Testimony 

Before the Senate Banking, Housing, and 

Urban Affairs Committee 

United States Government Accountability Office

GAO

For Release on Delivery 

Expected at 10:00 a.m. EDT 

Thursday, October 6, 2005 DEFENSE TRADE 

Implementation of ExonFlorio 

Statement of Katherine Schinasi, Managing Director 

Acquisition and Sourcing Management 

GAO-06-135T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

www.gao.gov/cgi-bin/getrpt?GAO-06-135T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Katherine V. 

Schinasi at (202) 512-4841 or 

schinasik@gao.gov. 

Highlights of GAO-06-135T, a report to 

Senate Banking, Housing, and Urban 

Affairs Committee 

October 6, 2005

DEFENSE TRADE

Implementation of Exon-Florio 

Several aspects of the process for implementing Exon-Florio could be 

enhanced thereby strengthening the law’s effectiveness. First, in light of 

differing views among Committee members about the scope of ExonFlorio—specifically, what defines a threat to national security, we have 

suggested that Congress should consider amending Exon-Florio to more 

clearly emphasize the factors that should be considered in determining 

potential harm to national security. 

Second, to provide additional time for analyzing transactions when 

necessary, while avoiding the perceived negative connotation of 

investigation on foreign investment in the United States we have suggested 

that the Congress eliminate the distinction between the 30-day review and 

the 45-day investigation and make the entire 75-day period available for 

review. 

Third, the Committee’s current approach to provide additional time for 

analysis or to resolve concerns while avoiding the potential negative impacts 

of an investigation on foreign investment in the United Stated is to 

encourage companies to withdraw their notifications of proposed or 

completed acquisitions and refile them at a later date. Since 1997, companies 

involved in 18 acquisitions have been allowed to withdraw their notification 

to refile at a later time. The new filing is considered a new case and restarts 

the 30-day clock. While withdrawing and refiling provides additional time 

while minimizing the risk of chilling foreign investment, withdrawal may also

heighten the risk to national security in transactions where there are 

concerns and the acquisition has been completed or is likely to be completed 

during the withdrawal period. We are therefore suggesting that the Congress 

consider requiring the Committee Chair to (1) establish interim protections 

where specific concerns have been raised, (2) specify time frames for 

refiling, and (3) establish a process for tracking any actions being taken 

during the withdrawal period. 

Finally, to provide more transparency and facilitate congressional oversight, 

we are suggesting that the Congress may want to revisit the criterion for 

reporting circumstances surrounding cases to the Congress. Currently, the 

criterion is a presidential decision. However, there have only been two such 

decisions since 1997 and thus only two reports to Congress. 

The 1988 Exon-Florio amendment 

to the Defense Production Act 

authorizes the President to suspend 

or prohibit foreign acquisitions of 

U.S. companies that may harm 

national security, an action the 

President has taken only once. 

Implementing Exon-Florio can 

pose a significant challenge 

because of the need to weigh 

security concerns against U.S. open 

investment policy—which requires 

equal treatment of foreign and 

domestic investors. 

Exon-Florio’s investigative 

authority was delegated to the 

Committee on Foreign Investment 

in the United States (Committee)—

an interagency committee 

established in 1975 to monitor and 

coordinate U.S. policy on foreign 

investments. In September 2002, 

GAO reported on weaknesses in 

the Committee’s implementation of 

Exon-Florio. This review further 

examined the Committee’s 

implementation of Exon-Florio. 

What GAO Recommends

GAO’s accompanying report on 

Exon-Florio—Defense Trade: 

Enhancements to the 

Implementation of Exon-Florio 

Could Strengthen the Law’s 

Effectiveness, GAO-05-686 

(Washington, D.C.: Sept. 28, 

2005)—contains matters for 

congressional consideration 

regarding Exon-Florio’s coverage 

and needed improvements to the 

implementation of the law. 
Page 1 GAO-06-135T 

Mr. Chairman and Members of the Committee: 

I am pleased to be here today to discuss the implementation of ExonFlorio—an amendment to the Defense Production Act of 19501

 that 

authorizes the President to suspend or prohibit foreign acquisitions, 

mergers, or takeovers2

 of U.S. companies that pose a threat to national 

security. As such, Exon-Florio is meant to serve as a safety net when laws 

other than the International Emergency Economic Powers Act3

 may be 

ineffective in protecting national security. As you know, implementing 

Exon-Florio can pose a significant challenge for the federal government 

because of the potential for conflict with the long-standing U.S. open 

investment policy. This policy recognizes the economic benefits 

associated with foreign investments. Accordingly, foreign investors are to 

be treated no differently than domestic investors. 

