Hacked U.S. tech contractors oppose anti-China procurement law

Technology contractors are warning Congress that a new counter-cyber spy law will leave agencies even more vulnerable to breaches by slowing the purchase of security systems to screen for Chinese-made components.

It might seem counterintuitive for companies allegedly robbed of proprietary designs by Chinese hackers to oppose protections. And it’s worth noting that information technology businesses generally are reluctant to publicly accuse China of hacking, partly because they have Chinese customers. 

But the firms say discriminating against China could encourage retaliation and additional federal security audits could prevent the timely installation of safe network controls.

"The requirement to assess every IT product purchase, absent any triggering threshold,  will likely slow the federal acquisition process and put impacted federal agencies behind the security innovation curve because they would not be acquiring and using the latest security innovations," 11 technology associations wrote in an April 4 letter to House and Senate leaders. The cosigners include TechAmerica, the Software and Information Industry Association that represents federal cloud providers; and the Chamber of Commerce, whose own data reportedly was compromised by Chinese hackers. 

The mandate, signed into law on March 26, applies to the departments of Commerce and Justice, NASA and the National Science Foundation

The provision defunds IT acquisitions unless an agency, "in consultation with the Federal Bureau of Investigation or other appropriate federal entity, has made an assessment of any associated risk of cyber espionage or sabotage,” including “any risk associated with such system being produced, manufactured or assembled by one or more entities that are owned, directed or subsidized by the People’s Republic of China." If a technology clears inspection, Congress requires a report asserting that the purchase "is in the national interest of the United States."

The IT associations argue that the origins of a product are irrelevant to a system's integrity and that targeting Chinese-controlled companies could come back to haunt U.S. tech companies. 

"Product security is a function of how a product is made, used, and maintained, not by whom or where it is made," their letter states. “Geographic-based restrictions in any form risk undermining the advancement of global best practices and standards on cybersecurity."

The industry representatives added that the Chinese government might retaliate against U.S.-based IT vendors by enacting a similar policy, or other countries might emulate U.S. policy by, in turn, blacklisting American goods. 

Lawmakers did not hold hearings on the measure but rather inserted it into necessary government funding legislation that was quickly passed with little opportunity for changes. 

In October 2012, the House Intelligence Committee published a nearly yearlong probe into Chinese firm Huawei that suggested the world's second-largest telecommunications company facilitates wiretaps for the PRC through the equipment it sells stateside. Committee leaders at the time urged U.S. companies doing business with Huawei to use another vendor.

Computer forensic firm Mandiant disclosed evidence on Feb. 18 linking the Chinese military to gross intellectual property theft at more than 100 companies in mostly English-speaking countries. Two days later, the Obama administration released a "Strategy to Mitigate the Theft of U.S. Trade Secrets," which singled out China.

Some of Thursday's signatories supported that plan, which focused on prosecuting cyber spies more aggressively. 

Robert Holleyman, president of the Business Software Alliance, said in a statement in February, “We strongly endorse and applaud the administration’s focus on curbing theft of trade secrets, which poses a serious and growing threat to the software industry around the world.”

This week, the businesses represented are asking that Congress "consider a more constructive approach to this issue” than country-of-origin restrictions, specifically bilateral dialogues between the United States and China.