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Report | Feb. 1, 2024

Executive Summary: Evaluation of DoD Efforts to Mitigate Foreign Influence When Foreign Investors Acquire Land or Property in Close Proximity to U.S. Military Facilities

Evaluations

The Department of Defense Office of Inspector General (DoD OIG) conducted an evaluation titled “Evaluation of DoD Efforts to Mitigate Foreign Influence When Foreign Investors Acquire Land or Property in Close Proximity to U.S. Military Facilities.”  The objective of this evaluation was to determine the extent to which the DoD developed plans, processes, and procedures to mitigate foreign influence when foreign investors acquire land or property in close proximity to U.S. military facilities. 

The Committee on Foreign Investment in the United States (CFIUS) serves as the U.S. Government’s forum for reviewing real estate purchases and transactions by foreign persons to determine their potential impact on U.S. national security.  CFIUS has the authority to stop these transactions if it determines that the transactions pose risks to national security.  

CFIUS consists of nine members:  the Secretaries of State, Defense, Homeland Security, Commerce, Energy, and the Treasury; the U.S. Attorney General; the U.S. Trade Representative; and the Director of the White House Office of Science and Technology Policy.  Additionally, the Secretary of Labor and the Director of National Intelligence serve as ex-officio members, and the President may appoint others to serve on the committee as needed.  This evaluation focused exclusively on the DoD’s actions as a member of CFIUS and not those of the broader committee.  

Federal law requires the DoD to ensure that transactions of or foreign investment in U.S. companies or real estate do not represent unacceptable risks to national security.  For example, the Foreign Investment and National Security Act of 2007 establishes CFIUS and mandates that the committee review transactions that could result in control of U.S. businesses or real estate by a foreign person.  The Foreign Investment Risk Review Modernization Act of 2018 specifies that CFIUS must review transactions that include real estate in close proximity to a U.S. military installation, and where the real estate could reasonably provide a foreign person the ability to collect intelligence on activities at that installation.    

In addition to federal law, the DoD has its own policy, DoD Instruction 2000.25, for executing its role in reviewing and monitoring transactions filed with CFIUS.  Under this policy, the Under Secretary of Defense for Acquisition and Sustainment is responsible for submitting the DoD’s overall recommendation to CFIUS based on the DoD Components’ assessments of the threats, vulnerabilities, and consequences.  Additionally, according to DoD Instruction 2000.25, the Assistant Secretary of Defense (Industrial Base Policy), who works for the Under Secretary of Defense for Acquisition and Sustainment, executes the DoD CFIUS process with the DoD Components.  The DoD Components—specifically the Military Departments—identify and assess the national security implications of threats, vulnerabilities, and consequences of a CFIUS transaction relevant to their respective Military Department.     

The DoD OIG team worked closely with the aforementioned DoD organizations during this evaluation by conducting interviews, and analyzing and reviewing documentation.  As a result of this work, the DoD OIG team found that the Office of the Assistant Secretary of Defense (Industrial Base Policy) developed processes and procedures to reduce the risk of foreign influence when foreign investors acquire land or property in close proximity to U.S. military facilities by (1) creating a monitoring and compliance guide to oversee national Security Agreements, and (2) establishing a mitigation guide to reduce risk of foreign influence.

However, the DoD OIG did make five recommendations to improve the DoD’s effectiveness and efficiency in executing its role on CFIUS, including with regard to the coordination and documentation thereof.  The Assistant Secretary of Defense (Industrial Base Policy) agreed with the recommendations and provided a statement of actions that management in the Office of the Assistant Secretary of Defense (Industrial Base Policy) will take to address the report’s recommendations.  Therefore, the recommendations are resolved, but will remain open until all actions are complete. 

This is a classified report, and no redacted version is available. To file a Freedom of Information Act Request, please submit a request to FOIA.gov.