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Department of Defense Contractors and Efforts to Mitigate Foreign Influence

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Department of Defense Contractors and
June 24, 2024
Efforts to Mitigate Foreign Influence
Alexandra G. Neenan

Department of Defense Contractors and Efforts to Mitigate Foreign Influence

Updated July 14, 2026 (R48110) Jump to Main Text of Report

Contents

Summary

Some U.S. firms, including some Department of Defense (DOD) contractors, receive foreign Some U.S. firms, including some Department of Defense (DOD) contractors, receive foreign
Analyst in U.S. Defense
investment or have other ties to foreign entities, including foreign firms and foreign governments. investment or have other ties to foreign entities, including foreign firms and foreign governments.
Infrastructure Policy
Some DOD contractors’DOD is "using a secondary Department of War designation," under Executive Order (E.O) 14347, dated September 5, 2025. Some DOD contractors' foreign connections could include connections such as ownership, foreign connections could include connections such as ownership,

investment, supplier or producer relationships, or production overseas. These ties may pose a risk investment, supplier or producer relationships, or production overseas. These ties may pose a risk
to U.S. national security, especially when firms to U.S. national security, especially when firms are performing work of a sensitive or classified performing work of a sensitive or classified

naturenature and have relationships with adversarial countries. have relationships with adversarial countries.
DOD’ DOD's Defense Counterintelligence and Security Agency (DCSA) is responsible for mitigating potential risks that may arise s Defense Counterintelligence and Security Agency (DCSA) is responsible for mitigating potential risks that may arise
from foreign investment or foreign ties to DOD contractors. Foreign Ownership, Control, or Influence (FOCI) is a term that from foreign investment or foreign ties to DOD contractors. Foreign Ownership, Control, or Influence (FOCI) is a term that
DOD uses to describe a condition in which a U.S. entityDOD uses to describe a condition in which a U.S. entity’'s foreign connections are believed to pose a risk of compromise of s foreign connections are believed to pose a risk of compromise of
or unauthorized access to classified U.S. national security information.or unauthorized access to classified U.S. national security information.
In the last In the last 1015 years, Congress and DOD have taken several approaches to change laws and regulations to mitigate concerns years, Congress and DOD have taken several approaches to change laws and regulations to mitigate concerns
about possible foreign malign influence on DOD contractors. Congress about possible foreign malign influence on DOD contractors. Congress is consideringmay consider changing statutory definitions to changing statutory definitions to
further address such concerns by broadening the scope of contract types subject to surveillance and mitigation. It may also further address such concerns by broadening the scope of contract types subject to surveillance and mitigation. It may also
consider tasking DOD to expand or centralize some of its pre-existing foreign influence mitigation programs. Congress might consider tasking DOD to expand or centralize some of its pre-existing foreign influence mitigation programs. Congress might
also consider reducing foreign influence mitigation efforts in the interest of allowing more entrants into the DOD contract also consider reducing foreign influence mitigation efforts in the interest of allowing more entrants into the DOD contract
market.

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Contents
Introduction ..................................................................................................................................... 1
Issues for Congress .......................................................................................................................... 1
Background ..................................................................................................................................... 1
Statute and Regulation ..................................................................................................................... 1
Title 10, U.S. Code .................................................................................................................... 2
Defense Federal Acquisition Regulation Supplement (DFARS) ............................................... 2
Selected Laws Related to Foreign Influence and DOD Contractors ......................................... 2
Fiscal Year 2018 National Defense Authorization Act (NDAA), P.L. 115-91 .................... 3
John S. McCain National Defense Authorization Act for Fiscal Year 2019, P.L.
115-232 ............................................................................................................................ 3
William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year
2021, P.L. 116-283 ........................................................................................................... 4
Fiscal Year 2022 NDAA, P.L. 117-81 ................................................................................. 5
James M. Inhofe National Defense Authorization Act for Fiscal Year 2023, P.L.
117-263 ............................................................................................................................ 5
Current Efforts to Mitigate Foreign Influence of DOD Contractors ............................................... 6
National Industrial Security Program (NISP) ........................................................................... 7
Technology Protection Programs .............................................................................................. 7
Agency-Specific DOD Foreign Influence Mitigation Programs ............................................... 8
Mitigating Foreign Influence for Small Businesses .................................................................. 8
Issues for Congress .......................................................................................................................... 9

Contacts
Author Information ........................................................................................................................ 10

Congressional Research Service



Introduction
This report provides background information and issues for Congress concerning the potential
risk of foreign, particularly adversarial government, influence on Department of Defense (DOD)
contractors.1market.

Introduction

This report provides background information and issues for Congress concerning the potential risk of foreign, particularly adversarial government, influence on Department of Defense (DOD) contractors.1 DOD is "using a secondary Department of War designation," under Executive Order (E.O)14347, dated September 5, 2025.2 This report also provides an overview of legislative activity over the last ten years This report also provides an overview of legislative activity over the last ten years
on this topic, as well as selected current DOD efforts to mitigate unwanted foreign influence of on this topic, as well as selected current DOD efforts to mitigate unwanted foreign influence of
contractors.contractors.
Issues for Congress
Some oversight issues for Congress regarding foreign influence and DOD contracting include Some oversight issues for Congress regarding foreign influence and DOD contracting include
whether or not to amend statutory requirements banning or limiting certain companies with ties to whether or not to amend statutory requirements banning or limiting certain companies with ties to
adversarial governments from being awarded certain categories of DOD contracts. Congress may adversarial governments from being awarded certain categories of DOD contracts. Congress may
consider whether or not to require DOD to take action to further mitigate the potential risk of consider whether or not to require DOD to take action to further mitigate the potential risk of
foreign influence in contracting. Congress may also consider taking no action or scaling back its foreign influence in contracting. Congress may also consider taking no action or scaling back its
current foreign influence mitigation efforts.current foreign influence mitigation efforts.
Background
Foreign direct investment in the United StatesForeign direct investment in the United States – that is,, including the ownership or control, direct or the ownership or control, direct or
indirect, by a foreign entity of U.S.-based firmsindirect, by a foreign entity of U.S.-based firms –, has generally increased over the past has generally increased over the past ten15 years. years.2
3 Some U.S. firms, including some Department of Defense (DOD) contractors, receive foreign Some U.S. firms, including some Department of Defense (DOD) contractors, receive foreign
investment or have other ties to foreign entities, including foreign firms and foreign governments. investment or have other ties to foreign entities, including foreign firms and foreign governments.
Some DOD contractorsSome DOD contractors’' foreign connections could include ties such as ownership, investment, foreign connections could include ties such as ownership, investment,
supplier or producer relationships, or production overseas. These ties may pose a risk to U.S. supplier or producer relationships, or production overseas. These ties may pose a risk to U.S.
national security, especially when those performing work of a sensitive or classified nature have national security, especially when those performing work of a sensitive or classified nature have
potential ties (such as foreign ownership and control) to adversarial countries.potential ties (such as foreign ownership and control) to adversarial countries.
DOD’ DOD's Defense Counterintelligence and Security Agency (DCSA) is responsible for mitigating s Defense Counterintelligence and Security Agency (DCSA) is responsible for mitigating
potential risks that may arise from foreign investment and foreign ties to DOD contractors. potential risks that may arise from foreign investment and foreign ties to DOD contractors.
According to DCSA, Foreign Ownership, Control, or Influence (FOCI) occurs According to DCSA, Foreign Ownership, Control, or Influence (FOCI) occurs “"whenever a whenever a
foreign interest has the power, direct or indirect, whether or not exercised, and whether or not foreign interest has the power, direct or indirect, whether or not exercised, and whether or not
exercisable, to direct or decide matters affecting the management or operations of that company exercisable, to direct or decide matters affecting the management or operations of that company
in a manner which may result in unauthorized access to classified information or may adversely in a manner which may result in unauthorized access to classified information or may adversely
affect the performance of classified contracts.affect the performance of classified contracts.”3
"4 Statute and Regulation
DOD contracting-related statutes are covered in Titles 10 and 41 of the DOD contracting-related statutes are covered in Titles 10 and 41 of the U.S. Code. Title 41 . Title 41
addresses federal procurement in generaladdresses federal procurement in general; its requirements and its provisions apply to DOD unless otherwise apply to DOD unless otherwise

