expressing an opinion that people don't like, you have inflicted an injury. i found that very striking, and frankly rather frightening, if the truth be told, and quite emblematic of the way the left is now responding to any sort of dissent and especially one that trenches on identity grievance politics which of course is everywhere and has infected everything. >> university of pennsylvania law school professor amy wax on the limits of free expression on college campuses in the united states. sunday night at 8:00 eastern on -span's "q&a." >> pentagon officials talked about military technology during a house armed services committee hearing. they discussed how contractors with the u.s. military work with international partners and how this impacts technology

developments being sent to other nations. mr. thornberry: the committee will come to order. in his january 19, 2018, remarks on the national defense strategy, secretary mattis warned that, quote, our competitive edge has eroded in every domain of warfare, air, land, sea, space, and cyberspace and it is continuing to erode, end quote. now, much of that erosion has been caused by things we've

done to ourselves. sequestration and continuing resolutions come to mind. but part of the erosion in our competitive edge is the result of adversaries and competitors obtaining american technology and intellectual property by legal and often illegal means. in its january, 2018, rorning, china's technology transfer strategy, diux found that the people's republic of china, for example, uses a variety of methods to obtain u.s. technology, including industrial espionage where china is by far the most aggressive country operating in the u.s. cybertheft on a massive scale, deploying hundreds of thousands of chinese army professionals. academia. since 25% of u.s. stem graduate students are chinese foreign nationals. china's use of open source

information cataloging foreign innovation on a large scale. chinese-based technology transfer organizations, u.s. based associations sponsored by the chinese government to recruit talent and tech anybodyal expertise on how to do -- technical expertise on how to do deals by u.s. firms. the cost of stolen intellectual property has been estimated at $300 billion a year. most alarming diux has found, and i quote, the u.s. does not have a comprehensive policy or the tools to address this massive technology transfer to china, and the u.s. government does not have a holistic view of how fast this technology transfer is occurring, the level of chinese investment in u.s. technology or what technologies we should be protected -- protecting. that's the end of the quote. now, i understand that the diux is one report but based on what

this committee has learned and heard about over the course of this year, those conclusions sound right to me and it should be alarming. there are several provisions in .he ndaa conference this hearing will better equip us on making important decisions in the days ahead. let me yield to the ranking member for any comments he'd like to make. >> thank you, mr. chairman. the most important statement is we don't have a strategy to counter what is happening. i think the chairman is right. our -- and the secretary of defense is correct. our advantage in a number of different areas has been eroding. now, the biggest reason for that, i believe, the rest of the world is catching up. mr. smith: there was a substantial period of time when it was just the soviet union and us who were building on a significant level, our military

capacity. and we dominated the world economically and militaryaryly post-world war ii for a long period of time. that was never going to last forever. the rest of the world was going to develop ways to grow their economies, grow their technology and eventually turn towards growing their defense and that's what's happened. we haven't responded to that. our strategy still seems to be based on the notion that we're still dominant so we don't have to worry about these details. and i think that is dangerous and that we need to develop. i will mention a couple of key areas most of which the chairman mentioned but to begin with, the process of protecting our technology has long needed reform. items that were not thought of as being national security are. technology, how do we protect that? how do we make sure adversaries aren't purchasing those companies and taking away our technology? i think what the senate added to the defense is a great opportunity for us to update

that process to help protect those technologies through the cfius process. we will try to get that right and try to do that in the next five, six weeks so we want to be in touch, make sure the language is right, make sure what we're doing in that part is correct. the second part is on a piece that we had a briefing on a cyber breach and it was shocking how disorganized, unprepared, and quite frankly utterly clueless the branch of the military was that had been breached. even in this day and age we still have not figured out how to put together a cyber policy to protect our assets. in particular with our defense contractors who we work with, who store our data but don't have adequate protection. but even within the d.o.d., we don't have a clear cohesive policy to put in place. third area of policy, we don't

have an industrial policy. again, i think this is a legacy of our dominance. we didn't have industrial policy because we were dominant. an example from my own neck of the woods, boeing. why is airbus able to be subsidized? well, because decades ago we agreed to allow them in many instances to do that. we did that because at the time we had like 85% of the global aircraft manufacturing market. we thought, well, isn't it cute, airbus wants to compete, whatever, doesn't matter to us. well, here we are with that flipped. they stepped up and competed. now we have not come through with a sensible idea of what technologies, what industries do we need to protect for our own national security? as the chairman will relate, i don't think it's flatware but that seems to be the one thing that we wind up debating in the ndaa every year. while meanwhile -- no offense to those in the part of the world who consider that

important. but, you know, meanwhile, we are losing core technologies that are critical to defense. no one really understands exactly why. the last piece of it i'll say i think is important is trade. now, we have a somewhat -- i don't know what the word would be. unfocused approach right now to how we combat a competitive trade environment. the one thing we definitely should be doing is figuring out how to get on a more level playing field with china. it's not just our trade deficit with chinese but it is the strategies that they have put in place to capture core technologies, to steal them in some instances, but a lot of it they're doing it within the w.t.o. framework. some of it they're doing it out of the w.t.o. framework. we have not put the comprehensive strategy, whether it's trying to get them to change their policies. it's sort of a reactionary

approach right now. so we need a strategy. i think this hearing is incredibly important. i look forward to the testimony of the witnesses and i thank the chairman for conving it. i yield back. -- convening it. i yield back. mr. thornberry: please to welcome our witness today. honorable michael griffin. n. orable kari binge mr. eric chewning. and mr. anthony schinella. thank you for being here. without objection, your written statement -- looks like there's just one to me -- will be made part of the record. and we will turn it over to y'all for comments you'd like to make. schinella, you're starting first? y'all figure it out. mr. secretary, go ahead if

you'd like. mr. schinella: i believe the earlier agreement is i would like to start first. thank you, chairman thornberry, ranking member smith, members of this committee. e appear before you to discuss the very real chinese adversarial that you said. this is not just the threat of such behavior, it's real behavior. we are here to underscore the urgency all of which must focus ur maintaining our technical dominance. mr. griffin: i thank you for the trust you placed in myself and my fellow panelists to discuss this topic in this open setting as carefully as we can. we did, yes, sir, we did submit a single joint statement

mr. griffin: no one believes more than i in the value of international commerce and fair exchange. but the chinese theft of technology and intellectual property of the ex-filtration of the work of others is not like the construction of islands to encroach on the domains of international waters and those of other sovereign nations. it is a departure from a rules-based global order. it's adversarial behavior and its perpetrator must be treated as such. the breath and depth of chinese malfeasance with regard to not only our technology but also to our larger economy and our nation is significant and intentional. as referenced in our written testimony, we are taking steps to counter it. you as a congress have established my office in particular to regain and maintain the technological dominance that we as a nation have depended upon in the past. we pledge to you to do that.

