Saturday, July 16, 2005

Pentagon faulted on U.S. industrial security


Pentagon faulted on U.S. industrial security

By Jim Wolf

WASHINGTON (Reuters) - The United States should do more to prevent unauthorized foreign access to secret information through defense contractors, congressional investigators said in a report issued on Friday.

The Defense Security Service (DSS) "does not systematically ask for, collect or analyze data in a manner that helps it properly oversee contractors entrusted with U.S. classified information," the Government Accountability Office (GAO) said.

The DSS is meant to keep tabs on contractors for the Defense Department and 23 other federal departments. It was set up to make sure that contractors safeguard classified information in their possession while doing work for the U.S. government.

It oversees more than 11,000 facilities run by U.S. contractors and cleared for classified information to develop and produce military technologies such as those used in warplanes and spy satellites.

Among these are a growing number of contractors under foreign ownership, control or influence.

In such cases, a foreign interest has the potential to sway operations in a way that could compromise U.S. secrets or affect performance on classified contracts, said the GAO report, which was requested by the Senate Armed Services Committee.

The Pentagon, in a response to the report, brushed off the criticism of the DSS.

"The report demonstrates a lack of understanding of the national policy governing access to classified information by our contractor population and the evaluation process used by DSS," Carol Haave, deputy undersecretary of defense for counterintelligence and security, wrote.

U.S. policy is to allow foreign investments in U.S. contractors as long as they are not known to threaten U.S. national-security interests. Such programs as Lockheed Martin Corp.'s next-generation $200 billion-plus F-35 Joint Strike Fighter, the biggest warplane project ever, hinge on complex multi-nation cooperation and co-financing.

The GAO said DSS does not know if contractors are reporting foreign business transactions as they occur.

Unless DSS improves its collection, analysis and other skills, it "will continue to operate without knowing how effective its oversight is at reducing the risk of foreign interests gaining unauthorized access," GAO said.