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. 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, investment, supplier or producer relationships, or production overseas. These ties may pose a risk to U.S. national security, especially when firms are performing work of a sensitive or classified nature and have relationships with adversarial countries. DOD’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 DOD uses to describe a condition in which a U.S. entity’s foreign connections are believed to pose a risk of compromise of or unauthorized access to classified U.S. national security information. In the last 15 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 may consider changing statutory definitions to 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 also consider reducing foreign influence mitigation efforts in the interest of allowing more entrants into the DOD contract market.
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