with your help and support we will. thank you and i look forward to your questions and i yield to my colleagues. >> mr. chairman thornberry, ranking member smith and all of the members of the distinguished committee. good morning and thank you for welcoming me here to discuss this important topic. -- there are the visible threats from foreign military forces and weapon systems. but u.s. intelligence community also sees a less visible but duo threat from adversaries and competitors that are distributely working to acquire u.s. research, technologies and talent to improve their own military programs and erode the effectiveness of ours. mr. schinella: more broadly, foreign countries acquisition of u.s. technology through

lissity and elicit means as well as joint ventures and exploiting scientific collaborations have the potential to erode the u.s. competitive edge. foreign countries, most notably china, are able to acquire and transfer critical u.s. technologies through their intelligence services, foreign direct investments, joint ventures, open source science and technology acquisition programs, use of insiders, front companies, and scientific and business collaboration. this has potentially far-reaching consequences. as we have highlighted in the d.n.i.'s annual threat testimony, persistent trade imbalances, trade barriers, and a lack of market-friendly policies in some countries probably will continue to challenge u.s. economic security. some countries will acquire u.s. intellectual property

illicitly to advance their own national security objectsives, china, for example, has acquired proprietary technology and early stage ideas through cyber enabled means. and some use legal transfers and relationships to gain access to research fields, experts, and key enabling industrial processes that could over time erode america's long-term competitive dvantages. foreign actors know that acquiring technology is absolutely essential to achieve their strategic goals. weapon t to develop system as a means to erode u.s. military strength and challenge the united states in all warfare domains. this pursuit of advanced weapon systems could lead to more

warfare, especially in robotic and autonomous systems across air, land, sea, space domains. the u.s. intelligence community has monitored technology outside of their own indigenous development programs. analysis of technology transfer, most intuitively includes tracking a cain cun's acquisition of a key technology or proponent, includes understanding how technical specifications, design or engineering skills and manufacturing and production techniques. they can allow a country to speed up or lower the cost of development projects because they can bypass or trim the costly research and development stages. they can not only improve foreign military mirlt capabilities but can give them economic benefits. in this china is the embodiment of the military technology transfer challenge. the chinese government has a

comprehensive strategy for technology modernization to bolster china's international image, foster its economic growth, and improve its military modernization. and technology acquisition from the united states is definitely part of that comprehensive strategy. for some time, beijing has articulated industrial policies and long-term objectives contained in a number of plans such as the well-known five-year plans and made in china 2025 initiative. in these plans, beijing has shown they are interested in acquiring technology and expertise that is of critical economic or national security importance to the united states. in its most recent five-year plan, beijing identified the most important priorities including clean energy, computer and information technology, manufacturing. china's therefore prioritizing investment in and acquisition

of critical future technologies that will be foundations for future innovations both for commercial and military innovations like artificial intelligence, robotics, autonomous vehicles, augmented and virtual reality, financial technology, and gene editing. these technologies are inherently duo use making it difficult to draw a line between commercial versus military applications. these technologies are likely to be foundational to future innovations and essential to the next wave of competitive high technology products. china's development strategy is multifaceted and it's supporting -- its supporting infrastructure is robust. they acquire the skills and know-how. i'd like to highlight a few of those for you. one is joint ventures, mergers and acquisitions. take transfer to china is occurring in part through increased levels in investment in ack which -- and acquisitions of u.s. companies which hit a record level in

2016 before dropping somewhat in 2017 and again in the first half of 2018. china's aggregate investment in u.s. technology over the past decade from 2007 to 2017 totaled approximately $40 billion and was about $5.3 billion last year. and because the chinese communist party is intimately involved in planning economic activity and supporting companies, there is a great deal of coordinated investment along with other vehicles of technology transfer to accomplish china's larger stated goals. another vehicle are research partnerships and academic collaborations. foreign governments often use every means at their disposal to obscure an advantage in technological areas and academics and researchers at u.s. colleges, national laboratories and other institutions is one of those means. china actively seeks partnerships with government laboratories to learn about and acquire specific technology and

the soft skills necessary to run such facilities. china also uses collaborations and relationships with universities to acquire specific research and access to high-end research equipment. another is science and technology investments. beijing has sustained long-term and investments in its s t infrastructure and they have key pieces of this s&t infrastructure to gain technology and know-how. in 2017, china's spending on research and development was estimated at $279 billion, up more than 70% from 2010. another mechanism are talent recruitment programs. beijing runs multiple talent recruitment programs specifically focused on recruiting global experts who can facilitate the transfer of foreign technology, intellectual property, and

know-how to advance china's science, technology, and military modernization goals. china uses these programs such as the thousand talents program to recruit western-trained experts to work in china on key strategic programs. beijing also has employed western-trained returnees to have important changes in the science, engineering and math urricula that foster greater creativity. another mechanism it exploits is the legal and regulatory environment. china consciously uses its laws and regulations in ways that can disadvantage u.s. companies and advantage its own companies. the chinese government uses foreign ownership restrictions such as formal and informal restrictions to require or pressure technology transfer from u.s. companies to chinese

entities. the chinese government also uses its administrative licensing and approval process to force technology transfer in exchange for the numerous administrative approvals needed to establish and operate a business in china. e also assess china will use cyberespionage and bolster its cyberattack capabilities to support national security priorities which include technology acquisition. the i.c. and private sector experts continue to identify ongoing cyber activity from china. most cyber activities are focused on clear defense contractors or i.t. and communication firms whose products and services support government and private sector networks worldwide. and china's technology transfer mechanisms are paired with beijing's parallel strategy of military civilian fusion that expands civil military

integration of defense and industrial bases to facilitate the construction of a national infrastructure connecting the p.l.a., state-owned defense research, development and government agencies under the state council, universities and firms. they have well supported beijing's rapid modernization. what are the possible long-term consequences? well, while the most immediate and visible effects may be related to particular military technologies, the long-term consequences could be much broader. a decline of the u.s. advantage in key technology could affect our ability to set global norms and regulations for technology, control access for military purposes and reap the economic benefits we derive from commercialization. if the u.s. were to lose its technological edge, the associated loss of influence would have far-reaching

implications beyond scientific disciplines to include security dynamics. within odni, we're facilitating the information exchange among the organizations responsible for the analysis of technology transfer because this issue is global and reach in nature. we collaborate closely among the communities as well as other national agencies and multiple add hock groups and groups working on specific transfer issues. we provide warning in the form of intelligence products of threats associated with technology transfer. this concludes my overview of the threats posed by military technology trrs and i'll go -- transfers and i'll go to my colleague on measures that will thwart and deter them. thank you very much.

ms. b nimbings gen: awas proud -- ms. bingen: i was proud of providing for our -- of you providing our military. i am the deputy undersecretary for both intelligence and security. executing the national defense strategy, including its direction to protect the national security innovation base. as you heard from my odni colleague, the department of defense is facing unprecedented threats to its technological and industrial base, putting at risk the capabilities critical to maintaining our military advantage. china in particular has made it a national goal to acquire foreign technologies to advance its economy and modernize its military. it is comprehensively targeting

advanced u.s. technologies and the people, the information, businesses and research institutions that underpin them. it is playing the long game using a variety of different methods to steal our information, circumvent our processes and exploit our seams. across the defense intelligence and security enterprise that usdi oversees, we are making significant changes in our approach to industrial and to information security as well as to counterintelligence. i welcome the opportunity to follow-up with you in a classified session to discuss additional initiatives we are undertaking that will provide you with a more holistic picture. in our unclassified forum today i'll touch on four key lines of effort. first, we are elevating the private sector's focus on security through an initiative called deliver uncompromised. we must have confidence that industry is delivering capabilities, technologies, and weapon systems that are uncompromised by our

adversaries, secure from cradle to grave. it's no longer sufficient to only consider cost, schedule, and performance when acquiring defense capabilities. we must establish security as a fourth pillar in defense acquisition and also create incentives for industry to embrace security, not as a cost burden, but as a major factor in our competitiveness for u.s. business. second, through the defense security service we're implementing a more comprehensive approach to industrial and information security. we are transitioning from a compliance checklist-based national industrial security program to a risk-based approach informed by the threat and the department's technology protection priorities. however, safeguarding our clear defense contractors only protects part of our defense industrial base. the increasing ease of access to large amounts of unclassified and nongovernment data in the defense industrial base offers opportunities for exploitation, which in aggregation can be as damaging as a breach of classified

information. to narrow this gap between protecting classified information and unclassified information, we're developing a program protection plan to identify the policies and resources necessary to do this. third, using authorities provided by this committee, including section 806 of the fiscal year 2011 ndaa, and section 1696 of last year's ndaa, we are strengthening the integrity of the supply chain as well as establishing a pilot program to enhance information sharing with clear defense contractors. and fourth, we are enhancing our counterintelligence capabilities to better address the nontraditional collection methods being employed by our adversaries. we are adding security and counterintelligence personnel resources to the defense security service, ncis, air force, office of special investigations and the army c.i. our defense intelligence components are augments their collection and analysis capabilities to gain a more

