Technology Collection Trends in the U.S. Defense Industry 2002ncms-antelopevalley.org/Helpful-Links/2002-DSS-technology-collection-trends.pdfThe Defense Security Service (DSS) is charged

TechnologyCollectionTrendsin theU.S. DefenseIndustry2002

RONALD W. IVERSON JUDITH M. HUGHESDeputy Director for Industrial Security Deputy Director for Personnel Security

Investigations

Foreword

The Defense Security Service (DSS) is charged with the mission of assistingcleared defense industry in the recognition and reporting of foreign contacts andcollection attempts as outlined in paragraph 1-302.b of the National IndustrialSecurity Program Operating Manual. This sixth edition of Technology CollectionTrends in the U.S. Defense Industry is a direct result of cleared defense industryreporting pursuant to this program.

Designed for use by security officials, cleared contractors, intelligence profession-als and DoD policy and decision makers, this report summarizes prominent topicsassociated with foreign targeting and collection attempts directed at defense industry including what is targeted and how the targeting is accomplished. DSSalso provides this publication via DSS web page www.dss.mil, at its SecurityLibrary, to maximize threat awareness and improve security practices in clearedindustry. DSS intends for this publication to enhance counterintelligence andsecurity integration by providing information and examples that apply to securityrisks throughout defense industry. This goal is tied to the ultimate goal of thispublication: threat awareness and related research and technology protection fromforeign collection attempts directed at U.S. defense industry.

Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Key Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

Associated Countries . . . . . . . . . . . . . . . . . . . . . . . . . .6

Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

Information Systems . . . . . . . . . . . . . . . . . . . . . . . .8

Sensor and Laser . . . . . . . . . . . . . . . . . . . . . . . . .12

Armaments and Energetic Materials . . . . . . . . . . .15

Aeronautics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

Electronics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20

Marine Systems . . . . . . . . . . . . . . . . . . . . . . . . . .22

Space Systems . . . . . . . . . . . . . . . . . . . . . . . . . . .25

Chemical and Biological Systems . . . . . . . . . . . . .26

Manufacturing and Fabrication . . . . . . . . . . . . . . .27

Guidance, Navigation, and Vehicle Control . . . . .29

Foreign Collection Methods . . . . . . . . . . . . . . . . . . . .29

Assessment of Future Trends . . . . . . . . . . . . . . . . . .39

This Defense Research and Technology Horizontal Protection publication was prepared byElisa Cruz, Peter DeCesare, Rebecca Morgan, Susan Porell, Gene Smith, and Bill Wrigley.Comments and queries are welcome and may be directed to the DSS CounterintelligenceOffice at 1340 Braddock Place, Alexandria, VA 22314-1651. Special thanks to AnnetteFrye Gunter for graphic design and layout, Laurie Dungan and Mamie Hill, TechnicalEditor, ACIC, for editorial support, and Mark Mooney for final editing.

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Introduction

This sixth annual study is the DefenseSecurity Service (DSS) counterintelligence(CI) tool for security professionals. The datapresented in this study is based solely onreports of suspicious foreign activity providedby DSS Industrial Security Representativesand DSS Special Agents. These reports arecomposed of information provided by U.S.cleared defense contractors and industrypersonnel who have experienced suspiciousforeign activity. This publication providesgeneral information and conclusions that helpcleared company personnel and DSS personnelrecognize and responsibly report suspiciousforeign activity so DSS can assist clearedcontractors in enacting responsive, threat-appropriate, and cost-effective security coun-termeasures (SCM). Numerous governmentagencies also use this reported information toanalytically confirm or deny assessments ofU.S. technology targeting, to identify suspi-cious foreign entities, and to strengthen andsupplement their investigative missions.

Key Judgments

Foreign collection attempts againstcleared contractors increased significantlyduring the fiscal year 2001 and will continue toincrease in the near future. U.S. militarily crit-ical technologies remain the most sought afterin the world, with more countries and foreignentities attempting to obtain high-technologyweapons components through various means.Collection attempts increased exponentiallywith worldwide Internet availability and website usage by cleared contractors. This increasewas reflected in cleared contractor reporting,which reached an all-time high of 717 suspi-cious contact reports. Availability of productinformation, anonymity of requestors, and

increased demand for high-technology weaponsystems require that U.S. security personneland the U.S. cleared contractors remain vigi-lant in protecting these products.

The weapons systems of today andthose of the future command high-technologyinformation systems for enhanced communica-tions, targeting, and battlespace control. TheU.S. cleared contractor remains the forerunnerin design and development of these much-needed systems. Longer-range, multiple reentryvehicles (MRVs) require information systemsfor effective deployment. Foreign attempts tocollect against U.S. space and energetic materialstechnologies increased significantly as morepowerful nations obtain long-range ballisticmissiles and develop intercontinental offensiveweapons systems.

The increased demand for defensivesystems, such as coastal defense radar tech-nologies and shallow-water rigid inflatableboats for patrol of claimed territorial watersand navigable rivers was reflected in overtattempts to acquire these systems. While morecountries now include submarines in theirorder of battle, the emphasis for foreign pro-curement of marine systems remains in coastaldefense and shallow-water technologies vicedeep-water systems such as submarines.

Executive Summary

Reporting Trends

In 2001, DSS received 717 suspiciouscontact reports from cleared contractors andDSS Industrial Security Representatives andSpecial Agents. This represents a significantincrease over any previous reporting year.DSS associates this rise with heightened threatawareness by DSS field personnel, cleared

defense contractors, and increased Internet use.DSS also observed a leveling off in the cate-gories of reporting. In the past, the recognitionof suspicious activities (and the reportingthereof) was often focused on a few countriesor particular Method of Operation (MO). Asthreat awareness sharpened, cleared contractorsbegan to recognize, and to report, suspiciouscontacts across a broad spectrum of foreignactors and foreign MOs.

Country Trends

DSS received reports of suspiciousactivities concerning interests associated with75 countries in 2001. The number of reportedcountries has increased steadily during thistime, from 37 reported foreign countries in1997 to 47 in 1998, 56 in 1999, 63 in 2000, andnow 75 in 2001. These countries representevery region of the globe and the entire spec-trum of social and political environments. In2001, as in prior years, reports to DSS indicate

the majority of countries targeting clearedcontractors are those with economies and tech-nology industries that are competitive with theU.S. with varying degrees of military capabili-ties. For the most part, these countries areseeking general technological advancement.

Technology Interest Trends

In 2001, the majority of targetedweapons systems and technologies wereassociated with Defense programs and werecovered by the International Traffic in ArmsRegulations (ITAR). As noted in the past,foreign entities continue targeting weaponcomponents, developing technology and tech-nical information more intensely than completeweapons systems and military equipment.Suspicious activity reports received in 2001included every militarily critical technologycategory. For the 2001 report, DSS expandedthe analysis of the most frequently targetedtechnology categories. This effort is intended

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Military Critical Technology List Percentage Targeted

Information Systems

Sensors and Lasers

Electronics

Aeronautics

Armaments and Energetic Materials

Guidance/Navigation/Vehicle

Marine Systems

Space Systems

30%

20%

11%

6%

4%

4%

7%

4%

5%

14%

Manufacturing and Fabrication

Chemical/Biological Systems

Technology Interest TrendsTable 1

3

to enhance DSS field personnel and clearedcontractor understanding of why a foreignentity chooses to target a particular technologyand the most effective means for countering theaction.

Most Frequently Reported TechnologyTargets

In order of frequency, those technolo-gies generating the most foreign interest in2001 included information systems, sensorsand lasers, armaments and energetic materials,aeronautic systems, and electronics. This rank-ing is similar to previous years and has variedlittle over time. However, the extent of foreigninterest and collection methodology employedagainst these specific technologies variesdramatically, from a passive request to sophis-ticated collection activities using various MO.

Most Frequently Reported Methods ofOperation (MO)

MOs are the techniques employed by aforeign entity against a given target to collectintelligence, scientific, and technical informa-tion. MOs associated with potential collectionefforts in 2001 are as follows, ranked in orderof frequency of occurrence:

• Requests for scientific and technological(S&T) information

• Attempted acquisition of U.S.technology/company

• Soliciting and marketing of services• Targeting of U.S. legal travelers

travelling abroad• Inappropriate conduct by foreign entities

during visits to U.S. facilities• Exploitation of existing relationships

0

5

10

15

20

25

30

Figure 1

Information Systems

Sensors & Lasers

Aeronautics

Armaments & Energetic Materials

Electronics

Marine Systems

Chemical/Biological Systems

Manufacturing & Fabrication

Space Systems

Guidance/Navigation/Vehicle

14%

4%

Technology Interest Trends

5%4%4%

6%7%

11%

20%

30%

4

including joint venture or research• Exploitation of Internet (hacking)• Targeting at international conventions,

seminars, and exhibits

Requests for S&T information was themost frequently used collection methodemployed by foreign interests in 2001. Whileforeign interests employed a variety ofmethods, these methods are consistently similarto those reported from 1995 to 2000. Foreignentities may use combinations of methodologiesor invent new methodologies, as a particularsituation demands. Although these practicescan sometimes make it difficult to assess themethodology used by a foreign entity in a par-ticular matter, in an effort to achieve a highstandard of analysis, DSS reviewed the MOcategories assessed to each reported incident in2001. DSS refined each category and, ulti-mately, arrived at a "pure" MO for each reportedincident. Information regarding this process,as well as foreign collection methods andtheir frequencies, is described in the ForeignCollection Methods section of this publication.

