CFIUS and Industrial Security

The return of great power competition and the economic interdependency that comes with globalization have put supply chain resiliency and secure cross-border corporate acquisitions at the forefront of the global conversation. While the U.S. maintains an open investment environment, national security considerations drive the constantly evolving landscape of scrutinizing foreign investment in the U.S. high-tech, critical technologies and sensitive defense industries, as well as in critical infrastructure companies. The U.S. government has also demonstrated an increasing awareness of the national security vulnerabilities associated with sensitive personal data of U.S. nationals, including health data, geolocation information and social media activity. The Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) reflects these developments and has made certain controlling and non-controlling investments subject to a mandatory filing requirement.

Holland & Knight's CFIUS and Industrial Security Team has a strong international trade and government contracts background, and our attorneys play a leading role in this expanding and constantly evolving area of the law. Holland & Knight has the experience, government relationships and industry understanding to provide pragmatic and sophisticated CFIUS legal services. Our team members have served in senior legal and policy positions across the U.S. government and have cultivated meaningful relationships at all levels of the CFIUS member agencies, from the working level action officers to the political appointees leading the agencies across administrations. Together with the firm's Mergers and Acquisitions, Government Contracts, Telecommunications, National Security, Defense and Intelligence, and other practice groups, the team is well-positioned to counsel clients across the spectrum of issues that may face U.S. and foreign businesses in the CFIUS and Industrial Security space.

Extensive CFIUS, FOCI and Team Telecom Capabilities

• Holland & Knight's CFIUS and Industrial Security Team provides sophisticated and multi-faceted regulatory counsel on transactions with national and industrial security implications, such as cross-border corporate acquisitions and foreign investments involving defense, critical technology, artificial intelligence (AI) and machine learning software, security and critical infrastructure applications, big data, microelectronics, satellite and NewSpace capabilities, climate adaptive technology, 5G/6G telecommunications providers, and a variety of other emerging technologies and sensitive business sectors. Our attorneys' experience and knowledge also extend to transaction structures increasingly subject to regulatory scrutiny, including minority investments, real estate transactions, fundraising and early-stage financing, restructurings and debt financing.
• Our lawyers have extensive experience assessing pre-transaction CFIUS regulatory considerations, representing clients before CFIUS and advising on all aspects of a CFIUS inquiry. Our services include corporate structuring that addresses CFIUS risk in the initial advice stage, where we evaluate whether a filing is mandatory or advisable, to a decision on the appropriate filing format and strategy, to drafting the CFIUS filing that anticipates and addresses national security sensitivities, to working with our clients and counterparties to respond to CFIUS follow-up inquiries, to negotiating complex national security agreements to mitigate risks identified by CFIUS.
• In addition to our extensive and well-established CFIUS knowledge, we are recognized for our deep experience in advising on parallel regulatory reviews of foreign direct investments in the U.S. defense or telecommunications sectors to mitigate foreign ownership or control. Holland & Knight is recognized as one of the preeminent firms appearing before the Defense Counterintelligence and Security Agency (DCSA) and the Intelligence Community on matters of Foreign Ownership, Control or Influence (FOCI) and implementing the appropriate FOCI mitigation for cleared companies.
• Our attorneys work with clients at each stage of the FOCI mitigation process, advising clients on negotiations with the U.S. government, developing FOCI mitigation strategies and implementing robust national security compliance programs. In addition, our attorneys are well versed in the best ways to structure transactions to anticipate FOCI concerns. Holland & Knight has been a leader in advising private equity firms on investing in these sectors.
• We regularly conduct negotiations with DCSA to assist our clients in obtaining the necessary facility security clearance so they may bid on and perform classified U.S. government contracts, including setting up new clearances, entering into joint ventures to meet security requirements in bid processes, advising on personnel clearances for key management officials and addressing the "I" in FOCI by accounting for and mitigating foreign influence stemming through foreign subsidiaries, supply chains or other contacts.
• In the context of Federal Communications Commission (FCC)-regulated entities, our attorneys negotiate security agreements for telecommunications and critical infrastructure owner clients with the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector (known as "Team Telecom"), comprising the U.S. Department of Homeland Security (DHS), U.S. Department of Defense (DOD) and U.S. Department of Justice (DOJ).
• For certain FCC-regulated entities, when certain categories of license applications demonstrate 10 percent or greater direct or indirect foreign ownership, the FCC makes a referral to Team Telecom for its input on any national security, law enforcement, foreign policy and trade policy concerns. Our team assists clients involved in foreign investments in, and acquisitions of, communications facilities and assets subject to FCC approval, which often require Network Security Agreements (NSAs). Our lawyers are well versed in the Team Telecom process, including responding to national security triage questions and negotiating NSAs for our telecommunications and critical infrastructure owner clients.
• Holland & Knight's reputation for navigating complex and difficult matters with overlapping national security-related regulatory regimes makes it a go-to firm for businesses, entrepreneurs and other law firms seeking experienced, skilled counsel. Our attorneys are routinely selected specifically for their CFIUS capabilities by premier firms throughout the European Union, United Kingdom, Asia, Australia, Canada, Israel and elsewhere to partner on cross-border mergers and acquisitions and foreign investment transactions.
• Our clients have an appreciation for cross-border deal-making, and so do we. Collectively, our team members speak a number of languages, have held negotiations in more than 20 countries and worked on transactions involving foreign investors from dozens of countries on nearly every continent.

