‘We expect vendors dealing with the Department of Defense to put U.S. national security ahead of profit maximalization,’ the defense secretary said.
U.S. Defense Secretary Pete Hegseth said the Trump administration has brought to an end Microsoft’s employment of Chinese nationals to write code for sensitive Pentagon cloud systems.
Hegseth said in a video address posted on X that “the use of Chinese nationals to serve the Department of Defense’s cloud environment—it’s over.”
Hegseth gave his initial findings after Microsoft was issued a formal complaint for a “breach of trust” over its Obama–Biden era program, called “digital escorts,” that had been running for almost a decade.
“We expect vendors dealing with the Department of Defense (DOD) to put U.S. national security ahead of profit maximalization,” Hegseth said.
Under the program, Microsoft engaged Chinese nationals, remotely supervised by American “digital escort” contractors, to service DOD cloud environments despite the clear risks to national security.
“[The] program was designed to comply with contracting rules, but it exposed the department to unacceptable risk,” Hegseth said. “I mean, if you’re thinking ‘American First’ and common sense, this doesn’t pass either of those tests.”
Third Party Audit, DOD Investigation
The secretary said the DOD was taking two courses of action to address the risks that remain from the program in China.
He said an independent third party will audit Microsoft’s China-based program, which will be “free of charge for U.S. taxpayers” and include all “code and the submissions by Chinese nationals.”
A parallel investigation will be run by DOD experts into the “digital escort” program and the Chinese nationals whom Microsoft employed.
“These investigations will help us determine the impact of this digital escort workaround. Did they put anything in the code that we didn’t know about? We’re going to find out,” Hegseth said.
He said that all DOD software providers will identify and terminate any Chinese involvement in the DOD system.
“It blows my mind that I’m even saying these things … that we ever allowed it to happen. That’s why we’re attacking it so hard,” he said.
Microsoft in July said it had ended its employment of China-based engineers to provide technical support to the DOD. Its announcement came after ProPublica published a report on the practice that caught the attention of Sen. Tom Cotton (R-Ark.).
Cotton, in his questioning, sought information on “all security classification guides provided to Microsoft or other contractors under the Joint Warfighting Cloud Capability (JWCC) program.”
Amazon, Google, Microsoft, and Oracle were awarded cloud contracts valued at up to $9 billion in 2022 to build the JWCC to provide cloud services across all security and classification levels.
Microsoft in China
The issue came to a head for Microsoft in 2024 when its president, Brad Smith, appeared before the House Homeland Security Committee to answer questions over reports that the company had asked about 700–800 employees, mostly engineers of Chinese nationality, to relocate out of China as it restructured operations to reduce its engineering presence in the country.
The Wall Street Journal reported in May 2024 that the tech giant had offered hundreds of employees in its cloud-computing and artificial-intelligence operations the opportunity to relocate to the United States, Ireland, Australia, and New Zealand amid U.S.-China tensions.
The lawmakers had also questioned Smith about Microsoft’s ties with China’s ruling communist regime and its security “shortfalls” that allowed China-based hackers to breach the company’s systems in 2023.
A March 2024 report by the U.S. Cyber Safety Review Board (CSRB) blamed Microsoft’s corporate culture for the hack. The report stated that a “cascade” of “avoidable errors” had made the breach, which was “consistent with espionage objectives,” possible. Tens of thousands of emails, including those of top U.S. officials, were compromised in the attack.
“We accept responsibility for each and every finding in the CSRB report,” Smith acknowledged in his remarks.
The Epoch Times reached out to the DOD for comment but received no response by publication time.
Aaron Pan, Andrew Thornebrooke, Frank Fang, Samantha Flom, and Reuters contributed to this report.
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