Reporting

DoD Directive 5240.2 requires DSS toassist industry in recognizing and reportingsuspicious activity including foreign contactsand collection attempts. Cleared companiesand DSS responded well in 2001, as in previ-ous years. This active response continues atrend of increased awareness and reporting.The following criteria are most often cited inassessing potential foreign collection efforts:

• Technology is classified/export-controlled

• Information has a national defense/military application

• Redundant requests from a country for each technology target

• Identifying consistent patterns acrossgovernment agencies reporting oncollection efforts by that country

• Foreign entity is affiliated with foreigngovernment defense organization

• Request/offer is from an embargoedcountry

• Possible front company and known technology target

• Foreign country is associated with diversionary practices

All threat information is evaluated inthe context in which it takes place. DSS eval-uates the criticality of the requested infor-mation: whether or not the technology exists atthe cleared defense contractor facility, associa-tion of the foreign collection method to thosereportedly used by foreign intelligence servic-es, history of previous suspicious activity by theforeign entity, and access of the contacted, clearedemployee to the requested information. Onlythen can DSS apply a value judgment to thethreat information and, subsequently, more rig-orously analyze the information if warranted.Foreign targets of interest to DSS include anytechnology that is classified, requires an exportlicense, and is listed in the ITAR or MilitaryCritical Technology List (MCTL).

MOs of interest to DSS include eco-nomic and industrial espionage activitiesrelated to intelligence, scientific, or technicalcollection operations, which normally involvea complementary set of activities. These activ-ities vary based on a nation's culture, politicalsystem, business practices, and resources.These MOs include, but are not limited to, thefollowing:

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• Request for information• Exploitation of visits including violation

of foreign visit protocols• Exploitation of existing relationships

including joint research• Acquisition of U.S. companies or

technologies• Hacking• Targeting cultural commonalties• Targeting at international conventions• Solicitation and marketing of services• Exploitation of foreign employees• Targeting former employees

Submitted incident reports continue toemphasize the importance of using companyFacility Security Officers (FSOs) as the centralcoordination point for each cleared companyand each cleared employee. By experience andrepetition, FSOs ensure timely and comprehen-sive review, recognition of suspicious indicators,and reporting of suspicious activity. The FSO,when appropriate, can be a force multiplier.Whether for investigation or analysis, reportinghelps educate industry, security, and CI profes-sionals about foreign collection methodsemployed against U.S. industry. The DSSOffice uses the information provided by ISRepresentatives for further analysis. Therefore,FSOs may be able to help identify the fol-lowing:

• The ultimate target (understandable description of technology, system, orresearch)

• Foreign identity (name, affiliation,descriptive features, previous contact,and postal and electronic addresses)

• Circumstances of the incident and background information (e.g., "met at convention in 2000," "denied a visit in 2001," "prime ignored several requests before foreigner approached us [sub-contractor]")

• Suspicious activity (e.g., called a few times and E-mailed inquiring about program or technology)

Timely reporting of suspicious foreignactivity enables DSS to evaluate foreign col-lection activity immediately, recommendthreat-appropriate SCM, and expedite referralsto U.S. government agencies that can neutralizeand, in turn, exploit foreign efforts. DSSsuccessfully contributed to government intelli-gence and law enforcement activities thatresulted in the neutralization of foreign threats.In 2001, DSS referrals of exploitable informa-tion to government law enforcement activitiesincreased, as did resultant arrests and successin neutralizing threats.

Cleared company reporting alsoindicates numerous successes in applyingappropriate SCM to potentially threateningsituations. Based on information provided toDSS, cleared companies refused tours tounauthorized visitors, did not respond to suspi-cious foreign requests for information, request-ed and received additional information from

Year

# of countries with identifiedcollection involvement

2001

75

1997 1998 1999

37 5647

2000

63

Table 2

6

The map above reflects the associated areas of origination for collection efforts.The percentages indicate the level of collection activity reported in 2001. The mapdoes not imply national-level support of the collection activity. The collector mayhave based his operation in a third country to conceal his intentions, such asbeing ultimate end-user of the technology.

Worldwide Sources of Targeting

Middle East/North Africa - 17%

South America - 10%

Sub-Saharan Africa - 8%

Other - 8%

Asia - 17%

Figure 2

Europe - 30%

Eurasia - 10%

foreign entities, refused inappropriate visitsponsorship requests, used effective escorts tocontrol visiting delegations, applied security toweb-based design and advertising, and ques-tioned foreign entities about the reason(s) fortheir inquiries. This professional handling offoreign collection efforts assisted in identifyingand reporting inappropriate foreign activities.

Associated Countries

Since 1997, the reported number ofcountries associated with suspicious activities

has increased. Many countries exhibit interestin the same technologies. Newly identifiedcountries, for the most part, were those devel-oping nations that may be interested inupgrading existing defense systems or acquir-ing similar technologies to level the playingfield against potential adversaries. It is possiblesome of the newly identified countries werecollecting for other nations whose own collec-tion efforts have either failed or needed to besupplemented.

7

Foreign Collectors

0

5

10

15

20

25

Figure 3

Government Sponsored

Government Affiliated

Commercial

Individual

DSS identifies types of collectors afterevaluating reported information, conductingextensive research, and assessing relationshipsand representatives in each incident. Foreigngovernment-sponsored targeting, includingMinistry of Defense, foreign military attaches,and other official government entities, accountedfor 23 percent of all matters reported to DSSfor 2001. Foreign government-affiliated activ-ities, including research institutes, laboratories,government-funded universities, and govern-ment contractors representing governmentinterests accounted for 21 percent. Foreigncompanies whose work is exclusively or pre-dominantly in support of government agenciesare also assessed as government-affiliated.Foreign commercial activities (22 percent) arethose that engage in commercial business, inthe commercial and defense sectors, whosesuspicious activity is not associated with aforeign government. Foreign individuals (14 per-cent) are entities for whom DSS has beenunable to determine affiliation due to lack ofinformation. While it is likely the majority of

these foreign individuals have a foreign spon-sorship or affiliation, a small percentage wereidentified by DSS as seeking personal financialgain. In some reported cases, only an individ-ual name or an E-mail address is known.

The high ratio of foreign government-affiliated collectors may be due to foreigngovernment mandates to their universities,research institutes, and S&T academies todevelop technologies. Because many criticalmilitary technologies are dual-use, technologi-cal expertise in these areas not only contributesto military superiority but also can be used todevelop a profitable industrial base. The highnumber of corporate collectors may be attributedto the dual-use nature of many technologies;however, the large number of foreign jointventure and joint research relationships withcleared U.S. industry must be factored in aswell. These relationships provide manyopportunities for the targeting of particulartechnologies.

Unknown

23%21% 22%

14%

20%

8

Information Systems

Information systems (IS) remained themost sought after militarily critical technologyin 2001. Forty-four of the foreign countriesassociated with suspicious activity in 2001attempted to collect IS technology. This madeIS the most diversely sought technologycategory. However, three countries accountedfor 41 percent of all the reported collectionactivity this year. Most of the activity reportedinvolved activities by foreign corporate enti-ties, which accounted for 32 percent of all ISmatters. In the extremely competitive businessenvironment of IS, corporate espionage is to beexpected. Foreign government entities alsotargeted IS heavily, accounting for 23 percentof all matters, followed by foreign individualtargeting at 13 percent, and foreign govern-ment-affiliated targeting at 10 percent.

Information systems are present invirtually all aspects of our lives. This isparticularly true for military, commercial, andindustrial activities, and at all levels of govern-ment. The pervasiveness of IS technologiesmake them vital to U.S. warfighter capabilities.Use of IS encompasses a wide range of appli-cations from information systems embedded inindividual smart weapons and sensors to localprocessing and communications systems,including transportable and personnel hand-helddevices to international wide area computernetworks.

Access to these technologies by poten-tial adversaries could enhance the performanceof their military systems and may be used tocounter U.S. capabilities. There were 226 totalincidents reported this year vice 142 in 2000,resulting in a 58 percent increase. Mostincreases occurred in the software; command,

control, communications, computing and intel-ligence (C4I), signals processing; modelingand simulation; and information security sub-categories.

The large increase in suspicious activityinvolving software may be attributed, in part,to the phenomenon of "off-shore software

services." Of growing concern to the CI com-munity is the use of foreign research facilitiesand software development companies locatedoutside the U.S. working on commercial proj-ects related to protected programs. Anytime aU.S. facility relinquishes direct control of itsprocesses and products they are exposing thetechnology to possible exploitation. Dealingwith foreign software companies can pose acollection risk in that codes could be embeddedinto the software to extract data. In addition,spawning processes and multi-thread tasksmay be coded into the program.

The targeting of C4I technology is alsoon the rise. C4I technology is essential in pro-viding error-free communications, informationmanagement, and decision-making capabilitiesin intense combat situations. The speed and

Technology

9

accuracy with which information is availablefor use may mean the difference between suc-cess and failure on the battlefield. C4I encom-passes a multi-disciplined set of technologieswith which U.S. forces maintain a superiorability to detect, localize and effectively engageenemy forces. In asymmetric, high-threat envi-ronments, such as those presented by the waron terrorism, secure and uncompromised C4Itechnologies are an essential element offorce protection. As such, it is understandablethat this form of IS technology would besought after by foreign collectors. C4I prod-ucts and programs targeted in 2001 includedigitization tracker data, E-mail interceptionsystems, and communications componentsassociated with telemetry and direction-findingsystems. While some countries are developedin this area, many have limited C4I capabilities.However, due to the fast changing technologyenvironment, even countries with advancedC4I capabilities will look to the U.S. andcleared contractors for developments in thisfield.

