Corporate acquisitions involving government contractors: DoD codifies significant security clearance-related risk

By Brad Jorgensen, Fernand A Lavallee PC, Sarah E Kahn and Thomas J Hendershot

The US Department of Defense (DoD) has published an Interim Final Rule assigning responsibilities and establishing requirements related to the National Industrial Security Program (NISP).

Effective on 9 April, the day it was published, the rule is intended to ‘ensure maximum uniformity and effectiveness for both DoD and non-DoD components… for which the department serves as the cognizant security agency… and provides industrial security services’.

Although the rule does not change the substance of DoD 5220.22-M (National Industrial Security Program Operating Manual) or levy new security clearance requirements on US contractors, it codifies at 32 CFR Part 117 DoD’s NISP policy and procedures concerning, among other things, (1) the initial facility security clearance (FCL) eligibility for companies that may be subject to foreign ownership, control or influence (FOCI) and (2) the continued FCL eligibility for contractors subject to FOCI…

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