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Foreign Companies May Compete With New Rules

WASHINGTON (CN) - The Department of Defense has issued requirements meant to ensure that classified information accessed by government contractors with foreign owners is safeguarded.

If a U.S. company with a foreign owner is awarded a contract requiring access to classified information, the new procedures provide actions for the U.S. Government to take to keep the owner from having direct authority over the disclosure of and access to classified information.

The National Industrial Security Program manages and oversees classified information accessed by private industry generally.

The Secretary of Defense acts as the program's executive agent, and responsibility is shared among the Defense Department, CIA, Department of Energy and Nuclear Regulatory Commission.

While the DoD oversees more than 10,000 U.S. contractors, it does not have consistent procedures to assess risks when a contractor has foreign ownership, control, or influence.

The Department of Defense issued a new regulation, last week, to ensure consistency of requirements.

The DoD was able to issue the regulation without notifying the public and providing a comment period, so the four agencies can quickly have lower prices for products and services due to fair and open competition.

"Without this rule, the [agencies] face an elevated risk of unauthorized disclosure of classified information to foreign interests resulting in potential economic losses or damage to U.S. national security," the DoD wrote.

The rule "provides a baseline for protection of classified information through analysis, evaluation and, if needed, protective measures," the DoD wrote.

Depending on the extent of a contractor's foreign ownership, control or influence, the government uses a variety of mechanisms to oversee the contractors and provide business management, including trusts, proxies and outside directors.

"The procedures in this rule allow companies determined to be under foreign ownership, control or influence to be cleared through...mitigation or negation agreement and thus realize billions of dollars in classified contracts," the DoD wrote.

The rule became effective Wednesday, and comments are due by June 9.

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