Fast Facts

Foreign investments in U.S. companies can benefit the economy, but could pose risks to national security.

The Committee on Foreign Investment in the United States (CFIUS) reviews certain foreign acquisitions and mergers and can work with the parties involved to mitigate national security risks or block transactions.

The committee reviewed over 50% more transactions in 2016 than in 2011. We recommended assessing staffing needs to address the concern that increased workload could limit the committee's effectiveness.

We also asked stakeholders about potential changes to the committee's structure and priorities. Their views varied widely.

 

A photo of an American flag.

A photo of an American flag.

Skip to Highlights
Highlights

What GAO Found

The Committee on Foreign Investment in the United States (CFIUS) has experienced an increased workload in recent years, and member agency officials have expressed concerns that CFIUS staff levels may not be sufficient to complete committee functions. Officials attribute the increased workload to an increase of over 50 percent in the volume of transactions reviewed from 2011 to 2016 and the complexity of those reviews in terms of technology, transaction structure, and national security concerns, compared to a modest increase in the number of staff assigned to CFIUS. Member agency officials stated that CFIUS is able to review all transactions that have been submitted to the committee. However, officials and external experts expressed concerns that agencies were limited in their ability to complete other functions, such as identifying transactions about which they have not been voluntarily notified but that may pose a risk. Standards for Internal Control in the Federal Government states that management should establish the organizational structure necessary to achieve its objectives and periodically evaluate this structure. Treasury—the agency that leads CFIUS— has not coordinated member agencies' efforts to better understand the staffing levels needed to address the current and future workload associated with core functions of the committee. Without this information, CFIUS may be limited in its ability to fulfill its objectives and address national security concerns.

Table: Committee on Foreign Investment in the United States (CFIUS) Member Agency Staff Compared to the Number of Covered Transactions Reviewed, 2011-2016

 

2011

2012

2013

2014

2015

2016

Percentage change

2011-2016

Covered Transactions

Reviewed

111

114

97

147

143

172

55%

Number of

staff assigned

82

82

79

85

83

91

11%

Source: GAO analysis of Treasury-reported CFIUS cases and agency-reported staffing levels. | GAO-18-249

Officials from CFIUS member agencies and selected nonmember agencies, as well as external experts, expressed a range of views on the potential benefits and drawbacks to possible changes to CFIUS. GAO organized the possible changes into three categories: (1) altering the structure of CFIUS, (2) redefining which transactions should be considered for CFIUS review, and (3) expanding the factors CFIUS considers when evaluating the impacts of a foreign transaction on national security. Agency officials were generally satisfied with CFIUS' structure, such as the committee's chair and membership. Views among officials and experts varied on redefining which transactions should be considered for review, such as requiring CFIUS to review all transactions covered by its authority regardless of notification. Officials and experts generally did not support expanding the list of national security factors CFIUS considers, such as by adding a net economic benefit test. Agency officials and experts agreed that one trade-off related to some possible changes is a likely increase to the CFIUS workload, which they noted is already straining agencies' staff resources.

Why GAO Did This Study

The United States economy has historically been the largest recipient of foreign direct investment in the world—receiving $373 billion in 2016, according to U.S. government statistics. Ensuring that these foreign investments do not harm national security can be a challenge. CFIUS is an interagency group that reviews transactions under its authority—certain foreign acquisitions or mergers of U.S. businesses—to determine their effects on U.S. national security, while maintaining an open investment climate. If CFIUS identifies concerns, it may work with parties to the transaction to mitigate them. In rare cases, CFIUS may recommend that the President block or suspend a transaction.

GAO was asked to review the CFIUS process and possible changes to that process. This report (1) examines changes in CFIUS's workload and staffing from 2011 through 2016, and (2) provides information on stakeholder views on potential changes to CFIUS. GAO analyzed CFIUS information on staffing levels and transactions reviewed, and interviewed officials from member agencies, selected nonmember agencies that have CFIUS-related expertise, and knowledgeable external experts, such as think tanks.

Skip to Recommendations

Recommendations

Treasury, as CFIUS lead, should coordinate member agencies' efforts to better understand the staffing levels needed to address the current and projected CFIUS workload associated with core committee functions. Treasury concurred.

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of the Treasury
Priority Rec.
Priority recommendations are those that GAO believes warrant priority attention from heads of key departments or agencies.
The Secretary of the Treasury, as the chair of CFIUS, and working with member agencies, should coordinate member agencies' efforts to better understand the staffing levels needed to address the current and projected CFIUS workload associated with core committee functions. (Recommendation 1)
Closed - Implemented
Treasury generally agreed with this recommendation. In April of 2021, agency officials stated that Treasury, as chair of CFIUS, had urged CFIUS member agencies to assess their current and anticipated staffing requirements. Treasury officials also emphasized that each member agency should use the special hiring authorities in the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) to quickly and effectively onboard staff to address the growing CFIUS workload. Further, FIRRMA established the CFIUS Fund, to be administered by the CFIUS Chair and available for transfer to any CFIUS member agency, "for the purpose of addressing emerging needs in carrying out [CFIUS activities]." In 2020, the CFIUS Chair approved funding requests from three agencies which included staffing and resource support. According to Treasury officials, all voting member agencies had told Treasury they had coordinated through their respective budget processes to account for the increase in CFIUS's workload. Treasury officials also stated that the additional resources had improved CFIUS's ability to carry out core committee functions and may help improve the committee's ability to fulfill its objectives and address national security threats.

Full Report

GAO Contacts