Grassley, Warren Introduce Bipartisan Bill to Improve Defense Contractor Transparency

Grassley, Warren Introduce Bipartisan Bill to Improve Defense Contractor Transparency

WASHINGTON - Sens. Chuck Grassley (R-Iowa) and Elizabeth Warren (D-Mass.) introduced a bill to improve transparency into foreign ownership of Department of Defense (DoD) contractors. The legislation would enhance commonsense safeguards to ensure foreign adversaries, illegitimate contractors and other bad actors cannot hide behind anonymous shell companies to bid for and win defense contracts.

The Government Accountability Office (GAO) has repeatedly warned about the fraud and national security risks opaque contractor ownership poses to the DoD. In one case, GAO found a contractor used a U.S. shell company to falsely claim U.S. ownership to receive government contracts, sent restricted military data to a foreign manufacturer and ultimately supplied the DoD with defective military parts, which grounded at least 47 fighter aircraft.

"Transparency brings accountability, and that includes shining a light on foreign influence in Defense Department contracts. By closing loopholes and strengthening disclosure provisions, our bipartisan legislation delivers commonsense reforms to support our national security," Grassley said.

"For too long, bad actors have hidden behind anonymous shell companies, including in defense contracting. They use that secrecy to skirt sourcing rules that protect American workers and, in some cases, have gained access to sensitive defense supply chains. This is a commonsense, bipartisan reform to ensure that the Pentagon knows who it is doing business with," Warren said.

The senators are pushing for the bill's inclusion in the Fiscal Year 2027 National Defense Authorization Act (NDAA). Key provisions include:

1. Requiring prospective DoD contractor or subcontractor companies to disclose basic beneficial ownership information as part of any bid or proposal, providing key information to the government before more serious vetting.
2. Closing a gap in current law that allows contractors and subcontractors with under $5 million in contracts to escape ownership disclosure and foreign ownership, control or influence (FOCI) mitigation.
3. Strengthening the definition of "beneficial owner" to align with a definition already present in Title 10 of the United States Code.

Full text of the legislation can be found HERE.

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