comprehensive understanding of threats to our technologies which will support control reviews and cfius transactions. lastly, we are increasingly relying on our partnerships with f.b.i. ot just increasingly must rely on partnerships to actively leverage both our individual and collective authorities to protect the nation's critical technologies. through these four lines of effort we can help mitigate the threats to our technology and information critical to our military advantage and by doing so deliver uncompromised capabilities to our war fighters. we recognize that strong relationships with industry, across the interagency, with our allies and partners and with congress are essential to that success. we thank you for your continued focus on the threat, your understanding of the impacts to our war fighters and their capabilities and your commitment to support our policies, programs, and the the resources necessary to maintain our advantage. i look forward to your questions. mr. chewning: thank you for the

opportunity to speak with y'all this morning. i serve as the principaled a h advisor for d.o.d. policies for maintenance of the industrial base. there includes assessing the national security impact of foreign investments. our national defense strategy outlines a handful of critical technologies necessary for maintaining u.s. military dominance. through those capabilities with unique military applications like missile defense and nuclear forces, the department of defense will continue to act as our nation's sole developer and technological first mover. but for those emerging technologies with both military and commercial uses, like artificial intelligence, we will also need to be a fast follower and adaptor of commercial sector innovation. therefore, for structure modernization requires legacy and commercial defense

industrial base. chinese industrial policies of economic aggression, such as investment driven technology transfer and legal intellectual property theft pose a multifaceted threat to our entire national security innovation base. a threat with the potential to create both long and short-term impacts. in the short term, their attempts to steal intellectual property, compromise our defense supply chain, and create economic independence of the subtier of our base, and over the longer term, spurred on by strategic initiatives like one belt, one road, civil military fusion, and made in china 2025, this potential for china to erode our underlying innovation and industrial advantage. the engine of our national defense has been the strength of our economy. chinese policies seek to extract technologies from western institutions, leverage our educational system to develop its own work force and use subsidies and nontariff barriers to prevent competition

and to enable the creation of national champions. they enjoy a protected market which they'll use to their relative advantage and enable them to grow at speed and scale and then use all the elements the communist state to place their national commercial champions at the top of critical markets and industries globally. these commercial national actors are then directed to compete globally against the united states and western firms while being given every subsidy and benefit that the government can devise with the goal of marginalizing u.s. companies. combating these predatory economics require a whole of nation approach to both protect and promote american industry as well as our like-minded allies and partners. from a defense industrial policy perspective, this includes modernization of the complementary protection measures of cfius and export controls, as well as increasing the private sector's focus on cybersecurity. on the promote side of the ledger, we need to make sure the department is a customer of

choice for emerging technology providers. this will require acquisition processes that operate at the speed of relevance as well as budget stability so we can clear a demand signal to industry. thank you for the opportunity to testify on this important topic and i look forward to answering your questions. . mr. thornberry: as i mentioned at the beginning, one of the which we will deal in conference is a modernization of the cfius process. that has been added to the senate defense authorization bill. there is an effort in the house to not only update cfius but also the export control regime which may be considered fairly soon in the house floor. regardless, this issue is before us and what guidance can you -- any of you give us as far as the

updating of cfius and export controls? >> i'm happy to take that first, mr. chairman. i'm sure my colleagues would also like to add on. we think of cfius and export tools s as complementary for protecting national security. secretary has identified three gaps in the current reason good morning, america, around tech -- current regime. tools for protecting expanded review of leases and real estate purchases so we can protect investments near sensitive military sites. mr. chewning: we suggest to you that recognizing that both cfius and export controls need to work in concert to address these three gaps. >> comment i would like to make, sir, is in the cfius process historically we look at one deal at a time. we don't look at the overarching pattern of such purchases or

investments. secretary griffin: i think it is the broader pattern which is of greater concern. we also don't look at cfius investments or investment candidates from the perspective of -- let me just say the intelligence gathering opportunities it offers. for example, every firm today which even if it's not in a technology critical sector, let that extreme, but yet such firms all have highly networked that extreme, softwar controlled by commercial operating systems. every time that there is a software update to such an operating system, it affords another intrusion path into domestic networks. we don't look at chinese perspectivefrom the

of the mischief that might be made simply by having foreign ownership and in some cases control perspective of the mischief of such avenues. i'll leave it at that. i believe that's as far as i would want to go at this point. mr. thornberry: my conclusion update t we need to cfius and export controls but it does not fix all the problems. secretary griffin: it does not there, sir n. my opinion. mr. thornberry: mr. smith. mr. smith: thank you. i mentioned in my opening remark the identify of having an industrial policy what key technologies we should protect. that's easy to say. it's incredibly complicated to implement in terms of how you do that. just what ideas would you have in terms of there, sir n. my opinion. what an industrial policy would look like if we basically geared our trade policy and our internal investments to make sure that we were protecting certain core technologies? i realize you could write a book in answer to this question.

please don't. us a little give bit of a framework of what an intelligent industrial policy would look like. i don't think -- i think the president has the vague idea of the problem. then it's just like -- all over the place in terms of how to solve t what would a more coherent approach look like? >> i'm not going to address any of the back and forth chatter in the current environment because we're talking about a long term strategy here. secretary griffin: we need to recognize that whether they are specific defense products or not, many things underlie our industrial base. i might from a large list, as you said, sir, i might pick out for example microelectronics. we worry about that from the oint of view of having a trusted supply, kari mentioned

that in her comments. we want to know that we have an end to end supply of defense equipment. i would also say commercial equipment that we can trust. the difficulty in the microelectronics arena is that an area in which the u.s. once igned supreme, thanks to 20-some years of chinese investment, domestic u.s. manufacturers no longer in all cases make the best microelectronics. so we should be unsurprised when others elsewhere or anywhere in the world no longer seek to buy from us but seek to buy the est. mr. mr. smith: can i shift the focus of my question to help with that. as i mentioned early on. some of this is inevitable. the rest of the world was going to catch up. i think a lot of people impact world he

war ii had on several decades of us -- the entire industrialized world got blown off the face of the map and we were the last ones standing basically. if you are going to fight a war, it's always good to win. it's even bettory win on the road. and that left us in a very, very strong position. for several decades. but that was highly unusual. so even if china wasn't doing all this nefarious stuff, i agree with the chairman, we need to go after the cfius. we're going to have to compete. we're also, i think, part of our industrial policy, is some of what we're going to need, we're going to have to get from someplace else. would you say that, my conclusion, we need allies. we need people -- i don't think there is anything built in america anymore that's entirely made america parts or anything built anywherefore that matter that doesn't rely on some sort of supply chain. what could we do bettory make that aspect of it work?

to have part -- countries that we can trust and work with? secretary griffin: i'll get off that previous path and refer to my opening remarks where we're today not drawing distinctions in our industrial policies between friends and allies and partners and people who behave in an adversarial manner. it is in our interest to make it partnersour allies and to cooperate and collaborate with us as opposed to making it to collaborate with china. and it is in our interest, in my opinion, for us to make it more difficult for the chinese to work with us. during the cold war, there was a whole of nation policy such that the idea of doing a commercial deal with the soviet union were words that didn't fit in one sentence. we tonight have such policies today. mr. smith: i'll stop there.

i have gone on too long. >> give a tactical example where that collaboration is taking place. the ndaa enshined the industrial textile base. we're using that to do a couple things. mr. chewning: collectively how we work together to create a foreign direct investment screen so we can work in concert against predatory economics from allied nations. but also identify areas where we can do industrial-based collaboration to benefit us more broadly. mr. smith: thank you. sorry. if i can also tackle that. from where i sit, i see it as my job not to make it easy for china to get this technology. in my remarks i hit on four key pieces. security has to be a pillar. in addition to scoss schedule performance. it's not right now -- it would be incredibly complex to do. we have to put in the regulations.

