--- title: Can a Foreign-Owned Company Win U.S. Government Contracts? description: Can foreign-owned companies win U.S. government contracts? Learn how FOCI, facility clearances, foreign ownership restrictions, and mitigation affect eligibility. image: https://industryfso.com/hubfs/Website/Pages/Homepage/Pentagon.webp --- [![Industry FSO logo](https://industryfso.com/hubfs/Website/Logos/Industry%20FSO%20logo.svg)](https://industryfso.com) - [About us](https://industryfso.com/about-us) - Services - [All Services](https://industryfso.com/services) - [FSO Services](https://industryfso.com/fso-services) - [FCL Setup & Maintenance](https://industryfso.com/fcl-formation) - [DCSA Review Prep](https://industryfso.com/dcsa-security-reviews) - [Foreign Ownership (FOCI)](https://industryfso.com/foci-consulting) - [Insights](https://industryfso.com/insights) [Speak to an Expert](https://industryfso.com/contact) - [About us](https://industryfso.com/about-us) - Services - [All Services](https://industryfso.com/services) - [FSO Services](https://industryfso.com/fso-services) - [FCL Setup & Maintenance](https://industryfso.com/fcl-formation) - [DCSA Review Prep](https://industryfso.com/dcsa-security-reviews) - [Foreign Ownership (FOCI)](https://industryfso.com/foci-consulting) - [Insights](https://industryfso.com/insights) [Speak to an Expert](https://industryfso.com/contact) - [FOCI](https://industryfso.com/insights/topic/foci) - [SF-328](https://industryfso.com/insights/topic/sf-328) # Can a Foreign-Owned Company Win U.S. Government Contracts? ![](https://industryfso.com/hubfs/Website/Global%20images/Sarah%20Phillips.jpg) By [Sarah Phillips](https://industryfso.com/insights/author/sarah-phillips) October 19 2026 5 min read ![Can a Foreign-Owned Company Win U.S. Government Contracts? image](https://industryfso.com/hubfs/Website/Pages/Homepage/Pentagon.webp) ## Contents ## Contents **Yes. Foreign-owned companies can compete for and receive many U.S. government contracts.** However, foreign ownership can introduce additional eligibility requirements, particularly for classified work, sensitive government programs, and contracts subject to foreign ownership reviews. A foreign parent company, international investors, or foreign board representation does not automatically disqualify a business from federal contracting. What matters is the nature of the ownership, the degree of foreign control or influence, and the requirements of the contract being pursued. For companies entering the federal market, understanding these distinctions early can help avoid unnecessary delays and complications. ## Does Foreign Ownership Disqualify a Company From Federal Contracting? There is no universal prohibition against foreign-owned businesses receiving U.S. government contracts. Many federal contracts are open to companies with foreign ownership, provided they satisfy the solicitation's eligibility requirements and applicable laws and regulations. However, restrictions can arise from several sources: - **Classified contract requirements:** Companies requiring access to classified information generally must obtain a Facility Clearance (FCL). - **Foreign ownership restrictions:** Certain procurements may restrict foreign ownership or require additional review. - **Supply chain security requirements:** Agencies may evaluate foreign influence, access to sensitive information, or relationships with restricted entities. - **Small business eligibility:** Foreign ownership and control may affect eligibility for certain SBA programs or set-aside contracts. - **Export controls:** Access to export-controlled technology or technical information may be restricted independently of contract eligibility. The key distinction is that **foreign ownership is not necessarily a barrier to federal contracting, but it can affect which opportunities a company is eligible to pursue.** ## What Is FOCI, and Why Does It Matter? FOCI stands for *Foreign Ownership, Control, or Influence*. Under the National Industrial Security Program (NISP), FOCI refers to circumstances in which a foreign interest has the ability to influence a company's management or operations in ways that could compromise classified information or adversely affect classified contract performance. FOCI can arise through direct ownership, indirect investments, voting rights, board representation, financial arrangements, or other relationships that provide foreign interests with influence over the business. A company does not have to be majority foreign-owned to raise FOCI concerns. Conversely, significant foreign ownership does not automatically prevent a company from performing government work. DCSA evaluates the nature and extent of foreign influence when determining whether a company is eligible for an FCL and whether mitigation measures are necessary. For a more detailed explanation, read our related article, [**What Is FOCI? A Practical Guide for Government Contractors**](https://industryfso.com/blog/what-is-foci). Additional guidance is available from the [Defense Counterintelligence and Security Agency (DCSA)](https://www.dcsa.mil/FOCI/When/). ## Can a Foreign-Owned Company Obtain a Facility Clearance? Yes. A U.S.