1 CRS In Focus IF10600, Defense Primer: Department of Defense Contractors, by Alexandra G. Neenan
2 For more information about foreign direct investment in the broader U.S. economy, see CRS Report RS21857,
Foreign Direct Investment in the United States: An Economic Analysis, by Andres B. Schwarzenberg.
3 Defense Counterintelligence and Security Agency, “Foreign Ownership, Control, or Influence,”
https://www.dcsa.mil/Industrial-Security/Entity-Vetting-Facility-Clearances-FOCI/Foreign-Ownership-Control-or-
Influence/. For information about intelligence community efforts to mitigate the effects of foreign malign influence, see
CRS In Focus IF12470, The Intelligence Community’s Foreign Malign Influence Center (FMIC), by Michael E.
DeVine.
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specified in Title 10. Title 10 addresses DOD procurement specifically. The procurement specified in Title 10. Title 10 addresses DOD procurement specifically. The procurement
provisions in Titles 41 and 10 are implemented by the Federal Acquisition Regulation (FAR) and provisions in Titles 41 and 10 are implemented by the Federal Acquisition Regulation (FAR) and
the DOD-specific FAR supplement, the Defense Federal Acquisition Regulation Supplement the DOD-specific FAR supplement, the Defense Federal Acquisition Regulation Supplement
(DFARS).(DFARS).4
5 Over the last Over the last 1015 years, Congress and DOD have taken several approaches to change laws and years, Congress and DOD have taken several approaches to change laws and
regulations to further mitigate FOCI concerns with regulations to further mitigate FOCI concerns with regard to DOD contractors. One method Congress and DOD contractors. One method Congress and
DOD have used to mitigate FOCI risks is to require in statute that only a U.S.-owned company DOD have used to mitigate FOCI risks is to require in statute that only a U.S.-owned company
may provide certain types of goods or services and that DOD may not purchase such goods from may provide certain types of goods or services and that DOD may not purchase such goods from
companies with ties to certain countries. The way that DOD and Congress have defined such companies with ties to certain countries. The way that DOD and Congress have defined such
restrictions and categories has varied over time. Legislation over the last restrictions and categories has varied over time. Legislation over the last 1015 years has added new years has added new
types of goods or services to these lists and some observers have proposed that this list be further types of goods or services to these lists and some observers have proposed that this list be further
expanded.expanded.
Title 10, U.S. Code
Various sections of Title 10 include prohibitions on DODVarious sections of Title 10 include prohibitions on DOD’'s procurement of certain categories of s procurement of certain categories of
goods and services from companies that have ties to certain countries or goods and services from companies that have ties to certain countries or organizationsentities that could that could
pose a risk to U.S. national security. Additionally, several sections in Title 10 include specific pose a risk to U.S. national security. Additionally, several sections in Title 10 include specific
procedures that DOD procedures that DOD mustis to follow to reduce the risk of foreign influence. Many of these follow to reduce the risk of foreign influence. Many of these
provisions stem from legislation enacted over the last provisions stem from legislation enacted over the last ten15 years, particularly sections that years, particularly sections that
specifically call out specifically call out concerns regarding the government and military of the Peoplethe government and military of the People’'s Republic of China (PRCs Republic of China (PRC or
China). The following section provides an overview of selected laws and legislation aimed at ). The following section provides an overview of selected laws and legislation aimed at
mitigating the potential risk of foreign influence in DOD contracting.mitigating the potential risk of foreign influence in DOD contracting.
Defense Federal Acquisition Regulation Supplement (DFARS)
Many DOD ultimately implements many of the Title 10 provisions that stem from legislative action of the Title 10 provisions that stem from legislative action are ultimately implemented by
DOD in the Defense Federal Acquisition Regulation Supplement (DFARS). The DFARS, the in the Defense Federal Acquisition Regulation Supplement (DFARS). The DFARS, the
DOD-specific supplement to the FAR, does not contain blanket restrictions on foreign entitiesDOD-specific supplement to the FAR, does not contain blanket restrictions on foreign entities’
' investment or other forms of involvement with DOD contractors. However, the DFARS does investment or other forms of involvement with DOD contractors. However, the DFARS does
include restrictions on the acquisition of some items from certain companies. For example, one include restrictions on the acquisition of some items from certain companies. For example, one
portion of the DFARS outlines a prohibition on some items from companies that have known ties portion of the DFARS outlines a prohibition on some items from companies that have known ties
to the PRC military.to the PRC military.5
6 Selected Laws Related to Foreign Influence and DOD Contractors
The following sections present selected laws related to the potential risk of foreign influence in The following sections present selected laws related to the potential risk of foreign influence in
DOD contracting. Several provisions impose federal procurement restrictions on selected DOD contracting. Several provisions impose federal procurement restrictions on selected
categories of technologies produced by certain companies and produced by other companies categories of technologies produced by certain companies and produced by other companies
owned or controlled by, or otherwise connected to, the governments of adversarial countries. owned or controlled by, or otherwise connected to, the governments of adversarial countries.
Additionally, some provisions address certain goods and services produced by certain PRC Additionally, some provisions address certain goods and services produced by certain PRC
government-affiliated entities, such as the Huawei Technologies Company (Huawei).6

4 Additional information about the FAR can be found in CRS Report R42826, The Federal Acquisition Regulation
(FAR): Answers to Frequently Asked Questions, coordinated by Erika K. Lunder. For additional information,
congressional clients may contact Dominick Fiorentino.
5 Defense Federal Acquisition Regulation Supplement, §252.225-7007.
6 For more information on U.S. restrictions on Huawei technologies specifically, see CRS Report R47012, U.S.
Restrictions on Huawei Technologies: National Security, Foreign Policy, and Economic Interests, by Jill C. Gallagher.
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government-affiliated entities, such as the Huawei Technologies Co., Ltd. (Huawei).7 Many of these provisions were enacted at the same time that the U.S. government began to Many of these provisions were enacted at the same time that the U.S. government began to
characterize its sometimes-tense relations with countries such as the PRC and the Russian characterize its sometimes-tense relations with countries such as the PRC and the Russian
Federation (Russia) as a great power competition (GPC).Federation (Russia) as a great power competition (GPC).7 During this time, both Congress and During this time, both Congress and
the executive branch identified foreign influence, supply chain risks, and risks involving DOD the executive branch identified foreign influence, supply chain risks, and risks involving DOD
contractors as part of GPC.contractors as part of GPC.
Fiscal Year 2018 National Defense Authorization Act (NDAA), P.L. 115-91
Section 1656 of the FY2018 National Defense Authorization Act (NDAA)Section 1656 of the FY2018 National Defense Authorization Act (NDAA) required that the required that the
Secretary of Defense submit to the congressional defense committees an assessment of the extent Secretary of Defense submit to the congressional defense committees an assessment of the extent
to which DOD relied on certain categories of telecommunications equipment that were produced to which DOD relied on certain categories of telecommunications equipment that were produced
or provided by certain foreign-affiliated entities (including Huawei) to fulfill nuclear deterrence or provided by certain foreign-affiliated entities (including Huawei) to fulfill nuclear deterrence
and ballistic missile defense missions.and ballistic missile defense missions.88 This provision allowed DOD to submit waivers for this This provision allowed DOD to submit waivers for this
requirement on a case-by-case basis, but required that these waivers be submitted by the requirement on a case-by-case basis, but required that these waivers be submitted by the
Secretary of Defense and not be delegated to lower levels of authority, which suggests a high Secretary of Defense and not be delegated to lower levels of authority, which suggests a high
level of importance, because many categories of acquisition requirements may often be waived at level of importance, because many categories of acquisition requirements may often be waived at
lower component levels.lower component levels.
John S. McCain National Defense Authorization Act for Fiscal Year 2019, P.L.
115-232
Section 889 of the FY2019 NDAASection 889 of the FY2019 NDAA (P.L. 115-232), imposed federal procurement restrictions on certain imposed federal procurement restrictions on certain
telecommunications and video surveillance goods and services from several companies affiliated telecommunications and video surveillance goods and services from several companies affiliated
with the PRC, including the Huawei Technologies Company and the ZTE Corporation.with the PRC, including the Huawei Technologies Company and the ZTE Corporation.9 This This
prohibition applies to DOD, and includes a prohibition on loans and grants, in addition to prohibition applies to DOD, and includes a prohibition on loans and grants, in addition to
contracting. The Federal Acquisition Regulatory Council issued several interim rules contracting. The Federal Acquisition Regulatory Council issued several interim rules
implementing this statute beginning in implementing this statute beginning in August 2019, including detailed requirements for DOD, as 2019, including detailed requirements for DOD, as
well as other covered agencies.well as other covered agencies.109 This restriction was implemented in the DFARS in Section This restriction was implemented in the DFARS in Section
252.204-7018 and includes waiver requirements and procedures should a DOD entity need to 252.204-7018 and includes waiver requirements and procedures should a DOD entity need to
work with a contractor using covered equipment.work with a contractor using covered equipment.11
Defense industry groups protested the timeline, intensity, and complexity of this requirement in Defense industry groups protested the timeline, intensity, and complexity of this requirement in
2020, the originally planned time of its implementation. For example, a representative of the 2020, the originally planned time of its implementation. For example, a representative of the
Professional Services Council, an advocacy group for federal service contractors, said that Professional Services Council, an advocacy group for federal service contractors, said that “"the the
potential impact under the statute could affect nearly every contractor and subcontractor across potential impact under the statute could affect nearly every contractor and subcontractor across
the entire federal government,the entire federal government,”" and that there were and that there were “"consequences that reach beyond prime contractors."10consequences that reach beyond prime

