DOD demands contractors spill on foreign ownership to protect secrets
Published Date: 5/7/2026
Proposed Rule
Summary
The Department of Defense is updating rules to make sure companies working with them reveal if they’re owned or controlled by foreign folks. This helps keep our defense projects safe from hidden foreign influence. If you’re a contractor or subcontractor, get ready to share ownership info by July 6, 2026, or risk delays in your contracts.
Analyzed Economic Effects
7 provisions identified: 0 benefits, 7 costs, 0 mixed.
Mandatory SF‑328 Ownership Disclosures
If you are a DoD offeror or contractor on contracts valued above $5,000,000, you must submit the SF‑328 (Certificate Pertaining to Foreign Interests) and supporting documents into the National Industrial Security System (NISS) for DCSA review and represent in your offer that the information is current, accurate, and complete.
NISS Eligibility for Award or Option
Contracting officers must not award, modify, or exercise an option on any contract valued above $5,000,000 unless the contractor or prospective contractor has an eligible status in the National Industrial Security System (NISS).
90‑Day Risk Mitigation Requirement
If DCSA or the requiring activity determines that FOCI or beneficial ownership poses a risk that can be mitigated, the offeror/contractor must agree at award and implement identified risk mitigation strategies within 90 calendar days of contract award, option exercise, modification, or identification of post‑award risks.
Rapid Reporting Timelines for Ownership Changes
During contract performance, contractors must update SF‑328 and supporting documents in NISS when changes occur; if changes may place the contractor under FOCI they must report foreign/beneficial owner details within 3 business days, and within 10 business days of DCSA notification must initiate a plan and submit additional information.
Subcontractor Eligibility and Flow‑Downs
Prime contractors must ensure subcontractors awarded subcontracts that exceed $5,000,000 have an eligible status in NISS prior to subcontract award and maintain eligible status for the duration of performance; the clause must be flowed down into subcontracts over $5,000,000.
Possible Coverage of Commercial Contracts
Although the rule generally excludes commercial products and services, the designated senior DoD official may require the disclosure and mitigation requirements for commercial acquisitions if the contract involves a risk to national security because of sensitive data, systems, or processes; DoD states it intends to apply the statute to commercial products and services when that determination is made.
Estimated Number and Paperwork Burden
DoD estimates an average 3,774 unique awardees (FY2022–2024) for awards over $5,000,000, 37,740 potentially impacted entities (assuming two offerors per award and five subcontractors per award), of which about 21,511 (57%) are estimated to be small businesses; OMB burdens cited include SF‑328 at $7,352,560 and NISS at $712,281, and DoD estimates an annual verification cost of $168,534 for offeror verification activity.
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Key Dates
Department and Agencies
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