Signals processing is the basic enablingtechnology for all telecommunications andmilitary sensors. Accuracy and reliability ofdata are critical to mission success. As such,effective signal processing technology ishighly desirable. Collection of signal processingtechnology in 2001 was attempted for SIRRMcode (calculates infrared emissions of rocketexhaust plumes), WAM system (regardingAEGIS warship program), ERDAS (imagingsoftware), and radio parts/frequency for VHFreceiver for tactical communications forVRC-12. A few nations, mostly in the West,have advanced signal-processing technology.However, most lag far behind the U.S. and,therefore, will continue to target cleared con-tractors working in these technical fields.

Modeling and simulation software isparticularly in demand now. Some of the itemstargeted in modeling and simulation included ascene simulator, battlefield visualization, air-borne radar simulation, flight simulators, H-60(derivative VH-60), M1A1 and other tank sim-

Collection Incidents per Sub-category per YearTable 3

10

ulators, UAV simulators, target simulationsystems, and aggregate level simulation proto-cols. Modeling and simulation technologiesare attractive for a variety of reasons. Trainingis expensive and labor intensive. Simulatedtraining is far more desirable. Modeling andsimulation programs also help a foreign actordetermine the makeup and workings of tech-nology from the program itself, saving onR&D expenses. Due to its high value, foreigncollectors are persistent in their attempts toretrieve simulation technology. DSS reports ofsuspicious activity suggest a particular countrymade six attempts from 1998 to present toobtain export or ITAR-controlled simulationtechnology.

The principle elements of informationsecurity systems are cryptographic and crypt-

analytic algorithms. Although it is hard tojudge the state of many foreign nations infor-mation security posture, the CI communityassessed that most nations have limited to nocapabilities in the information security arena.The great influx in communications technolo-gies and the vast array of options in communi-cations mediums have increased the need forstronger and more varied information securitytechnologies. As such, even those countriesthat possess some capabilities in this area willcontinue to target the U.S. for this type oftechnology. In 2001, information securitycollection attempts involved an asynchronoustransfer mode (ATM) monitor and voice anddata encryption devices.

Transmission systems saw the greatestdecrease in IS targeting in 2001. Transmission

Targeting of Communications Security Devices

DSS reporting revealed a suspicious contact and solicitation occurred involving the possiblepurchase of a crypto embedded device, the sale of which is export controlled.

On 2 January 2001, a foreign individual telephonically requested information for a "friend"who was described as living in a foreign country. The foreign caller wanted to purchase a cryptoembedded device. The telephone call was received by a U.S. cleared contractor, which then forwardedto DSS the following information: The foreign individual stated he would be ordering a large amountof crypto embedded devices but that first he would like to try out one or two units. He asked the con-tractor if it was okay to ship to the foreign country and the U.S. representative at the facility stated shewould have to check. The caller expressed an additional desired interest in obtaining a crypto embed-ded device user's manual and that it be express-mailed to him because he was going out of the coun-try and would like to take it with him. The foreign individual contacted the company again on the nextmorning to further inquire about the probable sale or acquisition of the user manual. This informa-tion was reported to U.S. Customs Service and arrests were later made under the Arms ExportControl Act.

This U.S. cleared facility currently writes encryption-to-encryption code and troubleshoots cir-cuit boards for the crypto embedded device but forwards repair work to another repair facility in theU.S. Before the stated incident, the repair facility also received an unsolicited request from the sameforeign country for the same type of system.

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systems include equipment and componentsused for transfer of voice, data, record, andother information by electromagnetic meanseither through atmospheric, exoatmospheric orsubsurface media or via metallic or fiber-opticcable. These systems mostly are associatedwith radio. The majority of technologies asso-ciated with information transmission are com-mon to both military and civil systems and wasmade readily available to the foreign market orwas developed jointly by U.S. and foreignfirms. This may be partially responsible for adecrease in targeting of this technology.However, due to rapid advances in IS tech-nologies including transmission systems, it islikely that, with the introduction of a particularnew system, reporting may increase and thenreturn to lower levels once the technology isacquired.

The request for information is the mostfrequently used collection methodology

directed against all technologies and is pre-dominant in the collection of IS. However,other collection methods were not far behind.

The high number of solicitation andmarketing of services attempts against IS aremostly attributed to offshore software services.Although some solicitations may be legitimaterequests for business, as noted above, the useof offshore software services for intelligencecollection purposes poses a grave risk to U.S.security. The effectiveness of this method ofoperation against software technology can bejudged, in part, by the increase in its use. From1998 to present, DSS recorded 21 incidents ofsolicitation and marketing of software servicesfrom one particular country to cleared U.S.defense contractors.

Attempted acquisition of IS technology(the offer to purchase) may be indicative ofextensive reverse engineering programs

27%

24%15%

8%

6%

6%6%

5% 2% 1%

Requests for Information

Solicitation & Marketing of Services

Attempted Acquisition of US Technology

Exploitation by Foreign Entities

Exploitation of Existing Relationships

Exploitation of Internet

Foreign Targeting of Legal US Travelers Abroad

Targeting at Conventions

Foreign Employees

PEI

Information SystemsFigure 4

12

employed by some foreign governments.Often the requestor will offer to purchase onesample of a program for evaluation with thefalse promise of buying more. In addition, IStechnologies often require multiple copies ofthe same code or software to outfit each enduser or end product with the application. Thiscan be costly. By purchasing one edition of thetechnology and illegally making a limitlessnumber of copies, foreign collectors mitigateexpenses. IS technology also can be costly andtime consuming to develop. Acquisition of IStechnologies is an effective and low cost meansof obtaining the most cutting-edge IS develop-ments and avoiding expensive R&D.

Sensors and Lasers

Sensors and lasers remained the secondmost frequently targeted technology for thethird consecutive year. Targeting incidentsdirected against sensors and lasers increased bythree percent to account for 20 percent of thetotal 2001 cases. Significantly, the total sensor

and laser technology incidents tripled over thepast year. Nearly one-third of these incidentswere specifically directed against acoustictechnologies. Forty-one different countriesattempted to collect sensor and laser technology.The top five foreign countries attempting tocollect U.S. technologies overall were respon-sible for 45 percent of the reported sensor orlaser incidents. Half of the cases directedagainst sensor and laser technology were eithergovernment-sponsored or affiliated. One thirdof the collection attempts were received viaE-mail. Requests for information (38 percent)and acquisition attempts (22 percent) were themost common methods of collection for thistechnology.

Acoustic sensors can be subcategorizedinto air platforms, marine active sonar, marinepassive sonar, and marine platforms. Passivesonar is used militarily for the covert locationof underwater objects that radiate sound andare used primarily for antisubmarine and anti-surface warfare. Except for academic research,


13

there are few commercial uses for passivesonar. Forty-one percent of the acoustic tech-nology cases were specifically directed againstpassive sonar. Passive sonar systems remainthe most effective acoustic sensor for anti-sub-marine and anti-surface ship warfare in thesurveillance or standoff mode. The U.S. main-tained a comfortable lead over the major west-ern countries in passive sonar systems technology.Most reported collection efforts targeting pas-sive sonar technology were requests forinformation E-mailed by alleged students atforeign universities or research facilities.

Twenty-four percent of the acousticsensors targeting incidents were directedagainst active sonar systems. Most marinesensing systems use active sonar or soundwaves to locate underwater objects. There areseveral commercial uses for active sonar,which include fish finding, mapping, seismicexploration at sea, petroleum and mineralexploitation, and academic studies. Militarily,active sonar is used for antisubmarine warfare,weapon homing, torpedo defense, mine war-fare, deep-sea salvage, and underwater com-munications and navigation. As submarinetechnology advances, reducing a submarine'ssignature and acoustic detection capabilitybecomes increasingly important. The strategicand tactical importance of active sonar forASW has continued to increase.

Marine platform acoustics encom-pass all measures taken to reduce the self-noise of ships, submarines, or other platforms.There are no known commercial uses forthe acoustic domes and windows that areconsidered militarily critical. Twenty-sevenpercent of the acoustic sensors targetedwere directed against these marine plat-forms.

Twenty-four percent of sensor targetingwas directed against electro-optical sensors.These sensors have military applicationsthat seek to facilitate the conduct of oper -ations a t n ight or under condi t ions oflimited visibility. This technology is usedfor equipment such as night-vision gog-gles, vehicle driver systems and weaponssights. The critical technology is in itssecond and third generation. Theseinfrared imaging systems create imagesbased on temperature differences within ascene. The Forward Looking Infrared(FLIR) technology is being used on ouradvanced weapons systems. The U.S.leads considerably in electro-optical sensortechnology, but several countries haveproduced some second and third genera-tion image intensifier capabilities basedon assessed technology transfers.

Laser technology is used in weaponssystems primarily for target acquisition.Many military forces use laser guidedweapons, but a few produce the newer "eyesafe" laser system. Over three percent of all2001 collection attempts were targeting thelimited dual-use laser technology that couldavoid the eye blindness effect caused byolder laser technology. Another 13 percentof collection attempts against sensor andlaser technologies were specifically directedagainst radar systems. Radar is indispensa-ble for a variety of military uses and isuniquely enabling since few other detectionschemes are capable of ranging and direc-tion finding in a variety of obstructingconditions. Most foreign countries haveindigenous capabilities over a broad rangeof radar expertise. However, most nationsare dependent upon U.S. technology forcomponents such as power amplifiers, pulse

14

compression units, and signal processingsubsystems.

In one 2001 case, a foreign delega-tion visited a contractor facility known forits research and production of SONAR andradar systems. Upon their arrival, the dele-gation attempted successfully to substitutethree persons from the previously authorizedlist. Once the tour and meetings began,some delegation members attempted towander away from their escorts. Delegationmembers persistently questioned facilitypersonnel about critical technologies pro-duced at the facility. In a second case, anapplicant from an embargoed nationattempted to gain employment at a facilitythat produces Radar systems. During thejob interview, the applicant refused to iden-tify his nationality and questioned therecruiter on specific technical details of U.S.radar systems.

