 
Defense Strategy [NDS] is great. But while DOD's investments 
accounts have grown, this growth has been concentrated in 
existing production lines and prototypes of military systems.
    Investments in the NDS technologies have been modest by 
comparison, particularly given the fundamental science and 
engineering challenges that confront both DOD and the 
commercial sector.
    And China's aggressive use of cyber theft, counterfeit 
parts, has led to defense supply chain efforts that are 
valuable but, if poorly implemented, could unintentionally cut 
DOD off from access to commercial markets.
    A close and continuing dialogue with industry is required 
to build effective supply chain awareness and enable sound 
supply chain management.
    Finally, I recommend that the committee establish 
performance metrics for meeting the China challenge. At a 
minimum, such metrics should include the level of DOD 
investment in key NDS technologies and success in leveraging 
commercial research and development; measuring performance in 
developing and fielding purpose-built military systems, as we 
sometimes do or have done in the past; measuring DOD's 
engagement with different elements in the national security 
innovation base; and measuring risk in DOD's supply chain.
    [The prepared statement of Mr. Hunter can be found in the 
Appendix on page 68.]
    The Chairman. Thank you.
    Admiral McDevitt.

STATEMENT OF RADM MICHAEL McDEVITT, USN (RET.), SENIOR FELLOW, 
                              CNA

    Admiral McDevitt. Thank you, Chairman Smith and Ranking 
Member Thornberry. It is my pleasure to appear before you 
today.
    I am appearing in my personal capacity and my comments 
reflect my personal views, not those of the CNA, certainly not 
the U.S. Navy.
    Both the National Security Strategy and, more recently, the 
Indo-Pacific Strategy Report from DOD say that China seeks to 
Indo-Pacific regional hegemony in the near term and, 
ultimately, global preeminence.
    Let me make a word or two about regional hegemony. China 
already militarily overshadows and intimidates its neighbors, 
especially if its army can walk or drive to their frontier.
    In every case, China is their largest trading partner. 
Economically, China's neighbors need China much more than China 
needs them. China has the ability to wreck their economies.
    These realities provide Beijing with tremendous regional 
political, diplomatic, and economic leverage. It is important 
that the U.S. be comprehensively engaged in the region to 
reassure our allies and our friends, those that live in the 
shadow of China, that they have not been written off. That 
includes our military posture.
    Peacetime military presence is very important as is 
continuing to demonstrate that we will fly, sail, or operate 
wherever international law permits.
    But we cannot forget that our friends and allies can also 
count. They understand that China is, after all, the home team 
and its entire military is right there.
    Our regional first responders, like the U.S. 7th Fleet or 
the 5th or 7th Air Force or 3d Marine Corps Expeditionary Force 
are numerically outnumbered. But--and we can't match them 
number for number.
    What we can do is try to improve our qualitative posture, 
especially in areas where we have a clear advantage such as 
with our forward-deployed submarine force.
    Submarines are our greatest operational advantage and we 
should do everything we can to capitalize on that by increasing 
their day in and day out presence in the region.
    We should also take a look at capitalizing on the 
opportunity created by our post-INF [Intermediate-Range Nuclear 
Forces Treaty] environment to help offset the strategic rocket 
force unchallenged advantage that they currently enjoy.
    That means getting on with the planned deployments of Army 
land-based conventionally armed ballistic and cruise missiles 
in the Western Pacific.
    Importantly, China's ability to be militarily preeminent 
globally, beyond East Asia, becomes much more problematic once 
its forces move away from China and are forced to operate 
beyond the umbrella provided by its land-based air cover or its 
ballistic missile forces.
    China is certainly not preeminent in the Eastern Pacific, 
the Indian Ocean, the Mediterranean Sea, or the Atlantic Ocean. 
But it is working on it.
    China is beginning to field a capable expeditionary force 
that could be used throughout the Indo-Pacific and along 
Africa's littoral--marines, large amphibs, carrier air, 
logistics ships, et cetera, et cetera. Some of them are already 
in place and they are growing.
    In response, DOD might offer assistance and encourage 
friends and allies to adopt a concept from the PLA and adopt 
their--develop their own local anti-access/area denial concepts 
to protect their own maritime approaches.
    Australia provides a good example today.
    General Secretary Xi's official goal for the entire PLA is 
he wants it to become world class by 2049. Significantly, he 
wants China's ongoing modernization to be completed by 2035, 
which is just 15 years from now.
    He is in a hurry, and the military-civil fusion policy that 
China has implemented will ensure that the PLA has the benefit 
of any innovations--the technical breakthroughs that China 
makes will be able to contribute to the PLA.
    Neither Xi nor other senior officials have defined what 
world class means. But world class carries a connotation of 
second to none or being top tier or being the best in the 
world, and a global foundation to support a world-class 
military is already being laid.
    We know about the base in Djibouti and that is probably the 
first along the Indian Ocean littoral. As of today, as part of 
China's naval buildup, it has commissioned or launched over 130 
modern blue-water--I am just talking about blue-water--warships 
that are capable of operating throughout Indian Ocean or, for 
that matter, anywhere in the world and remain on station for 
months at a time. Today, this is far and away the second 
largest and most modern blue-water navy in the world.
    DOD should become encouraged to become more outspoken about 
China's world-class military ambition and specifically address 
what does that mean for U.S. security. A section in its annual 
report to Congress that addresses the world-class military 
would be a good place to start.
    In conclusion, the long-term challenge to important U.S. 
national interests come from China and we must adopt a long-
term plan to address this challenge. It should be a whole-of-
government approach, as Ms. Flournoy mentioned.
    Central to this, DOD must be able to count on a predictable 
level of funding, whatever you decide it is. I am not sure what 
that number is but it should be predictable that the Department 
can count on day in--year in and year out.
    In this regard, the Indo-Pacific Security Initiative that 
has been authorized but not funded needs to--awaits a DOD input 
as to how that money would be spent and I encourage you to 
encourage DOD to get on with providing the requested plan--
funding plan so that this initiative can move forward.
    DOD also needs a China strategy for the long term. I think 
a reasonable starting point is the aforementioned 2019 Indo-
Pacific Strategy Report.
    Now, trust me, this is a far from perfect document. It is 
too glossy. It is too long. It seems to be more about public 
relations than strategy. But it does lay out some sensible 
strategic concepts.
    I suggest that it be recast, shortened to not more than 10 
pages, vetted on Capitol Hill, and approved by the White House, 
not the Acting Secretary of Defense, as this one was.
    In the interests of time, I have not mentioned China's 
ambitions in space, its concept of military-civil fusion only 
in passing, or its military modernization and global influence 
ops, and I can address those in your questions.
    Thank you.
    [The prepared statement of Admiral McDevitt can be found in 
the Appendix on page 76.]
    The Chairman. Thank you.
    We will now move into questions. For the witnesses' 
information, we try to keep everyone 5 minutes and that means 
that the whole time should be 5 minutes--you know, the whole--
you know, ask the question for 4 minutes and 59 seconds and 
then get a 5-minute answer.
    It is inconvenient because I don't want to cut you off in 
mid-sentence. But the people down in the bottom row start 
sending me texts if I don't because they want to get a chance 
to ask a question.
    So if you see the 5 minutes go off, if you could wrap up 
quickly so I don't have to, like, interrupt you that would be 
greatly appreciated.
    Admiral McDevitt, just a quick example. What are we 
spending money on at DOD? If you look at it from a perspective 
of what you all just said about the threat from China and 
having that China-centric focus, can you give us an example of 
something that we are spending money on at DOD that we 
shouldn't be and then something that we should be?
    Okay. You look at this problem. Okay, we are not addressing 
it here. Clearly, shouldn't be doing that; we should be doing 
this instead. Do you have a concrete example of that that would 
help guide us, basically?
    Admiral McDevitt. Actually, I am probably not the person to 
ask what we should or should not be spending money on. But what 
I would suggest to you is looking at the future I have been 
struck by the fascination with hypersonic weapons and I think 
we need to be sensible about that.
    At the technical level, hypersonic makes a heck of a lot of 
sense. You can shoot somebody very quickly before they can 
shoot back.
    At the strategic level, we have hypersonic weapons. They 
are called ICBMs [intercontinental ballistic missiles]. And we 
don't need any more hypersonic. And so if we are going to focus 
on hypersonic we ought to focus on what is tactically useable.
    The second thing I think I would suggest is keep in mind if 
you want to establish or reestablish deterrence, China is 
becoming as dependent as we are on space, cyber, networks. And 
so without their ability to surveil the open ocean they can't 
use their anti-ship ballistic missiles. They don't know where 
to vector their--the diesel submarine. They don't know where to 
launch their land-based aircraft in what direction.
    So we should not wring our hands and say that it is too 
hard. All we have to do is make that system not work.
    The Chairman. I think you actually are a very good person 
to answer that question. That was very helpful. Thank you.
    And building off of that last point is just something that 
Ms. Flournoy pointed out--that the command and control issue, I 
think, is one of the biggest issues facing us, going forward. 
When we talk about, you know, investing in new technologies 
versus investing in legacy systems a lot of times that can get 
blurred and not actually mean anything.
    But I think the biggest thing that it means is in this area 
because everything we have now is dependent upon that command 
and control system, and as the admiral just pointed out, same 
goes for China.
    If we can take down their command and control system that 
is an enormous advantage. If we can protect our own, same 
thing.
    What are the keys, and you mentioned a lot of different 
reforms and different pieces, but if you had to mention, any 
one of you, one or two things that is the absolute key to 
winning that command and control back, what do we need to 
invest in to be able to defend our own systems and to invest in 
to take down an adversary system?
    I don't know--Mr. Hunter, why don't you go ahead and start 
and then Ms. Flournoy can----
    Mr. Hunter. Yes. So we are--I naturally first go when you 
ask that question is the idea of really doing software 
acquisition well, being able to build robust resilient networks 
because both in the offense and the defense it's about taking 
down the networks that both sides have developed to pass 
information to do command and control.
    So it's about the cybersecurity of those networks and it's 
about the ability to rapidly adapt those networks as technology 
evolves and as we see the kinds of attacks that are likely to 
be posed on our C2 [command and control] systems.
    And this is an area where we really struggle, and we 
struggle because, as Ms. Flournoy mentioned in her testimony, 
we are struggling to adapt some of the agile development 
techniques--DevOp techniques--that have been successful in the 
private sector and, in some cases, it is our bureaucratic 
structures that make that so hard, for example the budget 
structure.
    The way that we do building of budgets makes it very hard 
to say we have got this budget for--you know, for doing 
upgrades and new features on our software system but we don't 
know yet which features we are going to select.
    We may have a menu of 20, but at the end of the day 5 are 
going to be the critical ones and we won't decide that as we 
are building the budget. We are going to decide it when we 
start to write code and are trying to write that code very 
quickly in weeks, not in years.
    So that would be something I would highlight.
    The Chairman. Okay. Ms. Flournoy.
    Ms. Flournoy. I would agree that building the, you know, 
Advanced Battle Management System that the Air Force and the 
Department are talking about is really the long pole in the 
tent for the vision of multi-domain operations.
    It will require rapid advancements in sensor integration, 
data processing, artificial intelligence, network connectivity 
to all the different shooters and actors, and cloud computing.
    These are all areas where the Department has to let itself 
learn from the private sector companies and entities that have 
really pioneered these technologies. We have to get much better 
at spiral development, creating, you know, prototypes that 
enable substantial feedback and interaction from operators 
before we move forward to further specify requirements.
    This is not something where you can architect it from the 
top down perfectly, take 5 years to define requirements, and 
then build to that the way we do. This has to be a spiral 
development process where you are going to learn and adapt 
along the way.
    But it means that the Department has to change, but also 
how defense industry works has to change. We have to move 
towards much more open architectures and much more iterative 
agile development.
    So that is the long pole in the tent. The thing that you 
all can do I think, most importantly, the services are asking 
to shift money to these efforts whether it is, you know, the 
Air Force moving $9 billion towards this, whether it is 
requesting your help for spiral development and 
experimentation. These are things that it is tough because it 
is taking money away from legacy programs. But these--we have 
got to move serious money into this area if we are going to 
make progress on the time and scale that we need to.
    The Chairman. Yes, and just the challenge there, of course, 
is, you know, shift it from where because that is when everyone 
is, like, you got to take--no, not from there, not from here, 
not from there. You know, that is the tougher part of the 
choice that I think we need to focus on. But I just want to 
emphasize and appreciate your testimony emphasizing it. It is 
crucial that we do that--that that shift has to happen.
    Mr. Thornberry.
    Mr. Thornberry. Thank you, Mr. Chairman.
    I just want to get a little bit more specific on three 
ideas, one from each of you kind of, that I just plucked out.
    Admiral, one of the points you made in your written and 
your oral testimony was funding the Indo-Pacific Security 
Initiative.
    We authorized that several years ago under kind of a 
thought that, well, it is working pretty well in Europe--why 
not look at doing it in the Pacific. And yet it has never been 
funded and I don't think the Department has taken it 
particularly seriously.
    But can you elaborate just a little bit? Is this worth 
fighting with them over? What are the benefits?
    Admiral McDevitt. I personally think that there are great 
benefits for the Indo-Pacific commander and if I am not 
mistaken I came across an article or something that showed up 
on the press anyway from INDOPACOM [U.S. Indo-Pacific Command] 
in which there were a whole list of initiatives that they were 
talking about wanting to have funded.
    Why they have not turned that into a budgetary request is 
beyond me. I don't know. My recommendation would be to rattle 
their cage, quite frankly, and say, tell me why you are--why 
you are dragging your feet on preparing.
    Take a look at what EUCOM [U.S. European Command] has done 
and copy it, for goodness sake, and give me a plan on how you 
intend to use these dollars.
    Mr. Thornberry. I think the answer is what the chairman 
said. Everybody is afraid they are going to rob their piggy 
bank in order to fund this. But sometimes----
    Admiral McDevit. That goes on every day in the building.
    Mr. Thornberry. Yes. Yes. We just have to fund it.
    Mr. Hunter, I was going to ask you about something else. 
But I want to follow up on software, because we hear that a lot 
and both you and Ms. Flournoy have talked about the people part 
of software--attracting the right people. And maybe that is the 
only answer. But is there some other concrete step we can do 
this year that would push the Department forward on having its 
own software capability?
    Mr. Hunter. I think there are and, again, I didn't want to 
harp too much on the budgetary piece but I really think it is 
