IG On Foreign Eligibility

The Defense Department's inspector general issued a report this week that looks at how DOD determines the eligibility of foreign contractors to win U.S. military contracts.

Specifically, the IG's report "assessed the process for determining and relaying relevant threat information and recommendations to the [Committee on Foreign Investment in the United States], the strength of [foreign ownership, control or influence] mitigation within cleared defense industry, and the effectiveness of existing tools to help FOCI mitigations and CFIUS determinations."

Among the IG's findings:

We found that existing policies clearly define requirements to support National Interest Determinations, but they do not effectively delineate roles and responsibilities to support the Services, agencies, and the acquisition community resulting in a significant backlog of decisions.

We also found that a need exists for a centralized, accessible database to process and store DD Form 254s -- a document that specifies security requirements for classified contracts -- as part of an enterprise system that manages the flow of contract information to support industrial security within cleared defense industry.

As for the IG's recommendations:

We recommend that the Under Secretary of Defense for Intelligence (USD(I)), in coordination with the Under Secretary of Defense for Acquisition, Technology, and Logistics (USD(AT&L)), issue guidance that defines ownership of information, delineates responsibility for coordination within respective Service and agency organizations, and outlines a consistent process flow for National Interest Determinations to further a synchronized, integrated approach to support CFIUS determinations and foreign ownership, control, or influence mitigation. We further recommend that the USD(I), in coordination with the USD(AT&L), direct the creation of a centralized repository for cleared defense contracts, to maintain DD Form 254s and other contract security requirements for classified contracts, and designate the Defense Security Service as executive agent in its role as the National Industrial Security Program Cognizant Security Office for DoD, 26 non-DoD agencies, and approximately 13,500 cleared contractors.

DOD management "concurred with the two main recommendations and its comments were responsive," according to the report, but did not concur "with designating at this time an executive agent for the DD Form 254 central repository."