Department of Defense Updates the National Industrial Security Program’s FOCI Regulations
Summary: The US Department of Defense (DoD) recently amended the Code of Federal Regulations (CFR) to codify DoD policies regarding contractors under foreign ownership, control or influence (FOCI) and that possess, or are in process to obtain, a facility security clearance (FCL). The codification of the FOCI policies serves to increase uniformity and effectiveness of the policies as applied by DoD, its components and the non-components for which DoD’s Defense Security Service (DSS) provides industrial security services (e.g., the Departments of State and Justice). The interim final rule, which is effective as of April 9, 2014, and is subject to comment until June 9, 2014, incorporates policies into the CFR that DSS has previously informally observed or that have been promulgated through less formal means. While the rule does not appear to substantively alter the requirements for companies under FOCI, it standardizes procedures and can assist companies in gauging the timing and steps of the FOCI process. By assigning a timeline to the key steps, companies can better assess the flow of transactions involving FOCI, as the FOCI-mitigation process often impacts deal timing.