The Committee on Foreign Investment in the United States, originally 

established in 1975 to monitor foreign investments, has been delegated 

responsibility for investigating foreign acquisitions when necessary. 

According to the regulations, after a company voluntarily files a notice of a 

pending or completed acquisition by a foreign concern, the Committee 

conducts a 30-day review to determine whether there are any national 

security concerns. If the Committee is unable to complete its review 

within 30 days, the Committee may either allow the companies to 

withdraw the notification or initiate a 45-day investigation. At the 

completion of the investigation, the Committee submits a report to the 

President, including a recommendation for action. The Committee 

currently has 12 members: the Department of the Treasury, which serves 

as Chair; the Departments of Commerce, Defense, Homeland Security, 

Justice, and State; and six offices in the Executive Office of the President.4

Other agencies may be called on when their particular expertise is needed. 

 1

 50 U.S.C. app. § 2170. 

2

 In the remainder of this statement, acquisitions, mergers, and takeovers are referred to as 

acquisitions. 

3

 The International Emergency Economic Powers Act gives the President broad powers to 

deal with any “unusual and extraordinary threat” to the national security, foreign policy, or 

economy of the United States (50 U.S.C. §§ 1701-1706). To exercise this authority, however, 

the President must declare a national emergency to deal with any such threat. Under this 

legislation, the President has the authority to investigate, regulate, and, if necessary, block 

any foreign interest’s acquisition of U.S. companies (50 U.S.C. § 1702(a) (1) (B)). 

4

 See appendix I for information on Committee members. 
Page 2 GAO-06-135T 

The Department of Homeland Security was the most recently added 

member, created as a result of the terrorist attacks of September 11th and 

the recognition of the new security environment in which we exist. 

Over the past decade, GAO has conducted several reviews of the 

Committee’s actions and has found areas where improvements should be 

made. For example, in September 2002, we reported that member agencies 

could improve the agreements they negotiated with companies under 

Exon-Florio to mitigate national security concerns.5

 While our recent work 

indicates that member agencies have begun to take action to respond to 

some of our recommendations, concerns remain about the extent to which 

the Committee’s implementation of Exon-Florio has provided the safety 

net envisioned by the law. My comments today will focus on the process 

the Committee follows in conducting its reviews, concerns about the 

process, and suggestions we have made in our report on these issues.6

 It 

should be noted that because the law provides for confidentiality of 

information filed under Exon-Florio, our ability to discuss certain details 

of cases we examined is limited. 

In summary, several aspects of the Committee’s process for implementing 

Exon-Florio could be enhanced thereby strengthening the law’s 

effectiveness. First, in light of differing views among Committee members 

about the scope of Exon-Florio—specifically, what defines a threat to 

national security, we have suggested that Congress should consider 

amending Exon-Florio to more clearly emphasize the factors that should 

be considered in determining potential harm to national security. 

Second, to provide additional time for analyzing transactions when 

necessary, while avoiding the perceived negative connotation of 

investigation on foreign investment in the United States we have suggested 

that the Congress eliminate the distinction between the 30-day review and 

the 45-day investigation and make the entire 75-day period available for 

review. 

Third, the Committee’s current approach to provide additional time for 

analysis or to resolve concerns while avoiding the potential negative 

 5 GAO, Defense Trade: Mitigating National Security Concerns under Exon-Florio Could 

be Improved, GAO-02-736 (Washington, D.C.: Sept. 12, 2002). 