7 For more information about Great Power Competition, see CRS Report R43838, Great Power Competition:
Implications for Defense—Issues for Congress, by Ronald O'Rourke.
8 P.L. 115-91, §1656. Defense committees, as defined in 10 U.S.C., §101(a)(16), are the Senate Armed Services
Committee, House Armed Services Committee, Senate Appropriations Committee, and the House Appropriations
Committee.
9 P.L. 115-232, §889.
10 84 FR 40216, at https://www.federalregister.gov/documents/2019/08/13/2019-17201/federal-acquisition-regulation-
prohibition-on-contracting-for-certain-telecommunications-and-video.
85 Federal Register 42665, at https://www.federalregister.gov/documents/2020/07/14/2020-15293/federal-acquisition-
regulation-prohibition-on-contracting-with-entities-using-certain.
11 Defense Federal Acquisition Regulation Supplement, §252.204-7018.
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contractors.”12 Other commentators raised concerns about the lack of clarity concerning Other commentators raised concerns about the lack of clarity concerning
applicability of the new requirements for subcontractors.applicability of the new requirements for subcontractors.13
11 In August 2020, the Director of National Intelligence (DNI) granted DOD a temporary waiver to In August 2020, the Director of National Intelligence (DNI) granted DOD a temporary waiver to
address some of these concerns and address some of these concerns and “"to provide time to review the full details of the rule to provide time to review the full details of the rule
implementation using additional information from DOD,implementation using additional information from DOD,”" according to a statement from DOD. according to a statement from DOD.14
12 William M. (Mac) Thornberry National Defense Authorization Act for Fiscal
Year 2021, P.L. 116-283
Section 819 of the FY2021 NDAA amended a note in Title 10 of the U.S. Code requiring DOD to Section 819 of the FY2021 NDAA amended a note in Title 10 of the U.S. Code requiring DOD to
“"require reports and conduct examinationsrequire reports and conduct examinations”" of covered contractors of covered contractors “"to assess complianceto assess compliance”" related related
to FOCI mitigation efforts.to FOCI mitigation efforts.1513 The provision also required that DOD develop The provision also required that DOD develop “"procedures for procedures for
appropriately responding to changes in covered contractor of subcontractor beneficial ownership appropriately responding to changes in covered contractor of subcontractor beneficial ownership
status based on changes in disclosures of their beneficial ownership and whether they are under status based on changes in disclosures of their beneficial ownership and whether they are under
FOCI…”16FOCI."14 This requirement was part of a broader initiative that began in the FY2020 NDAA to This requirement was part of a broader initiative that began in the FY2020 NDAA to
modernizemodernize DOD's acquisition processes and ensure integrity of the acquisition processes and ensure integrity of the U.S. defense industrial base.defense industrial base.17
15 According to DOD, its Acquisition Technology and Information Team was tasked in 2021 with According to DOD, its Acquisition Technology and Information Team was tasked in 2021 with
drafting the proposed DFARS rule partially implementing this provision; its report due datedrafting the proposed DFARS rule partially implementing this provision; its report due date, including responses to public comments, was was
extended to extended to June 2024.18
July 2026.16 Section 1260H of the FY2021 NDAA Section 1260H of the FY2021 NDAA (P.L. 116-283) required that DOD required that DOD “"identify each entity the Secretary [of identify each entity the Secretary [of
Defense] determinesDefense] determines, based on the most recent information available, is operating directly or based on the most recent information available, is operating directly or
indirectly in the United States or any of its territories and possessions, that is a Chinese military indirectly in the United States or any of its territories and possessions, that is a Chinese military
company.company.”19" This provision included This provision included the traditionala definition of definition of PRC"Chinese military company," and military companies, and
also what it calls what it calls “"military-civil fusion military-civil fusion contributors,”contributor," which includes a more expansive definition which includes a more expansive definition
of ties to the PRC military and government beyond companies with explicit ties to the of ties to the PRC military and government beyond companies with explicit ties to the Chinese
military.20PRC military.17 Beyond ties to the People Beyond ties to the People’'s Liberation Army or the Central Military Commission of the s Liberation Army or the Central Military Commission of the
Communist Party of China, a Communist Party of China, a “"military-civil fusion contributormilitary-civil fusion contributor”" may have ties to organizations may have ties to organizations
such as the PRCsuch as the PRC's Ministry of Industry and Information Technology or Ministry of Industry and Information Technology or “"entities that advertise on entities that advertise on
national, provincial, and nongovernmental military equipment procurement platforms in the national, provincial, and nongovernmental military equipment procurement platforms in the
People’People's Republic of China.s Republic of China.”21"18 DOD is to submit this information annually to the Armed Services DOD is to submit this information annually to the Armed Services
Committees and publish an unclassified version of its list in the Federal Register until 2030.22

