SECURE EQUIPMENT ACQUISITION POLICY (SEAP) MINUTES OF MEETING OF 3 NOVEMBER 1981

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP91-00280R000100130021-6
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 9
• Document Creation Date: December 23, 2016
• Document Release Date: September 11, 2013
• Sequence Number: 21
• Publication Date: November 4, 1981
• Content Type: MEMO

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4 NOV 1981
MEMORANDUM FOR THE RECORD
r--)]
SUBJECT: Secure Equipment Acquisition Policy (SEAP
Minutes of Meeting of 3 November 1981
1. The fifth meeting of the subject group was held on
3 November 1981 with the following personnel in attendance:
2. The meeting kicked off with a brief discussion of the
visit to NSA on 27 October to meet with who
is Deputy Director for their DOD Computer Security Center.
Attendees at that session agreed that the Chairman's memorandum,
dated 29 October, adequately described the meeting.
noted that, while had indicated that i as no
policy on acquisition of ADPE of foreign origin or firms with
foreign ownership, the Telecommunications Group does have a
policy which is exclusionary for such firms.
3. The attached agenda was adhered to with the documents
'listed-therein for distribution being handed out. Also distributed
were two article's (attached) from the New York Times:
a. Washington Watch, "Foreign Ties of Companies,"
by. Clyde H. Farnsworth, dated 26 October 1981.
b. "Tokyo, Calif., NEC, Toshiba, Toyo, et al., are
opening plants and old wounds in the Silicon Valley," dated
1 November 1981.
4, No detailed review of distributed documents took place,
however, the following questions were raised:
LaIAL
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STAT
STAT
STAT
STAT
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ragraph 19.c.(2) of
may be too restrictive.
c. Paragraph 19.e.(1)(a) of the
to fungible components.
d. Paragraph 19.e.(3) suggests that great cost
advantage could be a basis for policy exception. Trading
1 off security for cost advantage gave the group a problem.
draft version
draft refers
e. Paragraph 19.d.(2)(c) of
changed to delete the word, "specific."
paper
should be
STAT
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STAT
STAT
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5. Around the table discussion covered such points as
whether the resultant policy should be broader than ADP since
similar threats exist in other areas. 'Would handling of all
STAT procurements give the Agency additional protection?
Can we develop a policy, an HR, etc., which excludes foreign
ownership, and the impact of the Buy American Act?
6. Substantial discussion as to engineering of the Qroup's
final product occurred. The concensus was that the
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draft is nearing completion and should be our primary target. Once
the HR is agreed upon the policy statement and the supporting
documentary paper will be completed. Since HR's may take years to
issue, the thought was put forward that a Headquarters Notice
including the policy pronouncement wouldbe an appropriate medium.
7. The meetin
analyze the
comments in to
conc uded with agreement that members would
draft in depth and have their respective 25X1
by close of business on Thursday, 5 November. STAT
will incorporate comments and provide a revised draft to
members early during the week of9 November. A group meeting will WA!
occur subsequent to 9 November to "wordsmith" (criticize) the paper.
A subgroup of the Task Force will,attempt to seclude itself and
complete the policy paper and supporting documentation during the
week of 19 November. A target for completion of all effort has
been set as 1 December 1981.
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STAT
Chief
Procurement Management Staff
Office of Logistics
Attachments:
A. Agenda of 3 Nov mtg
B. N.Y. Times article dtd 26 Oct 81
C. N.Y. Times article dtd 1 Nov 81
2
P.rilainDATM
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TASK FORCE
SECURE EQUIPMENT ACQUISITION POLICY
MEETING AGENDA
3 NOVEMBER 1981
o Discussion of Meeting with NSA
o Papers:
Procedures to be Utilized in Procurements involving
Foreign ADP by Lane (distribute at meeting)
NSA Contract Clauses Restricting Off-shore Procurement
(distribute at meeting)
Keynote Address - Computer Security Initiative - by Inman
(distributed)
Address by Lincoln Faurer (distributed)
Secure Acquisition of Agency ADP Systems by
(distributed)
Questions (to be distributed)
O Other Inputs from Task Force members
0
Other actions or inputs considered necessary prior to wrap-up.
Team to complete:
Final Paper
HR
Policy Statement
Organizational changes
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STAT
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sionskina,
`-fv)11., 2.?( o ?TA u
ashin
oreign Ties
:Of Companies
on Watch
Clyde H. Farnsworth
WASHINGTON
FFIC1.AL Government policy is still to en-
courage foreign investment, but Congress
and some departments, especially the De-
/eine Department, are starting to worry about the ?
Implications of the ownership or some high-tech-
-nialogy American enterprises by foreign govern--
pent-controlled companies.
rench nationalization is one of the concerns,
:anti has already led to an impact study by an inter-
:agency group known as the Committee on Foreign
,Inyestment in the United States. . ? -
- One of the nationalization targets is Pechiney.
ligine Kuhlmann, a big French metals and mining
-company that owns the Howmet Aluminum Corpo- -
'ration of Greenwich, Conn., and the Howmet Tur-
bine Components Corporation of Muskegon, Mich..:
The turbine company is the leading American sup-
-per of turbine blades for jet engines. - .
