Defense Federal Acquisition Regulation Supplement: Mitigating Risks Related to Foreign Ownership, Control, or Influence

The Intelligence and National Security Alliance (INSA) supports the Department of Defense's objective of strengthening visibility into foreign ownership, control, or influence (FOCI) risks. They provide specific recommendations to ensure the rule is workable for the industrial base, focusing on predictable review timelines, clear guidance on NISS onboarding, and risk-based reporting thresholds.

Dechert LLP, a law firm representing clients in defense matters, supports the proposed rule but requests specific clarifications and improvements. They advocate for clearer contract valuation methodologies, the inclusion of risk mitigation guidance for uncleared contractors, the incorporation of reporting efficiencies for existing FCL holders, and the addition of safe harbor provisions for publicly traded contractors to avoid False Claims Act exposure.

The Professional Services Council (PSC), representing a large group of government contractors, supports the Department of War's objective of mitigating Foreign Ownership, Control, or Influence (FOCI) risks to protect national security. However, they urge the Department to implement the rule with clear, practical procedures to avoid acquisition delays, excessive administrative burdens, and barriers to competition.

The Council of Defense and Space Industry Associations (CODSIA) supports the Department of War's objective to mitigate risks related to foreign ownership, control, or influence (FOCI) to protect national security. However, they argue that the proposed rule lacks clear implementation procedures and could create significant acquisition delays, administrative burdens, and barriers to competition if not refined to be more practical and risk-based.

USAX, a veteran-owned small business and developer of provenance-verification technology, supports the proposed rule but emphasizes the need for automated analytic verification to prevent adjudication delays for small businesses. They recommend that the DoD use SBIR authority to procure technology that can map beneficial-ownership chains and provide auditable evidence to ensure the rule's implementation is efficient.

Moody’s Corporation supports the Department’s objective of increasing visibility into foreign ownership and beneficial ownership within the defense industrial base. However, the company requests clarifications and adjustments regarding implementation timelines, DCSA processing capacity, the commercial products exemption, and prime contractor verification obligations to ensure the rule is workable and effective.

Counsel for a defense industrial base supplier opposes the proposed rule, arguing that it exceeds the authority of section 847 of the NDAA by imposing burdensome pre-offer filing requirements, automatic NISS eligibility bars, and unilateral mitigation structures. The commenter recommends conforming the rule to the statutory minimum, providing risk-tiered treatment for allied nations, and ensuring that mitigation processes are negotiated rather than unilaterally imposed.

The Center for Procurement Advocacy (CPA) supports the proposed rule but argues that it should be revised to strictly align with the statute by making commercial products and services exempt unless a specific national security determination is made. They also suggest ways to reduce the reporting burden for noncommercial contracts by utilizing existing National Industrial Security System (NISS) structures.

The commenter, representing a business entity in the defense industrial base, argues that expanding FOCI requirements to unclassified contracts without a scalable, risk-based framework will create unnecessary complexity and disrupt supply chains. They advocate for a tiered approach that focuses on actual risk and influence rather than uniform requirements, and they request a longer implementation timeline of at least 180 days.