E-mail requests for information werethe most popular means of collecting sensorand laser technology. In one such case, therequestor asked for information related tothe Aegis Class Frigate; Towed ArraySystems; Torpedo Defense Systems; Mine-Hunting Systems; and Airborne Radar. Asimilar request asked a defense contractorfor information pertaining to specific NavalElectronic and Surveillance Radar andSonar systems. Another unsolicited E-mailrequested the Graphic User Interface for theForward Looking Sonar System (FLOSS).Most Electro-Optical contractors presentedtechnology to the public in published andweb site ads, which generated interest fromseveral countries requesting catalogs, prod-uct guides, or price lists for the technology.

Figure 5




Exploitation of Foreign Visit


Sensors and Lasers




15


Armaments and Energetic Materials

Armaments and Energetic MaterialsTechnology (AEMT) was the third mosttargeted technology group by foreign entities at14 percent. Foreign attempts to collect infor-mation on or to acquire these systems andtechnologies increased significantly since lastyear, with 24 incidents reported in 2000, to 108incidents reported in 2001. AEMT, whichincludes small and medium caliber ammuni-tion; bombs, warheads and large caliberprojectiles; energetic materials; safing, arming,fusing and firing technologies; gun andartillery systems; and mines, countermines;and demolition systems, is the fundamentalnucleus in virtually all weapons systems.Collection efforts for United States' high-tech-nology armaments and energetic materialsunderscore the worldwide push to update andintegrate the core weapons systems of military,paramilitary and terrorist forces.

While overall foreign collectionattempts against militarily critical technologiesincreased, the sharpest rise in this subcategorywas in energetic materials, from one cleared-

defense industry reported incident in 2000 to32 in 2001. As illustrated in the chart above,the combined total of incidents for the years1997 through 2000 was three. Collectionattempts against bombs, warheads, and largecaliber projectiles had the second highest num-ber of incidents reported at 24, up from 16 in2000. Guns and artillery systems collectionalso increased from previous years.

The dramatic increase in pursuit of thistechnology parallels the increase in "smartweapons" design and development. Whilemany countries now have the capability toproduce and acquire conventional weaponswith limited range, few are able to produceguided and individually targeted multi-reentryvehicles. The extended range of these smartweapons and near pinpoint accuracy of thewarhead will continue to make this criticaltechnology a targeted commodity by foreignpowers.

The most frequent method of operation,based solely on numbers, was attempted acqui-sition, at 28. Of particular note, 21 of theseincidents occurred against energetic materials.One U.S. Company had 25 reported incidents

16

in the overall category of Armaments andEnergetic Materials, 21 of which were attemptedacquisition. Solid and Liquid PropellantMechanical Behavior Manuals were the pre-dominant items sought by foreign collectors,with offers for purchases sent via E-mail.

Aeronautics

Aeronautics slipped to the fourth mostfrequently targeted technology, accounting for11 percent of the total reported incidents for2001. Although aeronautics may have droppedin ranking, the number of targeting incidentsagainst this critical technology jumped 360percent from 23 reported incidents in 2000 to83 in 2001. Thirty-one different countriesattempted to collect aeronautics technologywith the top five most active countries respon-sible for 38 incidents, nearly half of thosereported. In those cases whose source ofinterest in aeronautics technology could beidentified, 58 percent were either foreign gov-

ernment or affiliated. Requests for information(28) and acquisition attempts (18) were themost common methods of collection for thistechnology, with 24 (29 percent) of theattempts made via E-mail.

For several years, aeronautics technolo-gies have continued to be of high interest tomany countries attempting to upgrade theirindigenous aviation programs. In 2001, UAVsystems and components were highly targetedwith 21 reported incidents. Seven casesinvolved aero-elasticity as "students"from several foreign countries sent E-mailrequests for technology required for theirresearch programs. Additionally, helicoptersare still targeted, with several defense contrac-tors reporting suspicious activities.

Successful use of UAVs duringOperation DESERT STORM and the Balkanscrisis helped elevate a wide interest in thistechnology. The unmanned vehicles are a low

24%

27%

11%

11%9% 9%

Figure 6Armaments & Energetic Materials







17

cost answer to the reconnaissance and surveil-lance requirements of numerous countries. Inthe past year, there were several incidentsinvolving attempts to illegally obtain UAVtechnology. In one case, individuals werearrested, based on cleared contractor reporting,after being caught trying to smuggle UAVcamera systems through Europe to an embar-goed country. A few foreign companies aretrying to take advantage of the needs of somecountries by establishing themselves as thebroker in business-to-business ventures.Several foreign countries are openly attempt-ing to purchase UAV systems from the U.S.Both the UAV platforms and their componentswill continue to be highly targeted technology.

The electronics systems on all U.S. airborneplatforms continue to be targeted. The harden-ing of electronic integration of aeronauticsystems for the protection against electromag-netic pulse and radiation effects on the nuclearbattlefield remains the key to this criticaltechnology. With numerous applications ofelectronics and electro-optical technologieswithin space, weapons, or aeronautics systems,this critical technology will remain in demand.As the U.S. and other countries move into newgenerations of electronics weapons systems,

more countries are forced to keep pace protect-ing their aeronautics systems.

Technology collected from open-sourcevenues regarding aeronautics will continue tobe our greatest threat. Increased Internet use isan indicator for future technology collectionoperations. Off shore, business-to-businesssolicitation, and the number of foreign studentresearchers attempting to acquire informationor obtain employment will continue to grow asthe second most popular collection method forillicitly attempting to obtain aeronautical tech-nology. Although the ease of Internet use isbecoming more popular, we continue to seetraditional collection methodology usedagainst aeronautics technology. In 2001, therewas limited reporting regarding incidentswhere U.S. cleared contractors suspected sur-veillance activities and "bugged hotel rooms"while traveling abroad. DSS received severalreports from defense contractors indicating theblatant and aggressive collection operations atconventions and air shows by foreign entitiesinterested in the latest aeronautics technolo-gies, an MO previously employed and expectedduring these events.

1997 1998 1999 2000 2001

21

46

9

70

4 4

1 53 1

10 5

1 4

6 11

1 4

0 17 3

Unmanned aerial vehicles

HelicoptersHuman (crew systems interface)

Gas turbine engines

Aircraft, fixed wingAeronautics


18

22%10%

10%

7%7% 6% 2.5%

34%

Figure 7Aeronautics




TARGETING OF UNMANNED AERIAL VEHICLE TECHNOLOGY

During 2001, numerous countries targeted U.S. made unmanned aerial vehicle (UAV) plat-forms, although requests for aeronautical technology comprised 11 percent of all foreign requestsreported to DSS. Of 21 cases involving UAV technology reported to DSS during 2001, at least 50 per-cent involved E-mail requests for UAV platform or its various components' technologies. Several ofthese E-mail requests originated from newly independent nations. Based on the failure to acquireUAVs, these foreign countries are expected to continue targeting UAV technology for the near future.

Currently, nearly 50 nations deploy UAVs for military purposes. The UAV platform is con-sidered so essential for modern military use that the armies of many third world countries, includingthose in South America and the Middle East, now produce their own UAV platforms. TheseUAVs are utilized for training purposes and are usually similar to prototypes of remotely pilotedvehicles (RPVs) or drones. Terrorist forces may have deployed UAVs during the military campaignin Afghanistan following September 11, 2001. Nations bordering Afghanistan have Asian-producedUAVs in their order of battle. A Persian Gulf country already deploys two versions of its own domes-tically produced UAV platforms. Both of these UAV models were initially designed for training






19

ground operators in techniques involving RPVs, Several import/export firms are suspected of divert-ing UAV platforms to Middle East countries which are on the U.S. government's embargo list ofdefense products. At least two incidents were reported to DSS during 2001 involving the attempteddiversion of UAVs from the U.S. to the Middle East and may have been shipped to a third country orforeign entity.

While many technologically advanced nations deploy UAVs for military purposes, a numberare eager to acquire UAV technology from U.S. entities, either for their own aerospace industry useor to reverse-engineer these platforms for domestic or international sales. Recently, exhibits of com-mercially available UAV platforms have attracted large numbers of visitors at international air shows.Other potential customers for the UAV were South American drug cartels, which attempted acquisi-tion through approached aerospace firms in the Middle East. One South American government, whichalready produces its own UAV prototypes, approached U.S. entities directly with a formal request forinformation on such related technology as aerodynamics and wingspread data. According to lastyear’s edition of Technology Collection Trends in the U.S. Defense Industry, four percent of all RFIsreported by DoD contractors to DSS that year originated from South America. This small percentageof South American RFIs is even more interesting, as 11 percent of all reported RFIs from foreign enti-ties during 2001 involved aeronautical systems and technology; however, foreign interest in U.S.-made UAVs is not confined strictly to the Western Hemisphere.

Foreign nations also heavily targeted such UAV-related components as sensors and guidancesystems during 2001, and included 20 percent of sensors and lasers technology, while anotherfour percent of all such foreign requests involved guidance and navigation technology. Foreigntargeting has included such components as Ultra-Wide Band Synthetic Aperture Radar, autopilot controls, and data link subsystems including data link related technology involving encryptedsystems. Three nations deploying UAVs are known to have the capability to protect their data linktechnology through encryption.

Five of the 21 UAV cases reported to DSS during 2001 involved scheduled visits by for -eign military personnel, although the overall number of visits by foreign military personnel to acquiretechnology constituted eight percent of all reported MO during 2001. Nearly all these cases involvedsome overt incidents, including the photography of UAV platforms by visiting military personnel froman Asian nation.

