Recent developments in government contracting include a proposed US Department of Defense rule expanding foreign ownership, control, or influence (FOCI) requirements, a Government Accountability Office report focused on procurement reform and oversight, and a major False Claims Act settlement tied to customs duty evasion.
Together, these developments reflect continued emphasis on national security, procurement oversight, trade enforcement, and contractor compliance obligations.
DoD Proposes Rule Expanding FOCI and Security Requirements for Contractors
The Department of Defense has proposed a rule that would significantly expand FOCI requirements for certain contractors, alongside broader enhancements to security obligations tied to protecting sensitive information. The proposal would extend FOCI-like scrutiny beyond the traditional classified contract context, potentially capturing a wider universe of contractors performing unclassified but sensitive work.
In parallel, the rule would introduce more robust risk-based requirements tied to cybersecurity, supply chain visibility, and data protection, reflecting the government’s continuing focus on safeguarding defense-related information from foreign adversaries.
The proposal suggests that contractors pursuing certain government work may increasingly be required to provide information similar to that contained in Standard Form 328, which has customarily been associated with classified contracting.
Taken together, these developments signal a meaningful shift toward integrating national security considerations more directly into baseline contractor eligibility and performance requirements, even outside the traditional industrial security framework.
Contractors should expect increased diligence obligations, more detailed disclosures regarding ownership and control structures, and closer scrutiny of foreign ties in both prime and subcontractor relationships.
GAO Report Signals Continued Focus on Procurement Reform and Oversight
On May 12, the Government Accountability Office issued its annual report recommending numerous reforms aimed at improving procurement efficiency, transparency, and risk management across federal agencies. The recommendations span a range of issues, including strengthening acquisition workforce capabilities, improving data collection and use in procurement decision-making, enhancing oversight of contractor performance, and tightening internal controls to reduce fraud, waste, and abuse.
While many of the individual recommendations are incremental, the report collectively highlights persistent gaps in how agencies plan, execute, and oversee acquisitions.
For contractors, the report is a reminder that, even absent immediate regulatory change, scrutiny of procurement practices and contractor compliance is likely to remain elevated. As agencies work through these recommendations and respond to congressional pressure, contractors may encounter closer performance oversight, more frequent reviews, and heightened expectations surrounding documentation and internal controls.
$549 Million FCA Settlement Highlights Continued Trade Enforcement Priority
This week, DOJ secured a $549 million settlement resolving False Claims Act allegations tied to the evasion of customs duties on Chinese aluminum imports. The case involved allegations that defendants misrepresented aluminum products as finished goods to avoid countervailing duties, depriving the government of substantial revenue.
The resolution follows prior criminal convictions and restitution orders and reinforces the government’s continued focus on trade-related fraud and use of the FCA to recover losses tied to customs violations.
For contractors, particularly those operating through complex global supply chains, the settlement underscores the importance of accurate country-of-origin representations and compliance with import and duty requirements.
These areas remain active high-value enforcement priorities, with the government continuing to closely scrutinize import classifications, sourcing representations, and related certifications.
Looking Ahead
The week’s developments reflect continued expansion of enforcement and oversight activity across several core areas of government contracting, including national security vetting, trade compliance, procurement oversight, and program eligibility requirements.
Contractors should continue monitoring evolving disclosure obligations, reassess compliance controls tied to sourcing and ownership structures, and evaluate how shifting enforcement priorities may affect contracting strategy and operational risk.