6 GAO, Defense Trade: Enhancements to the Implementation of Exon-Florio Could 

Strengthen the Law’s Effectiveness, GAO-05-686 (Washington, D.C.: Sept. 28, 2005). 
Page 3 GAO-06-135T 

impacts of an investigation on foreign investment in the United Stated is to 

encourage companies to withdraw their notifications of proposed or 

completed acquisitions and refile them at a later date. Since 1997, 

companies involved in 18 acquisitions have been allowed to withdraw 

their notification to refile at a later time. The new filing is considered a 

new case and restarts the 30-day clock. While withdrawing and refiling 

provides additional time while minimizing the risk of chilling foreign 

investment, withdrawal may also heighten the risk to national security in 

transactions where there are concerns and the acquisition has been 

completed or is likely to be completed during the withdrawal period. We 

are therefore suggesting that the Congress consider requiring the 

Committee Chair to (1) establish interim protections where specific 

concerns have been raised, (2) specify time frames for refiling, and (3) 

establish a process for tracking any actions being taken during the 

withdrawal period. 

Finally, to provide more transparency and facilitate congressional 

oversight, we are suggesting that the Congress may want to revisit the 

criterion for reporting circumstances surrounding cases to the Congress. 

Currently, the criterion is a presidential decision. However, there have 

only been two such decisions since 1997 and thus only two reports to 

Congress.7

The Exon-Florio amendment to the Defense Production Act, enacted in 

1988, authorized the President to investigate the impact of foreign 

acquisitions of U.S. companies on national security and to suspend or 

prohibit acquisitions that might threaten national security. The President 

delegated the investigative authority to the Committee on Foreign 

Investment in the United States, an interagency group established in 1975 

to monitor and coordinate U.S. policy on foreign investment in the United 

States.8

In 1991, the Treasury Department, as chair of the Committee, issued 

regulations to implement Exon-Florio. The law and regulations establish a 

 7

 See Appendix II for a number of cases reviewed by the Committee between fiscal years 

1997 and 2004 and the disposition of these cases. 

8

 Executive Order 11858 (May 7, 1975), as amended by Executive Order 12188 (Jan. 2, 

1980), Executive Order 12661 (Dec. 27, 1988), Executive Order 12860 (Sept. 3, 1993), and 

Executive Order 13286 (Feb. 28, 2003). 

Background 
Page 4 GAO-06-135T 

four-step process for reviewing foreign acquisitions of U.S. companies: 

(1) voluntary notice by the companies;9

 (2) a 30-day review to determine 

whether the acquisition could pose a threat to national security; (3) a 45-

day investigation to determine whether those concerns require a 

recommendation to the President for possible action; and (4) a 

presidential decision to permit, suspend, or prohibit the acquisition. In 

most cases, the Committee completes its review within the initial 30 days 

because there are no national security concerns or concerns have been 

addressed, or the companies and the government agree on measures to 

mitigate identified security concerns. In cases where the Committee is 

unable to complete its review within 30 days, the Committee may initiate a 

45-day investigation or allow companies to withdraw their notifications. 

The Committee generally grants requests to withdraw. When the 

Committee concludes a 45-day investigation, it is required to submit a 

report to the President containing recommendations. If Committee 

members cannot agree on a recommendation, the regulations require that 

the report to the President include the differing views of all Committee 

members.10 The President has 15 days to decide whether to prohibit or 

suspend the proposed acquisition, order divestiture of a completed 

acquisition, or take no action.11

While neither the statute nor the implementing regulation defines “national 

security,” the statute provides the following factors to be considered in 

determining a threat to national security: 

• Domestic production needed for projected national defense 

requirements. 

• The capability and capacity of domestic industries to meet national 

defense requirements, including the availability of human resources, 

products, technology, materials, and other supplies and services. 

 9

 Notification is not mandatory. However, any member agency is authorized to submit a 

notification of an acquisition if the companies have not done so. To date, no agency has 

submitted a notification of an acquisition. Instead, member agencies have informed 

Treasury of acquisitions that may be subject to Exon-Florio, and Treasury has contacted 

the companies to encourage them to officially notify the Committee of the acquisition to 

begin a review. 

10 31 C.F.R. § 800.504(b). 

11 In 1990, the President ordered a Chinese aerospace company to divest its ownership of a 

U.S. aircraft parts manufacturer. To date, this is the only divestiture the President has 

ordered. 
Page 5 GAO-06-135T 

• The control of domestic industries and commercial activity by foreign 

citizens as it affects the capability and capacity of the United States to 

meet national security requirements. 