critical because, as was mentioned and as this committee well 
knows, there have been a huge number of flexible authorities 
provided to the Department for things like contracting, doing 
contracting quick, removing bureaucracy from the acquisition 
process.
    Where we haven't done really almost any of that is on how 
to use money to actually support those approaches. So it is 
still the typical programming, budgeting, planning, 
appropriating cycle.
    And ways we get around that we have reprogramming authority 
that allows us to move money. A huge piece of that is chewed up 
and churn on just recoloring money from procurement to R&D 
[research and development], from R&D to procurement, from O&M 
[operation and maintenance] to one of the other colors, because 
the thing you need to do is not the thing you thought you 
needed to do 2 years ago when you built the budget is not the 
thing you need to do in the year of execution.
    And I think a lot of that churn can be minimized by simply 
opening the aperture a little bit on these fuzzy lines between 
what is R&D, what is procurement.
    Mr. Thornberry. Okay. So you are not talking about a fund 
for software development. You are talking about program by 
program, a little more flexibility so that it is available----
    Mr. Hunter. Exactly, and to be clear, I like the idea of a 
fund for software development. But I know it can be--it could 
be a real challenge and I think we can do something very 
concrete with clarifying some of the reprogramming needs, 
eliminating some of them with color of money and then, 
secondly, on new starts. It is a--I am trying to think of a 
polite way to say it--no one knows what is going on with new 
starts. There are 15 different definitions of what they are and 
people tend to take the most conservative approach, which means 
that they are constantly holding and waiting for approval on 
things that should be moving out.
    Mr. Thornberry. Yes. No, and CRs [continuing resolutions] 
emphasize that because, you know, no new starts.
    Ms. Flournoy, I want you to talk to us a little bit more 
about bridge funding, because you had talked about we are doing 
better on experimentation, you know, some of these areas. But, 
still, there's a valley of death going between an experiment 
and making it real, having somebody--some service to pick up 
the ball and run with it. So could you elaborate on that?
    Ms. Flournoy. Yes. I think the first thing is to try to get 
services directly engaged as sponsors early in the game. This 
is working through SBIRs [Small Business Innovation Research] 
contracts. That is actually working. DIU [Defense Innovation 
Unit] is doing a better job of having service sponsors 
alongside them. So there is a sense of ownership from the 
start.
    But in terms of bridge funding, you know, what I am 
finding, talking to a lot of tech companies who actually want 
to work in the national security space, they want to help DOD, 
is they have a great experience through SOFWERX or DIU or 
whatever getting to the demonstration phase.
    They win the prototype competition. Great, we love you, and 
that is in, like, fiscal year 2019. And then they are told, 
okay, we are going to submit--we are going to have an RFP 
[request for proposal] for you in 2021 and they are, like, 
okay, but what do I do in 2020.
    I have got a 10-year hold in my business plan and my 
investors are pressuring me to drop the work on DOD because it 
is too slow, it is too small dollars. You can make more money 
in the commercial sector, just to drop it.
    And so we have got to figure out--there has got to be some 
areas where we know we have got to attract commercial industry, 
whether it is, you know, AI [artificial intelligence] or 
cybersecurity or quantum computing or 5G or whatever, to have 
some bridge funding where you can take the winners and continue 
to invest in them, developing things until you get to the big 
RFP where they can compete at scale, because what is happening 
is a lot of companies who try, they get stuck and their 
investors pressure them to pull away. So that is the concept.
    If I could just say I also endorse putting some software 
development moneys into each of the services and then requiring 
them to report on how they are implementing agile development 
processes.
    If you couple that with some smart tech talent, efforts to 
bring in mid-career people from the tech field for tours of 
duty, people who have experience in software project and 
program management, and you couple that with, you know, 
educating national security leaders how to manage that tech 
talent, you know, create more viable career paths for them in 
the public sector and, oh, by the way, again, reforming the 
security clearance process.
    Right now, you have, again, tech talent who wants to serve 
and they are told they got to wait a year and they end up 
saying, hey, I've got to--I've got to have a job. I can't wait. 
And the biggest barrier for them right now is security 
clearance process.
    Mr. Thornberry. Yes, ma'am. We hear--we hear that all the 
time, too. Thank you.
    The Chairman. Mrs. Davis.
    Mrs. Davis. Thank you, Mr. Chairman. Thank you all for 
being here. I want to commend your really very strong attempt 
at a comprehensive look here. I think we just feel like, you 
know, trying to--trying to really pick from that where we can 
be the most effective is really a key.
    Ms. Flournoy, I wanted to ask you a little bit about the 
civil-military fusion issue, which we are very well aware of 
and, you know, I think the question really is, you know, so 
what should our civil-military fusion look like and maybe the 
other question is what should it not look like, which may be 
pretty much what we have been doing all along.
    We have a different system, obviously. We are not going to 
be China in this at all. We don't want to be.
    So where do we go from here with that?
    Ms. Flournoy. So the Chinese approach would not work for 
us, which is fine. But what we--I think the DOD has to do a 
better job of appealing to our tech community in terms that 
they understand and respond to.
    So one of the best ways to get tech talent and military 
folks or DOD folks working alongside is through challenges, 
through--to say we have a problem and we want the best talent 
from across the board to come and work this problem set 
together.
    And at the end, there is either prize money or there is a 
contract or there is a way forward to take this solution into 
further development.
    That is a language that universities understand, tech 
community understands. So we need to do a better job of 
reaching out and engaging that.
    Mrs. Davis. I guess part of my question would be why 
haven't we done that? What is it? Is it cultural? Is it----
    Ms. Flournoy. We have done it at a very small scale but we 
are not doing it at scale and across the board. Systematically 
removing some of the barriers for tech talent to serve that we 
have talked a little bit about.
    I am actually working on a study on this right now and will 
be happy to come brief you all informally when we are done. But 
I also think, you know, using a scalpel and not a sledgehammer 
with our own industry. So I am all about protecting our crown 
jewels--national security technologies. I am all about making 
sure we are very careful about the kind of Chinese investment 
we allow in our tech community.
    But right now there is an environment of extreme risk 
aversion such that I fear we are actually cutting off things 
like completely passive investment that gets no access to IP 
[intellectual property], no controlling interest, no board 
seat, no ability. It is just money flowing through the 
bloodstream.
    There are some CFIUS [Committee on Foreign Investment in 
the United States] calls that I think are being made badly that 
are going to hurt us by cutting off money for our industry. 
There are some export control examples where old technology 
licenses that have been, you know, granted for 20 years 
suddenly they are being disapproved because--not because, you 
know, the technology is relevant to the Chinese military or 
because it can be reverse engineered or because there is any 
real IP theft threat. It is because someone in the bureaucracy 
is afraid to approve anything going to China.
    And so I worry we are creating an environment where we are 
going to hurt our own industry if we are not careful. So I just 
sound that as a cautionary note.
    Mrs. Davis. How do you think we can best oversee that to 
sort of catch it in process?
    Ms. Flournoy. You know, I think--I think making sure we are 
highlighting Andrew's point that yes, there is a military 
dimension of this competition but, fundamentally, this is an 
economic and technological competition and we need to 
consistently be asking--looking at any tradeoffs we are 
imposing for our own industry in their ability to compete.
    And so I think having--digging into this, you know, what 
are the right ways to protect the supply chain versus the 
heavy-handed stupid ways to do it----
    Mrs. Davis. Sledgehammer ways. Right.
    Ms. Flournoy [continuing]. You know, and get people--get 
people into the details, and to hear from you that you are not 
going to haul them up here and--you know, and punish them if 
they make more nuanced thoughtful judgment calls.
    Mrs. Davis. Anybody else? Yes, Admiral.
    Admiral McDevitt. Just wanted to make a quick--when you 
asked your question, Congresswoman Davis, you talked about 
civil-military fusion. In China, it is military-civil fusion 
and that order of words is very important because in China the 
companies that are doing the technology and the innovation, 
they don't have a vote. They must cooperate.
    Mrs. Davis. Yes. Big difference.
    Yes, thank you. Mr. Hunter.
    Mr. Hunter. I just wanted to say we should also understand 
that China's push towards military-civil fusion, they are 
actually seeking to replicate what they see as the U.S. model.
    You know, they look at Boeing and they say, we want 
something like that. We want a leading aviation company that is 
also our military aircraft supplier.
    So we aren't so terrible at this, right. There is a 
background here where we do know how to do this. We have been 
effective at it. I think where we are really challenged to do 
it is with companies that haven't worked closely with the 
Department of Defense.
    The Chairman. I am sorry. Excuse me for a moment.
    Mrs. Davis. Thank you. Thank you, Mr. Chairman.
    The Chairman. The gentlelady's time has expired.
    Mr. Wilson.
    Mr. Wilson. Thank you, Chairman Smith, and thank you for 
calling this very important hearing, and we look forward on 
Friday to providing a very warm welcome to Chairman Smith to 
South Carolina.
    And I appreciate each of the witnesses today and, Secretary 
Flournoy, I appreciate you pointing out that we can be 
partners.
    America and China have been partners in the past. My dad 
served in the Flying Tigers in World War II in Sian, Chengdu, 
Kunming, and I am really grateful that it was Chinese and 
American forces together to resist aggression at that time and 
still today there are monuments across China recognizing the 
U.S. Army Air Corps, what they did to save millions of Chinese 
lives.
    And so this is appreciated and we, hopefully, can build on 
that.
    And, Admiral McDevitt, I want to thank you for your 34 
years of service for the Navy. We are also thankful for 
President Donald Trump's leadership and the bipartisan support 
of Congress to pass the NDAA [National Defense Authorization 
Act], the signing on December the 20th for the 58th consecutive 
year to protect our country.
    And a question, Admiral. This week Admiral Michael Gilday, 
the Chief of Naval Operations, said the Navy needs more funding 
to compete with China's growing navy.
    This is at a time where the goals are presented in 
coordination with the National Defense Strategy as we 
transition to a great power competition.
    What ways should the Department of Defense offset China's 
growing naval fleet in the anti-access/area denial strategy?
    Admiral McDevitt. Well, I have addressed some of the anti-
access already about figuring out a way to make sure their 
anti-access surveillance piece of it doesn't work and in an 
open environment probably that is about as far as I want to go.
    The other part of it is numbers do matter and so I think 
the Navy is enthusiastic about the administration's 355-ship 
goal.
    Now, the reality is whether we ever get there or not. I 
think the Acting Secretary of the Navy has been clear that he 
is worried about efforts to rush the 355 to get to it before--I 
think the original year was 2034, which, coincidentally, by the 
way, is when China, in 2035, is saying that their military 
modernization will be completed.
    We don't know how big their navy is going to be. It's a 
state secret, and so--and they won't tell us. At least, they 
haven't told me and a lot of other people who have asked. We 
are trying to find out. They may not even know.
    But it is going to be big. I did a back-of-the-envelope 
calculation. You know, that has become a parlor game, I think. 
But about--in 2035 about 420 ships.
    That is not all blue water but I mean, that is about--so it 
will be the largest navy in the world. There is no way we are 
going to have a bigger navy, period, full stop.
    So we have to have a better navy and part of that is 
readiness improvements and part of that is continuing along 
with the plans, for example, on the--I know the LCS [littoral 
combat ship] is not the greatest ship in the world.
    I guess I can speak candidly there. There is a lot of 
critics of the littoral combat ship. But we own 25 or 35 of 
those things now and we ought to do the best we can for making 
them effective as opposed to just writing them off and saying, 
well, we will get something better.
    And so, because otherwise we can't even count them in terms 
of being a credible combat warship.
    So those are the things that strike me as--I don't--I am 
not in a position to comment on what type of ship this--ship Y, 
ship X.
    Whatever we build, though, it ought to be able to survive 
and it ought to be able to have an offensive punch that we can 
actually fight and win successfully.
    Mr. Wilson. Thank you very much.
    And Mr. Hunter, since 2004, China has established Confucius 
Institutes at American universities, at over a hundred, some 
close to the proximity of our technology centers.
    Do you see this as a problem for our country?
    Mr. Hunter. Well, I think anytime that you have a situation 
where academic freedom is being constrained, that has real 
implications for national security because fundamentally open 
research is what provides that foundation for the technological 
advances that we are depending upon both economically and for 
the military.
    So Confucius Institutes tend to be, you know, focused more 
on, you know, IR [international relations] and political 
science type issues. But I do think that injecting that sort of 
element into the academic environment does have risks.
    There was just a JASON's report that came out last couple 
of days where they have been evaluating how do we--how do we 
have the right kind of research for collaboration.
    The Chairman. Thank you. I apologize for the interjection.
    Mr. Wilson. Thank you, Mr. Chairman.
    The Chairman. The gentleman's time has expired.
    Mr. Courtney.
    Mr. Courtney. Thank you, Mr. Chairman, and to the witnesses 
for being here this morning.
    Ms. Flournoy, when you started out--again, I was pleased 
you were framing the question of that region of the world that 
our mission should be to create common cause to stand up for 
rules-based order and norms.
    I think one of the biggest glaring shortfalls we have as a 
country is, again, that we still have not ratified the Law of 
the Sea Treaty, which, again, every commander serving in the 
Indo-Pacific region and Admiral Davidson, who is there now, at 
his confirmation hearing called on Congress to move forward to 
do that.
    His predecessor, Admiral Harris, now Ambassador Harris, was 
almost militant on the question of the need to do that. He was 
quoted as saying, ``I think that by not signing onto it we lose 
the credibility for the very same thing we are arguing for, 
accepting rules and norms in the international arena.''
    And the biggest court case or maritime ruling against 
China, the Philippines case, the U.S. was actually denied not 
only party status but observer status.
    We had to rely on Australia to be our proxy during that 
proceeding, and China definitely sort of throws it back in our 
face anytime that ruling is cited, certainly by us, that, well, 
you know, you are not part of this.
    So, you know, there is now new issues like rare earth 
mineral seabed mining, which is now a gold rush out there in 
the Pacific region which, again, we are shooting ourselves in 
the foot in terms of not being able to be part of a legal 
framework so that we cannot allow China to overreach in that 
area.
    Again, just sort of--we have House Resolution, by the way, 
calling on the Senate to move forward on this, H.R. 454, which 
is bipartisan. I was just wondering if you could comment.
    Ms. Flournoy. No, I agree, it is not only ironic but 
damaging that the primary rules that we use our ships and our 
forces and our diplomatic clout every day to enforce, come from 
a treaty that we haven't ratified and that--and that I do think 
