Foreign Ownership Requirements Expanded: The US Department of Defense has long been concerned about restricting contracts with classified information to firms that are free from Foreign Ownership Control or Influence (FOCI) by countries of concern (currently Russia, North Korea, Iran, and China). The SBIR and STTR Extension Act of 2022 expanded FOCI oversight by establishing a due diligence program to assess security risks presented by small businesses.
In accordance with the Act, businesses submitting a proposal or application for a federally funded award will be required to complete a foreign disclosure form. A company is considered to be operating under FOCI whenever a foreign interest has the power, direct or indirect, weather or not exercised or exercisable, to direct or decide matters affecting the management or operations of that company. See an example of the new disclosure form in the DoD Broad Area Agency Announcement here that was published on November 21 (Attachment 2 is found on page 51).
The government recognizes that foreign investment plays a vital role in maintaining the vitality of the industrial base and there are several mitigation strategies your firm can implement that will reduce the risk of FOCI becoming problematic in your future government business.
Learn more from the Defense Counterintelligence and Security Agency linked here. And, watch this no-cost, on-demand training course by DoD partner Project Spectrum linked here that explains what it means to be under FOCI, and details FOCI’s effect on a company seeking initial or continued eligible for access to a federally funded award. You can also contact your local APEX Accelerator Advisor for questions related to FOCI, or any other federal contract compliance requirement.