Foci Mitigation Agreement

Foci Mitigation Agreement: Understanding the Importance and Requirements

In the context of mergers and acquisitions, FOCI mitigation agreement is a term that refers to the foreign ownership, control or influence of a US government contractor. FOCI stands for Foreign Ownership, Control or Influence, and it is a crucial consideration when it comes to federal contracts that require security clearance.

In simple terms, FOCI mitigation agreement is a contract between the US government contractor and the government agencies that aims to mitigate any perceived foreign influence on the contractor`s operations. The agreement delineates how the contractor will manage the potential risks of foreign ownership, control, or influence to ensure that its activities are consistent with national security interests.

The purpose of FOCI mitigation agreement is to safeguard the sensitivity of the US government`s operations from potential foreign interference. The risks of foreign influence on a government contractor may arise if the contractor has direct or indirect foreign ownership, is controlled by a foreign entity, or has significant foreign operational control. These risks can potentially affect the contractor`s ability to obtain security clearance, which is a prerequisite for government contracts that handle confidential information or the nation`s defense.

To mitigate any perceived risks, the government requires contractors to establish a FOCI mitigation plan that addresses any possible foreign influence. The plan should be designed to manage and reduce the potential risks of foreign influence to ensure that the contractor can maintain security clearance required for government contracts.

The FOCI mitigation plan typically includes specific requirements, such as the implementation of corporate governance structures that reflect the US government`s security policies. The plan may also require the contractor to maintain a US board of directors or a proxy agreement that ensures compliance with the US government`s security requirements.

Furthermore, the plan may restrict the contractor`s foreign access to sensitive information or technology, including the implementation of security measures such as firewalls, encryption, and data loss prevention mechanisms. It may also require the contractor to undergo additional scrutiny, such as continuous monitoring, background checks of employees, and security clearance investigations to ensure compliance with the FOCI mitigation plan.

In summary, the FOCI mitigation agreement is an essential element of any M&A deal involving a US government contractor. It is a requirement that must be met to maintain security clearance and ensure that the contractor`s activities are consistent with national security interests. As such, it is critical to understand the importance of FOCI mitigation and the specific requirements that must be met to establish a successful FOCI mitigation plan.