- Sweeping changes to FEOC laws impact defense, intel and energy acquisition
- FEOC refers entities connected to China, Russia, North Korea and Iran
- Decode ambiguity on complex FEOC laws with a panel at the 2026 Intel Summit on Sept. 24!
The Trump administration is transforming government contracting with sweeping changes to Foreign Entities of Concern, or FEOC, laws. These regulations not only impact defense and intelligence acquisition, but also energy tax credits.
The term FEOC does not refer to entire countries. Rather, it refers to individuals, organizations and businesses, particularly those with certain relationships to covered nations, such as:
- China
- Russia
- North Korea
- Iran
These regulatory changes seek to reduce U.S. reliance on foreign entities, particularly from these four nations, in critical supply chains. They have a goal of protecting national security and promoting domestic manufacturing and energy independence.
These FEOC regulatory reforms are extremely complex. Let’s break down five key ways new FEOC laws are changing the business of GovCon.
Discover what emerging FEOC regulations mean for the Department of War and intelligence community at the Potomac Officers Club’s 2026 Intel Summit on Sept. 24! Attend our Navigating the FEOC Frontier panel discussion and improve your understanding how FEOC rules are impacting contract eligibility, teaming arrangements, and subcontractor relationships. Leverage exclusive insights from our all-star panel of FEOC experts, including:
- Dr. Adele Merritt, Univ. of Maryland Applied Research Laboratory for Intelligence and Security chief research officer (and former NIH and IC CIO)
- Leo Alvarez, Baker Tilly principal
- And more to be announced!
Walk away with actionable guidance to prepare your compliance posture for what’s coming next. Secure your seat today!
How Are New FEOC Laws Changing GovCon?
1. Restricting Procurement of Advanced Batteries from FEOC-linked Sources
Congress is cracking down on Pentagon acquisition of advanced batteries that may come from FEOC-affiliated sources. Section 842 of the fiscal year 2026 National Defense Authorization Act limits DOW procurement of batteries from FEOC, like companies located in, or subject to the control, of China, Russia, Iran or North Korea.
It permits exceptions that keep some FEOCs in the supply chain and extends the implementation timeline to Jan. 1, 2028, for new contracts; Jan. 1, 2029, for standard batteries; and Jan. 1, 2031, for existing acquisition programs, the law firm Crowell said in December.
2. Banning Procurement of Critical Rare Earths
Congress, in the FY 2026 NDAA, also included new provisions that bar the DOW from acquiring rare metals that are often used in advanced military technologies if they come from non-friendly countries. The legislation specifically bans the department from procuring molybdenum, gallium or germanium from non-allied foreign nations. The restrictions applicable to gallium and germanium go into effect on Dec. 18, 2027.
Molybdenum is a is most commonly used as a high-temperature, corrosion-resistant metal alloy in steel, cast iron and super alloys, according to the National Mining Association. It is used in aircraft engines, wings and rudders; rocket nozzles and valves; satellite and spacecraft coatings; missiles and other machinery that requires high-temperature connectors.
Gallium has high strategic value. It is used in radars, missile seekers, secure radio frequency links and satellite solar cells, and advanced electronic warfare systems, according to the Atlantic Council think tank. But the U.S. doesn’t produce gallium domestically and lacks a government stockpile to protect against Chinese weaponization, as China in mid-2023 released new export licensing for gallium and germanium, reducing flows and causing prices to spike.
Germanium is used in infrared optics, night vision systems, individual thermal weapon sights and other electro-optical/infrared equipment. Germanium is also critical for solar cells that power military and civilian satellites.
Get clarity on evolving FEOC definitions and NDAA-driven restrictions before they affect your next contract by attending the Potomac Officers Club’s 2026 Intel Summit on Sept. 24! Our Navigating the FEOC Frontier panel discussion will give you practical due-diligence steps to identify FEOC exposure hiding in your vendor and joint venture relationships. Gain insight from officials and industry experts tracking real-time interpretation and enforcement trends. Network with DOW- and IC-focused GovCons facing identical regulatory pressure. Sign up now!
3. Expanding Covered Country Ban to Unclassified Contracts
The Pentagon recently progressed policy that would impact as many as 37,740 contractors and subcontractors, according to the law firm Wiley. The DOW published a proposed rule on May 7 that would extend, beyond classified contracts, the scope of Foreign Ownership, Control or Influence, or FOCI, requirements.
This proposed rule would greatly expand the universe of contractors that must disclose foreign ownership information and potentially implement risk mitigation measures that have traditionally been limited to contractors performing classified contracts. FOCI happens when a foreign entity has the power to direct or influence the management or operations of a company. This can lead to unauthorized access to sensitive information and possibly compromise national security. FOCI can involve legal means like joint ventures and acquisitions, or illegal methods like cyber espionage.
Examples of FOCI risk include:
- Foreign adversaries attempting to acquire sensitive or proprietary data from small businesses during due diligence before investing
- Foreign adversaries structuring their investments to avoid scrutiny or route investments through intermediaries to hide the money’s origin
The source of FOCI affects the severity of the risk. Close allies are considered low FOCI risk while FEOC nations like China, Iran, Russia and North Korea pose much greater risk.
4. More Stringent Waiver Requirements
An executive order signed by President Trump in July is expected to make it more difficult for the DOW to obtain waivers for acquiring rare materials from FEOC nations, according to the Winvale law firm. The July 20 executive order makes waiver requirements more stringent starting Jan. 1, 2027.
Companies looking to source non-compliant material must now propose a strategy that:
- Identifies the source of the covered material that would not be compliant
- Documents evidence of exhaustive efforts made to acquire compliant covered material, or that the material was not available at time of acquisition
- Explains steps to be taken by the prime contactor to remove non-compliant covered material from supply chains
- Proposes timeline for implementation of the mitigation plan
5. FEOC Application to Energy-Based Tax Credits
The federal government has even expanded FEOC requirements to energy-based tax credits to prevent FEOC nations from benefiting from U.S. clean energy tax credits and ensure domestic supply chains. The One Big Beautiful Bill Act of 2025 permits energy projects to be subject to new restrictions based on the degree of foreign investment or material assistance provided by certain foreign entities, Plante Moran said in a February announcement.
When triggered, FEOC rules can result in the denial of some of the most meaningful energy tax credits, including the Section 48E investment tax credit, the Section 45Y production tax credit and the Section 45X advanced manufacturing production credit, among others. An otherwise qualified energy project may lose energy tax credit eligibility under the FEOC rules if the project is owned by a prohibited foreign entity or if the project receives material assistance from a prohibited foreign entity.
There are three ways for energy projects to fail the FEOC requirements:
- The project owner is considered a specified foreign entity
- The project owner is considered a foreign-influenced entity
- The project receives material assistance from either a specified foreign entity or a foreign-influenced entity