20

Electronics

Electronicstechnologies areeither a majorcomponent of or areused to produceevery major weaponssystem in the U.S.arsenal. As such,electronics are oneof the most criticalelements in assur-ing the continuedsuperiority of U.S.military capabilities. The majority of defensetechnologies targeted in 2001 were compo-nents rather than complete systems and thisheld particularly true for electronics. Foreigntargeting of electronics technologies remainedin fifth place for 2001, with 24 countries,accounting for seven percent of all targeting.Only three countries accounted for 46 percentof all reported electronic collection activity thisyear. Foreign government-affiliated entitiesaccounted for most (33 percent) of the elec-tronics technology-targeting activity reportedto DSS for 2001. This was followed by foreigncorporate entities at 27 percent, foreign gov-ernment entities at 16 percent and foreignindividuals at 14 percent. In 10 percent ofreported electronics matters, DSS was unableto determine the affiliation of the foreigncollector.

The high ratio of foreign government-affiliated collectors may be due to foreign gov-ernment mandates to their universities,research institutes, and S&T academies todevelop electronics technologies. Becausemany electronics technologies are dual-use,technological expertise in this area not onlycontributed to military superiority but also is

used to develop aprofitable industrialbase. The financialgains realized froma strong electronicsindustrial market cancontribute to acountry's economy.Unfortunately, resaleof protected elec-tronics technologyto rogue nationsposes a substantialthreat to U.S. security.

In 2001, the majority of electronics tar-gets concerned defense applications of dual-use technology such as microwave and satellitecommunications components and antennas.There were 51 incidents reported this year, upfrom 36 in 2000. However, this increase issomewhat proportional to the overall increasein reporting from one year to the next and,therefore, does not actually represent a spike inelectronics targeting. Most targeting occurredin the subcategories of components andmaterials and fabrication. Specific targets in2001 included electronic elements of automatictarget recognition for UAVs, Patriot missileelectronic components, AgGaSe2 crystals,wave tubes, magnetrons, microencapsulationtechnology, Speckle interferometer, and mis-sile specifications using MIL-STD-810 E or F,and LC 1911 camera technology.

Electronics components include tech-nologies that provide electronic support to avariety of products including radar, communi-cations, navigation, and guided munitions.Missile guidance components are included inthis category and experienced heavy targetingin 2001. At least five incidents involved tar-geting of technology specifically designed as

21

electronic missile components. Microwavetechnology also falls under electronic compo-nents and includes microwave-integratedtransistors, integrated circuits, and poweramplifiers. In 2001, there were seven instancesin which microwave technologies were targeted.

Electronic materials support electronicdevices, components, sensors, environmenttolerant devices, compound semiconductors,and fabrication equipment. In turn, the fabri-cation equipment subcategory provides tech-nology for nano-structures, integrated circuits,and micro-electrical mechanical devices.Microelectronics are prevalent in nearly allmodern weapons and communications systems.The U.S. is one of two nations in the worldwith the capability to produce top of the linemicroelectronics technology. U.S. superiorityin this area is essential to maintaining an edgeover our adversaries. Finally, optoelectronicsis the fastest evolving electronics technology.Optoelectronics are engaged in sensors, signalinterconnectivity, image processing, radar,electronic warfare, and electronic intelli-gence applications.

The U.S. is a world leader in thedevelopment and production of electronictechnology. As such, it is not surprising thatcleared contractors participating in electronictechnology programs would be targeted.Request for information is the most frequentlyutilized collection methodology against alltechnologies, and that held true in the collec-tion of electronics technologies as well,accounting for 41 percent of all incidents.Attempted acquisition of U.S. technology wasnot far behind.

As with other technologies, attemptedacquisition of electronics may be indicative ofextensive reverse engineering programsemployed by some foreign governments.Visitors to some foreign countries have noted asignificant lack of imported hardware.Because of the dual-use nature of electronicstechnology, it lends itself to development forboth military effectiveness and a strong indus-trial base. Such development is a priority formany foreign governments. In addition, thedual-use aspect of electronics makes acquisitionan attractive MO in that a foreign collector may

1997 1998 1999 2000 2001

17

2

515 2

4 1

4 6

1 1

12 1

4 71 0

MicroelectronicsFabricated materials

Materials/componentsElectronics


*Many optoelectronic targets in 1997 may have concerned sensors. Detailed1998 reporting allowed DSS to identify optoelectronic targets that were beingapplied to sensors. In 2000, due to the nature of reported incidents, only 9 fitneatly in sub-categories and in 2001 that was true of only 25 matters.

22

try to obscure the end-use of the technology inan effort to make a purchase. Many foreigncollectors hope to confuse the issue when con-tacting a cleared U.S. contractor for purchaseof an item and many conveniently feigninnocence when confronted with the need toadhere to export regulations.

Marine Systems

Marine systems technology was the sixthmost targeted technology by foreign entities dur-ing 2001 with 49 incidents, which accounted forsix percent of the overall reported incidents bycleared contractors. Marine systems includepropulsion and propulsion systems; marine signa-ture control and survivability; and subsurface anddeep submergence vehicles.

The U.S. has long enjoyed the positionof superpower in the deep-water field of

marine systems with the former Soviet Uniononce a close rival. Few countries in the worldhave the capability for sustained at-sea opera-tions, with the predominance of those countries,being close allies of the U.S. Moreover, whilethere are countries whose maritime historyis rich and long or which may have a particulararea of expertise, none have across-the-boardsuccesses in technologies like the U.S.

The ability to control the seas, whetherby air, surface, or sub-surface, is critical to U.S.national security. The U.S. maintains itssuperiority in this field by constant researchand development in areas such as stealthtechnology, to include ship signature; deep-submergence hull design; and propulsionsystems, which expand range; speed; andendurance of a platform. The land attackdestroyer program was the single-most target-ed individual program, primarily from one

41%

10%12%4%8%

33%

*Totals equal more than 100% due to the use of multiple methods ofoperation in some suspicious incidents.

Figure 8Electronics


Other





23

country, with high-speed assault craft and anti-submarine warfare technology the next areastargeted by severalcountries.

With morecountries having sub-marines in their orderof battle, there is anincreasing need forrepairs, replacementparts, and upgrades.Cleared contractorsmust remain vigilantin protecting theirtechnology fromattempts by foreignentities to bypassexport controls.While there were49 attempts by for-eign entities to obtain this technology, therewere 25 countries identified as the collectors.Three MOs were predominant for collectionattempts; request for information was the mostfrequent method, Internet offers to purchase orto offer services was second, and visits to facil-ities and personal contact to an individualcombined for the third most frequent method.

Of particular interest is the geographi-cal areas associated with these foreign entitiesand methods used. One country used theanonymity of the Internet almost exclusively.Moreover, while normally DSS would separatethese categories, it is important to note that thetool used here was the Internet, and the methodof operation was E-mail requests for infor-mation, E-mail solicitation of business, andE-mail offering of services. The Internet wasfurther exploited by an attempt to hack intoweb sites to download critical technologyinformation.

Also of note is that a long-time collec-tor of U.S. technology maintained its normal

method of operations,preferring to attemptto exploit the humanelement of the intend-ed target. This countryattempted collectionthrough direct contactto an individualemployed by clearedcontractors or duringgroup visits to a facil-ity. Another countryand long-time ally ofthe U.S. also usedthese methods tocollect against clearedU.S. industry.

All marine plat-forms, whether surface or sub-surface, self-propelled, remotely operated or tethered,require some form of propulsion system. Theability to conduct long-range operations with-out numerous port calls for refueling was oneof the major obstacles facing foreign navalforces in general. With advanced designs andaccessibility, through whatever means, ofhigh-output low-fuel consumption, this portionof the hurdle will be quickly overcome.Maintenance by skilled technicians and theavailability of replacement parts underscorethe need for indigenous production or ease ofprocurement through cooperative entities tomake the final leap. Countries that haveobtained high-technology platforms must stillfind the means to maintain the overall opera-tional integrity of their naval forces. Oneembargoed country was noted E-mailing arequest for replacement parts for a gas turbinegovernor, directly to the manufacturer, therebyattempting to bypass export controls.

24

Stealth technology is by far a crownjewel held by U.S. naval platforms. The abilityto operate covertly or, at minimum, with areduced acoustic signature, is crucial to surviv-ability in non-permissive or hostile waters.These operations may take place in deep water,or, in highly trafficked areas in littoral environ-ments. Many countries operating in these areashave advanced sonar technology and weapons,such as mines and torpedoes, designed tohome-in on a particular sound or acousticthreshold. The U.S. Navy's effectiveness as thepreeminent sea power depends, in large part,on its ability to operate below that acousticthreshold. Several foreign entities, withapparent foreign government sponsorship oraffiliation, and with limited technology in thisfield, attempted to obtain information on U.S.systems during the year 2001.

There are 23 countries with at leastsome capability to produce subsurface vehiclesindigenously; 45 countries currently haveoperational submarines, albeit to a limiteddegree in some cases. Virtually every countrywith a maritime concern now includes at leastone operational submarine in its naval order ofbattle. Those countries, which have limited orno capability in this field, must go outside theirown country to obtain these platforms or com-ponents to support their subsurface require-ments. Many countries, including the U.S., selleither older platforms or exportable versions ofcurrent designs to meet the demand for thesevehicles. The U.S. is the leader in design,development and production in technology forthis category.