Select Representation Before CFIUS

• Represented Top Aces, a Canadian corporation, in its acquisition of Blue Air Training, a provider of training to the U.S. Air Force and allied forces, with clearing the transaction with CFIUS. Top Aces has the largest global footprint of privately-held operational fighter aircraft used to provide advanced adversary and air defense training services around the globe. Top Aces and its subsidiaries offer airborne training services to the Canadian Armed Forces, the U.S. Air Force and Navy and armed forces across the globe, including Germany, Australia and the UK.
• Represented PVP Advanced EO Systems Inc. in its acquisition by Rafael Advanced Defense Systems Ltd., an Israeli-based defense contractor. PVP provides innovative solutions to support complex electro-optical imaging applications used by U.S. Customs and Border Protection, the U.S. Marine Corps, U.S. Air Force, U.S. Navy, U.S. Department of Homeland Security, NASA and others. Rafael makes Israel's Iron Dome missile defense system.
• Represented Blue Danube Systems Inc. in its acquisition by NEC Corp., a Japanese technology company. Blue Danube is a U.S.-based provider of Citizens Broadband Radio Service (CBRS)/4G/5G/radio access network (RAN) products and artificial intelligence/machine learning (AI/ML)-based software solutions that help mobile operators address the challenge of 5G network buildouts and spectrum optimization. Blue Danube will accelerate NEC's expansion of RAN software assets to help customers address issues related to spectrum efficiency, RAN optimization and reducing network operating expenses.
• Represented Signal Point Systems Inc. in its acquisition by Mobilitie, a company in the portfolio of the Canada Pension Plan Investment Board. Signal Point develops and provides real estate solutions relating to telecommunications infrastructure (such as build-to-suit telecom solutions) on and off military bases at numerous U.S. locations through long-term leases or licenses with real property owners, DOD entities (including the Army Air Force Exchange Service), privatized military housing partners, privatized utility providers and others that have long-term leasehold rights on military bases.
• Represented Carlyle Infrastructure Partners LP, the infrastructure fund of The Carlyle Group, on the sale of ITS ConGlobal (ITSC) to AMP Capital. The Carlyle Group is a global alternative asset manager based in Washington, D.C., with more than $380 billion of assets under management across more than 570 investment vehicles. ITSC, North America's largest integrated intermodal operator of railroad auto and intermodal terminals, container yard depots, and intermodal equipment maintenance and repair, was acquired by Australia-based AMP Capital's global infrastructure equity platform.
• Represented American Water Works Company Inc. and New York American Water Company Inc. in its acquisition by Liberty Utilities, a Canadian utility corporation. New York American Water Company Inc. (NYAW) is the largest investor-owned water company in New York state, providing high-quality and reliable water services to more than 350,000 customers. The stock sale to Liberty Utilities was an acquisition of a U.S. public utility by a foreign entity.
• Represented Heila Technologies Inc. in its investment by Acario Investment One LLC, a leading publicly traded Japanese energy company. Heila Technologies Inc. is a clean technology company that is simplifying the integration and operation of solar, storage, fuel cell and other distributed energy resources through its patented technology. This investment was a high-profile transaction for the U.S. and Japanese energy sectors.
• Represented sensor technology company Manufacturing Techniques Inc. (MTEQ) (now QinetiQ US) in its sale to British defense contractor QinetiQ. MTEQ was a privately owned business providing innovative technical solutions to the U.S. Department of Defense, law enforcement, the intelligence community and commercial customers.