-organized company with foreign ownership may obtain an FCL if applicable eligibility requirements are met and any FOCI concerns are favorably resolved. An FCL establishes a company's eligibility to access classified information in connection with qualifying government requirements. During the clearance process, DCSA reviews the company's corporate structure, ownership, governance, and foreign relationships. This review typically involves documentation such as: - Corporate organizational charts - Direct and indirect ownership information - Key Management Personnel (KMP) listings - Corporate governance documents - The SF-328, Certificate Pertaining to Foreign Interests - Additional documentation supporting foreign ownership disclosures The government's objective is to determine whether foreign interests could compromise classified information or adversely affect classified contract performance. If DCSA identifies FOCI concerns, the company may need to implement an approved mitigation arrangement before receiving an FCL. It is also important to distinguish a foreign-owned U.S. company from a foreign-organized company. Under the NISP, the latter generally cannot receive a U.S. FCL directly. For additional information, see [DCSA's Facility Clearance guidance](https://www.dcsa.mil/FCL/). ## How Can a Company Mitigate Foreign Ownership Concerns? When DCSA identifies FOCI that affects FCL eligibility, the company may be able to address those concerns through an approved mitigation arrangement. The appropriate approach depends on the foreign ownership structure, governance rights, and level of control. Common mitigation instruments include: **Board Resolution** May be appropriate when foreign ownership does not provide sufficient voting power to appoint representation to the company's governing board. **Security Control Agreement (SCA)** May apply when a foreign interest has board representation but does not effectively own or control the company. **Special Security Agreement (SSA)** May be used when a company is effectively owned or controlled by a foreign entity, while establishing safeguards intended to protect classified and export-controlled information. **Proxy Agreement or Voting Trust Agreement** May be used to transfer specified voting and management authority to approved U.S. citizens, reducing the foreign owner's ability to influence security-sensitive operations. These arrangements vary significantly in their requirements and ongoing compliance responsibilities. Some companies must also establish Government Security Committees, appoint outside directors, and implement plans governing technology access, electronic communications, and relationships with foreign affiliates. DCSA provides an overview of these arrangements through its [FOCI Mitigation Agreements](https://www.dcsa.mil/Industrial-Security/Entity-Vetting-Facility-Clearances-FOCI/Foreign-Ownership-Control-or-Influence/Mitigation-Agreements/) guidance. **Related article:** *FOCI Mitigation Explained: How Companies Address Foreign Ownership Concerns* \[Link when published\] ## What About Government Contracts That Don't Require a Clearance? Foreign ownership considerations are not limited to classified contracting. Companies pursuing unclassified federal contracts may encounter ownership disclosures, supply chain restrictions, export control requirements, or other contract-specific eligibility reviews. One important development is **Section 847 of the FY2020 National Defense Authorization Act (NDAA)**. Section 847 established a framework for reviewing foreign ownership and beneficial ownership information associated with certain DoD contractors and subcontractors. The May 2026 proposed DFARS rule would establish additional disclosure and FOCI review requirements for covered DoD contracts and subcontracts valued above $5 million, including certain unclassified work. The proposed rule also includes exceptions, notably for many commercial products and services unless specific national security concerns warrant additional review. This means companies that have never needed an FCL may need to consider foreign ownership disclosures when pursuing covered DoD opportunities. Section 847 is not a blanket requirement for every federal contract exceeding $5 million. Contractors should evaluate the specific agency, procurement, and applicable requirements. For additional information, visit [DCSA's Section 847 resources](https://www.dcsa.mil/Section847/). **Related article:** *NDAA Section 847 Explained: What Government Contractors Need to Know* \[Link when published\] ## What Should Foreign-Owned Contractors Do Before Pursuing Government Work? Foreign-owned businesses should evaluate potential contracting restrictions before investing significant resources in an opportunity. A practical starting point includes: 1. **Document the ownership structure.** Identify direct and indirect owners, parent companies, voting rights, and beneficial ownership interests. 2. **Review corporate governance.