What you need to know about FOCI

Does your company have any foreign investment or ownership?  Have you seen or heard the word “FOCI”? Foreign investment can play an important role in maintaining the vitality of the U.S. industrial base. Therefore, it’s the policy of the U.S. Government to allow foreign investment consistent with the national security interest of the United States. The Foreign Ownership, Control, or Influence (FOCI) program is administered by the Department of Defense’s (DoD) Defense Counterintelligence and Security Agency (DCSA), which is by far the largest US FOCI program and continues to evolve based on threats to US national security.

A company is considered to be operating under FOCI whenever a foreign interest has the power, direct or indirect, whether exercised or not exercised, and whether or not exercisable, to direct or decide matters affecting the management or operations of that company in a manner which may result in unauthorized access to classified information or may adversely affect the performance of classified contracts.

Under the provisions of Federal Acquisition Regulation (FAR) 52.204-7 SAM Registration, a firm is required to make an affirmative statement that supports the Defense Acquisition Regulation supplement (DFARS) clause 252.209-7002.

As defined in the clause, foreign ownership and control is:

1. “Effectively owned or controlled” means that a foreign government or any entity controlled by a foreign government has the power, either directly or indirectly, whether exercised or exercisable, to control the election, appointment, or tenure of the Offeror’s officers or a majority of the Offeror’s board of directors by any means, e.g., ownership, contract, or operation of law (or equivalent power for unincorporated organizations).
2. “Entity controlled by a foreign government”—
   • (i) Means—
     • (A) Any domestic or foreign organization or corporation that is effectively owned or controlled by a foreign government; or
     • (B) Any individual acting on behalf of a foreign government.
   • (ii) Does not include an organization or corporation that is owned, but is not controlled, either directly or indirectly, by a foreign government if the ownership of that organization or corporation by that foreign government was effective before October 23, 1992.
3. “Foreign government” includes the state and the government of any country (other than the United States and its outlying areas) as well as any political subdivision, agency, or instrumentality thereof.

The provisions of FOCI come into play when classified programs and other protection requirements are included in the contract provisions. The DCSA then has full adjudication authority. If you are responding to a solicitation, you are required to make the appropriate disclosure.

The Offeror shall disclose any interest a foreign government has in the Offeror when that interest constitutes control by a foreign government as defined in this provision. If the Offeror is a subsidiary, it shall also disclose any reportable interest a foreign government has in any entity that owns or controls the subsidiary, including reportable interest concerning the Offeror’s immediate parent, intermediate parents, and the ultimate parent.

(C) Disclosure. DFARS 252.209-7002

If you are looking for more information and resources about FOCI and reporting requirments, check out our partners Project Spectrum. You can find an on-demand FOCI training on their website, accessible once you create a free account with them.

If you are looking for help with understanding FOCI requirements, government contracting, or want no-cost help to find contracting opportunities, please contact your Norcal APEX Accelerator counselor for assistance or apply for services today!