Defense Industrial Security: Weaknesses in U.S. Security Arrangements With Foreign-Owned Defense Contractors.

Since the mid-198Os, development, production, and marketing of weapon systems has been increasingly internationalized through government-sponsored cooperative development programs and various kinds of industrial linkages, including international subcontracting and teaming arrangements, joint ventures, and cross-border mergers and acquisitions. Foreign companies have acquired many U.S. defense companies and have legitimate business interests in them. The U.S. government allows such foreign investment as long as it is consistent with U.S. national security interests. Some foreign-owned U.S. companies are working on highly classified defense contracts, such as the B-2, the F-117, the F-22, and military satellite programs. The Federal Bureau of Investigation and intelligence agencies have reported that foreign intelligence activities directed at U.S. critical technologies pose a significant threat to national security. According to these agencies, some close U.S. allies are actively trying to obtain U.S. defense technologies through unauthorized means. To reduce the national security risks of foreign control over companies working on sensitive classified contracts, the Department of Defense DOD requires controls known as voting trusts, proxy agreements, and special security agreements SSA.