** Understand whether foreign investors can appoint directors, influence management, or exercise other control rights. 3. **Identify the contracts being pursued.** Determine whether opportunities require an FCL, involve sensitive information, or include foreign ownership restrictions. 4. **Evaluate potential FOCI concerns.** Consider whether ownership or governance arrangements could trigger additional disclosures or mitigation requirements. 5. **Prepare supporting documentation.** Maintain accurate ownership records, organizational charts, and corporate governance documents. 6. **Seek specialized assistance when necessary.** Complex ownership arrangements, government inquiries, or mitigation requirements may warrant support from experienced FOCI consultants and, where appropriate, legal counsel. Companies pursuing an FCL should also become familiar with the **SF-328**, which is used to disclose foreign interests during the clearance process and in other applicable reviews. **Related article:** *How to Complete the SF-328: A Step-by-Step Guide* \[Link when published\] ## When Should a Foreign-Owned Company Seek FOCI Assistance? Not every foreign-owned contractor requires a formal FOCI mitigation agreement. However, professional assistance may be useful when a company is: - Pursuing its first classified contract or FCL - Preparing an SF-328 or responding to government ownership questions - Accepting new foreign investment - Undergoing a merger or acquisition - Restructuring its corporate ownership - Evaluating Section 847 applicability - Establishing or maintaining a FOCI mitigation agreement Early assessment can help companies understand potential obstacles before those issues affect contract eligibility, clearance processing, or ongoing compliance. For many contractors, the first step is not an extensive legal engagement. It is a practical review of the ownership structure, applicable requirements, and documentation needed to address potential concerns. ## Foreign Ownership Doesn't Have to Prevent Government Contracting Foreign ownership can complicate certain government contracting opportunities, but it does not automatically exclude a company from the federal market. The important questions are whether foreign interests create applicable security or eligibility concerns, what disclosures are required, and whether those concerns can be addressed through appropriate safeguards. Industry FSO helps government contractors evaluate foreign ownership structures, prepare SF-328 disclosures, navigate FOCI requirements, and implement mitigation measures when necessary. Our team provides practical industrial security consulting and works alongside legal counsel when the situation requires it. Learn more about our [FOCI consulting services](https://industryfso.com/foci-consulting) or contact Industry FSO to discuss your company's ownership structure and contracting requirements. ![](https://industryfso.com/hubfs/Website/Global%20images/Sarah%20Phillips.jpg) Article by ### Sarah Phillips President & Founder Sarah Phillips founded Industry FSO to make industrial security more accessible and manageable for defense contractors. With deep experience as a Facility Security Officer and a strong understanding of DCSA expectations, Sarah recognized that many small businesses lack the time and resources to manage an FCL on their own. [More articles](https://industryfso.com/insights/author/sarah-phillips) ## Browse more resources Check out more helpful FSO and FCL resources in our Insights section.  [All posts](https://industryfso.com/insights) #### [![What Is FOCI? A Guide for Government Contractors](https://industryfso.com/hubfs/Website/Pages/Homepage/Pentagon.webp) October 19 2026 What Is FOCI? A Guide for Government Contractors Foreign ownership is common across American businesses, including companies that provide products and services to the federal government. However, certain foreign investments, ownership arrangements, and business relationships can introduce additional security and compliance requirements. FOCI SF-328](https://industryfso.com/insights/what-is-foci) #### [![What Is an SF-328? Certificate Pertaining to Foreign Interests Explained](https://industryfso.com/hubfs/Website/Global%20images/placeholder%20blog%20image.jpg) June 12 2026 What Is an SF-328? Certificate Pertaining to Foreign Interests Explained If you've recently encountered the term "SF-328" during a Facility Clearance process, security review, or discussion about NDAA Section 847, you're not alone. FOCI SF-328](https://industryfso.com/insights/sf-328-certificate-pertaining-to-foreign-interests) #### [![NDAA Section 847: What Defense Contractors Need to Know About FOCI Reporting](https://industryfso.com/hubfs/Website/Global%20images/placeholder%20blog%20image.jpg) June 12 2026 NDAA Section 847: What Defense Contractors Need to Know About FOCI Reporting The defense contracting community is paying close attention to the implementation of NDAA Section 847, a provision designed to increase transparency around Foreign Ownership, Control, or Influence (FOCI) within the Defense Industrial Base. 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