12 Joe Gould, “U.S. Government’s Huawei Ban Moving Too Fast, Contractors Say,” Defense News, July 9, 2020.
13 Scott S. Sheffler, “Section 889, The “Huawei Ban” in Federal Contracts: General Scope and Considerations,” (2020),
at https://www.feldesman.com/section-889-the-huawei-ban-in-federal-contracts-general-scope-and-considerations/.
14 Department of Defense, “Ellen M. Lord, Undersecretary of Defense for Acquisition and Sustainment, Briefs Media
at the Pentagon,” press release, August 2020, at
https://www.defense.gov/News/Transcripts/Transcript/Article/2319990/ellen-m-lord-undersecretary-of-defense-for-
acquisition-and-sustainment-briefs-m/.
15 P.L. 116-283, §819. The NDAA references a note in 10 U.S.C. §2509, but the portion of Title 10 in question has
since been renumbered and can be located in 10 U.S.C. §4819.
16 P.L. 116-283, §819.
17 P.L. 116-92, §845.
18DOD, “Open DFARS Cases,” April 2024, at
https://www.acq.osd.mil/dpap/dars/opencases/dfarscasenum/dfars.pdf#page=11.
19 P.L. 116-283
20 Ibid.
21 Ibid.
22 Ibid.
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Committees and publish an unclassified version of its list in the Federal Register until 2030.19 The most recent version of The most recent version of theDOD's notice of designation of Chinese Military Companies was released notice of designation of Chinese Military Companies was released
in the Federal Register on April 2, 2024on June 8, 2026, in accordance with this legislation, in accordance with this legislation’'s statutory reporting s statutory reporting
requirements.requirements.23
20 Fiscal Year 2022 NDAA, P.L. 117-81
Section 855 of the FY2022 NDAA tasked DOD with requiring that certain contractors and Section 855 of the FY2022 NDAA tasked DOD with requiring that certain contractors and
subcontractors disclose if they have employees subcontractors disclose if they have employees “"who will perform work in the Peoplewho will perform work in the People’'s Republic s Republic
of China on a covered contract.of China on a covered contract.”24"21 Per the provision, contract funding is be withheld until this Per the provision, contract funding is be withheld until this
information is provided to DOD, potentially making enforcement of this amendment easier by information is provided to DOD, potentially making enforcement of this amendment easier by
incentivizing contractors to provide this information expeditiously.incentivizing contractors to provide this information expeditiously.2522 Additionally, DOD is to Additionally, DOD is to
provide semi-annual briefings to congressional defense committees summarizing the information provide semi-annual briefings to congressional defense committees summarizing the information
it finds from such disclosures.it finds from such disclosures.2623 While not an explicit restriction of DOD contractors that work in While not an explicit restriction of DOD contractors that work in
the PRC, this additional information may support security and contracting officers when the PRC, this additional information may support security and contracting officers when
conducting due diligence.conducting due diligence.
This The Federal Acquisition Regulatory Council implemented this Federal Acquisition Regulatory Council implemented this provisionstatutory provision in May 2026, when it amended a when it amended a
portion of the DFARS that addressed DOD contract solicitation provisionsportion of the DFARS that addressed DOD contract solicitation provisions, which was last
updated in March 2024.27
.24 James M. Inhofe National Defense Authorization Act for Fiscal Year 2023, P.L.
117-263
Section 5949 of the FY2023 NDAA imposed restrictions on the procurement of goods or services Section 5949 of the FY2023 NDAA imposed restrictions on the procurement of goods or services
that include components from semiconductor companies with links to certain countriesthat include components from semiconductor companies with links to certain countries.28, with a focus on concerns about the PRC and specific PRC companies.25 It also It also
imposed a restriction on the procurement of goods and services for imposed a restriction on the procurement of goods and services for “"a critical systema critical system”" that that “uses”
"uses" components from these covered semiconductor companies.components from these covered semiconductor companies.2926 The final version of the legislation The final version of the legislation
changed the word changed the word “"use[s]use[s]”" to to “"include[s],include[s],”" which some analysts assert represented a less strict, which some analysts assert represented a less strict,
“"scaled backscaled back”" version of the originally proposed legislation. version of the originally proposed legislation.3027 This change came after reported This change came after reported
pushback from multiple industry and trade groups, including several defense industry groups.pushback from multiple industry and trade groups, including several defense industry groups.31
28 Similar to earlier NDAA provisions, this legislation also allows an executive agency head to Similar to earlier NDAA provisions, this legislation also allows an executive agency head to
waive, for two years, the prohibition if waive, for two years, the prohibition if “"no compliant product or service is available to be no compliant product or service is available to be
procured as, and when, needed at United States market prices or a price that is not considered procured as, and when, needed at United States market prices or a price that is not considered

23 89 FR 22698, “Notice of Availability of Designation of Chinese Military Companies,” April 2024,
https://www.federalregister.gov/documents/2024/04/02/2024-06895/notice-of-availability-of-designation-of-chinese-
military-companies.
24 P.L. 117-81, §855.
25 Ibid.
26 Ibid.
27 DFARS, §252.225-7058.
28 P.L. 117-263, §5949. For more information on Chinese influence in the semiconductor industry, see CRS Report
R46767, China’s New Semiconductor Policies: Issues for Congress, by Karen M. Sutter.
29 Ibid.
30 Alexandra Alper, “U.S. lawmakers ease planned curbs on Chinese chips amid corporate pushback,” Reuters,
December 2022, https://www.reuters.com/world/us/us-lawmakers-ease-proposed-curbs-chinese-chips-amid-corporate-
pushback-2022-12-06/.
31 Ibid.
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prohibitively expensive,” and if “prohibitively expensive," and if "such waiver could not reasonably be expected to compromise such waiver could not reasonably be expected to compromise
the critical national security interests of the United States.the critical national security interests of the United States.”32
"29 In the Joint Explanatory Statement, the defense committees noted thatIn the Joint Explanatory Statement, the defense committees noted that
the intent of Congress in advancing this proposal is that, in serving federal supply chains, the intent of Congress in advancing this proposal is that, in serving federal supply chains,
Federal contract recipients and their suppliers (including domestic and foreign subsidiaries, Federal contract recipients and their suppliers (including domestic and foreign subsidiaries,
affiliates,affiliates, distributors, and intermediaries) should not utilize companies connected to
foreign countries of concern that threaten national security, such as Semiconductor
Manufacturing International Corporation, Yangtze Memory Technologies Corp, and
ChangXin Memory Technologies, or any other company identified under this distributors, and intermediaries) should not utilize companies connected to foreign countries of concern that threaten national security, such as Semiconductor Manufacturing International Corporation, Yangtze Memory Technologies Corp, and ChangXin Memory Technologies, or any other company identified under this section section
(including(including any any affiliate,affiliate, subsidiary,subsidiary, successor,successor, distributor,distributor, or intermediary or intermediary thereof). thereof).
Furthermore, we believe that for the purposes of waivers that may be issued under this
Furthermore, we believe that for the purposes of waivers that may be issued under this section, critical national security interests of the United States may include protecting the section, critical national security interests of the United States may include protecting the
Nation’s economic security and its technological competitiveness relative to strategic
competitors…Nation's economic security and its technological competitiveness relative to strategic competitors … the intent of this provision is to include both contractors and suppliers, to the the intent of this provision is to include both contractors and suppliers, to the
extent possible under the Federal Acquisition Regulation.extent possible under the Federal Acquisition Regulation.33
30 This provision received mixed reactions from outside groups. Some pro-commerce advocacy This provision received mixed reactions from outside groups. Some pro-commerce advocacy
groups praised the provision, saying that it would groups praised the provision, saying that it would “"[protect] against Chinese cyber threats and any [protect] against Chinese cyber threats and any
dependence on China for our critical infrastructure and defense capabilities.dependence on China for our critical infrastructure and defense capabilities.”34"31 Other Other
commentators have noted that the prohibitions may be onerous for potential DOD contractors, commentators have noted that the prohibitions may be onerous for potential DOD contractors,
saying that contractors may need saying that contractors may need “"dedicated supply chain security personnel who are going to be dedicated supply chain security personnel who are going to be
responsible for all of the regulations that are coming out in this area.responsible for all of the regulations that are coming out in this area.”35
Current"32 Fiscal Year 2024 NDAA, P.L. 118-31

Section 812 of the FY2024 NDAA increased statutory requirements for consulting service contractors who confirm they do not have conflicts of interest, including contracts, with foreign entities, including entities with connections to the governments of the PRC or the Russian Federation.33 Contractors found to have conflicts of interest with covered entities would be subject to additional surveillance.34 DOD implemented this provision when it amended the DFARS to create a new section, "Prohibition Relating to Conflicts of Interest in Consulting Services—Certification."35

Fiscal Year 2025 NDAA, P.L. 118-159 The Joint Explanatory Statement for the FY2025 NDAA required that DOD provide to the defense committees a briefing on "the foreign capital disclosure requirements" of DOD organizations "that routinely engage with commercial entities backed by private equity or venture capital funds."36 Fiscal Year 2026 NDAA, P.L. 119-60

