Proposed DFARS Rule Would Extend FOCI Reviews to Unclassified DoD Work

The Department of Defense (DoD) published proposed amendments to the Defense Federal Acquisition Regulation Supplement (DFARS) on May 7, 2026, to implement Section 847 of the FY2020 National Defense Authorization Act. The proposal would extend foreign ownership, control, or influence (FOCI) disclosures and reviews to covered DoD contracts and subcontracts generally valued above $5 million. A central procurement implication is that unclassified status alone would not exempt covered work from the proposed review framework. The proposal is not final, and the comment period closed on July 6, 2026.

If finalized, the rule could make eligibility in the National Industrial Security System (NISS) relevant to a broader set of procurement actions, including awards, options, modifications, and extensions. This could affect contractors that have not previously treated unclassified DoD work as subject to the proposed FOCI process. Companies may need to identify foreign ownership and interests, maintain supporting records, and understand which entities in their supply chains could be covered. The proposal also makes subcontractor assessment a practical compliance concern, rather than an issue limited to a prime contractor’s own corporate structure.

The proposed scope is broad but not universal. Contracts and subcontracts generally valued above $5 million are the stated threshold, while commercial products and services are generally excluded, subject to a specified national-security risk determination. Contractors should therefore avoid assuming either that every award is covered or that commercial status guarantees an exclusion. Procurement and compliance teams will need to assess the contract type, value, applicable exclusions, and any relevant national-security determination as details are clarified in the final rule.

Companies should also distinguish the proposed DFARS amendments from DoD Instruction 5205.87, issued in May 2024. That instruction addresses qualifying defense research assistance awards above $5 million; it is separate from the proposed rule’s treatment of covered contracts and subcontracts. The proposal does not state transition or effective-date details, so contractors should not treat the proposed requirements as final or infer a specific implementation schedule. The period before finalization is nevertheless an opportunity to organize ownership and foreign-interest records, map potentially covered work, and collect information about relevant subcontractors. These steps can reduce the time needed to respond if the rule is finalized and help teams identify procurement actions that may require further review.