it undercuts our standing on this issue somewhat.
    I think it would be very powerful to get that treaty 
ratified. We are already spending lots of mindshare and 
resources to enforce it. We should have the benefits of being a 
full part of the treaty. There are absolutely no downsides that 
I see to that whatsoever.
    Mr. Courtney. I just wonder if the other witnesses could 
just sort of comment on that point.
    Admiral McDevitt. A topic near and dear to my heart. 
Absolutely we should--we should ratify it. It is important to 
keep in mind that at some point in the future--I don't know 
when--there is probably going to be another U.N. [United 
Nations]-sponsored commission to look at revisions and updates 
to the Law of the Sea Treaty and we are not going to have a 
seat at the table.
    We had a--we played a huge role in the first law--the 
extant Law of the Sea Treaty in terms of helping shape the 
debate and getting concerns of the maritime powers on the table 
and what have you.
    If we are not there the next time around it will be the 
Russians and the Chinese who will essentially be in charge or 
be the leading voice in those negotiations.
    Mr. Hunter. I also agree, and I think your point about 
seabed mining raises the fact that these kinds of international 
agreements help to shape where global markets go and 
technologies that are developing and resource extraction 
technologies that are coming online.
    And so I would point--if we can't do Law of the Sea, I 
think it presents challenges for us in areas like space where 
there are inevitably new international agreements coming with 
the explosion of commercial space and if we don't make 
ourselves an active party in that we will disadvantage 
ourselves in this competition with China.
    Mr. Courtney. Thank you.
    I just wanted to follow up on Mr. Thornberry's question on 
the Asia Reassurance Initiative which, again, passed 
unanimously last year, was signed into law actually right 
around New Year's Day last year, so it is about a year old.
    I mean, in the meantime, we have seen this administration 
getting into a food fight with South Korea about wanting a 
fivefold increase from Korea.
    I mean, there was such a disconnect in terms of, you know, 
what Congress called for, which was to boost, you know, 
investment in that part of the world and then what--you know, 
what policies we are seeing play out publicly by the 
administration, I just wondered if you could comment on that 
sort of contradiction.
    Ms. Flournoy. Yes. No, I do see the contradiction and I 
think we are--South Korea actually makes one of the largest 
contributions relative to other allies--it also hosts U.S. 
troops--than any other country.
    I mean, they are a very good partner in terms of financial 
support as well as military and operational cooperation. So we 
should not be beating them about the head and shoulders on this 
issue.
    On the----
    The Chairman. I am sorry. You can--maybe that is for the 
record.
    Ms. Flournoy. I am sorry. Okay.
    [The information referred to can be found in the Appendix 
on page 91.]
    The Chairman. But the gentleman's time has expired and I 
want to try to get to everybody.
    Mr. Turner.
    Mr. Turner. Thank you, Mr. Chairman.
    Ms. Flournoy, thank you for being here. Good to see you 
again. Appreciate your continued contributions to policy and 
the discussions of our national security.
    In reading your testimony, one of the most important themes 
throughout it is the issue of deterrence--what does the United 
States need to do to continue to deter China.
    You raised the issue of the technology. Obviously, their 
surveillance society represents a threat with Five Eyes and our 
allies and backdoor opportunities for China to freely access 
our data, our information.
    And, certainly, they have been very forward leaning in 
their hacking activities with even the OPM [Office of Personnel 
Management] records that were being taken of Federal employees 
attributed to China.
    And then we look at technologies and on page 2 you said, 
you know, China is investing tens of billions of dollars from 
hypersonics and robotics to quantum computing and, for example, 
hypersonics is not really modernization.
    That is new technology, and we have fallen short in that. 
In fact, they have stolen a lot of what has allowed them to 
advance.
    I would like you to talk for a minute about deterrence and 
what we need to do. You know, as they have hypersonics, most of 
our Chinese strategy has been basing in the area.
    As you point out in your testimony, their ability to hold 
us at bay or threaten our troops in the area, land- or sea-
based, is based upon the new technologies.
    What do you see in our opportunity for hypersonics that may 
also hold them at bay? Do you think that they see as we fall 
behind technologically that they have an edge that could give 
them the ability to be adventuresome in the area?
    Ms. Flournoy. Yes, I think that that is what they are 
hoping for, and I guess this connects to this. I think that 
numerical targets like 355-ship Navy, X number of Air Force 
squadrons, you know, those are the metrics of the past and if 
we--you know, if we hold to those we will get this wrong.
    That is not the right measure. The right things that we 
should be measuring are the time and scale of outcomes we can 
achieve that contribute to deterrence.
    So can we hold the Chinese fleet at risk at scale in a 72-
hour period. That is a pretty strong deterrent. You know, so 
what does that look like? In the near term, it may be cobbling 
together--it may be putting a Navy munition like LRASM [Long 
Range Anti-Ship Missile] on a bunch of Air Force B-2 bombers.
    It may be--you know, in the longer term it may be the Army 
playing a totally new role, or the Marine Corps, of fielding 
distributed, you know, long-range artillery missiles, perhaps 
some of them hypersonic, across the Asia-Pacific that are 
outside the Chinese threat ring but can hold those ships at 
risk.
    I am not suggesting we sink, you know, the Chinese fleet in 
one day. What I am suggesting is that if we could say to them, 
if you undertake this act of aggression you are putting your 
entire fleet at risk immediately--do you understand that. That 
might be pretty good for deterrence.
    So we really have to rethink our metrics to look at what 
are the outcomes that we can achieve that would really 
meaningfully help deterrence. That is what we should be 
measuring ourselves against, not the number--the size of 
different parts of the force structure.
    Mr. Turner. Two quick things. Russia is, again, not 
modernizing their nuclear forces. They are actually deploying 
new capabilities--hypersonics, Skyfall, Poseidon.
    China is looking, obviously, for a nuclear option for their 
new hypersonics capability, which are all first strikes 
capability.
    One, do you see an opportunity for us as we see Russia 
breaking out from our nuclear limitations agreements to be able 
to include China and try to lessen the arms race that we are 
obviously well behind in?
    And, secondly, with--there wouldn't be a nuclear North 
Korea but for China; what should we be doing to encourage China 
more on North Korea?
    Ms. Flournoy. Okay. On traditional arms control with 
Russia, I actually think we want to extend START [Strategic 
Arms Reduction Treaty], keep that cap in place because it does 
constrain a lot of things. It does give us, you know, 
verification, intelligence, et cetera, and we don't want to 
reopen those areas of competition.
    But in these other areas, new technologies like 
hypersonics, like cyber, like space, where they will have an 
impact on the domain of strategic stability, we absolutely 
should be having bilateral and multilateral discussions with 
the Russians and the Chinese to get--can we take certain really 
catastrophic scenarios off the table.
    Like, we do not want to go there because it would be very 
bad for you and it would be very bad for us, so can we just put 
that aside.
    Now, we won't succeed in everything. But I think exploring 
that area of how new technologies affect strategic stability is 
really, really critical.
    The Chairman. And, again, I am sorry.
    Ms. Flournoy. Yes. Sorry. Sorry we can't get to North 
Korea.
    [The information referred to can be found in the Appendix 
on page 91.]
    The Chairman. The gentleman's time has expired.
    Mr. Carbajal.
    Mr. Carbajal. Thank you, Mr. Chair.
    Secretary Flournoy, in your prepared testimony you 
mentioned that the U.S. should leverage the unique strategic 
advance of having many allies and partners around the world but 
that this administration has departed from that approach.
    I agree with you and believe that the departure from 
previous administrations' focus on a multilateral approach to 
China is undermining our long-term success.
    How else do you see or would you say that this 
administration has diverged from the approach of the previous 
two Presidents?
    Ms. Flournoy. Well, I think that the administration has 
paid a lot of attention to one metric, which is what allies 
contribute financially, and they have sort of embedded the 
military contribution inside a discussion of trade deficits.
    I think that is way too narrow a view. We have to consider 
that, you know, an organization like NATO [North Atlantic 
Treaty Organization] declared Article 5 for us after 9/11. They 
came to our aid.
    We would not have had the troops we needed in Afghanistan 
if not--if NATO didn't pony up 40,000 troops. We have allies 
and partners who have fought and died alongside us. That 
sacrifice, that willingness to be there--look at Australia, who 
has come no questions asked. You are going. You are asking. We 
are coming with you. I mean, that should count for something, 
not just the financial dimension of the relationship.
    And the problem is, you know, there is no national security 
problem that the United States can solve, no matter how 
powerful we are, alone. We need allies and partners. And so I 
would really endorse your committee's efforts to say how do we 
really leverage a more strategic approach to security 
cooperation and investing in allies and building their 
capacity, their ability to defend their own sovereignty 
throughout Asia. I think that is a really important project for 
the future.
    Mr. Carbajal. Thank you.
    Mr. Hunter, how much of the U.S. reemphasis towards 
hypersonic development comes from meeting a warfighter 
requirement or peer competition with China and their 
development allegedly being ahead of the United States?
    Mr. Hunter. Well, you know, the U.S. has been pursuing 
hypersonic systems for quite a while. But it's been a very slow 
pursuit. And so what happened is the Chinese made a very quick 
effort and so they have been able to demonstrate some things 
that we had not as yet demonstrated. But the core of the 
technology was really developed in the United States, and if we 
choose to commit significant investment dollars, I think we can 
make equally rapid progress to them, going forward.
    I think you ask a really good question, which is what 
commander need does that capability fulfil and it could vary 
differently across different regions.
    To my eye, it does look attractive in the Indo-Pacific 
because of the ranges that are involved there. Other systems 
have a hard time reaching the fight from secure areas. And so 
hypersonic systems do seem pretty promising there. But I 
wouldn't want to get out ahead of the PACOM commander--
INDOPACOM commander--in making that judgment.
    It was referenced in an earlier point with the security 
fund about how do we meet--how do we help spur on meeting the 
INDOPACOM's requirements. A big piece of what that has been 
over the last several years has been the Strategic Capabilities 
Office [SCO].
    A lot of their initiatives came out of INDOPACOM combatant 
commander requirements. So I am concerned that there has been 
an effort to kind of divorce what SCO is doing from combatant 
commander requirements.
    I think that tie is really important to us delivering a set 
of capabilities in the hypersonics systems area that actually 
have utility for the warfighter. I think you really need that 
connection.
    And let me just say on your question about the alliances, 
we have a very robust set of industrial--defense industrial 
cooperation alliances with the--with the Republic of Korea, 
with NATO allies, with Australia, and it is key to a lot of 
these technologies that we are talking about.
    Samsung is a world leader in microchips and 5G. You know, 
the Australians are world leaders in quantum computing.
    Mr. Carbajal. Let me get another question in before my time 
is up. What drives the U.S. need for hypersonic weapons and how 
is this driver different or the same for China in developing 
hypersonics?
    Mr. Hunter. I think part of the answer is that we need a 
diversity of approaches to solve the operational problems that 
we have in the Indo-Pacific.
    So I do think hypersonic systems give us options in the 
case of a high-intensity fight that we wouldn't currently have. 
So I don't know that they are going to be necessarily critical 
to victory or failure.
    But they definitely open up a space that do--can operate, 
you know, with a deterrence function to make the Chinese doubt 
that they might be able to succeed in some of their more 
aggressive plans that their military writers have written about 
that they could engage in in those island chains.
    Mr. Carbajal. Thank you. Mr. Chair, I yield back.
    The Chairman. The gentleman's time has expired.
    Mr. Lamborn.
    Mr. Lamborn. Thank you, Mr. Chairman, and I certainly agree 
with you, Mr. Chairman, when you talked earlier about our 
resources are not infinite.
    With that in mind, I am so glad that we have a strong 
economy, record low unemployment. There is a direct 
correlation, in my opinion, between a strong economy and a 
strong defense.
    The stronger the economy, the stronger the defense, and 
that is why we can have these well-funded budgets of last year 
and next year.
    So let me follow up on the great questions and the great 
answers already on hypersonics, and Ms. Flournoy, let me ask 
you. We tend to concentrate on the offensive capability of 
developing our own hypersonic fleet.
    But what about the defensive capability of using missile 
defense type technologies to cast doubt in the minds of the 
Chinese if they ever consider a potential first strike and to 
show that those plans would not be something they could rely 
on?
    Ms. Flournoy. Right. So I do think we have to, as we 
develop these technologies and as the Chinese do, we do have to 
think about how we would also defend against them. And here, 
again, I think there's ample room for innovation. You know, I 
think there is a lot of interesting research and development 
going on in the area of directed energy and electric weapons.
    If some of the electric--if some of the particularly 
electric weapons for ship defense, if these are borne out--and 
it's going to take some time, these are not around the corner--
but, you know, if these are borne out over the coming years, it 
could fundamentally change the basic cost calculus of offense 
and defense and give the defense a real advantage in terms of 
much lower cost, high magazine, you know, ability to defend our 
ships at sea who would otherwise be vulnerable.
    Mr. Lamborn. Okay. Thank you so--thank you so much.
    Now, you have all referenced the military-civil fusion 
between the PRC [People's Republic of China] and Chinese 
businesses. So for any one of you, the Chinese are paying close 
attention to the DOD's outreach to innovative agile companies 
in the private sector, which sometimes rely on venture capital.
    And last month, Michael Brown, director of the Pentagon's 
Defense Innovation Unit, said he discovered that the Chinese 
were tied up in 15 percent of all venture capital deals.
    So how should the Department of Defense handle 
relationships with private sector companies that are using 
venture capital, with this as a possible source of influence by 
the Chinese or subterfuge by the Chinese?
    Any one of you.
    Mr. Hunter. Okay. Yes. I mean, this gets to the issue I 
have focused on for a while, which is the opacity of a lot of 
the financial arrangements that go on in some of these mergers 
and acquisitions and investments because private equity funds 
may be based in one country but fundamentally the money is 
coming from somewhere else and in many cases we don't know that 
information.
    It is knowable. We can require them to report it. And so if 
a transaction comes into the CFIUS process, the government 
usually as probably I would expect them to be successful in 
obtaining that information.
    But because there is a lot of voluntary compliance in the 
CFIUS system, the concern is there could be transactions going 
on that we simply don't know about that don't come into the 
process and don't get that level of scrutiny.
    So I do think that is a core issue with the increase in a 
lot of these big hedge funds and private equity and sovereign 
wealth funds is we don't have good understanding of where the 
money is coming from and I don't have enough expertise on the 
financial side to know exactly what the right solutions there 
are. But the problem is very clear.
    Mr. Lamborn. Ms. Flournoy.
    Ms. Flournoy. If I could just add. I absolutely agree we 
have to know where the money is really coming from. But we also 
