Warren and Grassley Introduce Bipartisan Legislation to Improve Defense Contractor Transparency

Warren and Grassley Introduce Bipartisan Legislation to Improve Defense Contractor Transparency

Bill Text (PDF)

Washington, D.C. - U.S. Senator Elizabeth Warren (D-Mass.), Ranking Member of the Senate Banking, Housing, and Urban Affairs Committee, and Chuck Grassley (R-IA), Chairman of the Senate Judiciary Committee, introduced a bill to improve transparency into foreign ownership of Department of Defense contractors. This will enhance common-sense safeguards to ensure that 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 fraud and national security risks that opaque contractor ownership poses to the Department of Defense. In one case, GAO found that 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 Defense Department with defective military parts, which grounded at least 47 fighter aircraft.

"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," said Ranking Member Warren.

"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," Chairman Grassley said.

The senators are pushing for the bill's inclusion in the FY27 National Defense Authorization Act (NDAA). Key provisions include:

• Require any company that is a prospective DoD contractor or subcontractor to disclose basic beneficial ownership information as part of any bid or proposal, so the government knows who it is doing business with before going through more serious vetting.
• Closes 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.
• Strengthen the definition of "beneficial owner" to align with a definition already present in Title 10 of the United States Code.

Full bill text can be found here.

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