During 2001, there were multipleinstances involving foreign entities requestingnaval platform enabling technology. In contrastto foreign interest in subsurface vehicles,cleared contractors reported 14 foreign

requests, for the stealth technology associatedwith various military components of surfacevessels. These targeted areas of maritimetechnology included ship design, warfare sys-tems, propulsion systems, noise reductiontechnology, and C4I. The procurement ofstealth technology is a major priority for manynaval powers, especially since foreign requestsfor sensors and lasers comprised 20 percent ofall reported requests for U.S. technology.Many of these nations already have limitedauthorized access to the sensitive technologiesof these various undersea and surface warfaresystems through such arrangements as DataExchange Agreements. Nevertheless, becausethey have major naval assets in their defensearsenals, all these nations are anxious to acquiremore stealth technology and related systems.

Foreign media entities made severalrequests via E-mail or handwritten mail for photosand information about naval platforms and someof them made multiple requests. Nearly all theserequests resulted from individual initiative thatDSS cannot associate with government orcommercial interests. Although nothing beyondpublicity-class information has officially beenreleased about certain naval platforms, severalAsian and North American entities actuallyprinted photos of a U.S. Naval platform and itsrelated components on the Internet. The Asianperpetrator is a known collector of data thatsupports his nation's maritime power. Althoughthe actions of these foreign media entities werelargely innocuous, other foreign entities expressinginterest in U.S. Naval platforms were rather deter-mined to acquire sensitive military technology byillicit means.

The most obvious foreign threat tonaval platform technology occurred onlinewith the web sites maintained by DoD contrac-tors. In three major incidents recorded during

25

2001, Asian hackers attacked several of theseweb sites. Yet another hacker, connected to anaggressive state technology and science com-mission in the Asian Pacific region, did thesame to several web sites containing informa-tion on a particular naval platform. In a similarincident, European hackers, connected to aforeign state-owned aerospace/shipbuildingfirm, attempted to download the naval plat-form computer files of a DoD contractor. In2000, another employee of this same foreignfirm, which serves as a subcontractor forU.S. Naval platforms, requested a badge inorder to gain access to anaval platform. Thissort of industrial espi-onage is typical from anation whose govern-ment publicly admittedthat its intelligence serv-ices spied on U.S.industries for years.

One maritimenation in Asia requestedU.S. military technologyand expressed interest instealth capabilities of anaval platform, espe-cially its sonar and radarabsorbing materials.Asian maritime powershave expressed a seriousinterest in U.S. Naval platform as a means ofmodifying their own class of naval vessels.Petroleum-producing neighbors in immediategeopolitical region of this latter nation havealso expressed an interest in U.S. Naval plat-forms and their warfare capabilities.

Many foreign entities targeted thevarious stealth components of naval platforms

on an individual basis, rather than attempt totarget a whole naval platform. Requests forstealth technology also included such supportsystems as computers and software. Many ofthese foreign sources reside in other maritimenations in Europe, although several suchattempts involved Asian nations as well. Inaddition, a Middle Eastern state expressedmuch interest in undersea warfare technology(e.g. sonar), although it already receives suchtechnology from the DoD through foreignmilitary sales.

Space Systems

Collectioneffortsdirected at spacetechnologies doubledin 2001, accountingfor five percent ofDSS incident reports.Significantly, although14 different countriestargeted space technol-ogy, two countriesaccounted for 42 per-cent of the total reportedcollection attempts.Also of significance isthe fact that two cleareddefense contractorsreported a combined 58percent of these incidents.

Propulsion systems and propellant technologywere specifically targeted in 45 percent of thereported space-related cases.

With few exceptions, every countrytargeting space systems technology was inter-ested in propulsion systems. The Joint Army,Navy, NASA, and Air Force (JANNA)Interagency Propulsion Committee and the

26

Chemical Propulsion Information Agency,reported numerous cases of requests for infor-mation or acquisition of restricted militarytechnology by foreign entities seeking propul-sion manuals, product lists, or meeting notes.In two cases, these requests were from foreignmilitary attaches in Washington, DC.

The information highway is quicklybecoming the shortcut to space technology.Thirty-seven percent of the reported collectionefforts to acquire space technology werereceived by E-mail sent via the Internet. Ofgreat concern is the possibility that criticalinformation is lost through web sites providedby cleared U.S. defense contractors as a meansof advertising. These web sites may also pro-vide information such as a list of defensecontractors or universities working the technol-ogy, government agencies involved in theR&D, a calendar of events, and the location ofinvolved facilities.

Contractors also lose critical informa-tion through normal business-to-business prac-tices. Some space technology is considered"dual-use", and several contractors sell theinformation through joint ventures with foreignentities.

In some space technology related cases,several reports suggested U.S. executivesbelieved their hotel room or office spacewithin foreign countries was "bugged". It iscommon to have U.S. executives report thatthey were repeatedly placed in the same hotelroom over the period of several different trips.

DSS expects collection efforts directedagainst space-related technologies to continueto grow over the next few years. As morecountries expand their military programs to

include space, DSS assesses that foreign enti-ties will be more aggressive in their collectionefforts. As space technologies are used forpurposes that are more commercial in thefuture, DSS expects a greater interest by publiccompanies, foreign and domestic.

Chemical and Biological Systems

Chemical and biological systemstechnology was the eighth most targeted tech-nology by foreign entities at four percent ofoverall reported incidents from cleared con-tractors. This technology category includeschemical and biological defense systems, anddetection, warning, and identification.Recently, the U.S. and its allies were facedwith increasing numbers of countries activelymanufacturing chemical and biological warfareagents. The total of actual incidents reportedduring 2001 was 33, up from eight in the year2000, and seven from 1999. Of particularinterest, there was no country which had ahigher number of reported incidents associatedwith this technology, although there were manynew collectors reported. For instance, a partic-ular country requested blast doors for abiological manufacturing facility in 2000, andin 2001. Coincidentally, a student from thatcountry was arrested in the U.S. for technologydiversion linked to anthrax. Countries in areassuch as the Middle East and North Africa,where rapid procurement of these agents,coupled with the increasing likelihood ofemployment of chemical and biologicalweapons, drives the need for superiority indetection and countermeasures technology forthe U.S. Over 50 percent of the requests forchemical and biological systems technologycame from this region and associated countries.One request, which came from an individualwho claimed to be a student of a country that is

27

currently embargoed, wanted to work withchemical (mustard gas) or biological programsor to establish an academic relationship onthese topics with a U.S. entity.

The predominant tool used by foreigncollectors to obtain chemical and biologicalsystems technology was the Internet. Twentyrequests for information and products came byE-mail. The number of requests for decontam-ination equipment, techniques, and antidoteswere as high as requests for protective clothingand self-contained breathing apparatuses.

Of note, one country, which sufferedfrom terrorist-induced chemical and biologicalattacks, overtly requested protective gear anddetection equipment. Similarly, countries withno known anti-U.S. groups or links to terroristorganizations overtly requested similar tech-nology. This may reflect the growing uneaseand fear of a chemical or biological attack

occurring outside of the U.S. or in areas so farunaffected by terrorism.

Manufacturing and Fabrication

Technologies covered under manufac-turing and fabrication include those requiredfor the production of military hardware. Inmost cases, the technologies, equipment, andtechnological expertise required to produce thehardware are dual-use. All countries engagedin the production of military weapons, muni-tions, and systems possess at least some tech-nical expertise in this area. As such, targetingof manufacturing and fabrication technologieshas not historically been prolific. Still, foreigntargeting of manufacturing and fabricationdoes occur. Developing countries attemptingto obtain manufacturing and fabrication tech-nology in an effort to produce weapons of massdestruction is of great concern. However, eventhe loss of restricted information regarding

46%15%

15%12%12%

Figure 9Manufacturing & Fabrication






28

conventional weapons can pose a major threatto the U.S. warfighter. In 2001, targeting ofthis technology tied for ninth place (alongsideguidance and navigation control) and accountedfor four percent of all matters. DSS data showstargeting of manufacturing and fabricationtechnology remained stable over time as itplaced 10th for 2000, accounting for three per-cent of all suspicious contact reports that year.

Specific manufacturing and fabricationtargets in 2001 included aeroelasticity processes,F-15 horizontal stabilizer process specifica-tions, titanium materials, robotics technology,isothermal forging methods, casting methodsand wind tunnel technology. Fifteen of theforeign countries associated with suspiciousactivity in 2001 attempted to collect this typeof technology. Most of the countries seekingmanufacturing and fabrication technology hada few incidents each. However, several coun-tries, including two U.S. allies, made three orfour attempts to collect manufacturing andfabrication technology last year. Detectingsuch patterns helps DSS to identify targetingrequirements for foreign governments and,

eventually, effective SCMsnecessary to protect U.S.technology.

Foreign corporate enti-ties accounted for most (35percent) of the manufacturingand fabrication technologycollection activity reported toDSS for 2001. This was fol-lowed by official foreign gov-ernment entities at 15 percentand foreign individuals andforeign government-affiliatedentities at 11.5 percent each. In27 percent of reported matters,DSS was unable to determine

the affiliation of the foreign collector. The highratio of corporate collectors is likely attributedto the dual-use nature of manufacturing andfabrication technology and to the large numberof joint venture/joint research relationships inthis field.

The request for information is thecollection method used most frequently againstall technologies, accounting for 46 percent ofall matters.

The exploitation of a foreign visit is aneffective method by which to collect manufac-turing and fabrication technology. Foreignvisitors to U.S. cleared industrial plants andfacilities have an opportunity to observe theprocesses up close. Often the foreign visitorwill go beyond the bounds of the agreed uponvisit protocols, to include wandering unescortedin restricted areas. Several suspicious inci-dents in 2001 involved foreign visitors illicitlytaking photographs during visits. The effec-tiveness of this methodology is fostered byforeign relationships such as joint ventures.

29

The 2001 data on foreign collectionMO is derived from increased reporting fromcleared contractors. As in previous years, DSSis providing the frequency of reporting per MOcategory as a percentage of the whole.Percentages exceed 100 percent due to multi-ple reporting.

