Comment on FR Doc # 2026-09067

Dear Ms. Kitchens: On behalf of the Professional Services Council (PSC), I am pleased to provide comments on DFARS Case 2021-D011: Mitigating Risks Related to Foreign Ownership, Control, or Influence, published in the Federal Register on May 7, 2026. The proposed rule would implement paragraphs (b)(2)(A), (b)(2)(C), and (c)(1) of section 847 of the FY 2020 National Defense Authorization Act (NDAA), paragraph (c)(2) of section 819 of the FY 2021 NDAA, and elements of DoD Instruction 5205.87. As you may know, PSC is the leading trade association and voice of the government contracting industry, representing the full range and diversity of the federal services, technology, and solutions sector. PSC’s more than 400 member companies provide mission-critical solutions to the federal government and range in size from start-ups to multinational organizations. Together, PSC member companies employ nearly one million American workers and contribute—through commercial and government contracts—roughly $1 trillion annually to the U.S. economy. PSC supports DoW’s objective of protecting national security, sensitive data, systems, processes, and the defense industrial base from adversarial influence and supply-chain risk. We also support a risk-based approach to identifying and mitigating FOCI and beneficial ownership risks. The Department should have appropriate visibility into beneficial ownership and FOCI risks that may affect sensitive DoW work, including work that may not involve classified information. PSC also recognizes that FOCI risk is not static; ownership, governance, voting rights, investment rights, board participation, and affiliated entities may change during performance. However, as drafted, the proposed rule would move a security-centered disclosure and mitigation framework into the broader, multi-layer DoW acquisition process without sufficiently clear implementation procedures. Without further clarification, this approach could create acquisition delays, contract administration burdens, uncertainty for prime contractors and subcontractors, and avoidable barriers to subcontractor competition. The proposed rule would create new solicitation, award, option, modification, and subcontract performance dependencies on DCSA review, National Industrial Security System (NISS) eligibility status, and risk management strategies addressed by multiple parties. The rule therefore should not be treated as merely a disclosure rule. If finalized as proposed, it will operate as a responsibility, supply-chain, and acquisition-timing requirement across a large portion of the DoW industrial base. In general, PSC urges DoW to implement the rule in a practical, acquisition-compatible manner. Specifically, PSC recommends that DoW finalize the rule only with clear implementation procedures that preserve the statutory national security objective while minimizing award-process burdens and delays, avoiding inconsistent contracting officer interpretation, and preventing avoidable barriers to DoW’s ongoing effort to increase supply-chain competition. In these comments, PSC provides recommendations that reflect issues of concern to our member companies. We have aggregated comments and recommendations that impact PSC member companies, representing a significant portion of the Defense Industrial Base. Specifically, we recommend the following: 1.Preserve competition and avoid treating FOCI mitigation as a domestic preference or exclusionary rule. 2.Clarify that the $5 million threshold is based on contract or subcontract value, not company size or revenue. 3.Clarify the circumstances under which NISS eligibility becomes an acquisition gate. 4.Provide early notice for covered solicitations so offerors and subcontractors can prepare before proposal submission. 5.Identify the “designated senior DoW official” and define the commercial-products and commercial-services determination process. 6.Enhance NISS and DCSA capacity before the rule becomes operational. Phase implementation and pilot the process before broad application. 7.Avoid repeating the ICD-705/TEMPEST implementation pattern. 8.Clarify contractor responsibility and avoid imposing strict liability on contractors for subcontractor FOCI matters. 9.Protect confidentiality of Standard Form 328 (SF-328), ownership, and mitigation information. 10.Make the 90-day mitigation requirement risk-based and workable, providing examples of risk-based mitigation approaches. 11.Provide resources to companies newly subject to these requirements to clarify the meaning of beneficial ownership and FOCI 12.Reassess the regulatory flexibility and paperwork reduction analyses. 13.Clarify treatment of changes during performance and avoid over-reporting requirements. Discussions of these recommendations can be found in the attached .pdf.