have to make distinctions between entirely passive investment 
that is just interested in a good return on investment.
    The vast majority of Chinese funding in Silicon Valley 
through venture capital is passive return on--it is a good way 
to make a return on, you know, investment. Better than the 
stock market, right.
    But we need to be able to find are there cases where it is 
something else. They are getting a board seat. They are getting 
a controlling interest. They are getting a decision-making 
right--set of decision-making rights. They are getting access 
to nonpublic intellectual property.
    Those are the cases that we absolutely want to use CFIUS to 
restrict. But if we don't make that distinction, you know, you 
are going to cut off a huge amount of blood flow in our own 
innovation ecosystem that does no damage because it's 
completely passive.
    So I just--we have to--this is where we have to be--use the 
scalpel, not the sledgehammer. Be nuanced in our understanding.
    Mr. Lamborn. I thank you all and thank you, Mr. Chairman. I 
yield back my 3 seconds.
    The Chairman. Thank you. And Doug, you get the gold star 
for the day. You got it done on time.
    Mr. Moulton.
    Mr. Moulton. Thank you, Mr. Chairman.
    Ms. Flournoy, I thank you very much for being here. It is 
great to see you, and I want to talk a little bit about 
reestablishing credible deterrence, which you said is the 
number one priority that we have with China.
    Now, I was just refreshing my memory as to how many nuclear 
warheads our countries possess. America has 6,184 according to 
armscontrol.org. China has 290. That is a big difference. We 
have about 21 times as many warheads as China.
    It is also a huge investment and it is an investment that 
we are reinvesting in to the tune of trillions of dollars, 
which is something that to some degree we have to do.
    But I am curious, how effective is this deterrence against 
China?
    Ms. Flournoy. You know, I think--I think nuclear deterrence 
for both sides puts the specter of escalation to nuclear 
conflict on the table and that is useful.
    But, unfortunately, I think China has been consistently 
testing us as to what level of coercion, aggression, 
provocation can I get away with without the U.S. responding 
militarily, and they have been pushing the bar higher and 
higher and higher.
    And so my worry is they might miscalculate and think, I can 
take Taiwan back by force and the U.S. isn't going to respond 
because, you know, they have shown--you know, because--so I am 
talking about conventional deterrence. I think we have strong 
deterrence at the nuclear level----
    Mr. Moulton. So just to----
    Ms. Flournoy [continuing]. We may have overkill at the 
nuclear level. We probably do.
    Mr. Moulton. Well, just to put this in concrete terms, has 
this--has 29 times as many nuclear warheads as China stopped 
them from building islands in the South China Sea?
    Ms. Flournoy. No. No, it hasn't.
    Mr. Moulton. Has it stopped them from doing----
    Ms. Flournoy. It is really--it is a question of whether it 
would stop us from going to all-out conflict and put each 
other's homelands at risk.
    Mr. Moulton. Right, and I understand. Has it stopped them 
from stealing----
    Ms. Flournoy. Yeah. No.
    Mr. Moulton [continuing]. Our intellectual property?
    Ms. Flournoy. No. Nuclear deterrence is--I think nuclear 
weapons are for deterring other nuclear weapons----
    Mr. Moulton. So if I look at this chart that Russia has----
    Ms. Flournoy [continuing]. And to make us hesitate to get 
on the escalation ladder to war.
    Mr. Moulton. Right. So Russia has 6,490 nuclear warheads. I 
happen to be a Member of Congress who thinks that Russia is an 
enemy of the United States----
    Ms. Flournoy. Mm-hmm. Right. Right.
    Mr. Moulton [continuing]. And they are doing things to try 
to undermine our democracy. We need to have those weapons to 
deter Russia. I get that. But if----
    Ms. Flournoy. Yes. Yes. And they also add a deterrent 
benefit for others--other nuclear powers that might consider 
using nuclear weapons. But I don't--but I don't think it is the 
way----
    Mr. Moulton. But I don't see how we are making the mark 
with the----
    Ms. Flournoy. I don't think China is the sizing mechanism 
for our nuclear arsenal.
    Mr. Moulton. Right. But this is the problem. This is the 
problem. If China is our number one adversary and our number 
one investment in deterrence is nuclear weapons, then I just 
don't see how we are making the mark. So what kinds of 
investments do we need to make to deter China, not just to 
deter Russia?
    Ms. Flournoy. Well, I think we have to try to keep nuclear 
weapons deterrence in the background and we need to make the--
only the investments that are necessary to keep a safe, secure, 
and effective deterrent and no more.
    We need to use arms control to try to keep the constraints 
on or drive them lower because we don't--any dollar that we 
spend more on nuclear----
    Mr. Moulton. Right.
    Ms. Flournoy [continuing]. Capabilities we don't need is 
taking away from the investments we should be making in the 
conventional deterrents and the emerging technologies that will 
really make the difference in terms of preventing war.
    Mr. Moulton. So what kinds of other transformative 
deterrence structures or technologies can we make to actually 
be effective at deterring China, not just Russia?
    Ms. Flournoy. No, I think--and this is where I think in the 
near term it is looking at concepts of operations and tweaks in 
thinking asymmetrically to say how do we impose costs on China 
that will prevent them from launching an act of aggression. I 
gave the one example of holding their fleet at risk.
    But this is--we went to school on the Soviet Union. We have 
all read the books of--that were written about how to deter the 
Soviet leadership.
    We have not gotten inside the Chinese leadership, their 
strategic calculus, with enough precision and understanding--
depth of understanding to know how do we really affect their 
cost calculus in the near term with what we have and in the 
long term with what we are investing in. That is the work, and 
most--in my mind, most of that if not all of that is nonnuclear 
in nature.
    Mr. Moulton. I mean, it is extraordinary to me, for 
example, how much money, effort, time, and government resources 
they are putting into controlling their population.
    Ms. Flournoy. Yes.
    Mr. Moulton. The Uighurs, for example.
    Ms. Flournoy. Right.
    Mr. Moulton. What is our--what is our deterrence strategy 
vis-a-vis that clear critical vulnerability?
    Ms. Flournoy. Right. Well, it also--deterrence is not just 
military. You have to think about how are we using our 
political influence, our ability to compete economically.
    We haven't even talked about One Belt One Road and how we 
respond to that, how we use human rights violations and their 
record on that to constrain their influence, more broadly. 
Those are all really important questions.
    Mr. Moulton. Thank you very much, Mr. Chairman.
    Mrs. Davis [presiding]. Thank you. The gentleman's time was 
up.
    Mrs. Hartzler.
    Mrs. Hartzler. Sure. Well, it is great to have you all here 
and to see you again. Appreciate your expertise. Very important 
discussion.
    I would like to talk a little bit about the Chinese theft 
of sensitive U.S. military technology. Obviously, this is a 
very real concern, maintaining our competitive edge.
    China, as you know, has developed two fifth-generation 
fighter aircraft, the J-20 and the J-31, which draw amazing 
comparisons to our F-35.
    So, in your opinion, is DOD doing enough to protect our 
fifth-generation capabilities from theft and, if not, what more 
should the Department be doing?
    Mr. Hunter. Yes. So there is no doubt that the protections 
were inadequate in the past. I would not venture to say that we 
have solved the problem yet.
    But you are right. I mean, there were massive thefts of 
intellectual property and other information from U.S. defense 
industry and other parts of U.S. industry more broadly, that 
the Chinese have taken advantage of.
    In my testimony, I mentioned shortcuts and that was what I 
was alluding to. Have we tackled this problem?
    We have not, and it is a tough one because, you know, we 
often focus on the cyber threat and how this stuff can be 
stolen electronically and that has absolutely occurred.
    But that is not the only way. You know, the Chinese have 
obtained information by going into bankruptcy proceedings and 
getting access to--as evaluating--you know, being an acquirer 
they can look at information about a company and then don't 
even have to acquire it.
    There is many, many avenues by which they have the ability 
to gain information about U.S. industry. But, certainly, cyber 
stands out as a critical one and the Department has this cyber 
maturity--cybersecurity maturity certification that they are 
setting up, which is the right thing to do to make sure that 
industry focus on that.
    I do have some concerns about how that will be implemented, 
especially getting it stood up, that we don't end up forcing 
commercial companies out of our supply chain because they 
don't--can't go through the hassle of getting the certification 
on the front end and then end up, you know, declining to 
participate in our weapons systems programs because the 
certifications is not something that makes sense for them from 
a business perspective.
    I think some of those issues will settle out over time. But 
there is a real issue on the initial implementation that we 
need to pay attention to.
    Mrs. Hartzler. Anybody else want to share a little bit?
    Ms. Flournoy. I would just add there is the human capital 
dimension as well, the Thousand Talents program, which has 
sought to kind of recruit people recently retiring from 
industry to come over and lecture and spend time in China.
    There have been efforts to use academic research 
collaborations to get at sensitive technologies. And, again, 
the scalpel, not the sledgehammer. There is a lot of flow--
there is a lot of academic research collaboration in many 
fields that is actually--like health that is actually 
beneficial to both countries. But in areas where there is a 
national security application we want to be really careful and 
look at the human capital dimensions of the problem as well.
    Mrs. Hartzler. And I am so glad you brought that up because 
that was my next question. I have real concerns with some of 
the Chinese students that are coming into our country and doing 
high-level research at our universities and the potential 
threat that we have there. So you would suggest--what would you 
suggest?
    Ms. Flournoy. Yes. I mean, I think we have to do--I mean, I 
think the vast majority of Chinese students coming are honestly 
not there for espionage. They are there because we have the 
best education system on the planet.
    In the past, we have done a really good job of recruiting 
the best and brightest to stay and become Americans and bring 
their talents here.
    Right now, our immigration policy is working against that 
and that is, you know--you know, shooting ourselves in the 
foot. But I think we do have to do a better job of vetting and 
we have to be very careful in terms of what kinds of work they 
are allowed to do and whether truly sensitive research that is 
going on we want to make sure that we know exactly who is 
allowed into those labs.
    Mrs. Hartzler. Is that a State Department--just to follow 
up a little bit, is that a State Department on vetting?
    Ms. Flournoy. No, I think--I think that it has got to 
happen more--providing--helping universities have the tools to 
better understand the backgrounds of their students. But you 
may have ideas on this as well.
    Mrs. Hartzler. Yes, Admiral.
    Admiral McDevitt. This past year--2 years----
    Mrs. Hartzler. Could you--I can't hear you.
    Admiral McDevitt. I am sorry. This past year, the U.S.-
China Security Economic Review Commission looked at this 
problem and in their annual--I am no longer on the commission 
but in the annual report it recommends two things: one, that 
the National Security Education Board that was--Higher 
Education Board that had been established in 2005 but was 
disestablished in 2018 by the director of the FBI be reinstated 
to take a look at this issue, broadly, to talk to university 
presidents and what have you. And the other recommendation is 
that the GAO [Government Accountability Office] take--somebody 
needs to gather the data, quite frankly.
    Mrs. Hartzler. Somebody needs to be what?
    Admiral McDevitt. Somebody needs to gather the data----
    Mrs. Hartzler. Oh.
    Admiral McDevitt [continuing]. On how many students there 
are, how many are in STEM courses.
    The Chairman [presiding]. I am sorry. Again, we are going 
to have to leave that there. The gentlelady is out of time.
    Admiral McDevitt. Anyway, it is in the report.
    The Chairman. And we will go to Mr. Golden.
    Mr. Golden. Thank you.
    I wanted to quote the 2018 National Defense Strategy 
Commission in saying that because gray-zone challenges combine 
military and paramilitary measures with economic statecraft, 
political warfare, information operations, and other tools, 
they often occur in the seams between DOD and other U.S. 
departments and agencies, making them all the more difficult to 
address.
    Similarly, in February of 2019 in testimony before the 
Senate Armed Services Committee, the INDOPACOM commander, 
Admiral Davidson, testified that, quote, ``Our adversaries are 
pursuing their objectives in the space between peace and war, 
using fear and coercive actions across the instruments of 
national power to revise the rules-based international order 
without resorting to armed conflict.''
    Alongside like-minded allies and partners, U.S. INDOPACOM 
and the whole of U.S. Government must compete in a gray zone 
between peace and war to win before fighting, I think the point 
being that it would better to win this competition without a 
fight.
    China's gray-zone activities such as the Belt and Road 
Initiative, information ops, and broader and more involved 
military exercises pose risks not only to us but I think just 
as importantly to our regional partners--perhaps more so to our 
regional partners.
    So I wanted to ask the panel, in your assessment what is 
the Department doing well and what else should it be doing, 
working with the whole of the U.S. Government to better empower 
our regional allies not only to compete but to push back 
against these coercive efforts that they are facing from China? 
What do they need from us in order to make this an easier 
competition for them?
    Ms. Flournoy. I will just say I don't think it's a 
Department of Defense lead, actually. I think that this 
requires an integrated whole-of-government strategy.
    You know, first of all, we have to decide where do we care 
to compete. You know, we are not going to counter every One 
Belt One Road initiative nor should we.
    But there are some that are--touch on our strategic 
interests and there we need to think about what is our 
response. It is not going to--you know, maybe the Chinese are 
building, you know, a soccer stadium and a bridge to nowhere. 
But maybe we could go in with digital infrastructure that 
really makes--helps a country join the sort of transparent open 
information system that, frankly, will ultimately counter the 
Chinese influence that they are trying to exert through their 
construction projects.
    So we need to have a strategy is my point and then we need 
to look at what are the instruments we need to beef up--most of 
them will be nonmilitary, if not all of them--to really allow--
you know, to be able to compete effectively where we need to.
    Mr. Hunter. And I would say I agree that DOD is not the 
locus within the U.S. Government nor should it be. But it is a 
player in the conversation. It is a participant, and I would 
say in some of our allied partner nations it is much harder for 
their ministries of defense or their military to be involved. 
Their governments just aren't structured in a way that really 
supports that.
    So I think something DOD can do, working with partners and 
allies, is help them bring those national security perspectives 
into their own government conversations in a way that will 
help.
    Admiral McDevitt. DOD--well, DOD actually does conduct our 
own sets of gray-zone operations. If you listen to what the 
Chinese say, our reconnaissance flights around China in their 
EEZ [exclusive economic zone] that drives them crazy, we 
continue to do it. We continue to ignore their concerns about 
it, credibly.
    The State Department or whoever coined the term debt-trap 
diplomacy was a great example of gray-zone pushback, if you 
will, on BRI [Belt and Road Initiative] and it caused China to 
really rethink the whole approach.
    And so it's not that we are--it is all episodic, though. 
There is no central coordinating body. Obviously, that has to 
come out of the White House, the NSC [National Security 
Council] or something.
    Mr. Golden. Thank you. Obviously, the point being that we 
want to keep our allies in the region feeling confident in us 
as a partner and keep them in alliance with us.
    Ms. Flournoy. Absolutely.
    Mr. Golden. Real quickly, I just wanted to point out to the 
committee as we talk about deterrence and everyone is always 
thinking about hypersonics, about, you know, Navy ships, what 