Section 838 of the FY2026 NDAA required that DOD identify and conduct a risk assessment of "all critical infrastructure that relies on materials or components the origin of which is a foreign entity of concern."37 DOD is then to provide the defense committees a classified briefing on its findings and plans to address any concerns it identified, including "success stories or case studies of Departmental actions to mitigate foreign entity of concern-related risks."38

Section 842 created a new statutory prohibition on DOD's procurement of "advanced batteries composed of material from certain foreign sources."39 This restriction is to take effect in 2028 and allows for exceptions, including commercially available batteries used in equipment maintenance and batteries used for research, development, testing, and evaluation (RDT&E).40

Other Efforts to Mitigate Foreign Influence of
DOD Contractors
Beyond the statutory and regulatory measures detailed above, DOD maintains other programs Beyond the statutory and regulatory measures detailed above, DOD maintains other programs
that aim to mitigate the risks, extent of, and impact of foreign influence in DOD contracting. that aim to mitigate the risks, extent of, and impact of foreign influence in DOD contracting.
Some of these programsSome of these programs, —such as the National Industrial Security Program (NISP)such as the National Industrial Security Program (NISP), —protect certain protect certain
categories of contracts, such as classified contracts, while other programs aim to protect certain categories of contracts, such as classified contracts, while other programs aim to protect certain
components of DOD, such as science and technology programs.components of DOD, such as science and technology programs.
In addition to DOD-specific requirements and programs, DOD contractors must also follow U.S. In addition to DOD-specific requirements and programs, DOD contractors must also follow U.S.
export control regulations and decisions, which apply to all U.S. firms. The U.S. Department of export control regulations and decisions, which apply to all U.S. firms. The U.S. Department of
Commerce maintains a control list of dual use technologies, which have both civilian and military Commerce maintains a control list of dual use technologies, which have both civilian and military
uses and are subject to export controls. The Commerce Department uses and are subject to export controls. The Commerce Department (DOC) also maintains lists of entities also maintains lists of entities
that that U.S. government agencies have found pose proliferation or foreign policy concerns and require additional licensing requirements or pose proliferation or foreign policy concerns and require additional licensing requirements or
restrictions.36

32 Ibid.
33 Joint Explanatory Statement to Accompany the James M. Inhofe National Defense Authorization Act for Fiscal Year
2023, pp. 703-704, at https://www.armed-
services.senate.gov/imo/media/doc/fy23_ndaa_joint_explanatory_statement.pdf.
34 American Free Enterprise Chamber of Commerce, letter to Congress, November 2022, at
https://www.politico.com/f/?id=00000184-a64c-d1d1-ad8d-af7d115d0000.
35 Justin Doubleday, “New rule sets stage for banning risky technologies from government supply chains,” Federal
News Network, October 2023, at https://federalnewsnetwork.com/acquisition-policy/2023/10/new-rule-sets-stage-for-
banning-risky-technologies-from-government-supply-chains/.
36 U.S. Department of Commerce, “Commerce Control List,” at
https://www.bis.doc.gov/index.php/regulations/commerce-control-list-ccl.
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restrictions.41 National Industrial Security Program (NISP)
The NISP applies to contractors that have access to classified information and/or perform The NISP applies to contractors that have access to classified information and/or perform
classified contractsclassified contracts and. It has specific restrictions for contractors regarding FOCI. The NISP was has specific restrictions for contractors regarding FOCI. The NISP was
established in 1993 by Executive Order (E.O.) 12829, established in 1993 by Executive Order (E.O.) 12829, “"The National Industrial Security The National Industrial Security
Program,Program,”" with the intent to with the intent to “"safeguard Federal Government classified information that is safeguard Federal Government classified information that is
released to contractors, licensees, and granteesreleased to contractors, licensees, and grantees.”37 of the United States Government."42 The E.O. states that the NISP The E.O. states that the NISP “"shall serve as a shall serve as a
single, integrated, cohesive industrial security program to protect classified information and to single, integrated, cohesive industrial security program to protect classified information and to
preserve our Nationpreserve our Nation’'s economic and technological interests.s economic and technological interests.”38
"43 NISP regulations outline specific FOCI mitigation procedures for contractors that possess security NISP regulations outline specific FOCI mitigation procedures for contractors that possess security
clearances, including the NISP Operating Manual (NISPOM), located in the Code of Federal clearances, including the NISP Operating Manual (NISPOM), located in the Code of Federal
Regulation (CFRRegulations (C.F.R.). The NISPOM requires that cleared contractors report to DOD any FOCI, ). The NISPOM requires that cleared contractors report to DOD any FOCI,
including foreign classified contracts and including foreign classified contracts and “"loss, compromise, or suspected compromise of loss, compromise, or suspected compromise of
classified information.classified information.”39
"44 The NISPOM The NISPOM notesspecifies that the requirements for a that the requirements for a “"classified contractclassified contract”" (including FOCI-related (including FOCI-related
procedures) are also procedures) are also “"applicable to all phases of precontract, license or grant activity, including applicable to all phases of precontract, license or grant activity, including
solicitations (bids, quotations, and proposals), solicitations (bids, quotations, and proposals), precontractpre-contract negotiations, post-contract activity, or negotiations, post-contract activity, or
other government contracting activity (GCA) programs or projects which require access to other government contracting activity (GCA) programs or projects which require access to
classified information by a contractor.classified information by a contractor.”40"45 Additionally, DCSA has specific requirements for Additionally, DCSA has specific requirements for
contractor and subcontractor facility clearances to ensure the protection of classified contractor and subcontractor facility clearances to ensure the protection of classified
information.information.41
46 According to the NISPOM, when the cognizant security agency has According to the NISPOM, when the cognizant security agency has “"determined that an entity is determined that an entity is
under FOCI, the primary consideration will be the protection of classified informationunder FOCI, the primary consideration will be the protection of classified information”" and the and the
government will “cognizant security agency will "take whatever action is necessary to protect classified information.take whatever action is necessary to protect classified information.”42
"47 Technology Protection Programs
Data-sharing and intellectual property-related requirements and provisions for DOD contracts are Data-sharing and intellectual property-related requirements and provisions for DOD contracts are
oftentypically contract-specific. A 2021 update to Department of Defense Instruction (DODI) 5000.83 contract-specific. A 2021 update to Department of Defense Instruction (DODI) 5000.83
Technology and Program Protection to Maintain Technological Advantage Technology and Program Protection to Maintain Technological Advantage establishesestablished policy for policy for
science and technology (S&T) managers to protect DOD innovation.science and technology (S&T) managers to protect DOD innovation.4348 The DODI states The DODI states that DOD DOD
contractors and contractor facilities contractors and contractor facilities “"are at risk of attacks by state and non-state threat actors.are at risk of attacks by state and non-state threat actors.”44
"49 The DODI also tasks S&T managers and The DODI also tasks S&T managers and “"lead systems engineerslead systems engineers”" with developing "risk informed protection planning and management of their technology with developing “risk

