- The proposed DFARS rule would require covered contractors to disclose beneficial ownership and FOCI information to DCSA.
- Contractors would need to update FOCI and ownership disclosures throughout contract performance and mitigate identified risks within 90 days.
- The proposed rule would apply to contracts above $5 million and could extend to certain commercial contracts tied to national security risks.
The Department of War is seeking comments on proposed changes to the Defense Federal Acquisition Regulation Supplement, or DFARS, that would require contractors to disclose beneficial ownership and foreign ownership, control or influence, or FOCI, information as part of efforts to reduce national security risks related to FOCI.
According to a Federal Register notice published Thursday, DOW said the proposed rule implements portions of section 847 of the National Defense Authorization Act for fiscal 2020 and section 819 of the NDAA for fiscal 2021.
Comments on the proposed rule are due July 6.
What Are the Disclosure Requirements for Contractors Under the Proposed Rule?
According to the proposed rule, covered contractors and subcontractors would be required to disclose to the Defense Counterintelligence and Security Agency their beneficial ownership information and whether they are under FOCI.
Contractors determined to be under FOCI would also need to disclose contact information for each foreign owner that qualifies as a beneficial owner.
The proposed DFARS changes would require contractors to provide updates to DCSA regarding changes in beneficial ownership or FOCI status during the life of a contract.
The proposed rule would require contractors to mitigate risks related to FOCI within 90 days of a contract award, exercise of an option, modification or identification of risks during contract performance.
What Contracts Would the Proposed DFARS Rule Apply to?
If finalized, the proposed rule would apply to contracts valued above $5 million, according to DOW.
The department said designated senior DOW officials could apply the proposed rule to certain commercial product and service contracts involving sensitive data, systems or processes tied to national security risks.
The proposed rule aims to strengthen protections against unauthorized foreign access to DOW information.
How Does the Proposed Rule Align With Broader DFARS & Acquisition Policy Updates?
The proposed DFARS amendments follow several recent DOW acquisition policy and regulatory initiatives involving defense contracting requirements and acquisition reform.
Earlier this year, the department sought industry input for phase two of the Revolutionary FAR Overhaul initiative, which aims to revise portions of the Federal Acquisition Regulation and DFARS.
DOW also issued updated guidance covering the acquisition and management of contractor-prepared data throughout the contract lifecycle and across all defense components.
In addition, the department previously requested comments on a proposed DFARS amendment addressing joint venture eligibility requirements for certain defense contracts.