does the fleet of the future look like, the Commandant of the 
Marine Corps, General Berger, has put out a white paper where 
he is talking about pivoting the Marine Corps back to naval 
expeditionary purpose that was its original mission and one 
that it has not been focused on for some time, and he has 
specifically said that he wants to build a force that can 
facilitate sea denial and assured access in support of fleet 
and joint operations.
    I think that that is a likely potential successful 
deterrent if we support that pivot and I hope we will have some 
opportunity to talk about it in this committee in the year 
ahead.
    The Chairman. Thank you.
    Mr. Scott.
    Mr. Scott. Thank you, Mr. Chairman, and I want to thank the 
panel for being here. We are finally getting to the issue that 
I want to talk about more, which is the Belt and Road 
Initiative--what some refer to as the debt-trap diplomacy, what 
I refer to as the recolonization of Africa and other parts of 
the world through payday lending schemes orchestrated by the 
Chinese Communist Party.
    And Admiral McDevitt, you wrote in your testimony it is 
difficult to overstate the important role that BRI plays in 
enhancing Chinese influence globally. In the case of BRI, 
seaport enhancement projects stretch from Greece to Malaysia. I 
have been to Djibouti. I have been to several of the countries 
in that part of Africa. I have also been to West Africa.
    Secretary Flournoy, the one thing I would add to your 
statement is that when you talk about Indo-Pacific and the 
partnership need there, I would simply add Africa to that as 
well. And perhaps it is just that I have spent more time there 
than I have in the Indo-Pacific.
    But I no longer believe that China is interested in 
operating in universally accepted global interest, as some 
believe; some didn't believe that when their economy took off 
that they would be--that they would be good stewards.
    But I want to ask you, there is--the debt-trap diplomacy, 
what I refer to as the recolonization of vast areas of the 
world through the payday lending scheme--the BRI of Communist 
China--as we talk about other ways to build partnerships, one 
of the things that is being discussed right now is moving U.S. 
troops out of Africa.
    I have been with some of those U.S. troops in Mali, Niger, 
Nigeria, and that Lake Chad Basin area, and MINUSCA [United 
Nations Multidimensional Integrated Stabilization Mission in 
the Central African Republic], which is the largest U.N. 
peacekeeping mission in the world, if I am not mistaken. The 
one thing I remember very well from that trip is the discussion 
about the damage that China is doing throughout that part of 
the world with, effectively, using the Belt and Road Initiative 
to steal the countries' assets--to steal countries' assets 
without any benefit to the general public.
    What is the best way for the U.S.--not just the U.S. but 
the globe, the rest of the world powers, to counter that in 
both Eastern Africa and Western Africa, and how do you counter 
it if you actually pull the U.S. troops out of there?
    Ms. Flournoy. I will take a stab at it. I do think, again, 
you need a whole-of-government approach. Some of the most 
powerful instruments will be USAID [United States Agency for 
International Development] programs----
    Mr. Scott. I agree.
    Ms. Flournoy [continuing]. OPIC [Overseas Private 
Investment Corporation] programs to help incentivize private 
sector investment in the areas we care about, the whole digital 
development initiative that has been started.
    So I do think those economic instruments and particularly 
things focused on digital infrastructure are very, very 
powerful tools that we are underutilizing.
    But I do think that where we have either interests--
counterterrorism interests or we found partners who actually 
want to take on the fight on their home soil but they need some 
help--they need some training, they need some enablers, they 
need some support--that that is a very cost effective way for 
us to protect some of our interests and gain the political 
influence that comes with that without making--putting our guys 
kind of on the very front lines of combat in areas where, you 
know, others are willing to step up.
    So I do think our troop presence carefully tailored makes a 
difference.
    Mr. Scott. Would you agree that our troop presence is what 
allows USAID to operate and what allows other nongovernmental 
organizations to operate?
    Ms. Flournoy. Depends on the area. In high-conflict areas--
--
    Mr. Scott. It is a fair question. A fair statement.
    Ms. Flournoy [continuing]. It certainly is relevant. In 
others, less so. But we want to make sure it is integrated for 
sure in terms of looking at all the dimensions of strategy and 
how we approach individual countries.
    Mr. Scott. My concern is that if we pull--if we pull what 
amounts to a very small number of troops out of certain areas, 
that nongovernment organizations that provide services to the 
public--health care, education----
    Ms. Flournoy. The security environment may not be----
    Mr. Scott [continuing]. Then they will not be there. And I 
would just point out, Admiral, that you accurately state, you 
know, China has the ability to wreck their economies--talking 
about China's neighbors.
    If China would intentionally wreck an economy of one of 
their neighbors, then you can bet your bottom dollar they will 
wreck the economy of a country in Africa, and we need to make 
sure that when it comes to trade agreements and other things, 
that we are providing some information that maybe less 
sophisticated countries need when they are engaging in that 
fashion with China.
    The Chairman. And the gentleman's time has expired.
    Mr. Scott. Thank you.
    The Chairman. Ms. Houlahan.
    Ms. Houlahan. Thank you, Chairman, and thank you, Mr. 
Scott, for your questions. Mine are going to follow up largely 
on those questions as well and largely be directed to Ms. 
Flournoy.
    I am also really curious as a member of both this committee 
and also the Foreign Affairs Committee, specifically on the 
Asia and the Africa Subcommittees, about if we have any real 
understanding of how the investment of China in Africa--what 
implications it has to our own national security.
    Has there been any sort of overall study or understanding 
of that that we can reflect on, is my first question.
    Ms. Flournoy. So I think there has been some great outside 
work. I know that my old think tank, CNAS [Center for a New 
American Security], has done some very good work looking at 
this from a strategic perspective and making recommendations. I 
am sure that others like CSIS have as well and perhaps CNA. I 
don't know.
    So there is good think tank work out there that I would 
commend to you. But I think there--I do want to add that the--
we do need a strategy. We need priorities. We can't counter it 
everywhere nor should we.
    There is a very powerful tool we have in transparency. The 
more people understand the terms that China has imposed on some 
of these countries the more wary that others will be in going 
down this road. So that transparency, advertising it, making 
sure people know what they are walking into, providing that 
technical assistance in some cases, that is very important.
    Ms. Houlahan. And you touched a little bit on it with your 
conversation with Mr. Scott in terms of the fact that we can't 
necessarily respond directly to every single aspect of China's 
Belt and Road Initiative but maybe we should be more strategic 
about how we respond and you talked a little bit about the 
digital response as an example.
    Are there any other examples of those responses? Have we 
studied anything? Sir, you seemed very interested in that.
    Admiral McDevitt. I just read something this morning that 
one of the success stories of Japanese-U.S. cooperation is with 
Myanmar, Burma, and sitting down and talking with them and 
empowering them to renegotiate the deal that they had already 
made with China and vastly improve the financial implications 
for Burma.
    And those are the sorts of things that we have been trying 
to do piecemeal around the world where people are willing to 
listen.
    The truth of the matter is, as I put in my testimony, given 
the fact of Chinese largesse, no-questions-asked lending and 
what have you, they have a whole bunch of people around the 
world that are willing to toe the line on Taiwan and Tibet and 
Xinjiang and not do anything to upset the Chinese in order to 
keep that no-questions-asked-funding flowing to keep their 
internal developments going.
    And so China shows up with a credit card and a full 
billfold and it is very difficult to--for countries that can't 
get the money anywhere else.
    Ms. Flournoy. I would just add, though, the important--the 
big point here I think is we shouldn't be doing this alone. We 
should be doing this with our allies who have very shared 
interests in this area where we can put together a coalition 
with the Japanese, the Australians--you know, others who can 
collectively fund alternatives. We will be much--have a much 
better chance of competing successfully.
    Ms. Houlahan. And with my remaining time I was wondering if 
you all had any comment on what the implications of our current 
combat operations are, current movement in the Middle East has 
towards our posture towards China.
    Are you worried about that at all as we--the strategy of 
the current administration was to look to China and Russia and 
now seems to be going somewhere else.
    Admiral McDevitt. There is only so many ships can be only 
so many places, and every time you have a large naval buildup 
or an Air Force buildup in the Middle East that is--those are 
the same rotational forces that could be assigned to the 
Western Pacific or elsewhere in the Indo-Pacific that aren't 
there.
    Ms. Flournoy. Also a matter of mindshare and senior leader 
bandwidth. These crises, you know, wipe everything else off the 
agenda. And so, you know, Secretary Esper was out in the Reagan 
Forum saying, my number one priority is China, China, China.
    When he has a week like he had last week, he is not 
spending a lot of time on China because--you know, so I think 
there are real costs in both resources and in mindshare and 
what we need right now is a lot of creative thinking about 
Asia.
    Ms. Houlahan. Thank you. And Mr. Hunter, do you have 
anything?
    Mr. Hunter. Well, let me just say briefly on the--kind of 
the Africa point that I think there is a strong role actually 
for DOD engagement there, although I agree that it is a whole-
of-government problem and the ally point.
    But we do have to be careful because when we work with 
partner military organizations in Africa there is a 
possibility--a potential--that that can lead to coups and other 
things.
    Where I think we have had a lot of success is with the 
Department's logistical capacity. So when we have gone to 
Africa and helped with the health care emergencies they have 
had because we can bring in medical supplies and that 
logistical capacity through things like LOGCAP [Logistics Civil 
Augmentation Program] can be really helpful.
    Ms. Houlahan. Thank you, and I have run out of time and I 
yield back.
    The Chairman. Thank you.
    Ms. Stefanik.
    Ms. Stefanik. Thank you, Mr. Chairman.
    Secretary Flournoy, I wanted to drill down on a particular 
emerging technology and that is artificial intelligence. We 
have worked very hard to encourage and mature the Joint AI 
Center [JAIC] to have a more comprehensive strategy from the 
Department.
    Can you give your assessment on the JAIC? And I also want 
your recommendation. I am going to visit the JAIC pretty soon 
here and what questions, if you were me, would you ask of folks 
when I do visit the JAIC?
    Ms. Flournoy. So I think that General Shanahan has done a 
fantastic job of creating something meaningful out of nothing 
and under initially severe funding constraints--and I applaud 
the additional funding that you have been putting into the 
organization as it matures. I think that the JAIC has a lot of 
promise.
    I think it is very, very important to, you know, inform 
setting of common standards and ethical principles, policies, 
and, you know, set priorities for what we are doing in AI 
across the Department.
    I think one of the biggest things you may ask about is what 
kind of senior and mid-level kind of program manager kind of 
tech talent do they need and what could Congress do to better 
support them accessing that talent.
    Very hard to take someone who has never managed a software 
development program who comes from, you know, a traditional 
acquisition background, put them in that role for 2 years, and 
expect them to be successful.
    So there is a training component. There is an attracting 
talent component. There may also be a financial component. But 
I think--I think at this point, the long pole in the tent is 
getting the right talent.
    You now have a fantastic CTO [Chief Technology Officer] who 
is incredibly well regarded in Silicon Valley. He--just him 
being there will attract people to come want to work for him. 
But we need to make it a lot easier and reduce some of the 
obstacles to getting that talent.
    Ms. Stefanik. Thank you for that.
    Switching to cybersecurity and a technical question--and 
this is, again, for Secretary Flournoy--are there any 
discussions or concerns about the potential installation of 
Chinese optical fiber and related Chinese photonic components 
in a DOD network or through our private contractors who are 
contracted to work with the DOD network? I see folks nodding 
their heads. So if others want to answer as well.
    Ms. Flournoy. Short answer is yes, and I think this is 
where we need to really scrub any dependency we have on any 
Chinese supplies and parts.
    Some may not matter. It may be fine. Some of them are 
really not okay at all and could be very compromising either--
you know, from any number of perspectives. But if there are 
others who have looked at this more closely and want to 
comment, I am happy to let you do so.
    Admiral McDevitt. I would just say that the undersea cable 
networks that connect the world are all done by--are all 
privately owned. There are no state owned. And these are 
private contractors who are building this.
    And so yeah, we are liable to wind up with Chinese 
optical--Chinese material that is in some of these cables that 
are being laid.
    And I honestly don't know what the fix is but if the 
material itself gives--creates a situation where that data 
could be stolen or interrupted, that would have huge financial 
implications for the world.
    Ms. Stefanik. And I just have a slight time left so I am 
going to jump in here. We have touched upon the importance of 
allies and partnerships, and as we think about countering the 
One Belt One Road Initiative, when we think about countering 
China's significant state investment in emerging technologies, 
I believe that one of our greatest strengths is those 
partnerships and working with our closest allies.
    I look at the effective R&D that we have pursued between 
the U.S. and Israel, for example. What are specific initiatives 
that you would recommend we make investments in and with which 
particular countries? Because there are countries that are 
leading in different sectors.
    Mr. Hunter. Yes. So one recommendation--it may or may not 
require legislation but we have developed these OTA [other 
transaction agreement] arrangements which have the potential to 
be incredibly useful for working with allied and partner 
nations and national champions or technology leaders in other 
countries. But I am unaware as of yet that there is an OTA 
consortium that includes a foreign firm.
    I think we should have those. We should have purpose-built 
OTA consortia so we can work on those kinds of issues with 
partner nations where they have leading firms in key 
technologies.
    Ms. Stefanik. Thank you. Secretary Flournoy, 15 seconds.
    Ms. Flournoy. I would just add I do think that in each of 
the technology sectors we want to identify who are the leading 
allied technology partners and seek to use things like OTAs and 
other funding authorities to try to really leverage their 
assistance and have some more in the way of joint projects.
    Ms. Stefanik. Thank you. Yield back.
    Mrs. Davis [presiding]. Thank you.
    Mr. Brindisi.
    Mr. Brindisi. Thank you, Madam Chair.
    Building on some of the questions regarding investments in 
information technology, I am particularly concerned about DOD 
keeping pace--keeping pace with China in terms of our 
investment in information technology, specifically, quantum 
sciences.
    It has been fairly well documented that information warfare 
is a core strength of the People's Liberation Army and in 
recent years China has aggressively invested and increased the 
pace of its quantum research.
    It has been publicly reported that China has surpassed the 
United States in many areas of quantum research, which is 
deeply troubling because there is no doubt that early adopters 
of quantum technologies will gain significant military 
advantages.
    For example, quantum computing could be used for more 
effective artificial intelligence algorithms, highly secure 
encryption of communications to defend against hacking, and 
accurate navigation that does not require GPS [Global 
Positioning System] signals.
    So, Secretary Flournoy, I am worried that we are slightly 
slow to fully recommend the massive importance of quantum 
