Chewning: Government is taking into account BAE's concerns over CFIUS policy

By Marjorie Censer / November 26, 2018

A top Pentagon official said an interim Treasury Department rule that has concerned some organizations, including BAE Systems, will go through a regulation-writing process over the next year.

Eric Chewning, deputy assistant secretary of defense for industrial policy, said at an Atlantic Council event today the rule in place is "a pilot program."

The interim rule, put into effect Nov. 10, expands the Committee on Foreign Investment in the United States' jurisdiction to non-controlling investments by foreign persons in a U.S. business dealing in critical technologies and requires mandatory declarations on those transactions. Previously, the committee's oversight was limited to acquisitions resulting in foreign control of U.S. firms.

In an Oct. 31 letter to the Treasury Department, BAE warned that "as currently drafted, the interim rule could place certain trusted industry partners like BAE at a serious disadvantage, thereby depriving the U.S. government of both the general benefits of competition and particular opportunities to leverage trusted foreign investments in critical technologies."

During today's event, Chewning said "we're going to go into a reg[ulation]-writing process over the next year" to finalize the regulations.

Asked about BAE's concerns, he said: "We're certainly taking [them] into account." The government is seeking to address that "in a way we think is consistent with national security."

Meanwhile, Chewning also said today the Pentagon is considering both how it can catalyze the defense industry's move into digitization as well as how it can make internal investments to best make use of industry's work.

"If you're going to use it at the front end, to get the value out of the life-cycle costs requires investments in our own capabilities," he told the audience. "What can we do to catalyze, and then are we making the right investments internally to keep pace with what we're asking industry?"