GAO recommends steps to enhance national security reviews of foreign investments in US companies

The U.S. Government Accountability Office (GAO) issued recommendations on Tuesday to help the U.S. Department of Defense (DoD) better identify foreign investments in American companies that could potentially jeopardize national security.

A GAO review found that the DoD Office of Manufacturing and Industrial Base Policy co-led 99 reviews of 99 transactions last year, a 57-percent increase from the number of transactions reviewed five years earlier. DoD officials identified “some” transactions that could pose national security, the review found.

However, not all threats could be assessed because some investments did not result in foreign control of a U.S. business.

“DoD is taking steps to identify critical emerging technologies and military locations that should be protected from foreign investment,” the GAO report noted. “However, DoD has not fully assessed risks from these types of foreign investment or what additional authorities, if any, may be necessary for it to address them.”

As a result, GAO recommends that the secretary of defense assess Committee on Foreign Investment in the United States (CFIUS) resource requirements in the Office of Manufacturing and Industrial Base Policy (MIBP). The secretary should also incorporate efforts to identify, assess and prioritize national security concerns into DoD Instruction 2000-25, GAO recommends.

Additionally, GAO recommends that the deputy assistant secretary of defense for MIBP should evaluate what additional authorities are required to adequately assess security risks following the completion of an emerging technology study.