Feds Lease Space for Classified Operations From Foreign Owners

Officials say security risks include espionage, unauthorized access

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The federal government leases space from foreign owners that is used by various agencies to store sensitive information and conduct classified operations, raising concerns about potential security implications.

Office space used by the Federal Bureau of Investigation, Drug Enforcement Agency, Secret Service, and other agencies is leased by the government from companies based in foreign nations, according to a new audit from the Government Accountability Office assessing foreign ownership of "high-security space."

As of March 2016, the General Services Administration leased high-security space in at least 20 different buildings owned by companies based in China, Israel, Japan, South Korea, and other foreign nations.

"The 26 tenant agencies occupy about 3.3 million square feet at an annual cost of about $97 million and use the space, in some cases, for classified operations and to store law enforcement evidence and sensitive data," the report, a sensitive version of which was sent to Congress in November, states.

"Federal officials who assess foreign investments in the United States and some tenant agencies occupying high-security leased space told GAO that leasing space in foreign-owned buildings could present security risks such as espionage and unauthorized cyber and physical access."

The leased spaces included six different FBI field offices; three DEA field offices; and other offices used by the State Department, the Department of Defense's Army Corps of Engineers, the Social Security Administration, and various departments within the U.S. Treasury.

"Because the tenants include intelligence and law enforcement agencies, this high-security space is used, among other things, for classified operations and storage of weapons, law enforcement evidence, and sensitive data," GAO auditors wrote.

The report, issued Monday, could stoke concerns over cyber security and the potential of cyber attacks or espionage from foreign nations following Russia's cyber intrusions related to the U.S. presidential election. Hackers from Russia and China have breached computer systems used by U.S. organizations and government officials.

While Russian companies are not among those owning space leased by the federal government, eight of the offices are owned by companies based in China.

"A DHS foreign investment official said that potential threat actors could coerce owners into collecting intelligence about the personnel and activities of the facilities when maintaining the property," GAO auditors wrote. "The official said this situation could occur by direct observation or surreptitious placement of devices in sensitive spaces or on the telecommunications infrastructure of the facility."

"A DHS cybersecurity official said that advanced persistent cyber threats (adversaries possessing sophisticated levels of expertise and significant resources to pursue their objectives) tend to come from foreign sources," they wrote. "In addition, a representative from a real estate company said that foreign ownership could pose a cyber risk in buildings with data systems and sensitive information."

Nine agencies were unaware that their offices were owned by foreign companies. When notified, some indicated that they would ramp up security measures to safeguard their operations, while others downplayed concerns.

"The Secret Service indicated that its counterintelligence branch determined that foreign ownership of a building it occupies could raise counterintelligence and security concerns," the report states.

"The Secret Service indicated that the integrity and protection against potential compromise of the agency's protection and intelligence information, criminal investigations, and personal identifiable information would require implementing additional countermeasures to mitigate any threats and protect the agency's operations as a result of occupying space in a building that we identified as being foreign owned."

The report comes as lawmakers grapple with increased foreign ownership of U.S. assets, particularly by enterprises in China. According to analysis from the Rhodium Group, the combined Chinese foreign direct investment in the United States grew to nearly $46 billion last year, up from $15 billion in 2015 and an annual average of less than $500 million before 2008.

Last September, a group of U.S. lawmakers successfully pushed for a reassessment of the Committee on Foreign Investment in the United States, or CFIUS, which assesses potential national security implications of transactions that could result in foreign control of U.S. businesses. They cited concerns about state-owned and influenced companies in China and Russia and the rise in information warfare.

CFIUS, which is overseen by the Treasury Department, plays only a "limited role" in identifying risks of the federal government leasing office space from foreign companies, according to the GAO.

Published under: China , GAO