Sec. 833. Mitigating risks related to foreign ownership, control, or influence of Department of Defense contractors or subcontractors
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In this section: The terms beneficial owner and beneficial ownership shall be determined in the manner set forth in section 240.13d–3 of title 17, Code of Federal Regulations. The term company means any corporation, company, limited liability company, limited partnership, business trust, business association, or other similar entity. The term covered contractor or subcontractor means a company that is an existing or prospective contractor or subcontractor of the Department of Defense on a contract or subcontract with a value in excess of $5,000,000, except as provided in subsection (c).
The terms foreign ownership, control, or influence and FOCI have the meanings given those terms under the policy, factors, and procedures of the National Industrial Security Program Operating Manual, DOD 5220.22-M, or a successor document. In developing and implementing the analytical framework for mitigating risk relating to ownership structures, as required by section 831(b)(2)(B)(ii), the Secretary of Defense shall improve the process and procedures for the assessment and mitigation of risks related to foreign ownership, control, or influence
(FOCI)of contractors and subcontractors doing business with the Department of Defense. The process and procedures for the assessment and mitigation of risk relating to ownership structures referred to in paragraph
(1)shall include the following elements: A requirement for covered contractors and subcontractors to disclose to the Defense Security Service, or its successor organization, their beneficial ownership and whether they are under FOCI. A requirement to update such disclosures when significant changes occur to information previously provided, consistent with or similar to the procedures for updating FOCI information under the National Industrial Security Program. A requirement for covered contractors and subcontractors determined to be under FOCI to disclose contact information for each of its foreign owners that is a beneficial owner. A requirement that, at a minimum, the disclosures required by this paragraph be provided at the time the contract or subcontract is awarded, amended, or renewed, but in no case later than one year after the Secretary prescribes regulations to carry out this subsection. Consistent with section 831(b)(2)(C)(ii), consideration of FOCI risks as part of responsibility determinations, including— whether to establish a special standard of responsibility relating to FOCI risks for covered contractors or subcontractors, and the extent to which the policies and procedures consistent with or similar to those relating to FOCI under the National Industrial Security Program shall be applied to covered contractors or subcontractors; procedures for contracting officers making responsibility determinations regarding whether covered contractors and subcontractors may be under foreign ownership, control, or influence and for determining whether there is reason to believe that such foreign ownership, control, or influence would pose a risk to national security or potential risk of compromise because of sensitive data, systems, or processes, such as personally identifiable information, cybersecurity, or national security systems involved with the contract or subcontract; and modification of policies, directives, and practices to provide that an assessment that a covered contractor or subcontractor is under FOCI may be a sufficient basis for a contracting officer to determine that a contractor or subcontractor is not responsible. Requirements for contract clauses providing for and enforcing disclosures related to changes in FOCI during performance of the contract, consistent with subparagraph (A), and necessitating the effective mitigation of risks related to FOCI throughout the duration of the contract or subcontract. Pursuant to section 831(c), designation of the appropriate Department of Defense official responsible to approve and to take actions relating to award, modification, termination of a contract, or direction to modify or terminate a subcontract due to an assessment by the Defense Security Service, or its successor organization, that a covered contractor or subcontractor under FOCI poses a risk to national security or potential risk of compromise. A requirement for the provision of additional information regarding beneficial ownership and control of any covered contractor or subcontractor on the contract or subcontract. Other measures as necessary to be consistent with other relevant practices, policies, regulations, and actions, including those under the National Industrial Security Program. The disclosure requirements under subsection
(b)shall not apply to a contract or subcontract for commercial products or services, unless a designated senior official specifically requires the disclosures described in such subparagraphs with respect to the contract or subcontract based on a determination by the designated senior official that the contract or subcontract involves a risk to national security or potential risk of compromise because of sensitive data, systems, or processes, such as personally identifiable information, cybersecurity, or national security systems. The Secretary of Defense shall ensure that the requirements of this section are applied to research and development and procurement activities, including for the delivery of services, established through any means including those under section 2358(b) of title 10, United States Code. The Secretary shall ensure that sufficient resources, including subject matter expertise, are allocated to execute the functions necessary to carry out this section, including the assessment, mitigation, contract administration, and oversight functions. Not later than 180 days after the date of the enactment of this Act, the Secretary of Defense shall establish a process to update systems of record to improve the assessment and mitigation of risks associated with FOCI through the inclusion and updating of all appropriate associated uniquely identifying information about the contracts and contractors and subcontracts and subcontractors in the Federal Awardee Performance and Integrity Information System (FAPIIS), administered by the General Services Administration, and the Commercial and Government Entity
(CAGE)database, administered by the Defense Logistics Agency. The Secretary of Defense shall ensure that the information required to be disclosed pursuant to this subsection is— not made public; made available via the FAPIIS and CAGE databases; and made available to appropriate government departments or agencies.