• The potential effects of the proposed or pending transaction on sales of 

military goods, equipment, or technology to any country identified 

under applicable law as (a) supporting terrorism or (b) a country of 

concern for missile proliferation or the proliferation of chemical and 

biological weapons. 

• The potential effects of the proposed or pending transaction on U.S. 

international technological leadership in areas affecting national 

security. 

Lack of agreement among Committee members on what defines a threat to 

national security and what criteria should be used to initiate an 

investigation may be limiting the Committee’s analyses of proposed and 

completed foreign acquisitions. From 1997 through 2004, the Committee 

received a total of 470 notices of proposed or completed acquisitions,12 yet 

it initiated only 8 investigations. 

Some Committee member agencies, including Treasury, apply a more 

traditional and narrow definition of what constitutes a threat to national 

security—that is, (1) the U.S. company possesses export-controlled 

technologies or items; (2) the company has classified contracts and critical 

technologies; or (3) there is specific derogatory intelligence on the foreign 

company. Other members, including the departments of Defense and 

Justice, argue that acquisitions should be analyzed in broader terms. 

According to officials from these departments, vulnerabilities can result 

from foreign control of critical infrastructure, such as control of or access 

to information traveling on networks. Vulnerabilities can also result from 

foreign control of critical inputs to defense systems or a decrease in the 

number of innovative small businesses researching and developing new 

defense-related technologies. 

While these vulnerabilities may not pose an immediate threat to national 

security, they may create the potential for longer term harm to U.S. 

national security interests by reducing U.S. technological leadership in 

 12 Nineteen of these notices were refilings. 

Differing Views of 

What Defines A 

National Security 

Threat and When to 

Initiate an 

Investigation May 

Weaken Exon-Florio’s 

Effectiveness 
Page 6 GAO-06-135T 

defense systems. For example, in reviewing a 2001 acquisition of a U.S. 

company, the departments of Defense and Commerce raised several 

concerns about foreign ownership of sensitive but unclassified technology, 

including the possibility of this sensitive technology being transferred to 

countries of concern or losing U.S. government access to the technology. 

However, Treasury argued that these concerns were not national security 

concerns because they did not involve classified contracts, the foreign 

company’s country of origin was a U.S. ally, or there was no specific 

negative intelligence about the company’s actions in the United States. 

In one proposed acquisition that we reviewed, disagreement over the 

definition of national security resulted in an enforcement provision being 

removed from an agreement between the foreign company and the 

Departments of Defense and Homeland Security. Defense had raised 

concerns about the security of its supply of specialized integrated circuits, 

which are used in a variety of defense technologies that the Defense 

Science Board had identified as essential to our national defense—

technologies found in unmanned aerial vehicles, the Joint Tactical Radio 

System, and cryptography and other communications protection devices. 

However, Treasury and other Committee members argued that the 

security of supply issue was an industrial policy concern and, therefore, 

was outside the scope of Exon-Florio’s authority. As a result of removing 

the provision, the President’s authority to require divestiture under ExonFlorio has been eliminated as a remedy in the event of noncompliance.13

Committee members also disagree on the criteria that should be applied to 

determine whether a proposed or completed acquisition should be 

investigated. While Exon-Florio provides that the “President or the 

President’s designee may make an investigation to determine the effects 

on national security” of acquisitions that could result in foreign control of 

a U.S. company, it does not provide specific guidance for the appropriate 

criteria for initiating an investigation of an acquisition.14 Currently, 

Treasury, as Committee Chair, applies essentially the same criteria 

established in the law for the President to suspend or prohibit a 

 13 The regulations provide that the Committee may reopen its review or investigation and 

revise its recommendation to the President only if it determines that the companies 

omitted or provided false or misleading information (31 C.F.R. § 800.601(e)). 

14 50 U.S.C. App. § 2170(a). Under the statute, investigations are mandatory in those cases 

in which the acquiring company is “controlled by or acting on behalf of a foreign 

government” and the acquisition could result in control of the U.S. company and could 

affect the national security of the United States (50 U.S.C. App. § 2170(b)). 
Page 7 GAO-06-135T 

transaction, or order divestiture: (1) there is credible evidence that the 

foreign controlling interest may take action to threaten national security 

and (2) no laws other than the International Emergency Economic Powers 

Act are appropriate or adequate to protect national security.15 However, 

the Defense, Justice, and Homeland Security departments have argued 

that applying these criteria at this point in the process is inappropriate 

because the purpose of an investigation is to determine whether or not a 

credible threat exists. Notes from a policy-level discussion of one 

particular case further corroborated these differing views. 