technologies and invest accordingly.
    Do you feel we are investing adequate resources fast enough 
in order to keep pace with China regarding quantum information 
science research?
    Ms. Flournoy. I will say I have not looked at this at the 
level of detail that I can definitively answer that question. 
But I do think this is an area where we absolutely must 
compete.
    I think DOD, using its own research and development moneys, 
has a role to play. But I also think we need to be using things 
like tax incentives and civilian R&D, university research R&D 
to try to pull more effort from both universities and the 
private sector into this area.
    Because I agree with your assessment. It is absolutely 
critical that this is an area where we keep our edge.
    Mr. Brindisi. Any other?
    Mr. Hunter. Yes. I would add, you know, quantum is really 
hard. I think there is a general perception, you know, when you 
look at these key technologies that are identified in the NDS, 
they are all important, some of them much more near term than 
others, and I would probably say of those quantum is more of a 
reach than some of the others.
    Having said that, I also think in that respect DOD's role 
here could be larger because I think it is going to take some 
time for, you know, the VC [venture capital] sector and others 
to really see the kind of return on investment they are looking 
for in these technologies.
    So there is an opportunity for DOD to take a leadership 
role and shape the development of the technology globally and 
in the United States, and that is something we should seize on.
    That doesn't necessarily require a massive investment of 
dollars but it does involve, you know, a commitment and having 
a clearly identified research community within the United 
States with DOD involvement to push forward on it.
    Admiral McDevitt. I would just say that my--I wish my 15-
year-old grandson was here because he is really into quantum. I 
don't understand what he is talking about.
    But, no, seriously----
    Mr. Brindisi. He can educate me, too.
    Admiral McDevitt [continuing]. That really is----
    [Laughter.]
    Admiral McDevitt. I was a history major. Give me a break.
    Mr. Brindisi. Me, too.
    Admiral McDevitt. But the reality is this really is 
something that China is putting an incredible amount of effort 
into. And so they see great advantages by--to taking the lead 
in this.
    So this is one that I think that we definitely do not want 
to find ourselves behind the power curve.
    Mr. Brindisi. I know you mentioned the NDS. The 2018 
National Defense Strategy outlines that we must prioritize 
research and development of emerging technologies like quantum 
science, artificial intelligence, and machine learning.
    China seems to have taken a much more whole-of-society 
approach than we are. China's military-civil fusion program 
seeks to explicitly foster ties between the military and 
civilian enterprises in order to improve military technology, 
drive innovation, and foster economic growth.
    China is showing a clear commitment to investing heavily in 
game-changing technologies like AI, machine learning, quantum 
computing, and while I am encouraged by recent steps in the 
right direction that we have taken, I also believe that the 
United States needs to double down on its commitment to develop 
these technologies before our adversaries.
    Mr. Hunter, part of my reason for my amendment to create a 
new Quantum Information Sciences Innovation Center in this 
year's NDAA was to foster these collaborative relationships in 
order to accelerate quantum research.
    Do you believe there are--there is an adequate amount of 
collaboration on the research and development of quantum, AI, 
and machine learning technologies across the different 
departments, industry, and academia currently?
    Mr. Hunter. I would want to maybe distinguish between 
quantum and AI in that. I think--I think there is more we can 
and should be doing in AI.
    On quantum I think we have been pretty proactive. By we I 
mean the U.S. Government and the Department of Defense has been 
pretty proactive working with the key industry players and 
being aware. That doesn't mean we should stop or that we don't 
need, you know--and then I would also add the international 
piece to this because, you know, the Australians have quite a 
bit of capability with quantum and we can leverage our 
alliances there to help as well.
    Mr. Brindisi. Thank you.
    Mrs. Davis. Thank you very much. Thank you.
    Mr. Banks.
    Mr. Banks. Thank you, Madam Chair.
    Biometric identifiers such as fingerprints and facial 
recognition, DNA, retina, and other personal markers play an 
increasingly important role in military technological 
capabilities and threats.
    In December, the DOD issued a directive advising U.S. 
service members against using genetic testing kits such as 
23andMe. The memo states, quote, ``The test could expose 
personal and genetic information and potentially create 
unintended security consequences and increased risk to the 
Joint Force and mission,'' end quote.
    So whether it is TikTok or facial recognition apps on an 
iPhone or 23andMe DNA testing kits, Ms. Flournoy, what could 
the possible national security implications be if an adversary 
like China gained access to the genetic makeup of our U.S. 
service members?
    Ms. Flournoy. I think the risk is that the development of 
bioweapons or potential bioweapons is moving into the realm of 
using genetically modified approaches. So if there were 
significant genetic differences between, say, you know, the 
American population in general and the Chinese population in 
general and something could be designed that would, you know, 
be very damaging to an American but, you know, a Chinese person 
would be relatively more protected or less susceptible or what 
have you, you know, you could imagine going down that road. It 
sounds very sci-fi like, but that is where the cutting edge of 
the research could go.
    I think in this country there are ethical constraints and 
legal constraints on going there but in other countries that 
may not be so. So I think that is what, you know, people are 
worried about is, you know, is there information that we think 
is harmless today but could be really misused in the future 
against us.
    Mr. Banks. Mr. Hunter, maybe you can--could you maybe 
elaborate or speculate more on why the DOD wrote the memo 
advising our service members not to participate in Ancestry.com 
or 23andMe type genetic testing kits?
    Mr. Hunter. You know, when you consider what could be done 
with this information, I think we all on a daily basis--you 
know, you read the articles about the way in which we can all 
be tracked by people getting access to our cell phone 
information and the pings that our cell phones are sending out 
every day, and someone can completely map out your life.
    So from an espionage perspective, if you know where someone 
is spending all their time and, you know, first of all, you can 
go find them there. Secondly, you might discover things that 
would be personal reliability risk factors. If they have--if 
they have health issues maybe in the family, maybe that is 
something that could be leveraged from an espionage threat 
perspective.
    And, you know, when it comes to genetic information you are 
going to--they are going to find out a tremendous amount about 
someone's family and their structure, and that could, again, 
pose a risk for being targeted for espionage.
    Mr. Banks. Ms. Flournoy, in your opinion, is the DOD 
adequately resourced to counter China's biometric warfare 
efforts?
    Ms. Flournoy. Honestly, I haven't looked at it to know and 
give you a good answer. I am happy to--I am happy to look into 
that. But I think it is certainly an important area where both 
our intelligence community and our broader defense and national 
security community we need to take care.
    Mr. Banks. Mr. Hunter.
    Mr. Hunter. You are asking about biometric with respect 
to--could you just--I am sorry, just repeat----
    Mr. Banks. Are we adequately addressing this threat and 
what can we do to better resource the DOD to battle back 
against it?
    Mr. Hunter. Yes. Well, I have to admit when I think about 
biometrics it's usually from the perspective of how we leverage 
it. You know, we did a tremendous amount of use of biometrics 
in Afghanistan to try and understand who we were working with 
and to identify people coming onto U.S. FOBs [forward operating 
bases]. And so, you know, a lot of the effort within DOD has 
been how to leverage that information, how to share that 
information because it is really challenging to do all the data 
transfers necessary to actually--when someone walks through a 
door you identify them to get that information to the person 
who can do something about it if they are a threat.
    Well, if you flip it around and say what is the risk of, 
you know, Chinese technology being used to track and monitor 
U.S. personnel, I agree, that is one I haven't spent as much 
time thinking about how we would get after that problem.
    Mr. Banks. Thank you very much. I yield back.
    Mrs. Davis. Thank you.
    Mr. Gallego.
    Mr. Gallego. Thank you, and Rear Admiral, you kind of hit 
upon this earlier. When Ambassador Harris was Admiral Harris, 
he advised the committee that the area in which we had the most 
significant dominance was in undersea domain.
    In an environment where our surface assets are threatened, 
is there a coherent strategy relying on those undersea assets 
to maintain deterrence?
    Admiral McDevitt. Do you mean undersea--do you mean 
submarines?
    Mr. Gallego. Yes.
    Admiral McDevitt. Right now, at least on the 7th Fleet fact 
sheet that is on the internet they say that on an average day 
there is somewhere between 8 and 12 nuclear attack submarines 
in the Western Pacific, and in my testimony I suggested that 
needs to be increased to, say, 10 to--or 12 to 15.
    And it would be useful, I think, to have four of them 
homeported in Japan. We have four in Guam and put four on 
Japan.
    At 20 knots, if a submarine leaves Pearl Harbor, it takes 9 
days to get to the Taiwan Straits, and so that is a long time 
if you are looking to plus-up the number of resources that you 
have there because--to deal with Chinese ships and what have 
you.
    So is there a strategy? Obviously, the Navy has a force 
assignment and allocation process in place but is there a 
strategy based upon having how many submarines would we like to 
have on a day in and day out basis to be able to, as Ms. 
Flournoy said, sink the Chinese navy, then I am sure that is--I 
am sure somebody knows what the answer is but I am sure it is 
also classified.
    Mr. Gallego. Ms. Flournoy, yes, can you expand? I am very 
interested in your idea in terms of the deterrent factor of, 
for example, sinking the Chinese navy. Are we actually 
rightsized for that?
    Ms. Flournoy. If I--if I could just say, there is a big 
important set of force multipliers for the undersea competition 
and that is unmanned systems--for ISR [intelligence, 
surveillance, and reconnaissance], for strike, for counter 
mine, and particularly the larger, extra large UUVs [unmanned 
underwater vehicles]--and this is a classic area where the Navy 
needs to be able to have some of these to experiment with, to 
develop concepts, and then procure at scale.
    But in terms of--again, that was just one example. What I 
am trying to get at is, you know, when we face or try to deter 
a nuclear power from going to war over their vital interest and 
something that we also care deeply about, but they may perceive 
that their interest is stronger than ours, what can we hold at 
risk credibly without necessarily, you know, walking up the 
nuclear escalation ladder.
    And so I think--and if you can hold at risk the very assets 
they would need to launch the aggression or carry it through 
and that the costs of--to those assets would be quite--not just 
tactical but strategic, then I think, you know, that is--that 
is what we need to think about.
    I think if we developed some new operational concepts and 
made some tweaks we do--you know, there are munitions we have 
today and platforms that we have today that if we were to make 
them--they're cross-service, but we could put them together in 
ways that would give us a near-term kind of interim solution 
or, you know, option, and there are probably others.
    So, again, the really important part of this is funding the 
concept development experimentation efforts, things like the 
SCO that take really hard problems of the combatant commanders 
and say, I know maybe I will solve it in 10 years when new 
technology is here, but I don't have that long. I've got to 
solve it today and tomorrow, in the next 5 years--how do I do 
that with what we have, and really put some serious effort 
behind those creative concept work and then technology tweaking 
and cross-service work to get to some of these solutions. The 
one I gave was just an illustrative example. I am sure there 
are a hundred other good ideas out there.
    Mr. Gallego. Thank you. I yield back.
    Mrs. Davis. Thank you. Mr. Waltz.
    Mr. Waltz. Thank you, Madam Chair.
    So just to set the table for a moment and to be very 
candid, I think we are in a new Cold War with China. They 
certainly have been with us for some time. I think the policies 
that we are seeing under President Xi has accelerated that 
dynamic.
    I don't think the United States in many ways across our 
whole of society has fully woken up to what Xi has explicitly 
stated he wants to go and where he wants to go in terms of 
global dominance.
    But if you look at how the U.K. [United Kingdom] 
essentially peacefully stepped aside as a global leader post-
World War II and the United States essentially made that a fait 
accompli, there is a large body of analysis out there that I 
have seen that essentially wants China or believes that China 
is going to follow that same model.
    So that if you look at what we are facing over the next 10 
years, particularly right around 2030, Chinese military 
dominance on the cusp, if you buy--if you buy into the fact 
that they plan to do this by 2035, our entitlements going 
upside down, our debt reaching 100 percent of GDP [gross 
domestic product] if not sooner, their navy larger than ours in 
quantity and possibly in some cases quality as well.
    So it really is a perfect storm in many ways for them to 
make that essentially a fait accompli for the United States to 
begin sharing if not stepping back from the world order that I 
think many take for granted.
    So going back to a deterrence model and what we can do now, 
between now and then, Ms. Flournoy, or really for the entire 
panel, what would be more of a deterrent, getting inside the 
Chinese thinking, what they fear the most. Is it things like, 
for example, a free Hong Kong? The Uighurs on its western--on 
its western flank, so to speak, in its western boundary? A 
rearmed Japan? Denial to our capital markets? A unified Korea? 
Are those things--what would deter Chinese behavior and 
aggression more? Things like that or a few more submarines in 
the Western Pacific?
    Because I would argue--I am probably showing my cards--that 
it would be the former, not the latter, and I completely agree 
with you, Ms. Flournoy, in counting ships and counting planes, 
one, isn't the right metric but, number two, it is not one on 
the current economic paths that both countries are on that we 
could win.
    So I really--I mean, I think a lot of this back and forth 
today has been great and illustrative. But I don't know that 
this committee is really thinking about or, frankly, or the 
administration, the American society is really thinking about 
this in the right way and in a creative way. And I would 
welcome your thoughts on that kind of premise.
    Ms. Flournoy. Yes. This is why I started my testimony with 
saying I realize this is the HASC [House Armed Services 
Committee] and we are focused on military dimensions of 
deterrence. But this is a whole-of-government and a whole-of-
nation challenge, and the Communist Party cares about one 
thing, which is staying in power in China, period.
    Mr. Waltz. The Iranian regime as well, I will throw in 
there.
    Ms. Flournoy. And--yes, and so there are lots of ways that 
we can help them to be very preoccupied internally and also 
that we can use their missteps in places like Hong Kong or if 
they were to overreach in Taiwan to mobilize the world to push 
back on their coercion and their aggression.
    I think, again, this is not--we have to think in terms of 
allies and partners. You know, the U.S. trying to 
counterbalance and constrain China's negative behaviors is much 
harder than us rallying other like-minded states--democracies--
who want to push back on authoritarian systems in general and 
certainly don't want a world order in Asia that is defined by 
Chinese coercion.
    Mr. Waltz. Completely agree. And just in the interests of 
time, if there is any hard recommendations. I am also on the 
Science and Technology Committee and we are wrestling with on 
the one hand dramatically increasing our authorizations and 
investments; on the other hand, not using those investments 
then or finding ourselves in a situation where those 
investments are essentially supplementing the Chinese who are 
taking advantage of our very necessary openness.
    So how do we, on the one hand, make those investments that 
