The Pentagon is reportedly developing a covert espionage program aimed at conducting economic warfare against China and other strategic competitors, according to multiple individuals familiar with the initiative. This effort would involve deploying U.S. operatives undercover as business professionals or private-sector employees, operating without direct ties to the U.S. government. The program is intended as a clandestine extension of the Pentagon’s broader economic warfare strategy.

The planned initiative is overseen by Tom Rakusan, a former CIA deputy director of operations with nearly four decades of intelligence experience. After retiring from the CIA in 2021, Rakusan joined Cerberus Capital Management, a private equity firm co-founded by Deputy Defense Secretary Steve Feinberg, before moving with Feinberg to the Pentagon in 2025. The team involved in crafting the program includes personnel from the military services, the Office of the Under Secretary of War for Intelligence and Security, and retired CIA officials.

Sources indicate the program remains in the planning stage and is not yet operational. Its organizational placement within the Pentagon is uncertain; it could become a standalone deep-cover unit or expand existing clandestine human intelligence capabilities. However, the Defense Department has denied the existence of such a program. Pentagon spokespeople characterized reports about the initiative as inaccurate and misleading. The CIA declined to comment, while Rakusan has not responded to inquiries.

This development aligns with a wider U.S. government emphasis on economic warfare as a statecraft tool, a focus reinforced during the Trump administration through tariffs, export controls, investments in critical resources, and enhanced intelligence efforts targeting sectors like artificial intelligence, biotechnology, and advanced semiconductors. CIA Deputy Director Michael Ellis recently acknowledged an expansion of espionage efforts against Chinese technology firms in a public speech, signaling a shift in agency priorities.

Some former intelligence officials have suggested more aggressive use of economic intelligence is warranted. David S. Cohen, a former CIA deputy director, advocated relaxing longstanding prohibitions on sharing economic espionage findings with U.S. companies to provide them with commercial advantages, while emphasizing the need for oversight to prevent corruption or favoritism. Cohen stated he was unaware of the Pentagon’s planned nonofficial cover (NOC) program.

The Pentagon’s public economic warfare efforts have included establishing an Economic Defense Unit (EDU), led by George Kollitides, another Cerberus alumnus, which has made significant investments in strategic industries, including a $750 million deal to secure rare earth mineral deposits in Brazil. Initially, the EDU appeared to be a potential home for the deep-cover spy initiative, but concerns over increased media and congressional scrutiny—especially if opposition lawmakers gain power—have caused planners to reconsider that approach.

The proposal has met with mixed reactions among former CIA colleagues. Some view Rakusan’s efforts skeptically, perceiving an attempt to create a Pentagon intelligence operation that encroaches on CIA territory. The CIA traditionally maintains tight control over clandestine human intelligence activities abroad and insists on coordinating such efforts through its network.

The CIA’s own NOC program has reportedly been shrinking, with many veteran deep-cover officers eligible for retirement and minimal recruitment of replacements. Operating under nonofficial cover carries heightened risks, as officers cannot use diplomatic facilities or invoke immunity if captured. Past attempts to expand deep-cover operations have faced setbacks, including insufficient training and oversight, which led to program contractions.

Deep-cover operations also pose challenges for the Pentagon. Military service records and distinctive professional backgrounds can compromise cover, while biometric technologies and digital footprints have made maintaining aliases increasingly difficult. While defense intelligence elements like the Defense Intelligence Agency and Joint Special Operations Command have experimented with commercial cover, results have been mixed, with past exposures underscoring operational vulnerabilities.

Legal authorities governing the Pentagon’s potential covert economic espionage remain unclear. Military intelligence activities typically fall under Title 10, allowing broad battlefield-related intelligence gathering, whereas civilian agencies like the CIA operate under Title 50, which governs covert actions abroad. Some former officials speculate the Pentagon program would operate under an ambiguous hybrid framework, informally dubbed “Title 60” to denote a blend of military and intelligence authorities.

The initiative reflects evolving dynamics within U.S. national security, with the Pentagon seeking an expanded role in intelligence and aggressive economic conflict measures amid budget increases exceeding $1.5 trillion. CIA leadership has pledged more active recruitment and espionage, but some insiders caution the agency remains deliberate in executing risky spying missions, creating space for the Pentagon to adopt a more assertive posture.

As the program remains in development, its future shape and impact on U.S. intelligence operations and economic competition strategies have yet to be determined. Congressional oversight appears limited at this stage, and it remains uncertain how this new effort might integrate with or challenge existing intelligence frameworks.