Committee guidelines require member agencies to inform the Committee 

of national security concerns by the 23rd day of a 30-day review—further 

compressing the limited time allowed by legislation to determine whether 

a proposed or completed foreign acquisition poses a threat to national 

security. According to one Treasury official, the information is needed a 

week early to meet the legislated 30-day requirement. While most reviews 

are completed in the legislatively required 30 days, some Committee 

members have found that completing a review within such short time 

frames can be difficult—particularly in complex cases. One Defense 

official said that without advance notice of the acquisition, time frames are 

too short to complete analyses and provide input for the Defense 

Department’s position. Another official said that to meet the 23-day 

deadline, analysts have only 3 to 10 days to analyze the acquisition. In one 

instance, Homeland Security was unable to provide input within the 23-day 

time frame. 

If a review cannot be completed within 30 days and more time is needed to 

determine whether a problem exists or identify actions that would mitigate 

concerns, the Committee can initiate a 45-day investigation of the 

acquisition or allow companies to withdraw their notifications and refile at 

a later date.16 According to Treasury officials, the Committee’s interest is 

to ensure that the implementation of Exon-Florio does not undermine U.S. 

open investment policy. Concerned that public knowledge of 

investigations could devalue companies’ stock, erode confidence of 

foreign investors, and ultimately chill foreign investment in the United 

 15 50 U.S.C. app. § 2170(e). 

16 Exon-Florio’s implementing regulations permit companies to request to withdraw 

notifications at any time up to a presidential decision. After the Committee approves a 

withdrawal, any subsequent refiling is considered a new, voluntary notice. 

Allowing Withdrawal 

of Notifications to 

Avoid Investigations 

While Providing 

Additional Time May 

Leave National 

Security Concerns 

Unresolved 
Page 8 GAO-06-135T 

States, the Committee has generally allowed and often encouraged 

companies to withdraw their notifications rather than initiate an 

investigation. 

While an acquisition is pending, companies that have withdrawn their 

notification have an incentive to resolve any outstanding issues and refile 

as soon as possible. However, if an acquisition has been concluded, there 

is less incentive to resolve issues and refile, extending the time during 

which any concerns remain unresolved. Between 1997 and 2004, 

companies involved in 18 acquisitions have withdrawn their notification 

and refiled 19 times. In two cases, the companies had already concluded 

the acquisition and did not refile until 9 months to 1 year. Consequently, 

the concerns raised by Defense and Commerce about potential export 

control issues in these cases remained unresolved for as much as a year—

further increasing the risk that a foreign acquisition of a U.S. company 

would pose a threat to national security. 

We identified two cases in which companies that had concluded an 

acquisition before filing with the Committee withdrew their notification.17

In each case, the company has yet to refile. In one case, the company filed 

with the Committee more than a year after completing the acquisition. The 

Committee allowed it to withdraw the notification to provide more time to 

answer the Committee’s questions and provide assurances concerning 

export control matters. The company refiled, and was permitted to 

withdraw a second time because there were still unresolved issues. Four 

years have passed since the second withdrawal. In the second case, the 

company—which filed with the Committee more than 6 months after 

completing its acquisition—was also allowed to withdraw its notification. 

That was more than 2 years ago. 

In enacting Exon-Florio, the Congress, while recognizing the need for 

confidentiality, indicated a desire for insight into the process by requiring 

the President to report to the Congress on any transaction that the 

President prohibited. In response to concerns about the lack of 

transparency in the Committee’s process, the Congress passed the Byrd 

Amendment to Exon-Florio in 1992, requiring a report to the Congress if 

the President makes any decision regarding a proposed foreign 

 17 In one of these cases, as discussed above, the company had previously withdrawn and 

refiled more than a year later. 