? The Committee on Foreign Investment, made
representatives of the Treasury, Commerce,
Stitte, Defense and Labor departments and the Of.
fice of the United States Trade Representative, is
analyzing, among other things, the possibility, of ,
the transfer of sensitive data: ? ?
Another issue is the possible conflict between
business as usual for the American company and
broader French Government policies of spurring
the French aircraft industry. Under one hypothe-
Sis, the French Government could squeeze the
American company dry of secrets and capital in
?- hopes of giving an' edge to French competitors.
The House Commerce, Consumer and Monetary
:Affairs Subcommittee, under its chairman, Benja-
min S. Rosenthal, Democrat of Queens, is examin-
? ing the whole question of sensitive data transfers
? In connection with the Kuwait Petroleum Corpora-
tion's bid for the Santa Fe International Corpora-
tion: The Kuwait company has a single stockhold-
er, the Kuwaiti Government. Santa Fe, among
other things, builds oil drilling rigs and nuclear
power stations. .
?
;. ,?
? Other issues are raised by investments - from
South Africa and Canada. The politics of apartheid
Come hp in the acquisition by Consolidated Gold
Fields Ltd.. of 25 percent of the Newmont Mining
Corporation, which in turn is one of the leading
-- holders of shares in the Peabody Coal Company.
Ottawa's policies of freezing American compa-
nies out of Canadian energy development are
Drvvoking thoughts of retaliation in this capital,
11111;
/ all
1'I f1 (
,. ? ? ttuart Goldenberg
? ? --
? perhaps even by completely halting the flow of in-
vestments from the north. The State Department
is the loudest of the voices on the interagency com-
? mittee arguing that this would serve little purpose.
"They're helping us ,find oil," said one State De-
partment official. .."Why drive their rigs back
_ ?
The United States has three times the invest-
ment abroad of foreign companies in this country.
Another issue raised by those opposed to barriers
? is the fate of those foreign holdings if the United
States suddenly turned protectionist.
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"V6\1 -slit*/
yo, Calif.
ket penetration. The Toyo Electronics "the world's turning point." It
r, NEc,.'1"`ohiba, ,, -.. Eater Systems of Sunnyvale in 1971, a eessing and telecommunications, and
Industry Corporation helped found stressed greater emphasis on data pro-
chip maker specializing in a new semi- urged Japan to take the lead in prod-
Toyd et al.--are
.- .1 . / _ D.. . conductor technology, gate arrays - uct imovation.
Fujitsu has a disk memory operation
. Such statements May not be idle
:a! opening plants in Santa Clara and owns 36 pereentein 1 promises. Japan-watchers remember -
. _ ___
e "e and old Wounds _ .
in i tliecomUthii puter makerAmdahl. at a decade ago, after the ministry
Japanese - afzi gan- les, such as gave semiconductors top priority.
, - th -
- Mitsubishi Electric and Oki Electric Japan embarked on a 10-year program
., . . . .
..'-'. .the'. Silicon Valley. ..
, ? Industry, are at the initial stages of ex- that left American chip makers, which ' ?
pension, with sales offices in the Val-
e once au but owned the world market, '??
a e ? - ' leleand elsewhere in this country. bloodied and shaken.-Japan has cap-
-
e s
e Japanese plants here now account tared large chimes of the market, In.. ..
By MICHAEL S. MALO for only a tiny part of all United States
e ? NE
semiconductor sales of some $8.7 bil- eluding at least 40 percent of the world
market tor - the' popular 16,000-bit :
-...... -?.. .andprobably less than $50 million memory clap.. - _ : ? -. ? - - - - ? - .
- SANJOSE. Celli- ' of the worldwide industry, which had - : Already, signs cif the- 'change in
Of J, ..e.eon e. sales .a.s. j GO.4 ? 4,11.? ...e - Japanese priorities are becoming vis. ..
fiFTEN vill ed for copying 4e1A 1.;111; ;,,, c.1 1 ? ....... .,,...
? American technology, bringing Japanese share is certain to 'explode,
it home and then sending it back .., experts here say. or e, .Japa- ,. ible. Memory chips are used in come
, to haunt the American companies that , puters to retain information and cone-
. nese sernicenductor sales came to $4 peters also uselegic chips to process
-- developed it, the Japanese have be- -. billion last year, one-third of total
'-'-' come established, if not entirely ap- Information. Japanese companies are
. sales by United States companies, ac-
- 4' predated, residents of the semicon- '. cording to John shea, president of the , beginning to move into this business.
-el ductor capital of America, Califon...a Technology Analysis ' Group nt_ san Toyo's involvement in Exar and the
recent joint-venture agreement in gate
*?? *i. nia's Silicon Valley. - - , - - --: Jose. -:--- ??? . ; - e, - arrays?one way of making logic
'-- . -? Major Japanese companies-have - P onmPanies here fume not chips -- between Toshiba and Santa
l'---.taken over several small concerns, - limited themselves to semiconductors. . cara,s 1st Logic Inc. point in that di-
d:7--
opened subsidiaries and are embark- : , A Hitachi unit,- Nissei Sangyo Instru- - - random, -..., ? .e.... ,,, . : : .