second, the excessive transition, integrity of the supply chain and increasing our c.i. resources. d.s.s. in transition, it was the g to me to see approach we take to industrial schurt today is check based. do you have the alarms, locks, that's safe. it was not looking at what is the technology or capabilities that you are providing to the government. what is the threat what, are your vulnerabilities? o now based off d.o.d.'s critical technology priority list going into these companies that work in these areas to look at all those different pieces. it will probably be uncomfortable for industry but we need them as a partner to do this. mr. smith: thank you very much. i yield back. mr. thornberry: mr. wilson. mr. wilson: thank you for holding this hearing on such an important topic. establishing and maintaining our military's technology -- technological edge to increase their effectively and lethality on the battlefield while protecting our troops.

the department must encourage and protect research and innovation from being stolen by state and nonstate actors. i'm concerned by the assessments provided today, but hopeful by the attention being provided by chairman thornberry and the house armed services committee. first i'd like to welcome back secretary kari benningen as an alumna of this committee. we appreciate your service and wish you the best. appropriately the first question begins with you. is additional legislation needed to protect particular technologies associated intellectual properties with military applications? if so, what technologies are in the greatest need of protection? why would legislation be necessary to protect them? and how should such legislation provide such protections? ms. bingen: thank you, mr. wilson. back here. a back here. a couple areas i'd highlight. there's section 806 this year on extending the authority for us

to strengthen the supply chain. we think that's a very good measure and we're implementing those processes now to be able to do that and excise out of the supply chain vulnerabilities. on the resource front, we'll have to work with committee on the specifics of this, but on the counterintelligence areas that i talked about, on the greater analysis that we will have to do with our industry partners to understand where their threats and vulnerabilities are, that will require additional resources. with the cfius reforms, whatever final legislation comes out of that, that will place an increasing demand signal on our intelligence capabilities. so that will require additional resources. then also as we go through this delivering uncompromised and d.s.s. and transition, as we look at how we implement control -- how we implement protections on controlled unclassified information, we may need to come back to you with specific legislative proposals and work with you on that. mr. wilson: thank you. anyone else would like to respond. anyone else would like

respond. if not, a general question for everybody. is this primarily a nation safe problem? what about transnational riminal organizations, corporations, or terrorist groups? what risks do nonstate actors pose in transfer of u.s. intellectual property and technology? secretary griffin: sir, those are important issues as well, c terrorist groups? what risks do nonstate actors ose in transfer but the bulk of all the information we have gathered is that china is the big problem. i think we need to focus our efforts on first taking care of the big problems and then absolutely we cannot afford to neglect other areas such as you you suggest -- such as you suggest. but we have to prioritize. mr. wilson: you identified but the bulk china, the confucius institutes located 103 different colleges and universities across the united states, many of these are located adjacent to research

facilities. is anyone familiar with those which has been identified by a member of the central committee of the communist party of china as a very important propaganda arm. is anybody familiar with what's being done to try to identify these institutes as to their motives? >> your second question generally. i agree with my colleagues this is predominantly a state actor problem, that's certainly the largest, most looming problem ithin that china is the most pressing threat. mr. schinella: with the additional amplification in the case of a country like china, you asked about multinational corporations, when you have state-owned enterprises our framework doesn't necessarily capture that blurred line between the multinational

corporation and the state actor itself. we're familiar with the confucius institutes as one more visible representation of china's global presence, including in the united states. consistent with my earlier remarks i just know that is one of many, many footprints that beijing has in, near, and on our campuses and research institutes that it uses as was i to overtly and less overtly collect on and maintain awareness what's happening on those campuses and institutions. thank you. mr. wilson: thank each of you. we appreciate your service to our country. mr. thornberry: mr. gryyageo. -- mr. gallego. mr. gallego: even before getting to congress i have been hearing about this, reading about this. more so in congress i'm dismayed that i'm hearing about the

diagnosis, not necessarily the way to fix this. in the marine corps you have a couple options. protect yourself, you have your body armor, kevlar, your rifle, and the best in the marine corps way to stop somebody from trying to attack you is to look tougher and make sure they know the consequence it is they do aa tack you. i feel when we're dealing with this issue that we're talking about how to only play defense. what are actually our offensive tions to actually make our enemy understand if they do these actions it's going to be painful? and to a certain degree i don't want to trigger a war, but we need to be able to have some of a deterrence so that way they actually have to make a rational calculation whether or not they are going to engage in this type of conduct f not, i feel like this is just going to continue to happen every year i'm going to have the same briefing and all we're going to talk about is what happened and not what we can do to stop them. i don't know who wants to take

the question first. i would like to hear some ideas. if we have to do this in a classified setting, that's fine, too. love to hear it. welcome back, too. ms. bingen: if i can start from an industrial security perspective. that's what i'm here to represent. and i efense contractors outlined the four areas, the four pillars. two other areas and i. we're branching out as mr. schinella highlighted there is a deep concern with the cyber data exfiltration issue. it is one the chinese in particular are targeting. one of the direction that is my boss, the undersecretary, has given to dea fence security services is to come up that program protection plan, policies how we control with an industry that unclassified information yet still potentially have sensitive technical information or personal information.

that's one of the areas we're hitting. the other one i agree wufment we're playing defense right now, particularly in the cyber domain. we need to be playing more offense. orking with the f.b.i. lveraging their authorities on the law enforcement front. that will require further conversation with you, largely the classified level on some of the authorities and resources we might need to do that. secretary griffin: at the unclassified level i will say that it is through cfius and possibly firma in the future and other mechanisms. it is our choice as a nation, as a matter of national policy, as to whether or not we allow investments of any magnitude and cope by china in this country. madeallego: i point i have is that you are all describing defensive protocols and methods. it doesn't really matter to the chinese made is that you are all or to our f adversary if they know they can

get around our defenses and there is no consequences. what are we doing to change the rationale, the calculations that they are going to actually do these types of things that ostensibly are illegal? hat is our pushback? mr. schinella: obviously the administration's section 301 investigation, the chinese intellectual property theft would be an example of that. i think more broadly if we think about the offensive measures we can take from an industrial are we spective, what doing to promote our own industrial-based capability. mr. chewning: that starts with the recognition going forward we not overwhelm remain the sole developper for military applications. reform the acquisition process we can can leverage the entire economy.re we and become a customer that is able to attract the best of both the heritage defense industrial base, as well as emerge commercial technology providers.

mr. gallego: i yield back. mr. thornberry: thank you. >> thank you for being here. this is an occasion where i'm going to agree with mr. gallego. 100%, which is not a typical -- not daily occurrence, necessarily, but something on this important issue. mr. lamborn: i was going to ask and will ask the same exact question. what are we doing offensively? you have talked a lot about some great defensive measures. and we're buttoning up and making airtight the secure and vital research and technology that our defense contractors, that our government has. and i applaud you 100% for doing that. but i would like to see more in the way of consequences to the chinese when they do this adverse behavior. i'll make an editorial comment here. i think for too long

administrations of both parties have been rather passive in light of what's going on. i want to applaud the trump administration at least in the area of trade, that there is pushback going on now with talk of tariffs. i don't know how that will play out, but i'm glad that's being discussed and made a serious issue in washington. i think that's an example of pushback that needs to happen. let me throw out an idea just -- if you want to comment on this you can. you don't have to. should we have -- i think it might be interesting to have a widespread and concerted policy in our defense to put out wrong information. pretend like it's great information, great technology, won't y steal it, and it work for them. or they go down a dead end and waste money. actually backfires somehow. won ork for them.

