America is in a technology race, striving to keep pace with adversaries. The Department of Defense (DoD) is accelerating efforts to acquire and integrate innovative technologies that provide an asymmetric advantage. However, the question remains: Is the rush to adopt new technologies compromising national security? A recent order by the Trump Administration highlights the increasing importance of this area.
The concern is not technology readiness but due diligence. The surge in defense-focused startups and dual-use companies has introduced a renewed emphasis on Foreign Ownership, Control, or Influence (FOCI). Each company brings a web of funding sources, investments, and potential foreign entanglements.
A Growing and Overlooked Threat
FOCI is a silent yet formidable threat. Unlike traditional cyber intrusions, adversaries no longer need to breach networks covertly—they walk through the front door. Adversarial governments exploit legal contracts, financial investments, and corporate acquisitions to steal intellectual property, gain leverage in a given market, and threaten national security information.
Foreign ownership and control creates a complex and often opaque network. Adversaries frequently conceal activities through multi-layered corporations and front businesses, which often and regularly change names, country of registry, and ownership, making detection difficult. This vulnerability poses a significant risk to national security, prompting the DoD to intensify due diligence efforts. A recent DoD directive aimed at safeguarding the defense supply chain highlights the growing concern over foreign influence in the U.S. defense sector. This is not a hypothetical risk—it is an active battleground where national security and corporate interests collide.
The Capital Dilemma: Startups at Risk
Securing capital is a major hurdle for defense startups transitioning from prototype to production. Many may conduct only surface-level due diligence on potential investors, shifting the burden to the government.
While foreign investment can provide much-needed capital and expertise, it also creates vulnerabilities that adversaries eagerly exploit. The risk is clear: if an entity with ties to a foreign adversary holds ownership or significant influence over a defense contractor, sensitive information and critical technologies could be compromised.
Regulatory changes now require defense contractors and subcontractors to navigate additional filings and Defense Counterintelligence and Security Agency (DCSA) reviews to mitigate foreign influence. However, history has shown that these safeguards are often reactive rather than proactive.
The Need for Deeper Due Diligence
Despite evolving FOCI mitigation strategies, the U.S. government struggles to enforce effective protections against foreign interference. Limited access to comprehensive data and the fragmented nature of regulatory oversight create loopholes that allow foreign entities to infiltrate the defense sector.
Most relevant information is scattered, obscured, or buried within corporate structures, making detection a challenge—even for skilled analysts. Without better tools, threats remain hidden in plain sight.
Supply Chain Vulnerabilities: A Trojan Horse
Unlike traditional national security risks, supply chain vulnerabilities often remain undetected until it is too late. A single compromised supplier can introduce critical weaknesses into defense systems, enabling adversaries to manipulate, disable, or surveil U.S. military operations from afar.
Even more alarming, companies that provide proprietary information to investors may be unknowingly handing national security technology directly to an adversary if foreign influence exists within their ownership structure.
Recent DoD directives aim to address these risks by increasing scrutiny on both prime contractors and small businesses. However, smaller defense contractors often lack the resources to navigate complex regulations, making them easy targets for foreign entities seeking access to the supply chain.
The Danger of Moving Too Fast
Rapid technology adoption within the DoD cannot come at the expense of thorough due diligence. The consequences of failing to vet supply chains—from foreign influence to counterfeit parts—are too severe.
Adversaries actively seek ways to infiltrate America’s most innovative enterprises through shell companies, dark money, and cyber exploitation. Increasingly complex data environments and obscured corporate structures make manual due diligence nearly impossible. Analysts and investigators are overwhelmed by siloed and rapidly changing data, increasing the likelihood of missing critical FOCI connections. As adversaries refine their deception techniques, the need for reliable data sources and advanced investigative tools grows.
A Proactive Approach Is Essential
FOCI risks are now a top priority for the DoD, but a more aggressive approach is required. This means conducting deeper investigations into corporate structures, financial ties, and foreign connections across the defense industrial base, both before and after a contract is awarded. Artificial intelligence and big data analytics must be leveraged to enhance due diligence capabilities.
Currently, analysts manually sift through disparate databases, a process that is both inefficient and inadequate given the exponential growth of data. By 2028, global data volumes are projected to reach 394 zettabytes. Traditional analytic methods will be insufficient to uncover hidden threats. AI platforms capable of integrating human expertise with large-scale data analysis will be essential for identifying FOCI risks.
Shared Responsibility: Mitigating Influence at Every Level
FOCI risk mitigation is not solely a government responsibility. Defense startups, corporate contractors, and DoD procurement officers must all take active roles in identifying and addressing foreign influence. Adversaries will exploit any available vulnerability; vigilance is imperative.
Education and open discussion are critical. Without awareness, FOCI risks will not remain top of mind. The government and industry must continue highlighting FOCI cases, asking difficult questions about foreign access, and challenging weak security processes.
Industry partners can provide solutions such as FOCI discovery tools, but more structured protocols are needed. Continuous vetting—rather than periodic reviews—should become standard practice, with AI and big data analytics playing key roles in identifying potential threats.
The DoD's increased engagement with industry, particularly small defense contractors, necessitates providing these companies with access to investigative tools. Many startups lack the resources for in-depth FOCI investigations while struggling to secure funding. Without government support, they may inadvertently become weak links in the supply chain.
Conclusion: Sounding the Alarm
FOCI risks are no longer a niche concern—they represent a direct threat to national security. The defense industrial base is the backbone of America’s military power, and allowing foreign adversaries even limited access poses an unacceptable risk.
Recent government initiatives are a step in the right direction, but they fall short of what is needed. The question is no longer whether foreign influence is a problem, but how much longer it will be tolerated. Advanced technology and stronger industry collaboration are essential to protecting the defense supply chain. Addressing FOCI risks must become a top priority before the consequences become irreversible.
CEO of Accrete AI Government LLC