From the U.S. Government Accountability Office, www.gao.gov Transcript for: DOD's CFIUS Role Description: The Committee on Foreign Investment in the United States is an inter-agency group that reviews certain business deals to see what effect they may have on national security. GAO reported on the challenges the DoD faces as a CFIUS member. Related GAO Work: GAO-18-494: Committee on Foreign Investment in the United States: Action Needed to Address Evolving National Security Concerns Facing the Department of Defense Released: July 2018 [ Background Music ] [ Marie Mak: ] DOD needs to ensure that it has the resources to perform its responsibilities under CFIUS. [ Matt Oldham: ] Welcome to GAO's Watchdog Report, your source for news and information from the U.S. Government Accountability Office. I'm Matt Oldham. The Committee on Foreign Investment in the United States, also known as CFIUS, is an interagency group that reviews certain business deals like foreign purchases or mergers of American companies to see what effect they may have on national security. And CFIUS makes decisions about whether they think those deals should be allowed or not. I'm with Marie Mak, a director in our Contracting and National Security Acquisitions team, to talk about a GAO report that took a look at concerns relating to the process. Thank you for taking the time to speak with me, Marie. [ Marie Mak: ] Thank you for having me. [ Matt Oldham: ] So what did your report find? [ Marie Mak: ] We found that there's several challenges DOD faces addressing national security concerns through CFIUS, but the top two issues were related to DOD's workforce, and then there's some transactions that may not be covered through CFIUS. For example, specifically to workforce, the number of DOD staff performing CFIUS responsibilities have not kept pace with its CFIUS workload. More specifically, in 2017, DOD co-led over 50 percent more cases than it did in 2012. And in that same time frame, from 2012 to 2017, it was responsible for monitoring compliance with more than double the number of mitigation agreements. For the second challenge, which was focused on identifying transactions that aren't covered through CFIUS, and they're not covered through CFIUS because it doesn't necessarily involve foreign control of a U.S. business, but in those cases, they actually may pose national security concerns. [ Matt Oldham: ] So what sort of transactions would CFIUS be interested in? [ Marie Mak: ] Let me give you an example of a transaction that potentially could result in a foreign control of a U.S. company. If there's a U.S. company that supplies critical parts to a DOD weapon system, in that case, CFIUS would actually require DOD to serve as a co-lead to determine if it poses a national security concern. The hypothetical national security concern could be as simple as DOD would no longer have access to this critical part. CFIUS determines if a concern exists. And if it does, DOD would be required to recommend a mitigation agreement. And then, once that mitigation agreement is agreed to, they would be responsible for monitoring the terms of that agreement to make sure the company complies. [ Background Music ] [ Matt Oldham: ] It sounds like the Department of Defense, as a CFIUS member, is facing challenges as their caseload is growing and becoming more complex. And there is some concern that they are not able to keep up with current practices in a changing environment. So Marie, what did your team recommend? [ Marie Mak: ] We made several recommendations, but the primary ones addressed workforce in terms of DOD assessing the resources it needs to address its increasing workload, which is only going to keep on growing. And then, also, to assess those risks that it may face and if those risks need additional authorities -- for example, for the foreign investments in the emerging technologies and those that are related to, in close proximity to critical military locations. [ Matt Oldham: ] What do you believe is the bottom line of your report? [ Marie Mak: ] I would say that the bottom line is that, again, DOD needs to ensure that it has the resources to perform its responsibilities under CFIUS, and it needs to assess the evolving risks that DOD faces from foreign investments that may not be covered under CFIUS because, ultimately, that could impact national security. [ Matt Oldham: ] Marie Mak is a director in our Contracting and National Security Acquisitions team, and she led a GAO report on the concerns facing the Department of Defense and their role as a CFIUS member. Thank you for your time, Marie. [ Marie Mak: ] Thank you. [ Background Music ] [ Matt Oldham: ] And thank you for listening to the Watchdog Report. To hear more podcasts, subscribe to us on Apple Podcasts. [ Background Music ] For more from the congressional watchdog, the U.S. Government Accountability Office, visit us at gao.gov.