i think that would be an interesting thing to pursue where we start poisoning some of the technology that's ostensibly vital and healthy and good. but it messes them up when they start to pursue it. any thoughts on that? >> coy answer the first part of the question and defer to my colleagues around that issue. mr. chewning: just elaborate. section 301 investigation of the ustr led into theft of chinese left of u.s. intellectual property does have some offensive measures to it. and was articulated in a memo from the white house on the 29th of may. there's the tariff action that's been associated with that. there's potential for investment restrictions into the u.s. economy. and the w.t.o. case that we have taken forward. specifically to dispute -- there are offensive measures being done in response to chinese economic aggression. i'll defer -- mr. lamborn: i'm glad to hear

that. ms. bingen: i would love to follow up with you in classified session to talk more holistically we're doing or looking to do. mr. lamborn: ok. good. lastly i'll finish up. there was an article in the "wall street journal" today or yesterday about some detected chinese hacking on our space operations. it was on not research and development but on the operation side, which indicates that intent in the future, perhaps, to use that information to disrupt -- to be disruptive. to intent in the disrupt operat. in an offensive way. possibly in the time of conflict. does that concern you? secretary griffin: sir, that's a topic that i really do not want to discuss in a public setting. broadly speaking, your comment taken on its face is very

concerning. for me it's very concerning to . ve read are it in the papers -- to have read about it in the papers. as my colleague just said, i would welcome the opportunity to discuss this stuff in a more closed setting. mr. lamborn: with that i yield back the balance of my time. thank u mr. thornberry: mrs. davis. mrs. davis: thank you, mr. chairman. for being here. while we have raised the issue of trade policies, i wonder if you could comment, i'm not trying to make this into a debate here in terms of trade, but what we mentioned a number of areas, particularly related to china. was it real missed opportunity to have not moved forward on the transpacific partnership when it omes to national security?

secretary griffin: i'm unable to offer you an opinion on that, ma'am. i'm sorry. i'm not familiar -- i just don't have the expertise to comment on transpacific partnership versus national security. mrs. davis: because, in many ways, maybe you like to comment, i think we lost that opportunity to have china be more disruptive when it comes to that. did you want to comment? mr. chewning: i agree with the undersecretary. it was not an issue we looked at specifically. i don't have any further comments. mrs. davis: maybe that's some of the problems. i think that we were aware that an issue curity was in this regard, and it's -- i

guess surprising to me that there wasn't that kind of weigh in when it came to those issues. i wanted to ask you further, we talk about a whole government in this regard, and it's -- i guess surprising to me that approach. we're often doing that. yet when it comes to the concerns that you are raising here, how important is it? are you monitoring that? thoseu -- are we engaging elements of governance and government that historically or raditionally we don't think of in this area of intellectual property or indevers? -- endeavors? where do you think it is. how did the department of state, treasury, just t. homeland security contribute to technology in there other roles that the department of education, health and human services could be playing in this regard? it's a complex issue and protec are i'm looking to see -- to what extent do you think that that's important? secretary griffin: i'll start. i do think it's important. i have said publicly, actually i

in an earlier hearing before this committee, that we somehow in the years since the berlin wall came down and the soviet union dissolved, we believed that great power competition was behind us. the national defense strategy released this past january makes a very clear set of points that we are -- have returned to an era of up grade power competition and must treat it as such. when we believed throughout several decades of the cold war, when we believed we were in a great power competition for not only the hearts and minds of the world, but possibly our very existence, we treated all the matters that you are talking

about, state, education, commerce, treasury, we treated all of that as if it were of exy tension importance, which it was. -- existential performs, which it was. today we treat them as if they were individual matters. what you are hearing from us is they are not isolated issues. they need to be treated in the large. as i was starting to answer to mr. gallego's question earlier, we as a nation have choices. do we wish to admit, as we have today, 30,000 chinese ph.d. students in stem areas, do we wish to do that? do we think the benefits outweigh the gains? there is not a national decision in that regard as there was when we were competing against the soviet union. we didn't do those things. it's not for me to say whether we should or should not. i'm trying to put on the table that these apparently isolated decisions in fact when taken

together comprise a whole of government strategy that we do not have. mrs. davis: i don't know if anyone wants to comment. is there one particular example that you think creates -- best practices in this -- more nontraditional way of working tgget that we ought to be looking at more seriously? i guess not. thank you. mr. thornberry: dr. abraham. mr. abraham: thank you, mr. chairman. huge problem, national security issue. and the mentality of why build it when you can steal it. we get that. i was listening to miss bingen, you had your four pillars. one of those was a program called delivery on compromise i think is what it says. my question is, for these

contractors and subcontractors is there a management by objective policy that if they don't meet objectives they are penalized or punished? or if they don't reach that security level they are kicked out of the system? is there any accountability today? ms. bingen: you have actually hit on the challenge and why we're taking this different approach. when a contract is awarded it a company, it's based on cost, schedule, performance. it is not based on security. so part of this delivery on compromise initiative is working through all of the details of what would that look like, what are the standards? is there an independent verifier that does the good housekeeping seal of approval on it? how do we work with our acquisition colleagues of infusing security into acquisition policies and other regulations, and the contracting officials that help drive those decisions. those are the details that we're

working through now. then also industry can't look at it the way they do today, this is a cost center and loss to my bottom line. they have to be incentivized to look at security as, this is going to help me make more profit. mr. abraham: are they held to that stand -- standard now? s. bingen: they are not. mr. abraham: quick second question. classified versus unclassified, we understand that today's classified data is yesterday's outdated data or vice versa. this data evolves so quickly and this technology mr. abraham: evolves so quickly it is hard to keep up with. and that if you take two nclassified pieces of data and perhaps marry them together, it becomes a classified document. my question just for my understanding, who actually has the authority to make the call as to whether a piece of data or

ece of technology is classified or is unclassified? is it the project manager's? somebody in d.o.d.? somebody -- what wheelhouse makes that decision on a daily basis? ms. bingen: undersecretary for intelligence has the policy responsibility. so we set the framework and basic standards. mr. abraham: you have the responsibility. but do you have the authority? do others under you also have the authority? i understand the responsibility. that's where the bullet does stop there. the authority can be delegated out to other people. is that a lot of fingers going out? two or three people? how does that work? secretary griffin: in the technology arena, i have original classification authority. should i make a determination that a particular set of technologies upon which we're working needs to be protected. and many others do as well.

those authorities can be delegated and are delegated ownward. i know there have been breaches. we had reference to that earlier on today of actual classified information. sir, asll go on record, saying that i believe this hearing and our witness statements and responses to questions are more about the amalgamated effect of the industrial base and technology levels as a whole not whether or not a particular exfiltration attempt by the chinese was successful in a particular case. but rather the whole pattern of chinese investment in our base, extraction of data, predatory joint ventures, predatory trade practices. the whole spectrum of chinese

adversarial behavior with respect to our economic and industrial base. i believe that's the larger concern, sir. r. abraham: i understand the 30,000-foot view. i also understand the ground level view if we have that one breach on national security issue, it can certainly parlay into something much bigger. secretary griffin: absolutely. mr. abraham: i yield back. thank you. mr. thornberry: mr. larsen. mr. larsen: thank you, mr. chairman. mr. larson: o he -- on the gate about whole government approach, aim just concerned you throw the term around like it's candy at a parade because at the same time you have testified that someone, one of you did, that belt road initiative is problematic policy. at the same time you testified, department of commerce, bimonthly meetings with u.s. companies and u.s. embassy in china to figure out ways for

those u.s. companies to access projects. to save time you talk about whole government approach. not going to be experts on trade or tpp but have some concept of at the argument was on how it fit ship and into leveraging u.s. economic policy and strength in asia vis-a-vis china. just that basic understanding would be helpful for you-all. i don't think you are talking about how it fit into leveraging u.s. economic policy and strength whole gover. you may be talking about a whole pentagon approach. if there is a whole government approach, which like to know t not today. but an example, if we're an era of great power competition, you talk about the last one we had, we're not doing those things today that we did in the last one, well, in the last one we had we fought for open markets.

we put human rights near the top of the list when we talked to north korea. we're not doing that today. so does that not apply to this era of great power competition? again, i think you are throwing the term around to try to make it sound like you are doing it, but i don't think you are. and you need to get on it. you need to have a mechanism -- if we don't have a national security council mechanism that could develop a whole government approach that's used by the white house, then we might have one. that's -- i usually don't give speeches. i usually ask questions in my five minutes. it's just been frustrating to hear this term being thrown around. again like candy at a fourth of july parade. i don't think you are living up to it.