37 Executive Order 12829, "National Industrial Security Program," January 1993, WCPD-1993-01-11-Pg17.pdf
(govinfo.gov)
38 Ibid.
39 32 C.F.R. Part 117, “National Industrial Security Program Operating Manual (NISPOM), at
https://www.ecfr.gov/current/title-32/subtitle-A/chapter-I/subchapter-D/part-117.
40 Ibid.
41 Defense Counterintelligence and Security Agency, “Facility Clearances,” at https://www.dcsa.mil/Industrial-
Security/Entity-Vetting-Facility-Clearances-FOCI/Facility-Clearances/.
42 Ibid.
43 U.S. Department of Defense, “Instruction 5000.83: Technology and Program Protection to Maintain Technological
Advantage,” May 2021, at https://www.esd.whs.mil/Portals/54/Documents/DD/issuances/dodi/500083p.pdf.
44 Ibid, p. 11.
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informed protection planning and management of their technology… to mitigate adversary … to mitigate adversary
impacts.impacts.”45
"50 Agency-Specific DOD Foreign Influence Mitigation Programs
Some In addition to DOD's department-wide FOCI efforts, some DOD offices or agencies DOD offices or agencies also maintain their own programs or efforts to mitigate the potential maintain their own programs or efforts to mitigate the potential
impact of foreign influence for contractors or other nongovernmental partners. For example, the impact of foreign influence for contractors or other nongovernmental partners. For example, the
Defense Advanced Research Projects Agency (DARPA) has its own Defense Advanced Research Projects Agency (DARPA) has its own Countering Foreign
Influence Program (CFIPFundamental Research Risk-Based Security Review Program (FRRBS), which addresses academic partners for DARPA-funded research.), which addresses academic partners for DARPA-funded research.46
51 Congress might consider whether to require DOD to assess Congress might consider whether to require DOD to assess the CFIP andthis program, whether it could be whether it could be
integrated into other programs or organizationsintegrated into other programs or organizations.
, or whether it is sufficient. Foreign Ties to Fundamental Research Similarly, in 2023, DOD announced efforts to protect DOD-funded research at educational Similarly, in 2023, DOD announced efforts to protect DOD-funded research at educational
institutes, including issuing a institutes, including issuing a “"Policy for Risk-Based Security Reviews of Fundamental Policy for Risk-Based Security Reviews of Fundamental
Research.Research.”47"52 Congress may Congress may also consider studying or requiring a study of the potential efficacy of consider studying or requiring a study of the potential efficacy of
a similar initiative aimed at uncleared contractors that would specifically focus on foreign a similar initiative aimed at uncleared contractors that would specifically focus on foreign
influence using a risk-based framework.influence using a risk-based framework.
Mitigating Foreign Influence for Small Businesses
Understanding the potential risk of foreign influence on small businesses Understanding the potential risk of foreign influence on small businesses is a particularhas been a concern concern
for DOD, as smaller companies may lack the resources for protection from foreign influence for DOD, as smaller companies may lack the resources for protection from foreign influence
efforts.48 In 2023, DOD released a Small Business Strategy that aimed to bring small businesses
into the defense industrial base, including nontraditional vendors.49 According to DOD officials,
mitigating the potential negative effects of foreign influence is “arguably [one of] the most
pressing issues faced by small businesses,” as adversaries may find small firms to be an easier
target for espionage, cyber threats, or intellectual property (IP) theft.50
efforts.53 Small businesses that provide unique or innovative technologies are at particular risk of foreign Small businesses that provide unique or innovative technologies are at particular risk of foreign
influence efforts, as are companies that struggle to obtain financing. In 2020, DOD established influence efforts, as are companies that struggle to obtain financing. In 2020, DOD established
the Trusted Capital Digital Marketplace program, which connects vetted trusted capital providers the Trusted Capital Digital Marketplace program, which connects vetted trusted capital providers
and investors with qualifying domestic companies investors with qualifying domestic companies criticalDOD deems "vital" to the DIB. to the DIB.5154 This program was intended to This program was intended to
allow DOD contractors to have access to funding that is safe from FOCI risk and allow DOD contractors to have access to funding that is safe from FOCI risk and “"limit foreign access to critical technology."55 Then-Undersecretary of Defense for Acquisition and Sustainment Ellen Lord cited "adversarial capital," or investment funding from countries of concern, "whether that be in terms of intellectual property or whether that be technology development or manufacturing," as a driving factor for creating the program.56

These concerns have remained salient as DOD has sought to work more with the small business community, and technology start ups. In 2023, DOD released a Small Business Strategy that aimed to bring small businesses, including nontraditional vendors, into the defense industrial base.57 According to DOD strategy, mitigating the potential negative effects of foreign influence is "arguably [one of] the most pressing issues faced by small businesses," as adversaries may find small firms to be an easier target for espionage, cyber threats, or intellectual property (IP) theft.58

Issues for Congress limit foreign

45 Ibid.
46 Defense Advanced Research Projects Agency, “Countering Foreign Influence Program (CFIP) Frequently Asked
Questions (FAQ),” May 2022, at https://www.darpa.mil/attachments/CFIPFAQ.pdf.
47 Department of Defense, “Department of Defense Strengthening Efforts to Counter Unwanted Foreign Influence on
DOD-Funded Research at Institutions of Higher Education,” June 2023, at
https://www.defense.gov/News/Releases/Release/Article/3445601/department-of-defense-strengthening-efforts-to-
counter-unwanted-foreign-influen/.
48For more information on DOD and its relationship with small business contractors, see CRS Report R45576, An
Overview of Small Business Contracting, by R. Corinne Blackford.
49 U.S. Department of Defense, “Small Business Strategy,” January 2023, at
https://media.defense.gov/2023/Jan/26/2003150429/-1/-1/0/SMALL-BUSINESS-STRATEGY.PDF.
50 U.S. Department of Defense, “DOD Increases Efforts to Bring Small Businesses Into Defense Industrial Base ,”
press release, March 2023, at https://www.defense.gov/News/News-Stories/Article/Article/3339784/dod-increases-
efforts-to-bring-small-businesses-into-defense-industrial-base/.
51 U.S. Department of Defense, “Department of Defense Announces Establishment of the Trusted Capital Digital
Marketplace,” January 2021, at https://www.defense.gov/News/Releases/Release/Article/2470485/department-of-
defense-announces-establishment-of-the-trusted-capital-digital-ma/.
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access to critical technology.”52 Then-Undersecretary of Defense for Acquisition and Sustainment
Ellen Lord cited “adversarial capital,” or investment funding from countries of concern, “whether
that be in terms of intellectual property or whether that be technology development or
manufacturing,” as a driving factor for creating the program.53
Issues for Congress
Congress may consider taking no action, taking legislative action, or directing DOD to take action Congress may consider taking no action, taking legislative action, or directing DOD to take action
to further mitigate the potential risk of foreign influence with its contractors. Actions available to to further mitigate the potential risk of foreign influence with its contractors. Actions available to
Congress include the followingCongress include the following.
• :Title 10, U.S.C. and Foreign Ownership Limitations. Congress might consider whether . Congress might consider whether
or not to amend Title 10 of the U.S. Code to broaden the categories of goods or services or not to amend Title 10 of the U.S. Code to broaden the categories of goods or services
subject to oversightsubject to oversight, or named as covered items. Several portions of Title 10 include or named as covered items. Several portions of Title 10 include
prohibitions of DOD contracting with companies affiliated with certain countries for prohibitions of DOD contracting with companies affiliated with certain countries for
certain goods or services, generally goods or services related to sensitive military certain goods or services, generally goods or services related to sensitive military
capabilities capabilities – such as(e.g., nuclear command, control, and communications, or satellite nuclear command, control, and communications, or satellite
services. For example, a note in 10 U.S.C. §2302 establishes that DOD may not procure
certain categories of goods through a contract or subcontract from any PRC military
company, with certain exceptions.
• services). DOD Definitions of Foreign Influence. Congress might consider whether or not to Congress might consider whether or not to
require DOD to clarify or standardize its guidance language about foreign influence. require DOD to clarify or standardize its guidance language about foreign influence.
According to the NISPOM, According to the NISPOM, “"factors relating to the entity, relevant foreign interests, and factors relating to the entity, relevant foreign interests, and
the government of such foreign interests, as appropriate, will be considered in the the government of such foreign interests, as appropriate, will be considered in the
aggregate to determine whether an applicant entity is under FOCI.aggregate to determine whether an applicant entity is under FOCI.”54 It lists several of
these factors, including a record of espionage, and “source, extent, and nature of FOCI,”
such as “"59 The NISPOM lists several factors of "source, extent, and nature of FOCI," including a record of espionage, and "whether foreign interests hold a majority or minority position in the entity.whether foreign interests hold a majority or minority position in the entity.”55
"60 The current description of the assessment criteria does not elaborate on what factors are The current description of the assessment criteria does not elaborate on what factors are
considered the most critical or how security officers define and identify these factors.considered the most critical or how security officers define and identify these factors.
• Centralizing Foreign Influence Mitigation Efforts. Congress might consider . Congress might consider
whether certain mitigation programs that are currently limited in scope or whether certain mitigation programs that are currently limited in scope or
implemented by a implemented by a segment of DODDOD component could be implemented across the department. could be implemented across the department.
Some agencies within DOD have their own foreign influence mitigation Some agencies within DOD have their own foreign influence mitigation
programs. programs. Conflict of Interest Mitigation. Congress might additionally consider whether to require DOD to Congress might additionally consider whether to require DOD to
implement agency-wide conflict of interest mitigation programs. A 2021 implement agency-wide conflict of interest mitigation programs. A 2021
Government Accountability Office (GAO) study found that DOD lacked an Government Accountability Office (GAO) study found that DOD lacked an
agency-wide process for identifying conflicts of interest for grant awards.agency-wide process for identifying conflicts of interest for grant awards.56 The The
report noted thatreport noted that, during its interview process during its interview process, DOD and the Department of Energy DOD and the Department of Energy
told GAO that told GAO that “"they are working on developing agency-wide conflict of interest they are working on developing agency-wide conflict of interest