we need, keep it open enough but also block and tackle that--
you know, those then new technologies running right over to 
Beijing? I am talking National Science Foundation, NIST 
[National Institute of Standards and Technology], you know, 
those other areas that have, frankly, from a cultural 
standpoint have not really kind of bought onto this threat 
and----
    I yield.
    Mrs. Davis. Thank you. We are going to have to--we are 
going to have to stop it there, and I know that you have been 
adding to those questions along the way.
    Thank you. Ms. Escobar.
    Ms. Escobar. Thank you so much to our panel for being here 
this morning. Really appreciate your time. I have learned a lot 
through our discussion today.
    I was especially interested in your opening, Secretary 
Flournoy, where you talked about how part of what would make us 
stronger in terms of our competitiveness against China is 
investing in ourselves, investing in our R&D, investing in 
STEM.
    Mr. Hunter, you talked about the challenges in our 
workforce with regard to so many foreign students, and coming 
from a university that--where I get to boast that the vast 
majority of our STEM university graduates are American citizens 
ready for clearance, we see the competition with other 
universities where there are a lot of foreign students. And so 
it makes it more challenging, obviously, because of the 
clearance issue.
    Now, with regard to the--your testimony, Ms. Flournoy and 
Mr. Hunter, you all mentioned the need for flexibility in 
contracting when it comes to new technology and smaller 
innovative companies.
    Can you both share your perspective on whether efforts like 
Army Futures Command are hitting the mark? Also, are we doing 
enough to support the vast array of technologies and 
competencies like advanced materials manufacturing facilitated 
by 3Di printing?
    And finally, is Congress providing the necessary support 
for this agility? If not, what else can we do? I know that is a 
lot of questions. Tried to squeeze them in.
    And then, Admiral, if you have anything to add I would 
appreciate your thoughts as well.
    Mr. Hunter. Yes. On Army Futures Command, to my mind it is 
still fairly nascent, which is not a critique because it takes 
time to establish a four-star command.
    I am highly encouraged by the work done by the cross-
functional teams [CFTs]. I think it is--you know, there are six 
of them and so--at my last count. It could be updated.
    And so I think they are not all the same, right. They 
aren't all achieving the same things. I am most familiar with 
the Future Vertical Lift CFT--vertical lift aviation--because 
we have done some work with them where I think they have come 
up with some very creative approaches to make a generational 
shift to a next generation of technology.
    And I think that the work that the CFTs have been doing is 
what I right now think of as what Army Futures Command is 
accomplishing and I think a lot of it is very positive.
    I want--I hope that we reach an outcome where the CFTs and 
the goodness that they have brought to the Army's modernization 
program is sustained and brought forward by Army Futures 
Command and not supplanted by Army Futures Command and the 
structures that it puts in place.
    And I do have to say, you know, the Army has been the 
leader in the use of other transaction authority agreements. So 
they have been on the cutting edge of these more flexible tools 
for reaching out to nontraditional partners and they deserve 
full credit for that.
    So on the whole I would give it a pretty good grade at the 
moment. But we still have to keep our eye to make sure that the 
bureaucracy doesn't kind of solidify around some of what they 
have been doing.
    On additive technologies, I do know--I think that is still 
a huge area of opportunity for the Department of Defense. I 
think the capabilities that additive brings really suit very 
well to military missions. You know, the example a lot of folks 
talk about is having a 3D printing machine on a carrier where 
they can print the parts and not have to go back into port or 
ship them out.
    The military applications are really, really well tailored 
to that technology.
    Ms. Escobar. Thank you.
    Ms. Flournoy. And following up on your question in the 
spirit of Representative Thornberry's request for concrete 
proposals, so this committee has done an incredible job of 
seeding lots of, you know, authorities types of support to try 
to spur the Department to innovate.
    I think what we need now is a couple of efforts to kind of 
really assess what is working, what is not. I would love to 
see, like, an end-to-end analysis to sort of say if you're a 
small company and you start with a SBIR [Small Business 
Innovation Research] contract in the Air Force, then you get an 
OTA to prototype.
    Then you--like, almost an end-to-end how do these--this 
patchwork fit together into a path that a small--that is 
repeatable and that companies can be successful moving down. 
Where are the gaps, where do they--you know, in practice where 
are they falling through the cracks, where are they stumbling 
and getting disconnected, where are they--you know, what--so to 
really assess, put it all together as a journey, because that 
is what the experience is for these companies and how do we 
help them make the full journey, those that, you know, are 
successful.
    The other thing is sort of traditional, you know, 
management consulting portfolio analysis. Again, lots of things 
have been tried. In some cases, it is too early to assess 
whether Futures Command is succeeding.
    But can we start doing some regular portfolio analysis by 
this committee to say what is actually working out there, where 
are the wins, and how do we double down and start scaling 
those, and if it is happening in one service how do we get it 
across all the services, and so forth.
    Mrs. Davis. Thank you, Ms. Flournoy. I think we really do 
want to put that piece together. I appreciate it.
    Ms. Escobar. Thank you.
    Mrs. Davis. Mr. Wittman.
    Mr. Wittman. Thank you, Madam Chairman. Thank you to the 
panel members too for joining us today.
    Admiral McDevitt, I would like to begin with you and follow 
up on your written testimony where you talk about the track for 
the Chinese navy and where it'll be in 2035 with, essentially, 
420 ships, about 260 of those blue-water ships, the other 160 
various other types of ships.
    Again, I am pretty taken aback by that 420 ships. That is a 
pretty significant navy and that doesn't include various 
auxiliary ships, minesweepers, smaller amphibious ships. In 
fact, to put that in perspective, just this last Sunday, as you 
know, the Chinese commissioned a Type 055 Renhai-class 
destroyer.
    Now, that is on par with our cruisers and they are going to 
be using that to support carrier strike groups, and we saw 
recently they commissioned their second aircraft carrier, the 
Shandong, who allegedly can support 36 fighter aircraft.
    So they are building quite a capacity, and if you look at 
where they are going with large transport ships, amphibious 
transport dock ships with larger platform amphibious ships 
capable of carrying aircraft, they are on track not just to be 
a near-peer competitor but--and to be a pacing threat but be 
one that we are going to be far behind as they are pushing with 
everything they have got to build a 420-ship navy by 2035 and 
we are doing everything we can just to try, to try to get to 
355 ships, not to mention that the big sucking sound we are 
getting ready to hear in years to come out of the shipbuilding 
account is going to be Columbia class.
    And certainly we need that, but that is $128 billion that 
would come right off the top in the shipbuilding account, and 
we had a discussion about that the other day about national 
sea-based deterrence and trying to not have other shipbuilding 
programs be the bill payer for Columbia.
    I want to go to Admiral Gilday's words yesterday at the 
Surface Navy Association. He said, ``If we believe that we 
require overmatch in the maritime, if we believe that we are 
going to execute distributed maritime operations and operate 
forward in greater numbers now, that we need more iron, then we 
need more top line.''
    And to this end, I ask you this. Can we hope to keep up 
with the Chinese, our pacing threat, and not let them so 
surpass us that we have not the impact we need to deter in the 
maritimes?
    If we continue down the road of the formula of one-third, 
one-third, and one-third for our service branches, since in the 
future, or, I would argue, even today, the tip of the spear, 
that capability to be there on station to be able to deter and 
to react and to act is there in the maritimes with the Navy-
Marine Corps team?
    And no detriment towards our Army and Air Force brethren, 
but I just want to get your perspective on that.
    Admiral McDevitt. You know, as a former naval officer--as a 
retired naval officer, one part of me is saying hear, hear. But 
in truth, I think we need to not be too carried away by the 
numbers game with regard to the PLA navy.
    I talked about the numbers game just to give some sort of a 
sense of how big the breadbox is, quite frankly. But we also 
need to remember that the Navy we have and that we will have 
for the foreseeable future--you know, the ships that are here 
today or we are building tomorrow are going to be with us for 
another 30 years or so--is we still have a qualitative 
advantage.
    We may not have a numerical advantage. And, certainly, we 
don't know how well those ship--the Chinese ships actually are 
in terms of can they maintain those things when they are out 6 
months on deployment.
    Are their sailors really competent to do anything? Does the 
dual command arrangement--where you have a political officer 
and the commanding officer both of the same rank--how will that 
work when the chips are down, et cetera, et cetera.
    There is lots of uncertainties here, and so, clearly, I 
think that--I didn't hear what the CNO [Chief of Naval 
Operations] said yesterday at the Surface Navy Association but 
I do know that the U.S. Navy is really terrified by the 
prospect of having a hollow Navy.
    And so whatever they need, whatever size Navy we wind up 
with, it ought to be fully resourced and ready, and not be--not 
be something that is--we can't--I lived through a hollow Navy 
where you can't maintain the ships, where you don't have enough 
sailors, the spare parts are nonexistent, et cetera, et cetera, 
et cetera. So----
    Mr. Wittman. Yes, Mr. Hunter.
    Mr. Hunter. Just two thoughts. I mentioned in my 
testimony--in my written testimony that, you know, shipbuilding 
is an area where the Chinese have made incredible, incredible 
progress, and to my eye it is directly tied to the fact that 
they have a commercial shipbuilding industry that is world 
class. They are world leaders in that area.
    And so it is perfectly logical that this is--it is the 
reinforcing function why I say you have to pay attention to the 
economic commercial side.
    Secondly, on budget share, I will just say if you look at 
contract data and budget data, not to say that the Navy has 
exactly the right share today but I am not as concerned now as 
I used to be that the services will all just get a third 
because it has changed quite a bit in the last 5 years.
    And the Department of Navy actually has done well.
    Mrs. Davis. Thank you. Thank you. Mr. Brown.
    Mr. Brown. Thank you, Madam Chair. What an insightful and 
informative discussion today. So I want to thank Admiral 
McDevitt and Director Hunter, Secretary Flournoy, for being 
here today and sharing with us your thoughts on DOD's role in 
competing with China.
    We have talked a lot about modernization and procurement, 
force structure, technology, AI, quantum computing--a lot of 
things--the impact on the budget.
    I want to kind of shift a little bit to sort of current and 
near-term allocation of resources, deployment of forces, you 
know, ISR, intelligence, ground forces, and let me just start 
with a statement that General Votel offered a year ago in his 
posture statement, as you know, former CENTCOM [U.S. Central 
Command] commander.
    He said, ``We recognize the U.S. is rightly shifting its 
resources toward Europe''--he is thinking Russia--``and East 
Asia''--he is thinking China--``to balance great power 
competition but remain mindful that the CENTCOM AOR [area of 
responsibility] represents a geopolitical crossroads and a 
principal zone for that competition as well.''
    We saw, and I think there was a question when I was out of 
the room that the Pentagon is eyeing a drawdown in Africa. I 
visited AFRICOM [U.S. Africa Command]. There is some collective 
anxiety about their troop strength and their role in great 
power competition.
    I visited SOCOM [U.S. Special Operations Command] recently. 
They are sort of creatively describing their mission to meet 
both the counter VEO [violent extremist organization] effort, 
which they spent a lot of time and they do a great job, but how 
they also play a role in great power competition, and if you've 
had the same experience I have, when they try to articulate 
that they are struggling a little bit.
    So I guess the question is what is the intersection of our 
requirement to counter violent extremist organizations and to 
take on great power competition?
    Sometimes there seems to be oh, it's an either/or. Once we 
sort of settle the violent extremist organizations and we 
minimize that threat, which we mostly see in CENTCOM but we 
know it's in Africa, it's in the Indo-Pacific, then we will 
even have more resources to modernize and take on China and 
Russia.
    Can you share with me some thoughts about the intersection 
today--current allocation of resources and assets and how the 
counter VEO threat enables us to compete with China?
    Anybody.
    Admiral McDevitt. I am going to tee up former Secretary 
Flournoy because what you're talking about really in terms of 
the Department is having to balance risk.
    You have to make a--there is never going to be enough money 
to do everything. There just won't be. So the question needs to 
be what is--where are you willing to, if you will, disinvest or 
take troops out of Africa or wherever it is where you think you 
can accept that risk and take those resources and apply them 
somewhere else.
    And so people like former Under Secretary Flournoy are the 
ones that have to make decisions on how do you accept that 
risk.
    Ms. Flournoy. I used to advise my boss and he would make 
the decisions.
    [Laughter.]
    Ms. Flournoy. But no, I do think that we need--after, you 
know, 20 years or almost 20 years, we do need to sort of take a 
strategic look at countering violent extremism not only from a 
military perspective but from other tools and to really assess, 
you know, which of these groups directly threaten the United 
States and the United States homeland; which of them, you know, 
threaten important allies and partners and we want to assist 
them in dealing with, you know, building their capacity and 
dealing with them, you know; and which of these are really, 
really nasty groups but, frankly, it is more important to use 
our resources we would use to cover down on them, say, in the 
special operations community instead to regrow the kinds of 
Cold War skill sets that special operations had in terms of, 
you know, what are they going to do vis-a-vis the Soviet Union.
    So in a great power competition the special ops becomes 
very important in the gray zone. They become very important in 
any kind of irregular warfare or use of proxies. They become 
very important if it actually came to some kind of 
confrontation, you know, behind the lines and in the shadows 
and so forth.
    Those are skill sets that community has not really trained 
and practiced on and used for decades now, and so they have a 
very big challenge to start reexercising some of those muscle 
groups while also keeping a lid on counterterrorism and CVO 
because we count on them for that.
    And that threat is not going away, even if we are willing 
to manage some risk in that area.
    Mr. Hunter. If I could just add, you know, having been in 
the Pentagon when we had 150,000-plus troops overseas and we 
might have a daily variation of 5,000 troops in theater at 
any--from day to day, I am always a little puzzled by having, 
you know, really intense discussion about 1,000 troops in this 
location.
    You know, I mean, it is just--to me, it is a little 
overblown. Not to discount the--you know, the mindshare issues 
that have been brought up.
    And I would also say when it comes to Africa, you know, it 
is the fastest--economically the fastest growing continent and 
likely to be so for some time to come.
    The Chinese are making a huge strategic play for it. So I 
don't see a U.S. return on investment, if you will, by pulling 
out from there in a meaningful way.
    That doesn't mean you can't adjust.
    Mr. Brown. Thank you very much. I yield back, Madam Chair.
    Mrs. Davis. Thank you very much.
    I just want to thank you all. I want to thank Mr. Smith, 
Mr. Thornberry, for bringing this together. I think there are a 
long list of people that were here throughout the morning and 
it has been very informative. I can assure you we want to 
follow up on a number of these issues, and thank you very much, 
once again.
    Ms. Flournoy. Thank you very much.
    Mrs. Davis. Meeting is adjourned.
    [Whereupon, at 12:26 a.m., the committee was adjourned.]