miss bingen, i wanted to ask you about a couple questions -- four points on what you are doing. specifically on i think it was your third or second point of section 0 and 16 6 authorities and strengthening supply chain security and defense department. that's great. that might favor a larger contractors. so -- because they have the capacity to absorb the costs, if you will. how are you going to ensure that smaller companies, smaller businesses that maybe have more innovative ideas can bring more flexibility to the table, the pentagon, how are you going to ensure they don't get tossed aside because they don't have that capacity to to the kinds of things supply chain security you do? be asking them to ms. bingen: that's a great question. that's something we'll have to work through. we're really just at the front end of that. do? ms. bingen: together the plan for it right now. i think

early next putting it has to be year, 2019. that is something we absolutely will have to consider. i don't know that i have a good answer for you today, but it's something that we're looking into and would be happy to follow up with you. mr. larsen: if you could. your staff on the committee when we did a tour around the country with small businesses and chairman shuster at the time and i went around the country and tried to find ways to bring small business more into the pentagon contracting. just ask you to watch that. ms. bingen: we'll also have to work were them as we do the delivery and compromise pieces. they don't have the capacity that a lot of these large folks do. it's how do we incentivize them. how do we work the liability issues to encourage them to report and to make these fix when is they don't have that big capital that the large folks do. for me the again, crux of it is that this is where some of the innovation that we need to have happen.

dr. green, mr. green griffin, wants to have happen. a lot of this will take place in smaller companies, but we don't need to be building hurdles to make it more difficult for them to do that. i would ask you guys to watch that. thank you. yield back. mr. thornberry: mr. gallagher. mr. gallagher: thank you, mr. chairman. this is a great hearing to have. i think sometimes we overlook the issue of technology transfer and just to follow up on what the need to go on offense, as we're considering a few initiatives, obviously the need to strengthen cfius. i would also like to call your attention to section 217 of the senate ndaa which provides the usdr and e with the authority to establish or fund a nonprofit entity to help facilitate research and technology

development in critical hardware based technologies at the private sector has tended to insufficiently support and could help meet emerging security needs. i know it's a long bill. but have you-all maybe starting with mr. griffin been able to take a look at this provision and from your initial read do you support it? secretary griffin: yes, sir. i have read that section. i have worked with some of the folks that are promulgating that nitiative, and i support it. mr. gallon lager: that angle of the need to invest in hardware. we spend so much time about software and not hardware. mr. chewning: it's a great point . o build on it about 92% of our capital investment is in software. we know hardware and company formation in particular hardware technology is going to be critical. so i think taking that language in addition to exersigse the authorities given to us by

congress in section 1711 last year's ndaa we can pull together a response. mr. gallagher: i appreciate that. i look forward to helping this provision get over the line. i think one of the biggest challenges you face is those of us in the room here today may understand the scope of the challenge but much of the broader society doesn't. i think our competitive edge in many cases hinges on more people just getting it from the promising researcher who takes a second look at an attractive offer to join a state connected chinese firm, or graduate student who decides maybe they shouldn't conduct ph.d. stem research in china. i know this hearing is about solutions for d.o.d. i would be fascinated to hear your thoughts on how we can better communicate story we're hearing today to the broader population. in reading the diux report on technology transfer, one of the key proposals is outreach to the private secretaryor an academia. academia. nd

how do we -- how can can we more effectively conduct that outreach to private sector, academia, and public more broadly. mr. chewning: increasingly through our industry association engagement not just with the folks you think we would be talking about but more broadly. increasingly we're hearing those concerns. i think it's the need to begin to separate the need for an incremental revenue opportunity where you may be going into a new market, to the longer lens necessary, recognizing that you are going to be doing business with someone who eventually wants to put you out of business. and the need to get that message across. mr. gallagher: we have had these recent stories about certain silicon valley companies not wanting to do business with d.o.d. because of sort of the intersecting with lethal drone operations. huge problem at the time we need to be working more closely with the googles and amazons,

facebooks of the world. that's sort of the cultural reaction to working with d.o.d. i wonder if you would comment on that briefly. how do we turn that conversation around? if it makes any sense. ms. bingen: absolutely. we're disappointed in that. but we also know, particularly artificial intelligence, that's where the talent, that's where the technology is. the government is not leading in this area. we need to be able to leverage that. they look at -- when i think about the numbers of transactions, data sets they have. some of the problems may be pretty straightforward for them given what they do in the commercial sector and we have to leverage that. for us from intelligence perspective we have a clear mission imperative. we have manual labor intensive process that is our analysts undertake every day. we have to make it better for them and use their brainpower more effectively. but department wide there are a challenges that we have logistics, business reforms, etc., that would benefit from them. and we've got to believe there

are folks there that bleed red, white, and blue and want to participate and support national security but also the engineers like our problems and we have good ones for them. mr. gallagher: i have run out of time. i have a bunch of other questions. thank you. what you are doing is an important subject. i yield back the balance of my time. mr. thornberry: mr. langevin. mr. langevin: i want to thank our witnesses for your testimony here today. the committee and my colleagues, i believe comprehensive whole government approach is needed to maintain u.s. technology superiority as you have heard from many of my colleagues. it's a problem we run into is no democratic states have problem martialing their collective resources to their advantage. so what are your recommendations to congress for policies that maintain our technological edge n critical areas by countering activities -- nations, while fostering a culture of

innovation in the united states? secretary griffin: i'm fond of saying that the best way to get ahead and stay ahead is to work harder. un faster. we believe that our free market capitalist system, capitalist-based system is the seed of innovation to a far greater extent than any command economy can achieve. indeed, the entire topic of this hearing is about china stealing from us, not us stealing from china. so if we can provide the kinds of incentives that my colleagues have been talking about, we just for new 217 authorities for hardware based venture companies, if we in the

d.o.d. can, using the authorities that you have given us, learn to deal with our industrial base on a more commercial basis, on a quicker and more responsive manner that is not so burdensome to our companies, i think those actions will help us stay ahead. the mere recognition that we're in a competition and that we should not be making it easier or our adversary will help us. my colleague, kari bingen, outlined in the statement four broad areas we're very serious about. other than those more general statements i don't know that i have any specific things to recommend to you. mr. langevin: miss bingen, do you have anything to offer? ms. bingen: i think i would just go with what dr. griffin just highlighted.

job b, sir, i look at my slowing the chinese and others down from getting the stuff. his job is to push the envelope on our technology investment and r&d. my fear, big concern s. what's being taken from us now, the r&d we're both competing for, we're both interested in the same things right now, that is what's going to show up on the battlefield five to 10 years from now. need to slow down our adversaries and speed up our own capabilities. secretary griffin: let me amplify my comments. e of the best assets we have is the openness of our society and our alliances and partnerships with our western allies. the more that we can can find ways to do things jointly with them and binding them to us, that is the openness of our society take, sir. thank you. mr. langevin: there are many promising ideas that the

department has invested intellectual equity in of the only to see those ideas and programs end up in the valley of death. recognizing the remaining utility, other entities we can swoop up and gains made at that point and move forward from there, i find this troubling. i'm sure do you as well. programs like hiber sonics and directed energy where we invested but our competitors have taken our ideas and our investments and continued to innovate. do you deem it a risk when we worked on and developed a technology, but failed to fund the transition? also are there policy impediments that slow technology transfer to our own forces? secretary griffin: sir, the national defense strategy released in january, frankly, makes a big deal out of the point you have just raised, and has specific impediments that slow technology transfer to our own modernizati force modernization goals for

the future fight that are outlined in that strategy. and we're working today, this week, this month, next month to enshrine these, to codify these in the upcoming budget preparation. we have done groundwork, important groundwork and directed energy, especially in hyper sonics especially, that we have, if you will, let lie for a while we when we should have been turning it into actual force. we're trying to reverse that trend. we're working with all deliberate speed to do that. the two areas that you mentioned, hyper sonics and directed energy are major can tates for reinvestigatoring. i'm working on that as we speak. mr. langevin: the sooner the better. i yield back. thank you. mr. thornberry: mr. heist.