52 Ibid.
53 Hudson Institute, “Transcript: Competing with Great Powers at the “Speed of Relevance”: A Conversation with
Ellen Lord,” December 2020, at https://www.hudson.org/national-security-defense/transcript-competing-with-great-
powers-at-the-speed-of-relevance-a-conversation-with-ellen-lord.
54 32 C.F.R. Part 117, “National Industrial Security Program Operating Manual (NISPOM), at
https://www.ecfr.gov/current/title-32/subtitle-A/chapter-I/subchapter-D/part-117.
55 Ibid.
56 U.S. Government Accountability Office, Agencies Need to Enhance Policies to Address Foreign Influence, 21-130,
December 2020, at https://www.gao.gov/assets/gao-21-130.pdf, p. 7.
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• policies,” but reportedly it is not certain if progress on these policies has been
made.57
• Requiring Leadership Ownership of Foreign Influence Mitigation Efforts.
DOD instructions and policies such as its “Technology and Program Protection to
Maintain Technological Advantage” delegate responsibility for protecting DOD
IP to the S&T mangers and lead systems engineers.58 Congress may consider
requiring that this responsibility reside at higher levels of DOD leadership to
require streamlined reporting and accountability structures.
• Providing Continued or Increased Oversight of Current Efforts. Congress
may also consider increasing its oversight of DOD IP protection policies and
protocols, or providing DOD program managers with additional resources, which
could include additional reporting requirements, supporting a centralized
reporting information database, or additional funding to support foreign influence
mitigation efforts in the unclassified contract space. Alternatively, Congress may
consider maintaining the level of oversight it exercises, or decreasing it, thus
allowing DOD to develop its own policies and exercise more autonomy on this
matter.

Author Information

Alexandra G. Neenan

Analyst in U.S. Defense Infrastructure Policy



Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan
shared staff to congressional committees and Members of Congress. It operates solely at the behest of and
under the direction of Congress. Information in a CRS Report should not be relied upon for purposes other
than public understanding of information that has been provided by CRS to Members of Congress in
connection with CRS’s institutional role. CRS Reports, as a work of the United States Government, are not
subject to copyright protection in the United States. Any CRS Report may be reproduced and distributed in
its entirety without permission from CRS. However, as a CRS Report may include copyrighted images or
material from a third party, you may need to obtain the permission of the copyright holder if you wish to
copy or otherwise use copyrighted material.


57 Ibid.
58 Department of Defense, “policies," but reportedly it is not certain if progress on these policies has been made.61
  • Requiring Leadership Ownership of Foreign Influence Mitigation Efforts. DOD instructions and policies, such as its "Technology and Program Protection to Maintain Technological Advantage," delegate responsibility for protecting DOD IP to the S&T mangers and lead systems engineers.62 Congress may consider requiring that this responsibility reside at higher levels of DOD leadership to require streamlined reporting and accountability structures.
  • Providing Continued or Increased Oversight of Current Efforts. Congress may also consider increasing its oversight of DOD IP protection policies and protocols, including additional reporting requirements, providing DOD program managers with additional resources, which could support a centralized reporting information database, or providing additional funding to support foreign influence mitigation efforts with regard to unclassified contracts. Alternatively, Congress may consider maintaining the level of oversight it exercises, or decreasing it, thus allowing DOD to develop its own policies and exercise more autonomy on this matter.

    • Footnotes

    1.

    CRS In Focus IF10600, Defense Primer: Department of Defense Contractors, by Alexandra G. Neenan.

    2. Executive Order 14347, "Restoring the United States Department of War," September 5, 2025, https://www.federalregister.gov/documents/2025/09/10/2025-17508/restoring-the-united-states-department-of-war. 3.

    For more information about foreign direct investment in the broader U.S. economy, see CRS In Focus IF10636, Foreign Direct Investment: Background and Issues, by Shayerah I. Akhtar and Cathleen D. Cimino-Isaacs.

    4. Defense Counterintelligence and Security Agency, "Foreign Ownership, Control, or Influence," https://www.dcsa.mil/Industrial-Security/Entity-Vetting-Facility-Clearances-FOCI/Foreign-Ownership-Control-or-Influence/. 5.

    Additional information about the FAR can be found in CRS Report R42826, The Federal Acquisition Regulation (FAR): Answers to Frequently Asked Questions, by David H. Carpenter, Matthew D. Trout, and Dominick A. FiorentinoFor additional information, congressional clients may contact Dominick Fiorentino.

    6.

    Defense Federal Acquisition Regulation Supplement, §252.225-7007.

    7.

    For more information on U.S. restrictions on Huawei technologies specifically, see CRS Report R47012, U.S. Restrictions on Huawei Technologies: National Security, Foreign Policy, and Economic Interests, by Jill C. Gallagher.

    8.

    P.L. 115-91, §1656. Defense committees, as defined in 10 U.S.C., §101(a)(16), are the Senate Armed Services Committee, House Armed Services Committee, Senate Appropriations Committee, and the House Appropriations Committee.

    9.

    84 Federal Register 40216, at https://www.federalregister.gov/documents/2019/08/13/2019-17201/federal-acquisition-regulation-prohibition-on-contracting-for-certain-telecommunications-and-video.

    85 Federal Register 42665, at https://www.federalregister.gov/documents/2020/07/14/2020-15293/federal-acquisition-regulation-prohibition-on-contracting-with-entities-using-certain.

    10.

    Joe Gould, "U.S. Government's Huawei Ban Moving Too Fast, Contractors Say," Defense News, July 9, 2020.

    11. Scott S. Sheffler, "Section 889, The "Huawei Ban" in Federal Contracts: General Scope and Considerations," (2020), at https://www.feldesman.com/section-889-the-huawei-ban-in-federal-contracts-general-scope-and-considerations/. 12. Department of Defense, "Ellen M. Lord, Undersecretary of Defense for Acquisition and Sustainment, Briefs Media at the Pentagon," press release, August 2020, at https://www.defense.gov/News/Transcripts/Transcript/Article/2319990/ellen-m-lord-undersecretary-of-defense-for-acquisition-and-sustainment-briefs-m/. 13.

    P.L. 116-283, §819. The NDAA references a note in 10 U.S.C. §2509, but the portion of Title 10 in question has since been renumbered and can be located in 10 U.S.C. §4819.

    14.

    P.L. 116-283, §819.

    15.

    P.L. 116-92, §845.

    16.

    DOD, "Open DFARS Cases," April 2024, at https://www.acq.osd.mil/dpap/dars/opencases/dfarscasenum/dfars.pdf#page=11.

    17.

    P.L. 116-283(d)(2).

    18.

    P.L. 116-283(d)(2).

    19.

    P.L. 116-283(b).

    20.

    Department of Defense, "Entities Identified as Chinese Military Companies Operating in the United States in Accordance with Section 1260H of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (P.L. 116-283, Section 126H, as amended (codified at 10 U.S.C. §113, note)), June 2026, https://media.defense.gov/2026/Jun/08/2003945537/-1/-1/1/ENTITIES-IDENTIFIED-AS-CHINESE-MILITARY-COMPANIES-OPERATING-IN-THE-UNITED-STATES-IN-ACCORDANCE-WITH-SECTION-1260H.PDF.