...s. ?
41' 'Mg on a construction and hiring pro-. - meats, ma.kes scientific laboratory in- . The. conatnenicatitees revolution of
-- gram that may make some of them , struments in Moutainvi MS. Ricoh of the 1930's, vrhich wauld lead to cam-
among the largest semiconductor chip . America, becoming a major force in ? munic.ations networks combining
.'*-- -makers in America. --- : ? . -? - so-called daisy wheel printers, has a
1.1-1`? , Foremost among them is NEC Elec- _ research center in San Jose. And - .
. cornputens with telecommunications
l'Ar ironies U.S.A. Inc., the American arm - Kyocera International, a unit of Kyoto .. in data networks, could lead to a mar-
of the Nippon E.1.-tric Company. Since. ' - Ceranaic, operates an integrated cire - .ket that some analysts value at hem- :.
. opening its first American sales office; ' cult packa,ging plant in San Diego. - - a.. dredsrady of billions of dollars. Japan es al.
'''?:-..-': in 1974, NEC Electronics has geol.& Hiroe Osafune, c.hairman of NEC ? a big competitor in telecom-
r4 from seven employees to more than ? --ia.etronies, afters tara reasons to ex. municatitens, but it is. likely to need
-?:-: 600? most of them gained in the 1977 - : .pand in the United -States. "We need technologies it has not 'fully developed.
i" purchase of the semiconductor maker,: . - market' share," he said, "and 50 per- . at home. .. .. . . . .... . ? ..... ..?
te - Some industry experts expect to see .
Electronic Allays, of Mountainview.- ; -- _cent of the sernicondtictrir market in the Japanese resort to techniques that:
;,:Now, NEC has announced constnIc-' ''-? the world is in the U.S. So we needex- -. . they perfected years ego 41 winning a .
ton -of a $100 million, highly auto- a' perienee here."' And, he said, Ameri-
e! '
- mated chip-ma.king facility in the Sac- can plants vemild be inern to trad positon in semiconductors.
ramento suburb of Roseville, 100 miles barriers that the United States miadlte . ? "Ten to 15 years ago,"' said Selig"
northeast of t. Sill= Valley. By ' e ag t Japanese inaports. . ? - Gertels, director of technology studies -
le 1985, the company says, the plant will , . . . . . ? . u-- .. - for the Quantum Science Corporation,
-7Y investing in plants here, the
..- be one of the largest of its kind in the =.-ee a New York market eesearch firm-, -
' 1
world, employing 600 persons and . :,..,-.. Japanese have dispelled some - "Japanese companies sent creerthreee--
- churning out more than $200 million in ---4i.e9 industry- resentment But not to five-man groups of what they called
state-of-the-art memory and micro- all. The most persistent voice is that of 'liaison offices' to conduct legal-or
: processor chips a year. ? -, - - - - . -Charles Sporck, president of the Val- - quasi-legal -. industrial espionage- in
, "We've wanted manufacturing here -lay's largest chip maker, the National areas where the Japanese felt they had
for three years ? Since we saw trade Semiconductor Corporation. "We're at weaknesses. It worked. By 1975 to le30
- conflicts in the television and automo. war with Japan," he told employees a the Japanese were more or less sa.tis- -.
bile industries," said Keike Yawata,. - . few weeks ago, "net with guns and fled that they had reached an equiva-
am-
,a. president of NEC Electonics U.S.A. s. ': ?-? munition:hut an economic war with lent level with us- Exports of high tech-
, T 'And that is -just the beginning." - - -technology, productivity and quality." nolegy products to the U.S. exceeded ?
NEC's biggest Japanese competitors, ea: Mr.- Shea; of Technology Analysts. in1PDIts'" ? . .----------
-' '
some of which have publicly vowed to : :adds: ? "We've grown accustomed to Now. says Mr- ocess
match NEC step for step in the United ,, seeing them aneund, but the Japanese has tegUn again, this time in software.
. States market, are also moving In.-- ? - - - right now are a greater threat then All the Japanese market research, be
;Toshiba, which bought its own SW- : they've ever teen." - _ . , . , said, "tells there that their entry into.
con Valley cLer'p. maker, Marurnan - ? What concerns Mr. Shea and others everything imm computers to office
Semiconductor, almost two years ago, .are Japanese statements indicating equipment will be limited by soft ware.
his been worisi. to shore up the cone- desires to go beyond semiconductors So, being normal intelligent people
pan y as a platform for American mar. into other electronic technologies and they are now making every effort to
- ? - , computer software. They point to a develop software."
. . , ? - - .
. position paper published last year by And, he adds, "they are very astute.
Michael S. Malone is a freelance the Japanese Ministry of International - There's no reason. to, expect they'll
- _writerinSineelosee_Co4 - _ - ? Trade and Industry calling the 1980's -. fail -7 .:. ...., a, . e ..... A.?,.e?e .?'-e----es--,..0 -
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