A recent Federal watchdog report is sounding the alarm on the risk of consultants linked to China and other foreign adversaries doing work for government agencies, highlighting that this risk could pose grave threats to national security if left unchecked.
The Government Accountability Office (GAO) report issued on Sept. 19 highlights concerns over the influence and access that foreign entities may have through these consultants, and calls for immediate action to safeguard sensitive defense operations and protect U.S. interests.
“Federal agencies often use consultants to conduct their work. But when the Defense Department and other agencies with sensitive mission contracts with consultants also working for potential U.S. adversaries such as China, it can pose risks to national security,” the report reads.
There’s currently no regulation or policy that directs Federal acquisition personnel to assess consultants’ potential ties to foreign adversaries. According to GAO, existing regulations do not explicitly require agencies to consider these connections before awarding contracts, leaving a crucial oversight function missing.
Congress has taken steps to strengthen the evaluation of consultant risks, but progress has been slow, GAO said.
From 2019 to 2023, Congress passed several laws aimed at revising Federal acquisition regulations to better assess risks associated with awarding contracts to consultants serving both U.S. and foreign governments.
According to GAO, of the five new laws, only two – the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2022 and the Small Business Innovation Research and Technology Transfer Extension Act – have been fully implemented. However, the Department of Defense (DoD) and the Office of Management and Budget’s Office of Federal Procurement Policy (OFPP) missed statutory deadlines for the remaining three.
“Aspects of these laws target the national security risks posed by contractors working with the U.S. and China,” the report reads. “Without DoD and OFPP taking timely action to implement these laws while following applicable rulemaking procedures, acquisition officials will continue to operate without full knowledge of potential risks.”
Other policies that could address this risk include the NDAA FY 2020, which requires the DoD to update its processes for assessing foreign ownership risks on contracts over $5 million. However, it has yet to be fully implemented, despite a related policy issued in May 2024.
Additionally, the FY 2024 NDAA, which restricts DoD contracts with vendors providing certain consulting services to China, has not been updated in the Defense Federal Acquisition Regulation Supplement. As of July 1, 2024, implementation efforts related to these policies remain largely ongoing, GAO reported.
GAO issued three recommendations in the new report. The first urges the Secretary of Defense to ensure timely updates in response to legislation regarding how acquisition personnel utilize information on foreign ownership, control, or influence when awarding or modifying contracts. GAO also recommended that DoD update new requirements for contracts involving certain consulting services.
Additionally, GAO recommends that the Director of the Office of Management and Budget (OMB) expedite updates to the FAR to align with recent legislation.
DoD and OMB concurred with the recommendations.
