DoD just proposed a DFARS amendment (Case 2021-D011) requiring contractors on $5M+ contracts to disclose Foreign Ownership, Control, or Influence (FOCI) to DCSA, cleared or not.
What’s Changing?
20x scope expansion-– from 2,000 cleared firms to 40,000+, including uncleared contractors
Disclosure at bid stage -– FOCI details required before award, not after
90-day mitigation window -– fix foreign ties fast or lose the contract
Commercial contracts included -– national security-sensitive deals aren’t exempt
Ongoing reporting -– ownership changes must be promptly disclosed
Why GovCon Should Care
SMBs will feel the squeeze -– compliance burden is real
Bottom line: DoD is shifting from reactive risk management to proactive supply chain security. If your firm has foreign ties, start preparing now.
Let’s debate: Is this rule an unnecessary shield for national security, or a compliance sledgehammer that will crush small businesses and shrink the defense industrial base?
Drop your take below. Are you preparing, or pushing back?
While the objective of proactive supply chain security is vital to national defense, the current structure of Case 2021-D011 risks creating a “compliance sledgehammer” that will disproportionately affect and potentially eliminate Small Businesses (SBs) from the defense marketplace.
I think, DoD should increase the reporting threshold from $5M to $15M for non-cleared firms to exempt the smallest, most vulnerable contractors, allow a 12-month “grace period” for SBs to establish reporting protocols before non-compliance leads to disqualification and provide a DCSA-led “SB Help Desk” to assist firms in navigating the disclosure process without requiring expensive outside counsel.
Tafheem, the security intent is valid, but Case 2021‑D011 risks becoming a blunt instrument. Raising the non‑cleared threshold to $15M, adding a 12‑month SB grace period, and providing a DCSA‑led SB help desk would protect supply‑chain security without pricing small businesses out of the defense market. Resilience requires inclusion, not attrition.
The 90-day mitigation window proposed in Case 2021-D011 is fundamentally unrealistic for small businesses. Restructuring corporate governance or divesting foreign interests to mitigate FOCI is a process that typically takes 6–12 months of legal and financial maneuvering. A strict 90-day ‘fix it or lose it’ mandate will result in the immediate disqualification of critical niche suppliers who simply cannot move fast enough to satisfy DCSA.
Furthermore, the explosion in required reviews will likely lead to a DCSA backlog, stalling contract awards across the Department. This rule risks paralyzing the procurement cycle. The DoD should consider a ‘conditional award’ system where contractors can begin performance while finalizing mitigation, provided they have an approved ‘interim security plan’ in place.
Agreed. A 90‑day FOCI mitigation window is disconnected from reality; governance restructuring and divestment often take 6–12 months. This will eliminate capable small and niche contractors by default, not by risk. Add the inevitable DCSA backlog, and you’re looking at stalled awards across DoD. A conditional award with an approved interim security plan would protect national security without crippling the procurement cycle.
Farrukh- I appreciate the feedback. ‘Resilience through inclusion’ is a perfect way to frame this but failing to provide a clear path and higher threshold for SBs is equivalent to accepting high attrition rates.
Correct. A rule that doesn’t differentiate between a 50-person SB and a Tier-1 prime isn’t a security measure, it’s a filtration system. Without a tiered threshold, a realistic mitigation timeline, and dedicated SB support, DoD isn’t managing risk; it’s managing small businesses out of the defense industrial base. Attrition by design isn’t resilience, it’s erosion.
