Page 1 GAO-24-106932 CONSULTANTS CONTRACTING WITH CHINA
From fiscal years 2019 through 2023, federal agencies obligated more than $500
billion on contracts associated with a broad range of consulting services. The
Departments of Defense (DOD) and Homeland Security (DHS) accounted for
over 50 percent of those obligations and have national security focused missions.
Certain types of consulting services support important national security issues,
such as energy or technology research, defense analyses, and intelligence.
The U.S. National Security Strategy identifies China as the U.S.’s only competitor
with both the intent and power to reshape the international order, with ambitions
to expand its sphere of influence and become the world’s leading power.
Members of Congress have expressed concerns that companies that consult for
both for the U.S. government and a foreign government—particularly potential
U.S. adversaries—could present conflicts of interest that put U.S national
security interests at risk.
The Federal Acquisition Regulation (FAR) defines an
organizational conflict of interest (OCI) generally to include a situation where an
entity, such as a contractor, may be unable to provide impartial assistance or
advice as a result of its relationships or activities with another entity. As
discussed below, recently enacted legislation references a contractor’s
relationship with a foreign entity as a possible cause of an OCI.
You asked us to assess the national security risks posed when contractors
consult for both the U.S. and Chinese governments, including the types of
information federal agencies have on whether contractors work for the Chinese
government or its proxies and affiliates. Proxies or affiliates can include Chinese
state-owned enterprises and other entities connected to the People’s Republic of
China and the Chinese Communist Party. You also asked us to assess how
agencies assess, mitigate, and report on OCI involving foreign influence.
This report describes existing and pending regulations and policies most relevant
to these issues. It also discusses steps that DOD and DHS take to collect
information, assess, and mitigate such national security risks when awarding
contracts.
• Current acquisition regulations do not specifically direct agencies to consider
if contractors consulting for the U.S. government also have consulting
contracts with China. Therefore, acquisition personnel do not typically collect
information on, assess, or mitigate potential national security risks posed by
these consultants when awarding contracts.
• DOD has a process for granting clearances to contractor facilities that
involves consideration of contractors’ business relationships with foreign
U.S. Government Accountability Office
ederal Contracting: Timely Actions
Posed by Consultants Working
China
-24-106932
Report to Congressional Requesters
19, 2024
