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Corporate Espionage Concerns Could Affect Contracting

July 17, 2013

Frank Kendall, undersecretary of defense for acquisition, technology and logistics, told the Senate Banking, Housing and Urban Affairs Committee that he is concerned about the level of cyber attacks affecting defense suppliers. As a result, he is considering changes in contracting procedures to mitigate the risk of corporate espionage. “I’m talking particularly about design information that might not be classified, but if you acquire that information, it certainly shortens your lead time to building things, and it reduces your costs,” he told committee members. “That’s an advantage we don’t want to give our potential adversaries.”

Kendall expressed his concerns during his testimony in support of the reauthorization of the Defense Production Act, which grants the president the power to ensure timely procurement of essential services and materials during war or national emergencies. Parts of the act are set to expire on September 30, 2014.

The law is an urgent operational requirement that is as necessary today as it was in 1950 when it was enacted, Kendall said. “Industry has no obligation to prioritize national security requirements, and at times, they’re financially motivated to do otherwise,” he stated. “New, expanded and modernized domestic industrial capabilities reduce the risk of foreign dependencies caused by geopolitical factors or other economic issues and strengthen the economic and technological competitiveness of U.S. manufacturers.”

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