Requests for (S&T) Information

RFIs are broken down into fieldsincluding E-mail, letters, faxes, direct and in-person, telephone, and survey requests. E-mailedRFIs accounted for 70 percent of the total RFIreporting, up from last year's 64 percent.Letters accounted for the next most often used

RFI approach, representing 11 percent of thetotal reporting. A decrease in mailed RFIs wasseen by this office but is offset by the E-mailincrease. Telephone, direct and in-person, fax,and survey requests account for six per-cent, three percent, two percent, and twopercent respectively.

Sixty percent of the E-mailed RFIswere related to web-based advertising. Sincethe 2000 reporting year, DSS proactivelyencouraged cleared defense facilities to incor-porate the concepts of security with web-baseddesign and advertising. In most cases, clearedcontractors had already incorporated securitywith design and advertising. Additionally,

Foreign Collection Methods

Often visits, some long term, are negotiated incoordination with an existing or proposed jointventure. Exploitation of relationships is alsoeffective over time in lowering the guard ofU.S. cleared employees. By becoming part ofthe fabric of the U.S. cleared companies' dailyactivity, foreign company representatives mayattempt to blur the line between classified andunclassified programs and gain access torestricted materials. Relationships with for-eign companies also create an opportunity foroverseas travel by U.S. cleared contractors.

Guidance, Navigation and Vehicle Control

Targeting of guidance, navigation andvehicle control technologies by foreign entitiesrepresented four percent (28) of the total inci-dents reported by cleared contractors. This isan increase since 2000, when 2.5 percent (15)of reported cases were in this field. Twentypercent of total incidents in this technology

category originated from one country in theFar East. The most sought-after technologywas related to the Global Positioning System(GPS) at nearly 50 percent of the reportedincidents. Virtually all air, surface ship, andsubsurface vehicles, to include some missileslaunched by various platforms, require accurateinformation, real-time, to carry out preciseguidance and navigation. Military forces relyon GPS for land-craft guidance as well as dothe foot soldiers and sailors, in particular,special operations forces. The U.S., throughGPS, and Russia, through Global NavigationSatellite System (GLONASS) possess the onlyworldwide satellite navigation systems. Thisnear monopoly by two countries underscoresthe appeal of obtaining these technologies.Faster, more accurate, and longer-range systemsare supported and guided by these technolo-gies, driving foreign collectors to attempt toprocure them through illegal channels.

30

32%

21%15%

9%

8%7% 4%6%

FY 2001 Methods of OperationFigure 10









DSS and cleared contractors believe the threatfrom the Internet and E-mailed RFIs is mit-igated with a strong security education pro-gram wherein cleared employees are instructedto recognize the difference between suspiciousE-mail and a sincere business request. If sus-picious, cleared defense employees report thesuspicious E-mail to DSS. DSS reviews thesuspicious E-mail for referral to either aninvestigative or intelligence agency.

An increasing trend observed since1999 concerns E-mailed RFIs from foreignuniversities and research institutes. A majorityof these entities are state-funded and areheavily involved in military applicable tech-nologies. Representatives of the research cen-ters attempt to collect information on for-eign technology through the use of requestsfor technology exchanges and discussions with

experts. These foreign efforts involve iden-tifying and contacting experts in various fieldsof interest and forming greater cooperativeinformation exchanges with U.S. defensecontractors and military Research DevelopmentTest and Evaluation (RDT&E) facilities. Alarge number of affiliations were not assesseddue to limited data.

E-mailed RFIs accounted for 23 per-cent of all foreign attempts to collect ITAR.Most the E-mailed RFIs targeted informationsystems technology, sensor and lasers, andaeronautics respectively. In addition, E-mailedRFIs accounted for 20 percent of all foreigntargeting directed at classified programs. Morethan half of the E-mailed requests were directedat sensor and laser technology includinginfrared decoy devices. Almost entirely,requests for ITAR and classified technologies

31

were associated with a cleared defense contrac-tor's web site and advertising on the Internet.

The following is a list of technologytargeted by E-mailed RFI (the technologies arequoted exactly as they were received bycleared defense industry from a foreign entity):

• Aeroelasticity Research• Radioisotope Thermoelectric Generator

(RTG) • MC9128 and MC9256 Cameras• Robotics• Airplane Design• Warship Design

• Mark 58 Sparrow Missile Motor• Hawk Defense Systems• AN/FPS-108 Cobra• PAPA Detectors

Mailed RFIs were the second mostoften used method for initiating RFI. Themailed RFI accounted for 11 percent of thetotal RFIs reported to DSS. The technologiestargeted included marine systems, sensor andlasers, and aeronautics. For example, one indi-vidual sent two separate handwritten RFIs tothe same company for DD-21 photographs.This same requestor continued to ask forshipyard and company information.

70%

11% 6% 3%2%

2%

28%

27%

11%

10%7% 5%

5%

18%

22%

13%

11%

Figure 11Request for Information (RFI)

Emailed RFIs

Letters

Telephone

Direct

Fax

Survey

Sensors & Lasers

Information Systems

Aeronautics

Electronics

Space

Marine Systems


Foreign Universities & Research Institutes

Foreign Individuals

Foreign Commercial Entities

Foreign Government Sponsored

32

42%32%

26%

29%27%

15% 10%

Figure 12 Attempted Acquisition

Twenty-two different countries used theletter RFI. This was the most diverse distribu-tion of countries for any MO category. Letterstended to be handwritten and from individuals.In addition, letters came from both govern-ment-sponsored and affiliated entities equallyas often. Surprisingly, no letter RFI was sentby a foreign commercial activity.

Telephone RFIs accounted for the thirdmost reported type of RFI with six percent ofthe reporting. A total of 14 telephone requestswere made by foreign entities. One-third of therequests were for armament and energeticmaterials including cable assemblies for bombracks, missile detonator cord, and advancedpropellants. Fifty percent of the telephonerequests were made by foreign commercialactivities.

Attempted Acquisition of U.S. Technology or Company

Acquisition was the second most usedMO reported in 2001, up from fourth position

in 1999 and third position in 2000. This MOincludes attempted purchases of technologyand requests for price lists. Tempest and UAVtechnology were most often requested forpurchase while acquisition attempts tended totarget sensor and lasers, armaments and energeticmaterials, information systems, aeronautics,and electronics.

Acquisition attempts were E-mailed 58percent of the time. Fax, letter, and telephoneRFIs also often preceded acquisition requests.Nineteen acquisition attempts were directed atclassified technology. The following is a list of11 targeted technologies receiving acquisitionattempts:

• Patriot Missile Electrical Parts• Radar Enhanced Surface Target Balloon• Standard Infrared Radiation Model • NBC Mask Handbook• UAV Data Link Subsystems• Photocell Vacuum• C and Ku Antenna• Monopulse Doppler Tracking Radar

Information Systems

Electronics

Aeronautics


Commercial Affiliated

Government Requests

Individuals

• Multi-Channel Gamma Spectrometer• UH-1H Helicopter Circuit Boards• Spatial Light Modulators

Acquisitions accounted for 35 percentof total reported suspicious incidents believedto involve a third party. Third party involve-ment indicated a probability of technologytransfer or diversion. Third parties are not theactual entity acquiring the technology but areultimately the end user or recipient. Reportsinvolving third parties include either a countrywith a history of third party sales or a countryused by other foreign countries as a venue foracquiring denied technology. Thirty-five per-cent of the diversionary acquisitions involvedairborne platforms, especially high techcomponents of UAV.

Solicitation and Marketing of Services

Solicitation and marketing of servicesdropped to third during this reporting yearfrom last year's second place. Solicitation and

33

51%

14%

9% 8%5%

20%

12% 9%

42%

Figure 13

Solicitation and Marketing of Services

Commercial Entities


Government

Individuals

Information Systems

Aeronautics

Electronics

Sensor &Lasers

Armaments &Energetic Materials

marketing of services was the third most fre-quently reported MO in 1999, moving up fromfourth place in 1998. Consistent with pastreporting, individuals, companies and researchfacilities offer their technical and businessservices to U.S. research facilities, academicinstitutions and the cleared contractors in2001.

The following is a list of technologiestargeted using the solicitation and marketing ofservices MO:

• Active Electronic Scanned Array Radar• Low Observable Technology• Unmanned Underwater Vehicle• Magnetrons• Joint Tactical Information Distribution

System• Objective Infantry Combat Weapon• GSM, Wireless Technology• Javelin UAV• Optical Grade Germanium Blanks• Microwave Components

34

Offshore software development solici-tations accounted for 20 percent of all marketingand solicitations directed at cleared facilities.All solicitations were E-mailed and predomi-nantly originated at commercial entities inEurasia and a nation embargoed during most of2001. In addition, most were associated withmass E-mail. The solicitations offered offshoresoftware development and marketing represen-tation in the foreign country. All solicitationswere directed at the web sites of cleared facilities.At least one foreign entity sent three separatesolicitations to different cleared facilities.

The resume solicitation accounted for14 percent of all marketing and solicitationsdirected at cleared facilities. Most were sent byindividuals and were associated with both edu-cational and industrial experiences. Aeronauticand information systems experiences were thetwo most proffered categories.

Foreign Targeting of Legal U.S. Travelers Abroad

DSS saw an increase in the level of reportingon foreign collection missions directed against U.S.legal travelers. Since increased amounts of foreigncollection activity are occurring, DSS decided to con-sider foreign collection missions directed against U.S.legal travelers an MO for collecting U.S. technologyfrom U.S. cleared defense employees. This new MOfalls under security for reporting purposes at DSS.At the end of the reporting year, foreign targeting oflegal U.S. travelers abroad was the fourth most uti-lized MO for targeting U.S. critical technology, whichis up from a three-way tie for sixth place for frequen-cy of use by foreign entities last year.