mr. heist: thank you, mr. chairman. it was discussed and brought up the nead to better balance risk to speed when it comes to prototyping. can you expand on that a little bit? explain why that's important? secretary griffin: my favorite topic, sir. that's because in my more useful yearsdy that for a living. i now hope to enable others to do it for a living. i think the key point that i would make is that if we can return to what used to be this country's ace in the hole, our ability to try out new ideas, cobble them together in prototype fashion, take them to the test range, fly them off, see how they work, fix them where they break, and plump them up where they are doing good, then let operators interact with them because designers and operators need to work together.

things an develop new fashion, that is the best of this country. we have let our processes get in our way. by that i mean our legal and contracting processes. the congress has bent over backwards to offer broader permissions by which we might undertake these developments. if i have a single mission in life as the new undersecretary in this area, it is to get our guys in the field fashion, that best of this country. working a on these new ideas and let nature tell us which ones are good. the key point is it's important to recognize that a test failure is not a failure. the failure is when we don't stick to the goal and get the product to the finish line. mr. hice: i'm glad to hear that. i'd like to follow up on where dr. abraham was going earlier. i'm not sure exactly who this

would be addressed to. maybe a couple of you have an answer. how do we incentivize companies comply with the deliver uncompromised? ms. bingen: sir, that's something we're working through right now. we have had actually someone come onboard and do a study for working through those recommendations. the some of this will be outside our area where -- it comes back. how do they look at this so it's not a cost but a working throug recommendations. the some of this will be outsid them? how do we get them to encourage them to self-report but not think that there is going to be a liability or penalty associated with that? can here tax incentives we pursue? regulatory incentives? safe harbor ideas? we're working through all those right now. we do think there are some concrete ideas we can explore to do those incentives. mr. chewning: i think it's extremely important to solidify

this. would you agree? ms. bingen: absolutely sir. mr. hice: anyone else have a comment? secretary griffin: we need through a combination of public policy, tax code, selection criteria for our procurements. in the to make it interests of our industrial base to froket their own intellectual property from theft. when it is in their interest to do so, when it is a profit center rather than cost center, when they care about it as much as we do, then that will turn around. mr. hice: while you're going on that. how well integrated is the executive branch on the whole thread here? secretary griffin: that might be above all of our pay grades put together. mr. hice: you are doing with this. just from your observation. secretary griffin: it depends pon who you talk to.

really. the interests of the primary interests of the commerce department is to promote commerce. the primary interest of the intelligence community, i won't speak to that, we have intelligence community representatives, but as kari has said a couple times, their goal is to protect what we have. those two -- mr. hice: is d.o.d. and the intelligence community cooperating at least? secretary griffin: we, i think we're, sir. ms. bingen: daily, weekly, monthly basis. i get office meetings. mr. hice: thank you, mr. chairman. i yield back. thornberry: mrs. hartzler. mrs. hartzler: thank you very much. thanks for being here on this very, very important topic. there was a recent article in foreign policy magazine that discussed how china has create add sophisticated state surveillance system with facial

recognition technology. specifically to target minorities and what they call anti-china behavior. they developed this system with the help of chinese surveillance firms. high vision is about 42% owned government se anti-chairman of the board was quoted as saying that the board must ensure the company, quote, creates a state-owned enterprise and that it remains, quote, under direct control of the communist party central committee. in fact, they received $3 billion line of credit from the state-owned china development bank. this is one of the three so-called policy banks whose finances objectives follow political motives. i'm sure can you imagine i was alarmed when i learned that the cameras were operated at a military operation in my district. the cameras have since been removed but i am disturbed that the federal government willingly purchased these cameras knowing that china sacramentoively

engaged in espionage against the united states. my question s. i'm deeply concerned that video surveillance and security equipment showed by chinese companies exploses the u.s. government to signature to potentiales due built in back doors creating a video surveillance network for china purchased by the taxpayer and installed courtesy of the u.s. government. i would like each of you to discuss the security vulnerabilities posed by chinese surveillance cameras and whether or not you believe it's a security risk to have them operating at u.s. government facilities. mr. shi nella, you -- schinella, you want to start? mr. schinella: everything you laid out there is consistent with some of the threats which we tried to point a flashlight out in our opening statement. you have essentially a state-owned other certainly state invested company. and you've got an example of the sort of -- you could

characterize it as an insider threat, if you will, but the chinese government's relationships with these kinds of companies, which have a worldwide commercial presence poses the threat you have identified. and as my colleague says, it's also an indication of the different kind of world we had. we weren't buying surveillance cameras from the soviet union in those days, but when you've got chinese companies making world class equipment on a global market, they pose a threat that is different than we faced during the cold war. mr. chewning: it's obviously a concern. something that we're actively working. there are other additional examples like that. and that we'd have to take you through in a classified setting to discuss similar vulnerabilities we have identified and what we're doing to remediate them. ms. bingen: if i could also just add. going back to the supply chain discussion we had and the policies associated with that

anti-congressional engagement in the direction that you-all provided us. there are three areas of the supply chain i worry about. going through the front door. the cyber exfill racial, and -- exfiltration, and us making it easy for them. it's the backdoor piece. third, there is the counterfeit piece. we need to look holistically at all those and mitigate threats along all three of those sectors. mrs. hartzler: mr. griffin, anything to add? secretary griffin: shockingly for me i have nothing useful to add. thank you, ma'am. mrs. hartzler: mr. schinella and mr. griffin, you mention in your comments concerns about universities and the chinese using the universities. that's something i'm very concerned as well. the national intelligence council, you provided us with this chart that shows the different programs that china has in talents recruitment. and of the snapshot that is provided here, approximately 2/3

of these individuals worked or studied in the u.s. and are employed in china in areas such as defense research, technology, state owned enterprises, academia, and things. mr. griffin you said it's not to me to give a recommendation. i'll ask mr. schinella. do you think we should change our o visa system to deny chinese students being able to participate in ph.d. programs? mr. schinella: as part of the u.s. intelligence, it's even less my mandate to make policy recommendations, but as the intelligence product you have illustrates and as my opening throughindicated, china a state directed policy absolutely is trying to make the list it and illicit often through absolutely legal mechanisms exploitation of their

ability to take advantage of the u.s. university system. mrs. hartzler: thank you. mr. thornberry: mr. bacon. mr. bacon: thank you very much. i want to ask you a question about some of the areas we're seeing advances with technology. we keep seeing advances of stealth. we're seeing higher capacity computer -- computing power which is changing a loft our eapon systems. hyper sonics, nanotechnology. a few of these i want to ask a question. how did we fall behind in your mind on hyper sonics? what can we learn from that? i open it up to anybody. secretary griffin: let me take hat one first. we fell behind because while this nation was pioneering in that era, we decided some years a k that we did not face

significant threat requiring the delivery of force by means of hyper sonic weapons. we as an earlier questioner asked, we didn't transition those. we could have. e just chose not to. china has a stark capability. we can exceed that capability. and we are setting about that task. but we fell behind because we elected to make other choices. mr. bacon: let's focus on the middle east. occupied -- >> there is the tyranny of the urgent versus the long-term and truly, i lived through all of this. cold war competition and such. one of my political adversaries labeled me as an unconstructed

trade war i don't remember. we have for 25 years that the great era of competition is over. mr. bacon: reading about robotic technology and russia is investing a lot. would you say, where are we at compared to the russians, if you could elaborate? >> i don't believe that i know i can give you an assessment for the record later. will say in the area of autonomy and robotics, as my colleagues said earlier and quite well, the d.o.d. is a small player with regard to where commercial industry is. now, that's not bad. our commercial industrial base is the biggest single asset that we have for national security. but we need to make it

