Protecting Partners or Preserving Fiefdoms? How to Reform Counterintelligence Outreach to Industry

U.S. industry is increasingly independent of federal government direction in its creation of new knowledge and capabilities. Nonetheless, the outputs of industry support the United States’ ability to maintain elements of its national power. Consequently, industry is in the crosshairs of not only foreign competitors, but also of foreign intelligence services that seek to surreptitiously obtain valuable knowledge and other intellectual property. This is an unfair fight. It is further complicated by the fact that both adversaries and allies alike have directed their intelligence resources against U.S. industry.

Although the U.S. government has attempted to partner with the private sector on counterintelligence (CI) awareness and response, these efforts have been plagued by a limited concept of which industry sectors are at risk, inconsistency in programs, and redundancies across agencies. Moreover, the U.S. intelligence community is already being asked to do more with less.

It is time for a new approach to the important function of counterintelligence outreach to the commercial sector. Such an approach must focus more on recognizing and responding to indicators of the threat, less on turning to investigators once the damage has already been done. Counterintelligence—in the theoretical sense—means preventing an adversary’s intelligence services from acquiring an information advantage. While U.S. government agencies such as the Federal Bureau of Investigation, the Defense Security Service, the Department of Commerce, and the Department of Homeland Security make a valiant effort to disrupt criminal activities, they are only part of the solution. Missing from this approach is assistance to industries trying to navigate technically legal but unscrupulous activities such as China’s mercantilist approach to doing business—which can do long-term damage not just to U.S. companies, but also to U.S. strategic interests that are supported by the capabilities U.S. companies develop. The final necessary piece of a solution is enlisting the active participation of the private-sector entities at risk, since they are the first line of defense and best postured to identify anomalies.

To accomplish all this, the Trump administration should establish an interagency hub to consolidate existing counterintelligence outreach programs. The hub should not simply be an aggregation of programs, but, like the National Endowment for Democracy, an entity that focuses resources on achieving a strategic outcome—preservation of U.S. commercial ingenuity. This hub should be structured as a public-private partnership that incorporates industry, which is increasingly the front line of defense against foreign intelligence activities, as a contributing partner, rather than simply a recipient of government services. It should work to connect specific companies that have encountered foreign threats with the appropriate national security agencies that are best suited to disrupting these threats. Counterintelligence agencies should use this hub as an honest broker between the national security community and the private sector, which is an increasingly significant contributor to elements of U.S. national power. It must be capable of translating the community’s concerns into publicly releasable explanations of sector-specific threats.

This report first discusses the concept of counterintelligence. It examines the role of the private sector in protecting its own intellectual assets. It then examines the history of U.S. government efforts and the limitations and problems with these efforts. The report focuses on a key challenge: the changing priorities of the FBI and the negative consequences for commercial counterintelligence efforts. It then discusses the challenges of redundancy of counterintelligence efforts across the U.S. national security community. Finally, it discusses needed government and industry changes to better protect U.S. commercial knowledge assets.