Chinese Influence in Federal DoD Contracting Spend—Strategic Peril for United States

Abstract

The purpose of this ARP Symposium paper is to highlight major shifts in Chinese policy directed at infiltrating U.S. defense industries through federal contracting and supply chain assimilation and infiltration, and the necessity to enact legislation and regulations to prevent it. It represents a shorter version of a working paper in the NPS ARP working paper series under the same title. In the past decade, the amount of U.S. DoD contracted spend with Chinese national firms has skyrocketed. This represents a major strategic challenge and potential hazard for U.S. national security. China now holds a high position in the Defense News Top 100 contractor profile. Examining the top 20 of the top 100 shows the new preeminence of China and its emergence as a strong participant in the receipt of U.S. defense spend. Seven of the top 20 DoD spend recipient firms are Chinese. Totaling the amount of spend with Chinese firms from the 2018 data in the 2019 extraction yields $92,040 defense revenue in millions of dollars—in other words, more than $92 billion. The change in one decade, from zero dollars to more than $92 billion is significant in terms of sheer value, but also in the strategic inroad that it represents in the United States’ reliance on China on prime contract support. This includes hardware and services. This paper highlights the major issues and challenges the DoD faces in protecting its military systems from Chinese influence and outright compromise, which can damage U.S. national security. The Chinese, through its long-term strategy “China Made 2025” and the “Belt and Road” initiatives, plan to take control of major portions of U.S. intellectual, technological, and production capability. And this isn’t just in theory; it’s been happening and is happening currently. The Chinese have a long-term vision, more so than most U.S. policy-makers and business planners are accustomed. The long-term Chinese vision, although already showing strong inroads, and dangerously proactive measures to acquire and supplant U.S. supply chains, through U.S. contracting out, outsourcing, green-fielding, and corporate and political influence and takeover is a Sun Tzu strategy—long term and persistent. And take note! This is not a flash fad that the Chinese will abandon easily or without a fight. For every step the United States takes, and will take in the future, it’s very likely going to be met with a subtle, yet effective, counter-plan. Sun Tzu strategy calls for long term vigilance—the Chinese are noted for their persistence. But that doesn’t mean the United States should not take proactive action to stop the many talons of Chinese communist infiltration of our supply chains, productive capabilities and capacities, and intellectual property assimilation and piracy. On the contrary, the United States should do everything at its disposal to end the onslaught. This is a call to action!