Lack of Reporting 

Contributes to the 

Opaqueness of the 

Committee’s Process 
Page 9 GAO-06-135T 

acquisition. In 1992, another amendment also directed the President to 

report every 4 years on whether there is credible evidence of a 

coordinated strategy by one or more countries to acquire U.S. companies 

involved in research, development, or production of critical technologies 

for which the United States is a leading producer, and whether there are 

industrial espionage activities directed or assisted by foreign governments 

against private U.S. companies aimed at obtaining commercial secrets 

related to critical technologies. 

While the Byrd Amendment expanded required reporting on Committee 

actions, few reports have been submitted to the Congress because 

withdrawing and refiling notices to restart the clock limits the number of 

cases that result in a presidential decision. Since 1997, only two cases—

both involving telecommunications systems—resulted in a presidential 

decision and a subsequent report to the Congress. Infrequent reporting of 

Committee deliberations on specific cases provides little insight into the 

Committee’s process to identify concerns raised during investigations and 

determine the extent to which the Committee has reached consensus on a 

case. Further, despite the 1992 requirement for a report on foreign 

acquisition strategies every 4 years, there has been only one report—in 

1994. 

In conclusion, in recognition of the benefits of open investment, ExonFlorio comes into play only as a last resort. However, since that is its role, 

effective application in support of recognizing and mitigating national 

security risks remains critical. While Exon-Florio provides the Committee 

on Foreign Investment in the United States the latitude to address new 

emerging threats, the more traditional interpretation of what constitutes a 

threat to national security fails to fully consider the factors currently 

embodied in the law. Further, the practical requirement to complete 

reviews within 23 days to meet the 30-day legislative requirement, along 

with the reluctance to proceed to an investigation, limits agencies’ abilities 

to complete in-depth analyses. However, the alternative—allowing 

companies to withdraw and refile their notifications—increases the risk 

that the Committee, and the Congress, will lose visibility over foreign 

acquisitions of U.S. companies. 

Our report lays out several matters for congressional consideration to (1) 

help resolve the differing views as to the extent of coverage of ExonFlorio, (2) address the need for additional time, and (3) increase insight 

and oversight of the process. Further, we are suggesting that, when 

withdrawal is allowed for a transaction that has been completed, the 

Committee establish interim protections where specific concerns have 
Page 10 GAO-06-135T 

been raised, specific time frames for refiling, and a process for tracking 

any actions being taken during a withdrawal period. 

Mr. Chairman, this concludes my prepared statement. I will be happy to 

answer any questions you or other Members of the Committee may have. 

- - - - - 

For information about this testimony, please contact Katherine V. 

Schinasi, Managing Director, Acquisition and Sourcing Management, at 

(202) 512-4841 or schinasik@gao.gov. Other individuals making key 

contributions to this product include Thomas J. Denomme, Allison 

Bawden, Gregory K. Harmon, Paula J. Haurilesko, John Van Schaik, Karen 

Sloan, and Michael Zola. 

Our understanding of the Committee on Foreign Investment in the United 

States’ process is based on our current work and builds on our review of 

the process and our discussions with agency officials for our 2002 report. 

For our current review, and to expand our understanding of the 

Committee’s process for reviewing foreign acquisitions of U.S. companies, 

we met with officials from the Department of Commerce, the Department 

of Defense, the Department of Homeland Security, the Department of 

Justice, and the Department of the Treasury. For prior reviews we also 

collected data from and discussed the issues with representatives of the 

Department of State, the Council of Economic Advisors, the Office of 

Science and Technology, and the U.S. Trade Representative. Further, we 

conducted case studies of nine acquisitions that were filed with the 

Committee between June 28, 1995, and December 31, 2004. These case 

studies included reviewing files containing company submissions, 

correspondence between the Committee and the companies’ 

representatives, email traffic between member agencies, and minutes of 

policy-level meetings attended by at various times all 12 Committee 

members. 

We selected acquisitions based on recommendations by Committee 

member agencies and the following criteria: (1) the Committee permitted 

the companies to withdraw the notification; (2) the Committee or member 

agencies concluded agreements to mitigate national security concerns; (3) 

the foreign company had been involved in a prior acquisition notified to 

the Committee; or (4) GAO had reviewed the acquisition for its 2002 

report. We did not attempt to validate the conclusions reached by the 

Committee on any of the cases we reviewed. We also discussed our draft 

Scope and 

Methodology 
Page 11 GAO-06-135T 

report from our current review with officials from the Department of State 

and the U.S. Trade Representative’s office to obtain their views on our 

findings. 