    21.

    P.L. 117-81, §855.

    22.

    P.L. 117-81, §855.

    23.

    P.L. 117-81, §855.

    24.

    DFARS, §252.225-7058.

    25.

    P.L. 117-263, §5949. For more information on Chinese influence in the semiconductor industry, see CRS Report R46767, China's New Semiconductor Policies: Issues for Congress, by Karen M. Sutter; CRS Report R47558, Semiconductors and the CHIPS Act: The Global Context, by Karen M. Sutter, Emily G. Blevins, and Yong W. Kwon; and CRS In Focus IF12958, Section 301 and China: Mature-Node Semiconductors, by Karen M. Sutter.

    26.

    P.L. 117-263, §5949.

    27. Alexandra Alper, "U.S. Lawmakers Ease Planned Curbs on Chinese Chips amid Corporate Pushback," Reuters, December 2022, https://www.reuters.com/world/us/us-lawmakers-ease-proposed-curbs-chinese-chips-amid-corporate-pushback-2022-12-06/. 28. Alexandra Alper, "U.S. Lawmakers Ease Planned Curbs on Chinese Chips amid Corporate Pushback," Reuters, December 2022, https://www.reuters.com/world/us/us-lawmakers-ease-proposed-curbs-chinese-chips-amid-corporate-pushback-2022-12-06/. 29. Alexandra Alper, "U.S. Lawmakers Ease Planned Curbs on Chinese Chips amid Corporate Pushback," Reuters, December 2022, https://www.reuters.com/world/us/us-lawmakers-ease-proposed-curbs-chinese-chips-amid-corporate-pushback-2022-12-06/. 30.

    Joint Explanatory Statement to Accompany the James M. Inhofe National Defense Authorization Act for Fiscal Year 2023, pp. 703-704, at https://www.armed-services.senate.gov/imo/media/doc/fy23_ndaa_joint_explanatory_statement.pdf.

    31.

    American Free Enterprise Chamber of Commerce, letter to Congress, November 2022, at https://www.politico.com/f/?id=00000184-a64c-d1d1-ad8d-af7d115d0000.

    32. Justin Doubleday, "New Rule Sets Stage for Banning Risky Technologies from Government Supply Chains," Federal News Network, October 2023, at https://federalnewsnetwork.com/acquisition-policy/2023/10/new-rule-sets-stage-for-banning-risky-technologies-from-government-supply-chains/. 33.

    P.L. 118-31.

    34.

    P.L. 118-31.

    35.

    DFARS, §252.209-7012.

    36.

    Joint Explanatory Statement to Accompany the Servicemember Quality of Life Improvement and National Defense Authorization Act for Fiscal Year 2025, pp. 37-38, at https://docs.house.gov/billsthisweek/20241209/FY25%20NDAA%20JOINT%20EXPLANATORY%20MATERIAL%20FINAL.pdf.

    37.

    P.L. 119-60 §838(a)(1).

    38.

    P.L. 119-60 §838(f)(3)(B).

    39.

    P.L. 119-60. §842(a). 10 U.S.C. §4865.

    40.

    P.L. 119-60 §842(a).

    41. U.S. Department of Commerce, "Commerce Control List," at https://www.bis.gov/regulations/ear/interactive-commerce-control-list?isExpanded=&category=&keyword=. 42.

    Executive Order 12829, "National Industrial Security Program," January 1993, https://www.govinfo.gov/content/pkg/WCPD-1993-01-11/pdf/WCPD-1993-01-11-Pg17.pdf.

    43.

    Executive Order 12829, "National Industrial Security Program," January 1993.

    44.

    32 C.F.R. Part 117, "National Industrial Security Program Operating Manual (NISPOM), at https://www.ecfr.gov/current/title-32/subtitle-A/chapter-I/subchapter-D/part-117.

    45.

    32 C.F.R. Part 117, "National Industrial Security Program Operating Manual (NISPOM).

    46. Defense Counterintelligence and Security Agency, "Facility Clearances," at https://www.dcsa.mil/Industrial-Security/Entity-Vetting-Facility-Clearances-FOCI/Facility-Clearances/. 47.

    Defense Counterintelligence and Security Agency, "Facility Clearances."

    48.

    U.S. Department of Defense, "Instruction 5000.83: Technology and Program Protection to Maintain Technological Advantage," May 2021, at https://www.esd.whs.mil/Portals/54/Documents/DD/issuances/dodi/500083p.pdf.

    49.

    U.S. Department of Defense, "Instruction 5000.83: Technology and Program Protection to Maintain Technological Advantage," May 2021, p. 11.

    50.

    U.S. Department of Defense, "Instruction 5000.83: Technology and Program Protection to Maintain Technological Advantage," May 2021, p. 11.

    51.

    Defense Advanced Research Projects Agency, "Frequently Asked Questions," https://www.darpa.mil/sites/default/files/attachment/2025-01/darpa-fundamental-research-risk-based-review-faqs.pdf.

    52. Department of Defense, "Policy for Risk-Based Security Reviews of Fundamental Research," June 2023, https://basicresearch.defense.gov/Portals/61/Documents/Academic%20Research%20Security%20Page/Policy%20on%20Risk-Based%20Security%20Reviews%20of%20Fundamental%20Research_June%208%202023%20(2)%201.pdf?ver=9HXS_MMhHURBl85vhiI0Dg%3D%3D. 53.

    For more information on DOD and its relationship with small business contractors, see CRS Report R45576, An Overview of Small Business Contracting, by R. Corinne Blackford.

    54. U.S. Department of Defense, "Department of Defense Announces Establishment of the Trusted Capital Digital Marketplace," January 2021, at https://www.defense.gov/News/Releases/Release/Article/2470485/department-of-defense-announces-establishment-of-the-trusted-capital-digital-ma/. 55.

    U.S. Department of Defense, "Department of Defense Announces Establishment of the Trusted Capital Digital Marketplace," January 2021.

    56.

    Hudson Institute, "Transcript: Competing with Great Powers at the 'Speed of Relevance': A Conversation with Ellen Lord," December 2020, at https://www.hudson.org/national-security-defense/transcript-competing-with-great-powers-at-the-speed-of-relevance-a-conversation-with-ellen-lord.

    57.

    U.S. Department of Defense, "Small Business Strategy," January 2023, at https://media.defense.gov/2023/Jan/26/2003150429/-1/-1/0/SMALL-BUSINESS-STRATEGY.PDF.

    58. U.S. Department of Defense, "DOD Increases Efforts to Bring Small Businesses into Defense Industrial Base," press release, March 2023, at https://www.defense.gov/News/News-Stories/Article/Article/3339784/dod-increases-efforts-to-bring-small-businesses-into-defense-industrial-base/. 59.

    32 C.F.R. Part 117, "National Industrial Security Program Operating Manual (NISPOM), at https://www.ecfr.gov/current/title-32/subtitle-A/chapter-I/subchapter-D/part-117.

    60.

    32 C.F.R. Part 117, "National Industrial Security Program Operating Manual (NISPOM), at https://www.ecfr.gov/current/title-32/subtitle-A/chapter-I/subchapter-D/part-117.

    61.

    U.S. Government Accountability Office, Agencies Need to Enhance Policies to Address Foreign Influence, 21-130, December 2020, p.7. at https://www.gao.gov/assets/gao-21-130.pdf.

    62. Department of Defense, "    Instruction 5000.83: Technology and Program Protection to Maintain Technological Instruction 5000.83: Technology and Program Protection to Maintain Technological
    Advantage,Advantage,”" May 2021, at https://www.esd.whs.mil/Portals/54/Documents/DD/issuances/dodi/500083p.pdf May 2021, at https://www.esd.whs.mil/Portals/54/Documents/DD/issuances/dodi/500083p.pdf, p. 1. , p. 1.
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