Former intelligence officials, who wished to remain anonymous, said the contract with Veridian to analyse intrusion data and produce a list of potentially threatening IP addresses was an effort to determine the "level of activity" of China's information warfare programme.
"They want to see if they can target a specific country and determine if the intrusions are kids using China as a jumping-off point or a government programme," said one former official.
At least 20 countries, including Russia and China, are known to be developing information warfare strategies specifically targeting US military and private sector data networks, according to recent DIA and CIA estimates. However, officials say China has been particularly active. The fear is that computer viruses and worms unleashed by foreign hackers could wreak havoc on the US infrastructure in the event of a military conflict.
One former official said the Department of Energy witnessed a tenfold increase in intrusion attempts originating from China during the recent espionage investigation into the Chinese-American physicist Wen Ho Lee. Part of the Veridian contract calls for the company to correlate hacking incidents with particular world events.
The contract also calls for Veridian to study intrusion data from "computers that show evidence of being under the control of people in that country [China], who range from hackers to government personnel".
The US Defence Department recorded over 24,000 network intrusions last year, compared with 22,144 in 1999 and 5,844 in 1998. It is thought, however, that most incidents remain unreported.
A report carried out by the Defence Science Board estimated that the US government suffered a 2.5% slump in GDP as a result of viruses during 2000. It is thought that Chinese information warfare experts have recommended the use of viruses and worms as a means to wreak havoc on the US infrastructure in the event of a military conflict.
According to several former US government officials, the US intelligence community is still some way from developing what is known as the "cyberintelligence preparation of the battlefield".