To determine whether the weaknesses in provisions to assist agencies in 

monitoring agreements that GAO had identified in its 2002 report had been 

addressed, we analyzed agreements concluded under the Committee’s 

authority between 2003 and 2005. We conducted our review from April 

2004 through July 2005 in accordance with generally accepted government 

auditing standards. 
Page 12 GAO-06-135T 

Agencies Represented Year Added Lead Office Mission 

Executive Departments

Department of the Treasury (Chair) 1975 Office of International Investment: Coordinates policies toward foreign 

investments in the United States and U.S. investments abroad. 

Department of Commerce 1975 International Trade Administration: Coordinates issues concerning trade 

promotion, international commercial policy, market access, and trade law 

enforcement. 

Department of Defense 1975 Defense Technology Security Administration: Administers the 

development and implementation of Defense technology security policies 

on international transfers of defense-related goods, services, and 

technologies. 

Department of State 1975 Bureau of Economic and Business Affairs: Formulates and implements 

policy regarding foreign economic matters, including trade and 

international finance and development. 

Department of Justice 1988 Criminal Division: Develops, enforces, and supervises the application of 

all federal criminal laws, except for those assigned to other Justice 

Department divisions. 

Department of Homeland Security 2003 Information Analysis and Infrastructure Protection: Identifies and 

assesses current and future threats to the homeland, maps those threats 

against vulnerabilities, issues warnings, and takes preventative and 

protective action. 

Executive Office of the President

Council of Economic Advisers 1980 Performs analyses and appraisals of the national economy for the 

purpose of providing policy recommendations to the President. 

Office of the United States Trade 

Representative 

1980 Directs all trade negotiations of and formulates trade policy for the United 

States. 

Office of Management and Budget 1988 Evaluates, formulates, and coordinates management procedures and 

program objectives within and among federal departments and agencies, 

and controls administration of the federal budget. 

National Economic Council 1993 Coordinates the economic policy-making process and provides economic 

policy advice to the President. 

National Security Council 1993 Advises and assists the President in integrating all aspects of national 

security policy as it affects the United States. 

Office of Science and Technology 

Policy 

1993 Provides scientific, engineering and technological analyses for the 

President for federal policies, plans, and programs. 

Source: GAO analysis. 

Appendix I: Agencies Represented on the 

Committee on Foreign Investment in the 

United States 
Page 13 GAO-06-135T 

Year Notifications AcquisitionsaInvestigationsb

Notices 

 withdrawn after 

 investigation begun 

Presidential

decisions

1997 62 60 0 0 0

1998 65 62 2 2 0

1999 79 76 0 0 0

2000 72 71 1 0 1

2001 55 51 1 1 0

2002 43 42 0 0 0

2003 41 39 2 1 1

2004 53 50 2 2 0

Total 470 451 8 6 2c

Source: Department of the Treasury. 

a

Acquisitions that were withdrawn and refiled are shown in the year of initial notification. 

b

Investigations are shown in the year of their notification. 

c

In both cases the President took no action, thereby allowing the transaction, and sent a report to 

Congress. 

Appendix II: Notifications to the Committee 

on Foreign Investment in the United States 

and Actions Taken, 1997 through 2004 

(120482) 
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TDD: (202) 512-2537 

Fax: (202) 512-6061 

Contact: 

Web site: www.gao.gov/fraudnet/fraudnet.htm 

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470 

Gloria Jarmon, Managing Director, JarmonG@gao.gov (202) 512-4400 

U.S. Government Accountability Office, 441 G Street NW, Room 7125 

Washington, D.C. 20548 

Paul Anderson, Managing Director, AndersonP1@gao.gov (202) 512-4800 

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, D.C. 20548 

GAO’s Mission 

Obtaining Copies of 

GAO Reports and 

Testimony 

Order by Mail or Phone 

To Report Fraud, 

Waste, and Abuse in 

Federal Programs 

Congressional 

Relations 

Public Affairs 

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