Pentagon Warns: 'Pervasive' Industrial Spying Targets U.S. Space Tech

In 2011, two Chinese nationals were convicted in federal court on charges of conspiring to violate the Arms Control Export Act after attempting to buy thousands of radiation-hardened microchips and sell them to China. The day the pair were sentenced to two years in prison for the plot, the U.S. Attorney for the Eastern District of Virginia, Neil MacBride, called it an example of how 'the line between traditional espionage, export violations and economic espionage has become increasingly blurred.'

It's also an example of the increasing number of military and space technology espionage cases being uncovered in the U.S. each year, according to a new report from the Defense Security Service, which acts as the Pentagon's industrial security oversight agency. According to the report, first noted by InsideDefense.com, industrial espionage has grown 'more persistent, pervasive and insidious' (.pdf) and that 'regions with active or maturing space programs' are some of the most persistent 'collectors' of sensitive radiation-hardened, or 'rad-hard' microchips, an important component for satellites. And now with North Korea having successfully launched its first satellite, it's worth taking a close look.

The report doesn't single out any country for space-tech espionage, lumping the suspected origins of espionage plots together into regions such as East Asia and the Pacific. But according to the report, many espionage attempts arising in Asia reflect 'coordinated national strategies' by governments that 'perceive themselves as being surrounded by threats, including from each other.' Because of this, these governments desire to upgrade their armies and make themselves more self-sufficient. Front companies originating in Asia and involved in espionage have also attempted to sell technology to countries that are ' wink ' 'hostile to U.S. interests.'

If it's China the DSS is referring to as a 'hostile' country, then it's a bit unusual. As a rule, the U.S. normally takes pains not to characterize China, or most countries, like that, with exceptions such as North Korea, Iran and Syria.

Still, these are only hints, and it's difficult to pinpoint exactly where these cases are coming from. Twenty-three percent of espionage attempts from East Asia were 'attributed to cyber actors and were non-specific in nature.' Attempts to acquire technology through front companies is also difficult to track. Governments and militaries in Asia use 'complex and very opaque systems' to acquire American technology, and it can be hard to establish the identity of a government behind a shady front company with no specific connections.

These cases also have often little to do with classic espionage ' like infiltrating spies into the Defense Department ' or even smuggling. Instead, most are the seemingly more mundane ways to steal military secrets, such as seeking technology directly from the suppliers and then exporting the technology without a license.

In other words, the 'spies' just ask defense, aerospace and technology companies for what they want, and hope the companies don't ask too many questions. The spies also frequently appear to be representatives of what seem to be otherwise legitimate companies, but are actually fronts. They file Request for Information paperwork (or RFIs) to get details from the government about various technologies. There's also a growing amount of 'suspicious network activity' that can include malicious programs to infect sensitive databases.

Nowhere is this more true than for rad-hard microelectronics. These chips are frequently used in space, as they're built with a greater number of transistors than other microchips, which helps protect them against the onslaught of extra-atmospheric radiation while in orbit. They're super important to satellites and NASA space missions, for one. There's also a growing number of cases targeted against other space technologies used in 'processing and manufacturing' and directed-energy systems. In 2011, reports collected by the DSS on attempts to acquire sensitive rad-hard electronics increased by 17 percent, a pretty sizable jump.

It's worth not overstating the espionage cases as a whole, though. Espionage cases against technologies that are targeted most often ' information systems, lasers and optics, aeronautics and electronics ' have not increased. But there is an increase in the overall number of reports. Some of that is probably just due to greater reporting of cases, and not necessarily more espionage. According to the DSS, the number of case reports increased by 65 percent from 2010 to 2011. The number of these reported cases that turned into 'suspicious contact reports' increased by 75 percent, though. But that may just mean the DSS is getting better at spotting the espionage. And the only consistent data is a 'relentless upward trend' in the number of cases.

The other question is how the espionage attempts break down across regions. It's probably not surprising that the Asia-Pacific region counts for most: some 42 percent. The Defense Security Service also thinks it's very likely the attempts to seize rad-hard chips will continue to increase, as 'the perceived need within this region for modern militaries combined with growing economies will very likely fuel the continued targeting of U.S. technologies,' the report notes. Combined with the Near East ' or the Middle East and North Africa ' the number jumps to 61 percent. The rest largely come from Europe and the former Soviet bloc.

It also shows just how spycraft is often rather humdrum. As opposed to the fantasy image of spies, the reality is often ' like the two Chinese nationals arrested for violating an arms embargo ' as simple as calling up a company for information. The result is that company's trade secrets ending up in China or worse, North Korea, which is a nightmare for any business owner. But for the U.S. government, it's a serious threat to national security.