Other representative matters before CFIUS include:

• a multinational telecommunications company based in the Philippines in its acquisition of a cloud management solutions business
• an Australian defense and aerospace company in its acquisition of a satellite communications business
• a Spanish telecommunications provider in the sale of certain U.S. data center assets to a global private equity sponsor
• an Australian telecommunications company in its merger with a multinational telecommunications company
• U.K. acquisition of a cleared satellite service provider to the U.S. government
• Israeli government acquisition of a U.S. electro-optical surveillance defense provider to the U.S. government
• Canadian acquisition of mining claims attached to land parcels owned by a U.S. state
• Canadian acquisition of a U.S. provider of IT and geospatial services to the Department of Defense and other government agencies
• German purchase of a U.S. mobile technology retailer
• Singapore company's purchase of U.S. buildings that host data center tenants
• Swiss lease to develop and operate a terminal at a major U.S. port
• Chinese acquisition of an architectural firm designing buildings for use by the U.S. government
• Canadian purchase of U.S. high-tech defense contractor
• Danish purchase of U.S. security company
• French purchase of U.S. aircraft systems manufacturer
• Saudi investment in U.S. space launch company
• Danish purchase of U.S. satellite telecommunications firm
• Norwegian purchase of silicon materials manufacturer
• Malaysian purchase of a refueling port facility
• Chinese acquisition of a U.S. pilot school
• numerous acquisitions of government contractors for the DOD and U.S. Intelligence Community agencies

Select FOCI and Team Telecom Matters

• Obtaining a facility clearance for a newly formed entity of a private equity firm with foreign ownership to allow the spinoff of classified assets by a major defense contractor
• Representing an Israeli artificial intelligence/machine learning-based software company in negotiations for a proxy agreement with DCSA
• Canadian acquisition of an IT and geological service provider to the U.S. government
• U.K. government purchase of a U.S. satellite and terrestrial communication systems provider, which included both a FOCI mitigation structure and a Team Telecom NSA.
• Foreign purchase of a U.S. firm that safeguards U.S. nuclear facilities
• Establishment of a U.S. facility to design and manufacture military helicopters by foreign producer
• Establishment of a U.S. facility to provide defense services related to U.S. and foreign combat aircraft
• Providing advice regarding the negotiation and restructuring of U.S. classified contracts to allow foreign purchase
• Securing approval for private equity investments in cleared government contractors for the DOD and Intelligence Community agencies

Industrial Security: Facility Security Clearances

U.S. government agencies grant access to classified information only on a need-to-know basis. Correspondingly, we know what clients need to obtain and maintain FCLs. Holland & Knight's Facility Security Clearance Team assists federal government contractors in submitting a sponsorship letter, the initial facility clearance package and key management personnel (KMP) lists, negotiating FOCI mitigation with DCSA, and structuring their organizations through all types of transactions so that clearances are processed smoothly or preserved. Clients rely on our deep bench of attorneys, many having more than a decade of facility clearance and industrial security experience, to counsel them on an array of issues surrounding their clearance matters.