attractive for them to continue work in this area and make it attractive for them to partner with us to reap those advantages. mr. bacon: one last question on this line and give someone else what e, nanotechnology, militarization will do to the battlefield. they will have weapons systems that are smaller and harder to detect and perhaps just as ethal than what we have today. >> the innovations you are describing are exciting in a lot of fronts because of the applicability we have. it draws an important distinction and talked about the industry to push to us. and there is a pull effect. and the innovation of our war ghters to determine how they

will impact and providing that feedback. i think this push-pull concept, we take commercial insights and figure out what the applicability is. mr. bacon: anyone want to jump in on those questions? ms. bingen: i do want to bring us back to china as well and when i look at some of the trends out there and frankly, taste about us protecting but making it a national priority. hey have 16 makea projects and manhattan-style projects. 2000 s. drops 11% between and 2015 and china. stem degrees. chinese universities are putting

out 1.3 million students with em back grouped, we have 325,000. and the own us is on us to make these challenges to be a national priority. mr. bacon: if we have time at the end, i would like to come back around. but i yield. >> mr. banks. mr. banks: dr. griffin, i along with 25 members sent a bicameral and bipartisan letter to the secretary of education earlier this week on tuesday that expressed our concern about the links to the chinese government. it has so-called research partnerships with over 50 universities and likely using these relationships to exploit the culture of our schools and communities as well as gain access to critical next-again

tech nolings. they have use it it for spying and committing industrial and economic espionage. the d.o.d. policy that governance technology transfer is dated back to 1999. k. ere worried about y2 the world as i'm sure you would acknowledge is different technologically now than it was 19 years ago. considering the statistic teagueic competition with china and the need to protect our needs, what is the d.o.d. to do to protect the research from foreign threats and unvetted members. and what are you doing to assist the secretary of education in mitigating risk to universities and other schools and help the

federal government to protect and advance the united states' tech -- technological advantage. secretary griffin: that is a biggest question. eric might be more capable than i. and existence of so many china esteem students. i completely share your concern and well documented this is an avenue of access for the chinese that we don't want them to have. beyond that, i don't have any detail for you. eric. mr. chewning: before we move -- >> are you concerned about the dollars that fund academic research on universities in america that on our behalf are engaged in classified research for d.o.d.?

>> i'm concerned that we have ties -- i'm concerned that we re not yet as vigilant as we should be making sure that that research doesn't go to those places that have those ties. universities have a very long decade history of collaboration with the national security community at-large on problems of national interest. it's one of our greatest strengths. but doing so in an environment that can be penetrated by add veer sears is not wise. >> we are not as vigilant as we should be? >> agree 100%. we are concerned and reviewing the contract language and reviewing those projects at the universities. this hits on the hard issue, we

have an open innovation model and we have an adversary on that model. we need to experiment to find the structural fixes without breaking what makes our system work. >> are you aware of any interest by the u.s. department of education and these ties at the subject at large? have you had any conversations with the department of education? >> i have not? i would be happy to do so but i have not. another difference between now china99, which you cited, had not been admitted to the world trade organization in 1999. and i might make the point that was a branch point that allows many of the types of intrusions of which you speak. >> i yield back. >> let me follow up with just schinella for mr.

and ms. bingen. should we see any distinction between the chinese company and the chinese government? mr. thornberry: if the chinese company is investing in some technology, some business, something going on, as a practical matter, should we see that as the chinese government doing it? >> i would say that the gradation, but whether you have a wholly-owned state-owned company that is an element of a chinese government or private company that the chinese government still has leverage over back in china, there may be a spectrum of risk. at no point in that spectrum is the risk at zero.

ms. bingen: china international law says that all organizations and citizens shall support, corroborate and collaborate in national intelligence work. mr. thornberry: that's what i thought. mr. bacon? mr. bacon: i know there is an important role and we need to protect our technology and make sure it is not being sold or exported. i heard from a couple of companies that thought they were unfairly limited. and i want to know from the d.o.d. perspective shouldn't we have an appeal authority to say, if they get it wrong once or twice on whatever company they hold back, do you have any thoughts? >> if there is any specific case, we are always able to rovide briefings and explain the rational e.

as a representative, companies may not be aware of the full fact base that we have, because we conduct it by the intelligence community and why certain companies may not think we got it right. mr. bacon: shouldn't there be a recourse because i'm hearing your appeal authority and granted, i'm sure you get it right 99% of the time. there has to be some kind of board at the d.o.d. level and gives you a chance to make that case and people could agree or disagree. but some of the companies are saying there is no other authority.

>> i'll take it back to the exp. mr. thornberry: as luck would have it, votes have been called. thank you for being here and your insights. we will continue to have conversations on this topic. hearing stands adjourned. [captions copyright national cable satellite corp. 2017] captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org

>> the senate did not agree with what we had, as a part of last year's bill, we required the department to give us a road map of how you would get there assumeic that decision were to be made. i think that road map is even more relevant today rn it was a week ago. [indiscernible] mr. thornberry: we'll see what the department recommends. you see from the president and again on a bipartisan basis, we have to pay more attention to space. -- a war firefighter fighter domain.

we have to protect national interests in space. what we have in this bill is requiring the air force. we'll go through the provisions for this conference, but we'll see what the department suggests as to a path forward. there has to be a partnership between congress and the executives to move in this sort of direction. >> any tension between the goal getting the 3.-- 3% to 5% overall growth and how does it get paid for? mr. thornberry: well, secretary mattis is we can afford survival. i think that's the bottom line. we can afford to do what is necessary to protect this country.

probably don't need but we are down to 15% of the federal budget is spent on defense. ot very much to protect. i see youal. [captions copyright national cable satellite corp. 2017] captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org >> this week on "newsmakers, an interview with senator grassley and talked about whether former f.b.i. director should be subpoenaed to testify. here's a preview of the sunday interview on c-span. >> big department hearing report before your committee. express some disploshe sure that

james comey did not show up and he had time for media appearances. are you going to ask him or subpoena him to come back to the committee? senator grassley: i will want toll subpoena him. but in the senate rules, you have to have senator feinstein and i agree to it and i can't tell you she will agree to it. if she will, i will agree to it. >> when do you think a decision would be made on that? senator grassley: if senator fines stein tells me yesterday that she will do it, we'll do t.

>> to have a conversation of what he can contribute to our oversight because if he can't contribute anything substantial, there is no point in going through it. >> provided that conversation results in a positive outcome, you would be realming? senator grassley: yes. >> you can see the entire interview this coming sunday morning at 10:00 eastern and at 6:00 p.m. here on c-span and . tch it online at cspan.org the c-span bus is traveling across the country. the bus is on its 38-stop in

juneau alaska. we have opioid and substance abuse economy. the more and more people get upset and not living their lives and end up getting kind of destitute and turning to self-med indicating. >> i think the most important issue is child hunger and taking

care of children. it is all linked to poverty. we were at 40% of child hunger. food insecurity. we went down and now going way back up. we have to stop giving our money to the oil companies and start spending it on children for the children. >> one of our big issues in the state is the tour rism industry. it is a huge chunk. we are very concerned about the bility to promote at a nationwide level. of far as i can see, one the big social service issues is homelessness and trying to combat is a very real issue since a lot of them aren't

seeking help. but the ones that are seems to be moving from place to place looking for the aide they can get. homelessness and how we can combat it and fight it here in this state. >> i'm the executive director here. and from my perspective, the most important thing in alaska is to get a long-term fiscal plan in place for a state that has ongoing revenue outside of our nonrenewable resources and we need to stabilize education across the state. our educators need to feel that their funding which is a constitutional duty in alaska is stable and stabilize the schools and most important is for us to educate our students and the best way to do that is a stable

school. >> be sure to join us july 21 and 22 when we feature our visit to alaska. >> the house next week takes up the defense department spending bill. leo shane with "military times" what are the main priorities versus the president's request? >> it is pretty close to the president's request. and looking at the at the same level of military end strength. and same level for the military pay raise. and generally the same level of funding. little bit lower than what the administration asked for. we have gotten a note from milk mulvaney and wants to see those accounts fully resto