Events held on the collector's home territoryleave legal U.S. travelers vulnerable to exploitation bytraditional Foreign Intelligence Service (FIS) trade-craft, e.g. electronic surveillance. Entrapment ploys

such as inducement of the target into a compromisingsituation, which put the legal traveler at risk were alsoused. Cleared defense contractors should use cautionand review the type and amount of informationcontained in the registration, biographic and othermaterials requested by the host country. A number ofevents that caused legal U.S. travelers to be recog-nized by FIS included international conventions,combined military operations, and joint ventures.

In other cases, short-term custodial deten-tions by host government officials occur at portsincluding both airports and waterways during whichforeign officials attempt to gain information regard-ing the U.S. traveler's visit. These detentions tend todisrupt travel. Fifty-eight percent of the reporting inthis category received from cleared contractorsrelated to custodial detentions including search andseizure.

For targeting purposes, DSS contends thesecurity clearance level and access to a particulartechnology that the legal traveler possesses are ofgreat value to the FIS collection effort. The follow-ing is a list of technology targeted:

• Comanche• F404 Engine

19%

19%

5%5%

36%

Figure 14 Foreign Targeting of Legal US Travelers Abroad

Information Systems

Aeronautics

Space

Sensor &Lasers


35

Exploitation of Foreign Visits

Percentage of foreign visits conducted on behalf of a foreign government and foreign government affiliated entity.

82%

Table 8

• JSTARS• SH-60 Sea Hawk• Synthetic Aperture Radar• RD-180 Atlas Engine• Joint Land Attack Cruise Missile Defense

Elevated Netted Sensor (JLENS)• Patriot• AN/ALQ-135 Tactical Electronic Warfare

System• Digital Radio Frequency Memory

(DRFM)


Exploitation of foreign visit reports concern-ing suspected exploitation of visits to U.S. facilitiesdropped to fifth in frequency of reporting down fromlast year where this MO stood at fourth. The term"foreign visitor" includes one-time visits, long-termvisitors (such as exchange employees, official gov-ernment representatives and students) and frequentvisitors (such as foreign sales representatives).Suspicious conduct includes actions before, during,and after a visit. The one factor, which made manyforeign visits suspicious, was the extent to which theforeign visitor would request access to facilities or todiscuss information outside the scope of approvedactivities.

In several incidents in 2001, foreign visitorsignored security required by a company's technologycontrol plans (TCP). A TCP stipulates how a com-pany will protect its technology. The plan establishes

34%

23%

15%

Figure 15


Information Systems

Aeronautics


procedures to protect classified, proprietary, andexport-controlled information; to control access byforeign visitors; and to control access by employeeswho are non-U.S. persons.

The following is a list of technologiestargeted:

• Seawater Pumps• Explosives• Eutectic Technology• M1A1 Tank Simulation• Scramjet Motors• WJ-8629 Signal Surveillance• Vessel Traffic System (VTS)• Crusader• Spark Gap Switches• Camouflage against Infrared Detection

36


Associations, or exploitation ofexisting relationship (EOR), previouslytitled joint venture and research,remained sixth in frequency of use. ThisMO offers significant collection opportu -nities for foreign interests and venues forexpanding foreign interests' own industrialbase without having to pay for theresearch and development. As with fre -quent foreign visits and other internationalprograms, joint ventures place foreignpersonnel in close proximity to U.S. personneland technology and can facilitate accessto protected programs.

Exploitation of existing relation -ships include the following areas: joint

venture, foreign military sale (FMS),agreements, training, and requests forjoint venture.

The following is a list of specifictechnologies targeted during the exploita -tion of a relationship:

• Joint Direct Attack Munitions• Focal Plane Array Technology• Arrow Missile ADA Program• Multiple Launch Rocket System• OH-58D Kiowa Warrior• Sparrow Missile• TPS Radar Training• Acoustic Sensors

50%

19%

11%8%

42%

19%

19%

23%

13%13%

23%

Figure 16Exploitation of Existing Relationships

Information Systems

Aeronautics

Sensor & Lasers



Government

Commercial

Joint Ventures &Request for Joint Ventures

FMS

Agreements

Training

37


Targeting associated with exploitationof the Internet (hacking) fell to seventh placein use of frequency by foreign entities fromsixth place last reporting year. DSS maintainssecurity cognizance regarding classified sys-tems.

The majority of Internet endeavorswere correlated with probing efforts, whichaccount for the majority of activity in this cat-egory. This category is not related to theInternet-based RFI. The computer probes aremost likely searching for potential weaknessesin systems for exploitation. By detectingprobes, the cleared companies already demon-strated they have the SCMs in place to thwartattempts to penetrate their computer systems.Although probing a system is legal, once a portis breached, a crime is committed.

Internet activity is broken out into thefollowing categories: hack, probe, scan, ping,spam, and virus. In all cases, except spam,DSS relates to the activity in the way thecleared contractor reports the incident. Forexample, a cleared contractor's InformationSecurity Officer reported "probes" occurredduring a time when his company was in nego-tiations with a foreign entity. DSS looks at anE-mail for signs of spamming such ashaving the same E-mail already annotated inour database or by finding an exact example ofthe same E-mail on another web site, or byconducting either a reverse IP search ordomain look up and discovering if the regis-trant is a mass mailing company.

Most hacking events ended as deface-ments with derogatory remarks. Other hackingevents included attempts to download informa-tion, Trojan horses, and penetrations of firewalls.

29%

20%

17%

10%7%

Figure 17


Hacking

Spam

Probe

Virus

Scan


Targeting at conventions moved downto eighth position from fifth place in frequencyof use by foreign entities in the previous year.One explanation for why reporting is down inan apparently "target rich" environment forforeign intelligence collection is that U.S.attendees are marketing personnel ratherthan the more knowledgeable engineers.Marketing personnel usually are not clearedemployees and this is of less value to foreigncollectors. Additionally, they do not receivethe more informative classified threat briefings,which would facilitate higher levels of report-ing. Conventions, however, continue todirectly link U.S. programs and technologieswith knowledgeable personnel. Internationalexhibits provide a unique opportunity forforeign entities to study, compare, and photo-graph actual products in one location.

All these technology groups areassociated with international conventions.Some technologies targeted at conventionsinclude:

38

40%

36%

20%

40%

32%

20%

36%32%

20%

Figure 18Targeting at Conventions


Government

Commercial

Information Systems

Aeronautics


Trolling

Other activities

Qestioning

• F110-129 Engine• UAV Technology• Joint Strike Fighter• Rhenium Powder Metallurgy• Parametric Airborne Dipping Sonar

(PADS)• Sensor Fuzed Weapons• AIM-9X Sidewinder• Information Systems• Storage Area Networks

The audiences at international seminarsare composed principally of leading national sci-entists and technical experts, who pose more of athreat than intelligence officers due to their levelof technical understanding lead. Technical

experts focus their questions and requests onspecific technical areas having direct applicationto their work. Reports show during seminars, for-eign entities attempted subtle approaches such assitting next to a potential target and initiating acasual conversation. This establishes a point ofcontact that may later be subjected to exploitation.The use of membership lists of international busi-ness and technical societies as a source to identifypotential targets and as a means of introduction isincreasing. Because the threat is designed tocompromise the cleared defense employee, theapproach will be subtle and unrecognizable. Thetargeting will be directed at U.S. persons withcultural commonalties such as origin of birth,religion, and language.

39

The weapon systems of tomorrow willdemand high technology in nearly everyvenue. Foreign entities will continue collec-tion attempts against cleared contractors inpursuit of these technologies. Information sys-tems will remain in the forefront of sought-after commodities, primarily by foreign gov-ernment and affiliated collectors. Armamentsand energetic materials will continue to beheavily targeted by various foreign entities,with emphasis on less technologically devel-oped nations and non-government-sponsored,or affiliated entities. Biological, Incendiary,Chemical, and High-Explosive (B-NICE)technologies to include protective and decont-amination equipment will be targeted.

As DSS assessed in the 2001 Trends,nongovernment-affiliated or sponsored entitieswill continue to increase their collection effortsagainst cleared contractors. Universities, com-mercial entities, and individual persons will

attempt collection against U.S. technologies,employing E-mail as the primary method ofoperation.

Foreign collectors will continue the useof front companies or cooperative or unwittingthird-party entities to obtain denied technolo-gy. These foreign collectors will attempt todivert dual-use and export-controlled technolo-gy through these third party entities, employ-ing various means of shipment to includefreight-forwarders and overseas sales brokers.

Cleared contractors will continue to betargeted by foreign entities using various MOsand must adopt a proactive security posturethrough training and SCMs to thwart theseattempts and protect our nation's militarilycritical technologies.

Assessment of Future Trends

Of note this year is the increased use offoreign professional groups contacting U.S.academic and technology experts via theiracademic affiliation, R&D association, orprofessional memberships. Foreign professionalgroups use these well-established platforms forcollection, gleaning information for their tech-nological needs. An example was the use of anon-profit technical professional associationwith more than 360,000 individual members in150 countries. This association, internationally

recognized, sponsors conferences and sympo-siums in the furtherance of informationexchange. DSS received reports regardingseveral foreign E-mailed requests made tocleared defense contractors. The foreign enti-ties used this platform to offer an exchange ofideas. The E-mailed requests involvedexchanges of information on sensors to detectelectrode for training welding, packaging andmanufacturing technology, and batterychemistry.

Documents

Technology Collection Trends in the U.S. Defense Industry 2002ncms-antelopevalley.org/Helpful-Links/2002-DSS-technology-collection-trends.pdfThe Defense Security Service (DSS) is charged