NISPOM clause 2-302 requires contractors with facility security clearances to report Foreign Ownership, Control or Influence (FOCI) affecting their organization. This is not only true when a contractor first applies for a facility security clearance. Contractors must also report changes to such FOCI factors for as long as they hold a facility security clearance. Though foreign ownership/acquisition may be an event that clearly must be reported to the Defense Security Service (DSS), foreign control or influence may develop without a contractor noticing. Thus, we recommend that contractors review their SF 328 Form “Certificate Pertaining to Foreign Interests” on a regular basis—not just during formal self-inspections of their security programs.

Some circumstances that often change and which contractors may not realize must be reported immediately include:

  • new contracts, agreements, understandings, or arrangements with foreign persons/entities
  • indebtedness to foreign persons/entitites
  • increased revenue from a foreign organization
  • when key management personnel hold positions with or consult for foreign persons/entities

For further details on the FOCI reporting requirements, see DSS’ Industrial Security Letter 2003-03.

Foreign Ownership, Control or Influence (FOCI) of cleared contractors

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