Pentagon Reportedly Plans Business-Cover Spy Unit for Economic Warfare Against China

The Pentagon is reportedly considering a deep-cover intelligence unit whose officers would pose as businesspeople or other private-sector workers to collect economic intelligence on China and other U.S. competitors. Six people familiar with the planning described an initiative that is not yet operational, has no settled institutional home and has apparently not been briefed to relevant congressional committees.

The Defense Department categorically denies that the initiative exists. Pentagon deputy press secretary Jacob Bliss said the account was based on information that was “simply not true” and suggested those describing it were misinformed or deliberately misleading. The CIA declined to comment, while Tom Rakusan, the former senior CIA operations official reportedly overseeing the planning, did not respond to a request for comment.

That unresolved conflict defines the inquiry: multiple accounts describe planning for an unusually robust Pentagon espionage arm, but the department rejects the premise and no operational program has been confirmed. The key questions are therefore structural rather than tactical what authority would govern it, where it would sit, who would oversee it and whether the Pentagon could maintain credible commercial identities in a heavily documented digital economy.

A business identity would be more than an alias

Officers operating without an overt government affiliation are commonly described as working under nonofficial cover. Unlike personnel attached to an embassy, they cannot depend on diplomatic status or immunity if detained. Their private-sector role also has to withstand ordinary professional scrutiny, which requires credible expertise and a coherent history rather than paperwork alone.

That challenge has grown as biometric records and persistent digital traces make personal histories easier to compare. Military service records present an additional complication for Pentagon personnel. Previous commercial-cover efforts at both the CIA and Pentagon have encountered training, management and credibility problems, according to former officials.

The labor pipeline is another constraint. Former officials said the CIA’s own nonofficial-cover program has declined as experienced officers retire without enough replacements being trained. One former CIA official said an internal assessment produced during the COVID era found that roughly 75% of the agency’s deep-cover officers would be eligible to retire by the mid-2020s. Building another organization would therefore require scarce personnel as well as money and authority.

The unresolved legal home controls the oversight

People familiar with the planning said the contemplated unit could become a stand-alone organization or expand existing Pentagon clandestine human-intelligence capabilities. Former officials half-jokingly called its unsettled legal position “Title 60,” combining the military framework of Title 10 with the intelligence framework of Title 50.

The joke points to a consequential institutional boundary. A Congressional Research Service explanation of the two frameworks notes that Title 10 supplies much of the legal structure for military roles and operations, while Title 50 governs major intelligence responsibilities and procedures. Activities can overlap, but their classification affects the chain of command, funding, legal constraints and which congressional committees receive notice.

Traditional intelligence collection is also legally distinct from covert action. Collection generally seeks information in secret. Covert action is intended to influence political, economic or military conditions abroad while concealing the U.S. role. The reported emphasis on supporting “economic warfare” leaves a critical unanswered question: would officers only gather intelligence, or would a future mission include activities intended to change economic conditions?

The answer would shape notification requirements. For significant non-covert intelligence activities, intelligence agencies generally must keep congressional intelligence committees fully and currently informed. A covert action requires presidential authorization and notification through a finding, although access can be restricted in extraordinary circumstances. Defense activities conducted through a military chain of command can follow different procedures, as detailed in the Congressional Research Service overview of notification rules.

Economic intelligence already has an overt counterpart

The reported planning would complement visible Pentagon economic-security work rather than begin it. Deputy Defense Secretary Steve Feinberg announced an Economic Defense Unit, led by George Kollitides, that has disclosed hundreds of millions of dollars in public investments involving mining and refining. One transaction used $750 million in Pentagon funding to help secure a rare-earth deposit in Brazil.

Those overt investments have named organizations, public funding and identifiable projects. A deep-cover collection arm would operate on the opposite side of the transparency boundary, placing government officers behind private identities. It could also intensify friction with the CIA by duplicating capabilities in a field where experienced personnel are already limited.

Before such a unit could move beyond planning, the Pentagon would need more than plausible business roles. It would need a defined mission, durable legal authority, an accountable chain of command and a congressional notification path suited to what the officers would actually do. None of those elements has been publicly identified, and the department maintains that the initiative itself is not underway.

By Thomas Caldwell — AMI’s senior editor for mechanical and mobility engineering, covering vehicle electronics, systems integration, electrification, chassis systems, propulsion, and safety policy.