     
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                            A P P E N D I X

                            January 15, 2020


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              PREPARED STATEMENTS SUBMITTED FOR THE RECORD

                            January 15, 2020

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    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
      
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              WITNESS RESPONSES TO QUESTIONS ASKED DURING

                              THE HEARING

                            January 15, 2020

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             RESPONSE TO QUESTION SUBMITTED BY MR. COURTNEY

    Ms. Flournoy. I do see the contradiction. South Korea actually 
makes one of the largest contributions to defray the costs of the U.S. 
troops it hosts relative to other allies. They are actually a very good 
partner in terms of financial support as well as military and 
operational cooperation. So we should not be beating them about the 
head and shoulders on this issue.   [See page 21.]
                                 ______
                                 
              RESPONSE TO QUESTION SUBMITTED BY MR. TURNER
    Ms. Flournoy. China is one of the few countries that has real 
leverage over the North Korean regime given Pyongyang's dependence on 
China for both trade and energy supplies. Any serious U.S. diplomatic 
effort with regard to North Korean nuclear weapons should aim to bring 
China on board as a partner in reducing the threats to regional 
stability that North Korea poses. The U.S. and China have a shared 
interest in preventing conflict on the Korean peninsula, and the U.S. 
should seek to enlist and encourage Beijing to use what leverage it has 
to keep Kim Jong Un from undertaking provocative actions, like nuclear 
and ballistic missile testing, and to incentivize him to come to the 
negotiating table and engage more seriously on measures to reduce and 
roll back the North Korean nuclear threat.   [See page 23.]
     
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              QUESTIONS SUBMITTED BY MEMBERS POST HEARING

                            January 15, 2020

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                  QUESTIONS SUBMITTED BY MR. MITCHELL

    Mr. Mitchell. Ms. Flournoy, in your witness statement, you raise 
concerns about the DOD acquisition workforce, its training and use of 
the flexible authorities Congress has provided in recent years. I 
supported legislation this year that directed the DOD to update its 
certification and education requirements.
    Do you think this legislation went far enough?
    Do you have any recommendations for future legislation and/or 
recommendations for the DOD as they implement this legislation?
    Ms. Flournoy. I applaud your efforts to require the Department to 
have more rigorous education and certification requirements for the 
acquisition workforce. My main concern is that leveraging cutting-edge 
commercial technologies to accelerate defense innovation requires a 
different approach to acquisition than what the DOD acquisition 
workforce is traditionally trained to do. Acquiring software--and other 
technologies that use agile development--is a very different process 
than acquiring an aircraft carrier or weapons system. I also applaud 
the requirement in your legislation for DOD to establish training and 
management programs for oversight of software development and 
acquisition. That's a great step in the right direction. But I think 
the Department needs to go farther, in three key ways. First, it should 
develop a cadre within the acquisition workforce that is trained and 
specialized to focus on commercial technologies that require agile 
development processes, including but not limited to software. (As you 
well know, the Department is currently relying on people who've managed 
traditional acquisition programs to oversee software development 
programs that require a completely different skillset, risk tolerance, 
and approach to be successful.) Second, the Department needs to 
incentivize the new cadre, and the acquisition workforce more broadly, 
to use all of the flexible authorities that Congress has provided, with 
speed and at scale. In some cases, the spiral development process 
associated with developing and integrating emerging commercial 
technologies will require program managers and their seniors (not to 
mention their Congressional overseers) to be willing to tolerate a 
higher degree of risk than is normally the case. Taking appropriate 
risk that allows developers to fail fast, learn and iterate for more 
rapid success should be recognized and rewarded. Third, the Department 
must provide a viable career path for this new cadre and attractive 
opportunities for promotion over time.
                                 ______
                                 
                    QUESTIONS SUBMITTED BY MR. WALTZ
    Mr. Waltz. How do we increase authorizations and investments in 
science and technology research across the U.S. government, while 
ensuring that those investments are not exploited by the Chinese 
government? Especially for those agencies like National Science 
Foundation, National Institute of Standards and Technology, National 
Oceanic and Atmospheric Administration that may or may not fully 
comprehend the threat to their data.
    Ms. Flournoy. The surest way to strengthen the United States' 
ability to compete with China is to invest in the drivers of American 
competitiveness. This includes investing in science and technology 
research across the U.S. government and incentivizing the private 
sector to increase its R&D investment as well. In terms of reducing the 
ability of the Chinese government to exploit that research, we should 
have a clear notion of which areas we need to protect. There may be 
areas where it is fine for us to share and collaborate (e.g. climate 
change mitigation technologies, or ways to prevent pandemics). But in 
areas that touch on national security, we should take care to protect 
against compromise or exploitation along several dimensions. First, we 
should require USG agencies to undertake careful due diligence on any 
foreign research partners. Second, research teams should be required to 
show that they have undertaken a cybersecurity assessment to determine 
whether appropriate measures have been taken to protect sensitive IP 
from state-sponsored cyber threats. Third, there should be more fulsome 
interagency discussions on this subject, so that agencies outside the 
national security community that sponsor or conduct some of this 
research are aware of some of the national security factors or 
concerns.
    Mr. Waltz. What options do you see for strengthening the scrutiny 
with which Chinese investment is reviewed by Committee on Foreign 
Investment in the United States (CFIUS)?
    Ms. Flournoy. The CFIUS process has been strengthened over the 
years, and I believe it is performing well. I don't have any particular 
recommendations for how to make it stronger. In general, I think we 
should focus not on passive Chinese investment, but on investments that 
would give Chinese investors a controlling interest, access to non-
public IP, a board seat, and/or substantive decision-making authority 
in companies that have dual-use or national security related 
technologies.
    Mr. Waltz. What do you believe is China's strategy in Africa and 
why is it important that the U.S. maintain a presence in the region?
    Ms. Flournoy. China seeks, first and foremost, to secure access to 
strategic natural resources that it relies on for its economic growth. 
Its near-term motivations to gain access and influence in Africa are 
largely mercantilist in nature. That said, for the long term, it is 
also seeking access to infrastructure and leaders that can support 
future growth in its military footprint, specifically military bases 
that could be used for power projection and the securing of sea lines 
of communication. Given the scale and scope of China's Belt and Road 
initiative, the United States must take a strategic approach to 
deciding where it is important to counterbalance Chinese influence, and 
prioritize accordingly. We also need to be creative about how best to 
compete for influence in key parts of the continent, leveraging new 
tools like a U.S. Digital Development Fund. This will help ensure that 
we have the influence we need to protect our interests. In the near 
term, we also need to evaluate the presence we require to support 
important ongoing counter-terrorism operations.
    Mr. Waltz. How do we increase authorizations and investments in 
science and technology research across the U.S. government, while 
ensuring that those investments are not exploited by the Chinese 
government? Especially for those agencies like National Science 
Foundation, National Institute of Standards and Technology, National 
Oceanic and Atmospheric Administration that may or may not fully 
comprehend the threat to their data.
    Mr. Hunter. The awareness of the Chinese threat to U.S. R&D is 
currently high among U.S. government agencies including the civilian 
R&D agencies. However, the main vulnerabilities associated with this 
information lies in the entities that perform the bulk of this 
research, which are primarily universities and industry. The awareness 
of the aggressive measures Chinese institutions employ to collect 
research and technology from U.S. and other international sources is 
also growing in this R&D community. However, this awareness comes after 
a long period of time in which China's successfully exfiltrated large 
volumes of U.S. R&D, meaning that existing university and industry 
information protection practices need reform and making these changes 
can be difficult and sometimes expensive. Solutions to the problem are 
also complicated by the need to distinguish basic science research 
(which is generally published and publicly shared) and technology 
development that requires protection. While 6.1 basic research is 
usually designed for public release, 6.2 applied research often has 
dual use applications and can be harder to assess. Usually 6.3 advanced 
technology development is more focused on applications where military 
relevance is clear. In addition, the talent pool for advanced science 
and technology work is heavily dependent on foreign students including 
many from China. This requires the research community to clearly 
distinguish between more general scientific work, which can be 
internationally shared and undertaken by international students, from 
more focused research that must be closely protected from espionage.
    For industry engaged in R&D activities, there is a financial 
incentive to protect intellectual property so that revenues resulting 
from the R&D can be retained by the firm. There are also strict 
contract requirements and procedures for handling classified 
information, but a significant amount of important information falls 
outside the classification schema while nonetheless requiring 
protection. The Department of Defense has been increasingly working 
with industry to enhance security for this ``controlled unclassified 
information (CUI),'' working to identify this information and develop 
protocols for protection. The civilian R&D agencies have recently 
worked to expand protection of CUI among their research recipients.
    For universities, the challenges are more acute. The financial 
incentives around information protection are less clear cut and the 
challenges steeper. There are also less clear mechanisms for 
enforcement. Having said that, the university research community is now 
taking the challenge seriously. A recent December 2019 report by the 
JASONs (https://nsf.gov/news/special_reports/jasonsecurity/JSR-19-
2IFunda
mentalResearchSecurity_12062019FINAL.pdf), commissioned by the National 
Science Foundation, recommended a path ahead on these challenges. It 
leverages the existing mechanisms in place for enforcing research 
integrity as a means of ensuring compliance with the need to protect 
CUI.
    In my view the most effective path to improving university 
information protection practices is to work closely with universities 
to identify mechanisms and protocols that work in the university 
research setting. I am concerned that an approach not well coordinated 
with key research universities will drive researchers away from 
government work while not substantially increasing security. The 
National Science Foundation does seem the best equipped civilian agency 
to take on this role, potentially with support from DOD's Under 
Secretary of Defense for Research and Engineering.
    Mr. Waltz. What options do you see for strengthening the scrutiny 
with which Chinese investment is reviewed by Committee on Foreign 
Investment in the United States (CFIUS)?
    Mr. Hunter. CFIUS is a highly effective review process when it is 
engaged. In fact, the expansion of CFIUS reviews as a result of the 
FIRRMA legislation have reportedly served to substantially reduce 
Chinese-connected M&A activity in Silicon Valley and elsewhere in the 
United States. The two biggest hurdles for effective CFIUS review right 
now are resource limitations and the growth of non-transparent 
investment vehicles such as private equity.
    The CFIUS review process has no dedicated funding source. Agencies 
staff CFIUS reviews as they arise and if the pace of cases increases 
there is no corresponding increase in the resources available to review 
them. This creates the potential for understaffed reviews at just the 
point in time they are most needed, for example during a surge in 
overseas investment in sensitive U.S. industries. There has been some 
discussion of creating a dedicated funding source for CFIUS through a 
transaction or filing fee. I think resourcing this process properly 
should be a priority.
    One of the main challenges of CFIUS reviews is determining how 
extensive the potential for foreign influence is that needs to be 
mitigated. Private equity and other investment funds can be used a 
vehicle through which foreign funding can reach U.S. companies while 
presenting either a domestic or non-threatening foreign facade. This 
issue is addressed in the banking system through ``know your customer'' 
mandates. This problem could be addressed with disclosure requirements 
for mergers and acquisition activity in the absence of more 
transparency in private equity more generally.
    Mr. Waltz. What do you believe is China's strategy in Africa and 
why is it important that the U.S. maintain a presence in the region?
    Mr. Hunter. China's approach to Africa is consistent with its 
broader foreign policy objectives of developing a network of friendly 
states with political and commercial ties to China in which China plays 
a leadership role. Often, these ties work very much to China's 
advantage through the development of long-term leases of critical 
infrastructure, such as ports, and with preferential access to Chinese 
industry. China sees Africa as a major area of foreign policy 
opportunity because of historically good ties between China and Africa, 
historically problematic ties between Africa and the West, and the 
dramatic growth of African economies. China's presence in Africa is 
highly visible and comprehensive. My colleague, Judd Devermont, has 
written an in-depth look at China's activity in port infrastructure and 
the potential challenges this presents to U.S. interests: (https://
www.csis.org/analysis/assessing-risks-chinese-investments-sub-saharan-
african-ports).
    The United States has seen many of the same strategic opportunities 
in Africa and past Administrations have sought to leverage these 
opportunities through increased trade ties (e.g. the African Growth and 
Opportunity Act), cooperation in fighting the AIDS epidemic (PEPFAR), 
and support for more effective governance and development through the 
Millennium Challenge Corporation (MCC).
    On the military side, U.S. Africa Command (AFRICOM) was formally 
separated from U.S. European Command in 2007 so that a dedicated 
command could focus on building security through strong military 
relationship across the continent. AFRICOM was initially structured to 
facilitate this long-term relationship building with a strong tie to 
the U.S. State Department. The longer-term relationship and security 
building aspect of AFRICOM's mission is probably most important to 
countering Chinese influence in Africa.
    However, operational realities in Somalia, Libya and the Sahel 
region have also made AFRICOM one of the United States busiest 
operational commands. While the footprint of U.S. forces in Africa has 
been relative light, these operations have been very active, 
continuous, and they range widely over multiple areas. The U.S. 
presence has been important in helping to avoid conflicts spreading 
across the African continent and in directly countering terrorist 
influence. If the United States were to abruptly abandon these 
operations without an opportunity to transition them to other forces 
(if any were found willing to take them on) it would substantially set 
back U.S. credibility on the continent and undermine many of the 
relationships already established.

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