The Pentagon will no longer allow Chinese nationals to support Department of Defense (DOD) cloud environments, Defense Secretary Pete Hegseth said in a video posted to X on Aug. 27.
Hegseth said the arrangement – part of a Microsoft program known as “Digital Escorts” – allowed coders from China, remotely supervised by U.S. contractors, to assist with sensitive DOD cloud systems. He called the setup an “unacceptable risk” to national security.
The move follows a ProPublica investigation that prompted the Pentagon to launch a two-week review of the program, known internally as Microsoft’s “digital escort” system. The report revealed that China-based engineers, though denied direct access to DOD systems, submitted code through U.S. citizens with security clearances – intermediaries who often lacked the technical expertise to detect potential threats.
“I want to report our initial findings, so the use of Chinese nationals to service Department of Defense cloud environments is over,” Hegseth said in the video. “This never should have happened.”
“We’ve issued a formal letter of concern to Microsoft documenting this breach of trust, and we’re requiring a third party audit of Microsoft’s digital escort program, including the code and the submissions by Chinese nationals,” he continued.
Despite describing the program as exposing the department to unacceptable risk, Hegseth acknowledged that it was designed to comply with contracting rules, but said it still fails to meet the department’s “America First” mission.
In response, Microsoft has defended the program as contractually compliant but has since announced it will discontinue the use of China-based engineers for any DOD work.
“In response to concerns raised … Microsoft has made changes to assure that no China-based engineering teams are providing technical assistance for DOD government cloud and related services,” Microsoft spokesperson Frank Shaw said in a separate statement on X.
As part of the department’s review into the program, Hegseth said the DoD has launched a broader investigation into its impact and is requiring an independent audit of Microsoft’s digital escort system, including any code submitted by Chinese personnel.
“Did they put anything in the code that we didn’t know about? We’re going to find out,” Hegseth said, adding that a separate DoD probe will also examine the activities of those involved.
He also said that all vendors working with the DOD will be required to identify and terminate any involvement by Chinese nationals in DOD systems moving forward.
“We expect vendors doing business with the Department of Defense to put U.S. national security ahead of profit maximization,” Hegseth said.
While the department has yet to release official findings from its review, a July 18 memo from Hegseth – issued promptly after the program’s discovery – directs the DOD chief information officer to strengthen protections against foreign supply chain threats. The memo also calls for increased oversight and coordination across defense, intelligence, and cybersecurity offices.